While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find s ...

Financial Data and Key Metrics Changes - The overall second quarter revenue was $327.4 million, which was up 8% sequentially and up 0.71% year over year, outpacing the sector [22] - Adjusted EBITDA for Q2 2025 was $70.6 million with margins of 21.6%, up 95 basis points sequentially [22] - Earnings per share adjusted for charges and credits was 21¢ for Q2 2025, up 50% from Q1 2025 [23] - Free cash flow for Q2 2025 was $68.7 million, with cash flow from operations of $98.5 million [25] Business Line Data and Key Metrics Changes - Growth in Saudi Arabia was mainly driven by unconventional activity, along with growth in Egypt and Iraq [22] - Year-over-year growth was observed in Abu Dhabi, Algeria, Iraq, Egypt, and Jordan, partially offset by lower revenue in Saudi Arabia [22] - The company has secured solid new contracts in both Algeria and Libya, spanning three to five years [17] Market Data and Key Metrics Changes - The oil price is expected to remain challenged for the next twelve months, with a 35% decline in US activity this year [8] - The rig count in Kuwait is at an all-time high, making it the second largest country in the Middle East in terms of rig count [14] - North Africa is positioned to provide much-needed gas into the pipeline to meet increasing domestic power demand [18] Company Strategy and Development Direction - The company aims to achieve $2 billion in revenue, leveraging recent contract awards and a robust backlog [5] - A countercyclical investment strategy is being employed to navigate the softening upstream environment [6] - The focus is on building a solid pipeline and securing a robust backlog while maintaining profitable growth and free cash flow generation [19] Management's Comments on Operating Environment and Future Outlook - The management sees MENA as a bright spot despite sustained uncertainty in the global macro environment [7] - The outlook for overall energy demand remains robust, with significant growth expected in oil demand per capita in developing countries [9] - The company expects Q3 2025 revenues and EBITDA to be consistent with Q2 2025 results [26] Other Important Information - The company has successfully remediated its final material weakness in internal controls over financial reporting [28] - The company is currently refinancing its debt facility and anticipates completion within the next three months [29] - The company plans to use excess cash flow exclusively to pay down debt for the remainder of 2025 [30] Q&A Session Summary Question: Can you break apart the guidance for Q3? - The revenue for Q3 is expected to be consistent with Q2, with Q4 anticipated to be higher due to recent tender wins [40][41] Question: What is the outlook for MENA in 2026? - An uptick in MENA is expected in 2026, with countries planning to increase activity [44][49] Question: Any updates on the Jafora contract announcements? - The company is awaiting results from Aramco's evaluation phase for tenders [50] Question: Any consideration for buybacks or returning cash to shareholders? - The company will evaluate excess cash options after completing refinancing and assessing tender results [51] Question: Can you provide insights on the Kuwait contract? - The Kuwait production contracts are expected to be significant, with ongoing tenders [58] Question: What is the status of free cash flow and accounts receivables? - Accounts receivables have increased due to higher revenue, but working capital management has improved [106]

Group 1: Earnings Performance - National Energy Services Reunited (NESR) reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, but down from $0.29 per share a year ago, representing an earnings surprise of +10.53% [1] - The company posted revenues of $327.37 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.41%, compared to year-ago revenues of $324.97 million [2] - Over the last four quarters, NESR has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] Group 2: Stock Performance and Outlook - NESR shares have declined approximately 18.6% since the beginning of the year, contrasting with the S&P 500's gain of 9% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.28 on revenues of $350.11 million, and for the current fiscal year, it is $0.94 on revenues of $1.35 billion [7] Group 3: Industry Context - The Oil and Gas - Mechanical and Equipment industry, to which NESR belongs, is currently ranked in the bottom 29% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for NESR was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Financial Data and Key Metrics Changes - Overall first quarter revenue was $303.1 million, up 2.1% year-over-year but down 11.7% sequentially [23] - Adjusted EBITDA for Q1 2025 was $62.5 million with margins of 20.6%, down 100 basis points year-over-year [24] - Free cash flow for Q1 2025 was negative $9.6 million with CapEx at $30 million [26] - Net debt to adjusted EBITDA was 0.93, remaining below the one times target for three consecutive quarters [27] Business Line Data and Key Metrics Changes - Year-over-year growth was observed in Abu Dhabi, Algeria, Kuwait, Iraq, and Libya, partially offset