• Revenue, net income and adjusted EBITDAA of $229.7 million, $17.3 million and $39.2 million, respectively for the first quarter of 2019
• First quarter basic EPS of $0.59 and $0.76 adjusted basic EPSB
• First quarter 2019 ROICC of 13%
HOUSTON--(BUSINESS WIRE)--
Nine Energy Service, Inc. ("Nine" or the "Company") (NYSE: NINE)
reported first quarter 2019 revenues of $229.7 million, net income of
$17.3 million and adjusted EBITDA of $39.2 million. First quarter basic
earnings per share was $0.59. First quarter 2019 adjusted net incomeD
was $22.1 million, or $0.76 adjusted basic earnings per share, compared
to fourth quarter 2018 adjusted net income of $13.6 million, or $0.49
adjusted basic earnings per share, an increase of approximately 63% and
55%, respectively. The Company reported first quarter 2019 adjusted
EBITDA of $39.2 million and a first quarter adjusted EBITDA marginA
of approximately 17%. During the first quarter of 2019, the Company
generated ROIC of 13%.
The Company had provided original first quarter 2019 revenue guidance
between $220.0 and $230.0 million and adjusted EBITDA guidance between
$37.0 and $41.0 million, with actual results exceeding the midpoint of
first quarter 2019 revenue guidance by approximately 2% and meeting the
midpoint of first quarter 2019 adjusted EBITDA guidance.
“The first quarter was in-line with what we anticipated, with both
revenue and adjusted EBITDA falling at the midpoint or above of
Management’s original guidance range,” said Ann Fox, President and Chief
Executive Officer, Nine Energy Service. “Activity was steady across the
majority of our service lines, with our cementing division outperforming
the market as we continue to gain market share through the combination
of technical slurry development and execution at the wellsite. Pricing
within the portfolio has stabilized with the recovery in oil prices and
we believe the worst is behind us. We remain extremely positive around
the dissolvable plug thesis as operators continue the development of
large-scale well pad programs, adding complexity to the completion
process and reinforcing an extreme focus on efficiencies and reducing
cycle times.”
“I am confident in our differentiation in the market and the Company’s
ability to be nimble and flex with the industry. Our 2019 view is
unchanged at this time and we anticipate consistent results in Q2. We
remain well-positioned to capitalize on any potential activity tailwinds
resulting from the improved commodity price and believe we can continue
to gain market share across our Completions offering.”
Business Segment Results
Completion Solutions
During the first quarter of 2019, the Company’s Completion Solutions
segment, which includes the Company’s cementing, completion tools,
wireline and coiled tubing services, reported revenues of $209.1 million
compared to fourth quarter 2018 revenues of $209.0 million. For the
first quarter 2019, Completion Solutions reported adjusted gross profitE
of $47.7 million compared to fourth quarter 2018 adjusted gross profit
of $55.1 million.
Production Solutions
During the first quarter of 2019, the Company’s Production Solutions
segment, which includes well services, generated revenues of
$20.6 million compared to fourth quarter 2018 revenues of $20.5 million.
For the first quarter 2019, Production Solutions reported adjusted gross
profit of $3.4 million compared to fourth quarter 2018 adjusted gross
profit of $2.8 million.
Other Financial Information
During the first quarter of 2019, the Company reported selling, general
and administrative expense of $19.9 million, compared to $21.2 million
for the fourth quarter of 2018. Depreciation and amortization expense
("D&A") in the first quarter of 2019 was $18.2 million, compared to
$18.2 million for the fourth quarter of 2018.
During the first quarter of 2019, the Company’s effective tax rate was
2.6%. The effective tax rate for the quarter was primarily attributable
to changes in pre-tax income and valuation allowance positions as well
as tax liability in jurisdictions where income is expected to exceed
available net operating losses.
Liquidity and Capital Expenditures
During the first quarter of 2019, the Company reported net cash provided
by operating activities of $5.9 million.Capital expenditures
totaled $23.4 million during the first quarter of 2019, of which
approximately 10% related to maintenance capital expenditures.
