National Energy Services Reunited Corp. Reports Second Quarter 2020 Financial Results

HOUSTON, TX / ACCESSWIRE / August 4, 2020 / National Energy Services Reunited Corp. ("NESR" or the "Company") (NASDAQ:NESR)(NASDAQ:NESRW), a national, industry-leading provider of integrated energy services in the Middle East and North Africa ("MENA") and Asia Pacific regions, today reported its financial results for the quarter ended June 30, 2020. The Company posted the following results for the periods presented:

Revenue for the second quarter of 2020 is $203 million, growing 27% year-over-year and 2% over the sequential quarter
Free cash flow (a non-GAAP measure) for the second quarter of 2020 is $16 million*
Net Income for the second quarter of 2020 is $11 million
Adjusted Net Income (a non-GAAP measure) for the second quarter of 2020 is $12 million*
Adjusted EBITDA (a non-GAAP measure) is $52 million, an increase of 13% year-over-year and 2% over the sequential quarter*
Diluted Earnings per Share (EPS) for the second quarter of 2020 is $0.12
Adjusted Diluted EPS (a non-GAAP measure), which includes $0.02 per share of Charges and Credits, for the second quarter of 2020 is $0.14*

 
Three Months Ended
 
 
Variance
 

(in thousands except per share amounts and percentages)

June 30,

2020

 
 
March 31, 2020
 
 

June 30,

2019

 
 
Sequential
 
 
Year-over- year
 

Revenue

 
$ 
203,249
 
 
$ 
199,299
 
 
$ 
159,899
 
 
 
2
%
 
 
27
%

Net income

 
 
10,536
 
 
 
11,367
 
 
 
11,356
 
 
 
(7
)%
 
 
(7
)%

Adjusted net income (non-GAAP)*

 
 
12,342
 
 
 
13,042
 
 
 
16,410
 
 
 
(5
)%
 
 
(25
)%

Adjusted EBITDA (non-GAAP)*

 
 
51,841
 
 
 
50,938
 
 
 
45,714
 
 
 
2
%
 
 
13
%

Diluted EPS

 
 
0.12
 
 
 
0.13
 
 
 
0.13
 
 
 
(8
)%
 
 
(8
)%

Adjusted Diluted EPS (non-GAAP)*

 
 
0.14
 
 
 
0.15
 
 
 
0.19
 
 
 
(7
)%
 
 
(26
)%

Free cash flow (non-GAAP)*

 
 
15,948
 
 
 
(14,010
)
 
 
(48,704
)
 
$ 
29,958
 
 
$ 
64,652
 

*The Company presents its financial results in accordance with generally accepted accounting principles in the United States of America ("GAAP"). However, management believes that using additional non-GAAP measures will enhance the evaluation of the profitability of the Company and its ongoing operations. Please see Tables 1, 2, 3, 4, 5 and 6 below for reconciliations of GAAP to non-GAAP financial measures.

Sherif Foda, Chairman of the Board and CEO of NESR said, "We are very proud of our field personnel's ability to outperform themselves and deliver another solid quarter, growing both the top and bottom lines, despite the pandemic and economic turmoil experienced around the globe. As the National Champion of MENA, we benefitted from the resilience of our customers and their long-term view. At a time of crisis, differentiation really matters and we believe our talented national teams get the top ranking in everything we do."

Mr. Foda continued, "Separately, we took control of Sahara Petroleum Services Company S.A.E. (SAPESCO) toward the end of the quarter, expanding our footprint and strengthening our presence in North Africa. SAPESCO adds significant talent to our solid base of best-in-class operations, further enabling our ambitious growth plans for the near future."

Net Income Results

The Company had net income for the second quarter of 2020 totaling $10.5 million. Net income for the second quarter of 2020, first quarter of 2020, and second quarter of 2019, includes amortization expenses of approximately $3.8 million, per quarter, associated with intangible assets acquired primarily in the 2018 acquisitions of our two initial operating subsidiaries, NPS Holdings Limited and Gulf Energy S.A.O.C. Adjusted net income for the second quarter of 2020 is $12.3 million and includes adjustments totaling $1.8 million (collectively, "Total Charges and Credits") mainly related to nonrecurring transaction costs associated with the acquisition of SAPESCO in Egypt. A complete list of the adjusting items and the associated reconciliation from GAAP has been provided in Table 1 below in the section entitled "Reconciliation of Net Income and Adjusted Net Income."

