UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2020

 

Commission File Number: 001-38091

 

NATIONAL ENERGY SERVICES REUNITED CORP.

(Exact name of Registrant as specified in its charter)

 

Not Applicable

(Translation of registrant’s name into English)

 

777 Post Oak Blvd., Suite 730

Houston, Texas 77056

(Address of principal executive office)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F [X] Form 40-F [  ]

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): Yes [  ] No [X]

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): Yes [  ] No [X]

 

 

 

 

 

 

Information Contained in this Form 6-K Report

 

On October 28, 2020, National Energy Services Reunited Corp. (“NESR”) issued a press release announcing its financial condition and results of operations for the quarter ended September 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this report on Form 6-K.

 

The information contained in this report and the exhibit hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference into any filings made by NESR under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

 

Financial Statements and Exhibits

 

Exhibits.

 

Number   Description
     
99.1   Press Release dated October 28, 2020.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  NATIONAL ENERGY SERVICES REUNITED CORP.
     
Date: October 28, 2020 By: /s/ Christopher L. Boone
  Name: Christopher L. Boone
  Title: Chief Financial Officer

 

 

 

 

Exhibit 99.1

 

National Energy Services Reunited Corp. Reports Third Quarter 2020 Financial Results

 

  Revenue for the third quarter of 2020 is $218 million, growing 35% year-over-year and 7% over the sequential quarter
  Free cash flow (a non-GAAP measure) for the third quarter of 2020 is $9 million*
  Net Income for the third quarter of 2020 is $12 million, growing 11% over the sequential quarter
  Adjusted Net Income (a non-GAAP measure) for the third quarter of 2020 is $14 million*
  Adjusted EBITDA (a non-GAAP measure) is $56 million, an increase of 17% year-over-year and 8% over the sequential quarter*
  Diluted Earnings per Share (“EPS”) for the third quarter of 2020 is $0.13
  Adjusted Diluted EPS (a non-GAAP measure) for the third quarter of 2020 is $0.16*

 

HOUSTON, October 28, 2020 – National Energy Services Reunited Corp. (“NESR” or the “Company”) (NASDAQ: NESR) (NASDAQ: NESRW), a national, industry-leading provider of integrated energy services in the Middle East and North Africa (“MENA”) and Asia Pacific regions, today reported its financial results for the quarter ended September 30, 2020. The Company posted the following results for the periods presented:

 

    Three Months Ended     Variance  
(in thousands except per share amounts and percentages)  

September 30,

2020

    June 30, 2020    

September 30,

2019

    Sequential     Year-over- year  
                               
Revenue   $ 218,423     $ 203,249     $            161,606       7 %     35 %
Net income     11,666       10,536       11,110            11 %    

5

%
Adjusted net income (non-GAAP)*     14,165       12,342       16,195       15 %     (13 )%
Adjusted EBITDA (non-GAAP)*     55,803       51,841       47,708       8 %     17 %
Diluted EPS     0.13       0.12       0.13       8 %    

-

%
Adjusted Diluted EPS (non-GAAP)*     0.16       0.14       0.19       14 %     (16 )%
Free cash flow (non-GAAP)*     8,668       15,531       (12,530 )     (6,863 )     21,198  

 

*The Company presents its financial results in accordance with generally accepted accounting principles in the United States of America (“GAAP”). However, management believes that using additional non-GAAP measures will enhance the evaluation of the profitability of the Company and its ongoing operations. Please see Tables 1, 2, 3, 4, 5 and 6 below for reconciliations of GAAP to non-GAAP financial measures.

 

 

 

 

Sherif Foda, Chairman of the Board and CEO of NESR, said, “We are incredibly blessed to have such talented employees who always manage to beat all records and continue to grow and deliver in contrast to the market despite the existence of a worldwide pandemic. We maintained our usual close contacts with our customers in the region and managed to achieve new milestones in several initiatives and contracts. We are honored to have our clients’ trust and are very pleased to further consolidate our presence in the Sultanate of Oman, one of our key foundational countries, recognizing our full alignment with our primary customer enabling us to amplify our investment and long term goals. This is NESR’s ESG strategy in action, reflecting clear commitment and social contributions to the countries where we operate.”

 

Mr. Foda continued, “We concluded our acquisition of Sahara Petroleum Services Company S.A.E. (SAPESCO) during the quarter and managed to close the immediate transaction payments entirely with available cash from operations. We are already capitalizing on their qualifications in several countries and will be announcing further contract awards in the coming quarters.”

