NATIONAL ENERGY SERVICES REUNITED CORP. REPORTS THIRD QUARTER 2018 RESULTS
HOUSTON, November 8, 2018 – National Energy Services Reunited Corp. (“NESR”) (NASDAQ: NESR) (NASDAQ: NESRW), a national, industry-leading provider of integrated energy services in the Middle East and North Africa (“MENA”) and Asia Pacific region, today reported results for the third quarter ended September 30, 2018.
Operating and Financial Highlights
| ● | Revenue on a combined basis grew by over 10% from the prior quarter and by more than 20% compared to the prior year quarter with new contract start-ups and product offerings as well as increases in market share in NESR’s key markets. | |
| ● | Net income of $16.2 million for the successor quarter period compared to a net loss for the preceding period of $4 million. | |
| ● | Adjusted EBITDA on a combined basis for the third quarter was $46.5 million, a sequential growth in excess of 30% on the back of increased service intensity and startup of new contracts as well as realization of integration synergies. | |
| ● | Signed an agreement with Dhahran Techno Valley Company (“DTVC”), a wholly owned subsidiary of King Fahd University of Petroleum, to create a global center for the development of scientific research in DTVC. This is in line with NESR’s vision to create an open source platform in the region to partner with innovative technology companies to create fit for purpose technologies for our customers in the region. | |
| ● | Acquired quality coiled tubing and pumping assets of North American service company to deploy in the MENA region. |
“We are very pleased with our results for the third quarter,” said Sherif Foda, Chairman of the Board and CEO of NESR. “NESR is attractively positioned, with the ability to capitalize on its footprint across the MENA region. We remain encouraged by the outlook for our key markets, and we believe the services industry in the region will continue to grow further over the coming quarters. Additionally, as MENA activity increases in the fourth quarter, we have been deploying our resources strategically to take advantage of this trend.”
Mr. Foda continued, “I am very proud of the employees of both companies we acquired as our integration efforts continue to exceed expectations and are showing significant results. At NESR, we value agility, empowerment and fast decision making and this quarter’s operational and financial results are a testimony to the hard work of our personnel as well as the faith our customers have placed in our ability to deliver superior execution. Our ability to respond quickly and efficiently to our customers’ needs has already distinguished us and will continue to be a competitive advantage. We are very excited about the future and we have talented, motivated teams to execute at the highest levels of quality.”
Production Services Segment Results
Production Services contributed $88.7 million to consolidated revenue for the 2018 Successor third quarter period. Segment EBITDA totaled $33.2 million in the quarter. In addition to higher activity across all our product lines, this segment benefitted from the redeployment of idle assets where operations overlapped as well as from contract start-up costs recorded in the second quarter which did not recur in the third quarter.
See “Business Combination Accounting and Presentation of Results of Operations” section below for additional information on current reporting conventions.
| Successor (NESR) | Predecessor (NPS) | |||||||||||||||||||
| (in thousands) | 2018 | 2018 | 2017 | |||||||||||||||||
| July 1 to September 30 | June 7 to September 30 | January 1 to June 6 | July 1 to September 30 | January 1 to September 30 | ||||||||||||||||
| Revenue | $ | 88,666 | $ | 117,268 | $ | 112,295 | $ | 59,164 | $ | 164,493 | ||||||||||
| Segment EBITDA | $ | 33,180 | $ | 41,952 | $ | 36,836 | $ | 21,252 | $ | 58,463 | ||||||||||
Drilling and Evaluation Services Segment Results
Drilling and Evaluation Services contributed $56.9 million to consolidated revenue for the 2018 Successor third quarter period. Segment EBITDA totaled $17.6 million in the quarter. The improved performance of this segment was most noticeably impacted by new drilling contract start-ups with improved pricing along with the continued growth and expansion of our evaluation service offerings.
| Successor (NESR) | Predecessor (NPS) | |||||||||||||||||||
| (in thousands) | 2018 | 2018 | 2017 | |||||||||||||||||
| July 1 to September 30 | June 7 to September 30 | January 1 to June 6 | July 1 to September 30 | January 1 to September 30 | ||||||||||||||||
| Revenue | $ | 56,914 | $ | 73,298 | $ | 24,732 | $ | 11,289 | $ | 29,288 | ||||||||||
| Segment EBITDA | $ | 17,630 | $ | 18,905 | $ | 3,267 | $ | 1,618 | $ | 3,277 | ||||||||||
Offsetting our segment results were certain Corporate costs which are not yet allocated to segment operations.
