- Revenue of $1.73 billion, up 12% sequentially and 22%
year-over-year
- Net Income of $69 million, or $0.18 per fully diluted
share
- Operating profit of $68 million, up $89 million sequentially
and $56 million year-over-year
- Adjusted EBITDA* of $150 million, up $47 million sequentially
and $46 million year-over-year
- Orders of $670 million with a book-to-bill of 117%
*Adjusted EBITDA is a non-GAAP measure, see “Non-GAAP Financial
Measures” and “Reconciliation of Adjusted EBITDA to Net Income
(Loss)” below.
NOV Inc. (NYSE: NOV) today reported second quarter 2022 revenues
of $1.73 billion, an increase of 12 percent compared to the first
quarter of 2022 and an increase of 22 percent compared to the
second quarter of 2021. Net income for the second quarter of 2022
was $69 million, or 4.0 percent of sales, which included $14
million of Other Items (see Corporate Information for additional
details). Operating profit was $68 million, or 3.9% of sales, and
included $14 million of Other Items. Adjusted EBITDA increased
sequentially to $150 million, or 8.7 percent of sales.
“NOV’s second quarter results reflect improving execution,
customer demand, and pricing,” stated Clay Williams, Chairman,
President, and CEO. “Our team was better able to navigate through
persistent global supply chain challenges, improving our ability to
meet the rising demand for our critical product and technologies
and resulting in significantly improved profitability.
“Diminished global oil and gas inventories and productive
capacity; rising energy security risks; and higher commodity prices
are spurring increased oilfield activity. However, the industry is
struggling to ramp up following years of downsizing and
underinvestment. The urgent need to rebuild oilfield service
capabilities remains constrained by the limited availability, of
certain critical components; freight and logistics challenges;
tightness in many labor markets; inflationary pressures; and higher
costs-of-capital for oilfield enterprises.
“Nevertheless, NOV’s second quarter book-to-bill exceeded 100
percent for the fifth quarter in a row, a key indication that the
industry is embracing its critical mission of restoring its
capabilities to provide oil and gas supply to an energy-starved
global economy. As the early phase of this up-cycle advances, the
people of NOV are diligently working to assist our vital industry
in its efforts to alleviate challenges in meeting the world’s need
for affordable, secure, and clean energy supplies,” concluded
Williams.
Wellbore Technologies
Wellbore Technologies generated revenues of $666 million in the
second quarter of 2022, an increase of 10 percent from the first
quarter of 2022 and an increase of 44 percent from the second
quarter of 2021. Operating profit was $81 million, or 12.2 percent
of sales, and included $7 million of Other Items. Adjusted EBITDA
increased $21 million sequentially and $59 million from the prior
year to $122 million, or 18.3 percent of sales. Improved results
were driven by continued growth in the Western Hemisphere and the
Middle East, market share gains, higher prices, and improved
management of ongoing supply chain disruptions.
Completion & Production Solutions
Completion & Production Solutions generated revenues of $639
million in the second quarter of 2022, an increase of 21 percent
from the first quarter of 2022 and an increase of 29 percent from
the second quarter of 2021. Operating profit was $20 million, or
3.1 percent of sales, and included $1 million in Other Items.
Adjusted EBITDA increased $22 million sequentially and $28 million
from the prior year to $32 million, or 5.0 percent of sales.
Growing demand for oil and gas equipment and improving execution
against ongoing supply chain challenges and operational disruptions
in shipyards drove improved results for the segment.
New orders booked during the quarter totaled $530 million,
representing a book-to-bill of 132 percent when compared to the
$401 million of orders shipped from backlog. As of June 30, 2022,
backlog for capital equipment orders for Completion &
Production Solutions was $1.44 billion, an increase of 6 percent
from the first quarter of 2022 and an increase of 44 percent from
the second quarter of 2021.
Rig Technologies
Rig Technologies generated revenues of $462 million in the
second quarter of 2022, an increase of five percent from the first
quarter of 2022 and a decrease of five percent from the second
quarter of 2021. Operating profit was $31 million, or 6.7 percent
of sales, and included ($8) million of Other Items. Adjusted EBITDA
increased $5 million sequentially and decreased $34 million from
the prior year to $41 million, or 8.9 percent of sales. Growing
demand for the segment’s aftermarket products and services as a
result of increased global drilling activity levels, and the rising
number of offshore wind power installation vessel projects drove
the sequential improvement in results.
New orders booked during the quarter totaled $140 million,
representing a book-to-bill of 80 percent when compared to the $174
million of orders shipped from backlog. As of June 30, 2022,
backlog for capital equipment orders for Rig Technologies was $2.84
billion.