 

Net Income Results

 

Net income for the third quarter of 2020 is $11.7 million. Net income for the third quarter of 2020, second quarter of 2020, and third quarter of 2019, includes amortization expenses of approximately $4.0 million, $3.9 million, and $4.0 million, respectively, associated with intangible assets acquired primarily in the 2018 acquisitions of our two initial operating subsidiaries, NPS Holdings Limited and Gulf Energy S.A.O.C. (together, the “subsidiaries”). Adjusted net income for the third quarter of 2020 is $14.2 million and includes adjustments totaling $2.5 million (collectively, “Total Charges and Credits”) mainly related to nonrecurring transaction and integration costs associated with the acquisition of SAPESCO in Egypt. A complete list of the adjusting items and the associated reconciliation from GAAP has been provided in Table 1 below in the section entitled “Reconciliation of Net Income and Adjusted Net Income.”

 

The Company reported $0.13 of diluted earnings per share (“EPS”) for the third quarter of 2020. Adjusted for the impact of Total Charges and Credits, Adjusted Diluted EPS, a non-GAAP measure described in Table 1 below, for the third quarter of 2020 is $0.16.

 

Adjusted EBITDA Results

 

The Company produced Adjusted EBITDA of $55.8 million during the third quarter of 2020, growing 17% as compared to $47.7 million in the third quarter of 2019, and improving 8% as compared to $51.8 million in the second quarter of 2020. Third quarter 2020 Adjusted EBITDA includes adjustments for certain Total Charges and Credits (those not related to interest, taxes, and/or depreciation and amortization) of $2.5 million. The Company posted the following results for the periods presented.

 

(in thousands)  

Quarter ended

September 30, 2020

   

Quarter ended

June 30, 2020

   

Quarter ended

September 30, 2019

 
Revenue   $      218,423     $ 203,249     $ 161,606  
Adjusted EBITDA   $ 55,803     $ 51,841     $ 47,708  

 

 

 

 

Production Services Segment Results

 

The Production Services segment contributed $148.3 million to consolidated revenue for the third quarter of 2020, an improvement of 53% from $97.2 million in the third quarter of 2019 and 7% from $139.0 million in the second quarter of 2020. Segment Adjusted EBITDA, a non-GAAP measure, increased to $42.9 million from $40.5 million in the second quarter of 2020 and $34.2 million in the third quarter of 2019, an improvement of 6% and 25%, respectively. The Production Services segment posted the following results for the periods presented.

 

(in thousands)  

Quarter ended

September 30, 2020

   

Quarter ended

June 30, 2020

   

Quarter ended

September 30, 2019

 
Revenue   $ 148,292     $ 139,034     $ 97,160  
Operating income   $ 21,425     $ 20,217     $ 20,447  
Adjusted EBITDA   $ 42,891     $ 40,477     $ 34,218  

 

Drilling and Evaluation Services Segment Results

 

The Drilling and Evaluation (“D&E”) Services segment contributed $70.1 million to consolidated revenue for the third quarter of 2020, growing 9% as compared to both the sequential quarter and prior year quarter. Segment Adjusted EBITDA, a non-GAAP measure, totaled $16.5 million in the third quarter of 2020, growing 4% as compared to $15.8 million in the second quarter of 2020 and 1% as compared to $16.3 million in the third quarter of 2019.

 

The D&E Services segment posted the following results for the periods presented. 

 

(in thousands)  

Quarter ended

September 30, 2020

   

Quarter ended

June 30, 2020

   

Quarter ended

September 30, 2019

 
Revenue   $ 70,131     $ 64,215     $ 64,446  
Operating income   $

7,377

    $ 8,334     $ 9,183  
Adjusted EBITDA   $

16,492

    $ 15,847     $ 16,299  

 

Offsetting both the Production Services segment and D&E Services segment results were certain corporate costs, which are not allocated to segment operations.

 

Balance Sheet

 

Cash and cash equivalents are $50.5 million as of September 30, 2020, compared to $73.2 million as of December 31, 2019.