by a slow start in Saudi Arabia [23] - The sequential decrease in Saudi was mainly due to slowdowns in main projects during Ramadan [24] Market Data and Key Metrics Changes - Most markets in the Middle East, apart from Saudi Arabia, were flat to up in Q1 2025 compared to Q1 2024 [22] - The geopolitical and economic environment has led to lower oil prices and rig counts in certain countries [22] Company Strategy and Development Direction - The company is adapting its long-term strategy to fit current market conditions, focusing on right-sizing fixed costs and reallocating resources [13] - The company anticipates growth in 2025 and 2026 due to a larger set of incremental contract opportunities and recent contract wins [13][14] - Investment in technology and innovation is a key focus, particularly in Kuwait and North Africa [15][16] Management's Comments on Operating Environment and Future Outlook - The management highlighted a resetting of the oil cycle, with expectations of a softening market in Saudi Arabia but growth opportunities in unconventional gas [6][7] - The company remains optimistic about its positioning in the MENA region, expecting to outperform the market due to favorable project exposure [32] Other Important Information - The company is undergoing a tender process to convert outstanding warrants into equity [29] - The outlook for the MENA region remains favorable, with upstream spending expected to be durable [31] Q&A Session Summary Question: How does Saudi's upstream spending interplay with OPEC's actions? - Management indicated that Saudi's unconventional activities will continue to grow, while conventional activities may see a drop [40][41] Question: What are the expectations for margins recovery? - Management stated that margins are expected to improve but may not reach 25% until 2026 [48][49] Question: What are the pricing trends in the Middle East? - Management noted that pricing is expected to soften due to increased capacity and competition [56] Question: What growth opportunities exist in Kuwait? - Management highlighted that Kuwait is tendering for multiple contracts across various segments, which supports growth expectations [58][59] Question: What is the status of contracts in North Africa? - Management mentioned that many contracts in North Africa are expected to be awarded in the second half of the year, with potential for significant growth [66][70]

Financial Data and Key Metrics Changes - Overall first quarter revenue was $303.1 million, up 2.1% year over year but down 11.7% sequentially [21] - Adjusted EBITDA for Q1 2025 was $62.5 million with margins of 20.6%, down 100 basis points year over year [22] - Earnings per share adjusted for charges and credits was 14 cents for Q1 2025, with charges impacting adjusted EBITDA being the lowest for many periods [23] - Cash flow from operations during Q1 2025 was $20.5 million, with free cash flow being negative $9.6 million due to increased Days Sales Outstanding (DSO) [24] - Gross debt as of March 31 was $366 million, with net debt at $288 million, maintaining a net debt to adjusted EBITDA ratio of 0.93 [25] Business Line Data and Key Metrics Changes - Year-over-year growth was observed in Abu Dhabi, Algeria, Kuwait, Iraq, and Libya, partially offset by a slow start in Saudi Arabia [21] - The sequential decrease in Saudi Arabia was mainly due to slowdowns in main projects during Ramadan [22] - The company expects to grow in Oman and UAE due to strong contract bases and new contract wins [12][21] Market Data and Key Metrics Changes - The overall market in the Middle East is expected to remain stable to slightly up, with Saudi Arabia experiencing a decline [82] - Kuwait is projected to be the biggest growth market due to added rigs and capacity [84] - North Africa is expected to see stable growth, with opportunities for significant market share increase [70] Company Strategy and Development Direction - The company is adapting its long-term strategy to right-size its fixed cost structure and reallocate resources to areas of growth [11] - The focus remains on countercyclical investing, with plans to capitalize on downturn opportunities [19][75] - The company aims to be a top player in every segment within the countries it operates, leveraging its existing relationships and market footprint [76] Management's Comments on Operating Environment and Future Outlook - The management highlighted the geopolitical and economic uncertainties impacting oil demand and supply, with expectations of a market reset [5][7] - Despite the challenges, the company remains optimistic about growth opportunities in the MENA region, particularly in gas development [31] - The outlook for 2025 remains unchanged, with expectations of revenue growth driven by recent contract wins and technology deployments [26] Other Important Information - The company is undergoing a tender process to convert outstanding warrants into equity to improve its capital structure [28] - The company has reshaped its back office and implemented new processes and controls over the past two years [28] Q&A Session Summary Question: How does Saudi upstream spending interplay with OPEC's actions? - Management indicated