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Nabors Announces Third Quarter 2023 Results

HAMILTON, Bermuda, Oct. 25, 2023 /PRNewswire/ -- Nabors Industries Ltd. ("Nabors" or the "Company") (NYSE: NBR) today reported third quarter 2023 operating revenues of $734 million, compared to operating revenues of $767 million in the second quarter. The net loss attributable to Nabors shareholders for the quarter was $49 million, compared to net income of $5 million in the second quarter. This equates to a loss of $6.26 per diluted share, compared to a loss per diluted share of $0.31 in the second quarter. The third quarter results included a charge, related to mark-to-market treatment of Nabors warrants, of $8 million, or $0.86 per diluted share, compared to a gain of $18 million, or $1.95 per diluted share, in the second quarter. Third quarter adjusted EBITDA was $210 million, compared to $235 million in the previous quarter.

Nabors Industries Ltd. logo. (PRNewsFoto/NABORS INDUSTRIES LTD.)
Nabors Industries Ltd. logo. (PRNewsFoto/NABORS INDUSTRIES LTD.)

Anthony G. Petrello, Nabors Chairman, CEO and President, commented, "Drilling activity across our markets generally met our expectations. As we had anticipated in the Lower 48, rig count decreased in the third quarter but it appears to have bottomed, while leading-edge pricing also seems to have stabilized. The reduced drilling activity in the U.S. did impact our Nabors Drilling Solutions and Rig Technologies results somewhat more than we expected. In line with our forecasts, international markets have continued to expand with higher pricing.

"During the quarter we experienced challenges with our newbuild rigs and some of their critical components in Saudi Arabia, which resulted in deployment delays and significant downtime. We are currently addressing the quality assurance issues on these assets delivered by our third-party supplier. We expect our supplier's performance to improve rapidly as its local manufacturing experience increases.

"On the positive side, margins in our Lower 48 operation remained at higher levels than in any prior upcycle. During the third quarter we saw the early signs of the expected market upturn. In preparation, we have 14 warm stacked rigs ready to return to work immediately at minimum cost, as soon as drilling activity turns around.

"In our International segment, multiple rigs commenced operations, contributing to an increase in sequential revenue. We are encouraged by the prospects for a significant number of additional rigs in our international markets through 2024 and beyond.

"Broad demand for our technology portfolio in Nabors Drilling Solutions drove meaningful increases in U.S. third-party and international revenue.

"In Rig Technologies, our Energy Transition initiatives continued to gain momentum as we expanded our PowerTAP deployments, and our customers increased their demand for our innovative solutions."

Segment Results

The U.S. Drilling segment reported $117.4 million in adjusted EBITDA for the third quarter of 2023. Nabors' average Lower 48 rig count totaled 74. Daily adjusted gross margin in the Lower 48 market averaged $15,855.

International Drilling adjusted EBITDA totaled $96.2 million. Improved results across multiple markets were offset by start-up expenses in Saudi Arabia and lower rig count in Colombia and Kuwait. International rig count averaged 77, in line with the previous quarter. Daily adjusted gross margin for the third quarter averaged $15,778, down approximately 3% from the prior quarter.

Drilling Solutions adjusted EBITDA declined sequentially by approximately $2.3 million, to $30.4 million. Growth of 8% in both U.S. third-party revenue and international operations was more than offset by decreased Lower 48 activity on the reductions in Nabors rig count.

In Rig Technologies, adjusted EBITDA totaled $7.2 million, compared to $6.4 million in the second quarter. Increases in aftermarket margins and growth from the Energy Transition products accounted for the sequential improvement in adjusted EBITDA.

Adjusted Free Cash Flow

Adjusted free cash flow was negative $5 million in the third quarter. Capital expenditures totaled $157 million, which included $52 million for the newbuilds in Saudi Arabia. This compares to $152 million in the second quarter, including $66 million supporting the newbuilds in Saudi Arabia.

At the end of the third quarter, net debt was $2.1 billion.

William Restrepo, Nabors CFO, stated, "The results delivered by our operating rigs were encouraging. Our rig count in the Lower 48 held up well in the third quarter despite total market rig count landing a bit below expectations. In addition, our revenue per day and daily gross margin remained near the record high levels set the prior quarter. We remain well positioned to take advantage of any recovery in U.S. drilling activity. Internationally we continued to deploy rigs at attractive pricing, offsetting the contract expirations in Colombia and Kuwait. In the fourth quarter we expect rig count increases in the U.S. as well as in international markets, as compared to the current levels. And we expect Nabors Drilling Solutions to resume its growth trajectory.

