NINE · 10-Q

Nine Energy Service, Inc. [[NINE]] — Chapter 11 canceled $300 million of notes; $98.7 million remains drawn on Exit ABL

### Executive Summary
Nine Energy Service emerged from Chapter 11 on March 5, 2026, canceling its $300 million 2028 Notes and pre-emergence common stock; noteholders received 13,949,990 shares of the reorganized company. The reset sharply reduced interest expense, but the September quarter and post-emergence cash flow indicate that operating cash generation remains weak relative to capital spending and reliance on asset-based borrowing.

### What Happened
The reorganization replaced the prior debt structure with a $135 million Exit ABL Facility arranged by White Oak Commercial Finance, LLC, as agent. At September 30, Nine had drawn $98.7 million and reported approximately $29.9 million of availability; the filing also reports $16.1 million of cash and total liquidity of $46.0 million. The facility is secured by substantially all company assets, matures three years after the plan’s March 5 effective date, and bears one-month SOFR subject to a 1.50% floor, plus a 3.50%–4.00% margin and an additional 0.50% for certain borrowing-base components. It requires at least $5 million of excess availability and has a 1.10:1.00 fixed-charge coverage test if availability falls below specified thresholds. Nine reported covenant compliance at quarter-end.

For the quarter ended September 30, revenue rose to $142.0 million from $132.0 million, while Adjusted EBITDA fell to $8.3 million from $9.6 million and operating loss widened to $3.3 million from $1.2 million. Net loss narrowed to $5.1 million from $14.6 million as quarterly interest expense fell to $1.9 million from $13.7 million, primarily following cancellation of the notes. For the March 6–September 30 successor period, operating cash flow was $1,000 against $11.5 million of capital expenditures; cash, cash equivalents and restricted cash declined from $28.4 million on March 5 to $17.5 million on September 30.

### Why It Matters
The restructuring materially lowers the debt and interest burden, but the resulting positive equity and lower net loss should not be mistaken for stronger underlying cash generation. The company’s reported availability is tied to a borrowing base and lender reserves, while near-zero post-emergence operating cash flow did not fund capital expenditures. That makes working-capital conversion, spending discipline and covenant headroom central to the near-term liquidity picture.

The reset also carries longer-term costs: Nine estimates $171.3 million of cancellation-of-debt income, which will reduce tax-loss carryforwards, and expects remaining tax attributes to face annual Section 382 limits; the limit amount and future cash-tax effect are not disclosed in filing materials. The company retains an unquantified litigation exposure on remand, with no accrual because the potential loss cannot be estimated. It also reports that disclosure controls were effective as of September 30 and that no material control changes occurred during the quarter.

### Context & Prior Filing Comparison
Fresh-start accounting began at emergence, so successor and predecessor balance-sheet and operating periods are not directly comparable. The September-quarter comparison with the 2025 predecessor quarter is presented in the filing, but it also crosses that accounting boundary; the sharp reduction in interest expense principally reflects the debt cancellation, not operating improvement. The provided August 5, 2026 10-Q context does not include comparable figures, so a more specific quarter-to-quarter filing comparison is not available.

### What to Watch Next
- Exit ABL availability against the $5 million minimum and the threshold that triggers the fixed-charge coverage test.
- Cash conversion, receivables and inventory, and actual capital spending against the stated 2026 budget of $20 million–$30 million.
- Whether fourth-quarter revenue is flat sequentially and profitability improves as management expects from a shift toward cementing and international tools; the large-diameter coiled tubing unit’s return to service is also a stated operational watchpoint.
- Further proceedings in the remanded patent litigation and any change in the company’s ability to estimate or accrue a loss.
- Any disclosures clarifying the practical effect of tax-attribute limits or the amount of future annual Section 382 utilization.

[Generated on Edgar Tracker · edgartracker.com · AI summary · GPT 6 luna · selected parts]