Subjects: ERN, ERP
Nabors Announces Second Quarter 2022 Results
HAMILTON, Bermuda, Aug. 3, 2022 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported second quarter 2022 operating revenues of $631 million, an increase of approximately 11%, compared to operating revenues of $569 million in the first quarter of 2022. The net loss from continuing operations attributable to Nabors shareholders for the quarter was $83 million, or $9.41 per share. This compares to a loss of $184 million, or $22.51 per share, in the first quarter. The second quarter results included a non-cash charge of $22 million, or $2.42 per share, related to mark-to-market treatment of Nabors' warrants, while the first quarter included a non-cash charge for the warrants of $72 million, or $8.63 per share. Second quarter adjusted EBITDA was $158 million, a 21% increase, compared to $131 million in the previous quarter.
Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "All of our operating segments contributed to the strong adjusted EBITDA growth in the second quarter. Results in U.S. Drilling reflect improved performance in the Lower 48 market, where our daily adjusted gross margin continued to grow on higher average pricing for the fleet. Daily margin and EBITDA also improved in our international markets. In Rig Technologies, sequential revenue growth of 23% helped drive that segment's EBITDA increase.
"In the Lower 48 market, our daily margin reflects the strong pricing momentum and our success in capturing these higher rates. Our average daily revenue of $25,566 represents an increase of more than $2,500 versus the prior quarter. Leading-edge day rates remain at least $8,000 higher than the second quarter's average dayrates, and continued to increase in July.
"Growth in Lower 48 oilfield activity remains robust. The industry drilling rig count in this market grew 13% in the second quarter, and recently totaled more than 700. The commodity price environment remains supportive of additional increases in this activity, and most of our largest U.S. customers indicate they will add rigs by the end of the year. In addition, several of our larger customers have initiated discussions on further rig additions for 2023 and for longer contract term. We expect to reach 100% utilization in our high specification rigs relatively early next year and we anticipate a significantly tighter Lower 48 market for the industry.
"In our key International markets, tendering activity for additional rigs has increased. We remain optimistic for awards resulting in growth in these geographies. Already in the third quarter, our rig count in Saudi Arabia has increased, due to the deployment of the first newbuild rig in our SANAD joint venture with Saudi Aramco and we expect additional rig awards and deployments in Latin America within the next few months."
Consolidated and Segment Results
The U.S. Drilling segment reported $87.4 million in adjusted EBITDA for the second quarter of 2022, an 18% increase from the prior quarter. Nabors' average Lower 48 rig count, at 89.3, increased by nearly six rigs. Daily adjusted gross margin in the Lower 48 market averaged $8,706, more than 13% higher than the prior quarter.
International Drilling adjusted EBITDA totaled $82.4 million, a 16% increase from the prior quarter. Improved performance in Saudi Arabia and Latin America led the growth. The International rig count averaged 74.3 rigs, up more than two rigs from the prior quarter. Daily adjusted gross margin for the second quarter averaged $14,331, up $1,197 from the prior quarter.
In Drilling Solutions, adjusted EBITDA increased by 14% to $22.8 million, mainly reflecting increasing activity in the U.S. with higher volumes in performance drilling software and managed pressure drilling. Adjusted gross margin as a percentage of revenue in Drilling Solutions reached 52%, a record high since the segment's inception.
In Rig Technologies, adjusted EBITDA improved by $4.4 million in the second quarter. Revenue increased by 23% sequentially, to $45 million, mainly due to higher aftermarket sales and equipment rentals.
Adjusted Free Cash Flow and Capital Discipline
Adjusted free cash flow totaled $57 million in the second quarter. This result was primarily driven by higher financial results in the business, lower interest payments, and improved days sales outstanding. Capital expenditures for the second quarter totaled $99 million, including $27 million for the SANAD newbuilds.
In the second quarter, net debt was $2,184 million, a $33 million reduction as compared to the first quarter. Free cash flow generated in the quarter drove the improvement in net debt.
