National Oilwell Varco Reports Third Quarter 2020 Results
“Despite the sharp contraction in demand for oil and gas-related products and services caused by the global pandemic, our team’s solid execution on cost reduction and working capital initiatives continues to exceed expectations, resulting in
“While our third quarter bookings were light and market conditions remain challenging, we are seeing some encouraging signals in the marketplace. In
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion & Production Solutions generated revenues of
New orders booked during the quarter totaled
Rig Technologies
Rig Technologies generated revenues of
New orders booked during the quarter totaled
Other Corporate Items
During the third quarter, NOV generated
On
Significant Achievements
NOV posted several notable wins in the offshore wind market including an order for the design and jacking system for the first Jones Act wind turbine installation vessel and another order for the design package of a large wind turbine installation vessel.
NOV was awarded a 10-year service contract by a major international oil company for its proprietary hot oil thermal desorption unit (HTDU) to treat oily drilling waste from rigs and FPSOs. The fully-automated system is the only system that handles waste with higher liquid contents that do not require dilution and will treat processed solids to the point that the client can dispose on-site or re-use the offtake in civil projects. Thus, the system will safely reduce the customer’s drilling fluid and handling expenses while also lowering its environmental footprint.
NOV introduced its Ideal™ eFrac offering to multiple customers and industry participants. The Ideal™ system is designed to accelerate the transition to environmentally-friendly electric fracturing by providing an eFrac option that has a total cost of ownership lower than not only other eFrac options currently in the market, but also lower than conventional diesel fleets. The Ideal™ system features a clean and simple rig up and significantly higher power density than its competition while maintaining the redundancy that efficient hydraulic fracturing operations require.
NOV continues to introduce new products and technologies that allow customers to achieve their ESG goals while concurrently improving their economics. NOV secured the first order for its Hydraulic Power Unit (HPU) Eco Boost system to a Norwegian drilling contractor. This system reduces power consumption by shaving power peaks on ring-line HPUs, simultaneously reducing emissions and lowering costs. In addition, NOV won a third order for its PowerBlade™ hybrid system to a Norwegian drilling contractor. The PowerBlade system captures the kinetic energy of the drilling hoisting system and recycles it to the rig’s power grid, reducing fuel consumption and lowering rig emissions.
NOV launched the Phoenix™ geothermal drill bit series, further expanding its footprint in the renewable energy market. The Phoenix™ drill bit series features high-performance ION™-shaped cutter technology, advanced HydroShear™ nozzle design, thermal index modeling, and NOV’s TORC™ components for superior depth-of-cut control technology to increase torsional stability, all combined into one design platform to drill farther and faster in hard rock environments. NOV’s new 12½-in.