During the first quarter of 2019, the Company paid down approximately
$20.0 million of the outstanding ABL credit facility borrowings,
resulting in $15.0 million in outstanding revolver borrowings. As of
March 31, 2019, Nine’s cash and cash equivalents were $31.2 million with
$129.7 million of availability under the revolving ABL credit facility,
resulting in a total liquidity position of $160.9 as of March 31, 2019.
ABCDESee end of press release for definitions
Conference Call Information
The call is scheduled for Wednesday, May 8, 2019 at 10:00 am Central
Time. Participants may join the live conference call by dialing U.S.
(Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking
for the “Nine Energy Service Earnings Call”. Participants are encouraged
to dial into the conference call ten to fifteen minutes before the
scheduled start time to avoid any delays entering the earnings call.
For those who cannot listen to the live call, a telephonic replay of the
call will be available through May 22, 2019 and may be accessed by
dialing U.S. (Toll Free): (877) 660-6853 or International: (201)
612-7415 and entering the passcode of 13690044.
About Nine Energy Service
Nine Energy Service is an oilfield services company that offers
completion and production solutions within North America and abroad. The
Company brings years of experience with a deep commitment to serving
clients with smarter, customized solutions and world-class resources
that drive efficiencies. Serving the global oil and gas industry, Nine
continues to differentiate itself through superior service quality,
wellsite execution and cutting-edge technology. Nine is headquartered in
Houston, Texas with operating facilities in the Permian, Eagle Ford,
SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and throughout
Canada.
For more information on the Company, please visit Nine’s website at nineenergyservice.com.
Forward Looking Statements
The foregoing contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are those
that do not state historical facts and are, therefore, inherently
subject to risks and uncertainties. Forward-looking statements also
include statements that refer to or are based on projections, uncertain
events or assumptions. The forward-looking statements included herein
are based on current expectations and entail various risks and
uncertainties that could cause actual results to differ materially from
those forward-looking statements. Such risks and uncertainties include,
among other things, the general energy service industry risks;
volatility of crude oil and natural gas commodity prices; a decline in
demand for the Company’s services, including due to declining commodity
prices; the Company’s ability to implement price increases or maintain
pricing of the Company’s core services; pricing pressures, reduced
sales, or reduced market share as a result of intense competition in the
markets for the Company’s dissolvable plug products; the Company’s
ability to accurately predict customer demand; the loss of, or
interruption or delay in operations by, one or more significant
customers; the loss of or interruption in operations of one or more key
suppliers; the adequacy of the Company’s capital resources and
liquidity; the Company’s ability to implement new technologies and
services; the incurrence of significant costs and liabilities resulting
from litigation; the loss of, or inability to attract, key personnel;
the Company’s ability to successfully integrate recently acquired assets
and operations and realize anticipated revenues, cost savings or other
benefits thereof; and other factors described in the “Risk Factors” and
“Business” sections of the Company’s Annual Report on Form 10-K for the
year ended December 31, 2018 and the subsequently filed Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Readers are
cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date hereof, and, except as required by law,
the Company undertakes no obligation to update those statements or to
publicly announce the results of any revisions to any of those
statements to reflect future events or developments.
