NBR - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the Nabors' fourth quarter earnings release conference call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

to President conference of like Smith, to now Vice Senior Corporate would turn over the Denny I Development. Please go ahead.

Denny Smith

Good in results Restrepo, we into insights our Nabors' Fourth Earnings and how you William our Petrello, our for Full providing with and and customary with Thank we Financial Officer; XXXX Officer, Chief President perspectives our Today, Conference morning, Year Call. Tony follow along their format, Nabors Chairman, Quarter everyone. these to perform and will expect Executive Chief on markets. the quarter's markets joining

support With deck the as In William to well. President team. of in posted Investor Instructions available these other Siggi in this Organization; Meissner, and replay slide remarks, Relations management website us within and our are of on Tony, is call download Global the of Drilling members nabors.com. of and as a addition for a the section myself, both senior today, webcast of are the the

our of include Such to with the they in Exchange constitute the Securities commentary will much statements the XXXX. and Exchange subject risks filings Since disclosed as forward-looking from uncertainties Nabors time expectations, Act Act to within are of the Securities of forward-looking meaning XXXX certain our may by our Commission. and statements forward of today time and Securities

our may forward-looking materially vary factors, results from or actual of statements. such these implied indicated As by a result those

word release. is either EBITDA otherwise, EBITDA William or net adjusted our references free their as call, All Tony adjusted the and cash discuss in on Also, during by website by mean that whether adjusted earnings EBITDA qualified during such non-GAAP we our may and or made term the presentations, to debt, measures defined adjusted certain operating income, financial as flow.

context that earnings flow Likewise, defined flow clearly release. free measure to cash non-GAAP reference our indicates as means the otherwise, is unless cash in

of these a non-GAAP section comparable the the have most recently of measures. financial Investor GAAP to our to Relations posted measures reconciliation website We

begin. will turn I to to Tony Now, the call over

Tony Petrello

Thank us and morning. results for joining for we fourth quarter as you our review Good full year XXXX. the

I will will will comments market, William details usual begin will and follow outlook. our remarks follow wrap the with and results Our up. the I the on then format. with

macro. Now to the

During near-month under the price fourth This the quarter with averaged essentially of just the quarter, flat $XX. WTI average. was third

to gas trend quarter, The the During over averaging WTI economic in then quarter Survey, was Since reacting essentially and just flat reported the In quarter. elsewhere. the to during and of month the are E&P $XX XXXX, to most WTI fourth per $XX Dallas the upward. has $X.XX $XX. Natural for oil recent of in fourth $XX growth of Oil Fed planning. $XX quarterly began capital prices using the prices solidly XXXX and crude pricing did price the range above near from of beginning in declined Energy reduced sub demand were $XX. the Mcf respondent fears China half

is uncertain. as mitigate OPEC These same declined has coronavirus the consumption lower X reports global the The has demand million day. The per China. to recent have time, in fears proposed by impact production by oil demand. estimate as cut triggered barrels China in to temporary At outbreak been much the

the activity on call, XX in anticipated the drilling industrywide through prior year. end of earnings the I As Lower our declined

well pressure combination as free the resulted to from of to access flow. limited as reduction generate capital cash This investor

I in XX on count customer During this will a declined reduction quarter, land minutes. our from have XX a third rigs, by industry quarterly thoughts some fourth rig the cover Lower the surveys average I the quarter when and XX% US average. few more

has most increasingly the customer development markets, activity markets, IOC typical to continued improving, is incremental In NOC is support The to remains in plans. recent after softening. oil increasing. international is prices the Pricing international positive. committed even or longer-term activity of macro picture our the For level

we Fourth quarter million despite Solutions, line held all EBITDA such, in $XXX most solidly reductions our As international expect the Canada and activity. adjusted improving demand. expectations incremental to the rig conditions with our of improvement. markets offshore of Sequentially, US up recorded across our well, US in Drilling drive operations,

similar significant count renewal. average margin gross rigs. Lower reduction as revenue increased Our offset higher per EBITDA by declined Daily daily XX following rig expenses. day revenue amortizing segment, adjusted operational In in somewhat by essentially contract recent X% despite our flat a average a ten increase was in was International by about

across improvement quarters operating three results deteriorated. of Canada segment, even better the seasonal in NDS. in sequential lift as with sequentially improved Solutions This increased Drilling conditions activity. performance This improvement drilling marks other reflects several In markets. market

Technologies year. Rig the of declined capital tailed into equipment sales as off end the of

discuss Now, me let market more our detail. the view in of

stood XX count stood During rig XXX, is count end rig rigs. by reduction. week, XXX, averaged the the the which XXX fourth from X% Last a quarter, down XX the fourth rigs Lower at quarter, in that at the the industry of

by Over XX%. XX rigs the the months, past rig XXX counts declined or

year XX full rig count outperformed the Nabors' the XXXX, Lower For industry.

