Nabors Industries Q4 Earnings Call Highlights

Core Insights - Nabors Industries reported fourth-quarter 2025 adjusted EBITDA of $222 million, representing a 27.8% margin, which is a decline of 110 basis points sequentially, primarily due to the divestiture of Quail Tools [1][4][6] - Consolidated fourth-quarter revenue was $798 million, down 2.5% sequentially, with the sale of Quail Tools reducing revenue by $34 million, although international drilling growth partially offset this decline [2][4] - The company expects to maintain reported EBITDA levels in 2026 similar to 2025, while achieving 6% to 8% normalized growth excluding Quail [5][24] Financial Performance - Adjusted EBITDA for Q4 was $222 million, exceeding prior expectations due to stronger U.S. drilling performance and higher results from Nabors Drilling Solutions [4][6] - Full-year 2025 revenue reached $3.2 billion, an increase of 8.7% year-over-year, with adjusted EBITDA of $913 million, up $31 million from the previous year [21] - Fourth-quarter adjusted free cash flow was $132 million, surpassing revised guidance, attributed to stronger EBITDA and improved working capital [21] Segment Performance - International drilling revenue rose to $424 million, up 4.1% sequentially, with segment EBITDA increasing to $131 million, although results were modestly below prior guidance [7] - U.S. drilling revenue fell 3.7% sequentially to $241 million, with segment EBITDA at $93 million, driven by a stronger Lower 48 performance [8][10] - Nabors Drilling Solutions generated $108 million in revenue and $41 million in EBITDA, with normalized revenue slightly rising and EBITDA increasing 2.3% sequentially [10] Operational Updates - The average rig count in the international segment increased to 93.3, exceeding expectations, while the U.S. average rig count rose to 59.8 [8][12] - The company added four rigs in December, with an exit rig count of 62, later increasing to 66, primarily for public operators [12][13] - In Saudi Arabia, SANAD deployed its 14th new-build rig, with plans for five more in 2026 [16] Balance Sheet and Guidance - Nabors reduced net debt by approximately $554 million, achieving a net leverage ratio of about 1.7x, the lowest since 2008 [5][25] - For 2026, the company guided total capital expenditures of $730 million to $760 million, including significant investments in SANAD [22] - Management expects to reduce gross debt by at least $100 million during 2026 [24]