National Oilwell Varco Reports First Quarter 2020 Results
“NOV is persevering through a pandemic that is presenting historic and extraordinary challenges to the oil and gas industry on several fronts,” commented
“The current COVID-19 crisis is driving a historic drop in global demand for oil, which has resulted in the collapse of prices and forced unprecedented well shut-ins. While we find ourselves in what is likely to be one of the most severe downturns in our industry’s 161-year history, NOV is well-positioned to weather the storm, with a strong balance sheet, ample liquidity, and a focus on cost control. We expect this downturn to get much worse during the second quarter, so we are intensifying our cost-cutting efforts to position NOV appropriately for the challenges ahead.”
“Since year-end, we have raised our target for the cost-out program we initiated in the second quarter of 2019 by
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion & Production Solutions generated revenues of
Orders booked during the quarter totaled
Rig Technologies
Rig Technologies generated revenues of
Orders booked during the quarter totaled
Other Corporate Items
During the first quarter the Company evaluated the carrying value of its long-lived assets due to several market indicators hitting new decade-lows. Based on the evaluation, the Company recorded a charge of
As of
Significant Achievements
NOV’s employees are working to help support the global community during the COVID-19 pandemic. These efforts include donating personal protective equipment and cleaning supplies to front line emergency personnel and delivering portable generation systems from NOV’s WellSite Services business to provide critical power and air-conditioning to COVID-19 quarantine, testing and distribution centers. Additionally, an NOV engineer helped design a low-cost mechanical ventilator and is now working with the
NOV was awarded an integrated drilling equipment package to upgrade an offshore semi-tender rig. The package includes key NOV technologies including the drilling control system, hoisting and drill floor equipment, pressure control equipment, and solids control systems. The completed rig will drill on a long-term contract for a major oil company in
NOV was awarded contracts from a major Japanese construction company for the design and equipment package associated with an offshore wind turbine installation vessel scheduled for delivery in late 2022. The jack-up vessel will be able to efficiently construct 10-12 MW-class offshore wind power generation turbines and will be the third of its kind in the region, all of which have been designed by NOV.
NOV's 14½-in. TKC76 ION™ 3D cutter technology achieved new ROP records in both the Balam and the Maloob fields in the
NOV booked its first mooring tension dampener system contract with a major international operator for a floating liquefied natural gas (FLNG) facility operating on a project in
NOV deployed its Vector™ Rotary Steerable System (RSS) for the first time in
NOV delivered an APL™ buoy turret loading (BTL) system to the Jubilee field in
NOV signed a four-year contract to supply more than 85 miles of oil production, gas lift and water injection flexible pipe for post-salt fields in
NOV successfully signed a new drill bit contract with a national oil company in the
NOV was awarded a contract to use Thru-Kote™ sleeves and TK fittings to internally coat nearly 60 km of pipeline for the Llanito and Casabe fields in
NOV expanded its optimization services offerings by introducing two new products that expand the use of its IntelliServ™ high-speed telemetry technology. First, NOV introduced its iCon-RT tool, which leverages IntelliServ’s real-time, broadband data transmission to optimize completion operations. Leveraging NOV’s BlackStream technology, iCon-RT arms operators with the necessary information to optimize well efficiencies by meaningfully reducing completion installation times, increasing initial production, and confronting the most challenging completion jobs with full transparency into downhole conditions. NOV also introduced its new data while tripping (DWT) device, which provides previously unavailable real-time data during tripping operations by combing along string measurement (ASM), enhanced measurement system (EMS), and the WDP network, and overcoming the historical need to use a drillpipe’s fixed connection to the top drive and pumping operations to provide real-time, high-speed data delivery while tripping. The tool was deployed on two rigs in the
First Quarter Conference Call
NOV will hold a conference call to discuss its first quarter 2020 results on
About NOV
Visit www.nov.com for more information.
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
Certain prior period amounts have been reclassified in this press release to be consistent with current period presentation.
