Nabors(NBR) - 2025 Q1 - Quarterly Results

Financial and Operational Highlights This section details Nabors' Q1 2025 financial performance, strategic developments, segment results, cash flow, and future outlook Q1 2025 Financial Performance Nabors reported Q1 2025 operating revenues of $736 million, achieving a $33 million net income, a significant turnaround from the prior quarter's loss, influenced by a one-time gain and Russian operation charges Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q4 2024 | Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $736 million | $730 million | +$6 million | | Net Income (Loss) Attributable to Nabors | $33 million | ($54 million) | +$87 million | | Earnings (Loss) per Diluted Share | $2.18 | ($6.67) | +$8.85 | | Adjusted EBITDA | $206 million | $221 million | -$15 million | - The first quarter results included a significant one-time, non-cash net gain of $113.0 million, or $9.68 per diluted share, related to the Parker transaction[3] - The gain was partially offset by non-cash charges totaling $28.6 million, or $2.45 per diluted share, for the wind-down of operations in Russia[3] Key Operational and Strategic Developments Q1 saw the successful acquisition of Parker Wellbore, expansion of the SANAD joint venture with new rig deployments, enhanced technology offerings through Corva AI, and the suspension of Russian operations due to sanctions - Completed the acquisition of Parker Wellbore in March, adding complementary businesses such as Quail Tools and a fleet of ten international and Alaskan drilling rigs. The transaction is expected to be immediately accretive to 2025 free cash flow[6] - The SANAD joint venture deployed its tenth newbuild rig in Q1, with the eleventh starting in April and three more planned for the remainder of 2025[6][10] - Expanded the strategic alliance with Corva AI to integrate Corva's analytics into Nabors' RigCLOUD platform, aiming to enhance real-time data processing and predictive insights[6] - Suspended activity on its three rigs in Russia in March due to expanded sanctions, with no expectation of resuming activity in the near term[6] Segment Performance Analysis International Drilling's adjusted EBITDA rose to $115.5 million with improved margins, while U.S. Drilling's fell to $92.7 million due to lower rig count; Drilling Solutions' adjusted EBITDA reached $40.9 million boosted by Parker, and Rig Technologies declined to $5.6 million Adjusted EBITDA by Segment (Q1 2025 vs. Q4 2024) | Segment | Q1 2025 Adjusted EBITDA | Q4 2024 Adjusted EBITDA | | :--- | :--- | :--- | | International Drilling | $115.5 million | $112.0 million | | U.S. Drilling | $92.7 million | $105.8 million | | Drilling Solutions | $40.9 million | $33.8 million (Q4 2024 from table) | | Rig Technologies | $5.6 million | $9.2 million (Q4 2024 from table) | - International Drilling's daily adjusted gross margin improved by over $700 to $17,421, driven by newbuilds in Saudi Arabia and better performance in several geographies[9][10] - U.S. Drilling's Lower 48 rig count averaged 61, down from 66 in Q4, and daily margins decreased to $14,276 from $14,940 due to rig churn[11] - The Drilling Solutions (NDS) segment's results included a $9.6 million contribution from the Parker operations in Q1[12] Adjusted Free Cash Flow Nabors reported a $71 million adjusted free cash flow usage in Q1 2025, primarily due to seasonal payments, $14 million in Parker transaction costs, and collection shortfalls, with significant improvement anticipated for the remainder of the year - Consolidated adjusted free cash flow was a use of $71 million in Q1 2025[13] - Cash flow was negatively impacted by higher seasonal payments (bonuses, taxes), $14 million in severance and other costs related to the Parker transaction, and delayed collections[13][16] - The Parker business is expected to add material free cash flow, with a forecast of $130 million in incremental adjusted EBITDA and $40 million in cost synergies for 2025 post-closing[15] Outlook Nabors projects Q2 