National Energy Services Reunited Q1 Earnings Call Highlights

Key Points

• NESR reported record first-quarter 2026 revenue of $404.6 million, up 33.5% year over year, with adjusted EBITDA of $76.7 million and net income more than doubling from the prior quarter.
• The company said operations in the Middle East and North Africa were largely resilient despite regional disruptions, and it maintained “100% reliability” for customers while using extra logistics and supply chain measures.
• NESR announced plans to begin returning capital to shareholders, including a quarterly dividend starting in Q4 2026 and a $50 million share repurchase program over the next 12 months.

National Energy Services Reunited NASDAQ: NESR reported record first-quarter 2026 revenue and outlined plans to begin returning capital to shareholders, while management said operations across its core Middle East and North Africa markets remained resilient despite regional geopolitical disruptions.

Chairman and Chief Executive Officer Sherif Foda said the company had no evacuations, no operational impact and maintained “100% reliability” for customers during the period. He said NESR implemented a 30/60/90-day supply chain program to preserve the flow of materials and spare parts, including use of alternative routes and added inventory.

“We see this as our obligation to stand alongside our customers, ensure their operations are not impacted, delayed, or interrupted,” Foda said.

Revenue Hits Record Level

Chief Financial Officer Stefan Angeli said first-quarter revenue was $404.6 million, an all-time high for the company. Revenue increased 1.6% sequentially and 33.5% from the prior year.

Angeli said sequential growth was driven primarily by Saudi Arabia, reflecting the continued ramp-up of the Jafurah contract. That was partially offset by lower activity in Egypt, Oman and Iraq, with the Iraq decline tied to regional disruptions during March. On a year-over-year basis, growth reflected a full quarter of contribution from Jafurah and increased activity in Kuwait, Algeria, Libya and Egypt.

Adjusted EBITDA was $76.7 million, representing a margin of about 19%. Angeli said the quarter included normal first-quarter seasonality, contract ramp-up costs and roughly $4 million of incremental freight and logistics expense tied to regional geopolitical disruption. Those costs included special air freight charters and other measures intended to avoid interruptions to customer operations.

Net income was $23.8 million, more than doubling sequentially and rising 129% year over year. Adjusted diluted earnings per share were $0.26.

Cash Flow, Debt and 2026 Outlook

Operating cash flow was $30.7 million in the quarter. Free cash flow was negative $5.3 million, which Angeli said was an improvement compared with the first quarter of 2025. Working capital was a headwind due to a seasonal increase in days sales outstanding related to Ramadan and Eid, as well as the impact of geopolitical events in March.

Capital expenditures were $36 million in the quarter. NESR expects full-year 2026 capital expenditures of about $180 million as it invests in recent contract awards and activity growth.

As of March 31, gross debt was $287.4 million and net debt was $194.4 million. Angeli said net debt to adjusted EBITDA was 0.66 times, below the company’s target of 1 times. Return on capital employed improved to approximately 10.9%.

For the second quarter, management said it expects robust year-over-year growth driven by the Jafurah ramp-up and recent contract awards, sequential margin improvement consistent with normal seasonality, interest expense of about $6.5 million and an effective tax rate of 22.5%. Angeli said the company continues to see a path to its $2 billion revenue target and expects full-year free cash flow conversion of about 35% to 40% of adjusted EBITDA.

In response to a question from J.P. Morgan analyst Arun Jayaram, Angeli said NESR still expects full-year margins around last year’s level of approximately 21.5%, even with added freight costs. He said the first quarter is typically the lowest margin quarter of the year, with improvement expected through the year and the fourth quarter expected to be the highest.

Dividend and Buyback Announced

NESR said it plans to initiate a quarterly dividend beginning in the fourth quarter of 2026 at $0.10 per share, or $0.40 annually. Angeli said the dividend reflects confidence in the durability of the company’s cash flow generation and its intent to establish a sustainable base dividend over time.

The company also announced a $50 million share repurchase program over the next 12 months. Angeli said the repurchase authorization gives NESR flexibility to buy shares opportunistically if management believes the stock is trading below intrinsic value.

In response to UBS analyst Josh Silverstein, Angeli said the company chose to start with a dividend to reward long-term shareholders and also approved the buyback to act opportunistically if the share price declines.

Jafurah Ramp-Up and Tender Pipeline

Foda said the Jafurah project in Saudi Arabia remains a major driver for NESR and described the company’s execution as strong. He said Saudi Aramco’s performance in adding wells and preparing pads could allow NESR to complete more stages earlier than planned, depending on customer approval.

Foda said NESR’s fourth fleet is already in Saudi Arabia and is expected to be deployed “very, very soon.” He added that the company has locked in its fourth and fifth fleets, as well as chemicals, spare parts and engines, which he said positions NESR well as U.S. equipment markets tighten.

On the tender pipeline, Foda said the company’s previously discussed $3 billion pipeline remains intact. He said NESR has already announced awards in Kuwait and North Africa, including cementing work, and that other tenders are continuing without delay or suspension. He said he believes most will be awarded over the next two to three months, subject to customer decisions.

Management Points to MENA Resilience

Foda said his recent travel across Saudi Arabia, Kuwait, the United Arab Emirates, Oman and North Africa reinforced his view that regional energy investment plans remain durable. He said Saudi Arabia is proceeding with major upstream and gas projects, Kuwait’s tender pipeline remains robust, and land-based activity in the UAE and Oman has been largely unaffected.

Foda also pointed to opportunities in North Africa, citing existing pipeline capacity to Europe and increased interest from international oil companies. He said Algeria and Libya represent significant opportunities for both conventional and unconventional resources, while noting that the Gulf Cooperation Council region remains much larger for NESR than North Africa.

During the question-and-answer session, Foda said freight and logistics costs should decline in coming quarters if shipping conditions improve, but emphasized that supply chain diversification remains important. He said NESR’s regional approach, localized workforce and inventory planning are intended to support continuity for customers even during disruption.

“We continue to invest both in the opportunities today and for the long-term vision that our clients continue to stand behind,” Foda said in closing remarks.

About National Energy Services Reunited NASDAQ: NESR

National Energy Services Reunited Corp NASDAQ: NESR is a publicly traded oilfield services company formed in 2021 through a business combination that brought together complementary drilling and production service providers. The company's mission is to deliver integrated solutions across the upstream oil and gas value chain, combining regional expertise with global operational standards.

NESR's service portfolio spans drilling, completion and production, offering products and capabilities such as cementing, coiled tubing, hydraulic fracturing, well stimulation, pumping services and intervention solutions.

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