National Energy Services Reunited (NASDAQ:NESR) reported record second-quarter results for 2026, with revenue, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share all reaching new highs as activity ramped in Saudi Arabia and other markets.
Revenue rose 28.7% sequentially and 59.1% year over year to $520.8 million. Adjusted EBITDA increased to $106.2 million, producing a 20.4% margin, while adjusted net income reached $45.5 million and adjusted diluted EPS was $0.44.
Saudi Ramp Drives Revenue Growth
Chief Financial Officer Stefan Angeli said sequential growth was led by Saudi Arabia, where the company continued to ramp its Jafurah contract. Four hydraulic fracturing fleets were active throughout the second quarter, and a fifth fleet had been shipped and was expected to arrive in-country soon, subject to customer decisions on deployment timing.
NESR also recorded growth in Oman and Egypt. Angeli said Iraq remained a principal headwind because regional disruptions reduced activity there. Year-over-year growth also benefited from increased activity in Oman, Kuwait and North Africa.
Foda described Jafurah as the quarter’s “main highlight,” while noting that conventional operations in Saudi Arabia, Oman and North Africa also contributed. He said NESR’s limited exposure in the areas most affected by disruptions helped contain the impact on its results.
Adjusted EBITDA margins benefited from seasonal improvement, project ramp-ups and activity efficiencies, particularly at Jafurah. However, Angeli said margins absorbed approximately $4 million, or about 80 basis points, of incremental freight and logistics costs tied to the geopolitical environment. Those costs included special airfreight charters and other measures aimed at maintaining service continuity.
Cash Flow, Leverage and Capital Spending
Operating cash flow totaled $174 million in the quarter, compared with a first-quarter result affected by seasonal working-capital needs. Free cash flow was $99.9 million, although the figure included about $40 million of temporary quarter-end working-capital timing related to accounts payable and accrued expenses. Excluding that effect, Angeli said the business generated roughly $60 million of free cash flow.
Capital expenditures were $74.1 million as NESR deployed equipment for recently awarded contracts and continued its counter-cyclical investment strategy. Gross debt declined by $12.7 million from the first quarter to $274.6 million, while net debt fell to $99.6 million. Net debt to adjusted EBITDA was 0.3 times at June 30, or 0.42 times after normalizing for the supplier-payment timing effect, according to Angeli.
The company said trailing 12-month return on capital employed increased to approximately 13.5%.
Higher 2026 Revenue Objective
Following its first-half performance, NESR now views $2 billion in 2026 revenue as a minimum objective. Angeli said the company effectively reached its previously communicated fourth-quarter annualized exit-rate target two quarters early.
For the third quarter, management expects continued strong year-over-year revenue growth from the Jafurah ramp and recent contract awards in Kuwait, the United Arab Emirates and North Africa. It also expects sequential margin improvement consistent with normal seasonal trends. Freight and logistics remain the primary geopolitical cost pressure, but Angeli said the company does not expect those costs to exceed the second-quarter incremental amount unless conditions deteriorate materially.
- Full-year capital expenditures are expected to total approximately $210 million to $215 million.
- Net interest expense is projected at approximately $26 million to $27 million.
- The effective tax rate is expected to be about 24%.
- Net income margins are expected in a range of 9% to 9.5%.
- Free-cash-flow conversion is expected at approximately 35% to 40% of adjusted EBITDA, depending on collections.
Management expects full-year adjusted EBITDA margins to remain broadly in line with 2025 levels despite higher freight and logistics expenses. Angeli said investors could use a 21.5% to 22% margin range in the near term, while the company targets improvement over time as revenue grows and operating leverage increases.
3B3 Growth Plan and Kuwait Technology Agreement
Foda reiterated NESR’s “3B3” strategy, which targets a $3 billion revenue run rate within three years of the plan’s launch late last year. He said the company believes it could reach that goal sooner if it wins more than its share of large tenders, expands its presence in additional countries and commercializes technology investments.
The company said it is now eligible to bid on larger contract lots in many service lines after building operating scale and customer track records. Foda said some tender awards that had been expected earlier are likely to shift into the third and fourth quarters because customers are considering suppliers’ ability to mobilize equipment and personnel amid regional conditions.
NESR also highlighted its Ahmadi Innovation Valley contract in Kuwait, which establishes a long-term master technology agreement framework. Foda said the arrangement could enable the company to deploy and commercialize differentiated technologies without a separate tender for each application, provided those technologies meet customer requirements. The areas of focus include drilling, flow assurance, heavy oil, inspection, enhanced recovery and unconventional resources.
Separately, Angeli said NESR plans to begin paying a quarterly dividend in the fourth quarter of 2026 at $0.10 per share, or $0.40 annually. The company also intends to maintain its $50 million 12-month share repurchase program and evaluate a renewal after the initial authorization ends in the first quarter of 2027.
NESR also announced it will change auditors from Grant Thornton Dubai to PricewaterhouseCoopers Dubai effective for the 2027 audit. Angeli said the decision followed a competitive tender process and that there were no disagreements with Grant Thornton on accounting matters or principles.
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.