The Company reported $0.12 of diluted earnings per share ("EPS") for the second quarter of 2020. Adjusted for the impact of Total Charges and Credits, Adjusted Diluted EPS, a non-GAAP measure described in Table 1 below, for the second quarter of 2020 is $0.14.

Adjusted EBITDA Results

The Company produced Adjusted EBITDA of $51.8 million during the second quarter of 2020, growing 13% as compared to $45.7 million in the second quarter of 2019, and improving 2% as compared to $50.9 million in the first quarter of 2020. Second quarter 2020 Adjusted EBITDA includes adjustments for certain Total Charges and Credits (those not related to interest, taxes, and/or depreciation and amortization) of $1.8 million. The Company posted the following results for the periods presented.

(in thousands)

Quarter ended

June 30, 2020

Quarter ended

March 31, 2020

Quarter ended

June 30, 2019

Revenue

 
$ 
203,249
 
 
$ 
199,299
 
 
$ 
159,899
 

Adjusted EBITDA

 
$ 
51,841
 
 
$ 
50,938
 
 
$ 
45,714
 

Production Services Segment Results

The Production Services segment contributed $139.0 million to consolidated revenue for the second quarter of 2020, an improvement of 46% from $95.4 million in the second quarter of 2019 and 4% from $133.2 million in the first quarter of 2020. Segment Adjusted EBITDA, a non-GAAP measure, increased to $40.5 million from $34.1 million in the second quarter of 2019, an improvement of 19%, and flat when compared to the first quarter of 2020. Segment Adjusted EBITDA margins declined 151 basis points as compared to the first quarter of 2020 mainly due to the inclusion of startup costs, associated with the second hydraulic fracturing fleet in Saudi Arabia, in cost of services for the second quarter of 2020. The Production Services segment posted the following results for the periods presented.

(in thousands)

Quarter ended

June 30, 2020

Quarter ended

March 31, 2020

Quarter ended

June 30, 2019

Revenue

 
$ 
139,034
 
 
$ 
133,190
 
 
$ 
95,358
 

Operating income

 
$ 
20,217
 
 
$ 
21,328
 
 
$ 
23,192
 

Adjusted EBITDA

 
$ 
40,477
 
 
$ 
40,788
 
 
$ 
34,079
 

Drilling and Evaluation Services Segment Results

The Drilling and Evaluation ("D&E") Services segment contributed $64.2 million to consolidated revenue for the second quarter of 2020. Segment Adjusted EBITDA, a non-GAAP measure, totaled $15.8 million in the second quarter of 2020, improving 9% from $14.6 million in the first quarter of 2020. Segment EBITDA margins improved 263 basis points as compared to the first quarter of 2020 mainly due to the favorable mix from logging and thru tubing services.

The D&E Services segment posted the following results for the periods presented.

(in thousands)

Quarter ended

June 30, 2020

Quarter ended

March 31, 2020

Quarter ended

June 30, 2019

Revenue

 
$ 
64,215
 
 
$ 
66,109
 
 
$ 
64,541
 

Operating income

 
$ 
8,334
 
 
$ 
7,868
 
 
$ 
9,413
 

Adjusted EBITDA

 
$ 
15,847
 
 
$ 
14,577
 
 
$ 
16,315
 

Offsetting both the Production Services segment and D&E Services segment results were certain corporate costs, which are not allocated to segment operations.

Balance Sheet

Cash and cash equivalents are $79.3 million as of June 30, 2020, compared to $73.2 million as of December 31, 2019.

Total debt as of June 30, 2020 is $421.6 million with $86.2 million of such debt classified as short-term. Working capital for the Company totaled $141.9 million as of June 30, 2020. Free cash flow, a non-GAAP measure, for the second quarter of 2020 is $16 million, improving by $65 million as compared to the second quarter of 2019 and $30 million over the first quarter of 2020. Net Debt, which is the sum of our recorded Current installments of long-term debt, Short-term borrowings, and Long-term debt less Cash and cash equivalents, totaled $342.3 million as of June 30, 2020 as compared to $336.3 million as of March 31, 2020 and $296.9 million as of June 30, 2019. Net Debt has increased quarter-over-quarter and year-over-year to fund working capital growth, capital expenditures, and the SAPESCO acquisition. A reconciliation of the comparable GAAP measures to Net Debt is provided in Table 6 below, entitled "Reconciliation to Net Debt."

