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Nabors (NBR) Loss Wider, Sales Outperform Estimates in Q2

Shares of Nabors Industries Ltd. NBR have gone down 6.4% since the second-quarter 2022 earnings announcement on Aug 3.

This downward stock movement can be attributed to Nabor’s second-quarter loss being wider than the Zacks Consensus Estimate.

Behind the Earnings Headlines

Nabors Industries reported a second-quarter 2022 loss from continuing operations of $6.99 per share, wider than the Zacks Consensus Estimate of a loss of $6.43. 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 $18.01 per share due to better-than-expected sales from the U.S Drilling unit, Rig Technologies and the International Drilling segment.

Quarterly revenues of $631.7 million beat the Zacks Consensus Estimate of $620 million due to better-than-expected performances in some of NBR’s segments. The top line improved from the year-ago level of $489.3 million.

Nabors’ adjusted EBITDA rose from $117.3 million to $158 million year over year.

Nabors Industries Ltd. Price, Consensus and EPS Surprise

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

Segmental Performances

U.S. Drilling generated quarterly operating revenues of $253 million, up 56.5% from the year-ago level of $161.6 million, surpassing the Zacks Consensus Estimate of $249 million due to an increase in the rig count. The segment recorded an operating income of $8.3 million, comparing favorably to the year-ago loss of $20.8 million.

International Drilling’s operational revenues of $296.3 million increased from the year-ago quarter’s sales of $255.3 million due to the improved performance in Saudi Arabia and Latin America, which led growth and the international rig count up more than two rigs from the prior quarter. Moreover, the unit’s sales beat the Zacks Consensus Estimate of $291 million. The segmental operating profit came in at $4.6 million in the reported quarter, improving from the prior-year quarter’s loss of $8.4 million.

Revenues from the Drilling Solutions segment rose 42.9% to $55.9 million in the second quarter from about $39.1 million a year ago. However, the same marginally lagged the Zacks Consensus Estimate of $57 million. Additionally, the segment’s operating income of $18.3 million beat the year-ago figure of $6.5 million.

Revenues from Rig Technologies increased about 30.5% to $45 million from the prior-year level of $34.5 million. The metric beat the Zacks Consensus Estimate of $40.65 million due to increased activity in the reported quarter. Moreover, the segment’s operating profit came in at $2.1 million compared to the prior-year loss of $692,000.

Financial Position

Nabors’ total costs and expenses increased to $692.3 million from $654.9 million in the year-ago quarter, reflecting much higher direct expenses, general and administrative costs, and research and engineering expenses.

As of Jun 30, 2022, NBR had $417.9 million in cash and short-term investments and long-term debt of about $2.6 billion, with a total debt-to-total capital of 81.2%.

Nabors generated free cash flow of $56.9 million in the second quarter of 2022.

Guidance

Nabors’ third-quarter 2022 average lower 48 rig count is expected to increase by around three to four rigs over the second-quarter average, while the daily margin is predicted in the $10,400-$10,600 range.

This Hamilton-based entity’s International Drilling segment’s third-quarter 2022 daily drilling margin is anticipated at approximately $14,400, with the average rig count in line with the second-quarter average. Nabors expects third-quarter 2022 EBITDA for Drilling Solutions of 12% over the second-quarter level. Finally, adjusted EBITDA for NBR’s Rig Technologies segment is estimated at $2 million over the second-quarter level.

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

Zacks Rank & Other Key Picks

Nabors currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include Consol Energy CEIX, PBF Energy PBF and Liberty Energy LBRT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Consol Energy beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being around 15.75%.

The Zacks Consensus Estimate for CEIX’s 2022 earnings stands at $9.55 per share, up about 363.6% from the year-ago earnings of $2.06.

The Zacks Consensus Estimate for PBF Energy’s 2022 earnings stands at $16.61 per share, up about 764.4% from the year-ago loss of $2.50.

PBF beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 78%.

The Zacks Consensus Estimate for Liberty’s 2022 earnings is pegged at $1.59 per share, up about 255.9% from the year-ago loss of $1.02.

The Zacks Consensus Estimate for LBRT’s 2022 earnings has been revised upward by about 194.4% over the past 60 days from 54 cents to $1.59 per share.


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Nabors Industries Ltd. (NBR): Free Stock Analysis Report
 
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