UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.
| Item 2.02 | Results of Operations and Financial Condition. |
On January 17, 2023, Nine Energy Service, Inc. (the “Company”) filed a preliminary prospectus supplement (the “Preliminary Prospectus Supplement”) to its effective shelf registration statement on Form S-3 (File No. 333- 268999) pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”), relating to an underwritten public offering (the “Offering”) of 300,000 units, each of which consists of $1,000 principal amount of senior secured notes and five shares of common stock, par value $0.01 per share, of the Company. The Preliminary Prospectus Supplement contains select preliminary unaudited estimated financial results for the fourth quarter of 2022. Such preliminary estimated results are furnished in the excerpt from the Preliminary Prospectus Supplement attached hereto as Exhibit 99.1.
The information under this Item 2.02 and in Exhibit 99.1 to this Current Report on Form 8-K are being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information under this Item 2.02 and in Exhibit 99.1 to this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act.
| Item 8.01 | Other Events. |
On January 17, 2023, the Company delivered a conditional notice of full redemption to the holders of its outstanding 8.750% Senior Notes due 2023 (the “2023 Senior Notes”), informing such holders that the Company will redeem all of the 2023 Senior Notes on February 1, 2023 (the “Redemption Date”) at a redemption price of 100.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the Redemption Date (the “2023 Senior Notes Redemption”), subject to the Company having issued at least $300 million of units, with each unit consisting of $1,000 principal amount of senior secured notes and shares of the Company’s common stock, prior to the Redemption Date.
The Company intends to pay a portion of the redemption price for, and accrued and unpaid interest on, the 2023 Senior Notes with the net proceeds from the Offering and the remainder with borrowings under its revolving credit facility. In connection with the 2023 Senior Notes Redemption, the Company intends to satisfy and discharge the indenture governing the 2023 Senior Notes substantially concurrently with the completion of the Offering. As of December 31, 2022, approximately $307.3 million in aggregate principal amount of 2023 Senior Notes was outstanding.
This Current Report on Form 8-K does not constitute a notice of redemption of the 2023 Senior Notes.
The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. 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, such as those regarding the Company’s plan to redeem the 2023 Senior Notes, are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those forward-looking statements. 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.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit |
Description | |
| 99.1 | Excerpt from Preliminary Prospectus Supplement, dated January 17, 2023. | |
| 104 | Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document (contained in Exhibit 101). | |
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 hereunto duly authorized.
| Dated: January 17, 2023 | NINE ENERGY SERVICE, INC. | |||||
| By: | /s/ Theodore R. Moore | |||||
| Theodore R. Moore | ||||||
| Senior Vice President and General Counsel | ||||||
Exhibit 99.1
Preliminary estimate of the Company’s selected fourth quarter 2022 financials
We have prepared the following preliminary financial information to present our estimated results for the three months ended December 31, 2022. We have prepared such information in good faith based upon our internal reporting and accruals as of and for the three months ended December 31, 2022. Such estimates are preliminary and inherently uncertain and subject to change as we finalize our financial and operating data for the fourth quarter of 2022. There can be no assurance that our final results for the fourth quarter of 2022 will not differ materially from these estimates. During the course of the preparation of our consolidated financial statements and related notes as of and for the three months ended December 31, 2022, we may identify items that could cause our final reported results to be materially different from the preliminary financial estimates presented herein. Important factors that could cause actual results to differ from our preliminary estimates are set forth under the headings “Risk factors” and “Cautionary note regarding forward-looking statements.”
The preliminary estimates presented below have not been audited, reviewed or compiled by our independent registered public accounting firm. Accordingly, our independent registered public accounting firm does not express an opinion or any other form of assurance with respect thereto and assumes no responsibility for, and disclaims any association with, this information. In addition, the below information was not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information but, in our view is reasonable, reflects the best currently available estimates and judgments, and presents our expected performance.