|
NINE ENERGY SERVICE, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME (LOSS) |
(In Thousands, Except Per Share Amounts)
|
(Unaudited)
|
|
|
| |
|
| |
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
| | | | | |
|
Revenues | | |
$
|
229,705
| | | |
$
|
229,448
| |
Cost and expenses | | | | | | |
Cost of revenues (exclusive of depreciation and
| | | | | | |
amortization shown separately below)
| | | |
178,590
| | | | |
171,598
| |
General and administrative expenses
| | | |
19,939
| | | | |
21,164
| |
(Gain) loss on revaluation of contingent liabilities
| | | |
(13,955
|
)
| | | |
1,547
| |
Depreciation
| | | |
13,530
| | | | |
14,275
| |
Amortization of intangibles
| | | |
4,688
| | | | |
3,905
| |
Impairment of property and equipment
| | | |
-
| | | | |
45,694
| |
Impairment of goodwill
| | | |
-
| | | | |
12,986
| |
Impairment of intangibles
| | | |
-
| | | | |
19,065
| |
Loss on equity method investment
| | | |
-
| | | | |
77
| |
Gain on sale of property and equipment
| | |
|
(23
|
)
|
|
|
|
(30
|
)
|
Income (loss) from operations
| | |
|
26,936
|
|
|
|
|
(60,833
|
)
|
Other expense | | | | | | |
Interest expense
| | |
|
9,166
|
|
|
|
|
16,002
|
|
Total other expense
| | |
|
9,166
|
|
|
|
|
16,002
|
|
Income (loss) before income taxes
| | | |
17,770
| | | | |
(76,835
|
)
|
Provision for income taxes
| | |
|
460
|
|
|
|
|
500
|
|
Net income (loss)
| | |
$
|
17,310
| | | |
$
|
(77,335
|
)
|
Earnings (loss) per share
| | | | | | |
Basic
| | |
$
|
0.59
| | | |
$
|
(2.78
|
)
|
Diluted
| | |
$
|
0.59
| | | |
$
|
(2.78
|
)
|
Weighted average shares outstanding
| | | | | | |
Basic
| | | |
29,150,996
| | | | |
27,815,401
| |
Diluted
| | | |
29,471,753
| | | | |
27,815,401
| |
Other comprehensive income (loss), net of tax | | | | | | |
Foreign currency translation adjustments, net of tax of $0 and
$0 | | |
$
|
248
|
|
|
|
$
|
(722
|
)
|
Total other comprehensive income (loss), net of tax
| | |
|
248
|
|
|
|
|
(722
|
)
|
Total comprehensive income (loss)
| | |
$
|
17,558
| | | |
$
|
(78,057
|
)
|
|
NINE ENERGY SERVICE, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In Thousands)
|
(Unaudited)
|
|
|
| |
|
| |
| | |
March 31, 2019
| | |
December 31, 2018
|
| | | | | |
|
Assets | | | | | | |
Current assets
| | | | | | |
Cash and cash equivalents
| | |
$
|
31,157
| | | |
$
|
63,615
| |
Accounts receivable, net
| | | |
159,245
| | | | |
154,783
| |
Inventories, net
| | | |
98,053
| | | | |
91,435
| |
Prepaid expenses and other current assets
| | | |
20,608
| | | | |
15,717
| |
Notes receivable from shareholders
| | |
|
7,094
|
| | |
|
7,626
|
|
Total current assets
| | | |
316,157
| | | | |
333,176
| |
Property and equipment, net
| | | |
221,134
| | | | |
211,644
| |
Definite-lived intangible asset, net
| | | |
168,763
| | | | |
173,451
| |
Goodwill
| | | |
307,804
| | | | |
307,804
| |
Indefinite-lived intangible assets
| | | |
108,711
| | | | |
108,711
| |
Other long-term assets
| | |
|
6,052
|
| | |
|
6,386
|
|
Total assets
| | |
$
|
1,128,621
|
| | |
$
|
1,141,172
|
|
Liabilities and Stockholders’ Equity | | | | | | |
Current liabilities
| | | | | | |
Accounts payable
| | |
$
|
47,688
| | | |
$
|
46,132
| |
Accrued expenses
| | | |
44,033
| | | | |
61,434
| |
Current portion of capital lease obligations
| | | |
992
| | | | |
665
| |
Income taxes payable
| | |
|
853
|
| | |
|
57
|
|
Total current liabilities
| | | |
93,566
