← Back

Nabors: Nabors Industries Q2 Earnings: A Mixed Bag

Nabors Industries reported its Q2 2025 earnings, with revenues totaling $833 million, a 13% increase from the prior quarter, primarily due to the addition of Parker operations. The company's adjusted EBITDA was $248.5 million, up $42.1 million sequentially, driven by the full quarter effect of Parker's operations and improvements in legacy Saudi Arabia and U.S. Drilling. However, the actual EPS came out at '-2.71' relative to estimates at '-2.05', missing analyst expectations. As Tony Petrello noted, "The Parker businesses performed well, making a meaningful contribution to overall results, and Nabors is on track to achieve its $40 million cost synergy target for 2025." The company's valuation metrics, such as its P/E Ratio of -7.83, P/B Ratio of 0.67, and EV/EBITDA of 3.09, suggest that the stock may be undervalued, but the negative free cash flow yield of -12.15% and ROIC of -1.21% raise concerns about the company's ability to generate cash and profitability.

NBR

USD 50.8

1.48%

A-Score: 3.4/10

Publication date: July 30, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Adjusted EBITDA Totaled $248.5 million, up $42.1 million sequentially, driven by the full quarter effect of Parker's operations.
  • Revenue Growth Revenue from operations was $833 million, a 13% increase from the prior quarter, primarily due to the addition of Parker operations.
  • Drilling Solutions Margin NDS gross profit margin reached 53%, with EBITDA from NDS now accounting for approximately 25% of total operational EBITDA.
  • Capital Expenditures Total CapEx for Nabors in the second quarter was $199 million, with expected total 2025 CapEx to be between $700 million and $710 million.
  • Free Cash Flow Adjusted free cash flow was $41 million in the second quarter, with expectations to match this figure in the third quarter, assuming collections from a Mexican customer.

Segment Performance

The company's U.S. Drilling revenue was $255 million, up 11% sequentially, with the full quarter impact of Parker rigs accounting for $19 million of the increase. International Drilling segment revenue was $385 million, up 1% from the prior quarter, driven by the full quarter impact of Parker rigs. Drilling Solutions revenue was $170.3 million, up 82.7%, primarily due to the full quarter impact of Parker Wellbore. The company's margins increased in the quarter, with Nabors Drilling Solutions gross profit margin reaching 53%, and EBITDA from NDS now accounts for approximately 25% of total operational EBITDA.

Outlook and Guidance

Nabors expects a slightly softer drilling market in the third quarter, with Lower 48 daily margins forecasted to be approximately $13,300. The company anticipates improved EBITDA in the third quarter due to newbuild start-ups and reactivations. William Restrepo discussed the CapEx budget for 2026, stating it will be higher than the $700-710 million expected in 2025 due to a larger fleet. The SANAD project's milestones are easy to track, and new builds will likely be in the mid-300 range for 2026. Analysts estimate next year's revenues growth at 5.2%, which may be achievable given the company's strong position in the market and its efforts to integrate Parker's businesses.

Valuation and Financial Health

Nabors' valuation metrics, such as its P/S Ratio of 0.18 and P/B Ratio of 0.67, suggest that the stock may be undervalued. However, the company's negative free cash flow yield of -12.15% and ROIC of -1.21% raise concerns about the company's ability to generate cash and profitability. The company's net debt to EBITDA ratio of 2.49 is also a concern, as it may limit the company's ability to invest in new projects and pay off its debt. Overall, while Nabors' Q2 earnings were a mixed bag, the company's strong position in the market and its efforts to integrate Parker's businesses may drive future growth and profitability.

Nabors's A-Score