Nabors Announces First Quarter Results

Date : 05/01/2018 @ 7:27PM
Source : PR Newswire (US)
Stock : Nabors Industries Ltd. (NBR)
Quote : 7.28  -0.52 (-6.67%) @ 5:42PM

Nabors Announces First Quarter Results

Nabors (NYSE:NBR)
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HAMILTON, Bermuda, May 1, 2018 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported first quarter 2018 operating revenue of $734 million, compared to operating revenue of $708 million in the prior quarter.  Net income from continuing operations attributable to Nabors for the quarter was a loss of $144 million, or $0.46 per share, compared to a loss of $116 million, or $0.40 per share, in the fourth quarter of 2017.  Results for the first quarter included transaction charges of $7.4 million, or $0.02 per share and a sequential increase in non-cash tax expense of $46 million, or $0.15 per share. 

Anthony Petrello, Nabors Chairman and CEO, commented, "Our first quarter results showed continued improvement, primarily attributable to the outstanding performance of our US Drilling segment.  Canada Drilling also contributed meaningfully with the higher activity of the winter drilling season.  Our Drilling Solutions segment continued to achieve solid growth and remains on track to meet its annualized fourth quarter 2018 adjusted EBITDA objective of $100 million.  Internationally, our results declined slightly with lower average margins partially offset by four additional rigs working.  Rig Technologies came in well short of our expectations, principally due to delayed completion and shipment into April of numerous third-party legacy Tesco capital equipment orders.  The related logistics and manufacturing issues are resolved at our Tesco Calgary facility and we do not expect them to recur in the second quarter. We anticipate further improvements in all of our non-seasonal segments in the coming quarters."   

Consolidated and Segment Results

Adjusted operating income for the Company was a loss of $45 million during the quarter, as compared to a loss of $52 million in the fourth quarter of 2017.  Quarterly consolidated adjusted EBITDA represented an increase at $168 million, compared to $163 million in the fourth quarter.  During the first quarter, the Company averaged 228 rigs operating at an average gross margin of $11,470 per rig day.  This compares to 211 rigs at $10,963 per rig day in the fourth quarter of 2017.

The U.S. Drilling segment posted a 36% sequential increase in adjusted EBITDA, which equaled $73.1 million for the quarter.  This was driven by an increase of 6 rigs working and a 27% increase in average gross margin per rig day.  Virtually all of this increase in gross margin was attributable to the performance of the US lower 48 operation, which achieved an increase of approximately $2,000 per rig day.  The majority of this increase in lower 48 margins was attributable to reduced costs.  An increase in average dayrates also contributed meaningfully to the margin improvement.    In addition, on April 1, our MODS-400 deepwater platform rig commenced full operating rate on the Bigfoot deepwater offshore in the U.S. Gulf of Mexico.  This together with a recent contract award for an existing offshore platform rig and prospects for more should significantly boost near-term results.

International Drilling adjusted EBITDA decreased sequentially by $4.9 million to $124 million.  This decrease arose from the net effects of a quarterly increase in rig activity that was more than offset by lower average margins.  Average rig margins per day decreased by $594 largely attributable to a significant amount of previously announced long-term contract renewals at rates closer to market.  The quarterly average rig count increased by four to 94.6, representing the first significant increase in five quarters.   This appears to mark the beginning of a significant ramp up in activity over the course of the year.  Rig activity has been expanding with eight additional rigs scheduled to start before year-end and a number of proposals submitted or in process.  The market for higher spec international rigs is tightening and we expect rates for these rigs to increase as the year progresses.      

Canada Drilling operations posted a seasonal high in adjusted EBITDA of $9.3 million amounting to a 120% sequential increase.  The quarter's results also represented an increase of nearly 50% over the seasonally high first quarter of the prior year. The sequential improvement was attributable to higher rig activity, while the year-over-year growth arose from an increase in average per rig day margins on a flat rig count.  The Company expects a similar degree of improvement in adjusted EBITDA for the full year 2018.

In Drilling Solutions, adjusted EBITDA of $14.7 million represented a 17% quarterly increase. The results reflected higher activity across nearly all of the segment's product lines during the quarter, as well as increased contribution from Tesco's casing running services.  The segment again increased its penetration on both Nabors and third party rigs.  During the quarter, it also achieved two significant milestones that bolster the Company's expectations for the future.  Specifically, it conducted the first commercial operations for two key customers with its Navigator and Rockit® Pilot software, which facilitates directional drilling automation.  Additionally, Drilling Solutions worked with Canrig on the first successful field test of the rotary steerable system on a customer well.  This segment remains on track to achieve its annualized fourth-quarter 2018 goal of $100 million in adjusted EBITDA.

