Nine Energy Service Announces Fourth Quarter and Full Year 2021 Results

  • Total liquidity position of $64.7 million as of December 31, 2021
  • Full year 2021 revenue, net loss and adjusted EBITDAA of $349.4 million, $(64.6) million and $5.2 million, respectively
  • Revenue, net loss and adjusted EBITDA of $105.1 million, $(15.7) million and $4.6 million, respectively, for the fourth quarter of 2021
  • Fourth quarter 2021 basic loss per share of $(0.52)

HOUSTON–(BUSINESS WIRE)–Nine Energy Service, Inc. (“Nine” or the “Company”) (NYSE: NINE) reported fourth quarter 2021 revenues of $105.1 million, net loss of $(15.7) million and adjusted EBITDA of $4.6 million. For the fourth quarter 2021, adjusted net lossB was $(15.7) million, or $(0.52) adjusted basic loss per shareC.

The Company had provided original fourth quarter 2021 revenue guidance between $92.0 and $100.0 million, with actual results falling above the provided range and representing a sequential revenue increase of approximately 13% quarter over quarter.

“We outperformed our Q4 revenue guidance due to strong performances in both cementing and completion tools, both of which outperformed market drivers this quarter,” said Ann Fox, President and Chief Executive Officer, Nine Energy Service. “We saw activity and pricing improvements across most of our service lines, which is reflected in our 13% increase in revenue quarter over quarter.”

“Despite difficult market conditions in 2021, we were able to better position ourselves to capitalize on what looks to be a growth environment for the near to medium term. For the 7th consecutive year, we grew our market share of U.S. stages completed, increasing from approximately 20% in 2020 to approximately 22% in 2021. In cementing, we increased the total number of jobs completed by approximately 22% year over year, while the average U.S. rig count increased by only 10% over that same time. I remain extremely happy with both the success of our new Stinger Dissolvable plug, as well as the market’s overall adoption of dissolvable plugs. We estimate that the dissolvable plug market has increased from approximately 10-15% at the end of 2018 to approximately 20-25% at the end of 2021, and we believe that our initial prediction of the dissolvable plug market expanding to 35-50% by the end of 2023 is achievable. Our Stinger Dissolvable plug continues to perform extremely well in the field and is proven in our numbers. We increased the total number of Stinger products sold by over 400% in 2021, versus EIA completions, which increased approximately 32% over this same time.”

“We remain very optimistic looking into 2022 and 2023 and anticipate North American capital spending will increase by at least 20% in 2022. I do not see any near-term solution for the labor shortages and as our customers try to increase activity, this should move pricing leverage back to the service providers. For Q1, we have seen activity increases thus far and expect Q1 will be better than Q4 with sequential revenue increases. With what we know today, we anticipate revenue and earnings to improve each quarter throughout 2022. We remain differentiated by our service line diversity, forward-leaning technology, geographic diversity, and balanced commodity exposure. The shift of our top-line revenue derivation towards completion tools and technology over the last several years has significantly reduced the capital and labor needs of the Company to generate earnings growth. We have proven our ability to grow earnings while emerging from a downturn and believe our asset-light business model will enable us to capitalize on an improving market environment.”

Operating Results

For the year ended December 31, 2021, the Company reported revenues of $349.4 million, net loss of $(64.6) million, or $(2.13) per basic share, and adjusted EBITDA of $5.2 million. Full year 2021 adjusted net loss was $(80.6) million, or $(2.66) per adjusted basic share. For the full year 2021, the Company reported gross loss of $(1.6) million and adjusted gross profitD of $41.4 million. For the year ended December 31, 2021, the Company generated ROICE of (16.7)%.

During the fourth quarter of 2021, the Company reported revenues of $105.1 million, gross profit of $4.7 million and adjusted gross profit of $14.9 million. During the fourth quarter, the Company generated ROIC of (11.4)%.

