Nabors Industries Earnings: Reports a Loss, Misses Estimates

S&P 500 (NYSE:SPY) component Nabors Industries Ltd. (NYSE:NBR) swung to a loss in the second quarter, missing analysts’ forecast. Nabors Industries conducts oil, gas and geothermal land drilling operations in the Americas, Caribbean, Middle East, Far East, Russia, and Africa.

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Nabors Industries Ltd. Earnings Cheat Sheet

Results: Reported a loss of $72.8 million (25 cents per diluted share) in the quarter. Nabors Industries Ltd. had a net income of $192.4 million or 65 cents per share in the year-earlier quarter.

Revenue: Rose 18.9% to $1.61 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Nabors Industries Ltd. fell short of the mean analyst estimate of 39 cents per share. It fell short of the average revenue estimate of $1.74 billion.

Quoting Management: “Second quarter results, while short of our expectations in Pressure Pumping and International operations, illustrate the capacity of long-term contracts to limit downside exposure and sustain healthy levels of operating cash flow in weakening market conditions,” Tony Petrello , Nabors’ Chairman and CEO, commented. “As we saw with falling natural gas prices in the first quarter, the second quarter drop in prices for crude oil and natural gas liquids is further constraining customer cash flow and spending. These spending reductions, combined with the entry of newly built rigs without term commitments, are resulting in an increasingly competitive land rig market. The near term impact is diminished by our term contract coverage, but that mitigation dissipates with time. Fortunately, the longer term outlook for our business remains promising as expanded shale development will require continued drilling to offset decline rates, leading to higher demand for our services. Our Pressure Pumping and International segments notwithstanding, our second quarter results were in line with or modestly ahead of our expectations. The best sequential performance came from our US Well-servicing operations where we mitigated the impact of a declining Northeast market by quickly reducing costs and repositioning excess equipment into more active areas. The majority of our shortfall was in Pressure Pumping where lower revenues and higher costs disproportionately affected margins. Similarly, our International unit also fell short of expectations with startup delays and significantly higher costs.”

Key Stats:

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by 2 cents with net income of 49 cents versus a mean estimate of net income of 51 cents per share.

The company reported a net loss last quarter, after reporting a profit in the quarter prior. In the fourth quarter of the last fiscal year, the company booked a profit of $105.8 million, or 36 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 46 cents per share, down from 57 cents ninety days ago. Over the past sixty days, the average estimate for the fiscal year has reached $2 per share, a decline from $2.25.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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