SEC Form 10-Q filed by Nine Energy Service Inc.

5/7/25 4:47:05 PM ET

$NINE

Oilfield Services/Equipment

Energy

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nine-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38347

__________________________________________________________________

Nine Energy Service, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________________________________


Delaware			80-0759121
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2001 Kirby Drive, Suite 200

Houston, TX 77019

(Address of principal executive offices) (Zip Code)

(281) 730-5100

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NINE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares of the registrant’s common stock, par value $0.01 per share, outstanding at May 5, 2025 was 42,348,643.

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

Condensed Consolidated Statements of Cash Flows

Notes to the Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical fact, including those regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, and objectives of management, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q; we disclaim any obligation to update these statements unless required by law, and we caution you not to place undue reliance on them. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report on Form 10-Q are reasonable, we can give no assurance that these plans, intentions, or expectations will be achieved.

We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” in Item 1A of Part I in our Annual Report on Form 10-K for the year ended December 31, 2024 and in Item 1A of Part II in this Quarterly Report on Form 10-Q. These factors, some of which are beyond our control, include the following:

•Our business is cyclical and depends on capital spending and well completions by the onshore oil and natural gas industry, and the level of such activity is volatile and strongly influenced by current and expected oil and natural gas prices. If the prices of oil and natural gas decline, our business, financial condition, results of operations, cash flows, and prospects may be materially and adversely affected. Significant factors that are likely to affect near-term commodity prices include geopolitical and economic developments in the U.S. and globally, including conflicts, tariffs imposed by the U.S. and other countries or retaliatory trade measures, instability, acts of war, and terrorism in oil producing countries or regions, particularly the Middle East, Russia, South America, and Africa; actions by the members of the Organization of the Petroleum Exporting Countries (“OPEC”) and other oil exporting nations that relate to or impact oil production and supply; weather conditions; the effect of U.S. energy, monetary, and trade policies; and the pace of economic growth in the U.S. and throughout the world.

•Inflation may adversely affect our financial position and operating results; in particular, cost inflation with labor or materials could offset any price increases for our products and services.

•If we are unable to attract and retain key employees, technical personnel, and other skilled and qualified workers, our business, financial condition, or results of operations could suffer.

•We may be unable to maintain existing prices or implement price increases on our products and services, and intense competition in the markets for our dissolvable plug products may lead to pricing pressures, reduced sales, or reduced market share.

•Our substantial debt obligations could have significant adverse consequences on our business and future prospects, and restrictions in our debt agreements could limit our growth and our ability to engage in certain activities.

•Our current and potential competitors may have longer operating histories, significantly greater financial or technical resources, and greater name recognition than we do.

•Tariffs and other trade measures could adversely affect our business, results of operations, financial position, and cash flows, including by increasing the cost of certain raw materials, parts, and components that are manufactured and supplied for our operations, disrupting our supply chain and logistics, restricting or limiting the availability of materials or supplies, and causing adverse financial impacts due to volatility in foreign exchange rates and interest rates or inflationary pressures on raw materials and energy.

•Our operations are subject to conditions inherent in the oilfield services industry, such as equipment defects, liabilities arising from accidents or damage involving our fleet of trucks or other equipment, explosions and uncontrollable flows of gas or well fluids, and loss of well control.

•If we are unable to accurately predict customer demand, including that of our international customers, or if customers cancel their orders on short notice, we may hold excess or obsolete inventory, which would reduce gross margins. Conversely, insufficient inventory would result in lost revenue opportunities and potentially loss of market share and damaged customer relationships.

•We are dependent on customers in a single industry. The loss of one or more significant customers, including certain of our customers outside of the U.S., could adversely affect our financial condition, prospects, and results of operations. Sales to customers outside of the U.S. also exposes us to risks inherent in doing business internationally, including political, social, and economic instability and disruptions, export controls, economic sanctions, embargoes or trade restrictions, and fluctuations in foreign currency exchange rates.

•We may be subject to claims for personal injury and property damage or other litigation, which could materially adversely affect our financial condition, prospects, and results of operations.

•We are subject to federal, state, and local laws and regulations regarding issues of health, safety, and protection of the environment. Under these laws and regulations, we may become liable for penalties, damages, or costs of remediation or other corrective measures. Any changes in laws or government regulations could increase our costs of doing business.

•Our success may be affected by the use and protection of our proprietary technology as well as our ability to enter into license agreements. There are limitations to our intellectual property rights and, thus, our right to exclude others from the use of our proprietary technology.

•Our success may be affected by our ability to implement new technologies and services.

•We may be adversely affected by disputes regarding intellectual property rights.

•If our systems for protecting against cybersecurity risks prove not to be sufficient, we could be adversely affected by, among other things, loss or damage of intellectual property, proprietary information, customer or business data; interruption of business operations; or additional costs to prevent, respond to, or mitigate cybersecurity attacks.

•Our future financial condition and results of operations could be adversely impacted by asset impairment charges.

•Increased scrutiny of sustainability matters could have an adverse effect on our business and damage our reputation.

•Increased attention to climate change and conservation measures may reduce oil and natural gas demand, and we face various risks associated with increased activism and related litigation against oil and natural gas exploration and development activities.

•Seasonal and adverse weather conditions adversely affect demand for our products and services.

•We are currently out of compliance with certain of the New York Stock Exchange’s (the “NYSE”) continued listing standards and are at risk of the NYSE delisting our common stock, which would have an adverse impact on the liquidity and market price of our common stock.

Additional risks or uncertainties that are not currently known to us, that we currently deem to be immaterial, or that could apply to any company could also materially adversely affect our business, financial condition, or future results.

These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	March 31, 2025		December 31, 2024
Assets
Current assets
Cash and cash equivalents	$	17,275	$	27,880
Accounts receivable, net	95,115		81,157
Income taxes receivable	185		284
Inventories, net	51,186		50,781
Prepaid expenses	9,159		9,982
Other current assets	1,657		380
Total current assets	174,577		170,464
Property and equipment, net	68,562		70,518
Operating lease right of use assets, net	37,064		37,252
Finance lease right of use assets, net	50		29
Intangible assets, net	76,450		79,246
Other long-term assets	2,478		2,567
Total assets	$	359,181	$	360,076
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable	$	46,493	$	36,052
Accrued expenses	25,156		30,676
Current portion of long-term debt	2,260		3,580
Current portion of operating lease obligations	12,086		11,216
Current portion of finance lease obligations	34		21
Total current liabilities	86,029		81,545
Long-term liabilities
Long-term debt	319,137		317,264
Long-term operating lease obligations	25,588		26,710
Other long-term liabilities	540		621
Total liabilities	431,294		426,140
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit)
Common stock (120,000,000 shares authorized at $0.01 par value; 42,348,643 and 42,348,643 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively)	423		423
Additional paid-in capital	806,981		806,231
Accumulated other comprehensive loss	(5,144)		(5,406)
Accumulated deficit	(874,373)		(867,312)
Total stockholders’ equity (deficit)	(72,113)		(66,064)
Total liabilities and stockholders’ equity (deficit)	$	359,181	$	360,076

The accompanying notes are an integral part of these condensed consolidated financial statements.

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Revenues
Service	$	116,627	$	106,893
Product	33,839		35,227
	150,466		142,120
Cost and expenses
Cost of revenues (exclusive of depreciation and amortization shown separately below)
Service	95,584		90,090
Product	26,886		25,916
General and administrative expenses	13,263		12,265
Depreciation	5,837		6,734
Amortization of intangibles	2,796		2,796
Loss (gain) on revaluation of contingent liability	25		(74)
Loss (gain) on sale of property and equipment	446		(26)
Income from operations	5,629		4,419
Interest expense	12,876		12,792
Interest income	(139)		(310)
Other income	(162)		(162)
Loss before income taxes	(6,946)		(7,901)
Provision for income taxes	115		154
Net loss	$	(7,061)	$	(8,055)
Loss per share
Basic	$	(0.18)	$	(0.24)
Diluted	$	(0.18)	$	(0.24)
Weighted average shares outstanding
Basic	40,164,443		33,850,317
Diluted	40,164,443		33,850,317
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of $0 tax in each period	$	262	$	(210)
Total other comprehensive income (loss), net of tax	262		(210)
Total comprehensive loss	$	(6,799)	$	(8,265)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity (Deficit)
	Shares	Amounts
Balance, December 31, 2024	42,348,643	$	423	$	806,231	$	(5,406)	$	(867,312)	$	(66,064)
Stock-based compensation expense	—	—		750		—		—		750
Other comprehensive income	—	—		—		262		—		262
Net loss	—	—		—		—		(7,061)		(7,061)
Balance, March 31, 2025	42,348,643	$	423	$	806,981	$	(5,144)	$	(874,373)	$	(72,113)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity (Deficit)
	Shares	Amounts
Balance, December 31, 2023	35,324,861	$	353	$	795,106	$	(4,859)	$	(826,230)	$	(35,630)
Stock-based compensation expense	—	—		581		—		—		581
Other comprehensive loss	—	—		—		(210)		—		(210)
Net loss	—	—		—		—		(8,055)		(8,055)
Balance, March 31, 2024	35,324,861	$	353	$	795,687	$	(5,069)	$	(834,285)	$	(43,314)

The accompanying notes are an integral part of these condensed consolidated financial statements.

