Nabors Industries Ltd. Earnings Cheat Sheet: Margins Shrink as Costs Rise

S&P 500 (NYSE:SPY) component Nabors Industries Ltd. (NYSE:NBR) reported its results for the third quarter. 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 Earnings Cheat Sheet for the Third Quarter

Results: Reported a profit of $74.3 million (25 cents per diluted share) in the quarter. The oil and gas drilling and exploration company had a net loss of $39.6 million or a loss of 14 cents per share in the year earlier quarter.

Revenue: Rose 53.6% to $1.66 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: NBR reported adjusted net income of 44 cents per share. By that measure, the company beat the mean estimate of 40 cents per share. It beat the average revenue estimate of $1.5 billion.

Quoting Management: Gene Isenberg, Nabors’ Chairman and CEO, commented, “The quarter represents solid performance across all of our US and Canada Land Drilling and Well-servicing operations. These results were bolstered by more normalized Pressure Pumping results, a significant increase in income from our Other Operating Segments, primarily Canrig, and a return to profitability in our US Offshore operations. All of this served to more than offset the seasonal low in Alaska and significantly lower than expected results in our International operations.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 60.2%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose more than twofold from the year earlier quarter.

From the second quarter, the company’s current liabilities rose to $1.42 billion from $1.02 billion.

Gross margin shrank 4.2 percentage points to 37.9%. The contraction appeared to be driven by increased costs, which rose 64.7% from the year earlier quarter while revenue rose 53.6%.

The company beat estimates last quarter after falling short in the previous two quarters. In the second quarter, it missed the mark by 2 cents, and in the first quarter, it fell short by 5 cents.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for fourth quarter has fallen from 55 cents per share to 52 cents. The average estimate for the fiscal year is $1.45 per share, down from $1.51 ninety days ago.

Competitors to Watch: Patterson-UTI Energy, Inc. (NASDAQ:PTEN), Helmerich & Payne, Inc. (NYSE:HP), Pioneer Drilling Company (AMEX:PDC), Bronco Drilling Co., Inc. (NASDAQ:BRNC), Precision Drilling Corp. (NYSE:PDS), Rowan Companies, Inc. (NYSE:RDC), Unit Corporation (NYSE:UNT), Allis-Chalmers Energy Inc. (NYSE:ALY), and Union Drilling, Inc. (NASDAQ:UDRL).

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(Source: Xignite Financials)

 

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