Nine Energy Service, Inc. (NINE) Q2 2025 Earnings Call Transcript

Nine Energy Service (NYSE:NINE) reported Q2 2025 revenue of $147.3 million and adjusted EBITDA of $14.1 million, achieving the upper end of its revenue guidance despite significant market headwinds. The quarter saw a nearly 10% U.S. rig count decline, driven by lower oil prices, new tariffs, and global economic uncertainty, particularly impacting the Permian Basin and leading to pricing pressure that reduced Cementing and Coiled Tubing revenue. Conversely, the company capitalized on an improving natural gas market in the Northeast and Haynesville, driving 9% growth in Completion Tool revenue and 11% in Wireline, alongside a 20% year-over-year increase in international tool sales. Nine forecasts Q3 2025 revenue to decline to $135-$145 million as Q2 pressures fully materialize, but is pursuing cost reductions and strategic growth, including international expansion and a new Completion Tools facility, with some Permian customers signaling increased activity for Q1 2026.

Analysis

Nine Energy Service reported resilient Q2 2025 results, with revenue of $147.3 million landing at the high end of guidance despite a severe macro downturn. The company navigated a nearly 10% U.S. rig count decline in just three months, primarily concentrated in the Permian Basin, which was driven by lower oil prices, new tariffs, and economic uncertainty. This pressure directly impacted its oil-levered segments, causing a 9% revenue decline in Cementing and a 16% decline in Coiled Tubing. However, the company demonstrated strategic diversification and operational strength in other areas. Revenue from its Completion Tool and Wireline businesses grew by 9% and 11% respectively, capitalizing on a more stable natural gas environment in the Northeast and Haynesville. A key bright spot is the execution of its international strategy, which produced a 20% increase in international tool sales in the first half of 2025 compared to the prior year. Despite this operational outperformance in specific segments, the company projects a sequential decline in Q3 revenue to between $135 million and $145 million, reflecting the full impact of Q2's activity and pricing deterioration. Management is actively managing this downturn through significant cost reductions and asset redeployment while investing for future growth with a new completion tools facility planned for 2026.

Key Decisions for Investors

• Investors should anticipate near-term pressure on earnings and the stock price, given the company's guidance for a sequential decline in Q3 revenue and EBITDA as pricing headwinds from the oil market fully materialize.
• Monitor the performance of the international and natural gas-levered segments, as their continued growth is critical to offsetting the pronounced weakness and pricing pressure in the Permian-focused service lines.
• For a longer-term horizon, consider the company's strategic investments in a new completions R&D facility and its demonstrated ability to gain international market share, which could serve as significant growth catalysts upon market stabilization or a potential activity rebound in Q1 2026.