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities
Net loss	$	(7,061)	$	(8,055)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	5,837		6,734
Amortization of intangibles	2,796		2,796
Amortization of operating leases	3,418		3,294
Amortization of deferred financing costs	2,087		1,795
Provision for (recovery of) doubtful accounts	34		(1)
Provision for inventory obsolescence	611		220
Stock-based compensation expense	750		581
Loss (gain) on sale of property and equipment	446		(26)
Loss (gain) on revaluation of contingent liability	25		(74)
Changes in operating assets and liabilities
Accounts receivable, net	(13,967)		(2,533)
Inventories, net	(928)		(2,229)
Prepaid expenses and other current assets	(448)		(430)
Accounts payable and accrued expenses	4,699		(7,796)
Income taxes receivable/payable	98		148
Operating lease obligations	(3,372)		(3,251)
Other assets and liabilities	(302)		(10)
Net cash used in operating activities	(5,277)		(8,837)
Cash flows from investing activities
Proceeds from sales of property and equipment	—		28
Purchases of property and equipment	(3,981)		(5,488)
Net cash used in investing activities	(3,981)		(5,460)
Cash flows from financing activities
Proceeds from 2018 ABL Credit Facility	4,000		—
Payments on 2018 ABL Credit Facility	(4,000)		(5,000)
Payments of short-term debt	(1,320)		(1,054)
Principal payments on finance leases	(13)		(10)
Payments of contingent liability	(223)		(159)
Net cash used in financing activities	(1,556)		(6,223)
Impact of foreign currency exchange on cash	209		(83)
Net decrease in cash and cash equivalents	(10,605)		(20,603)
Cash and cash equivalents
Cash and cash equivalents beginning of period	$	27,880	$	30,840
Cash and cash equivalents end of period	$	17,275	$	10,237

Supplemental disclosures of cash flow information:
Cash paid for interest	$	20,641	$	20,883
Cash paid for income taxes	$	3	$	14
Right of use assets obtained in exchange for operating lease obligations	$	2,611	$	1,256


	Three Months Ended March 31,
	2025		2024
Supplemental schedule of non-cash investing and financing activities:
Right of use assets obtained in exchange for finance lease obligations	$	26	$	—
Capital expenditures in accounts payable and accrued expenses	$	1,218	$	1,211

The accompanying notes are an integral part of these condensed consolidated financial statements.

NINE ENERGY SERVICE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Company and Organization

Background

Nine Energy Service, Inc. (the “Company” or “Nine”), a Delaware corporation, is an oilfield services business that provides services integral to the completion of unconventional wells through a full range of tools and methodologies. The Company is headquartered in Houston, Texas.

Risks and Uncertainties

As Nine is a spot-market business, the Company’s business and its pricing depends, to a significant extent, on the level of unconventional resource development activity and corresponding capital spending of oil and natural gas companies. These activity and spending levels are strongly influenced by current and expected oil and natural gas prices, which have been extremely volatile historically and in recent years. In addition, the Company’s earnings are affected by its ability to maintain current pricing levels, the impact of wage and labor inflation, labor shortages, and supply chain constraints. Due to the spot-market nature of its business, the Company’s revenue and profitability generally move very similarly to rig, frac, and stage counts in U.S. rig count.

2. Basis of Presentation

Condensed Consolidated Financial Information

In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2025, and its results of operations for the three months ended March 31, 2025 and 2024, and cash flows for the three months ended March 31, 2025 and 2024. These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, in a manner consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, unless otherwise disclosed herein, and should be read in conjunction therewith. The Condensed Consolidated Balance Sheet at December 31, 2024 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Nine and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in the consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. Such estimates include fair value assumptions used in analyzing long-lived assets for possible impairment, useful lives used in depreciation and amortization expense, recognition of provisions for contingencies, and stock-based compensation fair value. It is at least reasonably possible that the estimates used will change within the next year.

3. New Accounting Standards

In November 2024, the (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, an update which requires additional disclosure of certain expense captions presented on the face of the Company’s income statement as well as disclosures about selling expenses. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, and should be applied on a prospective or retrospective basis, with early adoption permitted. The Company is

currently evaluating the impact that this guidance will have on the disclosures within its condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU is effective for fiscal years beginning after December 15, 2024. The Company does not expect this guidance to have a significant impact on the disclosures within its condensed consolidated financial statements.

4. Revenues

Disaggregation of Revenues

Disaggregated revenues for the three months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Cement	$	57,168	$	48,289
Coiled tubing	29,856		30,719
Wireline	29,603		27,885
Service revenues	$	116,627	$	106,893

Tools	$	33,839	$	35,227
Product revenues	$	33,839	$	35,227

Total revenues	$	150,466	$	142,120

The Company recognizes revenues from the sales of products at a point in time and revenues from the sales of services over time.

5. Inventories

Inventories, consisting primarily of finished goods and raw materials, are stated at the lower of cost or net realizable value. Cost is determined on an average cost basis. The Company reviews its inventory balances and writes down its inventory for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. The reserve for obsolescence was $4.7 million and $5.5 million at March 31, 2025 and December 31, 2024, respectively.

Inventories, net as of March 31, 2025 and December 31, 2024 were comprised of the following:


	March 31, 2025		December 31, 2024
	(in thousands)
Raw materials	$	29,021	$	28,900
Work in progress	580		148
Finished goods	26,300		27,194
Inventories	55,901		56,242
Reserve for obsolescence	(4,715)		(5,461)
Inventories, net	$	51,186	$	50,781

6. Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets as of March 31, 2025 and December 31, 2024 was as follows:


	March 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(in thousands, except weighted average amortization period information)
Customer relationships	$	63,270	$	(56,094)	$	7,176	2.6
Technology	125,110		(55,836)		69,274		8.5
Total	$	188,380	$	(111,930)	$	76,450


	December 31, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Amortization Period
	(in thousands, except weighted average amortization period information)
Customer relationships	$	63,270	$	(55,400)	$	7,870	2.8
Technology	125,110		(53,734)		71,376		8.8
Total	$	188,380	$	(109,134)	$	79,246

Amortization of intangibles expense was $2.8 million for both the three months ended March 31, 2025 and 2024.

Future estimated amortization of intangibles (in thousands) is as follows:


Year Ending December 31,
Remainder of 2025	$	8,387
2026	11,082
2027	10,315
2028	8,000
2029	8,000
2030	8,000
Thereafter	22,666
Total	$	76,450

7. Accrued Expenses

Accrued expenses as of March 31, 2025 and December 31, 2024 consisted of the following:


	March 31, 2025		December 31, 2024
	(in thousands)
Accrued interest	$	7,102	$	16,960
Accrued compensation and benefits	8,054		6,287
Accrued bonus	1,747		1,016
Accrued legal fees and settlements	208		256
Other accrued expenses	8,045		6,157
Accrued expenses	$	25,156	$	30,676

8. Debt Obligations

The Company’s debt obligations as of March 31, 2025 and December 31, 2024 were as follows:


	March 31, 2025		December 31, 2024
	(in thousands)
2028 Notes	$	300,000	$	300,000
2018 ABL Credit Facility	47,000		47,000
Short-term debt (1)	2,260		3,580
Total debt before deferred financing costs	$	349,260	$	350,580
Deferred financing costs	(27,863)		(29,736)
Total debt	$	321,397	$	320,844
Less: Current portion of long-term debt	(2,260)		(3,580)
Long-term debt	$	319,137	$	317,264

(1)The weighted average interest rate of short-term debt outstanding was 7.9% at both March 31, 2025 and December 31, 2024.

Units Offering and 2028 Notes

Units

On January 30, 2023, the Company completed its public offering of 300,000 units with an aggregate stated amount of $300.0 million (the “Units”). Each Unit consisted of $1,000 principal amount of the Company’s 13.000% Senior Secured Notes due 2028 (collectively, the “2028 Notes”) and five shares of common stock of the Company. The Company received proceeds of $279.8 million from the Units offering, after deducting underwriting discounts and commission, which was used to fund a portion of the redemption price of previously issued debt. These proceeds were allocated to the 2028 Notes and the common stock based on their relative fair value at the time of issuance. Each Unit separated into its constituent securities (the 2028 Notes and shares of common stock) automatically on October 27, 2023.

In the first quarter of 2023, the Company recorded approximately $41.7 million of deferred financing costs in connection with the Units offering. These costs are direct deductions from the carrying amount of the 2028 Notes and are being amortized through interest expense through the maturity date of the 2028 Notes using the effective interest method. The unamortized portion of these deferred financing costs was $27.9 million at March 31, 2025.

