National Energy Services Reunited Corp.(NESR) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Overall third quarter revenue was $295.3 million, down 9.8% sequentially and 12.2% year-over-year [17] - Adjusted EBITDA for Q3 2025 was $64 million, representing a margin of 21.7%, consistent with Q2 2025 levels despite lower revenues [18] - Adjusted EPS for Q3 2025 was $0.16, including adjustments totaling $2.3 million [19] - Gross debt totaled $332.9 million, and net debt was $263.3 million, with a net debt-to-adjusted EBITDA ratio of 0.93 [20] Business Line Data and Key Metrics Changes - Revenue decline was primarily due to the transition between major contracts in Saudi Arabia, partially offset by growth in Kuwait, Qatar, and Iraq [17] - Year-over-year revenue decline was attributed to contract transitions and timing of product sales, with steady growth in Kuwait, Oman, Egypt, Algeria, Iraq, and Libya [18] Market Data and Key Metrics Changes - Positive activity inflection noted in Kuwait and Saudi Arabia, with increased activities across most operational countries [5] - The company is positioned to capitalize on geopolitical relationships and energy demand growth in the Gulf region [8] Company Strategy and Development Direction - The company has secured a multi-billion dollar contract for the Jafurah project, which is a cornerstone achievement for future growth [4] - NESR's countercyclical investment strategy allows it to capitalize on global market weaknesses, positioning the company for operational readiness [5][12] - The focus is on energy addition in all forms, including oil, renewables, and natural gas, aligning with regional AI ambitions [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a $2 billion revenue run rate by the end of 2026, supported by awarded contracts [72] - The outlook for NESR remains favorable, driven by consistent execution on major contracts and strategic investments [25] - Management emphasized the importance of maintaining operational discipline and financial health amid market volatility [24] Other Important Information - The company is in the process of refinancing its debt facility, expected to enhance financial flexibility [24] - NESR is focused on delivering profitable revenue growth, enhancing execution efficiency, and maintaining disciplined debt reduction [25] Q&A Session Summary Question: Can you respond to comments about pricing competitiveness for the Jafurah contract? - Management highlighted their deep understanding of the local ecosystem and cost control measures that allow them to maintain margins [31][32] Question: What is the roadmap for development at Jafurah? - Management indicated readiness to ramp up operations with multiple crews and a target of delivering over 1,000 stages per month [35][36] Question: What is the incremental EBITDA expected from the Jafurah project? - Management confirmed that the incremental EBITDA for 2026 is approximately $100 million, based on a $2 billion run rate [38] Question: Can you provide updates on NEDA projects and water initiatives? - Management stated that several pilot projects are underway, with results expected to be shared in future calls [67][68] Question: What is the confidence level in achieving the $2 billion exit run rate for 2026? - Management expressed a 99% confidence level in achieving the $2 billion run rate, supported by signed contracts and ongoing work [72][73]