During the fourth quarter of 2021, the Company reported selling, general and administrative (“SG&A”) expense of $11.8 million, compared to $11.1 million for the third quarter of 2021. For the year ended December 31, 2021, the Company reported SG&A expense of $45.3 million. Depreciation and amortization expense (“D&A”) in the fourth quarter of 2021 was $10.7 million, compared to $11.0 million for the third quarter of 2021. For the year ended December 31, 2021, the Company reported D&A expense of $45.0 million.

The Company recognized an income tax benefit of approximately $25 thousand for the year, resulting in an effective tax rate of .01% for 2021. Our tax benefit for 2021 is primarily the result of our tax position in state and foreign tax jurisdictions.

Liquidity and Capital Expenditures

For the year ended December 31, 2021, the Company reported net cash used in operating activities of $(40.4) million. For the year ended December 31, 2021, the Company reported total capital expenditures of $14.8 million, which fell below management’s original full year 2021 guidance of $15-$20 million.

As of December 31, 2021, Nine’s cash and cash equivalents were $21.5 million, and the Company had $43.2 million of availability under the revolving credit facility, resulting in a total liquidity position of $64.7 million as of December 31, 2021. On December 31, 2021, the Company had $15.0 million of borrowings under the 2018 ABL Credit Facility and has subsequently borrowed an additional $5.0 million.

ABCDESee end of press release for definitions

Conference Call Information

The call is scheduled for Tuesday, March 8, 2022, at 9:00 am Central Time. Participants may join the live conference call by dialing U.S. (Toll Free): (877) 524-8416 or International: (412) 902-1028 and asking for the “Nine Energy Service Earnings Call”. Participants are encouraged to dial into the conference call ten to fifteen minutes before the scheduled start time to avoid any delays entering the earnings call.

For those who cannot listen to the live call, a telephonic replay of the call will be available through March 22, 2022, and may be accessed by dialing U.S. (Toll Free): (877) 660-6853 or International: (201) 612-7415 and entering the passcode of 13726409.

About Nine Energy Service

Nine Energy Service is an oilfield services company that offers completion solutions within North America and abroad. The Company brings years of experience with a deep commitment to serving clients with smarter, customized solutions and world-class resources that drive efficiencies. Serving the global oil and gas industry, Nine continues to differentiate itself through superior service quality, wellsite execution and cutting-edge technology. Nine is headquartered in Houston, Texas with operating facilities in the Permian, Eagle Ford, SCOOP/STACK, Niobrara, Barnett, Bakken, Marcellus, Utica and Canada.

For more information on the Company, please visit Nine’s website at nineenergyservice.com.

Forward Looking Statements

The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are those that do not state historical facts and are, therefore, inherently subject to risks and uncertainties. Forward-looking statements also include statements that refer to or are based on projections, uncertain events or assumptions. The forward-looking statements included herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. Such risks and uncertainties include, among other things, the level of capital spending and well completions by the onshore oil and natural gas industry, which has been and may again be affected by the COVID-19 pandemic and, related economic repercussions and which may be affected by geopolitical and economic developments in the U.S. and globally, including conflicts, instability, acts of war or terrorism in oil producing countries or regions, particularly Russia, the Middle East, South America and Africa; the ability of the OPEC+ countries to agree on and comply with supply limitations; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; pricing pressures, reduced sales, or reduced market share as a result of intense competition in the markets for the Company’s dissolvable plug products; the Company’s ability to implement and commercialize new technologies, services and tools; the Company’s ability to grow its completion tool business; the Company’s ability to manage capital expenditures; the Company’s ability to accurately predict customer demand; the loss of, or interruption or delay in operations by, one or more significant customers; the loss of or interruption in operations of one or more key suppliers; the adequacy of the Company’s capital resources and liquidity; the incurrence of significant costs and liabilities resulting from litigation; the loss of, or inability to attract, key personnel, technical personnel and other skilled and qualified workers; and other factors described in the “Risk Factors” and “Business” sections of the Company’s most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and, except as required by law, the Company undertakes no obligation to update those statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

 

Three Months Ended

 

Year Ended December 31,

December 31,

2021

September 30,

2021

 

2021

2020

 

Revenues

$

105,093

 

$

92,868

 

