National Energy Services Reunited Corp. (NASDAQ:NESR) Q2 2019 Earnings Conference Call Transcript

Aug 07, 2019 • 09:00 am ET

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National Energy Services Reunited Corp. (NASDAQ:NESR) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Greetings and welcome to National Energy Services Reunited Corp. Second Quarter 2019 Financial Results Conference Call.

[Operator Instructions]

I would now like to turn the conference over to your host, Mr. Chris Boone, CFO. Thank you. You may begin.

Executive
Christopher L. Boone

Good day and welcome to the NESR Corp.'s second quarter 2019 earnings call. With me today is Sherif Foda, Chairman and Chief Executive Officer. And we are hosting this call from London where we just concluded our second quarter Board Meeting. On today's call, we will comment on our second quarter results and overall performance. After our prepared remarks, we will open the call to questions.

Before we begin, I'd like to remind our participants that some of the statements we'll be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest earnings release filed earlier today and other SEC filings. Our comments today may also include non-GAAP financial measures. Additional details on reconciliations to the most directly-comparable GAAP financial measures can be found in our press release which is on our website.

Finally, some of you may be calling today for the first time, so please feel free to contact us after the call with any additional questions you may have. Our Investor Relations contact information is available at www.nesr.com.

Now I'll hand the call over to Sherif Foda. Sherif?

Executive
Sherif Foda

Thank you, Chris. And welcome to your inaugural call.

Ladies and gentlemen, thank you for participating in this conference call. We are excited to report on another quarter of tremendous result and continuous progress. We grew our revenue 22% year-over-year, which is more than double the industry average operating in the MENA region. This remarkable growth is due to continuous and sustained spending of our customers, while NESR continues to properly execute and take more share on our existing contracts. We are expanding our footprint as well as introducing new business lines in our operating countries. I would also like to highlight our stellar financial performance this quarter, which Chris is going to discuss in detail later. Adjusted EBITDA of $46 million is 12% higher sequentially, and 33% higher year-over-year. Adjusted net income of $16 million, grew approximately 13% sequentially.

We saw strong performance in both our Production as well as Drilling and Evaluation segment with Production growing revenue by 10% year-over-year and D&E growing by 45% for the same period. We shall see activity strengthen as we go further into the second half, same as the previous years. Now I would like to talk about the details of the MENA activities and our plans going forward. As most of you have heard many times, and this is something I have been very vocal about, the market overall is underestimating the magnitude of activity growth in the MENA region. All the estimates out there were in the mid-single-digit range, for '19 versus '18. We have been consistently saying that the