2028 Notes

On January 30, 2023, the Company and certain of its subsidiaries entered into an indenture, dated as of January 30, 2023 (the “2028 Notes Indenture”), with U.S. Bank Trust Company, National Association, as the trustee and as notes collateral agent, pursuant to which the 2028 Notes were issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an annual rate of 13.000% payable in cash semi-annually in arrears on each of February 1 and August 1, commencing August 1, 2023. The 2028 Notes are senior secured obligations of the Company and are guaranteed on a senior secured basis by each of the Company’s current domestic subsidiaries and will be so guaranteed by certain future subsidiaries, in each case, subject to agreed guaranty and security principles and certain exclusions.

Prior to February 1, 2026, the Company may, on any one or more occasions, redeem all or a part of the 2028 Notes at a redemption price equal to 100.0% of the principal amount of the 2028 Notes redeemed, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. In addition, prior to February 1, 2026, the Company may, from time to time, redeem up to 35.0% of the aggregate principal amount of the 2028 Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 113.0% of the principal amount of the 2028 Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, provided that at least 65.0% of the aggregate principal amount of the 2028 Notes originally issued under the 2028 Notes Indenture on January 30, 2023 remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering. Also, prior to February 1, 2026, the Company may redeem during each 12-month period beginning on January 30, 2023, up to 10% of the aggregate principal amount of the 2028 Notes outstanding at a redemption price equal to 103.0% of the aggregate principal amount of the 2028 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

On and after February 1, 2026, the Company may redeem the 2028 Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the 2028 Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding the date of redemption, if redeemed during the periods indicated:


	Redemption Price
February 1, 2026 to January 31, 2027	106.500	%
February 1, 2027 to October 31, 2027	103.250	%
November 1, 2027 and thereafter	100.000	%

On each May 15 and November 14, commencing November 14, 2023 (each, an “Excess Cash Flow Offer Date”), the Company is required to make an offer (an “Excess Cash Flow Offer”) to all holders of the 2028 Notes and, if required by the terms of any Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes Indenture), to any holders of any Pari Passu Notes Lien Indebtedness to purchase, prepay or redeem, together on a pro-rata basis, the maximum principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (plus all accrued interest (including additional interest, if any) on the 2028 Notes and any such Pari Passu Notes Lien Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed using an amount of cash equal to the Excess Cash Flow Amount (as defined in the 2028 Notes Indenture and which is 75.0% of Excess Cash Flow (as defined in the 2028 Notes Indenture), as determined immediately prior to the Excess Cash Flow Offer Date), if any, subject to certain exceptions set forth in the 2028 Notes Indenture. The offer price in any such offer will be equal to 100% of the principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of purchase, prepayment or redemption, subject to the rights of holders of the 2028 Notes or any such Pari Passu Notes Lien Indebtedness on the relevant record date to receive interest due on an interest payment date that is on or prior to the date of purchase, prepayment or redemption, and will be payable in cash.

If the Company experiences certain changes of control, each holder of 2028 Notes may require the Company to repurchase all or a portion of its 2028 Notes for cash at a price equal to 101.0% of the principal amount of such 2028 Notes, plus any accrued but unpaid interest, if any, to, but excluding, the date of repurchase.

The 2028 Notes Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the Company’s ability and the ability of its restricted subsidiaries to (i) incur additional indebtedness and guarantee indebtedness; (ii) pay dividends or make other distributions of capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) issue certain preferred stock or similar equity securities, (v) make loans and investments; (vi) sell assets; (vii) incur liens; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting its subsidiaries’ ability to pay dividends; or (x) consolidate, merge, or sell all or substantially all of its assets. The Company was in compliance with all covenants contained in the 2028 Notes Indenture at March 31, 2025.

Upon an event of default, the trustee of the 2028 Notes or the holders of at least 25% in aggregate principal amount of then outstanding 2028 Notes may declare the 2028 Notes immediately due and payable, except that a default resulting from certain events of bankruptcy or insolvency with respect to the Company, any significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary, will automatically cause all outstanding 2028 Notes to become due and payable.

2018 ABL Credit Facility

On October 25, 2018, the Company entered into a credit agreement (the “2018 ABL Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent and as an issuing lender, and certain other financial institutions party thereto as lenders and issuing lenders. The 2018 ABL Credit Agreement permitted aggregate borrowings of up to $200.0 million, subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for letters of credit (the “2018 ABL Credit Facility”). Pursuant to the 2018 ABL Credit Agreement, loans to the Company and its domestic related subsidiaries (the “U.S. Credit Parties”) under the 2018 ABL Credit Facility were base rate loans or London Interbank Offered Rate (“LIBOR”) loans; and loans to Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada, and its restricted subsidiaries (the “Canadian Credit Parties”) under the Canadian tranche were Canadian Dollar Offered Rate (“CDOR”) loans or Canadian prime rate loans.

On January 17, 2023, the Company entered into the First Amendment to Credit Agreement (the “First ABL Facility Amendment”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, which became effective on January 30, 2023. Pursuant to the First ABL Facility Amendment, the maturity date of the 2018 ABL Credit

Facility was extended from October 25, 2023 to January 29, 2027. In addition, the First ABL Facility Amendment, among other changes, revised the terms of the 2018 ABL Credit Facility as follows: (a) decreased the size of the 2018 ABL Credit Facility from $200.0 million to $150.0 million, subject to the borrowing base (the “Loan Limit”), (b) changed the interest rate benchmark from LIBOR to Term Secured Overnight Financing Rate with a 10 basis point spread adjustment and increased pricing from the existing range of 1.75% to 2.25% to a range of 2.00% to 2.50%, in each case depending on the Company’s leverage ratio, (c) modified the financial covenant, enhanced reporting and cash dominion triggers in the 2018 ABL Credit Facility from the existing minimum availability threshold of the greater of $18.75 million and 12.5% of the Loan Limit to a minimum availability threshold of (i) $12.5 million from January 30, 2023 until May 31, 2023 and (ii) the greater of $17.5 million and 12.5% of the Loan Limit thereafter, (d) decreased the Canadian tranche sub-limit from $25.0 million to $5.0 million, (e) decreased the letter of credit sub-limit from $50.0 million to $10.0 million and (f) made satisfaction of the Payment Conditions (as defined in the First ABL Facility Amendment) a condition to an Excess Cash Flow Offer in addition to a condition to voluntary payments of the 2028 Notes. The Payment Conditions in summary are (A) no default or event of default on a pro forma basis and (B) immediately after and at all times during the 30 days prior, on a pro forma basis, (1) (x) availability under the 2018 ABL Credit Facility shall not be less than the greater of 15% of the Loan Limit and $22.5 million and (y) the fixed charge coverage ratio shall be at least 1.00 to 1.00 or (2) availability under the 2018 ABL Credit Facility shall not be less than the greater of 20% of the Loan Limit and $30.0 million.

On June 7, 2024, the Company entered into the Second Amendment to Credit Agreement (together with the First ABL Facility Amendment, the “2018 ABL Facility Amendments”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, to change the interest rate benchmark for borrowings denominated in Canadian dollars from CDOR to a rate based on the Canadian Overnight Repo Rate Average (CORRA), effective as of June 14, 2024.

At March 31, 2025, the Company had $47.0 million outstanding borrowings under the 2018 ABL Credit Facility, and its availability under the 2018 ABL Credit Facility was approximately $36.5 million, net of outstanding letters of credit of $2.4 million. As further described below, on May 1, 2025, the Company fully repaid all borrowings outstanding under the 2018 ABL Credit Facility and terminated the 2018 ABL Credit Agreement, as amended by the 2018 ABL Facility Amendments (the “Amended 2018 ABL Credit Agreement”).

The Amended 2018 ABL Credit Agreement contained customary representations and warranties, events of default, and various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions), and transactions with affiliates. In addition, the Amended 2018 ABL Credit Agreement contained a financial covenant requiring a minimum fixed charge ratio of 1.00 to 1.00 that was tested quarterly when (a) the availability under the 2018 ABL Credit Facility dropped below (i) at any time on or before May 31, 2023, $12.5 million and (ii) at any time thereafter, the greater of $17.5 million and 12.5% of the Loan Limit or (b) a default has occurred. This financial covenant applied until the availability exceeds the applicable threshold for 30 consecutive days and no default is ongoing. The Company was in compliance with all covenants contained in the Amended 2018 ABL Credit Agreement at March 31, 2025.

Pursuant to the Amended 2018 ABL Credit Agreement, all of the Company’s obligations under the 2018 ABL Credit Facility were secured by security interests (subject to permitted liens) in substantially all of the personal property of U.S. Credit Parties, excluding certain assets. The obligations under the Canadian tranche are further secured by security interests (subject to permitted liens) in substantially all of the personal property of Canadian Credit Parties, excluding certain assets.