$

349,419

 

$

310,851

 

Cost and expenses

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

90,192

 

 

78,879

 

 

307,992

 

 

302,157

 

General and administrative expenses

 

11,796

 

 

11,114

 

 

45,301

 

 

49,346

 

Depreciation

 

6,757

 

 

6,921

 

 

28,905

 

 

32,431

 

Amortization of intangibles

 

3,904

 

 

4,029

 

 

16,116

 

 

16,467

 

Impairment of goodwill

 

 

 

 

 

 

 

296,196

 

Loss on revaluation of contingent liabilities

 

584

 

 

21

 

 

460

 

 

276

 

(Gain) loss on sale of property and equipment

 

 

 

(17

)

 

660

 

 

(2,857

)

Loss from operations

 

(8,140

)

 

(8,079

)

 

(50,015

)

 

(383,165

)

Interest expense

 

7,993

 

 

7,968

 

 

32,527

 

 

36,759

 

Interest income

 

(2

)

 

(3

)

 

(26

)

 

(615

)

Gain on extinguishment of debt

 

 

 

 

 

(17,618

)

 

(37,841

)

Other income

 

(195

)

 

(34

)

 

(298

)

 

(62

)

Loss before income taxes

 

(15,936

)

 

(16,010

)

 

(64,600

)

 

(381,406

)

Provision (benefit) for income taxes

 

(188

)

 

41

 

 

(25

)

 

(2,458

)

Net loss

$

(15,748

)

$

(16,051

)

$

(64,575

)

$

(378,948

)

 

Loss per share

Basic

$

(0.52

)

$

(0.53

)

$

(2.13

)

$

(12.74

)

Diluted

$

(0.52

)

$

(0.53

)

$

(2.13

)

$

(12.74

)

Weighted average shares outstanding

Basic

 

30,452,049

 

 

30,449,286

 

 

30,302,925

 

 

29,744,830

 

Diluted

 

30,452,049

 

 

30,449,286

 

 

30,302,925

 

 

29,744,830

 

 

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments, net of tax of $0 and $0

$

(2

)

$

(102

)

$

(34

)

$

(34

)

Total other comprehensive loss, net of tax

 

(2

)

 

(102

)

 

(34

)

 

(34

)

Total comprehensive loss

$

(15,750

)

$

(16,153

)

$

(64,609

)

$

(378,982

)

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands)

(Unaudited)

At December 31,

2021

 

2020

 

Assets

Current assets

Cash and cash equivalents

$

21,509

 

$

68,864

 

Accounts receivable, net

 

64,025

 

 

41,235

 

Income taxes receivable

 

1,393

 

 

1,392

 

Inventories, net

 

42,180

 

 

38,402

 

Prepaid expenses and other current assets

 

10,195

 

 

16,270

 

Total current assets

 

139,302

 

 

166,163

 

Property and equipment, net

 

86,958

 

 

102,429

 

Operating lease right-of-use assets, net

 

35,117

 

 

36,360

 

Finance lease right-of-use assets, net

 

1,445

 

 

1,816

 

Intangible assets, net

 

116,408

 

 

132,524

 

Other long-term assets

 

2,383

 

 

3,308

 

Total assets

$

381,613

 

$

442,600

 

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

28,680

 

$

18,140

 

Accrued expenses

 

18,519

 

 

17,139

 

Current portion of long-term debt

 

2,093

 

 

844

 

Current portion of operating lease obligations

 

6,091

 

 

6,200

 

Current portion of finance lease obligations

 

1,070

 

 

1,092

 

Total current liabilities

 

56,453

 

 

43,415

 

Long-term liabilities

Long-term debt

 

332,314

 

 

342,714

 

Long-term operating lease obligations

 

30,435

 

 

32,295

 

Long-term finance lease obligations

 

65

 

 

1,109

 

Other long-term liabilities

 

1,613

 

 

2,658

 

Total liabilities

 

420,880

 

 

422,191

 

 

Stockholders’ equity

Common stock (120,000,000 shares authorized at $.01 par value; 32,826,325 and 31,557,809 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively)

