National Energy Services Reunited Corp.(NESR) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The overall third quarter revenue reached a record $336.2 million, up 3.5$80 million, with margins of 23.8%, remaining flat sequentially [21] - Earnings per share (EPS) excluding charges and credits was $0.31 for Q3 2024, representing a 164$70.8 million, contributing to a year-to-date total of $183.1 million [23] - Net debt to trailing 12 months adjusted EBITDA fell to 0.96, below the target of 1, compared to 2.8 at the end of 2022 [23] Business Line Data and Key Metrics Changes - The core business continues to outperform, with significant growth in direction drilling and hydraulic fracturing segments [12][13] - The ROYA direction drilling platform is expected to drive future outperformance, with a market size exceeding$2 billion annually [13] - The company announced an investment in SALTTECH BV for technology aimed at recovering minerals from produced water, indicating a new market opportunity [16][17] Market Data and Key Metrics Changes - The MENA market remains stable, with growth expected in countries like Kuwait, which is anticipated to lead MENA growth in the coming years [10][11] - North Africa is also showing steady growth, particularly in Libya and Algeria, with NESR positioned to capitalize on potential opportunities [11] Company Strategy and Development Direction - The company aims to continue outperforming the broader MENA market, focusing on core business expansion and technological advancements [29] - Strategic investments in decarbonization and water recovery technologies are being pursued to align with sustainability goals [15][29] - The company is committed to leveraging partnerships with North American technology providers to enhance service offerings in the MENA region [64][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the MENA market despite global uncertainties, with a positive outlook for NESR's core business and new technology rollouts [6][9] - The company anticipates continued growth in 2025, outpacing the market growth rate, driven by successful deployment of new technologies [50][56] Other Important Information - NESR was re-listed on NASDAQ on October 22, 2024, marking a significant milestone for the company [25] - The company has undergone substantial internal control improvements and is optimistic about demonstrating remediation of past weaknesses [26] Q&A Session Summary Question: Overview of Saudi Arabia's market activity - Management noted that Saudi Arabia has adjusted its oil production plans, focusing on gas and unconventional projects, particularly the Jafurah project, which remains a priority [33][36] Question: Future activity levels in Saudi Arabia - Management expects overall activity to remain stable, with growth in gas projects offsetting any declines in oil drilling [38][39] Question: Growth expectations in MENA and ROYA platform - Management anticipates MENA market growth of 5-6% in 2025, with NESR aiming to double that growth through the ROYA platform and other technologies [50] Question: Impact of potential OPEC production increases - Management believes that any increase in OPEC production would depend on market conditions, but NESR is positioned to grow regardless [55] Question: CAPEX investment cycle and equipment capacity - Management indicated that CAPEX for 2024 is expected to be around $120 million, with a focus on supporting growth in the ROYA platform [61]