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, primarily due to the transition between major contracts in Saudi Arabia [17][18] - 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 for certain charges and credits [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 partially offset by solid growth in Kuwait, Qatar, and Iraq, with steady growth also noted in Oman, Egypt, Algeria, and Libya [17][18] - The company is positioned as the largest frac company in the Middle East, with the Jafurah tender representing the largest single-service contract in sector history [9][11] Market Data and Key Metrics Changes - The company is experiencing positive activity inflection beyond Jafurah, with growth in Kuwait and the return of additional rigs in Saudi Arabia [5][27] - The geopolitical relationship between the U.S. and Gulf states is strong, positively impacting energy markets and foreign investment [8] Company Strategy and Development Direction - The company is focused on a countercyclical investment strategy, allowing it to capitalize on global weaknesses and position itself for growth [11][12] - NESR aims to maintain operational readiness and efficiency while investing during downturns, contrasting with traditional industry practices [12][14] - The company plans to exit 2025 with a revenue run rate of approximately $2 billion, supported by expanding contract bases and sustained execution momentum [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a $2 billion exit run rate for 2026, with a high level of visibility on contract awards and execution [72][73] - The outlook for NESR remains favorable, supported by consistent execution on major contract wins and strategic investments [25][26] Other Important Information - The company is in the process of refinancing its debt facility, expected to enhance financial flexibility [24] - NESR is committed to maintaining disciplined debt reduction and improving working capital efficiency [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 allowed them to maintain margins while being competitive [31][32] Question: What is the roadmap for development at Jafurah? - Management indicated readiness to ramp up operations with multiple crews and equipment already in place, targeting significant increases in stages delivered [34][35] Question: What is the expected incremental EBITDA from Jafurah? - Management confirmed that the incremental EBITDA for 2026 is approximately $100 million, based on the projected revenue run rate [37][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 [66][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 target, with contracts already awarded and work commenced [72][73]