- Revenue of $2.09 billion, up 7% sequentially and up 21%
year-over-year
- Operating Profit of $181 million, up $55 million sequentially
and up $113 million year-over-year
- Net Income of $155 million, up $29 million sequentially and up
$86 million year-over-year
- Fully diluted earnings per share of $0.39, up $0.07
sequentially and up $0.21 year-over-year
- Adjusted EBITDA* of $245 million, up $50 million sequentially
and up $95 million year-over-year
*Adjusted EBITDA is a non-GAAP measure, see “Non-GAAP Financial
Measures” and “Reconciliation of Adjusted EBITDA to Net Income”
below.
NOV Inc. (NYSE: NOV) today reported second quarter 2023 revenues
of $2.09 billion, an increase of seven percent compared to the
first quarter of 2023 and an increase of 21 percent compared to the
second quarter of 2022. Net income for the second quarter of 2023
was $155 million, or 7.4 percent of sales. Operating profit was
$181 million, or 8.6 percent of sales. Under Other Items the
Company recorded a net pre-tax credit of $7 million (see Corporate
Information for additional details). Adjusted EBITDA increased
sequentially to $245 million, or 11.7 percent of sales.
“NOV’s consolidated revenue increased seven percent
sequentially, which helped lift fully diluted earnings per share to
the highest level since 2015,” stated Clay Williams, Chairman,
President, and CEO. “Rising demand in offshore and international
land markets led to a two percent sequential increase in capital
equipment orders for the Company, despite economic uncertainty and
continued declines in North American rig activity. We believe the
substantial backlog of oil and gas development projects across
offshore and international land markets will continue to push
oilfield service asset utilization higher, prompting continued
demand for NOV’s critical equipment and technologies.”
“Encouragingly, the Company’s global supply chain is continuing
to improve, which is positively impacting sales growth and
profitability. However, compressing delivery times from most, but
not all, of our vendors led to higher inventories in the second
quarter, which contributed to NOV’s working capital growth and cash
draw. We expect inventory balances to remain elevated as supply
chains normalize, before reversing out in the fourth quarter. As
the pace of customer backlog conversion accelerates through the
second half of the year, we expect both improved profitability and
sequentially improving free cash flow, particularly in the fourth
quarter and continuing into 2024.”
Wellbore Technologies
Wellbore Technologies generated revenues of $804 million in the
second quarter of 2023, an increase of eight percent from the first
quarter of 2023 and an increase of 21 percent from the second
quarter of 2022. Operating profit was $128 million, or 15.9 percent
of sales, and included a credit of $1 million from Other Items.
Adjusted EBITDA increased $31 million sequentially and increased
$42 million from the prior year to $164 million, or 20.4 percent of
sales. Significantly improved manufacturing throughput from the
segment’s drill pipe operations, market share gains and improving
demand from international and offshore markets offset activity
declines in North America to drive improved results.
Completion & Production Solutions
Completion & Production Solutions generated revenues of $753
million in the second quarter of 2023, an increase of five percent
from the first quarter of 2023 and an increase of 18 percent from
the second quarter of 2022. Operating profit was $53 million, or
7.0 percent of sales. Adjusted EBITDA increased $15 million
sequentially and increased $37 million from the prior year to $69
million, or 9.2 percent of sales. Results reflect improving
execution on a higher margin mix of international and offshore
projects, partially offset by softening demand for completion
equipment and aftermarket services in North America.
New orders booked during the quarter increased 11 percent and
totaled $450 million, representing a book-to-bill of 94 percent
when compared to the $477 million of orders shipped from backlog.
As of June 30, 2023, backlog for capital equipment orders for
Completion & Production Solutions was $1.59 billion, a decrease
of $15 million from the first quarter of 2023 and an increase of
$144 million from the second quarter of 2022.
Rig Technologies
Rig Technologies generated revenues of $606 million in the
second quarter of 2023, an increase of 10 percent from the first
quarter of 2023 and an increase of 31 percent from the second
quarter of 2022. Operating profit was $64 million, or 10.6 percent
of sales, and included a credit of $7 million from Other Items.
Adjusted EBITDA increased $2 million sequentially and increased $30
million from the prior year to $71 million, or 11.7 percent of
sales. Steadily improving demand drove the segment’s sequential
revenue growth. Incremental margins were limited by a lower margin
sales mix and sequentially higher costs related to a startup
operation.
New capital equipment orders booked during the quarter totaled
$222 million, representing a book-to-bill of 108 percent when
compared to the $205 million of orders shipped from backlog. As of
June 30, 2023, backlog for capital equipment orders for Rig
Technologies totaled $2.89 billion, an increase of $17 million from
the first quarter of 2023 and an increase of $54 million from the
second quarter of 2022.