William Restrepo, Nabors CFO, stated, "During the second quarter, activity increased across our segments, fueling a significant step up in our financial results. Our adjusted EBITDA as a percentage of revenue increased by 200 basis points to more than 25%. We expect similar improvement in the third quarter. Utilization for our high-spec Lower 48 rigs currently stands at 81%. With the current market tightness, pricing is rising rapidly. Margins are expanding, a trend we expect to continue in coming quarters. The accelerating market and our pricing momentum in the Lower 48, as well as stronger than expected fundamentals in the International segment, have significantly outpaced the estimates embedded in our previous EBITDA outlook for 2022 and 2023. We plan to provide an update for our 2023 expectations once our budget process is finalized.
"We once again made progress reducing our net debt in the second quarter. We expect further material improvement over the balance of 2022. For the full year 2022, we expect to generate adjusted free cash flow well in excess of $100 million. Outstanding debt maturing through 2024 now totals $251 million. At the end of the quarter our cash and short-term investments stood at $418 million, and our $350 million credit facility was undrawn. With our experience in managing liquidity, our demonstrated willingness to access the capital markets well ahead of debt maturities, and the healthy cash generation we are targeting over the next two years, we remain confident in our ability to manage our debt profile and materially improve our leverage."
Mr. Petrello added, "Once again, we made progress on each of our five keys to excellence:
- In our Lower 48 business, rig count and financial results continued their upward trends, with excellent prospects for further growth.
- Financial results in our International segment improved across several major markets, and most recently we deployed the first In-Kingdom newbuild rig in Saudi Arabia.
- The financial performance of our high-tech Drilling Solutions and Rig Technologies segments strengthened. Market adoption of our innovation portfolio, especially our automation solutions, is accelerating.
- We made additional progress to de-lever, reducing net debt and total debt, while generating free cash flow.
- We further expanded our Energy Transition efforts, recently completing investments in three companies focusing on sodium-based battery technology, emissions monitoring, and innovative ultra-capacitor solutions. We also made additional progress in our internal initiatives including fuel management, energy storage, hydrogen, and carbon capture."
Outlook Summary for the Third Quarter of 2022
Nabors expects the following quarterly metrics:
U.S. Drilling
- An increase in average Lower 48 rig count of 3 to 4 rigs over the second quarter average
- Lower 48 adjusted gross margin per day of approximately $10,400 - $10,600
- An additional rig and higher average dayrates in Alaska; Offshore in-line with second quarter levels
International
- Rig count approximately in line with the second quarter average
- Adjusted gross margin per day of approximately $14,400
Drilling Solutions
- Adjusted EBITDA up by approximately 12% over the second quarter level
Rig Technologies
- Adjusted EBITDA up by approximately $2 million over the second quarter level
Capital Expenditures
- Capital expenditures between $110 million and $120 million
- Capital expenditures for the full year 2022 of approximately $380 million
Adjusted Free Cash Flow
- Free cash flow approximately breakeven
- Free cash flow for the full year 2022 well above $100 million
Mr. Petrello concluded, "Nabors' second quarter financial results, and our future outlook, demonstrate the value of the strategies we've implemented over the past several years. In particular, our development and successful deployment of a robust, industry-leading portfolio of advanced process automation, robotization, and digitalization solutions have driven demand across the Nabors spectrum, including rigs, apps, services, and equipment. Our clients increasingly realize value from this expanding suite, by driving their productivity higher.
"Looking ahead, with a constructive commodity price environment, we see significant potential for our portfolio across global markets. Our focus includes the third-party drilling rig market, which is fertile for the adoption of many of our technologies, and international expansion. In short, our prospects today are more favorable than they have been in many years. We are well positioned today to capitalize on this environment. We look forward to reporting our progress."
About Nabors Industries
Nabors Industries (NYSE: NBR) is a leading provider of advanced technology for the energy industry. With presence in more than 20 countries, Nabors has established a global network of people, technology and equipment to deploy solutions that deliver safe, efficient and responsible energy production. By leveraging its core competencies, particularly in drilling, engineering, automation, data science and manufacturing, Nabors aims to innovate the future of energy and enable the transition to a lower-carbon world. Learn more about Nabors and its energy technology leadership: www.nabors.com.
