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Nabors (NBR) Earnings Lag and Sales Beat Estimates in Q1

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Nabors Industries Ltd. (NBR - Free Report) reported a first-quarter 2022 loss from the continuing operations of $13.88 per share, wider than the Zacks Consensus Estimate of a loss of $8.95. This underperformance was primarily due to much higher year-over-year total costs and expenses.

However, the loss was narrower than the year-ago loss of $20.16 per share due to better-than-expected sales from the U.S Drilling unit, the Drilling Solutions unit and the International Drilling segment.

Quarterly revenues of $568.7 million beat the Zacks Consensus Estimate of $561 million due to better-than-expected performances in some of Nabors’ segments. The top line improved from the year-ago level of $461.77 million.

Nabors’ adjusted EBITDA rose from $107.7 million to $130.5 million year over year.

Segmental Performances

U.S. Drilling generated quarterly operating revenues of $217.6 million, up 52.9% from the year-ago level of $142.3 million, surpassing the Zacks Consensus Estimate of $208 million due to an increase in the rig count. The segment recorded an operating loss of $5.8 million, narrower than the year-ago loss of $23.3 million.

International Drilling’s operational revenues of $279 million increased from the year-ago quarter’s sales of $246.8 million due to an increase in the average rig count of two to three rigs over the first-quarter average.   Moreover, the unit’s sales beat the Zacks Consensus Estimate of $276 million. The segmental operating loss came in at $6.3 million in the reported quarter, narrower than the prior-year quarter’s loss of $18.6 million.

Revenues from the Drilling Solutions segment rose 43.3% to $54.2 million in the first quarter from about $35.7 million a year ago. The same outpaced the Zacks Consensus Estimate of $53 million, driven by the efficient performance drilling software, managed pressure drilling and wellbore placement. Additionally, the unit’s operating income of $14.7 million beat the year-ago figure of $4.7 million.

Revenues from Rig Technologies increased about 42.7% to $36.7 million from the prior-year level of $25.7 million. The metric lagged the Zacks Consensus Estimate of $43.88 million and this can be attributed to the impact of delays in Canrig shipments and issues related to Russia. Moreover, the segment’s operating loss came in at $2.8 million compared with the prior-year loss of $2.6 million.

Nabors Industries Ltd. Price, Consensus and EPS Surprise

Nabors Industries Ltd. Price, Consensus and EPS Surprise

Nabors Industries Ltd. price-consensus-eps-surprise-chart | Nabors Industries Ltd. Quote

Financial Position

Nabors’ total costs and expenses increased to $729.7 million from $580.4 million in the year-ago quarter, reflecting much higher direct expenses and other net costs.

As of Mar 31, 2022, NBR had $394 million in cash and short-term investments and long-term debt of about $2.6 billion, with a total debt-to-total capital of 79.3%.

Nabors generated a negative free cash flow of $40.7 million in the first quarter of 2022.

Guidance

Nabors’ second-quarter 2022 average lower 48 rig count is expected to increase by around six to seven rigs over the first-quarter average, while the daily margin is predicted at about $8,500.

This Hamilton-based entity’s International Drilling segment’s second-quarter 2022 daily drilling margin is anticipated between $12,700 and $13,000, with an increase in the average rig count of two to three rigs over the first-quarter average. Nabors expects second-quarter 2022 EBITDA for Drilling Solutions of 5% over the first-quarter level. Finally, adjusted EBITDA for NBR’s Rig Technologies segment is estimated at around $2 million.

The capital expenditure for the second quarter of 2022 is to be in the range of $110-$120 million, with the full-year 2022 CAPEX estimated at approximately $380 million.

Zacks Rank & Key Picks

Nabors currently has a Zacks Rank #2 (Buy).

Investors interested in the energy space might also look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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