The preliminary estimates presented below should not be viewed as a substitute for full interim financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition, these preliminary estimates for the three months ended December 31, 2022 are not necessarily indicative of the results to be achieved for any future period.
Based on the information and data currently available, although our results of operations for the three months ended December 31, 2022 are not yet final, we estimate, on a preliminary basis, that revenue will be within a range of $166.0 million to $168.0 million for the three months ended December 31, 2022, as compared to $167.4 million for the three months ended September 30, 2022.
Based on currently available information, we also estimate that our capital expenditures will total $19.0 million to $21.0 million during the three months ended December 31, 2022, compared to $4.6 million during the three months ended September 30, 2022, and $29.0 million to $31.0 million for the year ended December 31, 2022, compared to $14.8 million for the year ended December 31, 2021.
In addition, we estimate that our net income will be within a range of $7.0 million to $11.0 million for the three months ended December 31, 2022, as compared to $14.3 million for the three months ended September 30,
2022, and our Adjusted EBITDA will be within a range of $29.5 million to $31.5 million for the three months ended December 31, 2022, as compared to $32.6 million for the three months ended September 30, 2022.
Adjusted EBITDA is a non-GAAP financial measure. For a definition of Adjusted EBITDA, see “—Summary historical financial data—Non-GAAP financial measures” below. The following table presents a reconciliation of the Company’s non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measure of net income (loss) for the three months ended December 31, 2022 (estimated) and 2021 (actual):
| Three months ended December 31, 2022 |
Three months ended September 30, 2022 |
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| (in thousands) (unaudited) |
Low | High | Actual | |||||||||
| Net income |
$ | 7,000 | $ | 11,000 | $ | 14,286 | ||||||
| Interest expense, net |
8,050 | 8,000 | 7,991 | |||||||||
| Provision for income taxes |
100 | 300 | 489 | |||||||||
| Depreciation |
7,250 | 7,050 | 6,593 | |||||||||
| Amortization of intangibles |
2,900 | 2,800 | 2,896 | |||||||||
| Loss on revaluation of contingent liabilities(1) |
250 | 200 | 46 | |||||||||
| Gain on extinguishment of debt |
— | — | (2,843 | ) | ||||||||
| Restructuring charges |
2,150 | 650 | 729 | |||||||||
| Stock-based compensation and cash award expense |
2,150 | 2,100 | 1,113 | |||||||||
| (Gain) loss on sale of property and equipment |
(400 | ) | (600 | ) | 1,242 | |||||||
| Legal fees and settlements(2) |
50 | — | 10 | |||||||||
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| Adjusted EBITDA |
$ | 29,500 | $ | 31,500 | $ | 32,552 | ||||||
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| (1) | Amounts relate to the revaluation of contingent liabilities associated with the Company’s 2018 acquisitions. |
| (2) | Amounts represent fees, legal settlements or accruals associated with legal proceedings brought pursuant to the Fair Labor Standards Act and/or similar state laws. |
Document and Entity Information |
Jan. 17, 2023 |
|---|---|
| Cover [Abstract] | |
| Amendment Flag | false |
| Entity Central Index Key | 0001532286 |
| Document Type | 8-K |
| Document Period End Date | Jan. 17, 2023 |
| Entity Registrant Name | NINE ENERGY SERVICE, INC. |
| Entity Incorporation State Country Code | DE |
| Entity File Number | 001-38347 |
| Entity Tax Identification Number | 80-0759121 |
| Entity Address, Address Line One | 2001 Kirby Drive |
| Entity Address, Address Line Two | Suite 200 |
| Entity Address, City or Town | Houston |
| Entity Address, State or Province | TX |
| Entity Address, Postal Zip Code | 77019 |
| City Area Code | (281) |
| Local Phone Number | 730-5100 |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Security 12b Title | Common Stock, par value $0.01 per share |
| Trading Symbol | NINE |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | true |
| Entity Ex Transition Period | false |