NOV continues to support customers in their performance improvement initiatives through NOV’s automation lifecycle management program. A land drilling contractor and a North American operator jointly published data documenting that the NOVOS™ reflexive drilling system enabled a 50 percent average connection time savings on a
NOV won a flexible pipe supply contract for the Sangomar Phase 1 project offshore
NOV continues to push the boundaries of drill bit technology through its
NOV secured a contract with a drilling contractor in
NOV signed a joint industry project contract with two multinational energy companies to launch a two-year research project in
Third Quarter Earnings Conference Call
NOV will hold a conference call to discuss its third 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 |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2020 |
|
2019 |
||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
361 |
|
|
$ |
793 |
|
|
$ |
442 |
|
|
$ |
1,494 |
|
|
$ |
2,450 |
|
Completion & Production Solutions |
|
|
601 |
|
|
|
728 |
|
|
|
611 |
|
|
|
1,887 |
|
|
|
1,972 |
|
Rig Technologies |
|
|
449 |
|
|
|
649 |
|
|
|
476 |
|
|
|
1,482 |
|
|
|
1,923 |
|
Eliminations |
|
|
(27 |
) |
|
|
(44 |
) |
|
|
(33 |
) |
|
|
(100 |
) |
|
|
(147 |
) |
Total revenue |
|
|
1,384 |
|
|
|
2,126 |
|
|
|
1,496 |
|
|
|
4,763 |
|
|
|
6,198 |
|
Gross profit |
|
|
139 |
|
|
|
151 |
|
|
|
137 |
|
|
|
500 |
|
|
|
469 |
|
Gross profit % |
|
|
10.0 |
% |
|
|
7.1 |
% |
|
|
9.2 |
% |
|
|
10.5 |
% |
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general, and administrative |
|
|
213 |
|
|
|
293 |
|
|
|
237 |
|
|
|
733 |
|
|
|
1,014 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,378 |
|
|
|
3,186 |
|
Long-lived asset impairment |
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
513 |
|
|
|
2,199 |
|
Operating loss |
|
|
(74 |
) |
|
|
(154 |
) |
|
|
(100 |
) |
|
|
(2,124 |
) |
|
|
(5,930 |
) |
Interest and financial costs |
|
|
(21 |
) |
|
|
(25 |
) |
|
|
(22 |
) |
|
|
(65 |
) |
|
|
(75 |
) |
Interest income |
|
|
— |
|
|
|
4 |
|
|
|
2 |
|
|
|
5 |
|
|
|
16 |
|
Equity loss in unconsolidated affiliates |
|
|
(11 |
) |
|
|
(4 |
) |
|
|
(6 |
) |
|
|
(250 |
) |
|
|
(6 |
) |
Other income (expense), net |
|
|
(8 |
) |
|
|
(10 |
) |
|
|
(8 |
) |
|
|
(19 |
) |
|
|
(36 |
) |
Loss before income taxes |
|
|
(114 |
) |
|
|
(189 |
) |
|
|
(134 |
) |
|
|
(2,453 |
) |
|
|
(6,031 |
) |
Benefit for income taxes |
|
|
(61 |
) |
|
|
60 |
|
|
|
(47 |
) |
|
|
(264 |
) |
|
|
(323 |
) |
Net loss |
|
|
(53 |
) |
|
|
(249 |
) |
|
|
(87 |
) |
|
|
(2,189 |
) |
|
|
(5,708 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
2 |
|
|
|
(5 |
) |
|
|
6 |
|
|
|
6 |
|
|
|
2 |
|
Net loss attributable to Company |
|
$ |
(55 |
) |
|
$ |
(244 |
) |
|
$ |
(93 |
) |
|
$ |
(2,195 |
) |
|
$ |
(5,710 |
) |
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
$ |
(0.14 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.24 |
) |
|
$ |
(5.72 |
) |
|
$ |
(14.95 |
) |