2025 ABL Credit Facility

On May 1, 2025, the Company entered into a Loan and Security Agreement (the “2025 ABL Credit Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto. The 2025 ABL Credit Agreement provides for an asset-based revolving credit facility (the “2025 ABL Credit Facility”) with lender commitments of $125.0 million (the “Maximum Revolving Facility Amount”) and a sub-limit of $5.0 million for letters of credit, which will mature on the earlier of (i) May 1, 2028 and (ii) the date that is 91 days prior to the maturity date of the 2028 Notes. The outstanding balance of the borrowings under the 2025 ABL Credit Facility may not exceed in the aggregate at any time the lesser of (a) the Maximum Revolving Facility Amount reduced by certain customary reserves and (b) the borrowing base, which is calculated on the basis of eligible accounts and inventory. The Maximum Revolving Facility Amount could increase from time to time pursuant to an uncommitted accordion by an aggregate amount for all such increases not to exceed $50.0 million. Borrowings under the 2025 ABL Credit Facility bear interest at a per annum rate equal to the term-specific Secured Overnight Financing Rate (SOFR) for an interest period of one month, subject to a 1.50% floor, plus an applicable margin of 4.00% to 4.50%, depending on the Company’s fixed charge coverage ratio.

On May 1, 2025, the Company borrowed approximately $48.9 million under the 2025 ABL Credit Facility and used such proceeds to repay all borrowings outstanding under the 2018 ABL Credit Facility and pay fees and expenses associated

with the entry into the 2025 ABL Credit Agreement.

The 2025 ABL Credit Agreement contains customary representations and warranties, events of default, and various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments and investments (including acquisitions). In addition, the 2025 ABL Credit Agreement contains a financial covenant requiring a minimum fixed charge ratio of 1.10 to 1.00 that is tested quarterly when the availability under the 2025 ABL Credit Facility is less than $10.0 million. This financial covenant applies until the availability exceeds such threshold for 30 consecutive days.

The Company’s obligations under the 2025 ABL Credit Facility are secured by a first priority security interest in substantially all tangible and intangible assets of the Company and all of its current domestic and Canadian subsidiaries.

Short-Term Debt

From time to time, the Company renews certain insurance policies and finances the premium for its excess policy. The outstanding balance on these premiums was $2.3 million and $3.6 million at March 31, 2025 and December 31, 2024, respectively.

Fair Value of Debt Instruments

The estimated fair value of the Company’s debt obligations at March 31, 2025 and December 31, 2024 was as follows:


	March 31, 2025		December 31, 2024
	(in thousands)
2028 Notes	$	199,404	$	197,283
2018 ABL Credit Facility	$	47,000	$	47,000
Short-term debt	$	2,260	$	3,580

The fair value of the 2028 Notes, 2018 ABL Credit Facility, and short-term debt is classified as Level 2 in the fair value hierarchy. The fair value of the 2028 Notes is established based on observable inputs in less active markets. The fair value of the 2018 ABL Credit Facility and short-term debt approximates their carrying value. On May 1, 2025, all debt obligations under the 2018 ABL Credit Facility were repaid, and the 2018 ABL Credit Facility has been terminated and replaced with the 2025 ABL Credit Facility.

9. Related Party Transactions

The Company leases office space, yard facilities, and equipment and purchases building maintenance and repair services from entities owned by David Crombie, an executive officer of the Company. Total lease expense and building maintenance and repair expense associated with these entities was $0.2 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively. The Company also purchased $0.8 million and $0.9 million of products and services during the three months ended March 31, 2025 and 2024, respectively, from an entity in which Mr. Crombie is a limited partner. There were outstanding payables due to entities associated with Mr. Crombie of $0.5 million and $0.3 million at March 31, 2025 and December 31, 2024, respectively.

Ann G. Fox, President and Chief Executive Officer and a director of the Company, is a director of Devon Energy Corporation (“Devon”). The Company generated revenue from Devon of $0.3 million and $1.6 million for the three months ended March 31, 2025 and 2024, respectively. There were outstanding receivables due from Devon of $0.2 million and $0.3 million at March 31, 2025 and December 31, 2024, respectively.

10. Commitments and Contingencies

Litigation

The Company records accruals related to litigation and other legal proceedings when they are either known or considered probable and can be reasonably estimated. Legal proceedings are inherently unpredictable and subject to significant uncertainties, and significant judgment is required to determine both probability and the estimated amount. Some of these uncertainties include the stage of litigation, available facts, uncertainty as to the outcome of any legal proceedings or settlement discussions, and any novel legal issues presented. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending litigation. At March 31, 2025 and December 31, 2024, the Company recorded a $0.2 million and $0.3 million accrual,

respectively, for legal matters, which is included under the caption “Accrued expenses” in its Condensed Consolidated Balance Sheets.

From time to time, the Company has various claims, lawsuits, and administrative proceedings that are pending or threatened with respect to personal injury, workers’ compensation, contractual matters, and other matters. Although no assurance can be given with respect to the outcome of these claims, lawsuits, or proceedings or the effect such outcomes may have, the Company believes any ultimate liability resulting from the outcome of such claims, lawsuits, or administrative proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on its business, operating results, or financial condition.

On April 18, 2020, the Company was named as a defendant in a patent infringement lawsuit regarding its Breakthru Casing Flotation Device. On January 18, 2022, the Company received an adverse judgment in this matter. The Company has posted a $2.1 million letter of credit representing the judgment amount and accrued royalties from the judgment date through March 31, 2025. While the Company believes it is probable that it will prevail on appeal resulting in no liability, in the event the Company does not prevail on appeal, the Company will be liable for the aggregate letter of credit posted through the date of appeal plus any future royalties awarded.

However, due to the inherent uncertainties of litigation, the Company is unable to determine the exact amount of any potential loss at this time, and thus, no accrual has been made for this matter in the Company’s condensed consolidated financial statements. The Company will continue to monitor the progress of this litigation and will adjust its accrual as necessary if and when additional information becomes available.

Self-insurance

The Company uses a combination of third-party insurance and self-insurance for health insurance claims. The self-insured liability represents an estimate of the undiscounted ultimate cost of uninsured claims incurred as of the balance sheet date. The estimate is based on an analysis of trailing months of incurred medical claims to project the amount of incurred but not reported claims liability. The estimated liability for self-insured medical claims was $1.7 million and $1.5 million at March 31, 2025 and December 31, 2024, respectively, and is included under the caption “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets.

Although the Company does not expect the amounts ultimately paid to differ significantly from the estimates, the self-insurance liability could be affected if future claims experience differs significantly from historical trends and actuarial assumptions.

Contingent Liabilities

On October 1, 2018, pursuant to the terms and conditions of a Securities Purchase Agreement (the “Frac Tech Purchase Agreement”), the Company acquired Frac Technology AS (“Frac Tech”), a Norwegian private limited company focused on the development of downhole technology, including a casing flotation tool and a number of patented downhole completion tools. The Frac Tech Purchase Agreement, as amended, includes, among other things, the potential for additional future payments, based on certain Frac Tech revenue metrics through December 31, 2025 (the “Frac Tech Earnout”).

The Company’s contingent liability (Level 3) associated with the Frac Tech Earnout (in thousands) at March 31, 2025 and 2024 was as follows:



Balance at December 31, 2024	$	719
Revaluation adjustments	25
Payments	(223)
Balance at March 31, 2025	$	521



Balance at December 31, 2023	$	1,219
Revaluation adjustments	(74)
Payments	(159)
Balance at March 31, 2024	$	986

All contingent liabilities that relate to contingent consideration are reported at fair value, based on a Monte Carlo simulation model. Significant inputs used in the fair value measurement include forecasted sales of the plugs, terms of the agreement, a risk-adjusted discount factor (of 4.3%), and a credit-adjusted rate (ranging from 11.5% to 11.6%). Contingent liabilities include $0.5 million and $0.6 million reported in “Accrued expenses” at March 31, 2025 and December 31, 2024, respectively, and $0.0 million and $0.1 million reported in “Other long-term liabilities” at March 31, 2025 and December 31, 2024, respectively, in the Company’s Condensed Consolidated Balance Sheets. The impact of the revaluation adjustments is included in the Company’s Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

11. Taxes

The Company’s provision (benefit) for income taxes included in its Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) was as follows:


	Three Months Ended March 31,
	2025			2024
	(in thousands, except percentages)
Provision for income taxes	$	115		$	154
Effective tax rate	(1.7)		%	(1.9)		%

The Company’s provision for income taxes for the three months ended March 31, 2025 was primarily attributed to state and non-U.S. income taxes. At March 31, 2025, the Company continued to record a full valuation allowance against its net deferred tax asset positions in the U.S. and Canada.

12. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is based on the weighted average number of shares outstanding for the period, including the dilutive effect of equity awards.

Basic and diluted earnings (loss) per share of common stock was computed as follows:


	Three Months Ended March 31, 2025					Three Months Ended March 31, 2024
	Net Loss		Average Shares Outstanding	Loss Per Share		Net Loss		Average Shares Outstanding	Loss Per Share
	(in thousands, except share and per share amounts)
Basic	$	(7,061)	40,164,443	$	(0.18)	$	(8,055)	33,850,317	$	(0.24)
Unvested restricted stock and stock units	—		—	—		—		—	—
Diluted	$	(7,061)	40,164,443	$	(0.18)	$	(8,055)	33,850,317	$	(0.24)

The diluted earnings (loss) per share calculation excludes all stock options, unvested restricted stock, and unvested restricted stock units for the three months ended March 31, 2025 and 2024 because their inclusion would be anti-dilutive given the Company was in a net loss position. The average number of securities that were excluded from diluted earnings (loss) per share that would potentially dilute earnings (loss) per share for the periods in which the Company experienced a net loss were as follows:


	2025	2024
Three months ended March 31,	103,289	341,577

13. Segment Information

The Company operates as one reportable segment, known as Completions Solutions. The Completions Solutions segment provides services and products integral to the completion of unconventional wells through a full range of tools and methodologies. These services and products are similar in purpose and end use by focusing on preparing and enabling a well to produce oil and gas and must be completed in order for a well to begin producing hydrocarbons. These services are also impacted by similar economic drivers, such as current and future expectations of oil and natural gas prices and hydrocarbon demand, and are complementary in nature in the successful completion phase of a well.