In the Rig Technologies segment, first quarter adjusted EBITDA was a loss of $8.7 million, down by $4.4 million compared to the fourth quarter. This shortfall was principally attributable to manufacturing issues, which induced delays in completing and shipping several capital equipment items - primarily six top drives - from the Calgary facility.  Most of these delayed units were completed and shipped in the first month of the second quarter.  The company expects the traditional capital equipment portion of the segment to return to positive adjusted EBITDA in the second quarter.  Meanwhile, both the robotics and rotary steerable developmental product lines achieved significant milestones during the quarter.  The robotics group received a contract for engineering work in advance of what it expects will be its first commercial order for a complete offshore rig floor automation system.  The award is from a large North Sea operator and encompasses the planning required to retrofit an offshore platform in mid-2019.  The rotary steerable group successfully conducted its first field test on a customer's well in South Texas for a large US E&P operator.  We believe commercialization of both product lines remains on track for late 2018.

William Restrepo, Nabors Chief Financial Officer, stated, "In general, our results continued the trends of the fourth quarter with strong overall drilling results, particularly in North America, and continued growth in NDS. Our International rig count is picking up fast, although pricing still lags. Finally, sluggish shipments of drilling equipment provided a temporary headwind.   

"Net debt increased by $200 million in the first quarter, which was $100 million more than anticipated due to cash outlays that should not recur in the second quarter. Among these were an increase of working capital associated with the initiation of SANAD operations, transaction costs and slower collections related to the Tesco acquisition, the customary first quarter spike in payroll expense, and fees associated with our bond issuance.  The timing of our semiannual major interest payments also weighed on the first quarter's cash flow.  We expect to generate positive cash flow in the second quarter exclusive of any proceeds from the potential sale of the first tranche of our Middle East jackups.  Further, we expect the increasing growth in consolidated adjusted EBITDA, along with other positive developments will lead to positive cash flow for the full year 2018."

Mr. Petrello concluded, "This quarter represents the first full quarter of operations by SANAD, our land drilling joint venture in Saudi Arabia.  I would like to express how pleased our entire organization is with the efficiency of the integration and most importantly, the level of cooperation from our partner, Saudi Aramco.  

"Regarding the other facets of our operations, I am particularly pleased with the substantial progress achieved in improving the profitability of our US lower 48 operations.  Our expectation of continued progress, in combination with the increasingly favorable outlook for all of our other segments, reinforces our confidence in achieving our vision 2020 goals of reducing our leverage and restoring returns on capital.  The near-term presents some challenges.  But absent a sharp contraction in oil prices, I believe as the year progresses we could experience each of our operations growing concurrently, a rather rare occurrence during my time at Nabors."

About Nabors

Nabors Industries (NYSE: NBR) owns and operates one of the world's largest land-based drilling rig fleets and is a provider of offshore platform rigs in the United States and numerous international markets. Nabors also provides directional drilling services, performance tools, and innovative technologies for its own rig fleet and those of third parties. Leveraging our advanced drilling automation capabilities, Nabors highly skilled workforce continues to set new standards for operational excellence and transform our industry.

Forward-looking Statements

The information included in this press release includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to a number of risks and uncertainties, as disclosed by Nabors from time to time in its filings with the Securities and Exchange Commission. As a result, of these factors, Nabors' actual results may differ materially from those indicated or implied by such forward-looking statements.  The forward-looking statements contained in this press release reflect management's estimates and beliefs as of the date of this press release.  Nabors does not undertake to update these forward-looking statements.  

Non-GAAP Disclaimer

This press release presents certain "non-GAAP" financial measures.  The components of these non-GAAP measures are computed by using amounts that are determined in accordance with accounting principles generally accepted in the United States of America ("GAAP").  Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues.  Adjusted operating income (loss) is computed similarly, but also subtracts depreciation and amortization expenses from operating revenues. Net debt is computed by subtracting the sum of cash and short-term investments from total debt.  Each of these non-GAAP measures has limitations and therefore should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make.  However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA, adjusted operating income (loss), and net debt, because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.  Securities analysts and investors also use these measures as some of the metrics on which they analyze the Company's performance. Other companies in this industry may compute these measures differently.  A reconciliation of adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes and net debt to total debt, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release. 