 

328

 

 

316

 

Additional paid-in capital

 

773,350

 

 

768,429

 

Accumulated other comprehensive loss

 

(4,535

)

 

(4,501

)

Accumulated deficit

 

(808,410

)

 

(743,835

)

Total stockholders’ equity

 

(39,267

)

 

20,409

 

Total liabilities and stockholders’ equity

$

381,613

 

$

442,600

NINE ENERGY SERVICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

Year Ended December 31,

2021

 

2020

 

Cash flows from operating activities

Net loss

$

(64,575

)

$

(378,948

)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation

 

28,905

 

 

32,431

 

Amortization of intangibles

 

16,116

 

 

16,467

 

Amortization of deferred financing costs

 

2,602

 

 

2,836

 

Amortization of operating leases

 

8,020

 

 

8,897

 

Provision for (recovery of) doubtful accounts

 

(229

)

 

2,820

 

Benefit for deferred income taxes

 

 

 

(1,588

)

Provision for inventory obsolescence

 

4,831

 

 

8,957

 

Impairment of goodwill

 

 

 

296,196

 

Impairment of operating lease

 

 

 

466

 

Stock-based compensation expense

 

5,406

 

 

9,744

 

Gain on extinguishment of debt

 

(17,618

)

 

(37,841

)

(Gain) loss on sale of property and equipment

 

660

 

 

(2,857

)

Loss on revaluation of contingent liabilities

 

460

 

 

276

 

Changes in operating assets and liabilities, net of effects from acquisitions

Accounts receivable, net

 

(22,540

)

 

52,914

 

Inventories, net

 

(8,608

)

 

13,600

 

Prepaid expenses and other current assets

 

3,350

 

 

1,368

 

Accounts payable and accrued expenses

 

12,447

 

 

(25,456

)

Income taxes receivable/payable

 

 

 

(732

)

Other assets and liabilities

 

(9,643

)

 

(4,451

)

Net cash used in operating activities

 

(40,416

)

 

(4,901

)

Cash flows from investing activities

Proceeds from sales of property and equipment

 

3,492

 

 

6,402

 

Proceeds from property and equipment casualty losses

 

 

 

1,237

 

Purchases of property and equipment

 

(15,413

)

 

(9,417

)

Net cash used in investing activities

 

(11,921

)

 

(1,778

)

Cash flows from financing activities

Proceeds from 2018 ABL Credit Facility

 

15,000

 

 

 

Payments on Magnum Promissory Notes

 

(844

)

 

(281

)

Purchases of Senior Notes

 

(8,355

)

 

(14,561

)

Proceeds from short-term debt

 

1,513

 

 

 

Payments of short-term debt

 

(545

)

 

 

Payments on finance leases

 

(1,094

)

 

(995

)

Payments of contingent liabilities

 

(154

)

 

(1,390

)

Vesting of restricted stock

 

(473

)

 

(158

)

Net cash provided by (used in) financing activities

 

5,048

 

 

(17,385

)

Impact of foreign currency exchange on cash

 

(66

)

 

(61

)

Net decrease in cash and cash equivalents

 

(47,355

)

 

(24,125

)

Cash and cash equivalents

Beginning of period

 

68,864

 

 

92,989

 

End of period

$

21,509

 

$

68,864

 

 

NINE ENERGY SERVICE, INC.

RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS)

(In Thousands)

(Unaudited)

 

Three Months Ended

Year Ended December 31,

December 31,

2021

September 30,

2021

2021

2020

Calculation of gross profit (loss)

Revenues

$

105,093

$

92,868

$

349,419

 

$

310,851

 

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

90,192

 

78,879

 

307,992

 

 

302,157

 

Depreciation (related to cost of revenues)

 

6,284

 

6,437

 

26,882

 

 

30,161

 

Amortization of intangibles

 

3,904

 

4,029

 

16,116

 

 

16,467

 

Gross profit (loss)

$

4,713

$

3,523

$

(1,571

)

$

(37,934

)

 

Adjusted gross profit (loss) reconciliation

Gross profit (loss)

$

4,713

$

3,523

$

(1,571

)

$

(37,934

)

Depreciation (related to cost of revenues)

 

6,284

 

6,437

 

26,882

 

 

30,161

 

Amortization of intangibles

 

3,904

 

4,029

 

16,116

 

 

16,467

 

Adjusted gross profit

$

14,901

$

13,989

$

41,427

 

$

8,694

 

NINE ENERGY SERVICE, INC.