that Saudi Arabia's unconventional projects will continue to grow, while conventional activity is expected to decline [39][40] Question: What are the expectations for margins recovery? - Management stated that margins are expected to improve but will not return to 25% by year-end, aiming for recovery in 2026 [47][48] Question: What are the pricing trends in the Middle East? - Management noted that pricing is expected to soften due to increased competition and the nature of long-term contracts [55] Question: What growth opportunities exist in Kuwait? - Management highlighted that Kuwait is tendering for various contracts, and the company is well-positioned to capture significant market share [59] Question: What is the status of contracts in North Africa? - Management expects many contracts to be awarded in the second half of the year, with potential for significant growth in Libya and Egypt [67][70] Question: How does the company view joint ventures in the region? - Management expressed confidence in their market position and plans to invest during downturns rather than pursue joint ventures [75]

Group 1 - National Energy Services Reunited (NESR) reported quarterly earnings of $0.14 per share, missing the Zacks Consensus Estimate of $0.20 per share, representing an earnings surprise of -30% [1] - The company posted revenues of $303.1 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.52%, compared to year-ago revenues of $296.85 million [2] - NESR shares have lost about 29.5% since the beginning of the year, while the S&P 500 has gained 0.9% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.30 on $347.61 million in revenues, and $1.19 on $1.4 billion in revenues for the current fiscal year [7] - The Zacks Industry Rank for Oil and Gas - Mechanical and Equipment is currently in the bottom 20% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

PART I – FINANCIAL INFORMATION [Unaudited Condensed Consolidated Interim Financial Statements](index=3&type=section&id=ITEM%201.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20FINANCIAL%20STATEMENTS) The company's Q1 2025 financial performance shows increased revenues and net income, with a slight decrease in total assets and segment-specific revenue shifts [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets slightly decreased to **$1.769 billion** as of March 31, 2025, while total liabilities decreased and total equity increased to **$920.5 million** Condensed Consolidated Balance Sheet Data (in US$ thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $554,848 | $540,516 | | **Total assets** | $1,769,323 | $1,773,678 | | **Total current liabilities** | $502,569 | $503,512 | | **Total liabilities** | $848,844 | $865,446 | | **Total equity** | $920,479 | $908,232 | [Unaudited Condensed Consolidated Interim Statements of Operations](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 revenue increased to **$303.1 million**, but gross profit and operating income declined, while net income slightly rose to **$10.4 million** due to lower expenses Q1 2025 vs Q1 2024 Statement of Operations (in US$ thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | $303,102 | $296,848 | | **Gross Profit** | $37,455 | $42,942 | | **Operating Income** | $20,941 | $24,558 | | **Net Income** | $10,391 | $9,982 | | **Diluted EPS** | $0.11 | $0.10 | [Unaudited Condensed Consolidated Interim Statements of Comprehensive Income](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Total comprehensive income for Q1 2025 was **$10.4 million**, aligning with net income, with no other comprehensive income items reported - Total comprehensive income was **$10.4 million** for Q1 2025 and **$10.0 million** for Q1 2024, with no other comprehensive income items reported in either period[14](index=14&type=chunk) [Unaudited Condensed Consolidated Interim Statements of Shareholders' Equity](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Total equity increased to **$920.5 million** by March 31, 2025, primarily driven by net income and share-based compensation - Total equity grew to **$920.5 million** at March 31, 2025, up from **$908.2 million** at December 31, 2024, mainly due to net income of **$10.4 million**[16](index=16&type=chunk) [Unaudited Condensed Consolidated Interim Statements of Cash Flows](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operating activities significantly decreased to **$20.5 million** in Q1 2025, resulting in a net cash decrease of **$29.3 million** for the period Cash Flow Summary (in US$ thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $20,485 | $69,620 | | **Net cash used in investing activities** | ($31,487) | ($41,363) | | **Net cash used in financing activities** | ($18,259) | ($33,319) | | **Net (decrease) in cash** | ($29,261) | ($5,062) | | **Cash and cash equivalents, end of period** | $78,695 | $62,759 | [Notes to Unaudited Condensed Consolidated Interim Financial Statements](index=10&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20INTERIM%20FINANCIAL%20STATEMENTS) The notes detail accounting policies, debt compliance, tax rates, segment reporting, and a subsequent warrant exchange offer, with **99%** of revenue from the MENA region - The company's