Nine Energy Service Q2FY26 Results: EBITDA misses on coil unit downtime
- Revenue hit $141.8 million in Q2 2026, meeting guidance despite operational challenges
- Adjusted EBITDA fell to $8.6 million, missing expectations due to coiled tubing margin compression
- Completion Tools revenue surged 44% to $37.1 million, driven by strong international demand
- Coiled Tubing revenue dropped 2% as two large-diameter units were taken offline for repairs
- Total liquidity stands at $46.8 million, with full-year capex guidance maintained at $20-$30 million
*this image is generated using AI for illustrative purposes only.
Nine Energy Service (NYSE: NINE) reported second-quarter 2026 revenue of $141.8 million, aligning with prior guidance. However, adjusted EBITDA declined to $8.6 million, falling short of expectations as margin compression in the coiled tubing segment offset strong performance in completion tools.
The results reflect significant operational headwinds, primarily driven by maintenance-related outages in the coiled tubing fleet and rising input costs that outpaced pricing adjustments.
Financial Performance Overview
Revenue remained stable quarter-over-quarter, supported by robust demand in the Completion Tools business, which saw a 44% increase in revenue to $37.1 million. This growth was driven by a 45% rise in stages completed, bolstered by strong international sales and domestic market share gains.
Conversely, the coiled tubing segment faced severe constraints. Two large-diameter units, representing approximately 17% of the large-diameter fleet, were taken out of service due to maintenance issues. Although days worked increased by 16%, the average blended day rate fell by 15%, leading to a 2% decline in coiled tubing revenue to $26.4 million.
| Segment | Revenue | Change | Key Operational Metric |
|---|---|---|---|
| Completion Tools | $37.1 million | +44% QoQ | Stages completed up 45% |
| Cementing | $55.3 million | +3% QoQ | Jobs completed up 13% |
| Wireline | $23 million | -4% QoQ | Stages completed down 7% |
| Coiled Tubing | $26.4 million | -2% QoQ | Days worked up 16% |
Cementing operations contributed $55.3 million, a 3% increase from the prior quarter, aided by a 13% rise in jobs completed. However, the average blended revenue per job decreased by 8% due to job mix. Wireline revenue fell 4% to $23 million, despite a 3% increase in average blended revenue per stage, as total stages completed dropped by 7%.
What the Numbers Show
A critical divergence exists between volume growth and profitability drivers. While Completion Tools posted a 44% revenue surge driven by volume and international expansion, Coiled Tubing saw a 15% drop in day rates despite a 16% increase in days worked. This indicates that pricing power and fleet availability are currently decoupled; the company is absorbing fixed costs for idle skilled crews while failing to pass through inflationary increases—averaging 12% in consumables, labor, and repairs—to customers quickly enough to protect margins.
Balance Sheet and Outlook
As of June 30, 2026, Nine Energy Service held $16.8 million in cash and cash equivalents, with $30 million available under its credit facility, resulting in total liquidity of $46.8 million. Outstanding borrowings stood at $97.3 million. The company reported net cash used in operating activities of $2.3 million for the quarter, with an average Days Sales Outstanding (DSO) of 59 days.
Capital expenditure for Q2 was $4.8 million, bringing year-to-date spend to $10.4 million. Management reaffirmed full-year capex guidance of $20 million to $30 million, expecting cash flow neutrality in the second half of the year.
Looking ahead, the company projects third-quarter revenue between $133 million and $143 million. Adjusted EBITDA is expected to be flat or slightly lower than Q2 levels, constrained by the continued absence of one coiled tubing unit expected to return near year-end and persistent inflationary pressures.
How might the delayed return of large-diameter coiled tubing units impact Nine Energy Service's ability to capture market share in upcoming high-volume drilling cycles?
Given the 12% inflationary pressure on inputs versus only partial pricing adjustments, what specific contractual mechanisms or renegotiations could help restore margin compression in the coiled tubing segment?
Will the strong international growth in Completion Tools be sufficient to offset domestic margin erosion, or does this signal a strategic pivot toward overseas markets for future profitability?
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