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

(In Thousands)

(Unaudited)

 

Three Months Ended

Year Ended December 31,

December 31,

2021

September 30,

2021

2021

2020

EBITDA reconciliation:

Net loss

$

(15,748

)

$

(16,051

)

$

(64,575

)

$

(378,948

)

Interest expense

 

7,993

 

 

7,968

 

 

32,527

 

 

36,759

 

Interest income

 

(2

)

 

(3

)

 

(26

)

 

(615

)

Depreciation

 

6,757

 

 

6,921

 

 

28,905

 

 

32,431

 

Amortization of intangibles

 

3,904

 

 

4,029

 

 

16,116

 

 

16,467

 

Provision (benefit) for income taxes

 

(188

)

 

41

 

 

(25

)

 

(2,458

)

EBITDA

$

2,716

 

$

2,905

 

$

12,922

 

$

(296,364

)

Impairment of goodwill

 

 

 

 

 

 

 

296,196

 

Transaction and integration costs

 

 

 

 

 

 

 

146

 

Gain on extinguishment of debt

 

 

 

 

 

(17,618

)

 

(37,841

)

Loss on revaluation of contingent liabilities (1)

 

584

 

 

21

 

 

460

 

 

276

 

Restructuring charges

 

 

 

375

 

 

1,588

 

 

4,907

 

Stock-based compensation expense

 

1,215

 

 

1,153

 

 

5,406

 

 

9,744

 

(Gain) loss on sale of property and equipment

 

 

 

(17

)

 

660

 

 

(2,857

)

Legal fees and settlements (2)

 

45

 

 

17

 

 

1,809

 

 

39

 

Adjusted EBITDA

$

4,560

 

$

4,454

 

$

5,227

 

$

(25,754

)

 

(1) Amounts relate to the revaluation of contingent liabilities associated with the Company’s 2018 acquisitions

(2) Amounts represent fees and legal settlements associated with legal proceedings brought pursuant to the Fair Labor Standards Act and/or similar state laws.

NINE ENERGY SERVICE, INC.

RECONCILIATION OF ROIC CALCULATION

(In Thousands)

(Unaudited)

 

Three Months Ended

 

Year Ended December 31,

December 31,

2021

September 30,

2021

 

2021

2020

 

Net loss

$

(15,748

)

$

(16,051

)

$

(64,575

)

$

(378,948

)

Add back:

Impairment of goodwill

 

 

 

 

 

 

 

296,196

 

Interest expense

 

7,993

 

 

7,968

 

 

32,527

 

 

36,759

 

Interest income

 

(2

)

 

(3

)

 

(26

)

 

(615

)

Transaction and integration costs

 

 

 

 

 

 

 

146

 

Restructuring charges

 

 

 

375

 

 

1,588

 

 

4,907

 

Gain on extinguishment of debt

 

 

 

 

 

(17,618

)

 

(37,841

)

Benefit for deferred income taxes

 

 

 

 

 

 

 

(1,588

)

After-tax net operating loss

$

(7,757

)

$

(7,711

)

$

(48,104

)

$

(80,984

)

 

Total capital as of prior period-end:

Total stockholders’ equity

$

(24,732

)

$

(9,731

)

$

20,409

 

$

389,877

 

Total debt

 

321,750

 

 

322,031

 

 

348,637

 

 

400,000

 

Less: cash and cash equivalents

 

(29,969

)

 

(33,128

)

 

(68,864

)

 

(92,989

)

Total capital as of prior period-end:

$

267,049

 

$

279,172

 

$

300,182

 

$

696,888

 