Our X% industry by count average by the rig full rig year count as improved X%. dropped

validates technology, drops of the and rig the offer rigs, significant in experienced We also safety peers count. we excellence. positioning operational market. performance on our largest believe combination best Our This

in a count impact Mid-Continent Marcellus. rigs drop Rather Haynesville, Once basins. XX quarter, decided XX account for surveyed customers. in total clients Activity The high-spec dramatic in top sharply Rockies, rig rigs rig chasing pricing fourth market. and and Lower year-end the approximately dropped than on Nabors' the count. natural legacy stack XX% Lower gas we XX at of our lower prices and some of industry the other to our During again, surveyed predominantly of move a counts gas XX% pricing, we steep to and rig had

the are those that of this full flat conclusions of On would these indicated a not balance, may remind which the participants for customer market. I XXXX. group, be representative outlook you

our fleet XX Lower mentioned held has of XX count. in is As point, working These conditions. overwhelmingly well up Lower high-spec. of the XX% earlier, spite industry count current in our rig our rigs rig I comprise At this quite working

Looking for predominantly The Ford at oil the of XX. way, working rigs XX% plays count. Eagle about high-spec market the basins, of strongest Permian, our Bakken, and another segment in it in rigs the comprise the comprises oily Lower

has disparities basins. strong the begun Contractors solid there customer Across market explain and adjusting somewhat. rig utilization have pricing the resilient to moderated results. trends the and Our between high presence our high mix industry, pricing significant spec recent financial and

depending market. a varies trend the on great This deal

stable With delivery are the International to retain performance We our value position. XXXX. is in of rig continue our activity on with markets In to we our hold customers, the line and industry these firm we Pricing pricing. will confident focus pockets leadership in was of markets, on our strength.

at not head our should second have fourth count deploy as deployed in we rigs rig We already one into the present quarter and least more additional quarter.

We to continue our in rigs Solutions. in remain continues the to see growing our services we levels for products pursue adoption and The markets. advanced segments, high-spec several interest of opportunities additional and other increase technologies high. inquiry innovative multiple In and Drilling

more Now, segment on detail let comment our in me highlights.

million $XXX was adjusted up X% prior year consolidated EBITDA Full versus year. the of

the strongest sequential expected in as of $XXX saw Among quarter, EBITDA million below the fourth adjusted growth EBITDA just was Canada. the we quarter. prior our For we segments,

five almost by improved. grew there count seasonal demand rigs or rig as XX% Our

X% and sequentially increased in running EBITDA to increased reflects adjusted services. million America $X Solutions This million. margins International Improvements than improvements These to higher EBITDA Drilling $XX.X Middle East, payment. $XX.X than material the expiration Latin amortizing the more in primarily by $XX improvement adjusted of tubular by million. drove upfront the offset approximately number growth. and revenue contracts renewal subsequent of of a million following with reduction

or This declined Canrig. XX% declined reduction Lower Rig segment was mainly in $X quarterly by to due In highlights US shipments quarter. Adjusted in rig We the some due count lower X%. during Technologies, XX. results in million EBITDA achieved notable drilling average in the the to

revolver $X to significant attractive billion we subsequently amended In business. covenants existing First, now for and debt at our More with profile. recently, terms have December, took we improve to and raised we notes. steps the our think tendered more

With transactions, debt substantially our these maturities. we extended

competitors of process. drilling industry compete integrating I Solutions. our to the mention leader rigs to Second, the Certainly, models similar I remain adopted the and our we onto believe, services strategy. want of performance additional NDS have with automation Nabors in Drilling the driving

by demonstrated the and segment delivered level is of by This trend. our NDS growth profits its continued by

is proposition gaining integration with value TRS pursue Our strategy. we profitability as our share increased

that for We and today robust are still stage of And, set software have early most industry. technologies extensive the in of NDS the suite in the mature downhole has purpose performance harvesting. a fit

outperformed segment of share XX Segment notably, Penetration gold industry's software oscillation Navigator both increased. ROP by industry's for thanks to the margin jobs. third-party increased and ROCKit, in increased, its improvement asset and standard and rig reduce to This running. light also Pilot casing the friction increase driven continued Nabors count. EBITDA solutions, Lower saw systems

a job rig we fourth our maintained total declining Navigator Pilot count. In market, quarter

our the business in fourth market quarter the essentially the sequentially gross Third, even daily in Lower unchanged margin was XX deteriorated. as

daily year, versus the up XXXX. more $X,XXX in Lower full each than exceeded in $XX,XXX margin the For quarter was XX and

maintain we pricing discipline, to customers. deliver to realize value the and We continue to

of US XX first let the Now activity, should approximate US rig we outlook Lower me higher. drilling; slightly our count believe segment. in level our current by discuss for quarter, drilling, or the

per XX day. Lower the decline by daily to dollars expect few hundred a We margins

Our results improve. should and activity Alaska

The segment, December, with increase and expect one US in We offshore deployed in business in to we of couple rigs one January. should platform offshore rig in International rigs. line fourth the International; essentially a two be late in activity the quarter. Mexico; by recently

placed during will rig rigs Kuwait activity the and in We a Russia also quarter. large our works resume

most quarter-over-quarter, Solutions, churn activities. in below to certification Drilling incremental fourth some international count $XX in expect million. business the driving adjusted quarter work to expect the the downtime decline. of we expected $XX All key planned EBITDA The quarter. in expect rig in in, of million and markets somewhat US, maintenance quarter third-party results Drilling of first the first is on and we Solutions; We decline

the as adjusted portfolio. remainder year, For the we the of technology expect EBITDA we continued growth, harvest