2025 Lower 48 rig count at 63-64 and international daily adjusted gross margin at ~$17,700, with Drilling Solutions' adjusted EBITDA around $75 million; full-year 2025 targets include ~$80 million adjusted free cash flow and $770-$780 million capital expenditures Q2 2025 Outlook | Segment/Metric | Q2 2025 Guidance | | :--- | :--- | | U.S. Drilling | | | Lower 48 Average Rig Count | 63 - 64 rigs | | Lower 48 Daily Adj. Gross Margin | ~$14,100 | | International Drilling | | | Average Rig Count | 85 - 86 rigs | | Daily Adj. Gross Margin | ~$17,700 | | Drilling Solutions | | | Adjusted EBITDA | ~$75 million | | Rig Technologies | | | Adjusted EBITDA | In line with Q1 | Full-Year 2025 Outlook | Metric | Full-Year 2025 Guidance | | :--- | :--- | | Capital Expenditures | $770 - $780 million | | Adjusted Free Cash Flow | ~$80 million (excl. tariff impact) | Consolidated Financial Statements This section presents Nabors' condensed consolidated statements of income, balance sheets, and segment reporting, along with non-GAAP financial measure reconciliations Condensed Consolidated Statements of Income (Loss) Nabors reported Q1 2025 operating revenues of $736.2 million, resulting in a net income attributable to Nabors of $33.0 million, or $2.18 per diluted share, a significant improvement from Q4 2024's net loss Key Income Statement Data (in thousands) | Line Item | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Operating revenues | $736,186 | $729,819 | | Income (loss) before income taxes | $72,186 | ($17,638) | | Net income (loss) attributable to Nabors | $32,988 | ($53,671) | | Diluted earnings (loss) per share | $2.18 | ($6.67) | Condensed Consolidated Balance Sheets As of March 31, 2025, Nabors' total assets increased to $5.05 billion from $4.50 billion, driven by the Parker acquisition, while total liabilities rose to $3.60 billion, and shareholders' equity improved to $342.7 million Key Balance Sheet Data (in thousands) | Line Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,198,818 | $999,537 | | Total assets | $5,049,684 | $4,504,301 | | Total current liabilities | $667,645 | $571,917 | | Long-term debt | $2,685,169 | $2,505,217 | | Total liabilities | $3,604,307 | $3,297,963 | | Shareholders' equity | $342,660 | $134,996 | Segment Reporting In Q1 2025, International Drilling led with $381.7 million in revenue and $115.5 million in adjusted EBITDA, while U.S. Drilling followed, and the total average working rigs decreased to 153.2 due to a Lower 48 rig count decline Operating Revenues by Segment (in thousands) | Segment | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | U.S. Drilling | $230,746 | $241,637 | | International Drilling | $381,718 | $371,406 | | Drilling Solutions | $93,179 | $75,992 | | Rig Technologies | $44,165 | $56,166 | Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | U.S. Drilling | $92,711 | $105,757 | | International Drilling | $115,486 | $111,962 | | Drilling Solutions | $40,853 | $33,809 | | Rig Technologies | $5,563 | $9,208 | Average Rigs Working | Region | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Lower 48 | 60.6 | 65.9 | | International Drilling | 85.0 | 84.8 | | Total | 153.2 | 157.5 | Non-GAAP Reconciliations This section provides detailed reconciliations of non-GAAP financial measures, including Adjusted EBITDA, Adjusted Free Cash Flow, and Net Debt, to their most comparable GAAP counterparts, ensuring transparency of alternative performance metrics - Adjusted EBITDA is derived from net income by excluding the effects of income taxes, investment income, interest expense, gain on bargain purchase, other net expenses, and depreciation & amortization[46][47] - Adjusted free cash flow is calculated as net cash provided by operating activities minus capital expenditures (net of proceeds from asset sales). For Q1 2025, this was a use of $(71,426) thousand[52] - Net Debt as of March 31, 2025, was $2.28 billion, calculated by subtracting cash and short-term investments ($404.1 million) from long-term debt ($2.69 billion)[50]