Le Lézard
Classified in: Oil industry, Business
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:

Outlook Summary for the Third Quarter of 2022

Nabors expects the following quarterly metrics:

U.S. Drilling

International

Drilling Solutions

Rig Technologies

Capital Expenditures

Adjusted Free Cash Flow

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 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


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.
Drilling


Canada

Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


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.
Drilling


Canada
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


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.
Drilling


Canada
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


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.
Drilling


Canada
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


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
Drilling


International
Drilling


Drilling
Solutions


Rig
Technologies


Other
reconciling
items


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
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


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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