 

Total debt as of September 30, 2020 is $399.9 million with $80.1 million of such debt classified as short-term. Working capital totaled $154.9 million as of September 30, 2020. Free cash flow, a non-GAAP measure, for the third quarter of 2020 is $8.7 million, improving by $21.2 million as compared to the third quarter of 2019. Net Debt, which is the sum of our recorded Current installments of long-term debt, Short-term borrowings, and Long-term debt less Cash and cash equivalents, totaled $349.4 million as of September 30, 2020 as compared to $342.3 million as of June 30, 2020 and $330.6 million as of September 30, 2019. Net Debt has increased quarter-over-quarter and year-over-year to fund the SAPESCO acquisition and working capital growth. A reconciliation of the comparable GAAP measures to Net Debt is provided in Table 6 below, entitled “Reconciliation to Net Debt.” 

 

 

 

 

Conference Call Information

 

NESR will host a conference call on Wednesday, October 28, 2020, to discuss third quarter financial results. The call will begin at 8:00 AM Eastern Time.

 

Investors, analysts and members of the media interested in listening to the conference call are encouraged to participate by dialing in to the U.S. 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 under the “Investors” section of the Company’s website at www.nesr.com. A replay of the conference call will be available after the event under 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 5,000 employees and representing more than 60 nationalities in over 15 countries, the Company helps its customers unlock the full potential of their reservoirs by providing Production Services such as Hydraulic Fracturing, Cementing, Coiled Tubing, Filtration, Completions, Stimulation, Pumping and Nitrogen Services. The Company also helps its customers to access their reservoirs in a smarter and faster manner by providing Drilling and Evaluation Services such as Drilling Downhole Tools, Directional Drilling, Fishing Tools, Testing Services, Wireline, Slickline, Drilling Fluids and Rig Services.

 

Forward-Looking Statements

 

This communication contains forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). Any and all statements contained in this communication that are not statements of historical fact, including statements regarding the impact of the COVID-19 pandemic and the Company’s response to COVID-19, may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of these terms) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this communication may include, without limitation, the plans and objectives of management for future operations, projections of income or loss, earnings or loss per share, capital expenditures, dividends, capital structure or other financial items, the Company’s future financial performance, expansion plans and opportunities, completion and integration of acquisitions, including the SAPESCO acquisition, and the assumptions underlying or relating to any such statement.

 

 

 

 

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon the Company’s current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which the Company has no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the accuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation: estimates of the Company’s future revenue, expenses, capital requirements and the Company’s need for financing; the risk of legal complaints and proceedings and government investigations; the Company’s financial performance; success in retaining or recruiting, or changes required in, the Company’s officers, key employees or directors; current and future government regulations; developments relating to the Company’s competitors; changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic and market conditions, particularly during extended periods of low oil and gas prices, political disturbances, war, terrorist acts, public health crises and threats, including risks from the coronavirus COVID-19 outbreak, ongoing actions taken by businesses and governments and resulting significant disruption in international economies, international financial and oil markets; international currency fluctuations, business and/or competitive factors; and other risks and uncertainties set forth in the Company’s most recent Annual Report on Form 20-F filed with the Securities and Exchange Commission (the “SEC”).

 

You are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. The Company disclaims any obligation to update the forward-looking statements contained in this communication to reflect any new information or future events or circumstances or otherwise, except as required by law. You should read this communication in conjunction with other documents which the Company may file or furnish from time to time with the SEC.

 

The preliminary financial results for the Company’s third quarter ended September 30, 2020 included in this press release represent the most current information available to management. The Company’s actual results when disclosed in its Periodic Report on Form 6-K for the quarter ended September 30, 2020 may differ from these preliminary results as a result of the completion of the Company’s financial statement closing procedures, final adjustments, completion of the independent registered public accounting firm’s review procedures, and other developments that may arise between now and the disclosure of the final results.

 

 

 

 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In US$ thousands, except share data)

 

    September 30, 2020     December 31, 2019  
             
Assets                
Current assets                
Cash and cash equivalents   $       50,487     $ 73,201  
Accounts receivable, net     128,719       98,799  
Unbilled revenue     155,935       76,347  
Service inventories, net     94,415       78,841  
Prepaid assets     8,267       9,590  
Retention withholdings     27,089       40,970  
Other receivables     19,381       14,019  
Other current assets     5,522       11,442  
Total current assets     489,815       403,209  
Non-current assets                
Property, plant and equipment, net     458,505       419,307  
Intangible assets, net     115,198       122,714  
Goodwill     596,857       574,764  
Other assets     3,069       2,370  
Total assets   $ 1,663,444     $ 1,522,364  
                 