Conference Call Information

NESR will host a conference call on Tuesday, August 4, 2020, to discuss second quarter financial results. The call will begin at 8:30 AM Eastern Time.

Investors, analysts and members of the media interested in listening to the conference call are encouraged to participate by dialing in to the U.S. toll-free line at 1-877-407-0312 or the international line at 1-201-389-0899. A live, listen-only webcast will also be available under the "Investors" section of the Company's website at www.nesr.com. A replay of the conference call will be available after the event under the "Investors" section of the Company's website.

About National Energy Services Reunited Corp.

Founded in 2017, NESR is one of the largest national oilfield services providers in the MENA and Asia Pacific regions. With over 5,000 employees, representing more than 60 nationalities in over 15 countries, the Company helps its customers unlock the full potential of their reservoirs by providing Production Services such as Hydraulic Fracturing, Cementing, Coiled Tubing, Filtration, Completions, Stimulation, Pumping and Nitrogen Services. The Company also helps its customers to access their reservoirs in a smarter and faster manner by providing Drilling and Evaluation Services such as Drilling Downhole Tools, Directional Drilling, Fishing Tools, Testing Services, Wireline, Slickline, Drilling Fluids and Rig Services.

Forward-Looking Statements

This communication contains forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). Any and all statements contained in this communication that are not statements of historical fact, the impact of the COVID-19 pandemic and the Company's response to COVID-19, may be deemed forward-looking statements. Terms such as "may," "might," "would," "should," "could," "project," "estimate," "predict," "potential," "strategy," "anticipate," "attempt," "develop," "plan," "help," "believe," "continue," "intend," "expect," "future," and terms of similar import (including the negative of any of these terms) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this communication may include, without limitation, the plans and objectives of management for future operations, projections of income or loss, earnings or loss per share, capital expenditures, dividends, capital structure or other financial items, the Company's future financial performance, expansion plans and opportunities, completion and integration of acquisitions, including the SAPESCO acquisition, and the assumptions underlying or relating to any such statement.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon the Company's current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which the Company has no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the accuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation: estimates of the Company's future revenue, expenses, capital requirements and the Company's need for financing; the risk of legal complaints and proceedings and government investigations; the Company's financial performance; success in retaining or recruiting, or changes required in, the Company's officers, key employees or directors; current and future government regulations; developments relating to the Company's competitors; changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic and market conditions, particularly during extended periods of low oil and gas prices, political disturbances, war, terrorist acts, public health crises and threats, including risks from the coronavirus COVID-19 outbreak, ongoing actions taken by businesses and governments and resulting significant disruption in international economies, international financial and oil markets; international currency fluctuations, business and/or competitive factors; and other risks and uncertainties set forth in the Company's most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission (the "SEC").

You are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. The Company disclaims any obligation to update the forward-looking statements contained in this communication to reflect any new information or future events or circumstances or otherwise, except as required by law. You should read this communication in conjunction with other documents which the Company may file or furnish from time to time with the SEC.

The preliminary financial results for the Company's second quarter ended June 30, 2020 included in this press release represent the most current information available to management. The Company's actual results when disclosed in its Periodic Report on Form 6-K for the quarter ended June 30, 2020 may differ from these preliminary results as a result of the completion of the Company's financial statement closing procedures, final adjustments, completion of the independent registered public accounting firm's review procedures, and other developments that may arise between now and the disclosure of the final results.

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In US$ thousands, except share data)

 
June 30, 2020
 
 
December 31, 2019
 

Assets

Current assets

Cash and cash equivalents

 
$ 
79,317
 
 
$ 
73,201
 

Accounts receivable, net

 
 
113,454
 
 
 
98,799
 

Unbilled revenue

 
 
126,840
 
 
 
76,347
 

Service inventories, net

 
 
91,764
 
 
 
78,841
 

Prepaid assets

 
 
9,412
 
 
 
9,590
 

Retention withholdings

 
 
49,671
 
 
 
40,970
 

Other receivables

 
 
14,923
 
 
 
14,019
 

Other current assets

 
 
5,158
 
 
 
11,442
 

Total current assets

 
 
490,539
 
 
 
403,209
 

Non-current assets

Property, plant and equipment, net

 
 
458,161
 
 
 
419,307
 

Intangible assets, net

 
 