"During the quarter, on top of the $5 million EBITDA shortfall on our new builds in Saudi Arabia, we faced several unexpected items that negatively affected our adjusted free cash flow. Most of these were one-offs or timing shifts across quarters. Capital expenditures were the largest of these items as they exceeded our forecast by $33 million. This increase was driven by higher capital spending in Saudi Arabia and by the $9.5 million purchase of our operating base in Vaca Muerta, Argentina. We had been attempting without success to lock in this critical facility over the last couple of years and had the opportunity to do so during the third quarter. We expect capital spending to fall materially in the fourth quarter as these items should not repeat. In addition, our accounts receivable and other working capital items were approximately $40 million higher than we had forecast at the end of last quarter. We expect this impact to reverse in the fourth quarter.

"Mainly as a result of higher capital expenditures, an EBITDA shortfall in Saudi Arabia of $11 million in the second half, and lower NDS and Rig Technologies EBITDA of about $13 million combined in the second half, our full year free cash flow is now expected to total $225 to $250 million, as compared to our prior forecast at the end of the second quarter of $300 to $350 million. The impact from higher capital expenditures during the second half, an increment of approximately $40 million, comes from the acceleration of deployments in Algeria, which will shift $20 million in capital expenditures from early 2024 into the fourth quarter of 2023, from capital spending in Saudi Arabia which is expected to be some $10 million higher than forecast earlier, and from the acquisition of the Vaca Muerta base, which was not part of our prior forecast.

"We are now beginning the forecasting process for 2024. Although we are not yet ready to discuss these projections, we do expect meaningful year over year increases in both EBITDA and free cash flow."

Outlook

Nabors expects the following metrics for the fourth quarter 2023:

U.S. Drilling

  • Lower 48 average rig count of 72 - 74 rigs

  • Lower 48 adjusted gross margin per day of $15,000 - $15,200

  • Alaska and Gulf of Mexico adjusted EBITDA up by $1.5 million

International

  • Rig count up by one to two rigs versus the third quarter average

  • Adjusted gross margin per day of approximately $16,200 - $16,300

Drilling Solutions

  • Adjusted EBITDA up by approximately 10% vs the third quarter

Rig Technologies

  • Adjusted EBITDA up by approximately 20% vs the third quarter

Capital Expenditures

  • Capital expenditures of $95 million, with approximately $35 million for the newbuilds in Saudi Arabia

Adjusted Free Cash Flow

  • Adjusted free cash flow for the fourth quarter of $165 to $190 million and for the full year 2023 of $225 to $250 million

Mr. Petrello concluded, "As we look to the fourth quarter, we expect improvements in our financial results, especially in free cash flow. With the international expansion already in hand, and the indications we have seen for growth in the U.S., we are positioned for meaningful improvement in 2024. The momentum we are now generating with our Energy Transition initiatives gives us additional confidence in this positive outlook."

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. We do not provide a forward-looking reconciliation of our outlook for Segment Adjusted EBITDA, Segment Gross Margin or Adjusted Free Cash Flow, as the amount and significance of items required to develop meaningful comparable GAAP financial measures cannot be estimated at this time without unreasonable efforts. These special items could be meaningful.

Investor Contacts: William C. Conroy, CFA, Vice President of Corporate Development & Investor Relations, +1 281-775-2423 or via e-mail william.conroy@nabors.com, or Kara Peak, Director of Corporate Development & Investor Relations, +1 281-775-4954 or via email kara.peak@nabors.com. To request investor materials, contact Nabors' corporate headquarters in Hamilton, Bermuda at +441-292-1510 or via e-mail mark.andrews@nabors.com

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)














Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,

(In thousands, except per share amounts)


2023


2022


2023


2023


2022












Revenues and other income:











Operating revenues 


$  733,974


$  694,136


$  767,067


$  2,280,180


$  1,893,618

Investment income (loss)


10,169


4,813


11,743


31,778


5,798

Total revenues and other income


744,143


698,949


778,810


2,311,958


1,899,416












Costs and other deductions:











Direct costs


447,751


432,311


455,531


1,365,611


1,208,820

General and administrative expenses


62,182


57,594


63,232


187,144


169,400

Research and engineering


14,016


13,409


13,281


42,371


36,028

Depreciation and amortization


161,337


169,857


159,698


484,066


496,231

Interest expense


44,042


43,841


46,164


135,347


133,650

Other, net


35,546


(25,954)


(1,775)


(8,604)


68,975

Total costs and other deductions


764,874


691,058


736,131


2,205,935


2,113,104












Income (loss) before income taxes


(20,731)


