Nabors Q3 2026 Earnings: Record International Margin Drives Cash Flow

Nabors Industries (NYSE: NBR) reported Q3 2026 operating revenue of $872.2 million, up 6.6% from $818.2 million a year earlier, while diluted EPS was a loss of $1.24 versus earnings of $16.85. Adjusted EBITDA rose to $245.5 million and adjusted free cash flow reached $74.5 million, supported by record International Drilling margins, a larger Lower 48 fleet, lower capital spending and improved working capital.

Core Financial Results

Revenue increased 7% sequentially, while adjusted EBITDA grew nearly 11% from Q2. Net income was $16.0 million before noncontrolling interests, but the allocation of $27.1 million to noncontrolling interests resulted in an $11.2 million loss attributable to Nabors shareholders.

Year-over-year earnings comparisons are distorted by the August 2025 sale of Quail Tools. The prior-year quarter included a $415.6 million disposal gain as well as operating contributions from Quail Tools.

Adjusted EBITDA, adjusted operating income and adjusted free cash flow are non-GAAP measures. Nabors defines adjusted free cash flow as operating cash flow less capital expenditures net of asset-sale proceeds and before acquisition-related cash costs.

Business and Segment Performance

International Drilling was the main source of sequential earnings growth. Its daily adjusted gross margin reached a record $19,060, up $1,526, or 8.7%, from Q2. Management attributed the increase to field performance and contributions from a recently deployed rig in Argentina and a new SANAD rig in Saudi Arabia.

U.S. Drilling also improved as the average Lower 48 working fleet rose to 72.8 rigs from 67.8. Drilling Solutions benefited from greater adoption of Performance Software and Downhole Services on Nabors rigs, along with international growth in Surface and Tubular services.

The following figures compare Q3 2026 with Q2 2026 and are in millions of dollars.

Rig Technologies remained the smallest reporting segment, but both aftermarket revenue and capital-equipment sales increased sequentially. Separately, SANAD deployed its 17th newbuild rig and plans one additional deployment in 2026 and two in Q1 2027, taking its newbuild fleet to 20 rigs.

Profitability, Cash Flow and Balance Sheet

Nabors’ adjusted EBITDA margin was approximately 28.2%, up from about 27.2% in Q2 but below 28.9% in the prior-year quarter. The sequential improvement reflected growth across all four reporting segments.

Operating cash flow reached $238.9 million, while capital expenditures net of asset-sale proceeds were $164.4 million, producing $74.5 million of adjusted free cash flow. Management cited higher profitability, controlled spending and improved working capital, partly offset by higher cash interest payments. Some SANAD construction milestones shifted into later periods, meaning part of the quarter’s cash-flow improvement reflected spending timing.

Nabors ended the quarter with $475.1 million of cash and short-term investments, $2.02 billion of total debt and $1.55 billion of net debt. During the quarter, it used cash to redeem $100 million of 9.125% notes. Compared with Q2, total debt declined by approximately $97.5 million and net debt fell by about $62.8 million.

Quail Tools Makes Growth Look Weaker but Prior EPS Look Stronger

Q3 2025 included $34.2 million of revenue and $20.3 million of adjusted EBITDA from Quail Tools, which Nabors sold in August 2025. Excluding only those disclosed contributions from the prior-year comparison, Q3 2026 revenue increased by approximately 11% and adjusted EBITDA rose by approximately 14%. This is a simple comparison rather than a company-reported organic growth measure.

At the same time, the $415.6 million disposal gain boosted prior-year GAAP earnings, making the move from diluted EPS of $16.85 to a loss of $1.24 appear much more severe than the operating results alone suggest. The current quarter’s higher adjusted operating income, EBITDA and cash flow provide a clearer view of the underlying sequential improvement.

Earnings Guidance

Nabors expects full-year adjusted EBITDA of approximately $930 million, which management described as the upper end of its previous guidance. Full-year adjusted free cash flow guidance was raised materially to $100 million-$110 million, although the earlier range was not provided in the source.

The outlook assumes further sequential adjusted EBITDA growth in Q4, led by U.S. Drilling. International rig activity is expected to decline because of five suspended SANAD rigs, but International daily adjusted gross margin is still projected to improve.

Management also expects to enter 2027 at an annualized adjusted EBITDA run rate of approximately $1 billion.

Recent Insider Transactions

The supplied insider data contains one cash sale and one cash purchase among the most recent records. The transactions moved in opposite directions and should be viewed as factual disclosures rather than indications of management’s outlook.

The other recent records supplied were primarily stock awards reported at a grant price of $0 rather than open-market purchases.

Risks Investors Should Watch

• SANAD rig suspensions: Five suspended rigs are expected to reduce the International average rig count to 92-93 in Q4 from 94.9 in Q3. The forecast for a higher daily margin will need to offset some of that activity pressure.
• Cash-flow timing: Q3 adjusted free cash flow benefited from SANAD construction milestones shifting into later periods. Q4 capital spending is expected to reach $250 million-$260 million, including $140 million-$150 million for SANAD, so some deferred cash use remains ahead.
• Debt and capital intensity: Nabors still carried $2.02 billion of debt and $1.55 billion of net debt at quarter-end. Interest expense was $42.1 million, while depreciation and amortization totaled $159.7 million, limiting the conversion of adjusted EBITDA into common-shareholder earnings.
• Reliance on non-GAAP improvement: Adjusted EBITDA and adjusted free cash flow strengthened, but Nabors still reported an attributable net loss. Investors should continue comparing adjusted measures with GAAP earnings, capital expenditures and debt reduction.

Summary

Nabors’ Q3 2026 results showed broad sequential improvement, led by record International Drilling margins, a larger Lower 48 fleet and growth in Drilling Solutions. Cash generation improved materially, although lower capital spending partly reflected project timing. The next points to monitor are whether U.S. Drilling can lead another quarter of EBITDA growth, whether International margins rise despite SANAD suspensions, and whether higher Q4 capital spending remains consistent with the raised full-year free-cash-flow outlook.