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 operating income (loss) represents income (loss) from continuing operations before income taxes, interest expense, investment income (loss), and other, net. Adjusted EBITDA is computed similarly, but also excludes depreciation and amortization expenses. In addition, adjusted EBITDA and adjusted operating income (loss) exclude certain cash expenses that the Company is obligated to make. Net debt is calculated as total debt minus the sum of cash, cash equivalents and short-term investments.
Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or other financing cash flows, such as dividends to shareholders.
Management believes that this non-GAAP measure is useful information to investors when comparing our cash flows with the cash flows of other companies. 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. However, management evaluates the performance of its operating segments and the consolidated Company based on several criteria, including Adjusted EBITDA, adjusted operating income (loss), net debt, and adjusted free cash flow, 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. Reconciliations of consolidated adjusted EBITDA and adjusted operating income (loss) to income (loss) from continuing operations before income taxes, net debt to total debt, and adjusted free cash flow to net cash provided by operations, which are their nearest comparable GAAP financial measures, are included in the tables at the end of this press release.
Investor Contacts: William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail [email protected], or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email [email protected]. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail [email protected]
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | March 31, | June 30, | |||||||||
(In thousands, except per share amounts) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||
Revenues and other income: | |||||||||||
Operating revenues | $ 630,943 | $ 489,333 | $ 568,539 | $ 1,199,482 | $ 949,844 | ||||||
Investment income (loss) | 822 | (62) | 163 | 985 | 1,201 | ||||||
Total revenues and other income | 631,765 | 489,271 | 568,702 | 1,200,467 | 951,045 | ||||||
Costs and other deductions: | |||||||||||
Direct costs | 403,797 | 312,466 | 372,712 | 776,509 | 603,120 | ||||||
General and administrative expenses | 58,167 | 51,580 | 53,639 | 111,806 | 106,240 | ||||||
Research and engineering | 10,941 | 7,965 | 11,678 | 22,619 | 15,432 | ||||||
Depreciation and amortization | 162,015 | 174,775 | 164,359 | 326,374 | 352,051 | ||||||
Interest expense | 42,899 | 41,714 | 46,910 | 89,809 | 84,689 | ||||||
Other, net | 14,528 | 66,455 | 80,401 | 94,929 | 73,801 | ||||||
Total costs and other deductions | 692,347 | 654,955 | 729,699 | 1,422,046 | 1,235,333 | ||||||
Income (loss) from continuing operations before income taxes | (60,582) | (165,684) | (160,997) | (221,579) | (284,288) | ||||||
Income tax expense (benefit) | 9,353 | 24,719 | 13,671 | 23,024 | 34,444 | ||||||
Income (loss) from continuing operations, net of tax | (69,935) | (190,403) | (174,668) | (244,603) | (318,732) | ||||||
Income (loss) from discontinued operations, net of tax | - | 8 | - | - | 27 | ||||||
Net income (loss) | (69,935) | (190,395) | (174,668) | (244,603) | (318,705) | ||||||
Less: Net (income) loss attributable to noncontrolling interest | (12,982) | (5,614) | (9,828) | (22,810) | (14,390) | ||||||