Corporate Information
NOV recorded a net credit of $7 million in Other Items,
primarily related to gains on sales of previously reserved
inventory (see Reconciliation of Adjusted EBITDA to Net Income)
during the second quarter.
As of June 30, 2023, the Company had total debt of $1.73
billion, with $2.00 billion available on its primary revolving
credit facility, and $592 million in cash and cash equivalents.
As previously disclosed, the Company is currently pursuing
litigation against several companies involving royalties due under
licenses for technology related to drill bits. During the second
quarter of 2023, the Company accrued an incremental $10 million of
accounts receivable owed by non-paying licensees, bringing the
total amount accrued to $52 million.
Significant Achievements
NOV entered a global arrangement with a major Integrated Oil
Company (IOC), to provide the customer with capabilities of NOV’s
MaxTM digital platform. The Max platform provides edge compute,
edge-to-cloud and cloud-based solutions that enable real-time
insights to drive operational efficiencies in the field. The
currently deployed solutions include: NOV’s Kaizen™ Intelligent
Drilling Optimizer, which employs artificial intelligence with
continuously learning capabilities that enable it to provide
proactive drilling dysfunction mitigation, maximize rate of
penetration (ROP), and optimize mechanical specific energy (MSE);
WellData 4.0™ Remote Drilling Monitor, which allows real-time
monitoring of drilling information anywhere in the world as if at
the wellsite; and RigSense 4.0™ Electronic Drilling Recorder, the
industry’s most versatile rig-site information system.
NOV’s automation and robotics suite continues to gather market
momentum as customers begin to benefit from its ability to drive
significant performance and safety improvements. During the
quarter, NOV secured multiple system orders for rigs operating in
markets around the globe, ranging from a land rig system in North
America to automation and robotic systems for deepwater drilling
rigs operating in South America and Southeast Asia. Following the
installation of the new systems, these customers will all benefit
from NOV’s Automation Lifecycle Management program and
round-the-clock support from the Performance Center, a dedicated
NOV team that utilizes NOV’s unparalleled library of rig
performance data to optimize rig configurations and drilling
methodologies.
NOV has recently signed orders to supply 11 top drives and 10
iron roughnecks for land rigs operating in the Middle East. These
orders reflect NOV’s commitment to providing advanced drilling
equipment and technologies to enhance operational efficiency in the
region.
NOV’s Fiber Glass Systems has been chosen to provide support for
the Fuji Borealis Project. The project, which will feature the
Pipex™ Chemsafe PP-H Dual Contained Drainage System, will provide
process waste, biowaste, and segregated drainage for a large
bio-tech facility. NOV Fiber Glass Systems’ differentiated
offerings allow it to meet the specific requirement for biowaste
systems containing live pathogens.
NOV continues to develop and advance the next generation of
fracturing technology. During the quarter, the NOV Ideal™ Power
Pod, a hybrid solution that enables scalable eFrac deployments
alongside conventional frac units and provides up to 15,000
horsepower per pod, was successfully deployed in the Marcellus
Basin with a large independent service provider. The Power Pod can
eliminate the need for up to eight conventional units, resulting in
fuel savings of approximately 800 gallons of diesel per hour and a
redzone footprint decrease of 50%. When employed alongside a
conventional dual-fuel fleet, the Power Pod system allows for
optimal consumption of natural gas fuel across the entire fleet,
leading to further reductions in diesel consumption and
emissions.
NOV continued to strengthen its position as a global leader in
the provision of carbon-reducing marine and heavy lift equipment
and technology. During the quarter, NOV secured orders for eight
third-generation all-electric cranes from multiple major operators,
an indication of the growing global recognition and acceptance of
NOV’s dependable all-electric crane. Additionally, NOV secured a
contract for the provision of slewing and tilting systems for two
sail masts on a large vessel, enabling a European client to reduce
the carbon footprint of its shipping fleet.
NOV secured the first sale of its XCalibur™ connection, a
threaded and coupled connector designed specifically for use in
geothermal operation, in the North American market. XCalibur has a
gas-tight, metal-to-metal seal, adding to the XL Systems family of
large-diameter casing and connector products. The XCalibur
connection features an integral pin with double-start threads and a
high strength forged coupling, ensuring robust performance and 100%
pipe body strength in challenging onshore and offshore
critical-service casing applications.
NOV’s PosiTrack™ Torsional Vibration Mitigation tool continues
to set new performance benchmarks on rotary steerable systems (RSS)
and motor bottomhole assemblies (BHA) with major operators and
directional companies in North and South America. In addition to
improving and maintaining RSS directional control in the most
demanding applications, the PosiTrack tool enables customers to
extend the mean time between equipment failures on RSS,
measurement-while-drilling, and logging-while-drilling operations.
