National Energy Services Reunited (NESR, Financial) has secured significant contract wins worth $200 million for its Slickline services in Kuwait and Oman. These five-year agreements mark an expansion within NESR's Drilling & Evaluation segment, highlighting the company's strategic push to grow its presence in key service areas. The new contracts align with NESR's efforts in enhancing its evaluation offerings, such as Cased Hole Wireline and Surface Well Testing. This initiative is a part of NESR's broader "portfolio pull through" strategy, which seeks to replicate successful service leadership across its operations in the MENA region, especially as it increases its participation in rigless activities.
NESR Key Business Developments
Release Date: March 12, 2025
- Revenue: Q4 2024 revenue was $343.7 million, up 2.2% sequentially and 11.8% year-over-year. Full year 2024 revenue was $1.3 billion, up 13.6% year-over-year.
- Adjusted EBITDA: Q4 2024 adjusted EBITDA was $87.2 million with margins of 25.4%. Full year adjusted EBITDA was $310.1 million, up 18.2% year-over-year with margins of 23.8%.
- Interest Expense: Q4 2024 interest expense was $9.9 million. Full year interest expense was $39.9 million.
- Effective Tax Rate: Full year 2024 effective tax rate was 20.1%, with a tax release of $3.8 million.
- Earnings Per Share (EPS): Q4 2024 EPS as adjusted was $0.30. Full year 2024 EPS was $1.04, up 6% year-over-year.
- Cash Flow from Operations: Q4 2024 cash flow from operations was $46.3 million. Full year 2024 cash flow was $229.3 million.
- Free Cash Flow: Full year 2024 free cash flow was $124 million with a conversion rate of 40.1%.
- Net Debt to Adjusted EBITDA Ratio: Ended 2024 at 0.89 times, down from 2.8 times at the end of 2022.
- Gross Debt: Year-end 2024 gross debt was $383 million, a reduction of $153 million over two years.
- CapEx: Full year 2024 CapEx was $105 million.
- Return on Capital Employed (ROCE): Q4 2024 ROCE was 11.6%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- National Energy Services Reunited Corp (NESR, Financial) achieved record revenue of $343.7 million in Q4 2024, marking an 11.8% year-over-year increase.
- The company reported a record adjusted EBITDA of $87.2 million for Q4 2024, with near-record margins of 25.4%.
- NESR's strategic expansion in key MENA countries, including Saudi Arabia, Oman, Kuwait, UAE, Iraq, Algeria, and Egypt, contributed to significant revenue growth.
- The company successfully executed a key pilot milestone for its Ro direction drilling platform, indicating progress in technology innovation.
- NESR's balance sheet strength improved, with a net debt to adjusted EBITDA ratio below 1.0 for the second consecutive quarter, ending 2024 at 0.89 times.
Negative Points
- The company anticipates increased competition in 2025, which may pressure margins despite expected high single-digit growth.
- NESR's growth in the MENA region is expected to moderate in 2025 compared to recent years, with overall market growth projected at low single digits.
- The company's operations are subject to geopolitical uncertainties in the Middle East, which could impact future performance.
- NESR's capital expenditure for 2024 was slightly below budget due to delivery timing issues, potentially affecting future growth plans.
- The company faces challenges in maintaining margins amidst rising costs and the need for efficiency improvements in unconventional resource projects.