Integrated Production Management (IPM) projects, where compensation is based on cash flow from production, represented **0.8%** of revenues in Q1 2025[21](index=21&type=chunk) - Total long-term debt stood at **$306.0 million** and short-term debt was **$60.4 million** as of March 31, 2025, with the company in compliance with all financial covenants[33](index=33&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - The effective tax rate for Q1 2025 was **24.2%**, a decrease from **31.5%** in Q1 2024, primarily due to fewer provisions for uncertain tax positions[42](index=42&type=chunk) - The company has two reportable segments: Production Services (**62%** of Q1 2025 revenue) and Drilling and Evaluation Services (**38%** of Q1 2025 revenue)[52](index=52&type=chunk)[57](index=57&type=chunk) - Subsequent to the quarter end, the company announced an intention to offer **0.10** ordinary shares in exchange for each outstanding warrant[64](index=64&type=chunk) [Operating and Financial Review](index=22&type=section&id=ITEM%202.%20OPERATING%20AND%20FINANCIAL%20REVIEW) Q1 2025 revenue grew **2.1%** to **$303.1 million**, driven by MENA E&P trends, with segment shifts and a contracted gross margin due to elevated costs - The company operates primarily in the MENA region, which contributed **99%** of revenue in Q1 2025, with demand linked to global commodity prices and regional E&P spending[70](index=70&type=chunk)[74](index=74&type=chunk) Q1 2025 vs Q1 2024 Revenue by Segment (in US$ thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Production Services** | $188,087 | $194,503 | | **Drilling and Evaluation Services** | $115,015 | $102,345 | | **Total revenue** | $303,102 | $296,848 | - Drilling and Evaluation Services revenue grew due to increased rig assignments in Saudi Arabia and contributions from the Roya™ advanced directional drilling technology platform[94](index=94&type=chunk) - Production Services revenue declined due to a seasonal slowdown related to the holy month of Ramadan[93](index=93&type=chunk) - Cost of services as a percentage of revenue increased from **85.5%** to **87.6%** YoY, attributed to an elevated cost structure to support expected higher activity levels in H2 2025[95](index=95&type=chunk) Cash Flow Summary (in US$ thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Operating Activities** | $20,485 | $69,620 | | **Investing Activities** | ($31,487) | ($41,363) | | **Financing Activities** | ($18,259) | ($33,319) | [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks primarily from interest rate changes on variable-rate borrowings, while foreign currency and credit risks are managed and considered low - Foreign currency risk is limited as key currencies in the UAE, Saudi Arabia, Oman, Kuwait, and Qatar are pegged to the U.S. dollar[123](index=123&type=chunk) - Credit risk is concentrated with National Oil Companies (NOCs) in the MENA region, but the company has not experienced material losses from non-payment[124](index=124&type=chunk)[125](index=125&type=chunk) - The company is exposed to market risk from rising interest rates on its borrowings, with the interest rate on U.S. dollar-denominated term loans increased from **2.96%** at the end of 2021 to **7.19%** as of March 31, 2025[128](index=128&type=chunk)[129](index=129&type=chunk) [Internal Controls and Procedures](index=33&type=section&id=ITEM%204.%20INTERNAL%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were ineffective due to a material weakness in internal control over financial reporting, with a remediation plan partially implemented - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period due to a material weakness in internal control over financial reporting[131](index=131&type=chunk) - The material weakness is related to the control environment, specifically: lack of an effective organizational structure, ineffective communication protocols, and insufficient technical accounting resources[133](index=133&type=chunk)[142](index=142&type=chunk) - A remediation plan has been designed, and several steps have been implemented, such as executive training, adding new independent directors, and enhancing policies, though not yet fully remediated[134](index=134&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in ordinary course legal proceedings, which management does not expect to have a material impact on its financial condition - The company is involved in ordinary course legal proceedings, but management does not expect them to have a material impact on its business, financial condition, or liquidity[136](index=136&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors.) The most significant risk is the ongoing material weakness in internal control over financial reporting, with potential for adverse financial impact and penalties - A key risk is the continuing material weakness in internal control over financial reporting, which could adversely affect the company's ability to report financial results accurately and prevent fraud[138](index=138&type=chunk) - If the material weakness is not remediated by August 28, 2025, the company faces an additional SEC civil monetary penalty of **$1.2 million**[141](index=141&type=chunk)

