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Category: Stock Market and Nine Energy Services
Date: 16 September 2019 Stock Price: $6.46 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Nine Energy Services an oilfield services company operating in North America and abroad.
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About Nine Energy Services
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
Overview of Nine Energy Services' latest earnings report
The numbers we are interested in (for the quarter):
- Total revenue: $237.517 million (up from $229.705 million from the same quarter of the previous year)
- Revenues increased by 3.4% over the last 12 months
- Cost of Revenues: $184.555 million (up from $178.590 million for the same quarter of the previous year)
- Cost of revenues increased by 3.34% over the last 12 months
- Net income: $6.087 million (down from $17.310 million for the same quarter of the previous year)
- Diluted earnings per share: $0.21 (down from $0.59 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 29.473 million (down from 43.5 million for the same quarter of the previous year)
- Cash and cash equivalents: $16.886 million
- Cash and cash equivalents per share: $0.57
- Cash and cash equivalents makes up 8.86% of Nine Energy Services' market capital
- Cash and cash equivalents makes up 1.54% of Nine Energy Services' total assets
- Stockholders equity: $624.309 million
- Stockholders equity per share: $21.18
- Stockholders equity per share: $21.18
- Cash generated from operations: $11.52 million
- Cash generated from operations per share: $0.39
Nine Energy Services' management commentary on the results and earnings guidance
HOUSTON--(BUSINESS WIRE)-- Nine Energy Service, Inc. ("Nine" or the "Company") (NYSE: NINE) reported second quarter 2019 revenues of $237.5 million, net income of $6.1 million and adjusted EBITDA of $38.0 million. Second quarter basic earnings per share was $0.21. Second quarter 2019 adjusted net incomeD was $8.8 million, or $0.30 adjusted basic earnings per share. The Company reported second quarter 2019 adjusted EBITDA of $38.0 million and a second quarter adjusted EBITDA marginA of approximately 16%. During the second quarter of 2019, the Company generated ROIC of 7%. During the second quarter of 2019, the Company reported net cash provided by operating activities of $11.5 million compared to $5.9 million during the first quarter, an increase of approximately 95%.
The Company had provided original second quarter 2019 revenue guidance between $230.0 and $240.0 million and adjusted EBITDA guidance between $38.0 and $42.0 million, with actual results for both falling within Management’s original guidance range.
“The first quarter was in-line with what we anticipated, with both revenue and adjusted EBITDA falling within the range of Management’s original guidance,” said Ann Fox, President and Chief Executive Officer, Nine Energy Service. “Despite a challenging environment, we were able to increase cash flow from operations by approximately 95% and anticipate this trend continuing throughout the rest of the year. Since June 30, 2019, our cash balance has increased significantly to approximately $59.0 million as of August 9, 2019, and our revolving credit facility is undrawn.”
“Our operations team continues to perform very well, outpacing market activity. In cementing, we continue to outperform the market, increasing revenue by approximately 7% quarter over quarter despite U.S. new wells drilled declining by approximately 4% quarter over quarter. In wireline and completions tools, we increased the number of stages completed as a company by approximately 19% despite seasonal headwinds in Canada associated with spring break-up and U.S. completions increasing by only 6%. Our coiled tubing group increased days worked and revenue quarter over quarter despite a number of new units coming into the market.”
“We remain focused and confident on the introduction and commercialization of our new technologies in Q1 of 2020, including a low-temperature dissolvable plug targeted for the Permian and Northeast markets. These technology developments, along with cash generation and evaluation of our current service lines and geographies remain our top priorities for 2019.”
“At Nine, we never forecasted a back-half recovery, which continues to be our view. With so much volatility in the market, in conjunction with operators unwavering commitment to staying within capital budgets, we do anticipate significant activity declines throughout the rest of the year, especially in the Northeast, which will adversely affect both our U.S. Wireline and Completion Tools divisions. Nonetheless, we remain extremely excited about our ability to generate strong cash flow in a volatile market and about the tools and technology we are developing.”
The Company had provided original second quarter 2019 revenue guidance between $230.0 and $240.0 million and adjusted EBITDA guidance between $38.0 and $42.0 million, with actual results for both falling within Management’s original guidance range.