Diluted |
|
$ |
(0.14 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.24 |
) |
|
$ |
(5.72 |
) |
|
$ |
(14.95 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
|
385 |
|
|
|
382 |
|
|
|
385 |
|
|
|
384 |
|
|
|
382 |
|
Diluted |
|
|
385 |
|
|
|
382 |
|
|
|
385 |
|
|
|
384 |
|
|
|
382 |
|
CONSOLIDATED BALANCE SHEETS (In millions) |
||||||||
|
|
|
|
|
|
|
||
|
|
2020 |
|
|
2019 |
|
||
|
|
(Unaudited) |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,485 |
|
|
$ |
1,171 |
|
Receivables, net |
|
|
1,382 |
|
|
|
1,855 |
|
Inventories, net |
|
|
1,745 |
|
|
|
2,197 |
|
Contract assets |
|
|
555 |
|
|
|
643 |
|
Other current assets |
|
|
209 |
|
|
|
247 |
|
Total current assets |
|
|
5,376 |
|
|
|
6,113 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
1,994 |
|
|
|
2,354 |
|
Lease right-of-use assets |
|
|
575 |
|
|
|
674 |
|
|
|
|
2,009 |
|
|
|
3,659 |
|
Other assets |
|
|
214 |
|
|
|
349 |
|
Total assets |
|
$ |
10,168 |
|
|
$ |
13,149 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
476 |
|
|
$ |
715 |
|
Accrued liabilities |
|
|
852 |
|
|
|
949 |
|
Contract liabilities |
|
|
371 |
|
|
|
427 |
|
Current portion of lease liabilities |
|
|
111 |
|
|
|
114 |
|
Accrued income taxes |
|
|
74 |
|
|
|
42 |
|
Total current liabilities |
|
|
1,884 |
|
|
|
2,247 |
|
|
|
|
|
|
|
|
|
|
Lease liabilities |
|
|
619 |
|
|
|
674 |
|
Long-term debt |
|
|
1,824 |
|
|
|
1,989 |
|
Other liabilities |
|
|
301 |
|
|
|
393 |
|
Total liabilities |
|
|
4,628 |
|
|
|
5,303 |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
5,540 |
|
|
|
7,846 |
|
Total liabilities and stockholders’ equity |
|
$ |
10,168 |
|
|
$ |
13,149 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
||||||||
|
|
Nine Months Ended |
||||||
|
|
|
||||||
|
|
2020 |
|
2019 |
||||
Cash flows from operating activities: |
|
|
||||||
Net loss |
|
$ |
(2,189 |
) |
|
$ |
(5,708 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
270 |
|
|
|
433 |
|
|
|
|
1,378 |
|
|
|
3,186 |
|
Long-lived asset impairment |
|
|
513 |
|
|
|
2,199 |
|
Working capital and other operating items, net |
|
|
768 |
|
|
|
131 |
|
Net cash provided by operating activities |
|
|
740 |
|
|
|
241 |
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property, plant and equipment |
|
|
(173 |
) |
|
|
(166 |
) |
Business acquisitions, net of cash acquired |
|
|
— |
|
|
|
(180 |
) |
Other |
|
|
13 |
|
|
|
78 |
|
Net cash used in investing activities |
|
|
(160 |
) |
|
|
(268 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Payments against lines of credit and other debt |
|
|
(217 |
) |
|
|
— |
|
Borrowings against lines of credit and other debt |
|
|
36 |
|
|
|
— |
|
Cash dividends paid |
|
|
(19 |
) |
|
|
(58 |
) |
Other |
|
|
(56 |
) |
|
|
(15 |
) |
Net cash used in financing activities |
|
|
(256 |
) |
|
|
(73 |
) |
Effect of exchange rates on cash |
|
|
(10 |
) |
|
|
(14 |
) |
Increase (decrease) in cash and cash equivalents |
|
|
314 |
|
|
|
(114 |
) |
Cash and cash equivalents, beginning of period |
|
|
1,171 |
|
|
|
1,427 |
|
Cash and cash equivalents, end of period |
|
$ |
1,485 |
|
|
$ |
1,313 |
|
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 |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2020 |