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (In millions, except per share data) |
||||||||||||
|
|
Three Months Ended |
|
|||||||||
|
|
|
|
|
|
|
||||||
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
|||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Wellbore Technologies |
|
$ |
691 |
|
|
$ |
807 |
|
|
$ |
764 |
|
Completion & Production Solutions |
|
|
675 |
|
|
|
581 |
|
|
|
799 |
|
Rig Technologies |
|
|
557 |
|
|
|
603 |
|
|
|
759 |
|
Eliminations |
|
|
(40 |
) |
|
|
(51 |
) |
|
|
(41 |
) |
Total revenue |
|
|
1,883 |
|
|
|
1,940 |
|
|
|
2,281 |
|
Gross profit |
|
|
224 |
|
|
|
256 |
|
|
|
376 |
|
Gross profit % |
|
|
11.9 |
% |
|
|
13.2 |
% |
|
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative |
|
|
283 |
|
|
|
304 |
|
|
|
289 |
|
|
|
|
1,378 |
|
|
|
— |
|
|
|
426 |
|
Long-lived asset impairment |
|
|
513 |
|
|
|
— |
|
|
|
10 |
|
Operating profit (loss) |
|
|
(1,950 |
) |
|
|
(48 |
) |
|
|
(349 |
) |
Interest and financial costs |
|
|
(22 |
) |
|
|
(25 |
) |
|
|
(25 |
) |
Interest income |
|
|
3 |
|
|
|
6 |
|
|
|
4 |
|
Equity income (loss) in unconsolidated affiliates |
|
|
(233 |
) |
|
|
— |
|
|
|
(7 |
) |
Other income (expense), net |
|
|
(3 |
) |
|
|
(18 |
) |
|
|
(54 |
) |
Income (loss) before income taxes |
|
|
(2,205 |
) |
|
|
(85 |
) |
|
|
(431 |
) |
Provision (benefit) for income taxes |
|
|
(156 |
) |
|
|
(10 |
) |
|
|
(46 |
) |
Net income (loss) |
|
|
(2,049 |
) |
|
|
(75 |
) |
|
|
(385 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
(2 |
) |
|
|
2 |
|
|
|
— |
|
Net income (loss) attributable to Company |
|
$ |
(2,047 |
) |
|
$ |
(77 |
) |
|
$ |
(385 |
) |
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(5.34 |
) |
|
$ |
(0.20 |
) |
|
$ |
(1.01 |
) |
Diluted |
|
$ |
(5.34 |
) |
|
$ |
(0.20 |
) |
|
$ |
(1.01 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
383 |
|
|
|
380 |
|
|
|
382 |
|
Diluted |
|
|
383 |
|
|
|
380 |
|
|
|
382 |
|
CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions) |
||||||||
|
|
|
|
|
|
|
||
|
|
2020 |
|
|
2019 |
|
||
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,115 |
|
|
$ |
1,171 |
|
Receivables, net |
|
|
1,879 |
|
|
|
1,855 |
|
Inventories, net |
|
|
2,032 |
|
|
|
2,197 |
|
Contract assets |
|
|
639 |
|
|
|
643 |
|
Other current assets |
|
|
237 |
|
|
|
247 |
|
Total current assets |
|
|
5,902 |
|
|
|
6,113 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
2,003 |
|
|
|
2,354 |
|
Lease right-of-use assets |
|
|
610 |
|
|
|
674 |
|
|
|
|
2,049 |
|
|
|
3,659 |
|
Other assets |
|
|
126 |
|
|
|
349 |
|
Total assets |
|
$ |
10,690 |
|
|
$ |
13,149 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
662 |
|
|
$ |
715 |
|
Accrued liabilities |
|
|
888 |
|
|
|
949 |
|
Contract liabilities |
|
|
470 |
|
|
|
427 |
|
Current portion of lease liabilities |
|
|
115 |
|
|
|
114 |
|
Accrued income taxes |
|
|
28 |
|
|
|
42 |
|
Total current liabilities |
|
|
2,163 |
|
|
|
2,247 |
|
|
|
|
|
|
|
|
|
|
Lease liabilities |
|
|
646 |
|
|
|
674 |
|
Long-term debt |
|
|
2,002 |
|
|
|
1,989 |
|
Other liabilities |
|
|
325 |
|
|
|
393 |
|
Total liabilities |
|
|
5,136 |
|
|
|
5,303 |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
5,554 |
|
|
|
7,846 |
|
Total liabilities and stockholders’ equity |
|
$ |
10,690 |
|
|
$ |
13,149 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
||||||||
|
|
Three Months Ended |
|
|||||
|
|
|
|
|||||
|
|
2020 |
|
|
2019 |
|
||
Cash flows from operating activities: |
|
|
|
|||||
Net loss |
|
$ |
(2,049 |
) |
|
$ |
(75 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
105 |
|
|
|
177 |
|
Long-lived asset impairment |
|
|
1,891 |
|
|
|
— |
|
Working capital and other operating items, net |
|
|
92 |
|
|
|
(140 |
) |