| | | | |
108,288
| |
Long-term liabilities
| | | | | | |
Long-term debt
| | | |
405,498
| | | | |
424,978
| |
Deferred income taxes
| | | |
5,437
| | | | |
5,915
| |
Long-term capital lease obligations
| | | |
3,101
| | | | |
2,330
| |
Other long-term liabilities
| | |
|
5,552
|
| | |
|
4,838
|
|
Total liabilities
| | | |
513,154
| | | | |
546,349
| |
| | | | | |
|
Stockholders’ equity
| | | | | | |
Common stock (120,000,000 shares authorized at $.01 par value;
30,782,600 and 30,163,408 shares issued and outstanding at March 31,
2019 and December 31, 2018, respectively)
| | | |
308
| | | | |
302
| |
Additional paid-in capital
| | | |
749,508
| | | | |
746,428
| |
Accumulated other comprehensive loss
| | | |
(4,595
|
)
| | | |
(4,843
|
)
|
Accumulated deficit
| | |
|
(129,754
|
)
| | |
|
(147,064
|
)
|
Total stockholders’ equity
| | |
|
615,467
|
| | |
|
594,823
|
|
Total liabilities and stockholders’ equity
| | |
$
|
1,128,621
|
| | |
$
|
1,141,172
|
|
|
| |
NINE ENERGY SERVICE, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In Thousands)
|
(Unaudited)
|
| | |
|
| |
| |
Three Months Ended
|
| |
March 31, 2019
| | |
December 31, 2018
|
| | | | |
|
Cash flows from operating activities | | | | | |
Net income (loss)
| |
$
|
17,310
| | | |
$
|
(77,335
|
)
|
Adjustments to reconcile net income to net cash provided by
operating activities
| | | | | |
Depreciation
| | |
13,530
| | | | |
14,275
| |
Amortization of intangibles
| | |
4,688
| | | | |
3,905
| |
Amortization of deferred financing costs
| | |
746
| | | | |
1,775
| |
Recovery of doubtful accounts
| | |
47
| | | | |
51
| |
Benefit for deferred income taxes
| | |
(478
|
)
| | | |
(67
|
)
|
Provision for inventory obsolescence
| | |
1,338
| | | | |
566
| |
Impairment of property and equipment
| | |
-
| | | | |
45,694
| |
Impairment of goodwill
| | |
-
| | | | |
12,986
| |
Impairment of intangible assets
| | |
-
| | | | |
19,065
| |
Stock-based compensation expense
| | |
3,153
| | | | |
3,502
| |
Gain on sale of property and equipment
| | |
(23
|
)
| | | |
(30
|
)
|
(Gain) loss on revaluation of contingent liabilities
| | |
(13,955
|
)
| | | |
1,547
| |
Loss on equity method investment
| | |
-
| | | | |
77
| |
Changes in operating assets and liabilities, net of effects from
acquisitions
| | | | | |
Accounts receivable, net
| | |
(4,402
|
)
| | | |
37,730
| |
Inventories, net
| | |
(7,879
|
)
| | | |
(7,336
|
)
|
Prepaid expenses and other current assets
| | |
(6,060
|
)
| | | |
(7,482
|
)
|
Accounts payable and accrued expenses
| | |
(3,703
|
)
| | | |
(10,961
|
)
|
Income taxes receivable/payable
| | |
796
| | | | |
411
| |
Other assets and liabilities
| |
|
780
|
| | |
|
448
|
|
Net cash provided by operating activities
| |
|
5,888
|
| | |
|
38,821
|
|
Cash flows from investing activities | | | | | |
Acquisitions, net of cash acquired
| | |
-
| | | | |
(349,986
|
)
|
Proceeds from sales of property and equipment
| | |
477
| | | | |
392
| |
Proceeds from property and equipment casualty losses
| | |
1,238
| | | | |
-
| |
Proceeds from notes receivable payments
| | |
532
| | | | |
2,941
| |
Purchases of property and equipment
| |
|
(20,386
|
)
| | |
|
(17,101
|
)
|
Net cash used in investing activities
| |
|
(18,139
|
)
| | |
|
(363,754
|
)
|
Cash flows from financing activities | | | | | |
Proceeds from revolving credit facilities
| | |
-
| | | | |
35,000
| |