Rig the for improvement of targeting EBITDA Technologies; up. as year, Technologies, following. part well full of expect services pick shipments adjusted outlook; are as an in in the Annual we as Rig for equipment the the we volume

assets market. and deployment base. higher idle assets First, extract increasing existing repositioning to includes we value expect value the from to asset of our This

Second, our technology accelerate of is our plan platform. the to robust monetization

and generate revenue We are several commercialize to target them XXXX. impactful to on projects during expect

performance the In Pilot for tools our materially contribute earnings. segment's to trajectory expect and is revenue and addition, and we steep Navigator to the them

target we flow generation cash million free in XXXX. of Third, $XXX

reduced fourth the quarter my on adjusted working results capital reduction. lower expect our remarks During capital concludes expenditures and revenue, XXXX, and we increased amortizing EBITDA, outlook. That

financial results. the the At I turn call for William point, his of usually to this over discussion

that, Before April. Smith would his do a seasons plan a team. After just of retire to announced of in part member remarks has to Denny make quarterly I about career our Nabors, I XXX Nabors a like XXXX. joined in earnings few Denny at full

invaluable spans more corporate oilfield During Denny's been his contributions operational, than tenure, XX to financial his career development success. have the and in Nabors' years.

tenure, in In part of pivotal Alaska. the Slope development North the early of oilfield he the role played of a his

arena While his span to international significant and many projects. at Nabors, responsibilities Alaska, the

You but may the recently, chief for most architect realize venture and was in Denny joint Saudi SANAD this, the Arabia. negotiated not

hope on Denny an industry. to of you the candor professionals He I in of is Investor you broader call. mentored personally, appreciate Relations the as successful me innumerable For within has it He and consider wisdom, honestly. I dean considered is I widely his Nabors well and all the many in oracle. industry his OFS his him have, known space. this

Corporate years will a retirement. to big shoes Development the be wishing me Conroy IR and join in and assuming in well-earned fill. role many and happy Denny senior Bill in Lunet Please has

sorely be will You remembered missed. and

After follow will his call with some remarks. will I turn over closing Now, William. to I the comments,

William Restrepo

net in morning. The to attributable loss $XXX a quarter of continuing represented Good the per Nabors share. loss million fourth from operations of $X.XX

assets other the and and $XXX primarily $X.XX impairments other shutdown impairments increased These well share, goodwill writedowns to of million or per Results from risk charges in political quarter the were as of charges. reflecting related of certain receivables, countries. the as and included

exceptional in The related quarter losses. settlement the quarter share compared in per share, Results per in a quarter. loss a an third results to of foreign or tax in jurisdiction the $X.XX and million income fourth $XXX $XX.X after-tax prior million included charges to currency or $X.XX

million was reflecting Technologies X.X% XX. X.X%. $XXX Rig the reduction quarter $XX.X or Revenue by from US operations the for parts fourth count fell a of sequential reductions and million, decreased revenue drilling driven by $XX.X by Lower sales. reduced million million in primarily rig $XX in or equipment

by XX count declined over rig average Lower rigs. Our in ten XX.X just the of

at revenue the $XXX. than more Lower by anticipated. Some XX,XXX had X.X rigs in slightly XX than increased Daily more we rig

software, per to revenue would I plus reimbursable to revenue business, drilling our our pressure related performance items not clarify include includes drilling and not managed certain include any include drilling, only our called rig not like sometimes it to it of testing. BOP drilling does App, automation does running, that rebuild day to casing our services and strictly customers. related revenue revenue It does

of these the are included results All Drilling Nabors segment. our in of Solutions

subsequently contracts million advanced $XX concluded at by operational due This in million significant recently reduction The payments. performance renewed a revenue revenue market. drilling of increased improvement were improved International $XXX across primarily reflects reduction number customers. to and by of roughly $X.X million deferred a that from our amortization offset several

$XX.X driven rigs in quarter. to activity an average fourth the seasonal at by in XX.X from by increased $XX.X drilling million was revenue previous rigs This quarter the in the Drilling declined $X.X ramp-up $X.X of X.X Solutions Canada from of revenue million million. the usual going million third by working quarter.

in $XXX as as EBITDA more $XXX activity primarily spare third lower US than compared rig driven well of was the internal capital for The quarter decreased was the in rig segment repairs quarter. count. Revenue sales parts lower our and million Rig by lower equipment, in land increases lower were market. the came revenue falling revenue, international US Adjusted Technologies million by to million million. the Our $XX.X offset $XX.X from at count

was margins and we margins XX app, expected, in Again, closing activity by software, sometimes X% in without sequentially. results was held million locations, Canrig As down are US these by improved drilling included other to segments. at I running the reduction in largely adjusted Drilling trucking Lower rig a out like of would competitors. our between or steady other contribution the XX, that compensated In daily our casing revenue margins EBITDA $XX,XXX. Lower margins pure point of from sources $XXX.X of