Corporate Information
During the second quarter, the Company recognized $14 million of
Other Items due to restructuring costs, net of related credits (see
Reconciliation of Adjusted EBITDA to Net Income (Loss).
Cash flow used in operations was $124 million for the quarter
driven primarily by the funding of working capital to support
growth of the business and the payment of a $51 million transfer
pricing tax assessment in Denmark. The Company and its advisors
believe the assessment is without merit, is presently appealing,
and believes it will be reimbursed following a successful appeals
process.
As of June 30, 2022, the Company had total debt of $1.72
billion, with $2.00 billion available on its primary revolving
credit facility, and $1.22 billion in cash and cash
equivalents.
Significant Achievements
NOV’s Rig Technologies segment was awarded contracts to
reactivate eleven idle jack-up rigs in Singapore and China in
preparation for work in the Middle East. As the global jack-up rig
market recovery begins to accelerate, key drilling contractor
customers are depending on NOV’s OEM aftermarket parts and service
capabilities to return idle assets back to service, allowing NOV’s
customers to bid from advantaged positions and deliver best in
class performance in upcoming drilling campaigns.
NOV’s Grant Prideco drill pipe business won several orders for
its premium drill pipe in the Middle East. In Qatar, NOV was
awarded an order that will be the first land project for Grant
Prideco’s Delta™ 544 connection in this key growth market. Delta’s
market penetration continues to accelerate as its extensive track
record of offering lower total cost of ownership with no
compromises on performance is becoming more apparent to customers
in the region. NOV also received orders for premium drill pipe that
will enable three rigs in Saudi Arabia to drill some of the world’s
most challenging onshore wells.
NOV‘s NOVOS™ process automation system continued to expand its
presence in the key market of Saudi Arabia. During the second
quarter, NOV received an order from a major oilfield service
company to install NOVOS on six rigs. NOV will also provide
automation lifecycle management services through a licensing
agreement and will leverage NOVOS’ expanded functionality, enhanced
rig control, and open-access operating platform to assist the
customer in deploying custom applications on the rigs in an
integrated manner. NOVOS is already included as a standard feature
of the fifty rigs NOV is building at its new manufacturing facility
in the Kingdom.
NOV’s Managed Pressure Drilling (MPD) operation won a contract
to deliver a dual drill string isolation tool (DSIT) package and
Cyberbase™ upgrade for a major offshore drilling contractor’s
ultra-deepwater drillship. The DSIT will enable the customer to
quickly close the riser below the termination joint, allowing gas
in the riser to be circulated out safely and efficiently. The
super-major operator to which the drillship is contracted has
approved the DSIT as a riser safety closing device for use with
their enhanced controlled mud level system. The package is now
under consideration to be the new operating standard for both the
operator and the drilling contractor.
NOV was awarded an order to design and equip a special hybrid
wind turbine and foundation installation vessel, which is a bespoke
version of the GustoMSC™ NG-20000X. The NG-20000X is designed for
use in harsh environments and water depths of up to 70 meters using
a telescopic leg crane with a capacity of up to 2,500 tons. This
unique vessel is the third award from this customer, who has come
to view NOV as a key partner in their pursuit of opportunities in
the growing offshore wind energy market.
NOV’s Tuboscope operations won several key project awards for
its TK™-Liner systems based on its ability to provide
cost-effective alternatives to corrosion-resistant alloys (CRAs)
and provide a proven solution for internal and external corrosion
mitigation. These qualities facilitated the award of three new
contracts for NOV’s TK-Liner technology supporting geothermal
operations in the Netherlands. One of these orders, an 11 ¾-in.
flush connection, represents a technical first for the geothermal
industry and required significant engineering to establish a flush
connection for a Glass Reinforced Epoxy (GRE) lining, a crucial
differentiating factor when compared to competitive threaded and
coupled products. The business also secured a contract with a
national oil company to provide TK™-Liner system with Tubo-Wrap™
coating for a critical injector well.
NOV’s XL Systems wedge thread technology was chosen for use in a
key geothermal project in California. Identified by the customer as
an ideal fit for their geothermal wells, the metal-to-metal thread
fit seals of XLF connections provide the robust sealing performance
required in the elevated temperatures found throughout the casing
string in geothermal wells, allowing for efficient operations and
improved cementing results.
NOV received an order to provide its BondstrandTM fiberglass
glass-reinforced epoxy (GRE) piping for two X-Class Wind Turbine
Installation Vessels. The first X-Class vessel will be delivered in
the third quarter of 2024 and has already been contracted by a
renewable energy company to transport and install 100 14MW wind
turbines at the Sofia Offshore Wind Farm in the North Sea.