The Company evaluates the performance of the Completions Solutions segment based on consolidated net income (loss). Consolidated net income (loss) is determined in accordance with the measurement principles most consistent with consolidated financial statements and is representative of the manner in which the Company’s chief operating decision maker (the “CODM”) and its board of directors view the business, manage liquidity, allocate capital resources, and make operational decisions for the Company. The CODM also uses consolidated net income (loss) to monitor budget versus actual results, perform variance analysis of current results to prior period results, and forecast future performance. The Company considers the CODM to be its Chief Executive Officer. The reported segment revenue, segment profit or loss, significant segment expenses, and other segment items (gain or loss on revaluation of contingent liability, gain or loss on sale of property and equipment, interest income, and other income) are the same as the consolidated results disclosed in the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). The CODM reviews total assets on a consolidated basis as disclosed in the Condensed Consolidated Balance Sheets and capital expenditures on a consolidated basis.

14. Subsequent Events

On May 1, 2025, the Company entered into the 2025 ABL Credit Agreement and used borrowings thereunder to, among other things, fully repay all borrowings under the 2018 ABL Credit Facility and terminate the Amended 2018 ABL Credit Agreement. For additional information, see Note 8 – Debt Obligations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the consolidated financial statements and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” including “Critical Accounting Estimates,” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

This section contains forward-looking statements based on our current expectations, estimates, and projections about our operations and the industry in which we operate. Our actual results may differ materially from those anticipated in these forward-looking statements because of various risks and uncertainties, including those described in the sections titled “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024.

OVERVIEW

Company Description

Nine Energy Service, Inc. (either individually or together with its subsidiaries, as the context requires, the “Company,” “Nine,” “we,” “us,” and “our”) is a leading completion services provider that targets unconventional oil and gas resource development. We partner with our exploration and production (“E&P”) customers across all major onshore basins in both the U.S. and Canada as well as abroad to design and deploy downhole solutions and technology to prepare horizontal, multistage wells for production. We focus on providing our customers with cost-effective and comprehensive completion solutions designed to maximize their production levels and operating efficiencies. We believe our success is a product of our culture, which is driven by our intense focus on performance and wellsite execution as well as our commitment to forward-leaning technologies that aid us in the development of smarter, customized applications that drive efficiencies and reduce emissions.

We provide (i) cementing services, which consist of blending high-grade cement and water with various solid and liquid additives to create a cement slurry that is pumped between the casing and the wellbore of the well, (ii) an innovative portfolio of completion tools, including those that provide technologies used for completing the toe stage of a horizontal well and fully-composite, dissolvable, and extended range frac plugs to isolate stages during plug-and-perf operations, (iii) wireline services, the majority of which consist of plug-and-perf completions, which is a multistage well completion technique for cased-hole wells that consists of deploying perforating guns and isolation tools to a specified depth, and (iv) coiled tubing services, which perform wellbore intervention operations utilizing a continuous steel pipe that is transported to the wellsite wound on a large spool, providing a cost-effective solution for well work due to the ability to deploy efficiently and safely into a live well.

How We Generate Revenue and the Costs of Conducting Our Business

We generate our revenues by providing completion services to E&P customers across all major onshore basins in both the U.S. and Canada as well as abroad. We primarily earn our revenues pursuant to work orders entered into with our customers on a job-by-job basis. We typically enter into a Master Service Agreement (“MSA”) with each customer that provides a framework of general terms and conditions of our services that will govern any future transactions or jobs awarded to us. Each specific job is obtained through competitive bidding or as a result of negotiations with customers. The rate we charge is determined by location, complexity of the job, operating conditions, duration of the contract, and market conditions. In addition to MSAs, we have entered into a select number of longer-term contracts with certain customers relating to our wireline and cementing services, and we may enter into similar contracts from time to time to the extent beneficial to the operation of our business. These longer-term contracts address pricing and other details concerning our services, but each job is performed on a standalone basis.

The principal expenses involved in conducting our business include labor costs, materials and freight, the costs of maintaining our equipment, and fuel costs. Our direct labor costs vary with the amount of equipment deployed and the utilization of that equipment. Another key component of labor costs relates to the ongoing training of our field service employees, which improves safety rates and reduces employee attrition.

How We Evaluate Our Operations

We evaluate our performance based on a number of financial and non-financial measures, including the following:

•Revenue: We compare actual revenue achieved each month to the most recent projection for that month and to

the annual plan for the month established at the beginning of the year. We monitor our revenue to analyze trends in the performance of our operations compared to historical revenue drivers or market metrics. We are particularly interested in identifying positive or negative trends and investigating to understand the root causes.

•Adjusted Gross Profit (Loss): Adjusted gross profit (loss) is a key metric that we use to evaluate operating performance. We define adjusted gross profit (loss) as revenues less direct and indirect costs of revenues (excluding depreciation and amortization). Costs of revenues include direct and indirect labor costs, costs of materials, maintenance of equipment, fuel and transportation freight costs, contract services, crew cost, and other miscellaneous expenses. For additional information, see “Non-GAAP Financial Measures” below.

•Adjusted EBITDA: We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest, taxes, and depreciation and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on revaluation of contingent liabilities, (iv) loss or gain on extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation and cash award expense, (viii) loss or gain on sale of property and equipment, and (ix) 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. For additional information, see “Non-GAAP Financial Measures” below.

•Adjusted Return on Invested Capital (“Adjusted ROIC”): We define Adjusted ROIC as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss) as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss (gain) on the sale of subsidiaries, (vi) loss (gain) on extinguishment of debt, and (vii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining Adjusted ROIC. For additional information, see “Non-GAAP Financial Measures” below.

•Safety: We measure safety by tracking the total recordable incident rate (“TRIR”), which is reviewed on a monthly basis. TRIR is a measure of the rate of recordable workplace injuries, defined below, normalized and stated on the basis of 100 workers for an annual period. The factor is derived by multiplying the number of recordable injuries in a calendar year by 200,000 (i.e., the total hours for 100 employees working 2,000 hours per year) and dividing this value by the total hours actually worked in the year. Recordable workplace injuries include occupational death, nonfatal occupational illness, and other occupational injuries that involve loss of consciousness, restriction of work or motion, transfer to another job, or medical treatment other than first aid.

Industry Trends and Outlook

Our business depends, to a significant extent, on the level of unconventional resource development activity and corresponding capital spending of oil and natural gas companies. These activity and spending levels are strongly influenced by current and expected oil and natural gas prices. In recent years, commodity prices have been extremely volatile and unpredictable. During 2024, natural gas prices were extremely depressed, averaging approximately $2.19 for the year. Through the first quarter of 2025, natural gas prices have recovered, averaging approximately $4.14 for the quarter. However, despite a more supportive natural gas price during the first quarter of 2025, we have yet to see increased activity levels in the natural gas-levered basins like the Haynesville and Northeast. For example, during the fourth quarter of 2024, the average rig count in the Haynesville was 32 rigs and in the first quarter of 2025, the average rig count was 30 rigs. Nonetheless, we remain positive on the long-term outlook of natural gas, even as prices have trended downward thus far in the second quarter of 2025. As for oil prices, towards the end of 2024, we began to see West Texas Intermediate (“WTI”) oil prices decline, and this trend has continued into the first quarter of 2025. Thus far in the second quarter, WTI prices continued to decline following the announcements of U.S. imposed tariffs and OPEC communicating they would be increasing production. Our customers are reviewing their capital plans real-time, and the impacts of oil price reductions on U.S. land activity are still unknown. In May, we began to see some activity declines, as well as receive pricing pressure, specifically in the Permian Basin in response to lower oil prices. Because of this, we anticipate second quarter revenue and profitability to be down compared to the first quarter of 2025. Where commodity prices land will have major impacts on activity levels for the second half of the year.

Due to the spot-market nature of our business, our revenue and profitability generally move very similarly to U.S. rig, frac, and stage counts. According to Baker Hughes, the average U.S. rig count was stable in the first quarter of 2025, averaging

588 rigs, compared to 586 rigs in the fourth quarter of 2024. Looking forward, U.S. activity levels will be impacted by the production of OPEC and other oil exporting nations, commodity prices, and any new governmental policies, such as tariffs, and we cannot predict the scope or extent of such impacts.

