NOV Reports First Quarter 2023 Earnings
- Revenue of
$1.96 billion , down 5% sequentially and up 27% year-over-year - Operating Profit of
$126 million , down$36 million sequentially and up$147 million year-over-year - Net Income of
$126 million , or$0.32 per fully diluted share - Adjusted EBITDA* of
$195 million , down$36 million sequentially and up$92 million year-over-year
*Adjusted EBITDA is a non-GAAP measure, see “Non-GAAP Financial Measures” and “Reconciliation of Adjusted EBITDA to Net Income (Loss)” below.
“Our first quarter results show continued strong demand and year-over-year growth,” stated
“Our first quarter results include the impact of seasonality and a significant supply chain disruption within our Wellbore Technologies segment, which arose during the quarter, along with unexpected charges that weighed on results. Nevertheless, the underlying performance across our business continued to improve, including better management against supply chain disruptions in most other areas. The need to retool the global oilfield service industry is driving a steady increase in tendering activity and backlog, along with greater demand for new technologies NOV developed through the downturn. As the world sharpens its focus on energy security, we expect rising demand in offshore and international markets to underpin steadily rising results for our organization as 2023 progresses.”
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 capital equipment orders booked during the quarter totaled
Corporate Information
NOV recorded a net credit of
During the first quarter, the Company increased its investment in Keystone Tower Systems (KTS), which resulted in NOV obtaining a controlling interest in the business and the consolidation of KTS’s results into NOV’s financial statements.
As of
Significant Achievements
NOV will provide drilling and pipe-handling automation technology solutions to Exxon’s entire drillship fleet in
NOV’s downhole technology continues to push drilling performance to new limits as highlighted by its recently introduced Vector™ Series
NOV was awarded a repeat order for the design license and jacking system of a large Wind Turbine Installation Vessel (WTIV) for a European client. This marks the sixth order for NOV's proprietary NG-20000 vessel design, which has become the industry standard for the international offshore wind installation market. As offshore wind development projects increasingly call for larger offshore wind turbines and heavier foundations, NOV is developing the next generation of larger WTIVs to enable safe and efficient installation processes.
NOV delivered the world's first two telescopic heavy-lift cranes capable of lifting 2,500 tons in retracted mode and 1,250 tons in extended mode. The first vessel is set to install its first offshore wind turbines in
NOV received an award to reactivate and upgrade a seventh-generation drillship to meet technical specifications for a recent contract. The award includes the installation of a new 165-ton active heave compensated (AHC) crane, an upgraded control system, including a drilling automation system, and associated handling tools.
NOV secured three purchase orders to provide its patented Cocoon & Shroud™ subsea protection structures for deployment in the
NOV debuted its all-electric Ideal™ processing plant for fracturing operations, capable of delivering more than 200 barrels per minute (BPM) of fresh water and 30,000 pounds per minute of sand/proppant. The blender and chemical additive system can be easily configured for conventional frac, simultaneous frac, or slip stream operations, and is fully remote-controlled. With the deployment of this unit, NOV takes another stride toward the complete implementation of its all-electric frac site offerings. Additionally, NOV received an order for an additional 15,000 horse power of NOV's Ideal™ eFrac units by a major pressure pumper in
NOV's Tolteq™ Measurement While Drilling (MWD) tools, featuring the new Hellfire Top
NOV secured its first project utilizing the Brandt iNOVaTHERM™ system with a leading national oil company in the
NOV enhanced its Downhole Broadband Solutions (DBS) portfolio by incorporating the iConic™ Digital Transponder (iDT) on NOV’s wired drill pipe (WDP) network in the Norwegian Continental Shelf. The iDT’s smart plug is used to temporarily seal open-hole portions of a well. WDP engages the plug to pull information on conditions below the plug without removing it, enabling decisions to be made prior to removing the plug. This solution offers the ability to detect pressure below barrier plugs downhole, contributing to the successful implementation of technology aimed at preventing well control incidents. NOV continues to expand its broad range of optimization services, visualization tools, downhole drilling equipment, and real-time downhole sensors that leverage its WDP network.
