National Energy Services Reunited Corp. (NASDAQ:NESR) posted third-quarter results that came in below Wall Street expectations, with ongoing contract transitions creating a softer revenue environment for the Middle East and North Africa-focused energy services group.
The company reported adjusted earnings of $0.16 per share, missing the analyst forecast of $0.18. Quarterly revenue totaled $295.3 million, falling short of expectations for $315.44 million and marking a 12.2% decline from the prior year.
Even with top-line pressure, NESR delivered sequential improvement in profitability. Net income rose to $17.7 million — up 16.7% from the previous quarter but still 14% lower than a year earlier — helped by cost-cutting efforts and the release of certain tax provisions.
“Amid a challenging quarter of major contract transition, our cost reduction initiatives and operational efficiency helped preserve profitability in a softer operating landscape,” said Stefan Angeli, Chief Financial Officer. “Although revenue was lower than expected, strong cost discipline and improved execution across our portfolio yielded EBITDA margins of 21.7%, remaining substantially flat on a sequential basis.”
Adjusted EBITDA came in at $64 million, down 20.1% year-over-year and 9.4% quarter-over-quarter. NESR ended the period with a net-debt-to-TTM adjusted EBITDA ratio of 0.93, underscoring a relatively solid balance sheet.
Looking ahead, Chairman and CEO Sherif Foda pointed to the company’s recent contract award from Saudi Aramco for the Jafurah integrated frac project. “We are extremely proud of our partnership with Aramco in establishing best in class unconventional development. Our countercyclical investment is paying dividends,” Foda said.
Management expects operating cash flow to improve significantly in the fourth quarter, supported by better collections compared to Q2.