Financial Performance - Total revenue for the year ended December 31, 2024, was $1,301,704 thousand, an increase of 13.6% from $1,145,915 thousand in 2023[159]. - Revenue for the year ended December 31, 2024, was $1,301.7 million, an increase of 13.6% from $1,145.9 million in 2023[205]. - Net income for 2024 was $76.3 million, significantly up from $12.6 million in 2023, showcasing strong financial performance[214]. - Total revenue for the year ended December 31, 2023, was $1,145.9 million, a 26% increase from $909.5 million in 2022[218]. - Net income for 2023 was $12.6 million, a significant recovery from a net loss of $36.4 million in 2022[218]. Revenue Sources and Customer Concentration - In 2024, revenues from four major customers accounted for 54%, 9%, 7%, and 4% of the company's consolidated revenues, indicating a high customer concentration risk[43]. - Four customers accounted for 54%, 9%, 7%, and 4% of consolidated revenues in 2024, showing a concentration of revenue sources[164]. Operational Risks - The company is experiencing a material weakness in internal control over financial reporting, which could adversely affect its ability to report financial results accurately[30]. - The geographic concentration of operations in the Middle East and North Africa exposes the company to regional economic and political risks, impacting financial stability[41]. - The company faces risks related to fluctuating exchange rates and currency control restrictions due to its operations in multiple countries[30]. - The company is subject to various legal and regulatory risks, including potential litigation and compliance with complex laws in different jurisdictions[31]. - The company is subject to risks from civil unrest, acts of terrorism, and other geopolitical factors that could adversely affect its operations and financial condition[46]. Capital Expenditures and Financial Needs - Significant capital expenditures are required for maintenance and upgrades of assets, which could strain the company's liquidity if not managed effectively[40]. - The company anticipates increased capital expenditure and financing needs due to upcoming gas field developments in the MENA region[190]. - NESR's total capital expenditures for the last three fiscal years amounted to $295.7 million, with $105.1 million in 2024, $68.2 million in 2023, and $122.4 million in 2022[143]. Environmental and Regulatory Compliance - Increased attention to ESG matters may adversely impact the oil and natural gas industry, affecting the company's operations and market position[37]. - The company is subject to various environmental regulations that could impose additional compliance costs and affect operations[168]. - Stricter regulations on greenhouse gas emissions could reduce demand for the company's services, impacting future financial performance[87]. Market Conditions and Industry Dynamics - Oil and natural gas prices have shown significant volatility, with Brent spot prices reaching a high of $133.18 per barrel in 2022 and a low of $76.02 per barrel in the same year[35]. - The oilfield services sector is highly cyclical, with operating results fluctuating based on global commodity prices and rig activity[188]. - Seasonal changes and significant weather events impact the demand for oil and oilfield services, with higher activity typically seen in Q4[160]. Strategic Initiatives and Investments - In 2024, NESR launched its NEDA service line, focusing on climate change mitigation and water management, and invested in Salttech BV for Zero Liquid Discharge technology[149][150]. - The company executed a second-phase Carbon Capture & Sequestration project in Indonesia in 2024, positioning NESR as a leader in CCS-related projects in the region[152]. - The company has established the NESR Oilfield Research & Innovation Center in Saudi Arabia to drive energy sector research and innovation[182]. Financial Liabilities and Risks - The company has $386.6 million in borrowings under various loan agreements, exposing it to interest rate risk due to floating interest rates[77]. - The company's subsidiaries may face default risks if they cannot generate sufficient cash flow to meet debt obligations, potentially leading to bankruptcy or liquidation[72]. - Collection of receivables may not meet projected cash requirements, impacting the ability to fulfill debt obligations[74]. Shareholder Considerations - As of December 31, 2024, there were 96,045,856 ordinary shares and 35,540,380 warrants outstanding, indicating potential dilution of ownership with future sales[113]. - The company currently has no plans to pay cash dividends on its ordinary shares, and any future dividend payments will depend on various factors including earnings and financial condition[116]. - There is a risk that the warrants may expire worthless as they are not "in the money" as of December 31, 2024[118]. Human Resources and Management - The loss of key employees could have a material adverse effect on the company's business operations and profitability[125]. - The company is in the process of remediating material weaknesses in internal control over financial reporting, which could divert management's attention and resources[56].

