NINE

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended March 31, 2026, for Nine Energy Service, Inc. (Nine), an oilfield services provider specializing in well completion solutions. The reporting period is bifurcated due to the Company's emergence from Chapter 11 bankruptcy on March 5, 2026 (the "Plan Effective Date"). Financial results are presented as the "Predecessor" (Jan 1 – Mar 5, 2026) and the "Successor" (Mar 6 – Mar 31, 2026). The Company applied fresh start accounting upon emergence, rendering financial statements post-March 5, 2026, non-comparable to prior periods.

Key Financial Metrics

Note: Predecessor Net Income includes a $124.1 million gain on reorganization items. Successor Net Loss reflects normal operations post-emergence.

Material Changes vs. Prior Period

• Bankruptcy Emergence: On March 5, 2026, the Company emerged from Chapter 11. All pre-petition equity was canceled, and 100% of new common stock was issued to holders of the 2028 Notes. The $300 million 2028 Notes were extinguished.
• Debt Restructuring: Total debt decreased from $369.6 million (Predecessor) to $94.4 million (Successor). The Prepetition ABL Facility and 2028 Notes were replaced by a new $135.0 million Exit ABL Facility.
• Asset Valuation: Fresh start accounting resulted in significant fair value adjustments. Intangible assets were written down from $68.1 million to $9.1 million, while Property and Equipment was written up from $64.3 million to $109.0 million.
• Revenue Decline: Revenue for the full quarter (Successor + Predecessor) was $130.0 million, a 13.3% decrease compared to $150.5 million in Q1 2025. This decline is attributed to lower rig counts in oil-levered basins and severe weather impacts in early 2026.

Guidance, Outlook, and Risks

Management Commentary: Management anticipates U.S. activity levels to remain relatively flat in Q2 2026 compared to Q1. However, they expect revenue and earnings to increase in Q2 due to more efficient operations and reduced calendar whitespace. The Company plans capital expenditures of $20.0 million to $30.0 million for 2026.

Risks and Contingencies:

• Commodity Price Volatility: Business is highly cyclical and dependent on oil and natural gas prices. Recent geopolitical tensions (e.g., Iran conflict) have caused price volatility.
• Post-Bankruptcy Challenges: Risks include potential renegotiation of contracts by vendors/customers, difficulty in attracting key personnel, and reputational damage.
• Legal Proceedings: The Company is a defendant in a patent infringement lawsuit regarding its Breakthru Casing Flotation Device. A $2.5 million letter of credit has been posted; no accrual has been made as the Company expects to prevail on appeal.
• Liquidity: The Company maintains a minimum excess availability covenant of $5.0 million under the Exit ABL Facility. As of March 31, 2026, availability was $35.7 million.

Investor Verification Checklist

• Debt Covenants: Verify compliance with the Exit ABL Facility's minimum excess availability ($5.0 million) and fixed charge coverage ratio covenants.
• Revenue Drivers: Monitor U.S. rig counts and activity levels in the Permian and Haynesville basins to validate revenue projections.
• Legal Exposure: Track the status of the Breakthru Casing Flotation Device patent litigation and potential royalty liabilities.
• Capital Expenditures: Confirm actual CapEx spending against the $20M-$30M budget to assess cash burn and growth investment.
• Working Capital: Review accounts receivable aging, as a $9.2 million increase in receivables drove operating cash outflows in the Successor period.