We expect by quarter the first $XX,XXX somewhat certain market off price erosion daily mark regions. rig margin tail driven the in toward in to

quarter. the average million XX. to by Rig International rig should XX in the for current count current Lower is than Our EBITDA higher in almost increased adjusted level. $XX.X count slightly the the quarter million fourth $X

contracts Mexico more Despite Nonetheless, Middle rigs America. in by to Incremental cost XX.X idle average our operational continue our offset we a as rig. and the Latin X.X in prior rig days substantially the to reduction in reduce we were revenue and East to between Russia, better moved than time in Kazakhstan than customer. operating quarter a was uptime new

somewhat to quarter. increased International adjusted by amortizing offset uptime $XX,XXX in in cost margin currently $XX and operational cost roughly the lower than the QX and gross expect daily revenue improvements dip sequential the and performance. improvements International These more in reduction rig count. million bolstered EBITDA $XX,XXX, We from slightly to approximately the first

which conducting likely significant in in planned several in are East result projects the rigs Middle downtime. will certification We

offset by increased partly Russia. had adjusted X.X at to activity This than margin by is we Kuwait as from Mexico The EBITDA million somewhat higher million. $X,XXX increased daily $X,XXX. to Canada, predicted. in better as $X.X be XX.X and what start-ups count $X.X will rig and This increased was increase in well

additional to margins. count with continue surprise we to and QX, improvements into upside. Canadian The market Going continues expect in the rig to

XX% higher services segment to improvement margin million quarter. Among product integrated as of in the tubular this posted activity lines, our continue adjusted increased Solutions margin the The XX.X%. EBITDA services. largest million, third Drilling shift was running from up adjusted $XX.X EBITDA $XX.X toward from to for in

lower NDS fourth declined modestly product quarter, count. rig the driven the in other lines Our US by

fall. are For below the quarter an first of Lower quarter, in fourth reduction Technologies we as $X.X loss EBITDA quarter, third million XX expecting the to $X.X million drilling a in adjusted reported adjusted continues results. activity EBITDA the Rig

to breakeven. in improvement some expecting QX are EBITDA just We in adjusted above

the in a adjusted of For we $XXX for quarter, Nabors $XXX a million. would expect million first whole, EBITDA as to range

liquidity generation. We XXXX leverage. liquidity during let review addressing cash busy remain our Now, me and and

net last $XXX started, between reduce our we As $XXX our we and investors that debt million year promised million. would

quite existing just in and than $XXX not To debt. with the US EBITDA. and replaced maintain net previous December, Although significantly, we we was facility. expected, the achieve suitable Most billion XXXX the by times reduced revolving amendment million funded X.X closed In net covenant to we this net we we debt under less expenditures what our and in DSO amended our a goal, market our covenant cuts debt net to debt year reduced further $X.X the our overhead to implemented at significantly. with capitalization more capital credit

of Nabors attractive notes tender offering more million XXXX XXXX. at to $X this senior $XXX debt We million senior million addressed completed In due offering of January, early and also $XXX maturing our in XXXX. successfully in than nearly of billion $XXX of for were used from The notes rate an proceeds near-term another maturities. XXXX due in and

In compares $XX was the $XXX flow to approximately quarter. million. the cash free This fourth million quarter, prior in

cash due seasonally low was strong generation part the interest payments. in in Our quarter to

benefited in reduced from our payments we that expenses, capital interest point of I third almost addition, the strong come all and would first out collections. quarters. In our and

will associated generation and bonuses The the capex, the other first interest of quarter reflect the beginning property higher costs one-time taxes cash with payments, for disbursements year.

contract million somewhat the below preceding was target in renewals our quarter, the the upgrades as brought level million, in for year fell quarter. from fourth Capital we $XXX forward million of than $XX.X and of full higher the $XX.X by expenditures certification Capex Argentina. committed

leverage. million capex focused generating on remained XXXX. now flow we our for $XXX In targeting in to million while decreasing cash XXXX, are $XXX We

flow this as We revenue decrease believe in We is are to our capex reduce amortizing free of and XXXX. XXXX. as XXXX, target million $XXX million by we $XX addition, cash expected is significantly, to in our targeting will achievable compared versus

These offset improve best Denny any should thank for increases to more is than to efforts of help his us I would capital. in Nabors. like I tailwinds potential people know. one the also working tireless Denny

has a in advice, and most a source a teacher friend. During of time importantly, mentor, Nabors, my he and been

miss concluding humor that, will turn wisdom, will of for back his support. his I With sense Tony remarks. I and the call greatly to his his

Tony Petrello

with conclude of now morning will I team tough that the XXXX I say William. very during you, our accomplished in what environment. would to my I'm proud remarks industry this Thank like a following.