119,206
 
 
 
122,714
 

Goodwill

 
 
595,706
 
 
 
574,764
 

Other assets

 
 
1,278
 
 
 
2,370
 

Total assets

 
$ 
1,664,890
 
 
$ 
1,522,364
 

Liabilities and equity

Liabilities

Accounts payable

 
$ 
123,213
 
 
$ 
65,704
 

Accrued expenses

 
 
49,393
 
 
 
69,137
 

Current installments of long-term debt

 
 
46,372
 
 
 
15,000
 

Short-term borrowings

 
 
39,781
 
 
 
37,963
 

Income taxes payable

 
 
9,138
 
 
 
7,542
 

Other taxes payable

 
 
9,067
 
 
 
7,189
 

Other current liabilities

 
 
71,662
 
 
 
25,601
 

Total current liabilities

 
 
348,626
 
 
 
228,136
 

Long-term debt

 
 
335,457
 
 
 
330,564
 

Deferred tax liabilities

 
 
24,090
 
 
 
26,217
 

Employee benefit liabilities

 
 
18,900
 
 
 
16,745
 

Other liabilities

 
 
25,586
 
 
 
34,230
 

Total liabilities

 
 
752,659
 
 
 
635,892
 

Commitments and contingencies

Equity

Preferred shares, no par value; unlimited shares authorized; none issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 
 
–
 
 
 
–
 

Common stock, no par value; unlimited shares authorized; 87,495,221 and 87,187,289 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 
 
801,545
 
 
 
801,545
 

Additional paid in capital

 
 
20,999
 
 
 
17,237
 

Retained earnings

 
 
89,564
 
 
 
67,661
 

Accumulated other comprehensive income

 
 
64
 
 
 
29
 

Total shareholders' equity

 
 
912,172
 
 
 
886,472
 

Non-controlling interests

 
 
59
 
 
 
–
 

Total equity

 
 
912,231
 
 
 
886,472
 

Total liabilities and equity

 
$ 
1,664,890
 
 
$ 
1,522,364
 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US$ thousands, except share data and per share amounts)

 
Quarter ended
 
 
Year-to-date Period Ended
 

Description

 
June 30, 2020
 
 
June 30, 2019
 
 
June 30, 2020
 
 
June 30, 2019
 

Revenues

 
$ 
203,249
 
 
$ 
159,899
 
 
$ 
402,548
 
 
$ 
311,603
 

Cost of services

 
 
(164,343
)
 
 
(116,893
)
 
 
(322,613
)
 
 
(231,390
)

Gross profit

 
 
38,906
 
 
 
43,006
 
 
 
79,935
 
 
 
80,213
 

Selling, general and administrative expense

 
 
(17,114
)
 
 
(17,062
)
 
 
(35,741
)
 
 
(30,107
)

Amortization

 
 
(3,934
)
 
 
(3,949
)
 
 
(7,821
)
 
 
(8,003
)

Operating income

 
 
17,858
 
 
 
21,995
 
 
 
36,373
 
 
 
42,103
 

Interest expense, net

 
 
(4,165
)
 
 
(5,750
)
 
 
(8,675
)
 
 
(9,680
)

Other income / (expense), net

 
 
(309
)
 
 
(438
)
 
 
(420
)
 
 
(499
 

Income before income tax

 
 
13,384
 
 
 
15,807
 
 
 
27,278
 
 
 
31,924
 

Income tax expense

 
 
(2,848
)
 
 
(4,451
)
 
 
(5,375
)
 
 
(7,394
)

Net income / (loss)

 
 
10,536
 
 
 
11,356
 
 
 
21,903
 
 
 
24,530
 

Net income / (loss) attributable to non-controlling interests

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 

Net income attributable to shareholders

 
$ 
10,536
 
 
$ 
11,356
 
 
$ 
21,903
 
 
$ 
24,530
 

Weighted average shares outstanding:

Basic

 
 
88,232,694
 
 
 
86,896,779
 
 
 
86,896,779
 
 
 
86,895,285
 

Diluted

 
 
88,232,694
 
 
 
86,896,779
 
 
 
86,896,779
 
 
 
86,895,285
 

Net earnings per share:

Basic

 
$ 
0.12
 
 
$ 
0.13
 
 
$ 
0.25
 
 
$ 
0.28
 

Diluted

 
$ 
0.12
 
 
$ 
0.13
 
 
$ 
0.25
 
 
$ 
0.28
 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In US$ thousands)