7,891


42,679


106,023


(213,688)

Income tax expense (benefit)


10,513


12,352


26,448


59,976


35,376












Net income (loss)


(31,244)


(4,461)


16,231


46,047


(249,064)

Less: Net (income) loss attributable to noncontrolling interest


(17,672)


(9,322)


(11,620)


(41,128)


(32,132)

Net income (loss) attributable to Nabors


$  (48,916)


$  (13,783)


$      4,611


$         4,919


$   (281,196)












Earnings (losses) per share:











   Basic 


$      (6.26)


$      (1.80)


$      (0.31)


$         (2.79)


$       (32.72)

   Diluted 


$      (6.26)


$      (1.80)


$      (0.31)


$         (2.79)


$       (32.72)












Weighted-average number of common shares outstanding:











   Basic 


9,148


9,099


9,195


9,168


8,830

   Diluted 


9,148


9,099


9,195


9,168


8,830























Adjusted EBITDA


$ 210,025


$ 190,822


$ 235,023


$    685,054


$    479,370












Adjusted operating income (loss)


$   48,688


$   20,965


$   75,325


$    200,988


$     (16,861)

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)










September 30,


June 30,


December 31,

(In thousands)


2023


2023


2022








ASSETS







Current assets:







Cash and short-term investments


$         406,643


$      429,059


$       452,315

Accounts receivable, net


324,970


297,388


327,397

Other current assets


228,941


251,687


220,911

     Total current assets


960,554


978,134


1,000,623

Property, plant and equipment, net


2,945,964


2,963,898


3,026,100

Other long-term assets


820,332


521,235


703,131

     Total assets


$     4,726,850


$ 4,463,267


$    4,729,854








LIABILITIES AND EQUITY







Current liabilities:







Trade accounts payable


$         287,228


$      301,751


$       314,041

Other current liabilities


241,475


242,514


282,349

     Total current liabilities


528,703


544,265


596,390

Long-term debt


2,501,339


2,503,250


2,537,540

Other long-term liabilities


314,441


310,263


380,529

     Total liabilities


3,344,483


3,357,778


3,514,459








Redeemable noncontrolling interest in subsidiary


834,195


513,817


678,604








Equity:







Shareholders' equity


348,234


402,650


368,956

Noncontrolling interest


199,938


189,022


167,835

     Total equity


548,172


591,672


536,791

     Total liabilities and equity


$     4,726,850


$   4,463,267


$    4,729,854

 

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


Nine Months Ended




September 30,


June 30,


September 30,

(In thousands, except rig activity)


2023


2022


2023


2023


2022













Operating revenues:












U.S. Drilling


$ 276,385


$ 297,178


$ 314,830


$    941,867


$    767,769


International Drilling


344,780


306,355


337,650


1,002,478


881,705


Drilling Solutions


72,831


61,981


76,855


224,729


172,042


Rig Technologies (1)


61,437


50,496


63,565


183,481


132,326


Other reconciling items (2)


(21,459)


(21,874)


(25,833)


(72,375)


(60,224)


Total operating revenues


$ 733,974


$ 694,136


$ 767,067


$ 2,280,180


$ 1,893,618













Adjusted EBITDA: (3)












U.S. Drilling


$ 117,357


$ 114,486


$ 141,446


$    415,292


$    276,122


International Drilling


96,175


85,922


98,331


283,114


239,616


Drilling Solutions


30,419


25,612


32,756


95,089


68,363


Rig Technologies (1)


7,221


4,818


6,408


18,583


7,138


Other reconciling items (4)


(41,147)


(40,016)


(43,918)


(127,024)


(111,869)


Total adjusted EBITDA


$ 210,025


$ 190,822


$ 235,023


$    685,054


$    479,370













Adjusted operating income (loss): (5)












U.S. Drilling


$   49,582


$   37,776


$   75,408


$    210,859


$      40,213


International Drilling


9,862


(907)


10,407


22,226


(2,629)


Drilling Solutions


25,341


20,099


28,351


80,830


53,068


Rig Technologies (1)


4,995


3,412


5,052


13,741


2,788


Other reconciling items (4)


(41,092)


(39,415)


(43,893)


(126,668)


(110,301)


Total adjusted operating income (loss)


$   48,688


$   20,965


$   75,325


$    200,988


$     (16,861)













Rig activity:











Average Rigs Working: (7)












     Lower 48


73.7


92.1


81.6


82.8


88.3


     Other US


6.7


7.7


7.0


6.9


7.2


U.S. Drilling


80.4


99.8


88.6


89.7


95.5


International Drilling


77.2


74.6


77.1


76.9


73.6


Total average rigs working


157.6


174.4


165.7


166.6


169.1













Daily Rig Revenue: (6),(8)












