Nabors(NBR) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights Q2 2025 Financial Performance Nabors reported a significant sequential increase in operating revenues to $833 million for the second quarter of 2025, recording a net loss of $31 million, in contrast to the prior quarter's net income inflated by a one-time gain from the Parker transaction, while Adjusted EBITDA showed strong sequential growth to $248 million Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Operating Revenues | $833 million | $736 million | | Net Income (Loss) Attributable to Nabors | ($31 million) | $33 million | | Loss (Earnings) per Diluted Share | ($2.71) | $2.18 | | Adjusted EBITDA | $248 million | $206 million | - The first quarter's net income included a one-time, non-cash net gain of $113.0 million, or $9.68 per diluted share, from the Parker transaction, which explains the significant difference in net income between Q1 and Q2[2] Q2 2025 Operational Highlights The second quarter was marked by the successful integration of Parker Wellbore, which materially contributed to financial results and achieved targeted cost synergies, alongside the SANAD joint venture's expansion, new rig deployments, and several drilling records in major U.S. basins - Key operational achievements in Q2 2025 include: - SANAD JV Expansion: Deployed two newbuild rigs in Saudi Arabia, bringing the total to twelve, and received an award for five more newbuilds - Kuwait Reactivations: Commenced operations for three high-specification rigs under multiyear contracts - Drilling Records: Set multiple records for lateral wellbore lengths with PACE® series SmartRigs® in the Bakken, Haynesville, and Eagle Ford basins - Parker Wellbore Integration: Made significant progress integrating the acquired businesses, which contributed materially to financial results and supported the $40 million cost synergy target for 2025[4][5] Segment Performance Adjusted EBITDA grew sequentially across most segments, significantly boosted by the full-quarter contribution from the acquired Parker operations, with International Drilling seeing modest growth, U.S. Drilling improving due to a higher rig count, Drilling Solutions experiencing a substantial increase, and Rig Technologies seeing a slight decline Adjusted EBITDA by Segment (Q2 2025 vs. Q1 2025) | Segment | Q2 2025 Adjusted EBITDA | Q1 2025 Adjusted EBITDA | Change | | :--- | :--- | :--- | :--- | | International Drilling | $117.7 million | $115.5 million | +$2.2M | | U.S. Drilling | $101.8 million | $92.7 million | +$9.1M | | Drilling Solutions | $76.5 million | $40.9 million | +$35.6M | | Rig Technologies | $5.2 million | $5.6 million | -$0.4M | - The addition of Parker's operations was a primary driver of growth, especially in the Drilling Solutions segment, which now comprises over 25% of adjusted EBITDA from operating segments[9][11] Cash Flow Analysis The company generated $41 million in adjusted free cash flow, a significant turnaround from a $61 million consumption in the prior quarter, driven by lower quarterly cash interest payments and improved customer collections, offsetting an increase in capital expenditures, and remaining on track to meet its full-year adjusted free cash flow target of $80 million Adjusted Free Cash Flow | Period | Adjusted Free Cash Flow | | :--- | :--- | | Q2 2025 | $41 million | | Q1 2025 | ($61 million) | - The improvement was achieved despite significantly lower-than-expected collections from the main customer in Mexico, as this was offset by higher payments from other clients[12] - The company forecasts similar adjusted free cash flow in Q3 and anticipates reaching its $80 million target for the full year, assuming expected collections from Mexico materialize[16] Q3 2025 Outlook Nabors anticipates its Lower 48 rig count and pricing to stabilize in the second half of the year, with Q3 U.S. Drilling adjusted EBITDA expected to be in line with Q2, International segment's daily gross margin projected to increase, and full-year 2025 capital expenditures forecasted between $700-$710 million, including significant investment in SANAD newbuilds Q3 2025 Guidance | Segment/Metric | Q3 2025 Outlook | | :--- | :--- | | U.S. Drilling | | | Lower 48 Average Rig Count | 57 - 59 rigs | | Lower 48 Daily Adjusted Gross Margin | ~$13,300 | | Alaska & GoM Combined Adj. EBITDA | ~$26 million | | International | | | Average Rig Count | 87 - 88 rigs | | Daily Adjusted Gross Margin | ~$17,900 | | Drilling Solutions | Adj. EBITDA approx. in line with Q2 | | Rig Technologies | Adj. EBITDA up ~$2 - $3 million from Q2 | Capital Expenditures and Free Cash Flow Outlook | Metric | Outlook | | :--- | :--- | | Q3 2025 Capital Expenditures | $200 - $210 million | | Full-Year 2025 Capital Expenditures | $700 - $710 million | | Q3 2025 Adjusted Free Cash Flow | In line with Q2 | Financial Statements Condensed Consolidated Statements of Income (Loss) For the second quarter of 2025, Nabors reported operating revenues of $832.8 million and a net loss attributable to shareholders of $30.9 million, or ($2.71) per diluted share, compared to a net income of $33.0 million in Q1 2025, which was influenced by a significant non-cash gain on bargain purchase related to the Parker acquisition Income Statement Highlights (Three Months Ended June 30, 2025) | Metric | Q2 2025 (In thousands) | Q1 2025 (In thousands) | | :--- | :--- | :--- | | Operating revenues | $832,788 | $736,186 | | Income (loss) before income taxes | $20,872 | $72,186 | | Net income (loss) attributable to Nabors | $(30,910) | $32,988 | | Diluted earnings (losses) per share | $(2.71) | $2.18 | | Adjusted EBITDA | $248,459 | $206,345 | Condensed Consolidated Balance Sheets As of June 30, 2025, the company's balance sheet showed total assets of $5.04 billion, slightly down from the previous quarter, with cash and short-term investments at $387.4 million, long-term debt stable at $2.67 billion, and total equity at $640.3 million Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 (In thousands) | March 31, 2025 (In thousands) | | :--- | :--- | :--- | | Cash and short-term investments | $387,355 | $404,109 | | Total current assets | $1,196,891 | $1,198,818 | | Total assets | $5,038,663 | $5,049,684 | | Long-term debt | $2,672,820 | $2,685,169 | | Total liabilities | $3,591,993 | $3,604,307 | | Total equity | $640,328 | $649,734 | Segment Reporting In Q2 2025, the International Drilling segment was the largest contributor to both operating revenues ($385.0 million) and adjusted EBITDA ($117.7 million), while the Drilling Solutions segment saw its revenue more than double sequentially to $170.3 million due to the Parker acquisition, and the average number of working rigs increased to 158.3 globally Q2 2025 Operating Revenues by Segment (In thousands) | Segment | Q2 2025 (In thousands) | Q1 2025 (In thousands) | | :--- | :--- | :--- | | U.S. Drilling | $255,438 | $230,746 | | International Drilling | $384,970 | $381,718 | | Drilling Solutions | $170,283 | $93,179 | | Rig Technologies | $36,527 | $44,165 | Q2 2025 Adjusted EBITDA by Segment (In thousands) | Segment | Q2 2025 (In thousands) | Q1 2025 (In thousands) | | :--- | :--- | :--- | | U.S. Drilling | $101,821 | $92,711 | | International Drilling | $117,658 | $115,486 | | Drilling Solutions | $76,501 | $40,853 | | Rig Technologies | $5,174 | $5,563 | Q2 2025 Average Rigs Working | Segment | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | U.S. Drilling | 72.4 | 68.2 | | International Drilling | 85.9 | 85.0 | | Total | 158.3 | 153.2 | Reconciliation of Non-GAAP Financial Measures Reconciliation of Earnings per Share This section details the calculation of basic and diluted earnings per share (EPS), where for Q2 2025, the net loss attributable to Nabors of $30.9 million, after adjustments, resulted in a basic and diluted loss per share of ($2.71) based on 14,083 weighted-average shares outstanding - Due to the net loss position in Q2 2025, there was no dilutive effect from convertible notes or potential common shares, resulting in basic and diluted EPS being identical[37] Reconciliation of Segment EBITDA and Operating Income This table reconciles adjusted operating income to adjusted EBITDA for each business segment by adding back depreciation and amortization, showing that for Q2 2025, total adjusted EBITDA was $248.5 million, derived from $73.4 million in total adjusted operating income and $175.1 million in total depreciation and amortization Total Company Reconciliation for Q2 2025 (In thousands) | Metric | Amount (In thousands) | | :--- | :--- | | Adjusted operating income (loss) | $73,398 | | Depreciation and amortization | $175,061 | | Adjusted EBITDA | $248,459 | Reconciliation of Segment Gross Margin and Operating Income This section reconciles adjusted operating income to adjusted gross margin for the U.S. and International Drilling segments by adding back G&A, R&E, and depreciation & amortization costs, with Q2 2025 showing the U.S. Drilling segment's adjusted gross margin at $108.2 million and the International Drilling segment's at $137.0 million - Adjusted gross margin, a key performance metric for drilling segments, is calculated by adding back general and administrative costs, research and engineering costs, and depreciation and amortization to the segment's adjusted operating income[39] Reconciliation to Net Income (Loss) This table provides a clear reconciliation from the GAAP measure of Net Income (Loss) to the non-GAAP measures of Adjusted Operating Income and Adjusted EBITDA, where for Q2 2025, a net loss of $2.2 million was adjusted for various items to arrive at an Adjusted EBITDA of $248.5 million Reconciliation from Net Income to Adjusted EBITDA for Q2 2025 (In thousands) | Metric | Amount (In thousands) | | :--- | :--- | | Net income (loss) | $(2,205) | | Adjustments (Taxes, Interest, etc.) | $81,714 | | Adjusted operating income (loss) | $73,398 | | Depreciation and amortization | $175,061 | | Adjusted EBITDA | $248,459 | Reconciliation of Net Debt Net debt is calculated as total long-term debt less cash and short-term investments, with Nabors' net debt as of June 30, 2025, being approximately $2.29 billion, remaining relatively stable compared to the previous quarter Net Debt Calculation (In thousands) | Metric | June 30, 2025 (In thousands) | March 31, 2025 (In thousands) | | :--- | :--- | :--- | | Long-term debt | $2,672,820 | $2,685,169 | | Less: Cash and short-term investments | $(387,355) | $(404,109) | | Net Debt | $2,285,465 | $2,281,060 | Reconciliation of Adjusted Free Cash Flow This table reconciles net cash from operating activities to adjusted free cash flow, showing that for Q2 2025, net cash from operations was $151.8 million, and after subtracting net capital expenditures and adding back cash paid for acquisition-related costs, the adjusted free cash flow was $40.6 million Adjusted Free Cash Flow Reconciliation for Q2 2025 (In thousands) | Metric | Amount (In thousands) | | :--- | :--- | | Net cash provided by operating activities | $151,810 | | Less: Capital expenditures, net | $(141,849) | | Free cash flow | $9,961 | | Add: Cash paid for acquisition related costs | $30,635 | | Adjusted free cash flow | $40,596 |