 
Year-to-date Period
Ended
June 30, 2020
 
 
Year-to-date Period
Ended
June 30, 2019
 

Cash flows from operating activities:

Net income

 
$ 
21,903
 
 
$ 
24,530
 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 
 
59,585
 
 
 
38,476
 

Stock-based compensation

 
 
3,760
 
 
 
2,113
 

Loss (Gain) on disposal of assets

 
 
240
 
 
 
(356
)

Non-cash interest expense

 
 
(125
)
 
 
2,484
 

Deferred tax benefit

 
 
(2,126
)
 
 
(1,077
)

Allowance for (reversal of) doubtful receivables

 
 
(26
)
 
 
476
 

Provision for obsolete service inventories

 
 
614
 
 
 
1,057
 

Other operating activities, net

 
 
219
 
 
 
(1,848
)

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

 
 
1,887
 
 
 
(41,440
)

(Increase) in inventories

 
 
(7,883
)
 
 
(7,964
)

Decrease (increase) in prepaid assets

 
 
857
 
 
 
(2,289
)

(Increase) in other current assets

 
 
(46,533
)
 
 
(8,651
)

(Increase) decrease in other long-term assets and liabilities

 
 
(2,140
)
 
 
702
 

Increase in accounts payable and accrued expenses

 
 
23,185
 
 
 
20,009
 

(Decrease) in other current liabilities

 
 
(818
)
 
 
(2,050
)

Net cash provided by operating activities

 
 
52,599
 
 
 
24,172
 

Cash flows from investing activities:

Capital expenditures

 
 
(50,661
)
 
 
(56,513
)

Proceeds from disposal of assets

 
 
1,277
 
 
 
1,273
 

Acquisition of business, net of cash acquired

 
 
3,740
 
 
 
–
 

Other investing activities

 
 
(570
)
 
 
(285
)

Net cash (used in) investing activities

 
 
(46,214)
 
 
 
(55,525)
 

Cash flows from financing activities:

Proceeds from long-term debt

 
 
15,000
 
 
 
365,000
 

Repayments of long-term debt

 
 
–
 
 
 
(278,039
)

Proceeds from short-term borrowings

 
 
3,999
 
 
 
–
 

Repayments of short-term borrowings

 
 
(7,131
)
 
 
(7,013
)

Payments on capital leases

 
 
(11,180
)
 
 
–
 

Payments on seller-provided financing for capital expenditures

 
 
(992
)
 
 
–
 

Other financing activities, net

 
 
–
 
 
 
(3,825
)

Net cash (used in) provided by financing activities

 
 
(304)
 
 
 
76,123
 

Effect of exchange rate changes on cash

 
 
35
 
 
 
(19
)

Net increase (decrease) in cash

 
 
6,116
 
 
 
44,751
 

Cash and cash equivalents, beginning of period

 
 
73,201
 
 
 
24,892
 

Cash and cash equivalents, end of period

 
$ 
79,317
 
 
$ 
69,643
 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

(In US$ thousands except per share amounts)

The Company uses and presents certain key non-GAAP financial measures to evaluate its business and trends, measure performance, prepare financial projections and make strategic decisions. Included in this release are discussions of earnings before interest, income tax and depreciation and amortization adjusted for certain non-recurring and non-core expenses ("Adjusted EBITDA"), net income and diluted earnings per share ("EPS") adjusted for certain non-recurring and non-core expenses ("Adjusted Net Income" and "Adjusted Diluted EPS," respectively), as well as a reconciliation of these non-GAAP measures to operating income, net income, and diluted EPS, respectively, in accordance with GAAP. The Company also discusses the non-GAAP balance sheet measure of the sum of our recorded current installments of long-term debt, short-term borrowings, and long-term debt less cash and cash equivalents ("Net Debt") in this release and provides a reconciliation to the GAAP measures of cash and cash equivalents, current installments of long-term debt, short-term borrowings, and long-term debt to Net Debt.