Payments on revolving credit facilities
| | |
(20,000
|
)
| | | |
-
| |
Proceeds from Senior Notes
| | |
-
| | | | |
400,000
| |
Payments on term loans
| | |
-
| | | | |
(115,274
|
)
|
Payments on capital leases
| | |
(212
|
)
| | | |
(128
|
)
|
Payments of contingent liability on Scorpion purchase
| | |
-
| | | | |
(3,445
|
)
|
Proceeds from exercise of stock options
| | |
15
| | | | |
1,038
| |
Vesting of restricted stock
| | |
(82
|
)
| | | |
(137
|
)
|
Cost of debt issuance
| |
|
-
|
| | |
|
(14,922
|
)
|
Net cash provided by (used in) financing activities
| |
|
(20,279
|
)
| | |
|
302,132
|
|
Impact of foreign currency exchange on cash
| |
|
72
|
| | |
|
(118
|
)
|
Net decrease in cash and cash equivalents
| | |
(32,458
|
)
| | | |
(22,919
|
)
|
Cash, cash equivalents and restricted cash | | | | | |
Beginning of period
| |
|
63,615
|
| | |
|
86,534
|
|
End of period
| |
$
|
31,157
|
| | |
$
|
63,615
|
|
|
|
| |
NINE ENERGY SERVICE, INC. |
SEGMENT DATA |
(In Thousands)
|
(Unaudited)
|
| | | |
|
| |
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
Revenues | | | | | | |
Completion Solutions
| | |
$
|
209,132
| | | |
$
|
208,953
| |
Production Solutions
| | |
|
20,573
|
|
|
|
|
20,495
|
|
| | |
$
|
229,705
|
|
|
|
$
|
229,448
|
|
| | | | | |
|
Cost of revenues (1) | | | | | | |
Completion Solutions
| | |
$
|
161,439
| | | |
$
|
153,891
| |
Production Solutions
| | |
|
17,151
|
|
|
|
|
17,707
|
|
| | |
$
|
178,590
|
|
|
|
$
|
171,598
|
|
| | | | | |
|
Adjusted gross profit | | | | | | |
Completion Solutions
| | |
$
|
47,693
| | | |
$
|
55,062
| |
Production Solutions
| | |
|
3,422
|
|
|
|
|
2,788
|
|
| | |
$
|
51,115
|
|
|
|
$
|
57,850
|
|
| | | | | |
|
General and administrative expenses
| | | |
19,939
| | | | |
21,164
| |
(Gain) loss on revaluation of contingent liabilities
| | | |
(13,955
|
)
| | | |
1,547
| |
Depreciation
| | | |
13,530
| | | | |
14,275
| |
Amortization of intangibles
| | | |
4,688
| | | | |
3,905
| |
Impairment of property and equipment
| | | |
-
| | | | |
45,694
| |
Impairment of goodwill
| | | |
-
| | | | |
12,986
| |
Impairment of intangibles
| | | |
-
| | | | |
19,065
| |
Loss on equity method investment
| | | |
-
| | | | |
77
| |
Gain on sale of property and equipment
| | |
|
(23
|
)
|
|
|
|
(30
|
)
|
Income (loss) from operations | | |
$
|
26,936
| | | |
$
|
(60,833
|
)
|
| | | | | |
|
Capital expenditures | | | | | | |
Completion Solutions
| | |
$
|
22,478
| | | |
$
|
8,666
| |
Production Solutions
| | | |
914
| | | | |
901
| |
Corporate
| | |
|
55
|
|
|
|
|
64
|
|
| | |
$
|
23,447
| | | |
$
|
9,631
| |
Total assets | | | | | | |
Completion Solutions
| | |
$
|
1,053,653
| | | |
$
|
1,045,643
| |
Production Solutions
| | | |
34,662
| | | | |
35,086
| |
Corporate
| | |
|
40,306
|
|
|
|
|
60,443
|
|
| | |
$
|
1,128,621
| | | |
$
|
1,141,172
| |
| | | | | |
|
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
Revenue by country | | | | | | |
United States | | |
$
|
222,315
| | | |
$
|
223,178
| |
Canada and other
| | |
|
7,390
|
|
|
|
|
6,270
|
|
| | |
$
|
229,705
| | | |
$
|
229,448
| |
| | | | | |
|
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
Long-lived assets (2) | | | | | | |
United States | | |
$
|
382,624
| | | |
$
|
377,623
| |
Canada and other
| | |
|
7,273
|
|
|
|
|
7,472
|
|
| | |
$
|
389,897
| | | |
$
|
385,095
| |
| | | | | |
|
(1) Excludes depreciation and amortization, shown separately.