Second Quarter Earnings Conference Call
NOV will hold a conference call to discuss its second quarter
2022 results on July 28, 2022 at 10:00 AM Central Time (11:00 AM
Eastern Time). The call will be broadcast simultaneously at
www.nov.com/investors. A replay will be available on the website
for 30 days.
About NOV
NOV (NYSE: NOV) delivers technology-driven solutions to empower
the global energy industry. For more than 150 years, NOV has
pioneered innovations that enable its customers to safely produce
abundant energy while minimizing environmental impact. The energy
industry depends on NOV’s deep expertise and technology to
continually improve oilfield operations and assist in efforts to
advance the energy transition towards a more sustainable future.
NOV powers the industry that powers the world.
Visit www.nov.com for more information.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures
that management believes are useful tools for internal use and the
investment community in evaluating NOV’s overall financial
performance. These non-GAAP financial measures are broadly used to
value and compare companies in the oilfield services and equipment
industry. Not all companies define these measures in the same way.
In addition, these non-GAAP financial measures are not a substitute
for financial measures prepared in accordance with GAAP and should
therefore be considered only as supplemental to such GAAP financial
measures. Please see the attached schedules for reconciliations of
the differences between the non-GAAP financial measures used in
this press release and the most directly comparable GAAP financial
measures.
Cautionary Statement for the Purpose of the “Safe Harbor”
Provisions of the Private Securities Litigation Reform Act of
1995
Statements made in this press release that are forward-looking
in nature are intended to be “forward-looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934
and may involve risks and uncertainties. These statements may
differ materially from the actual future events or results. Readers
are referred to documents filed by NOV with the Securities and
Exchange Commission, including the Annual Report on Form 10-K,
which identify significant risk factors which could cause actual
results to differ from those contained in the forward-looking
statements.
Certain prior period amounts have been reclassified in this
press release to be consistent with current period
presentation.
NOV INC.
CONSOLIDATED STATEMENTS OF
INCOME (LOSS) (Unaudited)
(In millions, except per share
data)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2022
2021
2022
2022
2021
Revenue:
Wellbore Technologies
$
666
$
463
$
608
$
1,274
$
876
Completion & Production Solutions
639
497
530
1,169
936
Rig Technologies
462
487
441
903
918
Eliminations
(40
)
(30
)
(31
)
(71
)
(64
)
Total revenue
1,727
1,417
1,548
3,275
2,666
Gross profit
309
231
214
523
387
Gross profit %
17.9
%
16.3
%
13.8
%
16.0
%
14.5
%
Selling, general, and administrative
241
219
235
476
463
Operating profit (loss)
68
12
(21
)
47
(76
)
Interest Expense, net
(14
)
(17
)
(18
)
(32
)
(35
)
Equity income (loss) in unconsolidated
affiliates
14
—
6
20
(4
)
Other income (expense), net
—
(16
)
(2
)
(2
)
(26
)
Net income (loss) before income taxes
68
(21
)
(35
)
33
(141
)
Provision (benefit) for income taxes
(2
)
2
14
12
(4
)
Net income (loss)
70
(23
)
(49
)
21
(137
)
Net income attributable to noncontrolling
interests
1
3
1
2
4
Net income (loss) attributable to
Company
$
69
$
(26
)
$
(50
)
$
19
$
(141
)
Per share data:
Basic
$
0.18
$
(0.07
)
$
(0.13
)
$
0.05
$
(0.37
)
Diluted
$
0.18
$
(0.07
)
$
(0.13
)
$
0.05
$
(0.37
)
Weighted average shares outstanding:
Basic
390
386
387
389
386
Diluted
393
386
387
392
386
NOV INC.
CONSOLIDATED BALANCE
SHEETS
(In millions)
June 30,
December 31,
2022
2021
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
1,218
$
1,591
Receivables, net
1,582
1,321
Inventories, net
1,591
1,331
Contract assets
476
461
Prepaid and other current assets
226
198
Total current assets
5,093
4,902
Property, plant and equipment, net
1,761
1,823
Lease right-of-use assets
521
537
Goodwill and intangibles, net
2,014
2,030
Other assets
311
258
Total assets
$
9,700
$
9,550
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
754
$
612
Accrued liabilities
831
778
Contract liabilities
455
392
Current portion of lease liabilities
92
99
Current portion of long-term debt
10
5
Accrued income taxes
29
24
Total current liabilities
2,171
1,910
Lease liabilities
563
576
Long-term debt
1,714
1,708
Other liabilities
280
292
Total liabilities
4,728
4,486
Total stockholders’ equity
4,972
5,064
Total liabilities and stockholders’
equity
$
9,700
$
9,550
NOV INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2022
2021
Cash flows from operating activities:
Net income (loss)
$
70
$
21
$
(137
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
75
149
156
Working capital and other operating items,
net
(269
)
(397
)
131
Net cash provided (used) in operating
activities
(124
)
(227
)
150
Cash flows from investing activities:
Purchases of property, plant and
equipment
(43
)
(89
)
(98
)
Other
3
—
9
Net cash used in investing activities
(40
)
(89
)
(89
)
Cash flows from financing activities:
Borrowings against lines of credit and
other debt
9
10
34
Payments against lines of credit and other
debt
—
—
(183
)
Cash dividends paid
(19
)
(39
)
—
Other
(6
)
(23
)
(33
)
Net cash used in financing activities
(16
)
(52
)
(182
)
Effect of exchange rates on cash
(8
)
(5
)
1
Decrease in cash and cash equivalents
(188
)
(373
)
(120
)
Cash and cash equivalents, beginning of
period
1,406
1,591
1,692
Cash and cash equivalents, end of
period
$
1,218
$
1,218
$
1,572
NOV INC.