First, past from during most XX have assets the to years, we market. several our in predominantly Lower we the capable, in modern legacy transformed believe is fleet what fleet the

Our our of value-added rigs And, peers. our the performance crews, services for premium We have performance and and customer the believe our software the and operational base integration. increased utilization of they pricing. of assets, of highest us industry-leading our share rewarded our recognizes quality competency our our is the market with high-spec

This us important our has We average to grow contractor major outperform Lower this count land were XX helped the XXXX. in market. competitors rig only in

continued Second, has grow our Lower in the XX growth Year-on-year, was segment drop steep to adjusted Drilling XX%. despite Solutions Nabors EBITDA count. rig

EBITDA. to of software cash strides. The significant made strongly drilling accounts offerings our significant a adjusted contributes It portion capital business margin-low intensity Our our software for flow. have NDS automation high,

our NDS, rig the used grow. When of also improve it share. to innovative rigs offerings may downhole helping are to us started pull You Today, our and through NDS continue and find drilling activity. we portfolio NDS our depth will we market surprising, our to breadth tool incremental

our results. offerings presence have stability with our in global us and balanced Third, provided diversified

final year. competitors and and the quarter in in fourth As of quarter Nabors the to third continued quarters, sustained those grow third off our levels the the dropped in

a meaningful to Our contribution results. leading provides rig position our offshore

in position, have market combination in Canada a offset the the in unique set US. each has strong of diversified weakness of International In Our which have NDS This market space. the short, we drivers. teams growth is quality

results. followed six- and and $X concerns about ability the to by our credit investor Finally, January, started markets notes we liquidity to Amendment billion billion to rate. the has show with on of leverage demonstrated December at maturities. term $X relatively of covenants. facility eight-year the with hard attractive capital redemption in in work notes our In This tap removed nearly nearer was senior our

lower liquidity X.X increased leverage. we dividend. as the million debt result, improvements These in time, increased expenses, decreased a the the capex, debt adjusted prior As net and At same our our XXXX. duration substantially and average from investors. resulted year, $XXX concerns our years by EBITDA to interest as we of over alleviated reduced well

excited I'm what future forward, has store Looking in the for with Nabors.

portfolio stronger ever. rig than and services Our is

strategy fleet modernization, have drilling drilling automation international the progress services strength, rig, our enormous and drilling made and integration We of process. rig the into of in of the

to of our technologies contribute meaningfully already our Several results.

We initiatives. a automation are of now number commercializing our

mainstays, In in start automated handling addition we have pipe from automated our And, from the initial automation to floors expect gains of drilling continued moving us needle deployments and with software penetration NDS to on robotization XXXX. rig still the our in ahead of we the rig. offshore land,

attention. With That remarks morning. time for this you concludes will take your questions. and we my your that, Thank

Operator

begin question-and-answer first Syed question [Operator We will ahead. Capital. Instructions]. the comes AltaCorp And Waqar Please go of our from now session.

Waqar Syed

my you for Thank call. taking

the to join First service to Tony the Denny, your industry for and years. of you last friendship I for over all, XX and William your thanking in to want

a learned you analysts that about the generation a me, enlightened industry. from have lot learned really I I've You've of you, believe and from sell-side

Thank So to congratulations now. retirement, your and thank you're some you your again. you you. take on for rest service, Thank able I hope

Denny Smith

Waqar. you, Thank

Waqar Syed

first -- it of them your of flattish. Is what mentioned customers, flattish maybe question, you said just that Tony, survey, a to that clarification, from levels, could your activity you rig is My current all, that in said? half be

Tony Petrello

levels, current yes. From

Waqar Syed

that. clarify Okay. just I to wanted

would Could how and would for -- shake that be how on maybe and growth some maintenance capex of the breakdown what domestic out also much versus and would the that XXXX. you international, -- between on provide Secondly, within be the SANAD?

Tony Petrello

Sure.

does growth of or NDS million it be some capital, would and and I so in and speak international, I'll about -- would think let say Rig Tech. William growth, roughly in to some the most a sustaining range It I'd the $XXX not rest about for assume lot SANAD. of be that.

William Restrepo

really have. the But it year is $XX the that million so forecasting about to that the SANAD from contracts about year, ongoing capex, many of we a of comes which outside which that, which another Well, mentioned, million. -- we $XXX $XX of Tony not sustaining piece, have or facility are million those next Arabia. for is and $XXX international renewals is $XX how year. million But from which renewals about we're a million really vary still big does And new and is builds Saudi is of deploying any there in

So are not the higher than levels elsewhere. there much

Waqar Syed

expect do into builds? to investing start when And the new you

William Restrepo

depends all don't it expect I be don't NOV XXXX, that, at investing in -- really a I deployments end gotten we haven't when is point. start good I XXXX ready, fix believe but and on no wouldn't this mean Well, the on to for of

Waqar Syed

SANAD the was last one what what the in of the the the at sheet just then of is cash And end Okay. balance -- question, quarter?