     Lower 48


$   35,697


$   29,190


$   36,751


$      36,324


$      26,050


     Other US


56,163


70,661


65,860


64,312


70,953


U.S. Drilling (10)


37,397


32,380


39,049


38,474


29,449


International Drilling


48,528


44,658


48,106


47,728


43,859













Daily Adjusted Gross Margin: (6),(9)












     Lower 48


$   15,855


$   11,165


$   16,890


$      16,505


$        9,225


     Other US


27,631


38,034


35,932


33,618


37,215


U.S. Drilling (10)


16,833


13,232


18,394


17,820


11,371


International Drilling


15,778


14,589


16,276


15,762


14,033



(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 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 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

Reconciliation of Earnings per Share

(Unaudited)

















Three Months Ended 


Nine Months Ended 


September 30, 


June 30,


September 30, 

(in thousands, except per share amounts)

2023


2022


2023


2023


2022



BASIC EPS:















Net income (loss) (numerator):















Income (loss), net of tax

$

(31,244)


$

(4,461)


$

16,231


$

46,047


$

(249,064)

Less: net (income) loss attributable to noncontrolling interest


(17,672)



(9,322)



(11,620)



(41,128)



(32,132)

Less: deemed dividends to SPAC public shareholders


(823)







(8,180)



Less: accrued distribution on redeemable noncontrolling interest in subsidiary


(7,517)



(2,601)



(7,436)



(22,307)



(7,720)

Numerator for basic earnings per share:















Adjusted income (loss), net of tax - basic

$

(57,256)


$

(16,384)


$

(2,825)


$

(25,568)


$

(288,916)
















Weighted-average number of shares outstanding - basic


9,148



9,099



9,195



9,168



8,830

Earnings (losses) per share:















Total Basic

$

(6.26)


$

(1.80)


$

(0.31)


$

(2.79)


$

(32.72)
















DILUTED EPS:















Adjusted income (loss), net of tax - diluted

$

(57,256)


$

(16,384)


$

(2,825)


$

(25,568)


$

(288,916)
















Weighted-average number of shares outstanding - diluted 


9,148



9,099



9,195



9,168



8,830

Earnings (losses) per share:















Total Diluted

$

(6.26)


$

(1.80)


$

(0.31)


$

(2.79)


$

(32.72)

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

RECONCILIATION OF ADJUSTED EBITDA BY SEGMENT TO ADJUSTED OPERATING INCOME (LOSS) BY SEGMENT

(Unaudited)














(In thousands)















Three Months Ended September 30, 2023



U.S.
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


Total














Adjusted operating income (loss)


$     49,582


$            9,862


$       25,341


$               4,995


$        (41,092)


$         48,688

Depreciation and amortization 


67,775


86,313


5,078


2,226


(55)


161,337

Adjusted EBITDA


$   117,357


$          96,175


$       30,419


$               7,221


$        (41,147)


$       210,025





























Three Months Ended September 30, 2022



U.S.
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


Total














Adjusted operating income (loss)


$     37,776


$              (907)


$       20,099


$               3,412


$        (39,415)


$         20,965

Depreciation and amortization 


76,710


86,829


5,513


1,406


(601)


169,857

Adjusted EBITDA


$   114,486


$          85,922


$       25,612


$               4,818


$        (40,016)


$       190,822





























Three Months Ended June 30, 2023



U.S.
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


Total














Adjusted operating income (loss)


$     75,408


$          10,407


$       28,351


$               5,052


$        (43,893)


$         75,325

Depreciation and amortization 


66,038


87,924


4,405


1,356


(25)


159,698

Adjusted EBITDA


$   141,446


$          98,331


$       32,756


$               6,408


$        (43,918)


$       235,023





























Nine Months Ended September 30, 2023



U.S.
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


Total














Adjusted operating income (loss)


$  210,859


$          22,226


$       80,830


$             13,741


$      (126,668)


$       200,988

Depreciation and amortization 


204,433


260,888


14,259


4,842


(356)


484,066

Adjusted EBITDA


$  415,292


$        283,114


$       95,089


$             18,583


$      (127,024)


$       685,054





























Nine Months Ended September 30, 2022



U.S.
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


Total














Adjusted operating income (loss)


$     40,213


$           (2,629)


$       53,068


$               2,788


$      (110,301)


$        (16,861)

Depreciation and amortization 


235,909


242,245


15,295


4,350


(1,568)