Net income (loss) attributable to Nabors | (82,917) | (196,009) | (184,496) | (267,413) | (333,095) | ||||||
Less: Preferred stock dividend | - | - | - | - | (3,653) | ||||||
Net income (loss) attributable to Nabors common shareholders | $ (82,917) | $(196,009) | $(184,496) | $ (267,413) | $(336,748) | ||||||
Amounts attributable to Nabors common shareholders: | |||||||||||
Net income (loss) from continuing operations | $ (82,917) | $(196,017) | $(184,496) | $ (267,413) | $(336,775) | ||||||
Net income (loss) from discontinued operations | - | 8 | - | - | 27 | ||||||
Net income (loss) attributable to Nabors common shareholders | $ (82,917) | $(196,009) | $(184,496) | $ (267,413) | $(336,748) | ||||||
Earnings (losses) per share: | |||||||||||
Basic from continuing operations | $ (9.41) | $ (26.59) | $ (22.51) | $ (31.34) | $ (46.90) | ||||||
Basic from discontinued operations | - | - | - | - | - | ||||||
Total Basic | $ (9.41) | $ (26.59) | $ (22.51) | $ (31.34) | $ (46.90) | ||||||
Diluted from continuing operations | $ (9.41) | $ (26.59) | $ (22.51) | $ (31.34) | $ (46.90) | ||||||
Diluted from discontinued operations | - | - | - | - | - | ||||||
Total Diluted | $ (9.41) | $ (26.59) | $ (22.51) | $ (31.34) | $ (46.90) | ||||||
Weighted-average number of common shares outstanding: | |||||||||||
Basic | 9,081 | 7,460 | 8,311 | 8,696 | 7,281 | ||||||
Diluted | 9,081 | 7,460 | 8,311 | 8,696 | 7,281 | ||||||
Adjusted EBITDA | $ 158,038 | $ 117,322 | $ 130,510 | $ 288,548 | $ 225,052 | ||||||
Adjusted operating income (loss) | $ (3,977) | $ (57,453) | $ (33,849) | $ (37,826) | $(126,999) | ||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
June 30, | March 31, | December 31, | ||||
(In thousands) | 2022 | 2022 | 2021 | |||
(Unaudited) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and short-term investments | $ 417,978 | $ 394,039 | $ 991,488 | |||
Accounts receivable, net | 278,112 | 297,209 | 287,572 | |||
Other current assets | 227,290 | 236,820 | 222,749 | |||
Total current assets | 923,380 | 928,068 | 1,501,809 | |||
Property, plant and equipment, net | 3,186,849 | 3,261,574 | 3,348,498 | |||
Other long-term assets | 690,754 | 667,524 | 675,057 | |||
Total assets | $ 4,800,983 | $ 4,857,166 | $ 5,525,364 | |||
LIABILITIES AND EQUITY | ||||||
Current liabilities: | ||||||
Current portion of debt | $ - | $ - | $ - | |||
Other current liabilities | 524,058 | 513,445 | 525,228 | |||
Total current liabilities | 524,058 | 513,445 | 525,228 | |||
Long-term debt | 2,601,510 | 2,610,092 | 3,262,795 | |||
Other long-term liabilities | 394,210 | 375,070 | 343,120 | |||
Total liabilities | 3,519,778 | 3,498,607 | 4,131,143 | |||
Redeemable noncontrolling interest in subsidiary | 680,403 | 677,829 | 675,283 | |||
Equity: | ||||||
Shareholders' equity | 453,200 | 543,616 | 590,656 | |||
Noncontrolling interest | 147,602 | 137,114 | 128,282 | |||
Total equity | 600,802 | 680,730 | 718,938 | |||
Total liabilities and equity | $ 4,800,983 | $ 4,857,166 | $ 5,525,364 | |||
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 | Six Months Ended | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
(In thousands, except rig activity) | 2022 | 2021 | 2022 | 2022 | 2021 | |||||||
Operating revenues: | ||||||||||||
U.S. Drilling | $ 253,008 | $ 161,606 | $ 217,583 | $ 470,591 | $ 303,905 | |||||||
Canada Drilling | - | 12,313 | - | - | 33,302 | |||||||
International Drilling | 296,320 | 255,282 | 279,030 | 575,350 | 502,120 | |||||||
Drilling Solutions | 55,879 | 39,111 | 54,182 | 110,061 | 74,817 | |||||||