William Restrepo

somewhere million $XXX that $XXX It's somewhere in range. million, around

Operator

Our next Please Wells Chris of ahead. Fargo. comes question go Voie from

Chris Voie

what commentary check, I that. bit was Thanks. to then, point XQ at first NDS if to recover a do it morning. on you to just in Good little expect color the should it quarter. more you little lower that be think And give could wanted I a the level? Curious on

Tony Petrello

on do and going. the is therefore it's will going although is some the think on the therefore in rigs offering first in happened what's focused our third-party Sure. to the and affect to, believe we're Well, count, traction gaining is the keep market, churn going -- given it for in quarter. rig -- broader third year, going about there a we NDS it's But we growth with of

I think a couple of spots here. there's bright

The gained it realized casing this both TRS and the class at is is, best of second emphasis you Gulf it and probably think people the international are operation share portion market point, running our first in have against on going the the execution one I of in margins has now but think I NDS, Mexico public we actually on when a and measured available. not biggest tubular strong

that's good story. been So really a

jobs year margin. to from know, our We're pause count, moving had the to ago, you away waiting conventional improve of that's because about for of increasing seeing, proposition same a our job approach with on integration. integrated We were margin it. now we gain and more As we back a the some more and this the on even it's you're have accounting value

think is we going interesting, On the the proposition of is customers is think compelling. story of because about So if that directional that continue, -- if story the drilling kind actually there believe you a the seismic think to you value -- about also with the in now. general, shift in marketplace a drilling we think in directional I services, it's right drilling, arena

years think look four I is today. or five now, it's to tough at anything it like

downhole use to sorry of the they interruption. value available going should what is -- for different think -- combined The who's the combined a with automation happen the to the proposition is to use which making I is going what's think of I operator. downhole, the

and that in international big the drilling, is challenged. four US historical also I that think had the both on directional being stronghold the

used now of XX% maybe of look number the you count XX the It's for ago Lower example, for to it's than four the years US, down at half Big more that If a MWD today. five market, --

place offering in I we so, that is now growth kind have substantial an think And opportunity. offering the that of has

growth about think XX% QX or I at I XXXX fourth quarter QX -- quarter looking that, so. of fourth forward throughout we're versus all with the XXXX to think So year, looking

William Restrepo

In the XX%s

Tony Petrello

In the XX%s.

Chris Voie

Okay, you. that's follow-up. And Thank my helpful. then

gains have forward, for of kind be your the of second granted Do customer the quarter share land you rig US guys So might rig you expect base market count? some flattish the is suggesting that best going therefore the momentum some count rigs. upward for and

that? to around extent I'm any curious have what thoughts or your just you visibility

Tony Petrello

will of we're any expect the saying will slightly of depend terms anticipate now is, We as count year, rig about of the improvement think right our be level do this current go quarter in we'll be such higher. that. I trajectory through what guess on the path. do we I Margin course or higher, we

do an that But expect will yes, there be increase. we

utilization. XXX% of of busy. fleet we basins. one your our a North XX in oily look and there rigs basins, information gas one XX when the today, all In Just for here, of are busy is our high-spec stacked. of South at of Only And rigs our In have of our rig XX -- Texas XX -- Dakota, idea, basins wide you give disparity only in are we rigs only West an stacked. have you ex-rig to between terms just Texas,

So that of utilization gives we're idea high the that you enjoying. an

we So rigs find the and to in the stacked that the going are we think we rigs think are do premier homes. have marketplace

William Restrepo

So, a also. on I'll comment that make

squeeze fleet optimize be our think cost market share part responsibly some how we lot not the the brunt rigs. basins, have way, balance much to rather we're the that share rigs. to share. pricing And other market locations some count do to of to by of pricing suffered I by trying market and focusing and to of trying a moving drop. trying The decided the stacked, to chase to than gas and in any legacy purely bigger have on stewards equipment rig is EBITDA at should are we behave can even and Those stacking of out the our start of ones of what companies we're also we've against preferred

Operator

Please ahead. go from Kurt of next Our Hallead question RBC. comes

Kurt Hallead

good Denny, wish to best. Denn. morning. you, the going Well, all you I miss

time. You've for partner this great all a been

you've appreciate done. really, you. So Thank really everything

Denny Smith

Thank you.

Kurt Hallead

movement rig in you for question directional year on kind automation of outlined We're fall to maybe moment plan and Tony, now apps and drilling the back you guys 'XX the and we stand and reflect I guess if the this kind now. you. of 'XX going I got the laid since of a great fourth and that these and take game toward that presentation and was software back on, services so kind of in a upon where out did

along and of -- expected way? that thought, the than maybe called You speed the some have of out some of might you you better have bumps things what been the some the, gone

Tony Petrello

the appreciate I Sure. question.

the in we've in without about time talked the marketplace. think XXXX, at and If you back talked I was go something about being what

that it rig, the talked was the as Analyst X-rig special planning I that the think about spoke features, we of about we well rigs at the pad-optimal pipeline. the are that as actually all, first Day in new and

pad-optimal the we saying the remember, was rig If was and there that debate cetera, other you at in and up caught got terms identified skid is rig you conference, everyone between there a in are that when know the now we were different of what et the that discussing functionality. view people were and difference also then, all But super-spec people back calling the outlined no rig -- walking we a that.

to rise rig integrating -- guess, business create strategy, we the NDS turned and casing we and be strategy that directional gave into to services, the not growing but the different was potentially that business the going warrants conference, needs well we or in on it software a into NDS same adjust to business. that's the model out a market why as to the sideways said, I the or and At down and as the getting said, industry them focused and bundling that's

of that advances pretty on at at All part, was -- move precipitous reasonably a what it's worked three out well. our -- those, think I today