We remain cautiously optimistic on the long-term outlook for the energy sector, and we believe there is potential upside for North American activity levels, especially in natural gas basins. In the first quarter of 2025, despite the rig count remaining relatively flat, we outperformed market drivers due in large part to sustained and continued market share gains achieved by our cementing division, as well as better utilization in our coiled tubing division. Additionally, we have increased profitability through cost-cutting measures we began implementing in the first half of 2024.

Significant factors that are likely to affect commodity prices moving forward include geopolitical and economic developments in the U.S. and globally, including conflicts, the pace of economic growth in the U.S. and throughout the world, including the potential for macro weakness; tariffs imposed by the U.S. and other countries or retaliatory trade measures; instability, acts of war or terrorism in oil producing countries or regions, particularly the Middle East, Russia, South America and Africa; actions of the members of OPEC and other oil exporting nations that relate to or impact oil production or supply; weather conditions; the effect of energy, monetary, and trade policies of the U.S.; changes to energy regulations and policies, including those of the U.S. Environmental Protection Agency and other governmental bodies; and overall North American oil and natural gas supply and demand fundamentals, including the pace at which export capacity grows. Furthermore, although as noted above, our customers’ activity and spending levels, and thus demand for our services and products, are strongly influenced by current and expected oil and natural gas prices, even with price improvements in oil and natural gas, operator activity may not materially increase, as operators remain focused on operating within their capital plans and uncertainty remains around supply and demand fundamentals.

Results of Operations

Results for the Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024


	Three Months Ended March 31,
	2025		2024		Change		Percentage Change
	(in thousands, except percentage change)
Revenues	$	150,466	$	142,120	$	8,346	6	%
Cost of revenues (exclusive of depreciation and amortization shown separately below)	122,470		116,006		6,464		6	%
Adjusted gross profit	$	27,996	$	26,114	$	1,882	7	%

General and administrative expenses	$	13,263	$	12,265	$	998	8	%
Depreciation	5,837		6,734		(897)		(13)	%
Amortization of intangibles	2,796		2,796		—		—	%
Loss (gain) on revaluation of contingent liability	25		(74)		99		(134)	%
Loss (gain) on sale of property and equipment	446		(26)		472		(1815)	%
Income from operations	5,629		4,419		1,210		27	%
Non-operating expense	12,575		12,320		255		2	%
Loss before income taxes	(6,946)		(7,901)		955		(12)	%
Provision for income taxes	115		154		(39)		(25)	%
Net loss	$	(7,061)	$	(8,055)	$	994	(12)	%

Revenues

Revenues increased $8.3 million, or 6%, to $150.5 million for the first quarter of 2025. The increase in comparison to the first quarter of 2024 was primarily related to cementing revenue (including pump downs), which increased $8.9 million, or 18%, as total cement job count increased 32%. In addition, wireline revenue increased $1.7 million, or 6%, in comparison to the first quarter of 2024 as total completed wireline stages increased 19%. The overall increase was partially offset with a $1.4 million, or 4%, decrease in completion tools revenue based on pricing pressure coupled with changes in product mix between the two periods. The overall increase was also partially offset by a $0.9 million decrease, or 3%, in coiled tubing revenue as total days worked decreased 4%, each in comparison to the first quarter of 2024.

Cost of Revenues (Exclusive of Depreciation and Amortization)

Cost of revenues increased $6.5 million, or 6%, to $122.5 million for the first quarter of 2025. The increase in comparison to the first quarter of 2024 was related to a $5.0 million increase in materials installed and consumed while performing services, a $1.0 million increase in vehicle costs, and a $0.5 million increase in insurance, taxes, employee and other costs, each in comparison to the first quarter of 2024.

Adjusted Gross Profit (Loss)

Adjusted gross profit increased approximately $1.9 million to $28.0 million for the first quarter of 2025 due to the factors described above under “Revenues” and “Cost of Revenues.”

General and Administrative Expenses

General and administrative expenses increased $1.0 million to $13.3 million for the first quarter of 2025. The increase was primarily related to a $0.8 million increase in employee-related costs and a $0.4 million increase in professional fees between periods. The overall increase was partially offset by a $0.2 million decrease in other general and administrative costs between periods.

Depreciation

Depreciation expense decreased $0.9 million to $5.8 million for the first quarter of 2025. The decrease in comparison to the first quarter of 2024 was primarily due to a decrease in capital expenditures across certain lines of service over the last twelve months.

Amortization of Intangibles

We recorded $2.8 million in amortization of intangibles (comprised of technology and customer relationships) in both the first quarter of 2025 and the first quarter of 2024.

(Gain) Loss on Sale of Property and Equipment

Loss on sale of property and equipment increased $0.5 million in comparison to the first quarter of 2024. The increase is primarily related to certain asset disposals in the first quarter of 2025 that did not occur in the first quarter of 2024.

Non-Operating (Income) Expenses

Non-operating expenses increased $0.3 million to $12.6 million for the first quarter of 2025. The increase in comparison to the first quarter of 2024 was attributed to a decrease in interest income earned on cash in the first quarter of 2025, as our average cash for the period decreased in comparison to the first quarter of 2024.

Provision (Benefit) for Income Taxes

We recorded an income tax provision of $0.1 million for the first quarter of 2025 compared to an income tax provision of $0.2 million for the first quarter of 2024. The difference between the periods was primarily attributed to our income tax position in state and foreign tax jurisdictions.

Net Income (Loss) and Adjusted EBITDA

Net loss decreased $1.0 million, or 12%, to $7.1 million for the first quarter of 2025, and Adjusted EBITDA increased $1.5 million, or 10%, to $16.5 million for the first quarter of 2025. The changes were primarily due to the fluctuations in revenues and expenses discussed above. See “Non-GAAP Financial Measures” below for further information regarding Adjusted EBITDA.

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders, and rating agencies. We define Adjusted EBITDA as EBITDA (which is net income (loss) before interest, taxes, depreciation, and amortization) further adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) loss or gain on

revaluation of contingent liabilities, (iv) loss or gain on extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation and cash award expense, (viii) loss or gain on sale of property and equipment, and (ix) 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.

Management believes Adjusted EBITDA provides useful information to us and our investors regarding our financial condition and results of operations because it allows us and them 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 helps identify underlying trends in our operations that could otherwise be distorted by the effect of impairments, acquisitions and dispositions, and costs that are not reflective of the ongoing performance of our business. We exclude the items listed above from net income (loss) in arriving at this measure because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired.

Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) or as an indicator of our operating performance. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.

The following table presents a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss) for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Net loss	$	(7,061)	$	(8,055)
Interest expense	12,876		12,792
Interest income	(139)		(310)
Provision for income taxes	115		154
Depreciation	5,837		6,734
Amortization of intangibles	2,796		2,796
EBITDA	$	14,424	$	14,111
Loss (gain) on revaluation of contingent liability (1)	25		(74)
Restructuring charges	—		27
Stock-based compensation expense	750		581
Cash award expense	892		415
Loss (gain) on sale of property and equipment	446		(26)
Adjusted EBITDA	$	16,537	$	15,034

(1)Amounts relate to the revaluation of a contingent liability associated with a 2018 acquisition. The impact is included in our Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss). For additional information on contingent liabilities, see Note 10 – Commitments and Contingencies included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Adjusted Return on Invested Capital

Adjusted ROIC is a non-GAAP financial measure. We define Adjusted ROIC as adjusted after-tax net operating profit (loss), divided by average total capital. We define adjusted after-tax net operating profit (loss), which is a non-GAAP financial measure, as net income (loss) plus (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) interest expense (income), (iv) restructuring charges, (v) loss (gain) on the sale of subsidiaries, (vi) loss (gain) on extinguishment of debt, and (vii) the provision (benefit) for deferred income taxes. We define total capital as book value of equity (deficit) plus the book value of debt less balance sheet cash and cash equivalents. We compute and use the average of the current and prior period-end total capital in determining Adjusted ROIC.

Management believes Adjusted ROIC provides useful information to us and our investors regarding our financial condition and results of operations 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. Management uses Adjusted ROIC to assist them in capital resource allocation decisions and in evaluating business performance. Although Adjusted ROIC is commonly used as a measure of capital efficiency, definitions of Adjusted ROIC differ, and our computation of Adjusted ROIC may not be comparable to other similarly titled measures of other companies.

The following table provides our calculation of Adjusted ROIC for the three months ended March 31, 2025 and 2024. The following table also presents ROIC (defined as net income (loss), divided by average total capital) and a reconciliation of the non-GAAP financial measure of adjusted after-tax net operating profit (loss) to the most directly comparable GAAP measure of net income (loss), in each case for the three months ended March 31, 2025 and 2024.