The new technology has also succeeded in enhancing borehole
enlargement applications, where balancing dual-cutting structures,
bit, and reamer in the BHA is the main challenge. By mitigating
torsional vibrations, RSS tools were kept in the hole longer while
achieving competitive ROP.
NOV secured an order from a Fortune 500 independent midstream
infrastructure company in North America for Tuboscope™ TK™-70 and
TK-70XT coating with 24-in. Thru-Kote™ sleeves for a brine piping
project in Mont Belvieu, Texas. Used in the construction of
internally coated pipelines, Thru-Kote’s insert sleeve protects the
internal coating during welding, improving connection integrity and
providing a continuous coating barrier. The layout of the new
system, combined with TK coatings and Thru-Kote sleeves, will
greatly improve pumping efficiencies and provide exceptional
corrosion and abrasion protection. Additionally, another major
operator placed an order for the new Tuboscope TK-340TC drill pipe
coating. After exceeding performance expectations in a drilling
trial, the low thermal conductivity coating was chosen for its
ability to insulate drilling fluids, provide corrosion protection,
and improve hydraulic efficiencies. As the market leader in tubular
corrosion control, Tuboscope is committed to providing coating
solutions for the most challenging environments.
NOV received multiple contract awards for its Managed Pressure
Drilling (MPD) products as it establishes itself as a market leader
in the space. A national oil company in the Asia Pacific region
extended its contract for an additional 10-well campaign, securing
two sets of Land Rotating Control Devices (LRCD)/Pressure Mud Cap
Drilling systems. A drilling contractor ordered a dual Drill String
Isolation Tool (DSIT), the second controlled mud level system the
customer plans to use in the Gulf of Mexico. Additionally, a major
operator chose to replace a competitor system with our J-Series RCD
system on a tension leg platform, confirming its reputation for
reliability and performance. The team also executed a deepwater
Integrated Riser Joint (IRJ) upgrade for a major drilling
contractor, which included making the NControl™ platform the
primary MPD software platform. In addition, a major drilling
contractor purchased its fifth IRJ system.
NOV further strengthened its data aggregation and delivery
business in the Middle East by securing two key purchase orders.
The M/D Totco business unit will supply RigSense technology to a
national oil company’s 10 new-build rigs and deliver RigSense
upgrades for 27 offshore rigs belonging to an international
drilling contractor. Furthermore, NOV garnered maintenance and
licensing orders from major coiled tubing service companies,
international oil companies, and international wireline service
providers for its OrionNET, Max Completions™, and Cerberus™ well
intervention software, further highlighting NOV’s significant
achievements in the field of surface sensors.
Second Quarter Earnings Conference Call
NOV will hold a conference call to discuss its second quarter
2023 results on July 27, 2023 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. These statements speak only as of the date of this
document, and we undertake no obligation to update or revise the
statements, except as may be required by law.
Certain prior period amounts have been reclassified in this
press release to be consistent with current period
presentation.
NOV INC.
CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
(In millions, except per share
data)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2023
2022
2023
2023
2022
Revenue:
Wellbore Technologies
$
804
$
666
$
745
$
1,549
$
1,274
Completion & Production Solutions
753
639
718
1,471
1,169
Rig Technologies
606
462
550
1,156
903
Eliminations
(70
)
(40
)
(51
)
(121
)
(71
)
Total revenue
2,093
1,727
1,962
4,055
3,275
Gross profit
457
309
411
868
523
Gross profit %
21.8
%
17.9
%
20.9
%
21.4
%
16.0
%
Selling, general, and administrative
276
241
285
561
476
Operating profit
181
68
126
307
47
Interest Expense, net
(13
)
(14
)
(13
)
(26
)
(32
)
Equity income in unconsolidated
affiliates
37
14
48
85
20
Other expense, net
(29
)
—
(16
)
(45
)
(2
)
Net income before income taxes
176
68
145
321
33
Provision (benefit) for income taxes
19
(2
)
20
39
12
Net income
157
70
125
282
21
Net income (loss) attributable to
noncontrolling interests
2
1
(1
)
1
2
Net income attributable to Company
$
155
$
69
$
126
$
281
$
19
Per share data:
Basic
$
0.39
$
0.18
$
0.32
$
0.72
$
0.05
Diluted
$
0.39
$
0.18
$
0.32
$
0.71
$
0.05
Weighted average shares outstanding:
Basic
393
390
392
392
389
Diluted
395
393
396
396
392
NOV INC.