I'll lot of it actual didn't the was one think if three talking disappointed you, the progress of thing the I be years was the understand four what there operators course -- during time with spend solutions. to marketing, our a we didn't the we're quite be marketing probably about, on, of they penetration or past in was that enough honest

people would everyone's effort. But and in is, joined course engaged say have the other I highly this of fact now,

operators the I five versus got, replicate extent, strongly all sure some where of lion's that a of some the to make of obviously of this contractors got back, this all that have topical, in and action the past it's per large is drilling it sense, other trying to is rig the believe so think flattery. you that is. You And share look if I imitation they that. the years support And the form productivity EBITDA

like you to unless And do you're challenged. going this, be something

out years, past downturns much then, pretty necessity of four faces back to the another -- envision, we'd all us the have for now, portfolio right our in the of were accomplished as so business pursue And shorter I laid in absolutely and objectives downturns we two So we this obviously that proud it's didn't with we've it. I'm have with well.

And stuff and as the era, well. we I the as think more I as I I some have is pretty the offerings new said the well on here, think think a rigs digital going to of as in call the some pipeline, best in yet come, pipeline is robotization exciting, be to

between stopping, successful understand choose larger are to in because require the require is really thing of them we're to change which as more to the from of need to making as your work. alter not reaction the hopefully joint this to more initiatives of that there's And operators benefit enthused kind We'll workflows, mindset. industry these because by in complications will find you hopefully it's make these and where operators its To for fantastic, the that make who contractor. the you we'll investment effort stickiness some we're this potential work, the drilling to going them So pretty well alliance the requires willing with. join untapped relationships work

we way that's So it. the see

William Restrepo

And of part comment financial Kurt, I'll the it. on

I think results, we're happy the very very, with to up now.

Drilling XX% EBITDA results. wanted by to Solutions, very XX% today. that our coming About And number what right. from we're Nabors our are of drive we seeing to We encouraged is total of

about last the and, much of because the $XX compared or of capex, we why, as into more our importantly we is margins in expect or flow the EBITDA XX%, portfolio whole margins those million thing the right, huge the year second are higher. so have but and the was margins you drilling tell that the even mentioned cash we I'll so at business had that conversion $XXX And million we highest to rig are a

as of changing nature world, what the see it are the seeing move So and we forward NDS into more expect results a XXXX, of we XXXX. we in to think in you're our cash we and generation

Kurt Hallead

a expect free That's of cash you net some if kind great free William of to maybe you I And for then give that follow-up, -- us insights of drive XXXX for wondering target $XXX to you drive summary. kind help flow what as contribution working -- capital million the what was on cash flow?

William Restrepo

say just So, so in the stay million, in working us, us the I right, it's capital did but say didn't I at helping it place yeah, to but, is $XXX helping least, about our increase this year, we we in that the to during XXXX. see by five most sense which will days offset to expect reduce that coming revenue DSO in of expect

biggest you're So is seeing, so. what $XX increases the which and from is the million or one -- capital, quite seeing from second the the in are not working reduction significant, capex, the really you're

to amortizing So we goes EBITDA that, XXXX. XXXX higher higher to the in in And of expect to reduction have in the EBITDA, $XX down than cash that so flow. -- straight revenue, just million free

So significant, those if up. them two numbers are add you pretty

Kurt Hallead

of then And the is it flow? what, goal, cash amount Okay. debt that free by reduce

Tony Petrello

so did to not dividends say quite some least million. of, $XXX take account amount, have but I we Well, that at

So…

Operator

of from comes Jon question Cowen. Please go ahead. next Our Hunter

Jonathan Hunter

Hey, good Denny, congratulations. morning and

Denny Smith

you. Thank

Jonathan Hunter

wanted the to is just I one XX. first Lower on ask So

outperforming in did all you XXXX. job a the So market great

little and drops mostly quarter guidance are the a below market Your bit from appears operators. first these a decline for private that implies it

how second of to of quarter, you third was and that visibility some that So if the lost the playing from see privates? out you as picking we I'm things and wondering the up activity move some into have

William Restrepo

little some still pick market, for also rigs. comfortable is with say XXXX have in our visibility. would some up we we're premature the I to core level shoots The green and

redoing to that But -- and XX% yes, large that market with of struggled that's be One the thing impact probably there you're bit of right, from as we're going is other health crisis much with just impact that that's efforts a China focus away oil to independents, some the on is and to little we the and prices. now going core attack segment, majors how So super the is in our there our the well. of count.

