Nine Energy Service Reports Third Quarter 2025 Financial Results Amid Market Headwinds
leading oilfield services provider specializing in completion, cementing, and downhole technologies, has released its third quarter 2025 financial results, highlighting a period marked by industry contraction, pricing pressure, and shifting market dynamics.
For the third quarter, Q3 2025 the company reported revenue of $132.0 million, reflecting a decline from its prior guidance range of $135.0 to $145.0 million. Net loss for the quarter was $14.6 million, or $(0.35) per diluted and basic share. Adjusted EBITDA stood at $9.6 million, indicating the effects of weakened rig activity and reduced pricing across multiple service lines.
Market Conditions and Activity Decline
President and Chief Executive Officer Ann Fox acknowledged that the third quarter presented a series of operational and market challenges. “Q3 was a challenging quarter following significant rig declines and subsequent pricing pressure beginning in Q2,” Fox said.
By the end of the first quarter, the U.S. rig count stood at 592. However, by the close of Q3, it had dropped to 549 rigs, representing a 7% decline over two quarters. The most pronounced impact occurred in the Permian Basin, where competition has intensified amid fewer active rigs.
“With these activity declines, we have seen significant pricing pressure starting in Q2 and continuing into Q3, most evident in the Permian Basin where the majority of rigs have come out of the market, and the competitive landscape is saturated,” Fox explained.
Impact Across Service Lines
The slowdown in drilling activity and pricing adjustments reverberated across all of Nine Energy’s major business units. The Completion Tools Division was hit particularly hard, with both revenue and market share impacted by customer consolidation and changes in completion design among certain domestic clients.
Despite these setbacks, Fox emphasized the company’s proactive approach. “Our R&D team is working in real time to design, test, and commercialize new technology to address the evolving market needs,” she said. “We are committed to maintaining our leadership in technical innovation and service delivery.”
While domestic results reflected short-term headwinds, Nine’s international business segment remains a cornerstone of its long-term strategy. Q3 2025 Fox reiterated optimism about this side of the business, noting, “Our international tools revenue continues to be an important part of our growth strategy, and we still anticipate year-over-year expansion.”
Energy Prices and Regional Dynamics
Natural gas prices averaged $3.03 per MMBtu in Q3, down slightly from $3.19 in Q2. Though still supportive of industry activity, regional factors—particularly in the Northeast United States—posed challenges. Prolonged droughts during the quarter caused completion delays and operational inefficiencies, primarily affecting Nine’s Wireline and Completion Tools divisions.
“While the long-term natural gas outlook remains positive, temporary regional conditions affected our performance in the Northeast,” Fox said.
Technology and Operational Highlights
Despite industry-wide headwinds, Q3 2025 Nine Energy Service underscored its ongoing commitment to technological advancement and operational excellence. The company’s cementing division achieved a significant milestone by completing a landmark cementing project in the Haynesville Basin, an area recognized for its difficult operating conditions.
Our lab technicians formulated a proprietary, latex-based slurry tailored to the challenges of Haynesville,” Fox noted. “Operations executed the plan flawlessly, demonstrating our team’s technical capabilities and adaptability even in complex environments.
Market Outlook and Strategic Positioning
Looking ahead, Q3 2025 Nine Energy Service remains cautious but determined. “The U.S. land market continues to be challenging,” said Fox. “It is too early to provide a definitive outlook for 2026 activity, but we expect typical seasonality in Q4 due to budget exhaustion, holidays, and weather. We also anticipate continued low pricing across most service categories.”
Given these factors, the company expects fourth-quarter revenue and earnings to be lower than in Q3. Nevertheless, Fox reaffirmed Q3 2025 Nine’s strategic focus on efficiency, safety, and innovation.
We will continue Q3 2025 to navigate market dynamics with discipline,” she said. “Our team remains capable and resilient. We’re committed to growing our market share both domestically and internationally while reducing costs without sacrificing service quality, safety, or technology development.
In the third quarter of 2025, Nine Energy reported:
- Revenue: $132.0 million
- Gross profit: $11.9 million
- Adjusted gross profit: $20.3 million
- Return on invested capital (ROIC): -23.1%
- Adjusted ROIC: -1.6%
The company’s general and administrative (G&A) expenses totaled $12.8 million, while depreciation and amortization (D&A) expenses were $8.6 million.
Year-to-date, Q3 2025 Nine reported a modest tax benefit of approximately $0.3 million, which includes a $0.5 million discrete tax benefit recorded during Q2 2025, partially offset by state and international tax obligations.
Liquidity and Capital Management
Q3 2025 Nine Energy Service maintained a disciplined capital management approach throughout the quarter. The company reported net cash used in operating activities of $9.9 million and capital expenditures (CapEx) of $3.5 million for Q3.
For the first nine months of 2025, CapEx totaled $13.9 million, in line with the company’s full-year guidance of $15 million to $25 million. However, management now expects total 2025 CapEx to come in at the lower end of that range, reflecting conservative spending amid a tight market.
As of September 30, 2025, Nine held:
- Cash and cash equivalents: $14.4 million
- Availability under revolving credit facility: $25.9 million
- Total liquidity position: $40.3 million
The company reported $63.3 million in borrowings under its revolving credit facility at quarter’s end. Due to current commodity price conditions and a decline in the appraised value of its inventory, the company expects a series of reductions in its borrowing base under the 2025 ABL Credit Facility—approximately $2.2 million per month from October through January 2026.
A new inventory appraisal is scheduled for mid-December 2025, which could lead to adjustments (either upward or downward) in Nine’s borrowing base by year-end.
Debt and Shareholder Position
Under the terms of its senior secured notes indenture, Q3 2025 Nine Energy Service must periodically offer to repurchase notes using a portion of its Excess Cash Flow (ECF). However, the company did not generate any ECF in the six-month period ended September 30, 2025, and therefore no repurchase offer will be made this quarter.
Additionally, Nine did not issue or sell any shares of common stock under its at-the-market (ATM) equity program during Q3 2025.
Non-GAAP Measures
The company emphasized that financial metrics such as Adjusted EBITDA, Adjusted Gross Profit, and Adjusted ROIC are non-GAAP measures designed to provide investors with additional insight into operational performance. These measures exclude certain items that management believes do not reflect core performance, including taxes, depreciation, and financing costs.
However, Q3 2025 Nine cautioned investors not to view these measures as substitutes for GAAP results, noting that calculations may differ from those used by other companies.
Callers should request the “Nine Energy Service Earnings Call.” The company recommends dialing in 10 to 15 minutes early to ensure timely participation.
Although 2025 has been defined by market contraction and pricing headwinds, Q3 2025 Nine Energy Service remains focused on strategic growth, innovation, and cost control. The company continues to invest in R&D, expand its international footprint, and pursue opportunities that align with its long-term goal of becoming a leading provider of efficient, technology-driven energy solutions.
Source link: https://www.businesswire.com/news