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Net loss	$	(7,061)	$	(8,055)
Add back:
Interest expense	12,876		12,792
Interest income	(139)		(310)
Restructuring charges	—		27
Adjusted after-tax net operating income	$	5,676	$	4,454

Total capital as of prior period-end:
Total stockholders’ deficit	$	(66,064)	$	(35,630)
Total debt	350,580		359,859
Less cash and cash equivalents	(27,880)		(30,840)
Total capital as of prior period-end	$	256,636	$	293,389
Total capital as of period-end:
Total stockholders’ deficit	$	(72,113)	$	(43,314)
Total debt	349,260		353,805
Less cash and cash equivalents	(17,275)		(10,237)
Total capital as of period-end	$	259,872	$	300,254
Average total capital	$	258,254	$	296,822

ROIC	(10.9)%		(10.9)%
Adjusted ROIC	8.8%		6.0%

Adjusted Gross Profit (Loss)

GAAP defines gross profit (loss) as revenues less cost of revenues and includes depreciation and amortization in costs of revenues. We define adjusted gross profit (loss) as revenues less direct and indirect costs of revenues (excluding depreciation and amortization). This measure differs from the GAAP definition of gross profit (loss) because we do not include the impact of depreciation and amortization, which represent non-cash expenses.

Management believes adjusted gross profit (loss) provides useful information to us and our investors regarding our financial condition and results of operation and helps management evaluate our operating performance by eliminating the impact of depreciation and amortization, which we do not consider indicative of our core operating performance. Adjusted gross profit (loss) should not be considered as an alternative to gross profit (loss), operating income (loss), or any other measure of financial performance calculated and presented in accordance with GAAP. Adjusted gross profit (loss) may not be comparable to similarly titled measures of other companies because other companies may not calculate adjusted gross profit (loss) or similarly titled measures in the same manner as we do.

The following table presents a reconciliation of adjusted gross profit (loss) to GAAP gross profit (loss) for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Calculation of gross profit:
Revenues	$	150,466	$	142,120
Cost of revenues (exclusive of depreciation and amortization shown separately below)	122,470		116,006
Depreciation (related to cost of revenues)	5,723		6,263
Amortization of intangibles	2,796		2,796
Gross profit	$	19,477	$	17,055

Adjusted gross profit reconciliation:
Gross profit	$	19,477	$	17,055
Depreciation (related to cost of revenues)	5,723		6,263
Amortization of intangibles	2,796		2,796
Adjusted gross profit	$	27,996	$	26,114

Liquidity and Capital Resources

Sources and Uses of Liquidity

Historically, we have met our liquidity needs principally from cash on hand, cash flows from operations and, if needed, external borrowings and issuances of debt and equity securities. Our principal uses of cash are to fund capital expenditures, service our outstanding debt (including semi-annual interest payments ($19.5 million based on amounts outstanding as of March 31, 2025) to the holders of the 2028 Notes (as defined and described below), which began on August 1, 2023), and fund our working capital requirements. Due to our high level of variable costs and the asset-light make-up of our business, we have historically been able to quickly implement cost-cutting measures and will continue to adapt as the market dictates. For example, in 2024, we implemented certain cost reduction and supply chain initiatives. These ongoing initiatives have helped reduce some of our largest material costs, and starting at the end of the second quarter of 2024, we began to see positive impacts, that have continued into 2025, on our profitability as a result of such efforts. We have also used cash to make open market repurchases of our debt and may, from time to time, continue to make such repurchases when it is opportunistic to do so to manage our debt maturity profile.

For 2025, our planned capital expenditure budget, excluding possible acquisitions, is expected to be between $15 million and $25 million. The nature of our capital expenditures is comprised of a base level of investment required to support our current operations and amounts related to growth and company initiatives. Capital expenditures for growth and company initiatives are discretionary. We continually evaluate our capital expenditures, and the amount we ultimately spend will depend on a number of factors, including expected industry activity levels and company initiatives. Although we do not budget for acquisitions, pursuing growth through acquisitions may continue to be a part of our business strategy. Our ability to make significant additional acquisitions for cash will require us to obtain additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.

We continually monitor potential capital sources, including equity and debt financing, to meet our investment and target liquidity requirements. Our future success and growth will be highly dependent on our ability to continue to access outside sources of capital, which we cannot guarantee.

At March 31, 2025, we had $17.3 million of cash and cash equivalents and $36.5 million of availability under the 2018 ABL Credit Facility (as defined and described below), which resulted in a total liquidity position of $53.8 million. On May 1, 2025, we repaid all borrowings outstanding under the 2018 ABL Credit Facility and replaced the 2018 ABL Credit Facility with the 2025 ABL Credit Facility (as defined and described below) under which we borrowed $48.9 million on such date. As of May 1, 2025, after such borrowings, we had $51.3 million of availability under the 2025 ABL Credit Facility.

We believe that, based on our current forecasts, our cash on hand, together with cash flows from operations and borrowings under the 2025 ABL Credit Facility, should be sufficient to fund our capital requirements for at least the next twelve months from the issuance date of our condensed consolidated financial statements. However, we can make no assurance

regarding our ability to achieve our forecasts, which are materially dependent on our financial performance and the ever-changing market.

ATM Program

On November 6, 2023, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Piper Sandler & Co. (the “Agent”), pursuant to which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $30.0 million through the Agent acting as our sales agent. The Agent will receive a commission equal to 3.0% of the gross sale price of any shares sold under the Equity Distribution Agreement.

Under the Equity Distribution Agreement, we will set the parameters for the sale of the shares thereunder, including the number of shares to be sold, the time period during which sales are requested to be made and any price below which sales may not be made. During both the three months ended March 31, 2025 and March 31, 2024, no shares were sold under the Equity Distribution Agreement.

Units Offering and 2028 Notes

On January 30, 2023, we completed our public offering of 300,000 units with an aggregate stated amount of $300.0 million (the “Units”). Each Unit consisted of $1,000 principal amount of our 13.000% Senior Secured Notes due 2028 (collectively, the “2028 Notes”) and five shares of our common stock. Each Unit separated into its constituent securities (the 2028 Notes and the shares of our common stock) automatically on October 27, 2023.

On January 30, 2023, we, and certain of our subsidiaries entered into an indenture, dated as of January 30, 2023 (the “2028 Notes Indenture”), with U.S. Bank Trust Company, National Association, as the trustee and as notes collateral agent, pursuant to which the 2028 Notes were issued. The 2028 Notes will mature on February 1, 2028 and bear interest at an annual rate of 13.000% payable in cash semi-annually in arrears on each of February 1 and August 1, commencing August 1, 2023.

On each May 15 and November 14, commencing November 14, 2023 (each, an “Excess Cash Flow Offer Date”), we are required to make an offer (an “Excess Cash Flow Offer”) to all holders of the 2028 Notes and, if required by the terms of any Pari Passu Notes Lien Indebtedness (as defined in the 2028 Notes Indenture), to any holders of any Pari Passu Notes Lien Indebtedness to purchase, prepay or redeem, together on a pro-rata basis, the maximum principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (plus all accrued interest (including additional interest, if any) on the 2028 Notes and any such Pari Passu Notes Lien Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed using an amount of cash equal to the Excess Cash Flow Amount (as defined in the 2028 Notes Indenture and which is 75.0% of Excess Cash Flow (as defined in the 2028 Notes Indenture), as determined immediately prior to the Excess Cash Flow Offer Date), if any, subject to certain exceptions set forth in the 2028 Notes Indenture. The offer price in any such offer will be equal to 100% of the principal amount of the 2028 Notes and any such Pari Passu Notes Lien Indebtedness (or, in respect of any such Pari Passu Notes Lien Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Notes Lien Indebtedness), plus accrued and unpaid interest and additional interest, if any, to, but excluding, the date of purchase, prepayment or redemption, subject to the rights of holders of the 2028 Notes or any such Pari Passu Notes Lien Indebtedness on the relevant record date to receive interest due on an interest payment date that is on or prior to the date of purchase, prepayment or redemption, and will be payable in cash. For the Excess Cash Flow Offer Date of May 15, 2025, the Excess Cash Flow Amount will be $0, and as such, no Excess Cash Flow Offer will be made.

The 2028 Notes Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit our ability and the ability of our restricted subsidiaries to engage in certain activities. We were in compliance with the covenants contained in the 2028 Notes Indenture at March 31, 2025.

For additional information on the Units and the 2028 Notes, see Note 8 – Debt Obligations included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

ABL Credit Facilities

On October 25, 2018, we entered into a credit agreement (the “2018 ABL Credit Agreement”) that permitted aggregate borrowings of up to $200.0 million, subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million and a sub-limit of $50.0 million for letters of credit (the “2018 ABL Credit Facility”). On January 17, 2023, we entered into the First Amendment to Credit Agreement (the “First ABL Facility Amendment”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, which became effective on January 30, 2023. Pursuant to the First ABL Facility Amendment, the maturity date of the 2018 ABL Credit Facility was extended from October 25, 2023 to January 29,

2027. In addition, the First ABL Facility Amendment, among other changes, revised the terms of the 2018 ABL Credit Facility as follows: (a) decreased the size of the 2018 ABL Credit Facility from $200.0 million to $150.0 million, subject to the borrowing base, (b) changed the interest rate benchmark from London Interbank Offered Rate to Term Secured Overnight Financing Rate with a 10 basis point spread adjustment and increased pricing from the existing range of 1.75% to 2.25% to a range of 2.00% to 2.50%, in each case depending on our leverage ratio, (c) decreased the Canadian tranche sub-limit from $25.0 million to $5.0 million, and (d) decreased the letter of credit sub-limit from $50.0 million to $10.0 million. Certain other changes to the terms of the 2018 ABL Credit Facility as a result of the First ABL Facility Amendment are summarized in Note 8 – Debt Obligations included in Item 1 of Part I of this Quarterly Report on Form 10-Q. On June 7, 2024, we entered into the Second Amendment to Credit Agreement (together with the First ABL Facility Amendment, the “2018 ABL Facility Amendments”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto, to change the interest rate benchmark for borrowings denominated in Canadian dollars from Canadian Dollar Offered Rate (CDOR) to a rate based on the Canadian Overnight Repo Rate Average (CORRA), effective as of June 14, 2024.