Liabilities and equity                
Liabilities                
Accounts payable   $ 147,268     $ 65,704  
Accrued expenses     51,591       69,137  
Current installments of long-term debt     43,750       15,000  
Short-term borrowings     36,392       37,963  
Income taxes payable     6,809       7,542  
Other taxes payable     11,466       7,189  
Other current liabilities     37,685       25,601  
Total current liabilities     334,961       228,136  
                 
Long-term debt     319,738       330,564  
Deferred tax liabilities     23,691       26,217  
Employee benefit liabilities     19,438       16,745  
Other liabilities     39,645       34,230  
Total liabilities     737,473       635,892  
                 
Equity                
Preferred shares, no par value; unlimited shares authorized; none issued and outstanding at September 30, 2020 and December 31, 2019, respectively     -       -  
Common stock, no par value; unlimited shares authorized; 87,777,553 and 87,187,289 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively     801,545       801,545  
Additional paid in capital     23,076       17,237  
Retained earnings     101,230       67,661  
Accumulated other comprehensive income     64       29  
Total shareholders’ equity     925,915       886,472  
Non-controlling interests     56       -  
Total equity     925,971       886,472  
Total liabilities and equity   $ 1,663,444     $ 1,522,364  

 

 

 

 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In US$ thousands, except share data and per share amounts)

 

    Quarter ended     Year-to-date period ended  
Description   September 30,
2020
    September 30,
2019
    September 30,
2020
    September 30,
2019
 
                         
Revenues   $ 218,423     $ 161,606     $ 620,971     $ 473,209  
Cost of services     (177,953 )     (121,326 )     (500,566 )     (352,716 )
Gross profit     40,470       40,280       120,405       120,493  
Selling, general and administrative expenses     (17,449 )     (16,485 )     (53,190 )     (46,592 )
Amortization     (4,034 )     (4,033 )     (11,855 )     (12,036 )
Operating income     18,987       19,762       55,360       61,865  
Interest expense, net     (3,793 )     (5,011 )     (12,468 )     (14,691 )
Other income / (expense), net     37       (130 )     (383 )     (629 )
Income before income tax     15,231       14,621       42,509       46,545  
Income tax expense     (3,565 )     (3,511 )     (8,940 )     (10,905 )
Net income     11,666       11,110       33,569       35,640  
Net income / (loss) attributable to non-controlling interests     -       -       -       -  
Net income attributable to shareholders   $ 11,666     $ 11,110     $ 33,569     $ 35,640  
                                 
Weighted average shares outstanding:                                
Basic     89,876,456       87,024,655       88,452,027       86,938,883  
Diluted     89,876,456       87,024,655       88,452,027       86,938,883  
                                 
Net earnings per share:                                
Basic   $ 0.13     $ 0.13     $ 0.38     $ 0.40  
Diluted   $ 0.13     $ 0.13     $ 0.38     $ 0.40  

 

 

 

 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In US$ thousands)

 

    Year-to-date
period ended
September 30, 2020
    Year-to-date
period ended
September 30, 2019
 
             
Cash flows from operating activities:                
Net income   $ 33,569     $ 35,640  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     91,783     59,728  
Share-based compensation expense     5,842       4,057  
Loss (Gain) on disposal of assets     688       (399 )
Non-cash interest expense     (118 )     1,361  
Deferred tax expense (benefit)     (2,526 )     (1,733 )
Allowance for (reversal of) doubtful receivables     (97 )     920  
Provision for obsolete service inventories     821       932  
Other operating activities, net     (184     (100 )
Changes in operating assets and liabilities:                
(Increase) in accounts receivable     (13,223 )     (46,523 )
(Increase) in inventories     (10,755 )     (15,123 )
Decrease (increase) in prepaid assets     2,002       (3,825 )
(Increase) in other current assets     (57,400 )     (5,537 )
(Increase) decrease in other long-term assets and liabilities     (4,025 )     5,403  
Increase in accounts payable and accrued expenses     40,970       23,971  
(Decrease) in other current liabilities     (1,293 )     (13,482 )
Net cash provided by operating activities     86,054       45,290  
                 
Cash flows from investing activities:                
Capital expenditures     (75,448 )     (90,164 )
Proceeds from disposal of assets     1,490       1,125  
Acquisition of business, net of cash acquired (Note 5)     (11,260 )     -  
Other investing activities     (628 )     (932 )
Net cash used in investing activities     (85,846 )     (89,971 )
                 