Net Income and Consolidated Adjusted EBITDA Results
The Company had Successor period net income for the third quarter totaling $16.2 million, which includes the impact of $2.4 million of transaction and integration costs related to the combination transaction completed in June 2018 and $3.6 million of purchase accounting related amortization costs incurred in the quarter. On a combined basis, the Company had Adjusted EBITDA of $111.8 million for the year to date period through September 30, 2018. Adjustments to EBITDA include transaction and integration costs of $25 million for the 2018 period.
Balance Sheet
Cash and cash equivalents were $67.6 million as of September 30, 2018 (Successor), compared to $27.5 million as of December 31, 2017 (Predecessor) and $36.9 million as of June 30, 2018. The Company had $355.3 million in debt as of September 30, 2018 including a $50 million convertible loan facility with an implied conversion price of 11.244 per share. During July, the Company completed a refinancing of its $50 million bridge loan facility to term out the debt. Additionally, in July the Company entered into a previously disclosed $50 million working capital facility and drew down $25 million under the facility. During August, the Company drew down the remaining $25 million to provide the company with financial flexibility and seize growth opportunities as and when they arise.
The Company purchased certain assets from a North American service company for $7 million in cash. Offsetting these asset additions were additional adjustments to the fixed asset values made as part of the Company’s finalization of purchase price accounting.
Improvements to working capital efficiency were initiated post-combination and the Company anticipates additional benefits from these actions to be reflected in the year-end balance sheet.
Predecessor/Successor Accounting Treatment
NESR continues to report in a Predecessor/Successor format whereby the National Petroleum Services (“NPS”) legacy entity is the Predecessor for periods prior to the completion of the business combination on June 7, 2018 and NESR, including NPS and Gulf Energy Services (“GES”), is the Successor for post-transaction periods.
Conference Call Information
NESR will host a conference call on Thursday, November 8, 2018, to discuss the third quarter 2018 financial results. The call will begin at 8:00 AM Central Time (9:00 AM Eastern Time) and 6:00 PM UAE time.
Investors, analysts and members of the media interested in listening to the call are encouraged to participate by dialing into the 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 in the investors section of www.nesr.com. A replay of the conference call will be available a few hours after the event in 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 3,200 employees, representing more than 40 nationalities in over 14 countries, the Company helps its customers unlock the full potential of their reservoirs by providing Production Services such as Cementing, Coiled Tubing, Filtration, Completions, Stimulation and Fracturing, and Nitrogen Services. The Company also helps its customers to access the reservoirs in a smarter and faster manner by providing Drilling and Evaluation services like Drilling Downhole Tools, Directional Drilling Fishing Tools, Testing Services, Wireline, Slickline, Fluids and Rig Services.
Business Combination Accounting and Presentation of Results of Operations
As a result of the Business Combination, NESR was determined to be the accounting acquirer and NPS was determined to be the predecessor for SEC reporting purposes. Pursuant to Accounting Standard Codification (“ASC”) 805, Business Combinations (“ASC 805”), a preliminary assessment was made as of the acquisition-date fair value of the purchase consideration paid by NESR to effect the Business Combination was allocated to the assets acquired and the liabilities assumed based on their estimated fair values. As a result of the application of the acquisition method of accounting resulting from the Business Combination, the financial statements and certain footnote presentations separate our presentations into two distinct sets of reporting periods, the periods before the consummation of the transaction (“Predecessor Periods”) and the period after that date (“Successor Period”), to indicate the application of the different basis of accounting between the periods presented. The Predecessor Periods reflect the historical financial information of NPS prior to the Business Combination, while the Successor Period reflects our consolidated financial information, including the results of NPS and GES, after the Business Combination. The Successor Periods are from June 7, 2018 to September 30, 2018 and for the three months ended September 30, 2018. The Predecessor Periods are from January 1, 2017 to September 30, 2017, for the three months ended September 30, 2017 and from January 1, 2018 to June 6, 2018.