The 2018 ABL Credit Agreement, as amended by the 2018 ABL Facility Amendments (the “Amended 2018 ABL Credit Agreement”), contained various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions) and transactions with affiliates. We were in compliance with all covenants contained in the Amended 2018 ABL Credit Agreement as of March 31, 2025.

At March 31, 2025, we had $47.0 million of borrowings under the 2018 ABL Credit Facility, and our availability under the 2018 ABL Credit Facility was approximately $36.5 million, net of outstanding letters of credit of $2.4 million.

On May 1, 2025, we entered into a Loan and Security Agreement (the “2025 ABL Credit Agreement”) with White Oak Commercial Finance, LLC, as agent, and the lenders from time to time party thereto. The 2025 ABL Credit Agreement provides for an asset-based revolving credit facility (the “2025 ABL Credit Facility”) with lender commitments of $125.0 million (the “Maximum Revolving Facility Amount”) and a sub-limit of $5.0 million for letters of credit, which will mature on the earlier of (i) May 1, 2028 and (ii) the date that is 91 days prior to the maturity date of the 2028 Notes. The outstanding balance of the borrowings under the 2025 ABL Credit Facility may not exceed in the aggregate at any time the lesser of (a) the Maximum Revolving Facility Amount reduced by certain customary reserves and (b) the borrowing base, which is calculated on the basis of eligible accounts and inventory. The Maximum Revolving Facility Amount could increase from time to time pursuant to an uncommitted accordion by an aggregate amount for all such increases not to exceed $50.0 million. Borrowings under the 2025 ABL Credit Facility bear interest at a per annum rate equal to the term-specific Secured Overnight Financing Rate (SOFR) for an interest period of one month, subject to a 1.50% floor, plus an applicable margin of 4.00% to 4.50%, depending on our fixed charge coverage ratio.

On May 1, 2025, we borrowed approximately $48.9 million under the 2025 ABL Credit Facility and used such proceeds to repay all borrowings outstanding under the 2018 ABL Credit Facility and pay fees and expenses associated with the entry into the 2025 ABL Credit Agreement.

For additional information on the 2018 ABL Credit Facility and the 2025 ABL Credit Facility, see Note 8 – Debt Obligations included in Item 1 of Part I of this Quarter Report on Form 10-Q.

Cash Flows

Cash flows provided by (used in) operations by type of activity were as follows for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	2025		2024
	(in thousands)
Operating activities	$	(5,277)	$	(8,837)
Investing activities	(3,981)		(5,460)
Financing activities	(1,556)		(6,223)
Impact of foreign exchange rate on cash	209		(83)
Net change in cash and cash equivalents	$	(10,605)	$	(20,603)

Operating Activities

Net cash used in operating activities was $5.3 million in the first three months of 2025 compared to $8.8 million in net cash used in the first three months of 2024. The decrease in cash flow used in operating activities was primarily attributed to a $1.9 million increase in cash provided by working capital in comparison to the first three months of 2024, as well as a $1.7 million increase in cash provided by operations driven mainly by a decreased net loss in comparison to the first three months of 2024.

Investing Activities

Net cash used in investing activities was $4.0 million during the first three months of 2025 compared to $5.5 million in net cash used in the first three months of 2024. The decrease in cash flow used in investing activities was attributed to a $1.5 million decrease in cash purchases of property and equipment in comparison to the first three months of 2024.

Financing Activities

Net cash used in financing activities was $1.6 million during the first three months of 2025 compared to $6.2 million in net cash used in the first three months of 2024. The decrease in cash flow used in financing activities was primarily attributed to $4.0 million in proceeds received from the 2018 ABL Credit Facility in the first quarter of 2025 that did not occur in the first quarter of 2024 as well as a $1.0 million reduction in payments on the 2018 ABL Credit Facility between periods. The decrease was partially offset by a $0.3 million increase in payments of short-term debt in comparison to the first quarter of 2024.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Our critical accounting estimates, which are estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations, are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting estimates as described therein.

Recent Accounting Pronouncements

See Note 3 – New Accounting Standards included in Item 1 of Part I of this Quarterly Report on Form 10-Q for a summary of recently issued accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As required by Rule 13a-15(b) under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarterly period ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act).

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we have various claims, lawsuits, and administrative proceedings that are pending or threatened with respect to personal injury, workers’ compensation, contractual matters, and other matters. Although no assurance can be given with respect to the outcome of these claims, lawsuits, or proceedings or the effect such outcomes may have, we believe any ultimate liability resulting from the outcome of such claims, lawsuits, or administrative proceedings, to the extent not otherwise provided for or covered by insurance, will not have a material adverse effect on our business, operating results, or financial condition.

ITEM 1A. RISK FACTORS

Except as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

We are currently out of compliance with certain NYSE continued listing standards and are at risk of the NYSE delisting our common stock; such a delisting could negatively impact us as it would likely reduce the liquidity and market price of our common stock, which in turn would, among other things, negatively impact our ability to raise equity financing.

On October 21, 2024, we received written notification (the “Market Capitalization Notice”) from the NYSE that we no longer satisfy the continued listing standard set forth under Section 802.01B of the NYSE Listed Company Manual (the “NYSE Manual”) because our average global market capitalization was less than $50,000,000 over a consecutive 30 trading-day period that ended on October 18, 2024 and, at the same time, our last reported stockholders’ equity was less than $50,000,000. In accordance with applicable NYSE procedures, we developed and submitted a plan (the “Market Capitalization Plan”) to the NYSE demonstrating how we intend to regain compliance with such continued listing standard within 18 months of our receipt of the Market Capitalization Notice, which was reviewed and accepted by the Listings Operations Committee of the NYSE. We are subject to quarterly review for compliance with the Market Capitalization Plan, and if we fail to meet material aspects of the Market Capitalization Plan or any quarterly milestones contained in the Market Capitalization Plan, the NYSE may commence suspension and delisting procedures prior to the end of the cure period.

On April 30, 2025, we received written notification (the “Price Criteria Notice”) from the NYSE that we no longer satisfy the continued listing standard set forth in Section 802.01C of the NYSE Manual because, as of April 29, 2025, the average closing share price of our common stock was less than $1.00 over a consecutive 30 trading-day period. Under the NYSE’s rules, we can regain compliance at any time within the six-month period following receipt of the Price Criteria Notice if, on the last trading day of any calendar month during the six-month cure period, our common stock has a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month. We intend to consider all available options to cure the minimum share price deficiency and regain compliance, including, but not limited to, a reverse stock split, subject to stockholder approval, if necessary to cure the non-compliance.

If we do not regain compliance with the continued listing standards set forth under Section 802.01B and Section 802.01C of the NYSE Manual within the applicable cure periods, or we do not make progress consistent with the Market Capitalization Plan, the NYSE may initiate proceedings to delist our common stock. The NYSE may also commence accelerated delisting actions if our common stock trades at an “abnormally low” price or if our average market capitalization falls below $15 million over a 30 trading-day period.

A delisting of our common stock from the NYSE could negatively impact us as it would likely reduce the liquidity and market price of our common stock and thus (i) reduce the number of investors willing to hold or acquire our common stock, which would negatively impact our ability to access equity markets and obtain financing, and (ii) impair our ability to provide equity incentives to our employees.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed below.


Exhibit Number						Description
3.1						Third Amended and Restated Certificate of Incorporation of Nine Energy Service, Inc., dated January 23, 2018 (Incorporated by reference to Exhibit 3.1 of Nine Energy Service, Inc.’s Current Report on Form 8-K filed on January 23, 2018).

3.2						Fourth Amended and Restated Bylaws of Nine Energy Service, Inc., dated January 23, 2018 (Incorporated by reference to Exhibit 3.2 of Nine Energy Service, Inc.’s Current Report on Form 8-K filed on January 23, 2018).

31.1*						Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Certifications by Chief Executive Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

32.2**						Certifications by Chief Financial Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101*						Interactive Data Files (Formatted as inline XBRL).

104*						Cover Page Interactive Data File (Formatted as inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith in accordance with Item 601(b)(32) of Regulation S-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Nine Energy Service, Inc.

Date:

May 7, 2025

By:

/s/ Ann G. Fox

Ann G. Fox

President, Chief Executive Officer and Director

(Principal Executive Officer)

Date:

May 7, 2025

By:

/s/ Guy Sirkes

Guy Sirkes

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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SEC Form 10-Q filed by Nine Energy Service Inc.

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