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Why National Energy Stock Climbed to a New All-Time High Today
Key Points
National Energy generated sharply higher free cash flow in the second quarter.
Management is wisely paying down debt to strengthen the company's financial position.
Shares of National Energy Services Reunited (NASDAQ: NESR) surged to a record high on Monday after the oil and gas field operator reported a massive increase in profits.
Image source: Getty Images.
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Strong execution in a difficult operating environment
NESR's second-quarter revenue jumped 59% year over year to $521 million, driven by higher demand for its hydraulic fracturing and well testing services.
It was a particularly impressive performance given that the oilfield operations provider primarily serves customers in the Middle East and North Africa.
"Despite the continued conflict in the region, we maintained our presence intact in all operating units with no interruption to any of our customers' activities," CEO Sherif Foda said.
Soaring profits are bolstering NESR's balance sheet
The operating leverage inherent in NESR's business model was on full display during the quarter. Its adjusted net income soared 126% to $45 million, while its earnings per share climbed 110% to $0.44.
NESR also generated $100 million in free cash flow, up from $69 million in the prior-year quarter. That enabled it to pay down debt and increase its cash reserves to $175 million as of June 30.
"These results reinforce the scalability of the NESR platform and our ability to consistently translate growth into expanding profitability, strong cash generation, and long-term shareholder value," chief financial officer Stefan Angeli said.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.