RECONCILIATION OF ADJUSTED
EBITDA TO NET INCOME (LOSS) (Unaudited)
(In millions)
Presented below is a reconciliation of Net
Income (Loss) to Adjusted EBITDA. The Company defines Adjusted
EBITDA as Operating Profit excluding Depreciation, Amortization,
Gains and Losses on Sales of Fixed Assets, and, when applicable,
Other Items. Management believes this is important information to
provide because it is used by management to evaluate the Company’s
operational performance and trends between periods and manage the
business. Management also believes this information may be useful
to investors and analysts to gain a better understanding of the
Company’s results of ongoing operations. Adjusted EBITDA is not
intended to replace GAAP financial measures, such as Net Income.
Other Items include impairment, restructure, severance, facility
closure costs and inventory charges and credits.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2022
2021
2022
2022
2021
Operating profit (loss):
Wellbore Technologies
$
81
$
6
$
39
$
120
$
(8
)
Completion & Production Solutions
20
(6
)
(22
)
(2
)
(23
)
Rig Technologies
31
49
11
42
41
Eliminations and corporate costs
(64
)
(37
)
(49
)
(113
)
(86
)
Total operating profit (loss)
$
68
$
12
$
(21
)
$
47
$
(76
)
Other items, net:
Wellbore Technologies
$
7
$
18
$
23
$
30
$
22
Completion & Production Solutions
1
(6
)
16
17
(8
)
Rig Technologies
(8
)
8
6
(2
)
10
Corporate
14
—
—
14
—
Total other items
$
14
$
20
$
45
$
59
$
24
(Gain)/Loss on Sales of Fixed Assets:
Wellbore Technologies
$
(3
)
$
—
$
2
$
(1
)
$
2
Completion & Production Solutions
(4
)
—
—
(4
)
—
Rig Technologies
—
—
1
1
1
Eliminations and corporate costs
—
(5
)
2
2
(3
)
Total (gain)/loss on sales of fixed
assets
$
(7
)
$
(5
)
$
5
$
(2
)
$
—
Depreciation & amortization:
Wellbore Technologies
$
37
$
39
$
37
$
74
$
81
Completion & Production Solutions
15
16
16
31
31
Rig Technologies
18
18
18
36
36
Corporate
5
4
3
8
8
Total depreciation & amortization
$
75
$
77
$
74
$
149
$
156
Adjusted EBITDA:
Wellbore Technologies
$
122
$
63
$
101
$
223
$
97
Completion & Production Solutions
32
4
10
42
—
Rig Technologies
41
75
36
77
88
Eliminations and corporate costs
(45
)
(38
)
(44
)
(89
)
(81
)
Total Adjusted EBITDA
$
150
$
104
$
103
$
253
$
104
Reconciliation of Adjusted EBITDA:
GAAP net income (loss) attributable to
Company
$
69
$
(26
)
$
(50
)
$
19
$
(141
)
Noncontrolling interests
1
3
1
2
4
Provision (benefit) for income taxes
(2
)
2
14
12
(4
)
Interest expense
19
19
19
38
39
Interest income
(5
)
(2
)
(1
)
(6
)
(4
)
Equity (income) loss in unconsolidated
affiliate
(14
)
—
(6
)
(20
)
4
Other (income) expense, net
—
16
2
2
26
(Gain)/Loss on Sales of Fixed Assets
(7
)
(5
)
5
(2
)
—
Depreciation and amortization
75
77
74
149
156
Other items, net
14
20
45
59
24
Total Adjusted EBITDA
$
150
$
104
$
103
$
253
$
104
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005986/en/
Blake McCarthy Vice President, Corporate Development and
Investor Relations (713) 815-3535 Blake.McCarthy@nov.com
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