Net cash provided by (used by) operating activities |
|
|
39 |
|
|
|
(38 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(68 |
) |
|
|
(43 |
) |
Business acquisitions, net of cash acquired |
|
|
— |
|
|
|
(65 |
) |
Other |
|
|
15 |
|
|
|
1 |
|
Net cash used in investing activities |
|
|
(53 |
) |
|
|
(107 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Cash dividends paid |
|
|
(19 |
) |
|
|
(19 |
) |
Other |
|
|
(24 |
) |
|
|
(1 |
) |
Net cash used in financing activities |
|
|
(43 |
) |
|
|
(20 |
) |
Effect of exchange rates on cash |
|
|
1 |
|
|
|
8 |
|
Decrease in cash and cash equivalents |
|
|
(56 |
) |
|
|
(157 |
) |
Cash and cash equivalents, beginning of period |
|
|
1,171 |
|
|
|
1,427 |
|
Cash and cash equivalents, end of period |
|
$ |
1,115 |
|
|
$ |
1,270 |
|
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) (Unaudited) (In millions)
The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. The Company uses Adjusted EBITDA internally to evaluate and manage the business. Adjusted EBITDA is not intended to replace GAAP financial measures, such as Net Income. Other items include impairment charges, inventory charges and severance and other restructuring costs. |
||||||||||||
|
|
Three Months Ended |
|
|||||||||
|
|
|
|
|
|
|
||||||
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
|||
Operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Wellbore Technologies |
|
$ |
(663 |
) |
|
$ |
19 |
|
|
$ |
(317 |
) |
Completion & Production Solutions |
|
|
(1,013 |
) |
|
|
(35 |
) |
|
|
57 |
|
Rig Technologies |
|
|
(202 |
) |
|
|
31 |
|
|
|
(23 |
) |
Eliminations and corporate costs |
|
|
(72 |
) |
|
|
(63 |
) |
|
|
(66 |
) |
Total operating profit (loss) |
|
$ |
(1,950 |
) |
|
$ |
(48 |
) |
|
$ |
(349 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other items: |
|
|
|
|
|
|
|
|
|
|
|
|
Wellbore Technologies |
|
$ |
715 |
|
|
$ |
(2 |
) |
|
$ |
410 |
|
Completion & Production Solutions |
|
|
1,054 |
|
|
|
11 |
|
|
|
13 |
|
Rig Technologies |
|
|
238 |
|
|
|
2 |
|
|
|
114 |
|
Corporate |
|
|
16 |
|
|
|
— |
|
|
|
— |
|
Total other items |
|
$ |
2,023 |
|
|
$ |
11 |
|
|
$ |
537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
Wellbore Technologies |
|
$ |
51 |
|
|
$ |
100 |
|
|
$ |
50 |
|
Completion & Production Solutions |
|
|
30 |
|
|
|
52 |
|
|
|
26 |
|
Rig Technologies |
|
|
20 |
|
|
|
23 |
|
|
|
21 |
|
Corporate |
|
|
4 |
|
|
|
2 |
|
|
|
3 |
|
Total depreciation & amortization |
|
$ |
105 |
|
|
$ |
177 |
|
|
$ |
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Wellbore Technologies |
|
$ |
103 |
|
|
$ |
117 |
|
|
$ |
143 |
|
Completion & Production Solutions |
|
|
71 |
|
|
|
28 |
|
|
|
96 |
|
Rig Technologies |
|
|
56 |
|
|
|
56 |
|
|
|
112 |
|
Eliminations and corporate costs |
|
|
(52 |
) |
|
|
(61 |
) |
|
|
(63 |
) |
Total Adjusted EBITDA |
|
$ |
178 |
|
|
$ |
140 |
|
|
$ |
288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) attributable to Company |
|
$ |
(2,047 |
) |
|
$ |
(77 |
) |
|
$ |
(385 |
) |
Noncontrolling interests |
|
|
(2 |
) |
|
|
2 |
|
|
|
— |
|
Provision (benefit) for income taxes |
|
|
(156 |
) |
|
|
(10 |
) |
|
|
(46 |
) |
Interest expense |
|
|
22 |
|
|
|
25 |
|
|
|
25 |
|
Interest income |
|
|
(3 |
) |
|
|
(6 |
) |
|
|
(4 |
) |
Equity (income) loss in unconsolidated affiliate |
|
|
233 |
|
|
|
— |
|
|
|
7 |
|
Other (income) expense, net |
|
|
3 |
|
|
|
18 |
|
|
|
54 |
|
Depreciation and amortization |
|
|
105 |
|
|
|
177 |
|
|
|
100 |
|
Other items |
|
|
2,023 |
|
|
|
11 |
|
|
|
537 |
|
Total Adjusted EBITDA |
|
$ |
178 |
|
|
$ |
140 |
|
|
$ |
288 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200427005884/en/
Vice President, Corporate Development and Investor Relations
(713) 815-3535
Blake.McCarthy@nov.com
Source: