Yahoo Finance Nabors' (NBR) Q1 Earnings Miss Estimates, Revenues Rise Y/Y
Nabors Industries Ltd.( NBR) reported first-quarter 2023 adjusted loss per share of 55 cents, which missed the Zacks Consensus Estimate of a profit of $1.06 per share. This underperformance was primarily due to much higher year-over-year direct costs and general and administrative expenses.
However, the loss was significantly narrower than the year-ago quarter’s reported loss of $13.88 per share. This was due to better-than-expected operating income from the U.S. and the International Drilling units.
Revenues of $789 million beat the Zacks Consensus Estimate of $768 million, owing to better-than-expected performance in some of Nabors’ segments. The top line also improved from the year-ago quarter’s level of $568.7 million.
Adjusted EBITDA increased from $130.5 million to $240 million year over year.
Segmental Performances
U.S. Drilling generated operating revenues of $350.7 million, up 61.1% from the year-ago quarter’s level of $217.6 million. The figure beat the Zacks Consensus Estimate of $343 million due to an increase in the rig count. The segment recorded an operating profit of $85.9 million, turning around from the year-ago quarter’s loss of $5.8 million.
International Drilling’s operational revenues of $320 million increased from the year-ago quarter’s sales of $279 million. This was due to an increase in performance and higher day rates on renewal contracts in Saudi Arabia. The unit’s top line also beat the Zacks Consensus Estimate of $318 million. Operating profit came in at $1.9 million compared to the prior-year quarter’s loss of $6.3 million.
Revenues from the Drilling Solutions segment totaled $75 million, up 38.5% from $54.2 million recorded in the prior-year quarter. The top line beat the Zacks Consensus Estimate of $73 million, driven by the efficient performance drilling software, and managed pressure drilling. Additionally, the unit’s operating income of $27.1 million beat the year-ago figure of $14.7 million.
Revenues from Rig Technologies increased about 59.1% to $58.5 million from the prior-year level of $36.7 million. However, the metric lagged the Zacks Consensus Estimate of $60 million. This can be attributed to the impact of delays in deliveries of capital equipment components. The segment’s operating profit came in at $3.7 million compared to the prior-year quarter’s loss of $2.8 million.
Financial Position
Nabors’ total costs and expenses decreased to $704.9 million from $729.7 million in the year-ago quarter, reflecting lower interest expenses, depreciation and amortization costs.
As of Mar 31, 2023, NBR had $475.7 million in cash and short-term investments. As of the same date, long-term debt was about $2.6 billion, with a total debt-to-total capital of 81.4%.
Nabors generated an adjusted free cash flow of $37.2 million in the reported quarter.
Guidance
Nabors’ second-quarter 2023 average rig count is expected to be 85 rigs. The daily margin is predicted between $16,900 and $17,000 in the U.S. Drilling segment.
The segment’s second-quarter daily drilling margin is anticipated between $15,900 and $16,100, with the rig count nearly in line with the first-quarter average. Expected EBITDA for Drilling Solutions increased 3% from the first-quarter level. Adjusted EBITDA for the Rig Technologies segment is estimated at $2-$3 million.
NBR expects a second-quarter 2023 capital expenditure of $140 million. It also expects an adjusted free cash flow of $400 million for full-year 2023.
Zacks Rank and Key Picks
Currently, NBR carries a Zacks Rank #5 (Strong Sell). Investors interested in the energy sector might look at some better-ranked stocks like Par Pacific PARR and Marathon Petroleum MPC,each sporting a Zacks Rank #1 (Strong Buy), and Ranger Energy Services RNGR, holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Par Pacific: PARR is worth approximately $1.63 billion. Its shares have risen 82.1% in the past year.
The company manages and maintains interests in energy and infrastructure businesses. Its operating segment consists of refining, retail and logistics.
Marathon Petroleum: MPC is valued at around $58.02 billion. It delivered an average earnings surprise of 20.91% for the last four quarters and its current dividend yield is 2.30%.
The companycurrently has a forward P/E ratio of 6.36. In comparison, its industry has an average forward P/E of 9.10, which means MPC is trading at a discount to the group.
Ranger Energy Services:RNGR is valued at around $242.99 million. In the past year, its shares have gained 16.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
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