The Company believes that the presentation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS provides useful information to investors in assessing its financial performance and results of operations as the Company's board of directors, management and investors use Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS to compare the Company's operating performance on a consistent basis across periods by removing the effects of changes in capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), items that do not impact the ongoing operations (transaction, integration, and startup costs) and items outside the control of its management team. Similarly, Net Debt is used by management as a liquidity measure used to illustrate the Company's debt level absent variability in cash and cash equivalents, and the Company believes that the presentation of Net Debt provides useful information to investors in assessing its financial leverage. Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS should not be considered as an alternative to operating income, net income, or diluted EPS, respectively, the most directly comparable GAAP financial measures. Net Debt also should not be considered as an alternative to GAAP measures of cash and cash equivalents, current installments of long-term debt, short-term borrowings, and long-term debt. Finally, Free Cash Flow is used by management as a liquidity measure to illustrate the Company's ability to produce cash that is available to be distributed in a discretionary manner, after excluding investments in capital assets. Free Cash Flow should not be considered as an alternative to Net cash provided by (used in) operations or Net cash provided by (used in) investing activities, respectively, the most directly comparable GAAP financial measures. Non-GAAP financial measures have important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measure. You should not consider non-GAAP measures in isolation or as a substitute for an analysis of the Company's results as reported under GAAP.

Information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments is focused on the timing of when the services are performed during a well's lifecycle. Production Services are services performed during the production stage of a well's lifecycle. Drilling and Evaluation Services are services performed during the pre-production stages of a well's lifecycle. The Company believes that the presentation of Segment EBITDA provides useful information to investors in assessing its financial performance and results of operations.

Table 1 – Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS

Quarter ended

June 30, 2020

Quarter ended

March 31, 2020

Quarter ended

June 30, 2019

Net

Income

Diluted

EPS

 
 
Net Income
 
 

Diluted

EPS

 
 
Net Income
 
 

Diluted

EPS

Net Income

 
$ 
10,536
 
 
$ 
0.12
 
 
$ 
11,367
 
 
$ 
0.13
 
 
$ 
11,356
 
 
$ 
0.13
 

Add Charges and Credits:

Transaction and other costs

 
 
1,806
 
 
 
0.02
 
 
 
1,675
 
 
 
0.02
 
 
 
5,054
 
 
 
0.06
 

Total Charges and Credits(1)

 
 
1,806
 
 
 
0.02
 
 
 
1,675
 
 
 
0.02
 
 
 
5,054
 
 
 
0.06
 

Total Adjusted

 
$ 
12,342
 
 
$ 
0.14
 
 
$ 
13,042
 
 
$ 
0.15
 
 
$ 
16,410
 
 
$ 
0.19
 

(1)

In the second quarter of 2020, Total Charges and Credits included $1.8 million mainly related to nonrecurring transaction costs associated with the acquisition of SAPESCO in Egypt. In the first quarter of 2020, Total Charges and Credits included $1.7 million mainly related to nonrecurring transaction costs associated with the acquisition of SAPESCO in Egypt. Similarly, in the second quarter of 2019, Total Charges and Credits included $5.1 million in costs related to integration and restructuring costs, exceptional interest charges, and other discrete provisions.

Table 2 – Reconciliation of Net Income to Adjusted EBITDA

Quarter ended

June 30, 2020

Quarter ended

March 31, 2020

Quarter ended

June 30, 2019

Net Income

 
$ 
10,536
 
 
$ 
11,367
 
 
$ 
11,356
 

Add:

Income Taxes

 
 
2,848
 
 
 
2,527
 
 
 
4,451
 

Interest Expense, net

 
 
4,165
 
 
 
4,510
 
 
 
5,750
 

Depreciation and Amortization

 
 
32,486
 
 
 
30,859
 
 
 
21,285
 

Charges and Credits impacting Adjusted EBITDA(2)

 
 
1,806
 
 
 
1,675
 
 
 
2,872
 

Total Adjusted EBITDA

 
$ 
51,841
 
 
$ 
50,938
 
 
$ 
45,714
 

(2)

Charges and Credits impacting Adjusted EBITDA are described in Table 1 above. Charges and Credits impacting Adjusted EBITDA exclude items related to interest, income tax and depreciation and amortization.