|
2019 |
||||||||||
Operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
(50 |
) |
|
$ |
42 |
|
|
$ |
(67 |
) |
|
$ |
(780 |
) |
|
$ |
(3,234 |
) |
Completion & Production Solutions |
|
|
25 |
|
|
|
(24 |
) |
|
|
42 |
|
|
|
(946 |
) |
|
|
(1,991 |
) |
Rig Technologies |
|
|
(3 |
) |
|
|
(110 |
) |
|
|
(25 |
) |
|
|
(230 |
) |
|
|
(501 |
) |
Eliminations and corporate costs |
|
|
(46 |
) |
|
|
(62 |
) |
|
|
(50 |
) |
|
|
(168 |
) |
|
|
(204 |
) |
Total operating loss |
|
$ |
(74 |
) |
|
$ |
(154 |
) |
|
$ |
(100 |
) |
|
$ |
(2,124 |
) |
|
$ |
(5,930 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
26 |
|
|
$ |
41 |
|
|
$ |
62 |
|
|
$ |
803 |
|
|
$ |
3,384 |
|
Completion & Production Solutions |
|
|
23 |
|
|
|
79 |
|
|
|
12 |
|
|
|
1,089 |
|
|
|
2,029 |
|
Rig Technologies |
|
|
12 |
|
|
|
194 |
|
|
|
20 |
|
|
|
270 |
|
|
|
670 |
|
Corporate |
|
|
1 |
|
|
|
— |
|
|
|
8 |
|
|
|
25 |
|
|
|
11 |
|
Total other items |
|
$ |
62 |
|
|
$ |
314 |
|
|
$ |
102 |
|
|
$ |
2,187 |
|
|
$ |
6,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation & amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
45 |
|
|
$ |
50 |
|
|
$ |
47 |
|
|
$ |
143 |
|
|
$ |
234 |
|
Completion & Production Solutions |
|
|
15 |
|
|
|
27 |
|
|
|
14 |
|
|
|
59 |
|
|
|
124 |
|
Rig Technologies |
|
|
19 |
|
|
|
21 |
|
|
|
19 |
|
|
|
58 |
|
|
|
66 |
|
Corporate |
|
|
4 |
|
|
|
4 |
|
|
|
2 |
|
|
|
10 |
|
|
|
9 |
|
Total depreciation & amortization |
|
$ |
83 |
|
|
$ |
102 |
|
|
$ |
82 |
|
|
$ |
270 |
|
|
$ |
433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
21 |
|
|
$ |
133 |
|
|
$ |
42 |
|
|
$ |
166 |
|
|
$ |
384 |
|
Completion & Production Solutions |
|
|
63 |
|
|
|
82 |
|
|
|
68 |
|
|
|
202 |
|
|
|
162 |
|
Rig Technologies |
|
|
28 |
|
|
|
105 |
|
|
|
14 |
|
|
|
98 |
|
|
|
235 |
|
Eliminations and corporate costs |
|
|
(41 |
) |
|
|
(58 |
) |
|
|
(40 |
) |
|
|
(133 |
) |
|
|
(184 |
) |
Total Adjusted EBITDA |
|
$ |
71 |
|
|
$ |
262 |
|
|
$ |
84 |
|
|
$ |
333 |
|
|
$ |
597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP net loss attributable to Company |
|
$ |
(55 |
) |
|
$ |
(244 |
) |
|
$ |
(93 |
) |
|
$ |
(2,195 |
) |
|
$ |
(5,710 |
) |
Noncontrolling interests |
|
|
2 |
|
|
|
(5 |
) |
|
|
6 |
|
|
|
6 |
|
|
|
2 |
|
Benefit for income taxes |
|
|
(61 |
) |
|
|
60 |
|
|
|
(47 |
) |
|
|
(264 |
) |
|
|
(323 |
) |
Interest expense |
|
|
21 |
|
|
|
25 |
|
|
|
22 |
|
|
|
65 |
|
|
|
75 |
|
Interest income |
|
|
— |
|
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
(16 |
) |
Equity loss in unconsolidated affiliate |
|
|
11 |
|
|
|
4 |
|
|
|
6 |
|
|
|
250 |
|
|
|
6 |
|
Other (income) expense, net |
|
|
8 |
|
|
|
10 |
|
|
|
8 |
|
|
|
19 |
|
|
|
36 |
|
Depreciation and amortization |
|
|
83 |
|
|
|
102 |
|
|
|
82 |
|
|
|
270 |
|
|
|
433 |
|
Other items |
|
|
62 |
|
|
|
314 |
|
|
|
102 |
|
|
|
2,187 |
|
|
|
6,094 |
|
Total Adjusted EBITDA |
|
$ |
71 |
|
|
$ |
262 |
|
|
$ |
84 |
|
|
$ |
333 |
|
|
$ |
597 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201026005924/en/
Vice President, Corporate Development and Investor Relations
(713) 815-3535
Blake.McCarthy@nov.com
Source: