Financial Performance - Total revenues for the three-month period ended September 30, 2024, increased to $336,205 thousand, up from $300,084 thousand in the same period last year, representing an increase of 12%[11] - Gross profit for the nine-month period ended September 30, 2024, was $149,492 thousand, compared to $104,235 thousand for the same period in 2023, reflecting a growth of 43%[11] - Net income for the three-month period ended September 30, 2024, was $20,618 thousand, compared to $14,731 thousand for the same period in 2023, marking an increase of 40%[11] - Operating income for the nine-month period ended September 30, 2024, was $94,122 thousand, compared to $53,138 thousand for the same period in 2023, reflecting a substantial increase of 77%[11] - Net income for the nine-month period ended September 30, 2024, was $49.473 million, a significant increase from $10.319 million in the same period of 2023, representing a growth of approximately 380%[19] - Net cash provided by operating activities increased to $183.069 million for the nine-month period ended September 30, 2024, compared to $140.439 million for the same period in 2023, reflecting a growth of about 30%[19] - Revenue for Q3 2024 was $336.2 million, up from $300.1 million in Q3 2023, representing an increase of 12.7%[94] - For the nine-month period ended September 30, 2024, revenue reached $958.0 million, compared to $838.4 million for the same period in 2023, reflecting a growth of 14.3%[94] - Production Services revenue for the three-month period ended September 30, 2024, was $230.521 million, compared to $208.890 million for the same period in 2023, reflecting an increase of about 10.3%[61] - Drilling and Evaluation Services revenue for the nine-month period ended September 30, 2024, reached $313.402 million, up from $261.996 million in the prior year, marking a growth of approximately 19.6%[61] Assets and Liabilities - Total current assets as of September 30, 2024, amounted to $577,154 thousand, an increase from $541,715 thousand as of December 31, 2023, representing a growth of 7%[8] - Total liabilities decreased to $929,300 thousand as of September 30, 2024, down from $976,246 thousand as of December 31, 2023, indicating a reduction of 5%[8] - The total equity of the company rose to $873,548 thousand as of September 30, 2024, compared to $821,494 thousand as of December 31, 2023, showing an increase of 6%[8] - The company’s accounts receivable, net, decreased to $132,549 thousand as of September 30, 2024, from $171,269 thousand as of December 31, 2023, indicating a decline of 23%[8] - Trade receivables decreased to $146.058 million as of September 30, 2024, from $180.989 million as of December 31, 2023, indicating a reduction of approximately 19%[31] - Long-lived assets as of September 30, 2024, totaled $425.133 million, a decrease from $442.666 million as of December 31, 2023[63] Cash Flow and Capital Expenditures - Cash and cash equivalents increased to $118,169 thousand as of September 30, 2024, up from $67,821 thousand as of December 31, 2023, representing a significant increase of 74%[8] - Capital expenditures for the nine-month period ended September 30, 2024, were $80.053 million, up from $65.824 million in the same period of 2023, representing an increase of approximately 21%[19] - The company anticipates increased capital expenditure and financing needs due to upcoming gas field developments in the MENA region[75] - Capital expenditure commitments were $64.4 million as of September 30, 2024, significantly higher than $15.4 million at the end of 2023[44] Earnings Per Share - The company reported a basic earnings per share of $0.22 for the three-month period ended September 30, 2024, compared to $0.16 for the same period in 2023, reflecting a growth of 38%[11] - The company reported a diluted EPS of $0.52 for the nine-month period ended September 30, 2024, compared to $0.11 for the same period in 2023, representing a significant increase of approximately 372.7%[54] Debt and Financing - As of September 30, 2024, the company's long-term debt, net of unamortized debt issuance costs, was $284.2 million, a decrease of 14.3% from $331.6 million as of December 31, 2023[34] - The company had total loans and borrowings of $354.7 million as of September 30, 2024, down from $403.3 million at the end of 2023, reflecting a reduction of 12.0%[34] - The net cash used in financing activities decreased to $48.563 million for the nine-month period ended September 30, 2024, compared to $75.494 million in the same period of 2023, indicating a reduction of approximately 36%[19] - Outstanding borrowings decreased to $409.3 million as of September 30, 2024, from $452.2 million as of December 31, 2023[107] Tax and Compliance - The effective tax rate for the quarter ended September 30, 2024, was 20.4%, compared to 15.7% for the same quarter in 2023, reflecting an increase of 4.7 percentage points[42] - The company recorded an income tax expense of $5.3 million for the quarter ended September 30, 2024, up from $2.7 million for the same quarter in 2023, representing a 96.3% increase[42] - The company was in compliance with all financial and non-financial covenants under the 2021 Secured Facilities Agreement as of September 30, 2024[38] Operational Insights - The company operates primarily in the MENA region, with total revenue from this area amounting to $949.884 million for the nine-month period ended September 30, 2024, compared to $830.338 million in 2023, reflecting an increase of approximately 14.4%[62] - The company has two reportable segments: Production Services and Drilling and Evaluation Services, with segment operating income for Production Services increasing to $104.205 million for the nine-month period ended September 30, 2024, from $77.327 million in 2023[62] - Production Services accounted for 69% of total revenue in Q3 2024, with revenue of $230.5 million, compared to $208.9 million in Q3 2023[89] - Drilling and Evaluation Services revenue increased to $105.7 million in Q3 2024 from $91.2 million in Q3 2023, marking a growth of 15.7%[97] Internal Controls and Governance - The company identified material weaknesses in its internal control over financial reporting as of December 31, 2023, which could result in future material misstatements if unremediated[135] - The company has implemented remedial steps to address identified material weaknesses, including appointing a Director of Internal Audit and engaging a third party for interim internal audit functions[139] - The company is in the process of remediating material weaknesses and must do so by August 28, 2025, to avoid an additional civil monetary penalty of $1.2 million from the SEC[148] - The company is committed to improving its internal control environment and has begun testing redesigned controls, expecting them to be fully effective by Q4 2024 or Q1 2025[139] Market Risks - The company is exposed to market risks primarily from changes in interest rates on borrowings, which have significantly increased since the end of 2021[131] - The company has not used derivatives for trading purposes or speculative activities[133]
National Energy Services Reunited Corp.(NESR) - 2024 Q3 - Quarterly Report