Rig Technologies (1) | 45,094 | 34,552 | 36,736 | 81,830 | 60,300 | |||||||
Other reconciling items (2) | (19,358) | (13,531) | (18,992) | (38,350) | (24,600) | |||||||
Total operating revenues | $ 630,943 | $ 489,333 | $ 568,539 | $ 1,199,482 | $ 949,844 | |||||||
Adjusted EBITDA: (3) | ||||||||||||
U.S. Drilling | $ 87,371 | $ 59,784 | $ 74,265 | $ 161,636 | $ 118,570 | |||||||
Canada Drilling | (15) | 3,008 | (19) | (34) | 12,667 | |||||||
International Drilling | 82,446 | 71,322 | 71,248 | 153,694 | 133,933 | |||||||
Drilling Solutions | 22,751 | 12,796 | 20,000 | 42,751 | 24,254 | |||||||
Rig Technologies (1) | 3,364 | 2,035 | (1,044) | 2,320 | 1,502 | |||||||
Other reconciling items (4) | (37,879) | (31,623) | (33,940) | (71,819) | (65,873) | |||||||
Total adjusted EBITDA | $ 158,038 | $ 117,322 | $ 130,510 | $ 288,548 | $ 225,052 | |||||||
Adjusted operating income (loss): (5) | ||||||||||||
U.S. Drilling | $ 8,288 | $ (20,869) | $ (5,851) | $ 2,437 | $ (44,205) | |||||||
Canada Drilling | (15) | (2,608) | (19) | (34) | 1,299 | |||||||
International Drilling | 4,605 | (8,439) | (6,327) | (1,722) | (27,071) | |||||||
Drilling Solutions | 18,260 | 6,524 | 14,709 | 32,969 | 11,234 | |||||||
Rig Technologies (1) | 2,127 | (692) | (2,751) | (624) | (3,261) | |||||||
Other reconciling items (4) | (37,242) | (31,369) | (33,610) | (70,852) | (64,995) | |||||||
Total adjusted operating income (loss) | $ (3,977) | $ (57,453) | $ (33,849) | $ (37,826) | $ (126,999) | |||||||
Rig activity: | ||||||||||||
Average Rigs Working: (7) | ||||||||||||
Lower 48 | 89.3 | 63.5 | 83.4 | 86.3 | 59.9 | |||||||
Other US | 7.1 | 5.7 | 6.9 | 7.0 | 5.0 | |||||||
U.S. Drilling | 96.4 | 69.2 | 90.3 | 93.3 | 64.9 | |||||||
Canada Drilling | - | 8.2 | - | - | 10.9 | |||||||
International Drilling | 74.3 | 68.3 | 72.0 | 73.2 | 66.5 | |||||||
Total average rigs working | 170.7 | 145.7 | 162.3 | 166.5 | 142.3 | |||||||
Daily Rig Revenue: (6),(8) | ||||||||||||
Lower 48 | $ 25,566 | $ 21,015 | $ 23,030 | $ 24,348 | $ 21,314 | |||||||
Other US | 70,181 | 78,215 | 72,089 | 71,116 | 80,624 | |||||||
U.S. Drilling (10) | 28,852 | 25,694 | 26,781 | 27,856 | 25,890 | |||||||
Canada Drilling | - | 16,512 | - | - | 16,813 | |||||||
International Drilling | 43,808 | 41,102 | 43,065 | 43,445 | 41,704 | |||||||
Daily Adjusted Gross Margin: (6),(9) | ||||||||||||
Lower 48 | $ 8,706 | $ 7,017 | $ 7,694 | $ 8,220 | $ 7,694 | |||||||
Other US | 36,300 | 48,657 | 37,236 | 36,759 | 51,385 | |||||||
U.S. Drilling (10) | 10,738 | 10,424 | 9,953 | 10,361 | 11,064 | |||||||
Canada Drilling | - | 4,993 | - | - | 6,968 | |||||||
International Drilling | 14,331 | 13,420 | 13,134 | 13,746 | 13,176 | |||||||
(1) | Includes our oilfield equipment manufacturing activities. | |||||||
(2) | Represents the elimination of inter-segment transactions related to our Rig Technologies operating segment. | |||||||
(3) | Adjusted EBITDA represents net income (loss) before income (loss) from discontinued operations, net of tax, income tax expense (benefit), investment income (loss), interest expense, other, net and depreciation and amortization. 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 net income (loss), 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 Net Income (Loss)". | |||||||
(4) | Represents the elimination of inter-segment transactions and unallocated corporate expenses. | |||||||