Media ContactDennis A. Smith, Vice President of Corporate Development & Investor Relations, +1 281-775-8038.  To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail at mark.andrews@nabors.com

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)








Three Months Ended


March 31,


December 31,







(In thousands, except per share amounts)

2018


2017


2017







Revenues and other income:






Operating revenues 

$  734,194


$  562,550


$       708,277

Earnings (losses) from unconsolidated affiliates

2


2


1

Investment income (loss)

465


721


986

Total revenues and other income

734,661


563,273


709,264







Costs and other deductions:






Direct costs

475,403


387,644


471,641

General and administrative expenses

74,571


63,409


59,070

Research and engineering

15,806


11,757


15,009

Depreciation and amortization

213,448


203,672


214,106

Interest expense

61,386


56,518


57,076

Other, net

14,089


13,510


30,243

Total costs and other deductions

854,703


736,510


847,145







Income (loss) from continuing operations before income taxes

(120,042)


(173,237)


(137,881)

Income tax expense (benefit)

23,545


(25,609)


(23,156)







Income (loss) from continuing operations, net of tax

(143,587)


(147,628)


(114,725)

Income (loss) from discontinued operations, net of tax

(75)


(439)


(442)







Net income (loss)

(143,662)


(148,067)


(115,167)

Less: Net (income) loss attributable to noncontrolling interest

(539)


(917)


(1,177)

Net income (loss) attributable to Nabors

$(144,201)


$(148,984)


$      (116,344)







Amounts attributable to Nabors:






Net income (loss) from continuing operations

$(144,126)


$(148,545)


$      (115,902)

Net income (loss) from discontinued operations

(75)


(439)


(442)

Net income (loss) attributable to Nabors

$(144,201)


$(148,984)


$      (116,344)







Earnings (losses) per share:






Basic from continuing operations

$      (0.46)


$      (0.52)


$            (0.40)

Basic from discontinued operations

-


-


-

Total Basic

$      (0.46)


$      (0.52)


$            (0.40)







Diluted from continuing operations

$      (0.46)


$      (0.52)


$            (0.40)

Diluted from discontinued operations

-


-


-

Total Diluted

$      (0.46)


$      (0.52)


$            (0.40)













Weighted-average number of common shares outstanding:






Basic 

308,788


277,781


286,603

Diluted 

308,788


277,781


286,603













Adjusted EBITDA

$ 168,414


$    99,740


$       162,557







Adjusted operating income (loss)

$ (45,034)


$(103,932)


$       (51,549)

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS






March 31,


December 31,

(In thousands)

2018


2017


(Unaudited)

ASSETS




Current assets:




Cash and short-term investments

$    393,587


$       365,366

Accounts receivable, net

733,541


698,477

Assets held for sale

36,404


37,052

Other current assets

330,841


346,441

     Total current assets

1,494,373


1,447,336

Property, plant and equipment, net

5,969,063


6,109,565

Goodwill

172,982


173,226

Other long-term assets

663,412


671,857

     Total assets

$ 8,299,830


$    8,401,984





LIABILITIES AND EQUITY




Current liabilities:




Current portion of debt

$           375


$              181

Other current liabilities

766,453


919,295

     Total current liabilities

766,828


919,476

Long-term debt

4,256,160


4,027,766

Other long-term liabilities

333,438


311,971

     Total liabilities

5,356,426


5,259,213





Redeemable noncontrolling interest in subsidiary

206,396


203,998





Equity:




Shareholders' equity

2,709,608


2,911,816

Noncontrolling interest

27,400


26,957

     Total equity

2,737,008


2,938,773

     Total liabilities and equity

$ 8,299,830


$    8,401,984

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

SEGMENT REPORTING

(Unaudited)







The following tables set forth certain information with respect to our reportable segments and rig activity:








Three Months Ended


March 31,


December 31,







(In thousands, except rig activity)

2018


2017


2017







Operating revenues:






U.S. Drilling

$ 241,002


$  161,934


$       233,198

Canada Drilling

31,887


27,808


19,927

International Drilling

368,845


338,223


381,393

Drilling Solutions

62,648


27,365


44,001

Rig Technologies (1)