|
| | | | | |
|
(2) Inclusive of property and equipment and definite-lived
intangible assets.
|
|
|
| |
NINE ENERGY SERVICE, INC. |
RECONCILIATION OF ADJUSTED GROSS PROFIT |
(In Thousands)
|
(Unaudited)
|
| | | |
|
| |
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
Calculation of gross profit | | | | | | |
Revenues
| | |
$
|
229,705
| | |
$
|
229,448
|
Cost of revenues (exclusive of depreciation and
| | | | | | |
amortization shown separately below)
| | | |
178,590
| | | |
171,598
|
Depreciation (related to cost of revenues)
| | | |
13,306
| | | |
14,039
|
Amortization of intangibles
| | |
|
4,688
|
|
|
|
3,905
|
Gross profit | | |
$
|
33,121
|
|
|
$
|
39,906
|
| | | | | |
|
Adjusted gross profit (excluding depreciation and amortization)
reconciliation | | | | | | |
Gross profit
| | |
$
|
33,121
| | |
$
|
39,906
|
Depreciation (related to cost of revenues)
| | | |
13,306
| | | |
14,039
|
Amortization of intangibles
| | |
|
4,688
|
|
|
|
3,905
|
Adjusted gross profit | | |
$
|
51,115
|
|
|
$
|
57,850
|
|
|
| |
NINE ENERGY SERVICE, INC. |
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA |
(In Thousands)
|
(Unaudited)
|
| | | |
|
| |
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
EBITDA reconciliation: | | | | | | |
Net income (loss)
| | |
$
|
17,310
| | | |
$
|
(77,335
|
)
|
Interest expense
| | | |
9,166
| | | | |
16,002
| |
Depreciation
| | | |
13,530
| | | | |
14,275
| |
Amortization of intangibles
| | | |
4,688
| | | | |
3,905
| |
Provision for income taxes
| | |
|
460
|
|
|
|
|
500
|
|
EBITDA | | |
$
|
45,154
| | | |
$
|
(42,653
|
)
|
Impairment of property and equipment
| | | |
-
| | | | |
45,694
| |
Impairment of goodwill
| | | |
-
| | | | |
12,986
| |
Impairment of intangible assets
| | | |
-
| | | | |
19,065
| |
Transaction and integration costs
| | | |
4,762
| | | | |
7,630
| |
(Gain) loss on revaluation of contingent liabilities (1)
| | | |
(13,955
|
)
| | | |
1,547
| |
Loss on equity method investment
| | | |
-
| | | | |
77
| |
Stock-based compensation expense
| | | |
3,153
| | | | |
3,502
| |
Gain on sale of property and equipment
| | | |
(23
|
)
| | | |
(30
|
)
|
Legal fees and settlements (2)
| | |
|
68
|
|
|
|
|
155
|
|
Adjusted EBITDA | | |
$
|
39,159
|
|
|
|
$
|
47,973
|
|
|
(1) Amounts relate to the revaluation of contingent liabilities
associated with the Company's recent acquisitions. The impact is
included in the Company’s Condensed Consolidated Statements of
Income and Comprehensive Income (Loss).
|
|
(2) Amounts represent fees and legal settlements associated with
legal proceedings brought pursuant to the Fair Labor Standards Act
and/or similar state laws.