(5) | Adjusted operating income (loss) represents net income (loss) before income (losses) from discontinued operations, net of tax, income tax expense (benefit), investment income (loss), interest expense and other, net. 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 net income (loss), 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 Net Income (Loss)". | |||||||
(6) | Rig revenue days represents the number of days the Company's rigs are contracted and performing under a contract during the period. These would typically include days in which operating, standby and move revenue is earned. | |||||||
(7) | Average rigs working 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. Average rigs working can also be calculated as rig revenue days during the period divided by the number of calendar days in the period. | |||||||
(8) | Daily rig revenue represents operating revenue, divided by the total number of revenue days during the quarter. | |||||||
(9) | Daily adjusted gross margin represents operating revenue less direct costs, divided by the total number of rig revenue days during the quarter. | |||||||
(10) | The U.S. Drilling segment includes the Lower 48, Alaska, and Gulf of Mexico operating areas. | |||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||||||||||
NON-GAAP FINANCIAL MEASURES | ||||||||||||||
RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended June 30, 2022 | ||||||||||||||
(In thousands) | U.S. | Canada Drilling | International | Drilling | Rig | Other | Total | |||||||
Adjusted operating income (loss) | $ 8,288 | $ (15) | $ 4,605 | $ 18,260 | $ 2,127 | $ (37,242) | $ (3,977) | |||||||
Depreciation and amortization | 79,083 | - | 77,841 | 4,491 | 1,237 | (637) | 162,015 | |||||||
Adjusted EBITDA | $ 87,371 | $ (15) | $ 82,446 | $ 22,751 | $ 3,364 | $ (37,879) | $ 158,038 | |||||||
Three Months Ended June 30, 2021 | ||||||||||||||
U.S. | Canada | International | Drilling | Rig | Other | Total | ||||||||
Adjusted operating income (loss) | $ (20,869) | $ (2,608) | $ (8,439) | $ 6,524 | $ (692) | $ (31,369) | $ (57,453) | |||||||
Depreciation and amortization | 80,653 | 5,616 | 79,761 | 6,272 | 2,727 | (254) | 174,775 | |||||||
Adjusted EBITDA | $ 59,784 | $ 3,008 | $ 71,322 | $ 12,796 | $ 2,035 | $ (31,623) | $ 117,322 | |||||||
Three Months Ended March 31, 2022 | ||||||||||||||
(In thousands) | U.S. | Canada | International | Drilling | Rig | Other | Total | |||||||
Adjusted operating income (loss) | $ (5,851) | $ (19) | $ (6,327) | $ 14,709 | $ (2,751) | $ (33,610) | $ (33,849) | |||||||
Depreciation and amortization | 80,116 | - | 77,575 | 5,291 | 1,707 | (330) | 164,359 | |||||||
Adjusted EBITDA | $ 74,265 | $ (19) | $ 71,248 | $ 20,000 | $ (1,044) | $ (33,940) | $ 130,510 | |||||||
Six Months Ended June 30, 2022 | ||||||||||||||
(In thousands) | U.S. | Canada | International | Drilling | Rig | Other | Total | |||||||
Adjusted operating income (loss) | $ 2,437 | $ (34) | $ (1,722) | $ 32,969 | $ (624) | $ (70,852) | $ (37,826) | |||||||
Depreciation and amortization | 159,199 | - | 155,416 | 9,782 | 2,944 | (967) | 326,374 | |||||||
Adjusted EBITDA | $ 161,636 | $ (34) | $ 153,694 | $ 42,751 | $ 2,320 | $ (71,819) | $ 288,548 | |||||||
Six Months Ended June 30, 2021 | ||||||||||||||
U.S. Drilling | Canada | International | Drilling | Rig | Other | Total | ||||||||
Adjusted operating income (loss) | $ (44,205) | $ 1,299 | $ (27,071) | $ 11,234 | $ (3,261) | $ (64,995) | $ (126,999) | |||||||
Depreciation and amortization | 162,775 | 11,368 | 161,004 | 13,020 | 4,763 | (878) | 352,051 | |||||||
Adjusted EBITDA | $ 118,570 | $ 12,667 | $ 133,933 | $ 24,254 | $ 1,502 | $ (65,873) | $ 225,052 | |||||||