Company Overview - National Energy Services Reunited Corp. (NESR) is the largest publicly listed pure-play diversified oilfield service company focused on national oil company (NOC) and international oil company (IOC) customers in the Middle East and North Africa (MENA) region [2] - NESR operates in over 15 countries, with significant operations in Saudi Arabia, Oman, Kuwait, UAE, Iraq, Algeria, and Egypt, and is exploring new opportunities in Libya [2] - The MENA region is characterized as one of the most stable oilfield service markets globally, with NOCs focused on maintaining or increasing production capacity [2] Financial Performance - For FY24, NESR reported adjusted EBITDA of approximately $310 million on total revenue of $1.3 billion, with free cash flow totaling $124 million [5] - The company's FY25 and FY26 adjusted EBITDA estimates are $318 million and $338 million, respectively [5] - As of December 31, 2024, NESR had $108 million in cash and net debt of $279 million, trading at 2.7x and 2.2x FY25 and FY26 adjusted EBITDA estimates, with an 18.7% free cash flow yield based on FY25 estimates [5] Strategic Initiatives - NESR has expanded its oilfield service capabilities through strategic acquisitions and partnerships with technology innovators, focusing on complex drilling and production requirements [3] - The ROYA™ directional drilling platform, launched in February 2024, has secured contract awards in Saudi Arabia, Oman, and Kuwait, potentially generating up to $200 million in incremental revenue [3] - Through its NEDA platform, NESR is developing decarbonization technologies in the MENA region, including a closed-loop technology for recycling produced water in Saudi Arabia [4]

Financial Data and Key Metrics Changes - In Q4 2024, NESR achieved record revenue of $343.7 million, up 2.2% sequentially and 11.8% year-over-year. Full year revenue was $1.3 billion, up 13.6% year-over-year [32] - Adjusted EBITDA for Q4 2024 was a record $87.2 million with margins of 25.4%, up 157 basis points sequentially. Full year adjusted EBITDA was $310.1 million, up 18.2% year-over-year, with margins at 23.8% [33] - Earnings per share (EPS) for Q4 2024 was $0.30, and for the full year it was $1.04, reflecting a 96% year-over-year increase [35] - Cash flow from operations in Q4 2024 was $46.3 million, with full year cash flow at $229.3 million. Free cash flow for the full year was $124 million, with a conversion rate of 40.1% on adjusted EBITDA [36][37] - Net debt-to-adjusted EBITDA ratio was 0.89 times at year-end 2024, down from 2.8 times at the end of 2022 [38] Business Line Data and Key Metrics Changes - NESR's operational performance across its key countries remained strong, with significant growth in Saudi Arabia, Kuwait, and Oman. Saudi Arabia was the fastest-growing country in both percentage and absolute dollar terms [12][14] - In Kuwait, NESR has become the third largest player with high growth potential, having entered the market six years ago [13] - The company maintained steady performance in UAE, Algeria, and Iraq, closing the year with record revenue and strong margins across its MENA footprint [14] Market Data and Key Metrics Changes - The MENA region's rig count is at historical highs, surpassing North America for the first time, indicating robust activity growth despite global commodity price fluctuations [16] - The outlook for 2025 suggests moderate growth in the region, with NESR expecting to outpace the market due to its strategic positioning in gas development and unconventional resources [46][47] Company Strategy and Development Direction - NESR is focused on profitable growth opportunities, technology expansion, and maintaining a strong balance sheet. The company aims to leverage its ROYA direction drilling platform and NEDA decarbonization portfolio for future growth [9][29] - The company is also exploring innovative solutions in mineral recovery and direct lithium extraction, which could significantly enhance its revenue potential [29][77] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the MENA market's growth potential, particularly in unconventional gas development, despite a backdrop of low expectations for the sector [46] - The company anticipates a seasonal pattern in 2025 similar to 2024, with a slow start in Q1 followed by increased activity throughout the year [47] - Management highlighted the importance of maintaining operational efficiency and service quality to sustain margins amid competitive pressures [83] Other Important Information - NESR's gross debt at year-end 2024 was $383 million, a reduction of $153 million over the last two years [39] - The company has extended its warrants until June 2026, which was not included in the press release but will be detailed in the upcoming 20-F filing [117] Q&A Session Summary Question: Outlook on regional spending patterns and overall growth - Management expects moderate growth in the Middle East for 2025, with single-digit growth anticipated, particularly in Saudi Arabia and Kuwait [56][57] Question: Changes in NESR's mix and Jafurah's progress - NESR's exposure in Jafurah remains positive, with ongoing involvement in unconventional gas development and expectations for future tenders [66] Question: Margin performance and sustainability - Management is confident that margins will track similarly to 2024, with good execution and service quality expected to support this [83] Question: Commercial activities in Kuwait - Kuwait is experiencing strong activity with significant offshore discoveries, and NESR aims to expand its presence and contracts in the region [87][91] Question: Impact of unconventional resources on product mix and margins - NESR plans to maintain margins through efficiency improvements and technology advancements in unconventional resource development [99] Question: Valuation gap and potential strategies to close it - Management acknowledges the valuation gap and is exploring options to enhance visibility and appreciation in the market [112][114] Question: Base case for market growth and visibility - NESR anticipates 8% to 10% growth for itself in 2025, leveraging its smaller size and contract visibility to outperform the market [123]