Note
This communication includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, among others, statements about the benefits and synergies of the recently completed business combination transaction. These forward-looking statements are based on information available as of the date of this communication, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing NESR’s views as of any subsequent date, and NESR does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, NESR’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include NESR’s ability to recognize the anticipated benefits of the transaction, which may be affected by, among other things, competition and the ability of NESR to grow and manage growth profitably following the transaction; changes in applicable laws or regulations; the possibility that NESR may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties indicated in NESR’s public filings with the Securities and Exchange Commission.
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
| Successor (NESR) | Predecessor (NPS) | |||||||
| September 30, 2018 | December 31, 2017 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 67,560 | 27,545 | ||||||
| Accounts receivable, net | 76,758 | 58,174 | ||||||
| Unbilled revenue | 96,895 | 24,167 | ||||||
| Inventories | 65,765 | 32,313 | ||||||
| Other current assets | 47,142 | 19,656 | ||||||
| Total current assets | 354,120 | 161,855 | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | 304,727 | 264,269 | ||||||
| Intangible assets | 140,894 | 10 | ||||||
| Goodwill | 532,441 | 182,053 | ||||||
| Other assets | 8,836 | 11,385 | ||||||
| Total assets | $ | 1,341,018 | $ | 619,572 | ||||
| Liabilities and equity | ||||||||
| Liabilities | ||||||||
| Accounts payable | 54,345 | 25,132 | ||||||
| Accrued expenses | 55,795 | 23,324 | ||||||
| Current portion of loans and borrowings | 16,368 | - | ||||||
| Short-term borrowings | 71,940 | 8,773 | ||||||
| Other current liabilities | 37,933 | 5,228 | ||||||
| Total current liabilities | 236,381 | 62,457 | ||||||
| Loans and borrowings | 266,964 | 147,024 | ||||||
| Other liabilities | 26,126 | 20,662 | ||||||
| Total liabilities | 529,471 | 230,143 | ||||||
| Commitments | - | - | ||||||
| Equity | ||||||||
| Successor preferred shares, no par value; unlimited shares authorized; none issued and outstanding Predecessor common stock, par value $1; 370,000,000 shares authorized; 342,250,000 shares issued and outstanding at December 31, 2017 | - | 342,250 | ||||||
| Successor common stock, no par value; unlimited shares authorized; 85,562,769 shares issued and outstanding at September 30, 2018 | 801,546 | - | ||||||
| Predecessor convertible redeemable shares | - | 27,750 | ||||||
| Additional paid in capital | 331 | 3,345 | ||||||
| Retained earnings | 8,745 | 18,480 | ||||||
| Accumulated other comprehensive (loss) | - | (436 | ) | |||||
| Total shareholders’ equity | 810,622 | 391,389 | ||||||
| Non-controlling interests | 925 | (1,960 | ) | |||||
| Total equity | 811,547 | 389,429 | ||||||
| Total liabilities and equity | $ | 1,341,018 | $ | 619,572 | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(In thousands, except share data)
| Successor (NESR) | Predecessor (NPS) | |||||||||||||||||||
| 2018 | 2018 | 2017 | ||||||||||||||||||
| Period from July 1 to September 30 | Period from June 7 to September 30 | Period from January 1 to June 6 | Period From July 1 to September 30 | Period From January 1 to September 30 | ||||||||||||||||
| Revenues | $ | 145,580 | $ | 190,566 | $ | 137,027 | $ | 70,453 | $ | 193,781 | ||||||||||
| Cost of products and services | (102,349 | ) | (139,404 | ) | (104,242 | ) | (50,551 | ) | (142,722 | ) | ||||||||||