|
|
NINE ENERGY SERVICE, INC. RECONCILIATION OF ROIC
CALCULATION (In Thousands) (Unaudited)
|
|
|
|
|
| | |
Consolidated
|
| | |
Three Months Ended
|
|
|
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
| | | |
|
| |
Net income (loss) | | |
$
|
17,310
| | | |
$
|
(77,335
|
)
|
Add back:
| | | | | | |
Impairment of property and equipment
| | | |
-
| | | | |
45,694
| |
Impairment of goodwill
| | | |
-
| | | | |
12,986
| |
Impairment of intangibles
| | | |
-
| | | | |
19,065
| |
Interest expense
| | | |
9,166
| | | | |
16,002
| |
Transaction and integration costs
| | | |
4,762
| | | | |
7,630
| |
Benefit for deferred income taxes
| | |
|
(478
|
)
|
|
|
|
(67
|
)
|
After-tax net operating profit | | |
$
|
30,760
| | | |
$
|
23,975
| |
| | | | | |
|
Total capital as of prior year-end/period-end: | | | | | | |
Total stockholders' equity
| | |
$
|
594,823
| | | |
$
|
490,630
| |
Total debt
| | | |
435,000
| | | | |
115,274
| |
Less cash and cash equivalents
| | |
|
(63,615
|
)
|
|
|
|
(86,534
|
)
|
Total capital as of prior year-end/period-end | | |
$
|
966,208
|
|
|
|
$
|
519,370
|
|
| | | | | |
|
Total capital as of period-end/year-end: | | | | | | |
Total stockholders' equity
| | |
$
|
615,467
| | | |
$
|
594,823
| |
Total debt
| | | |
415,000
| | | | |
435,000
| |
Less: cash and cash equivalents
| | |
|
(31,157
|
)
|
|
|
|
(63,615
|
)
|
Total capital as of period-end/year-end: | | |
$
|
999,310
| | | |
$
|
966,208
| |
| | |
|
|
|
|
Average total capital | | |
$
|
982,759
|
|
|
|
$
|
742,789
|
|
ROIC | | | |
13
|
%
| | | |
13
|
%
|
|
|
| |
|
| |
NINE ENERGY SERVICE, INC. RECONCILIATION OF ADJUSTED
BASIC EARNINGS (LOSS) PER SHARE CALCULATION (In Thousands) (Unaudited)
|
| | | | | |
|
| | |
Three Months Ended
|
| | |
March 31, 2019
|
|
|
December 31, 2018
|
Reconciliation of adjusted net income: | | | | | | |
Net income (loss)
| | |
$
|
17,310
| | |
$
|
(77,335
|
)
|
Add back:
| | | | | | |
Impairment of property and equipment (a)
| | | |
-
| | | |
45,694
| |
Impairment of goodwill (a)
| | | |
-
| | | |
12,986
| |
Impairment of intangibles (a)
| | | |
-
| | | |
19,065
| |
Transaction and integration costs (b)
| | | |
4,762
| | | |
7,630
| |
Commitment fee (c)
| | | |
-
| | | |
6,900
| |
Income tax impact of adjustments
| | |
|
-
|
|
|
|
(1,375
|
)
|
| | | | | |
|
Adjusted net income (loss)
| | |
$
|
22,072
| | |
$
|
13,565
| |
| | | | | |
|
Weighted average shares | | | | | | |
Weighted average shares outstanding for basic and adjusted basic
earnings (loss) per share
| | | |
29,150,996
| | | |
27,815,401
| |
| | | | | |
|
Earnings (Loss) per share: | | | | | | |
Basic earnings (loss) per share
| | |
$
|
0.59
| | |
$
|
(2.78
|
)
|
Adjusted basic earnings per share
| | |
$
|
0.76
| | |
$
|
0.49
| |
|
(a) Impairment charges recorded in the fourth quarter of 2018 were
due to deteriorating market conditions in the Company's Production
Solutions segment attributed to depressed commodity prices towards
the end of the fourth quarter of 2018, coupled with customers
focusing more on the completion business where there is more
technological differentiation and value.