Cash flows from financing activities:                
Proceeds from long-term debt     15,000       365,000  
Repayments of long-term debt     (18,472 )     (285,048 )
Net change in overdraft facilities     -       (7,050 )
Proceeds from short-term borrowings     14,928       39,941  
Repayments of short-term borrowings     (15,829 )     (44,250 )
Payments on capital leases     (15,679 )     -  
Payments on seller-provided financing for capital expenditures     (2,905 )     -  
Other financing activities, net     -       (5,703 )
Net cash (used in) provided by financing activities     (22,957 )     62,890  
                 
Effect of exchange rate changes on cash             35       (19 )
Net (decrease) increase in cash     (22,714     18,190  
Cash and cash equivalents, beginning of period     73,201       24,892  
Cash and cash equivalents, end of period   $ 50,487     $ 43,082  

 

 

 

 

NATIONAL ENERGY SERVICES REUNITED CORP. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited)

(In US$ thousands except per share amounts)

 

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 release are discussions of earnings before interest, income tax and depreciation and amortization adjusted for certain non-recurring and non-core expenses (“Adjusted EBITDA”), net income and diluted earnings per share (“EPS”) adjusted for certain non-recurring and non-core expenses (“Adjusted Net Income” and “Adjusted Diluted EPS,” respectively), as well as a reconciliation of these non-GAAP measures to operating income, net income, and diluted EPS, respectively, in accordance with GAAP. The Company also discusses the non-GAAP balance sheet measure of the sum of our recorded current installments of long-term debt, short-term borrowings, and long-term debt less cash and cash equivalents (“Net Debt”) in this release and provides a reconciliation to the GAAP measures of cash and cash equivalents, current installments of long-term debt, short-term borrowings, and long-term debt to Net Debt.

 

The Company believes that the presentation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS 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, Adjusted Net Income, and Adjusted Diluted EPS 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), items that do not impact the ongoing operations (transaction, integration, and startup costs) and items outside the control of its management team. Similarly, Net Debt is used by management as a liquidity measure used to illustrate the Company’s debt level absent variability in cash and cash equivalents, and the Company believes that the presentation of Net Debt provides useful information to investors in assessing its financial leverage. Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS should not be considered as an alternative to operating income, net income, or diluted EPS, respectively, the most directly comparable GAAP financial measures. Net Debt also should not be considered as an alternative to GAAP measures of cash and cash equivalents, current installments of long-term debt, short-term borrowings, and long-term debt. Finally, Free Cash Flow is used by management as a liquidity measure to illustrate the Company’s ability to produce cash that is available to be distributed in a discretionary manner, after excluding investments in capital assets. Free Cash Flow should not be considered as an alternative to Net cash provided by (used in) operations or Net cash provided by (used in) investing activities, respectively, the most directly comparable GAAP financial measures. 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 GAAP.

 

Information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments is focused on the timing of when the services are performed during a well’s lifecycle. Production Services are services performed during the production stage of a well’s lifecycle. Drilling and Evaluation Services are services performed during the pre-production stages of a well’s lifecycle. The Company believes that the presentation of Segment EBITDA provides useful information to investors in assessing its financial performance and results of operations.

 

Table 1 - Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS

 

   

Quarter ended

September 30, 2020

   

Quarter ended

June 30, 2020

   

Quarter ended

September 30, 2019

 
   

Net

Income

   

Diluted

EPS

    Net Income    

Diluted

EPS

    Net Income    

Diluted

EPS

 
                                     
Net Income   $      11,666     $ 0.13     $ 10,536     $ 0.12     $ 11,110     $ 0.13  
Add Charges and Credits:                                                
Transaction and other costs     2,499       0.03       1,806       0.02       5,085       0.06  
Total Charges and Credits(1)     2,499       0.03       1,806       0.02       5,085       0.06  
Total Adjusted   $ 14,165     $ 0.16     $ 12,342     $ 0.14     $ 16,195     $ 0.19  

 

  (1) In the third quarter of 2020, Total Charges and Credits included $2.5 million mainly related to nonrecurring transaction and integration costs associated with the acquisition of SAPESCO in Egypt. In the second quarter of 2020, Total Charges and Credits included $1.8 million mainly related to nonrecurring transaction and integration costs associated with the acquisition of SAPESCO in Egypt. Similarly, in the third quarter of 2019, Total Charges and Credits included $5.1 million in costs related to integration and restructuring costs, exceptional interest charges, and other discrete provisions.