“The first quarter was in-line with what we anticipated, with both revenue and adjusted EBITDA falling within the range of Management’s original guidance,” said Ann Fox, President and Chief Executive Officer, Nine Energy Service. “Despite a challenging environment, we were able to increase cash flow from operations by approximately 95% and anticipate this trend continuing throughout the rest of the year. Since June 30, 2019, our cash balance has increased significantly to approximately $59.0 million as of August 9, 2019, and our revolving credit facility is undrawn.”
“Our operations team continues to perform very well, outpacing market activity. In cementing, we continue to outperform the market, increasing revenue by approximately 7% quarter over quarter despite U.S. new wells drilled declining by approximately 4% quarter over quarter. In wireline and completions tools, we increased the number of stages completed as a company by approximately 19% despite seasonal headwinds in Canada associated with spring break-up and U.S. completions increasing by only 6%. Our coiled tubing group increased days worked and revenue quarter over quarter despite a number of new units coming into the market.”
“We remain focused and confident on the introduction and commercialization of our new technologies in Q1 of 2020, including a low-temperature dissolvable plug targeted for the Permian and Northeast markets. These technology developments, along with cash generation and evaluation of our current service lines and geographies remain our top priorities for 2019.”
“At Nine, we never forecasted a back-half recovery, which continues to be our view. With so much volatility in the market, in conjunction with operators unwavering commitment to staying within capital budgets, we do anticipate significant activity declines throughout the rest of the year, especially in the Northeast, which will adversely affect both our U.S. Wireline and Completion Tools divisions. Nonetheless, we remain extremely excited about our ability to generate strong cash flow in a volatile market and about the tools and technology we are developing.”
Nine Energy Services (NYSE: NINE) stock price history
The image below, obtained from Google, shows the stock price history of Nine Energy Services (NYSE: NINE) for the last year. And its not been a good time for NINE stockholders. With the stock declining significantly over the past 12 months. A year ago the stock was trading at around $30 a stock and its currently trading at $6.46. That is a whopping -70.6% lost by NINE stockholders over the last 12 months. Another indicator of the negative sentiment and momentum of NINE is the fact that it is trading at a lot closer to its 52 week low of $4.85 than it is to its 52 week high of $40.39.
Recent coverage of Nine Energy Services
The extract below shows recent coverage of Nine Energy Services as obtained from Zacks
Nine Energy Service (NINE - Free Report) came out with quarterly earnings of $0.30 per share, beating the Zacks Consensus Estimate of $0.25 per share. This compares to earnings of $0.37 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 20%. A quarter ago, it was expected that this oilfield services company would post earnings of $0.23 per share when it actually produced earnings of $0.76, delivering a surprise of 230.43%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times. Nine Energy, which belongs to the Zacks Oil and Gas - Field Services industry, posted revenues of $237.52 million for the quarter ended June 2019, missing the Zacks Consensus Estimate by 0.13%. This compares to year-ago revenues of $205.49 million. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Nine Energy shares have lost about 56.4% since the beginning of the year versus the S&P 500's gain of 16.4%
Read the full article here
Nine Energy Service (NINE - Free Report) came out with quarterly earnings of $0.30 per share, beating the Zacks Consensus Estimate of $0.25 per share. This compares to earnings of $0.37 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 20%. A quarter ago, it was expected that this oilfield services company would post earnings of $0.23 per share when it actually produced earnings of $0.76, delivering a surprise of 230.43%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times. Nine Energy, which belongs to the Zacks Oil and Gas - Field Services industry, posted revenues of $237.52 million for the quarter ended June 2019, missing the Zacks Consensus Estimate by 0.13%. This compares to year-ago revenues of $205.49 million. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Nine Energy shares have lost about 56.4% since the beginning of the year versus the S&P 500's gain of 16.4%
Read the full article here
Nine Energy Services (NYSE: NINE) latest stock valuation
So based on the earnings report of Nine Energy Services (NYSE: NINE) and their fiscal outlook provided for 2020 what do we value Nine Energy Services stock at? Based on the earnings reported and the fiscal guidance provided our valuation model provides a target (full value) price for Nine Energy Services (NINE) at $12.80 a stock. We therefore feel that the stock is undervalued We would however caution investors into jumping into the stock head first as the outlook for the industry in the short to medium term will have an impact on the current price valuations of the stock.