|
|
(b) Amounts for each period presented represent transaction and
integration costs, including the cost of inventory that was stepped
up to fair value during purchase accounting associated with recent
acquisitions.
|
|
(c) Amount represents commitment fee associated with a potential
bridge financing in the fourth quarter of 2018.
|
|
AAdjusted EBITDA is defined as net income (loss) before
interest, taxes, and depreciation and amortization, further adjusted for
(i) property and equipment, goodwill, and/or intangible asset impairment
charges, (ii) transaction and integration costs related to acquisitions
and our IPO, (iii) loss or gains from discontinued operations, (iv) loss
or gains from the revaluation of contingent liabilities, (v) loss or
gains on equity method investment, (vi) stock-based compensation
expense, (vii) loss or gains on sale of property and equipment and
(viii) other expenses or charges to exclude certain items which we
believe are not reflective of ongoing performance of our business, such
as legal expenses and settlement costs related to litigation outside the
ordinary course of business and restructuring costs. Adjusted EBITDA
margin is defined as Adjusted EBITDA divided by revenue. Management
believes Adjusted EBITDA and Adjusted EBITDA margin are useful because
they allow us to more effectively evaluate our operating performance and
compare the results of our operations from period to period without
regard to our financing methods or capital structure and help identify
underlying trends in our operations that could otherwise be distorted by
the effect of the impairments, acquisitions and dispositions and costs
that are not reflective of the ongoing performance of our business.
BAdjusted Basic Earnings Per Share is defined as adjusted net
income (loss), divided by weighted average basic shares outstanding.
Management believes Adjusted Basic Earnings Per Share is useful because
it allows us to more effectively evaluate our operating performance and
compare the results of our operations from period to period and help
identify underlying trends in our operations that could otherwise be
distorted by the effect of the impairments and acquisitions.
CReturn on Invested Capital (“ROIC”) is defined as after-tax
net operating profit (loss), divided by average total capital. We define
after-tax net operating profit (loss) as net income (loss) plus (i)
transaction and integration costs related to acquisitions and our IPO,
(ii) property and equipment, goodwill, and/or intangible asset
impairment charges, (iii) interest expense, and (iv) the provision or
benefit for deferred income taxes. We define total capital as book value
of equity plus the book value of debt less balance sheet cash and cash
equivalents. We compute the average of the current and prior year-end
adjusted total capital for use in this analysis. Management believes
ROIC is a meaningful measure because it quantifies how well we generate
operating income relative to the capital we have invested in our
business and illustrates the profitability of a business or project
taking into account the capital invested.
DAdjusted Net Income is defined as net income (loss) adjusted
for (i) property and equipment, goodwill and/or intangible asset
impairment charges, (ii) transaction and integration costs related to
acquisitions and our IPO, including the commitment fee associated with a
potential bridge financing in connection with an acquisition, and (iii)
the income tax impact of such adjustments. Management believes Adjusted
Net Income is useful because it allows us to more effectively evaluate
our operating performance and compare the results of our operations from
period to period and help identify underlying trends in our operations
that could otherwise be distorted by the effect of the impairments and
acquisitions.
EAdjusted Gross Profit is defined as revenues less cost of
revenues excluding depreciation and amortization. This measure differs
from the GAAP definition of gross profit because we do not include the
impact of depreciation and amortization, which represent non-cash
expenses. Our management uses adjusted gross profit to evaluate
operating performance and to determine resource allocation between
segments. We prepare adjusted gross profit (excluding depreciation and
amortization) to eliminate the impact of depreciation and amortization
because we do not consider depreciation and amortization indicative of
our core operating performance.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190507006006/en/
Heather Schmidt
Vice President, Investor Relations and Marketing
(281)
730-5113
[email protected]
Source: Nine Energy Service, Inc.