Table 3 – Reconciliation of Segment EBITDA to Adjusted EBITDA

 
Quarter ended
June 30, 2020
 
 
Quarter ended
March 31, 2020
 
 
Quarter ended
June 30, 2019
 

 
EBITDA
 
 
Charges and Credits impacting Adjusted EBITDA
 
 
Adjusted EBITDA
 
 
EBITDA
 
 
Charges and Credits impacting Adjusted EBITDA
 
 
Adjusted EBITDA
 
 
EBITDA
 
 
Charges and Credits impacting Adjusted EBITDA
 
 
Adjusted EBITDA
 

Production Services

 
$ 
39,572
 
 
$ 
905
 
 
$ 
40,477
 
 
$ 
40,788
 
 
$ 
–
 
 
$ 
40,788
 
 
$ 
33,764
 
 
$ 
315
 
 
$ 
34,079
 

Drilling & Evaluation

 
 
15,631
 
 
 
216
 
 
 
15,847
 
 
 
14,577
 
 
 
–
 
 
 
14,577
 
 
 
14,943
 
 
 
1,372
 
 
 
16,315
 

Unallocated

 
 
(5,168
)
 
 
685
 
 
 
(4,483
)
 
 
(6,102
)
 
 
1,675
 
 
 
(4,427
)
 
 
(5,865
)
 
 
1,185
 
 
 
(4,680
)

Total

 
$ 
50,035
 
 
$ 
1,806
 
 
$ 
51,841
 
 
$ 
49,263
 
 
$ 
1,675
 
 
$ 
50,938
 
 
$ 
42,842
 
 
$ 
2,872
 
 
$ 
45,714
 

Table 4 – Reconciliation of Segment EBITDA to Segment Operating Income

 
Quarter ended June 30, 2020
 
 
Quarter ended March 31, 2020
 
 
Quarter ended June 30, 2019
 

Production Services:

Segment EBITDA

 
$ 
39,572
 
 
$ 
40,788
 
 
$ 
33,765
 

Depreciation and amort.

 
 
(19,637
)
 
 
(19,628
)
 
 
(11,497
)

Other (income)/expense, net

 
 
282
 
 
 
168
 
 
 
924
 

Segment Operating Income

 
 
20,217
 
 
 
21,328
 
 
 
23,192
 

Drilling and Evaluation Services:

Segment EBITDA

 
 
15,631
 
 
 
14,577
 
 
 
14,942
 

Depreciation and amort.

 
 
(7,318
)
 
 
(6,798
)
 
 
(5,582
)

Other (income)/expense, net

 
 
21
 
 
 
89
 
 
 
53
 

Segment Operating Income

 
 
8,334
 
 
 
7,868
 
 
 
9,413
 

Unallocated:

Segment EBITDA

 
 
(5,168
)
 
 
(6,102
)
 
 
(5,864
)

Share-based compensation

 
 
(2,125
)
 
 
(1,634
)
 
 
(1,373
)

Depreciation and amort.

 
 
(3,406
)
 
 
(2,799
)
 
 
(2,833
)

Other (income)/expense, net

 
 
6
 
 
 
(146
)
 
 
(540
)

Segment Operating Income

 
 
(10,693
)
 
 
(10,681
)
 
 
(10,610
)

Total Operating Income

 
$ 
17,858
 
 
$ 
18,515
 
 
$ 
21,995
 

Table 5 – Reconciliation of Net cash provided by (used in) operating activities to Free Cash Flow

 
Quarter Ended
 

 
June 30, 2020
 
 
March 31, 2020
 
 
June 30, 2019
 

Net cash provided by (used in) operating activities

 
$ 
42,650
 
 
$ 
9,949
 
 
$ 
(660
)

Less:

Capital expenditures

 
 
(26,702
)
 
 
(23,959
)
 
 
(48,044
)

Free cash flow

 
$ 
15,948
 
 
$ 
(14,010
)
 
$ 
(48,704
)

Table 6 – Reconciliation to Net Debt

 
June 30, 2020
 
 
March 31, 2020
 
 
December 31, 2019
 

Current installments of long-term debt

 
$ 
46,372
 
 
$ 
22,500
 
 
$ 
15,000
 

Short-term borrowings

 
 
39,781
 
 
 
39,569
 
 
 
37,963
 

Long-term debt

 
 
335,457
 
 
 
323,244
 
 
 
330,564
 

Less:

Cash and cash equivalents

 
 
79,317
 
 
 
49,017
 
 
 
73,201
 

Net Debt

 
$ 
342,293
 
 
$ 
336,296
 
 
$ 
310,326
 

For inquiries regarding NESR, please contact:

Christopher L. Boone
National Energy Services Reunited Corp.
832-925-3777
investors@nesr.com

SOURCE: National Energy Services Reunited Corp via EQS Newswire

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