We that widening the of upper our be our range expectations was range a bit little have it that to So more what a will the would the forecast. very to have with downside. been point we expect our It's of for would We to do that, do would the aggressive be the that guidance, on wider our land end Absent thought this difficult to and think take really, results. I put first lot in appropriate to in health crisis, to to I however I of than see impact think you mind. at it's it lower. the that us think that closer crisis in quarter

Tony Petrello

Yeah, I that. just would reiterate

enhancing we these whole as thing earnings that's the here forward, all is margin of will and these that downtime, in is think and we there's there coming looking International, pretty The from force of good the incremental in really at rigs going our have Looking on on above, just be power we rigs things some operational. although segments, mentioned planned well. International

comfortable So next up heard people. well, that even there from as we as is Canada a good there strong offshore, is fundamentals for we pretty you've there there, well. and NDS, year we're we're -- looking have said, position as other And

the little all we're William I cautiously that's with everything more a guide happening. US, more said, in on, with we So going a thought light we'd little as here guess cautious, macro of

Jonathan Hunter

then whole the and take of to your just it on only curious is you level? would lower quarters the a where And on a many to the that Understood. margin kind Lower down how XX I'm would how side about market $XXX get fleet much be the follow-up to guiding mark if rate day, margin today,

Tony Petrello

big wouldn't into say want that, I disparity a really get don't to here. there but I is

William Restrepo

regions. Between

Tony Petrello

Yeah.

William Restrepo

in So some why stability seeing margin today in of our pricing significantly chase think our regions don't affected we fleet. -- fleet and our that's been on XX% our it's and EBITDA. lower we you're overall and to about strategy forward, only our our appropriate have going those not to our in has And

lot a of Texas. places like stability We in have Texas, Bakken, seen South West

-- with now. of feel in markets, with pretty on right our strategy So, we XX% fleet our those good our

Jonathan Hunter

turn back. my will Great. questions. for it I Thanks taking

Tony Petrello

please. could you if an hour, one to Andrea, more take close just getting we're question,

Operator

from Meakim Please Morgan. J.P. Our ahead. of next question comes Sean go

Sean Meakim

you. morning. Thank Good

you pieces beating on coming this XQ on So a I major flex of highlight direction your in context within the of with what the we're control. versus call, or respect to free the things million call, end comments the on some cash your are moving outside from that up flow. thinking of now, in and appreciate it either If 'XX points short I'm year if control materially, are curious about the things the $XXX that are just you'd that the

William Restrepo

answer don't to we I question. left that think have time

Tony Petrello

on generate be EBITDA that obviously the think actual next would influencer cash flow, for really we year. free the the I biggest

geographies, are we in that can doing. Canada international going that on and on Drilling what's know, our of -- on is business market what by is, of -- can issues some some really focusing to and assuming the control, is smart we strategy, to. get DSO there. all mitigate we capex pricing And out can which further some more aggressive US been and that collections our the clients What Nabors whatever offset we've and happens we on really, cut those we and you Solutions, being we is on on, based and that Now, places need about of if but is other can going certain our our do,

on are those initiatives, the of with, idle capital we can selling aggressive work working So some more things assets.

that if more of working some try capital that to compensate pay the million, the again we'll reductions, so bit mentioned, and we'll exceed compensating If down But initiatives think we do. we we I a issues could the capex comp $XXX -- debt. all we're items are forth. with short, those So the which just

William Restrepo

in the year's confidence going in full that that a we've number would this does year is last target, targets Company and a speech course numbers. said, that measured numbers, employee target against thousand metrics one that's the both XXXX information year, that the of -- SG&A we year this I target and everybody just reiterate the have information. above as EBITDA the Yeah, of as well financial that's pretentious be for of cash base, those this to your as At whole of flow of free for

Tony Petrello

of our are this flow. incentives quarters year three coming basically for from So cash

William Restrepo

Yeah, cash flow.

in what like the International mainstays to -- of is, that because having with as distinguishing count. solid what competitors don't our NDS gives those Nabors a this I'd offshore, but make that we is your the our So, look really even EBITDA, when and the at of composition most have, at and base foundation look as where we question that different rig market that volatile a feature things unlike pretty of have, and we there think against is much move point

Sean Meakim

think I was pretty specific. that Well,

own I you Tony, think expectations your outperformed there. So

you're the Just clarify, when cash free I from about talk thing investing. you saying last cash say, from would less so cash just operations to

Tony Petrello

That's correct.

Sean Meakim

of much that other you how cash number? Do estimate are into CFI asset have free an being sales or items baked within that

Tony Petrello

that of year close pretty number $XX $XX somewhere know, in sell $XX the much somewhere between of estate, stranded, remains we and million million range We have that every every facilities. some you real That's year. we do million. But assets the happens that

So calculation. the that's part of obviously

Tony Petrello

discuss and feel you for Andrea, email a Thank us and as ahead to if to wind ladies if and up or call anything, will us go question and want you or you thank call you have free gentlemen participating, the always. you.

Operator

The Thank concluded. for conference today’s is attending now you presentation.

may You now disconnect.

Denny Smith	Senior Vice President of Corporate Development
Tony Petrello	Chairman, President and Chief Executive Officer
William Restrepo	Chief Financial Officer
Siggi Meissner	President, Global Drilling Organization
Waqar Syed	AltaCorp Capital
Chris Voie	Wells Fargo
Kurt Hallead	RBC Capital Markets
Jonathan Hunter	Cowen and Company
Sean Meakim	JP Morgan

Nabors Industries (NBR) 21 Feb 202019 Q4 Earnings call transcript