| Gross profit | 43,231 | 51,162 | 32,785 | 19,902 | 51,059 | |||||||||||||||
| Selling, general and administrative expense | (13,759 | ) | (22,779 | ) | (19,969 | ) | (7,514 | ) | (22,851 | ) | ||||||||||
| Amortization | (3,577 | ) | (5,116 | ) | (10 | ) | (158 | ) | (304 | ) | ||||||||||
| Operating income | 25,895 | 23,267 | 12,806 | 12,230 | 27,904 | |||||||||||||||
| Interest expense, net | (6,199 | ) | (8,099 | ) | (4,090 | ) | (712 | ) | (3,985 | ) | ||||||||||
| Other income (expense), net | 450 | (18 | ) | 362 | (1,151 | ) | (1,339 | ) | ||||||||||||
| Income before income taxes | 20,146 | 15,150 | 9,078 | 10,367 | 22,580 | |||||||||||||||
| Income taxes | (3,989 | ) | (2,960 | ) | (2,342 | ) | 313 | (1,641 | ) | |||||||||||
| Net income | 16,157 | 12,190 | 6,736 | 10,680 | 20,939 | |||||||||||||||
| Net income (loss) attributable to non-controlling interests | 47 | (172 | ) | (881 | ) | (558 | ) | (1,770 | ) | |||||||||||
| Net income attributable to shareholders | $ | 16,110 | $ | 12,362 | $ | 7,617 | $ | 11,238 | $ | 22,709 | ||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||
| Basic | 85,562,769 | 85,562,769 | 348,524,566 | 342,250,000 | 342,250,000 | |||||||||||||||
| Diluted | 85,912,715 | 85,840,312 | 370,000,000 | 370,000,000 | 370,000,000 | |||||||||||||||
| Net earnings per share | ||||||||||||||||||||
| Basic | 0.19 | 0.14 | 0.02 | 0.03 | 0.07 | |||||||||||||||
| Diluted | 0.19 | 0.14 | 0.02 | 0.03 | 0.06 | |||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
| Successor (NESR) | Predecessor (NPS) | |||||||||||||||||||
| 2018 | 2018 | 2017 | ||||||||||||||||||
| Period from July 1 to September 30 | Period from June 7 to September 30 | Period from January 1 to June 6 | Period from July 1 to September 30 | Period from January 1 to September 30 | ||||||||||||||||
| Net income | $ | 16,157 | $ | 12,190 | $ | 6,736 | $ | 10,680 | $ | 20,939 | ||||||||||
| Foreign currency translation adjustments | - | - | (16 | ) | 364 | 338 | ||||||||||||||
| Other comprehensive earnings | 16,157 | 12,190 | 6,720 | 11,044 | 21,277 | |||||||||||||||
| Total comprehensive earnings | $ | 16,157 | $ | 12,190 | $ | 6,720 | $ | 11,044 | $ | 21,277 | ||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
Condensed Consolidated Statements Shareholders’ equity
(In thousands, except share data)
(Unaudited)
| Predecessor (NPS) | Shares Outstanding | Common Stock | Redeemable Convertible Shares Outstanding | Redeemable Convertible Shares | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Total Company Stockholders’ Equity | Noncontrolling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||
| Balance at January 1, 2018 | 342,250,000 | $ | 342,250 | 27,750,000 | $ | 27,750 | $ | 3,345 | $ | (436 | ) | $ | 18,480 | $ | 391,389 | $ | (1,960 | ) | $ | 389,429 | ||||||||||||||||||||
| Net income (loss) | 7,617 | 7,617 | (881 | ) | 6,736 | |||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | (16 | ) | (16 | ) | (16 | ) | ||||||||||||||||||||||||||||||||||
| Conversion of redeemable shares | 6,274,566 | 6,275 | (6,274,566 | ) | (6,275 | ) | - | - | ||||||||||||||||||||||||||||||||
| Dividends paid | (48,210 | ) | (48,210 | ) | (48,210 | ) | ||||||||||||||||||||||||||||||||||
| Amount of Provision for Zakat | (767 | ) | (767 | ) | (767 | ) | ||||||||||||||||||||||||||||||||||
| Balance at June 6, 2018 | 348,524,566 | $ | 348,525 | 21,475,434 | $ | 21,475 | $ | 3,345 | $ | (452 | ) | $ | (22,880 | ) | $ | 350,013 | $ | (2,841 | ) | $ | 347,172 | |||||||||||||||||||
| Successor (NESR) | Ordinary Shares | Redeemable Convertible Shares Outstanding | Additional Paid in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Total Shareholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||||||||||||||
| Balances at June 7, 2018 | 11,730,425 | $ | 56,602 | - | $ | (4,611 | ) | $ | 51,991 | $ | 51,991 | |||||||||||||||||||||||||
| Reclassification of shares previously subject to redemption | 16,921,700 | 165,188 | 165,188 | 165,188 | ||||||||||||||||||||||||||||||||
| Redeemed shares | (1,916,511 | ) | (19,379 | ) | (19,379 | ) | (19,379 | ) | ||||||||||||||||||||||||||||
| Shares issued to acquire NPS | 25,077,277 | 255,537 | 255,537 | 255,537 | ||||||||||||||||||||||||||||||||
| Shares issued to acquire GES | 28,346,229 | 288,848 | 288,848 | 288,848 | ||||||||||||||||||||||||||||||||
| Shares issued to related party for loan fee and transaction costs | 266,809 | 2,719 | 2,719 | 2,719 | ||||||||||||||||||||||||||||||||
| Shares issued in secondary offering | 4,829,375 | 48,294 | 48,294 | 48,294 | ||||||||||||||||||||||||||||||||
| Shares issued for IPO underwriting fees | 307,465 | 3,737 | 3,737 | 3,737 | ||||||||||||||||||||||||||||||||
| Shares issued through Restricted Stock Units | 331 | 331 | 331 | |||||||||||||||||||||||||||||||||
| Business combination non-controlling interest | (951 | ) | (951 | ) | ||||||||||||||||||||||||||||||||
| Non - controlling interest | - | 3,042 | 3,042 | |||||||||||||||||||||||||||||||||
| Acquisition of noncontrolling interest during the period | 994 | 994 | (994 | ) | - | |||||||||||||||||||||||||||||||
| Net income (loss) through September 30, 2018 | 12,362 | 12,362 | (172 | ) | 12,190 | |||||||||||||||||||||||||||||||
| Balances at September 30, 2018 | 85,562,769 | $ | 801,546 | - | $ | 331 | - | $ | 8,745 | $ | 810,622 | $ | 925 | $ | 811,547 | |||||||||||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Successor (NESR) | Predecessor (NPS) | |||||||||||
| Period from June 7 to September 30, 2018 | Period from January 1 to June 6, 2018 | Period from January 1 to September 30, 2017 | ||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net income | $ | 12,190 | $ | 6,736 | $ | 20,939 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | - | - | ||||||||||
| Depreciation and amortization | 24,155 | 17,284 | 28,389 | |||||||||
| Shares issued for transaction costs | 2,175 | |||||||||||
| (Loss) on disposal of assets, net | (684 | ) | - | (216 | ) | |||||||
| Accrued interest | 8,001 | 3,350 | 2,139 | |||||||||
| Deferred tax (asset) | 948 | |||||||||||
| Bad Debt Expense | 629 | 2,402 | 949 | |||||||||
| Other operating activities, net | 603 | 1,442 | 506 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Decrease (increase) in accounts receivable | 10,178 | (15 | ) | (10,757 | ) | |||||||
| (Increase) in inventories | (2,297 | ) | (2,080 | ) | (5,911 | ) | ||||||
| (Increase) in prepaid expenses | (2,943 | ) | (759 | ) | (2,153 | ) | ||||||
| (Increase) in other current assets | (21,866 | ) | (16,257 | ) | (1,588 | ) | ||||||
| Decrease (increase) in other long term assets | 312 | (544 | ) | - | ||||||||
| Increase (decrease) accounts payable and accrued liabilities | (14,629 | ) | 7,335 | 12,556 | ||||||||
| Increase in other current liabilities | (2,341 | ) | 1,932 | 3,264 | ||||||||
| Net cash provided by operating activities | 14,431 | 20,826 | 48,117 | |||||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Proceeds from the Company’s Trust Account | 231,782 | - | - | |||||||||
| Capital expenditures | (16,169 | ) | (9,861 | ) | (36,030 | ) | ||||||
| Acquisition of business, net of cash acquired | (285,081 | ) | (1,098 | ) | (625 | ) | ||||||
| Proceeds from disposal of assets | 4,432 | 288 | ||||||||||
| Other investing activities | 330 | - | - | |||||||||