64,669


44,076


79,249

Other reconciling items (2)

(34,857)


(36,856)


(49,491)

Total operating revenues

$ 734,194


$  562,550


$       708,277







Adjusted EBITDA: (3)






U.S. Drilling

$   73,067


$    26,629


$         53,618

Canada Drilling

9,299


6,335


4,253

International Drilling

123,990


108,656


128,902

Drilling Solutions

14,728


2,946


12,596

Rig Technologies (1)

(8,684)


(5,053)


(4,292)

Other reconciling items (4)

(43,986)


(39,773)


(32,520)

Total adjusted EBITDA

$ 168,414


$    99,740


$       162,557







Adjusted operating income (loss): (5)






U.S. Drilling

$ (19,746)


$   (63,182)


$        (41,080)

Canada Drilling

(592)


(4,011)


(5,743)

International Drilling

24,536


11,974


27,964

Drilling Solutions

8,721


(978)


8,080

Rig Technologies (1)

(12,976)


(8,131)


(7,258)

Other reconciling items (4)

(44,977)


(39,604)


(33,512)

Total adjusted operating income (loss)

$ (45,034)


$(103,932)


$        (51,549)







Rig activity:






Average Rigs Working: (6)






U.S. Drilling

111.8


88.8


106.3

Canada Drilling

21.1


22.0


13.8

International Drilling

94.6


89.8


90.7

Total average rigs working

227.5


200.6


210.8



(1)

Includes our oilfield equipment manufacturing, automated systems, and downhole tools.



(2)

Represents the elimination of inter-segment transactions.



(3)

Adjusted EBITDA is computed by subtracting the sum of direct costs, general and administrative expenses and research and engineering expenses from operating revenues. Adjusted EBITDA is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted EBITDA excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.  Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance.  Other companies in this industry may compute these measures differently.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".



(4)

Represents the elimination of inter-segment transactions and unallocated corporate expenses.



(5)

Adjusted operating income (loss) is computed by subtracting the sum of direct costs, general and administrative expenses, research and engineering expenses and depreciation and amortization from operating revenues. Adjusted operating income (loss) is a non-GAAP financial measure and should not be used in isolation or as a substitute for the amounts reported in accordance with GAAP. In addition, adjusted operating income (loss) excludes certain cash expenses that the Company is obligated to make. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including adjusted EBITDA and adjusted operating income (loss), because it believes that these financial measures accurately reflect the Company's ongoing profitability and performance.  Securities analysts and investors use this measure as one of the metrics on which they analyze the Company's performance.  Other companies in this industry may compute these measures differently.  A reconciliation of this non-GAAP measure to income (loss) from continuing operations before income taxes, which is the most closely comparable GAAP measure, is provided in the table set forth immediately following the heading "Reconciliation of Non-GAAP Financial Measures to Income (loss) from Continuing Operations before Income Taxes".



(6)

Represents a measure of the average number of rigs operating during a given period.  For example, one rig operating 45 days during a quarter represents approximately 0.5 average rigs working for the quarter.  On an annual period, one rig operating 182.5 days represents approximately 0.5 average rigs working for the year.

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO 

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(Unaudited)








Three Months Ended


March 31,


December 31,







(In thousands)

2018


2017


2017







Adjusted EBITDA

$  168,414


$   99,740


$      162,557

Depreciation and amortization 

(213,448)


(203,672)


(214,106)

Adjusted operating income (loss)

(45,034)


(103,932)


(51,549)







Earnings (losses) from unconsolidated affiliates

2


2


1

Investment income (loss)

465


721


986

Interest expense

(61,386)


(56,518)


(57,076)

Other, net

(14,089)


(13,510)


(30,243)

Income (loss) from continuing operations before income taxes

$(120,042)


$(173,237)


$    (137,881)

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NET DEBT TO TOTAL DEBT






March 31,


December 31,

(In thousands)

2018


2017


(Unaudited)





Current portion of debt

$           375


$              181

Long-term debt

4,256,160


4,027,766

     Total Debt

4,256,535


4,027,947

Less: Cash and short-term investments

393,587


365,366

     Net Debt

$ 3,862,948


$    3,662,581

 

Cision View original content:http://www.prnewswire.com/news-releases/nabors-announces-first-quarter-results-300640670.html

SOURCE Nabors Industries Ltd.

Copyright 2018 PR Newswire

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