First Quarter Earnings Conference Call
NOV will hold a conference call to discuss its first quarter 2023 results on
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
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 |
||||||||||
|
|
|
|
|
||||||||
|
|
2023 |
|
2022 |
|
2022 |
||||||
Revenue: |
|
|
|
|
|
|
||||||
Wellbore Technologies |
|
$ |
745 |
|
|
$ |
608 |
|
|
$ |
762 |
|
Completion & Production Solutions |
|
|
718 |
|
|
|
530 |
|
|
|
738 |
|
Rig Technologies |
|
|
550 |
|
|
|
441 |
|
|
|
620 |
|
Eliminations |
|
|
(51 |
) |
|
|
(31 |
) |
|
|
(47 |
) |
Total revenue |
|
|
1,962 |
|
|
|
1,548 |
|
|
|
2,073 |
|
Gross profit |
|
|
411 |
|
|
|
214 |
|
|
|
443 |
|
Gross profit % |
|
|
20.9 |
% |
|
|
13.8 |
% |
|
|
21.4 |
% |
|
|
|
|
|
|
|
||||||
Selling, general, and administrative |
|
|
285 |
|
|
|
235 |
|
|
|
281 |
|
Operating profit (loss) |
|
|
126 |
|
|
|
(21 |
) |
|
|
162 |
|
Interest Expense, net |
|
|
(13 |
) |
|
|
(18 |
) |
|
|
(14 |
) |
Equity income in unconsolidated affiliates |
|
|
48 |
|
|
|
6 |
|
|
|
36 |
|
Other expense, net |
|
|
(16 |
) |
|
|
(2 |
) |
|
|
(43 |
) |
Net income (loss) before income taxes |
|
|
145 |
|
|
|
(35 |
) |
|
|
141 |
|
Provision for income taxes |
|
|
20 |
|
|
|
14 |
|
|
|
42 |
|
Net income (loss) |
|
|
125 |
|
|
|
(49 |
) |
|
|
99 |
|
Net income (loss) attributable to noncontrolling interests |
|
|
(1 |
) |
|
|
1 |
|
|
|
(5 |
) |
Net income (loss) attributable to Company |
|
$ |
126 |
|
|
$ |
(50 |
) |
|
$ |
104 |
|
Per share data: |
|
|
|
|
|
|
||||||
Basic |
|
$ |
0.32 |
|
|
$ |
(0.13 |
) |
|
$ |
0.27 |
|
Diluted |
|
$ |
0.32 |
|
|
$ |
(0.13 |
) |
|
$ |
0.26 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
||||||
Basic |
|
|
392 |
|
|
|
387 |
|
|
|
391 |
|
Diluted |
|
|
396 |
|
|
|
387 |
|
|
|
395 |
|
|
||||||
CONSOLIDATED BALANCE SHEETS |
||||||
(In millions) |
||||||
|
|
|
|
|
||
|
|
2023 |
|
2022 |
||
ASSETS |
|
(Unaudited) |
|
|
||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
774 |
|
$ |
1,069 |
Receivables, net |
|
|
1,776 |
|
|
1,739 |
Inventories, net |
|
|
2,036 |
|
|
1,813 |
Contract assets |
|
|
637 |
|
|
685 |
Prepaid and other current assets |
|
|
199 |
|
|
187 |
Total current assets |
|
|
5,422 |
|
|
5,493 |
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
1,814 |
|
|
1,781 |
Lease right-of-use assets |
|
|
532 |
|
|
517 |
|
|
|
2,026 |
|
|
1,995 |
Other assets |
|
|
383 |
|
|
349 |
Total assets |
|
$ |
10,177 |
|
$ |
10,135 |
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
||
Current liabilities: |
|
|
|
|
||
Accounts payable |
|
$ |
961 |
|
$ |
906 |
Accrued liabilities |
|
|
775 |
|
|
959 |
Contract liabilities |
|
|
449 |
|
|
444 |
Current portion of lease liabilities |
|
|
89 |
|
|
87 |
Current portion of long-term debt |
|
|
13 |
|
|
13 |
Accrued income taxes |
|
|
21 |
|
|
28 |
Total current liabilities |
|
|
2,308 |
|
|
2,437 |
|
|
|
|
|
||
Long-term debt |
|
|
1,719 |
|
|
1,717 |
Lease liabilities |
|
|
556 |
|
|
549 |
Other liabilities |
|
|
286 |
|
|
298 |
Total liabilities |
|
|
4,869 |
|
|
5,001 |
|
|
|
|
|
||
Total stockholders’ equity |
|
|
5,308 |
|
|
5,134 |
Total liabilities and stockholders’ equity |
|
$ |