 

Table 2 - Reconciliation of Net Income to Adjusted EBITDA

 

   

Quarter ended

September 30, 2020

   

Quarter ended

June 30, 2020

   

Quarter ended

September 30, 2019

 
                   
Net Income   $       11,666     $ 10,536     $ 11,110  
Add:                        
Income Taxes     3,565       2,848       3,511  
Interest Expense, net     3,793       4,165       5,011  
Depreciation and Amortization     34,280       32,486       23,196  
Charges and Credits impacting Adjusted EBITDA(2)     2,499       1,806       4,880  
Total Adjusted EBITDA   $ 55,803     $ 51,841     $ 47,708  

 

  (2) Charges and Credits impacting Adjusted EBITDA are described in Table 1 above.

 

 

 

 

Table 3 - Reconciliation of Segment EBITDA to Adjusted EBITDA

 

    Quarter ended
September 30, 2020
    Quarter ended
June 30, 2020
    Quarter ended
September 30, 2019
 
    EBITDA     Charges and Credits impacting Adjusted EBITDA     Adjusted EBITDA     EBITDA     Charges and Credits impacting Adjusted EBITDA     Adjusted EBITDA     EBITDA     Charges and Credits impacting Adjusted EBITDA     Adjusted EBITDA  
Production Services   $ 41,705     $ 1,186     $ 42,891     $ 39,572     $ 905     $ 40,477     $ 32,581     $ 1,637     $ 34,218  
Drilling & Evaluation      15,538            954        16,492       15,631       216       15,847       15,239       1,060       16,299  
Unallocated     (3,939 )     359       (3,580 )     (5,168 )     685       (4,483 )     (4,992 )     2,183       (2,809 )
Total   $ 53,304     $ 2,499     $ 55,803     $ 50,035     $ 1,806     $ 51,841     $ 42,828     $ 4,880     $ 47,708  

 

Table 4 - Reconciliation of Segment EBITDA to Segment Operating Income

 

    Quarter ended September 30, 2020     Quarter ended June 30, 2020     Quarter ended September 30, 2019  
Production Services:                        
Segment EBITDA   $ 41,705     $ 39,572     $ 32,581  
Depreciation and amort.     (20,222 )     (19,637 )     (12,322 )
Other (income)/expense, net     (58 )     282       188  
Segment Operating Income     21,425       20,217       20,447  
Drilling and Evaluation Services:                        
Segment EBITDA            15,538       15,631       15,239  
Depreciation and amort.     (8,153 )     (7,318 )     (5,980 )
Other (income)/expense, net     (8 )     21       (76 )
Segment Operating Income     7,377       8,334       9,183  
Unallocated:                        
Segment EBITDA     (3,939 )     (5,168 )     (4,992 )
Share-based compensation     (2,082 )     (2,125 )     (1,944 )
Depreciation and amort.     (3,823 )     (3,406 )     (2,950 )
Other (income)/expense, net     29       6 )     18  
Unallocated Operating Income     (9,815 )     (10,693 )     (9,868 )
Total Operating Income   $ 18,987     $ 17,858     $ 19,762  

 

Table 5 - Reconciliation of Net cash provided by (used in) operating activities to Free Cash Flow

 

    Quarter Ended  
    September 30, 2020     June 30, 2020     September 30, 2019  
                   
Net cash provided by (used in) operating activities   $         33,455     $ 42,650     $ (21,118 )
Less:                        
Capital expenditures     (24,787 )     (27,119 )     (33,648 )
Free cash flow   $ 8,668     $ 15,531   $ (12,530 )

 

Table 6 - Reconciliation to Net Debt

 

    September 30, 2020     June 30, 2020     September 30, 2019  
                   
Current installments of long-term debt   $      43,750     $ 46,372     $ 7,500  
Short-term borrowings     36,392       39,781       28,261  
Long-term debt     319,738       335,457       337,885  
Less:                        
Cash and cash equivalents     50,487       79,317       43,082  
Net Debt   $ 349,393     $ 342,293     $ 330,564  

 

For inquiries regarding NESR, please contact:

Christopher L. Boone

National Energy Services Reunited Corp.

832-925-3777

investors@nesr.com