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Nabors' (NBR) Q2 Loss Narrower Than Expected, Sales Miss
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Nabors Industries Ltd.’s (NBR - Free Report) second-quarter 2020 loss from continuing operations (excluding special items) of $14.45 per share is narrower than the Zacks Consensus Estimate of a loss of $26.40 as well as the year-ago loss of $20.50. This outperformance can be attributed to a strong contribution from the Rig Technologies segment.
However, quarterly revenues of $535.97 million missed the Zacks Consensus Estimate $541 million and also declined from the year-ago level of $809 million, primarily due to weak performance at the U.S. drilling and Drilling Solutions segments.
Notably, year over year, Nabors’ adjusted EBITDA fell from $198.4 million to $153.8 million.
Segmental Performance
U.S. Drilling generated quarterly operating revenues of $173.8 million, down 46.3% from the year-ago level of $323.4 million. The segment recorded an operating loss of $23.4 million against the year-ago income of $20.4 million due to a drop in the rig count at Lower 48.
Canadian Drilling’s revenues of $3.56 million in the quarter under review tumbled from the year-ago figure of $11.4 million. Moreover, the segment’s operating loss came in at $5.8 million, wider than the year-ago quarter’s loss of $5.5 million due to weak activity across several markets and coronavirus-induced market distortions.
International Drilling’s operational revenues of $301.1 million decreased from the year-ago quarter’s sales of $326.9 million. However, the segmental operating income came in at $276 thousand in the reported quarter against the prior-year loss of $6.9 million.
Revenues from the Drilling Solutions were 48.7% down to $33.1 million in the second quarter from $64.6 million a year ago and the same further missed the Zacks Consensus Estimate of $36.1 million. Moreover, the unit’s operating income of $1.73 million slumped from $13.8 million due to diminished activity across service lines and an increased price competition.
Revenues from the Rig Technologies segment plunged 53.8% to $33.6 million from the prior-year level of $72.75 million. However, the metric surpassed the Zacks Consensus Estimate of $29.5 million. Moreover, the segment’s operating income marginally improved to $3.17 million from the prior-year figure of $3.16 million. This upside is owing to robust sales in international markets and solid cost-saving measures.
Nabors Industries Ltd. Price, Consensus and EPS Surprise
Total costs and expenses declined to $669.5 million from $953.3 million in the year-ago quarter, reflecting lower depreciation costs and impairment charges.
As of Jun 30, 2020, the company had $494.3 million in cash and short-term investments and a long-term debt of $3.3 billion with total debt to total capital of 69.9%.
Guidance
Nabors reiterates its previously announced 2020 capex guidance cut to $240 million, indicating a $185 million decrease from the year-earlier reported figure.
This Hamilton-based entity’s third-quarter average Lower 48 rig count is anticipated to fall by two to three rigs from the second-quarter figure of 49 rigs. Additionally, the company projects its drilling margins to shrink between $9,000 and $9,500, implying more normal costs and the continued impact of soft pricing.
However, its Canada Drilling segment estimates its third-quarter adjusted EBITDA to grow on the back of seasonal activity recovery. Also, the rig count is expected to rise by four rigs in the third quarter.
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Nabors' (NBR) Q2 Loss Narrower Than Expected, Sales Miss
Nabors Industries Ltd.’s (NBR - Free Report) second-quarter 2020 loss from continuing operations (excluding special items) of $14.45 per share is narrower than the Zacks Consensus Estimate of a loss of $26.40 as well as the year-ago loss of $20.50. This outperformance can be attributed to a strong contribution from the Rig Technologies segment.
However, quarterly revenues of $535.97 million missed the Zacks Consensus Estimate $541 million and also declined from the year-ago level of $809 million, primarily due to weak performance at the U.S. drilling and Drilling Solutions segments.
Notably, year over year, Nabors’ adjusted EBITDA fell from $198.4 million to $153.8 million.
Segmental Performance
U.S. Drilling generated quarterly operating revenues of $173.8 million, down 46.3% from the year-ago level of $323.4 million. The segment recorded an operating loss of $23.4 million against the year-ago income of $20.4 million due to a drop in the rig count at Lower 48.
Canadian Drilling’s revenues of $3.56 million in the quarter under review tumbled from the year-ago figure of $11.4 million. Moreover, the segment’s operating loss came in at $5.8 million, wider than the year-ago quarter’s loss of $5.5 million due to weak activity across several markets and coronavirus-induced market distortions.
International Drilling’s operational revenues of $301.1 million decreased from the year-ago quarter’s sales of $326.9 million. However, the segmental operating income came in at $276 thousand in the reported quarter against the prior-year loss of $6.9 million.
Revenues from the Drilling Solutions were 48.7% down to $33.1 million in the second quarter from $64.6 million a year ago and the same further missed the Zacks Consensus Estimate of $36.1 million. Moreover, the unit’s operating income of $1.73 million slumped from $13.8 million due to diminished activity across service lines and an increased price competition.
Revenues from the Rig Technologies segment plunged 53.8% to $33.6 million from the prior-year level of $72.75 million. However, the metric surpassed the Zacks Consensus Estimate of $29.5 million. Moreover, the segment’s operating income marginally improved to $3.17 million from the prior-year figure of $3.16 million. This upside is owing to robust sales in international markets and solid cost-saving measures.
Nabors Industries Ltd. Price, Consensus and EPS Surprise
Nabors Industries Ltd. price-consensus-eps-surprise-chart | Nabors Industries Ltd. Quote
Financials
Total costs and expenses declined to $669.5 million from $953.3 million in the year-ago quarter, reflecting lower depreciation costs and impairment charges.
As of Jun 30, 2020, the company had $494.3 million in cash and short-term investments and a long-term debt of $3.3 billion with total debt to total capital of 69.9%.
Guidance
Nabors reiterates its previously announced 2020 capex guidance cut to $240 million, indicating a $185 million decrease from the year-earlier reported figure.
This Hamilton-based entity’s third-quarter average Lower 48 rig count is anticipated to fall by two to three rigs from the second-quarter figure of 49 rigs. Additionally, the company projects its drilling margins to shrink between $9,000 and $9,500, implying more normal costs and the continued impact of soft pricing.
However, its Canada Drilling segment estimates its third-quarter adjusted EBITDA to grow on the back of seasonal activity recovery. Also, the rig count is expected to rise by four rigs in the third quarter.
Zacks Rank & Key Picks
Nabors currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Halliburton Company (HAL - Free Report) , Core Laboratories NV (CLB - Free Report) and Newpark Resources Inc (NR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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