Adjusted EBITDA by segment represents adjusted income (loss) plus depreciation and amortization. | ||||||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | |||||||||||
NON-GAAP FINANCIAL MEASURES | |||||||||||
RECONCILIATION OF ADJUSTED GROSS MARGIN BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | Six Months Ended | ||||||||||
June 30, | March 31, | June 30, | |||||||||
(In thousands) | 2022 | 2021 | 2022 | 2022 | 2021 | ||||||
Lower 48 - U.S. Drilling | |||||||||||
Adjusted operating income (loss) | $ (937) | $ (31,721) | $ (14,596) | $ (15,533) | $ (62,743) | ||||||
Plus: General and administrative costs | 4,740 | 4,396 | 4,445 | 9,185 | 8,676 | ||||||
Plus: Research and engineering | 1,611 | 732 | 1,638 | 3,250 | 1,375 | ||||||
GAAP Gross Margin | 5,414 | (26,593) | (8,513) | (3,098) | (52,692) | ||||||
Plus: Depreciation and amortization | 65,312 | 67,119 | 66,245 | 131,556 | 136,040 | ||||||
Adjusted gross margin | $ 70,726 | $ 40,526 | $ 57,732 | $ 128,458 | $ 83,348 | ||||||
Other - U.S. Drilling | |||||||||||
Adjusted operating income (loss) | $ 9,225 | $ 10,852 | $ 8,745 | $ 17,970 | $ 18,538 | ||||||
Plus: General and administrative costs | 307 | 550 | 383 | 691 | 1,076 | ||||||
Plus: Research and engineering | 139 | 100 | 132 | 270 | 183 | ||||||
GAAP Gross Margin | 9,671 | 11,502 | 9,260 | 18,931 | 19,797 | ||||||
Plus: Depreciation and amortization | 13,771 | 13,534 | 13,873 | 27,644 | 26,734 | ||||||
Adjusted gross margin | $ 23,442 | $ 25,036 | $ 23,133 | $ 46,575 | $ 46,531 | ||||||
U.S. Drilling | |||||||||||
Adjusted operating income (loss) | $ 8,288 | $ (20,869) | $ (5,851) | $ 2,437 | $ (44,205) | ||||||
Plus: General and administrative costs | 5,047 | 4,946 | 4,828 | 9,876 | 9,752 | ||||||
Plus: Research and engineering | 1,750 | 832 | 1,770 | 3,520 | 1,558 | ||||||
GAAP Gross Margin | 15,085 | (15,091) | 747 | 15,833 | (32,895) | ||||||
Plus: Depreciation and amortization | 79,083 | 80,653 | 80,118 | 159,200 | 162,774 | ||||||
Adjusted gross margin | $ 94,168 | $ 65,562 | $ 80,865 | $ 175,033 | $ 129,879 | ||||||
Canada Drilling | |||||||||||
Adjusted operating income (loss) | $ (15) | $ (2,608) | $ (19) | $ (34) | $ 1,299 | ||||||
Plus: General and administrative costs | 15 | 681 | 18 | 33 | 1,048 | ||||||
Plus: Research and engineering | - | 33 | - | - | 85 | ||||||
GAAP Gross Margin | - | (1,894) | (1) | (1) | 2,432 | ||||||
Plus: Depreciation and amortization | - | 5,617 | 2 | 2 | 11,369 | ||||||
Adjusted gross margin | $ - | $ 3,723 | $ 1 | $ 1 | $ 13,801 | ||||||
International Drilling | |||||||||||
Adjusted operating income (loss) | $ 4,605 | $ (8,439) | $ (6,327) | $ (1,722) | $ (27,071) | ||||||
Plus: General and administrative costs | 13,056 | 10,621 | 12,483 | 25,539 | 22,027 | ||||||
Plus: Research and engineering | 1,433 | 1,406 | 1,369 | 2,802 | 2,682 | ||||||
GAAP Gross Margin | 19,094 | 3,588 | 7,525 | 26,619 | (2,362) | ||||||
Plus: Depreciation and amortization | 77,842 | 79,761 | 77,574 | 155,416 | 161,005 | ||||||
Adjusted gross margin | $ 96,936 | $ 83,349 | $ 85,099 | $ 182,035 | $ 158,643 | ||||||
Adjusted gross margin by segment represents adjusted operating income (loss) plus general and administrative | |||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS) | ||||||||||
(Unaudited) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 30, | March 31, | June 30, | ||||||||
(In thousands) | 2022 | 2021 | 2022 | 2022 | 2021 | |||||
Net income (loss) | $ (69,935) | $ (190,395) | $ (174,668) | $ (244,603) | $ (318,705) | |||||
(Income) loss from discontinued operations, net of tax | - | (8) | - | - | (27) | |||||
Income (loss) from continuing operations, net of tax | (69,935) | (190,403) | (174,668) | (244,603) | (318,732) | |||||
Income tax expense (benefit) | 9,353 | 24,719 | 13,671 | 23,024 | 34,444 | |||||
Income (loss) from continuing operations before income taxes | (60,582) | (165,684) | (160,997) | (221,579) | (284,288) | |||||
Investment (income) loss | (822) | 62 | (163) | (985) | (1,201) | |||||
Interest expense | 42,899 | 41,714 | 46,910 | 89,809 | 84,689 | |||||
Other, net | 14,528 | 66,455 | 80,401 | 94,929 | 73,801 | |||||
Adjusted operating income (loss) (1) | (3,977) | (57,453) | (33,849) | (37,826) | (126,999) | |||||
Depreciation and amortization | 162,015 | 174,775 | 164,359 | 326,374 | 352,051 | |||||
Adjusted EBITDA (2) | $ 158,038 | $ 117,322 | $ 130,510 | $ 288,548 | $ 225,052 | |||||
(1) Adjusted operating income (loss) represents net income (loss) before income (losses) from discontinued operations, net of tax, iincome tax expense (benefit), investment income (loss), interest expense, and other, net. 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. | ||||||||||
(2) Adjusted EBITDA represents net income (loss) before income (loss) from discontinued operations, net of tax, income tax expense (benefit), investment income (loss), interest expense, other, net and depreciation and amortization. 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. | ||||||||||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||
RECONCILIATION OF NET DEBT TO TOTAL DEBT | ||||||
June 30, | March 31, | December 31, | ||||
(In thousands) | 2022 | 2022 | 2021 | |||
(Unaudited) | ||||||
Current portion of debt | $ - | $ - | $ - | |||
Long-term debt | 2,601,510 | 2,610,092 | 3,262,795 | |||
Total Debt | 2,601,510 | 2,610,092 | 3,262,795 | |||
Less: Cash and short-term investments | 417,978 | 394,039 | 991,488 | |||
Net Debt | $ 2,183,532 | $ 2,216,053 | $ 2,271,307 | |||
NABORS INDUSTRIES LTD. AND SUBSIDIARIES | ||||||
RECONCILIATION OF ADJUSTED FREE CASH FLOW TO | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||
(Unaudited) | ||||||
Three Months Ended | Six Months Ended | |||||
June 30, | March 31, | June 30, | ||||
(In thousands) | 2022 | 2022 | 2022 | |||
Net cash provided by operating activities | $ 120,796 | $ 41,354 | $ 162,150 | |||
Capital expenditures | (76,632) | (84,258) | (160,890) | |||
Proceeds from sales of assets | 12,760 | 3,671 | 16,431 | |||
Adjusted free cash flow | $ 56,924 | $ (39,233) | $ 17,691 | |||
Adjusted free cash flow represents net cash provided by operating activities less cash used for capital expenditures, net of proceeds from sales of assets. Management believes that adjusted free cash flow is an important liquidity measure for the company and that it is useful to investors and management as a measure of the company's ability to generate cash flow, after reinvesting in the company for future growth, that could be available for paying down debt or to return to shareholders through dividend payments or share repurchases. Adjusted free cash flow does not represent the residual cash flow available for discretionary expenditures. Adjusted free cash flow is a non-GAAP financial measure that should be considered in addition to, not as a substitute for or superior to, cash flow from operations reported in accordance with GAAP. |
SOURCE Nabors Industries Ltd.
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