CONSOLIDATED BALANCE
SHEETS
(In millions)
June 30,
December 31,
2023
2022
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
592
$
1,069
Receivables, net
1,891
1,739
Inventories, net
2,199
1,813
Contract assets
704
685
Prepaid and other current assets
224
187
Total current assets
5,610
5,493
Property, plant and equipment, net
1,839
1,781
Lease right-of-use assets
548
517
Goodwill and intangibles, net
2,019
1,995
Other assets
430
349
Total assets
$
10,446
$
10,135
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,007
$
906
Accrued liabilities
769
959
Contract liabilities
494
444
Current portion of lease liabilities
91
87
Current portion of long-term debt
13
13
Accrued income taxes
11
28
Total current liabilities
2,385
2,437
Long-term debt
1,715
1,717
Lease liabilities
568
549
Other liabilities
281
298
Total liabilities
4,949
5,001
Total stockholders’ equity
5,497
5,134
Total liabilities and stockholders’
equity
$
10,446
$
10,135
NOV INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2023
2022
Cash flows from operating activities:
Net income
$
157
$
282
$
21
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization
71
148
149
Working capital and other operating items,
net
(300
)
(704
)
(397
)
Net cash used in operating activities
(72
)
(274
)
(227
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(76
)
(133
)
(89
)
Other
—
5
—
Net cash used in investing activities
(76
)
(128
)
(89
)
Cash flows from financing activities:
Borrowings against lines of credit and
other debt
1
2
10
Payments against lines of credit and other
debt
(5
)
(5
)
—
Cash dividends paid
(20
)
(40
)
(39
)
Other
(8
)
(30
)
(23
)
Net cash used in financing activities
(32
)
(73
)
(52
)
Effect of exchange rates on cash
(2
)
(2
)
(5
)
Decrease in cash and cash equivalents
(182
)
(477
)
(373
)
Cash and cash equivalents, beginning of
period
774
1,069
1,591
Cash and cash equivalents, end of
period
$
592
$
592
$
1,218
NOV INC.
RECONCILIATION OF ADJUSTED
EBITDA TO NET INCOME (Unaudited)
(In millions)
Presented below is a reconciliation of Net
Income 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,
2023
2022
2023
2023
2022
Operating profit (loss):
Wellbore Technologies
$
128
$
81
$
96
$
224
$
120
Completion & Production Solutions
53
20
44
97
(2
)
Rig Technologies
64
31
53
117
42
Eliminations and corporate costs
(64
)
(64
)
(67
)
(131
)
(113
)
Total operating profit (loss)
$
181
$
68
$
126
$
307
$
47
Other items, net:
Wellbore Technologies
$
(1
)
$
7
$
—
$
(1
)
$
30
Completion & Production Solutions
—
1
(1
)
(1
)
17
Rig Technologies
(7
)
(8
)
(3
)
(10
)
(2
)
Corporate
1
14
—
1
14
Total other items
$
(7
)
$
14
$
(4
)
$
(11
)
$
59
(Gain)/Loss on Sales of Fixed Assets:
Wellbore Technologies
$
—
$
(3
)
$
—
$
—
$
(1
)
Completion & Production Solutions
—
(4
)
(5
)
(5
)
(4
)
Rig Technologies
—
—
—
—
1
Corporate
—
—
1
1
2
Total (gain)/loss on sales of fixed
assets
$
—
$
(7
)
$
(4
)
$
(4
)
$
(2
)
Depreciation & amortization:
Wellbore Technologies
$
37
$
37
$
37
$
74
$
74
Completion & Production Solutions
16
15
16
32
31
Rig Technologies
14
18
19
33
36
Corporate
4
5
5
9
8
Total depreciation & amortization
$
71
$
75
$
77
$
148
$
149
Adjusted EBITDA:
Wellbore Technologies
$
164
$
122
$
133
$
297
$
223
Completion & Production Solutions
69
32
54
123
42
Rig Technologies
71
41
69
140
77
Eliminations and corporate costs
(59
)
(45
)
(61
)
(120
)
(89
)
Total Adjusted EBITDA
$
245
$
150
$
195
$
440
$
253
Reconciliation of Adjusted EBITDA:
GAAP net income attributable to
Company
$
155
$
69
$
126
$
281
$
19
Noncontrolling interests
2
1
(1
)
1
2
Provision for income taxes
19
(2
)
20
39
12
Interest expense
21
19
21
42
38
Interest income
(8
)
(5
)
(8
)
(16
)
(6
)
Equity income in unconsolidated
affiliates
(37
)
(14
)
(48
)
(85
)
(20
)
Other expense, net
29
—
16
45
2
(Gain)/Loss on Sales of Fixed Assets
—
(7
)
(4
)
(4
)
(2
)
Depreciation and amortization
71
75
77
148
149
Other items, net
(7
)
14
(4
)
(11
)
59
Total Adjusted EBITDA
$
245
$
150
$
195
$
440
$
253
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726823750/en/
Blake McCarthy Vice President, Corporate Development and
Investor Relations (713) 815-3535 Blake.McCarthy@nov.com
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