Yahoo Finance Why Is Nabors (NBR) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Nabors Industries (NBR). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nabors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Nabors Q1 Loss Wider Than Expected
Nabors Industries reported an adjusted loss per share of $5.16 in the first quarter of 2024 compared to the Zacks Consensus Estimate for a loss of $2.24 per share. 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.
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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Nabors has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Nabors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Nabors Industries Ltd. (NBR) : Free Stock Analysis Report