 

Total capital as of period-end:

Total stockholders’ equity

$

(39,267

)

$

(24,732

)

$

(39,267

)

$

20,409

 

Total debt

 

337,436

 

 

321,750

 

 

337,436

 

 

348,637

 

Less: cash and cash equivalents

 

(21,509

)

 

(29,969

)

 

(21,509

)

 

(68,864

)

Total capital as of period-end:

$

276,660

 

$

267,049

 

$

276,660

 

$

300,182

 

 

 

 

 

Average total capital

$

271,855

 

$

273,111

 

$

288,421

 

$

498,535

 

ROIC

 

-11.4

%

 

-11.3

%

 

-16.7

%

 

-16.2

%

NINE ENERGY SERVICE, INC.

RECONCILIATION OF ADJUSTED NET INCOME (LOSS) AND ADJUSTED BASIC EARNINGS (LOSS) PER SHARE CALCULATION

(In Thousands)

(Unaudited)

 

Three Months Ended

 

Year Ended December 31,

December 31,

2021

September 30,

2021

 

2021

2020

Reconciliation of adjusted net income (loss):

Net loss

$

(15,748

)

$

(16,051

)

$

(64,575

)

$

(378,948

)

Add back:

Impairment of goodwill (a)

 

 

 

 

 

 

 

296,196

 

Transaction and integration costs (b)

 

 

 

 

 

 

 

146

 

Gain on extinguishment of debt (c)

 

 

 

 

 

(17,618

)

 

(37,841

)

Restructuring charges

 

 

 

375

 

 

1,588

 

 

4,907

 

Less: Tax benefit from add backs

 

 

 

 

 

 

 

(2,547

)

Adjusted net loss

$

(15,748

)

$

(15,676

)

$

(80,605

)

$

(118,087

)

 

Weighted average shares

Weighted average shares outstanding for basic

 

30,452,049

 

 

30,449,286

 

 

30,302,925

 

 

29,744,830

 

and adjusted basic earnings (loss) per share

 

Earnings (loss) per share:

Basic loss per share

$

(0.52

)

$

(0.53

)

$

(2.13

)

$

(12.74

)

Adjusted basic loss per share

$

(0.52

)

$

(0.51

)

$

(2.66

)

$

(3.97

)

 

(a) 2020 impairment charges were driven by sharp declines in global crude oil demand and an economic recession associated with the coronavirus pandemic as well as sharp declines in oil and natural gas prices.

(b) Amounts represent transaction and integration costs, including the cost of inventory that was stepped up to fair value during purchase accounting, associated with 2018 acquisitions.

(c) Amount primarily represents the difference between the repurchase price and the carrying amount of Senior Notes repurchased in 2021 and 2020

AAdjusted EBITDA is defined as 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 the extinguishment of debt, (v) loss or gain on the sale of subsidiaries, (vi) restructuring charges, (vii) stock-based compensation 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 is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period without regard to our financing methods or capital structure and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments, acquisitions and dispositions and costs that are not reflective of the ongoing performance of our business.

BAdjusted Net Income (Loss) is defined as net income (loss) adjusted for (i) goodwill, intangible asset, and/or property and equipment impairment charges, (ii) transaction and integration costs related to acquisitions, (iii) restructuring charges, (iv) loss or gain on the sale of subsidiaries, (v) loss or gain on the extinguishment of debt and (vi) the tax impact of such adjustments. Management believes Adjusted Net Income (Loss) is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and helps identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.

CAdjusted Basic Earnings (Loss) Per Share is defined as adjusted net income (loss), divided by weighted average basic shares outstanding. Management believes Adjusted Basic Earnings (Loss) Per Share is useful because it allows us to more effectively evaluate our operating performance and compare the results of our operations from period to period and help identify underlying trends in our operations that could otherwise be distorted by the effect of the impairments and acquisitions.

Contacts

Nine Energy Service Investor Contact:
Heather Schmidt

Vice President, Strategic Development, Investor Relations and Marketing

(281) 730-5113

investors@nineenergyservice.com

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