496,231

Adjusted EBITDA


$   276,122


$        239,616


$       68,363


$               7,138


$      (111,869)


$       479,370

 

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


Nine Months Ended




September 30,


June 30,


September 30,

(In thousands)


2023


2022


2023


2023


2022













Lower 48 - U.S. Drilling












Adjusted operating income (loss)


$   40,366


$   25,551


$   60,496


$ 174,933


$   10,018


Plus: General and administrative costs


5,239


4,798


5,209


15,503


13,983


Plus: Research and engineering


1,389


1,652


1,189


4,098


4,902


GAAP Gross Margin


46,994


32,001


66,894


194,534


28,903


Plus: Depreciation and amortization


60,447


62,583


58,533


178,487


194,139


Adjusted gross margin


$ 107,441


$   94,584


$ 125,427


$ 373,021


$ 223,042













Other - U.S. Drilling












Adjusted operating income (loss)


$     9,216


$   12,225


$   14,912


$   35,926


$   30,195


Plus: General and administrative costs


331


343


323


999


1,034


Plus: Research and engineering


90


157


132


349


428


GAAP Gross Margin


9,637


12,725


15,367


37,274


31,657


Plus: Depreciation and amortization


7,329


14,127


7,504


25,945


41,770


Adjusted gross margin


$   16,966


$   26,852


$   22,871


$   63,219


$   73,427













U.S. Drilling












Adjusted operating income (loss)


$   49,582


$   37,776


$   75,408


$ 210,859


$   40,213


Plus: General and administrative costs


5,570


5,141


5,532


16,502


15,017


Plus: Research and engineering


1,479


1,809


1,321


4,447


5,330


GAAP Gross Margin


56,631


44,726


82,261


231,808


60,560


Plus: Depreciation and amortization


67,776


76,710


66,037


204,432


235,909


Adjusted gross margin


$ 124,407


$ 121,436


$ 148,298


$ 436,240


$ 296,469













International Drilling












Adjusted operating income (loss)


$     9,862


$       (907)


$   10,407


$   22,226


$    (2,629)


Plus: General and administrative costs


14,300


12,599


14,089


42,725


38,137


Plus: Research and engineering


1,622


1,558


1,821


5,229


4,360


GAAP Gross Margin


25,784


13,250


26,317


70,180


39,868


Plus: Depreciation and amortization


86,313


86,830


87,924


260,887


242,247


Adjusted gross margin


$ 112,097


$ 100,080


$ 114,241


$ 331,067


$ 282,115


Adjusted gross margin by segment represents adjusted operating income (loss) plus general and administrative costs, research and engineering costs and depreciation and amortization.

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO NET INCOME (LOSS)

(Unaudited)














Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,

(In thousands)


2023


2022


2023


2023


2022












Net income (loss)


(31,244)


(4,461)


16,231


46,047


(249,064)

Income tax expense (benefit)


10,513


12,352


26,448


59,976


35,376

Income (loss) from continuing operations before income taxes


(20,731)


7,891


42,679


106,023


(213,688)

Investment (income) loss


(10,169)


(4,813)


(11,743)


(31,778)


(5,798)

Interest expense


44,042


43,841


46,164


135,347


133,650

Other, net


35,546


(25,954)


(1,775)


(8,604)


68,975

Adjusted operating income (loss) (1)


48,688


20,965


75,325


200,988


(16,861)

Depreciation and amortization 


161,337


169,857


159,698


484,066


496,231

Adjusted EBITDA (2)


$ 210,025


$ 190,822


$ 235,023


$ 685,054


$ 479,370


(1) Adjusted operating income (loss) represents net income (loss) before 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.


(2) Adjusted EBITDA represents net income (loss) before 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

(Unaudited)










September 30,


June 30,


December 31,

(In thousands)


2023


2023


2022















Long-term debt


$    2,501,339


$    2,503,250


$    2,537,540

Less: Cash and short-term investments


406,643


429,059


452,315

     Net Debt


$    2,094,696


$    2,074,191


$    2,085,225

 

NABORS INDUSTRIES LTD. AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED FREE CASH FLOW TO

NET CASH PROVIDED BY OPERATING ACTIVITIES

(Unaudited)




Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,

(In thousands)


2023


2023


2023








Net cash provided by operating activities


$     133,425


$     168,466


$     455,941

Add: Capital expenditures, net of proceeds from sales of assets


(138,583)


(141,683)


(397,018)








Adjusted free cash flow


$        (5,158)


$       26,783


$       58,923


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.  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.

 

Cision
Cision

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SOURCE Nabors Industries Ltd.