Yahoo Finance Nabors (NBR) Incurs Loss in Q1 Earnings Season, Sales Beat
Nabors Industries NBR reported a loss per share of $4.54 in the first quarter of 2024. In the year-ago quarter, the company had reported a profit of $4.11 per share. This underperformance was primarily due to much higher year-over-year total costs and expenses.
Revenues of $743.9 million beat the Zacks Consensus Estimate of $731 million. However, the top line decreased from the year-ago quarter’s level of $789 million. This was due to poor contribution from NBR’s U.S. Drilling and Rig Technologies segments.
Adjusted EBITDA decreased to $221 million from $240 million recorded a year ago. The amount is above our model estimates of $192.6 million.
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 operating revenues of $272 million, down 22.4% from the year-ago quarter’s level of $350.7 million. The figure also missed the Zacks Consensus Estimate of $280.8 million. Operating profit totaled $50.5 million compared with the prior-year quarter’s level of $85.9 million. The figure is below our estimated profit of $52 million.
International Drilling’s operational revenues of $349.4 million increased from the year-ago quarter’s level of $320 million, attributed to the commencement of operations by five rigs. But the unit’s top line missed our estimate of $342.9 million. Operating profit totaled $22.5 million compared with the prior-year quarter’s level of $2 million. The figure is above our estimated profit of $10.3 million.
Revenues from the Drilling Solutions segment totaled $75.6 million, up 0.8% from $75 million recorded in the prior-year quarter. However, the top line missed our estimate of $86.5 million. Additionally, the unit’s operating income of $26.9 million was lower than the year-ago quarter’s figure of $27.1 million. However, it was higher than our projection of $25.7 million.
Revenues from Rig Technologies totaled $50.2 million, down 14.2% from the prior-year quarter’s level of $58.5 million. The metric beat our projection of $38.3 million. The segment’s operating profit totaled $4.2 million compared with the prior-year quarter’s level of $3.7 million. The figure is higher than our projection of $3.7 million.
Financial Position
Nabors’ total costs and expenses increased to $736.9 million from $704.9 million in the year-ago quarter, reflecting higher general and administrative expenses, interest expenses and other expenses. Additionally, the amount is above our prediction of $724.7 million.
As of Mar 31, 2024, NBR had $425.6 million in cash and short-term investments. Long-term debt was about $2.5 billion, with a total debt-to-total capital of 82.8%.
Nabors generated a free cash flow of $8.1 million in the first quarter of 2024.
Guidance
For the second quarter of 2024, Nabors expects the average rig count in the U.S. drilling segment to be around 70. It also anticipates a daily margin of $15,500 during the same time period. The adjusted EBITDA for Alaska and the Gulf of Mexico is estimated to be $21 million.
Nabors anticipates that for the International Drilling segment in the second quarter of 2024, the average rig count will increase by two to three rigs compared to the first quarter average, alongside a daily adjusted gross margin of approximately $15,700.
In terms of financial performance, Nabors expects Drilling Solutions and Rig Technologies to generate adjusted EBITDA in the range of $30-$32 million and $8-$10 million, respectively, for the second quarter of 2024.
Furthermore, Nabors anticipates capital expenditures for the second quarter of 2024 to total approximately $190 million, with around $70 million allocated for newbuilds in Saudi Arabia. The full-year capital expenditure projection stands at approximately $590 million, inclusive of funds for recent rig awards.
Zacks Rank and Key Picks
Currently, NBR carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Murphy USA Inc. MUSA and SM Energy Company SM, each sporting a Zacks #1 Rank (Strong Buy), and Sunoco LP SUN, carrying a Zacks #2 Rank (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is valued at approximately $8.67 billion. In the past year, the company’s shares have surged 51.1%.
MUSA markets retail motor fuel products and convenience merchandise, operating retail stores under the brands Murphy USA, Murphy Express and QuickChek.
SM Energy is valued at $5.77 billion. The company currently pays a dividend of 72 cents per share, or 1.45% on an annual basis.
SM engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.
Sunoco is valued at $5.71 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, thereby ensuring consistent cash flow.
SUN’s extensive distribution network across 40 states provides a robust and reliable source of income, and the Brownsville terminal expansion should add to its revenue diversification.
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