| Net cash used in investing activities | (64,706 | ) | (10,959 | ) | (36,367 | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Redemption of ordinary shares | (19,380 | ) | - | - | ||||||||
| Proceeds from issuance of shares | 48,294 | - | - | |||||||||
| Proceeds from borrowings | 100,000 | 47,063 | - | |||||||||
| Payment of deferred underwriting fees | (5,333 | ) | (164 | ) | (2,885 | ) | ||||||
| Proceeds from lines of credit and other debt | - | - | 749 | |||||||||
| Dividend paid | - | (48,210 | ) | (5,000 | ) | |||||||
| Other financing activities, net | (5,792 | ) | (4,429 | ) | (1,734 | ) | ||||||
| Net cash provided by (used in) financing activities | 117,789 | (5,740 | ) | (8,870 | ) | |||||||
| Effect of exchange rate changes on cash | - | (16 | ) | (40 | ) | |||||||
| Net increase in cash | 67,514 | 4,111 | 2,840 | |||||||||
| Cash, beginning of period | 46 | 27,545 | 25,534 | |||||||||
| Cash, end of period | $ | 67,560 | $ | 31,656 | $ | 28,374 | ||||||
| Supplemental disclosure of cash flow information | ||||||||||||
| Interest paid | 3,724 | 3,636 | 4,222 | |||||||||
| Taxes paid | 3,129 | 345 | 358 | |||||||||
NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME
(Unaudited)
(In thousands)
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 earnings release are discussions of earnings before interest, income tax and depreciation and amortization adjusted for certain non-recurring and non-core expenses (“Adjusted EBITDA”), as well a reconciliation of this non-GAAP measure to net income in accordance with U.S. GAAP.
The Company believes that the presentation of Adjusted EBITDA 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 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 and impairment), items that do not impact the ongoing operations (Business Combination transaction expenses and related integration costs) and items outside the control of its management team. Adjusted EBITDA should not be considered as an alternative to net income, the most directly comparable GAAP financial measure. 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 U.S. GAAP.
| Successor (NESR) | ||||
| July 1, 2018 to September 30, 2018 | ||||
| Net Income (loss) | 16,157 | |||
| Add: | ||||
| Income Taxes | 3,989 | |||
| Interest Expense, net | 6,199 | |||
| Depreciation and Amortization | 17,694 | |||
| Transaction and Integration Costs | 2,434 | |||
| Total Adjusted EBITDA | 46,473 | |||
| Successor (NESR) | Predecessor (NPS), NESR and GES | Combined | ||||||||||
| June 7, 2018 to September 30, 2018 | January
1 To | YTD January 1 To September 30, 2018 | ||||||||||
| Net Income (loss) | 12,191 | 4,544 | 16,735 | |||||||||
| Add: | ||||||||||||
| Income Taxes | 2,960 | 3,705 | 6,665 | |||||||||
| Interest Expense, net | 8,100 | 5,097 | 13,197 | |||||||||
| Depreciation and Amortization | 24,154 | 26,085 | 50,238 | |||||||||
| Transaction and Integration Costs | 9,736 | 15,227 | 24,963 | |||||||||
| Total Adjusted EBITDA | 57,140 | 54,658 | 111,798 | |||||||||
| Successor (NESR) | Predecessor (NPS), NESR and GES | Combined | ||||||||||
June 7, 2018 to June 30, 2018 | April 1 To June 6, 2018 | April 1 To June 30, 2018 | ||||||||||
| Net Income (loss) | (3,965 | ) | (1,500 | ) | (5,465 | ) | ||||||
| Add: | ||||||||||||
| Income Taxes | (1,029 | ) | 1,804 | 775 | ||||||||
| Interest Expense, net | 1,900 | 1,370 | 3,270 | |||||||||
| Depreciation and Amortization | 6,460 | 10,338 | 16,798 | |||||||||
| Transaction and Integration Costs | 7,832 | 11,047 | 18,879 | |||||||||
| Total Adjusted EBITDA | 11,198 | 23,059 | 34,257 | |||||||||
For inquiries regarding NESR, please contact:
Dhiraj Dudeja
NESR Corp.
832-925-3777
info@nesr.com
or
Joseph Caminiti or Steve Calk
Alpha IR Group
312-445-2870
NESR@alpha-ir.com