National Energy Services 2025 Q1 Earnings Strong Performance with Net Income Growth of 4.1%

National Energy Services (NESR) reported its fiscal 2025 Q1 earnings on Jun 03rd, 2025. The total revenue of National Energy Services increased by 2.1% to $303.10 million in 2025 Q1, up from $296.85 million in 2024 Q1, with specific segment revenue listed as follow: Production Services: $188.09 million, Drilling and Evaluation Services: $115.02 million and Total external revenue: $303.10 million. NESR achieved a slight beat in net income expectations with a 4.1% year-over-year growth, while EPS remained stable. The company raised its guidance, forecasting sequential revenue growth for Q2 2025 and full-year revenue increases due to recent contracts.

Revenue

National Energy Services achieved a 2.1% increase in total revenue for Q1 2025, reaching $303.10 million compared to $296.85 million in Q1 2024. Within this, the Production Services segment generated revenue of $188.09 million, while the Drilling and Evaluation Services segment contributed $115.02 million. The company's overall external revenue matched the total at $303.10 million.

Earnings/Net Income

National Energy Services maintained stable EPS at $0.11 in 2025 Q1 compared to 2024 Q1. Meanwhile, the company's profitability strengthened with net income of $10.39 million in 2025 Q1, marking 4.1% growth from $9.98 million in 2024 Q1. The Company has sustained profitability for 6 years over the corresponding fiscal quarter, reflecting stable business performance. The unchanged EPS reflects consistent financial performance.

Price Action

The stock price of National Energy Services has edged up 2.58% during the latest trading day, has dropped 6.28% during the most recent full trading week, and has dropped 5.39% month-to-date.

Post-Earnings Price Action Review

The strategy of buying National Energy Services (NESR) shares after a revenue drop quarter-over-quarter on the financial report release date and holding for 30 days has yielded poor results over the past three years. Specifically, this approach resulted in a return of -31.63%, significantly underperforming the benchmark return of -1.21%. The strategy's excess return was -30.42%, and it experienced a compound annual growth rate (CAGR) of -46.99%, indicating substantial losses. Furthermore, the strategy exhibited a high maximum drawdown of -40.47% and a Sharpe ratio of -0.98, indicating significant risk and negative returns. Collectively, these metrics suggest that the approach has been unsuccessful and has exposed investors to considerable financial risk without adequate compensation.

CEO Commentary

Sherif Foda - Executive Chairman & CEO: "Despite the macro environment, we believe that NESR will grow in '25 and in '26. We are moving to right size our fixed cost structure and will reallocate resources to where activity growth is. In Oman and Kuwait, we have recently won multiple key contracts and expect to gain significant market share. Our strategic positioning in areas like Kuwait and the gas development theme will drive growth. We are confident that our differentiated story will come to the forefront in the coming 12 to 18 months, supported by our countercyclical investments."

Guidance

We expect Q2 '25 revenues to grow sequentially versus Q1 '25, with full-year '25 revenue growth anticipated due to recent contract wins and successful technology deployments. EPS adjusted for charges is projected at $0.14 for Q1 '25, with full-year '25 interest estimated at around $30 million. CapEx for the full year is expected to be in the vicinity of $125 million, potentially increasing depending on tender results. Additionally, we forecast margins in Q2 '25 to slightly improve over Q1 '25, with a target to reach 25% margins by '26.

Additional News

National Energy Services Reunited Corp. (NESR) has recently been active in the strategic realm, announcing the commencement of an exchange offer and consent solicitation related to its outstanding warrants. The company is offering 0.10 ordinary shares for each warrant tendered, aiming to simplify its capital structure and reduce potential dilution. Additionally, NESR has secured significant new slickline contracts worth $200 million across Kuwait and Oman, marking its expansion in the Drilling & Evaluation segment within the MENA region. Furthermore, NESR has begun construction of a 180,000m² state-of-the-art facility at King Salman Energy Park (SPARK) in Saudi Arabia, aligning with the country's Vision 2030 initiative and emphasizing technological advancements and sustainability in the energy sector.