10,177 |
|
$ |
10,135 |
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||
(In millions) |
||||||||
|
|
Three Months Ended |
||||||
|
|
|
||||||
|
|
2023 |
|
2022 |
||||
Cash flows from operating activities: |
|
|
||||||
Net income (loss) |
|
$ |
125 |
|
|
$ |
(49 |
) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
||||
Depreciation and amortization |
|
|
77 |
|
|
|
74 |
|
Working capital and other operating items, net |
|
|
(404 |
) |
|
|
(128 |
) |
Net cash used in operating activities |
|
|
(202 |
) |
|
|
(103 |
) |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property, plant and equipment |
|
|
(57 |
) |
|
|
(46 |
) |
Other |
|
|
5 |
|
|
|
(3 |
) |
Net cash used in investing activities |
|
|
(52 |
) |
|
|
(49 |
) |
|
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
|
||||
Borrowings against lines of credit and other debt |
|
|
1 |
|
|
|
1 |
|
Cash dividends paid |
|
|
(20 |
) |
|
|
(20 |
) |
Other |
|
|
(22 |
) |
|
|
(17 |
) |
Net cash used in financing activities |
|
|
(41 |
) |
|
|
(36 |
) |
Effect of exchange rates on cash |
|
|
— |
|
|
|
3 |
|
Decrease in cash and cash equivalents |
|
|
(295 |
) |
|
|
(185 |
) |
Cash and cash equivalents, beginning of period |
|
|
1,069 |
|
|
|
1,591 |
|
Cash and cash equivalents, end of period |
|
$ |
774 |
|
|
$ |
1,406 |
|
|
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 |
||||||||||
|
|
|
|
|
||||||||
|
|
2023 |
|
2022 |
|
2022 |
||||||
Operating profit (loss): |
|
|
|
|
|
|
||||||
Wellbore Technologies |
|
$ |
96 |
|
|
$ |
39 |
|
|
$ |
110 |
|
Completion & Production Solutions |
|
|
44 |
|
|
|
(22 |
) |
|
|
50 |
|
Rig Technologies |
|
|
53 |
|
|
|
11 |
|
|
|
80 |
|
Eliminations and corporate costs |
|
|
(67 |
) |
|
|
(49 |
) |
|
|
(78 |
) |
Total operating profit (loss) |
|
$ |
126 |
|
|
$ |
(21 |
) |
|
$ |
162 |
|
|
|
|
|
|
|
|
||||||
Other items, net: |
|
|
|
|
|
|
||||||
Wellbore Technologies |
|
$ |
— |
|
|
$ |
23 |
|
|
$ |
(1 |
) |
Completion & Production Solutions |
|
|
(1 |
) |
|
|
16 |
|
|
|
— |
|
Rig Technologies |
|
|
(3 |
) |
|
|
6 |
|
|
|
(11 |
) |
Corporate |
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Total other items |
|
$ |
(4 |
) |
|
$ |
45 |
|
|
$ |
(8 |
) |
|
|
|
|
|
|
|
||||||
(Gain)/Loss on Sales of Fixed Assets: |
|
|
|
|
|
|
||||||
Wellbore Technologies |
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
Completion & Production Solutions |
|
|
(5 |
) |
|
|
— |
|
|
|
1 |
|
Rig Technologies |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Corporate |
|
|
1 |
|
|
|
2 |
|
|
|
— |
|
Total (gain)/loss on sales of fixed assets |
|
$ |
(4 |
) |
|
$ |
5 |
|
|
$ |
1 |
|
|
|
|
|
|
|
|
||||||
Depreciation & amortization: |
|
|
|
|
|
|
||||||
Wellbore Technologies |
|
$ |
37 |
|
|
$ |
37 |
|
|
$ |
37 |
|
Completion & Production Solutions |
|
|
16 |
|
|
|
16 |
|
|
|
15 |
|
Rig Technologies |
|
|
19 |
|
|
|
18 |
|
|
|
19 |
|
Corporate |
|
|
5 |
|
|
|
3 |
|
|
|
5 |
|
Total depreciation & amortization |
|
$ |
77 |
|
|
$ |
74 |
|
|
$ |
76 |
|
|
|
|
|
|
|
|
||||||
Adjusted EBITDA: |
|
|
|
|
|
|
||||||
Wellbore Technologies |
|
$ |
133 |
|
|
$ |
101 |
|
|
$ |
146 |
|
Completion & Production Solutions |
|
|
54 |
|
|
|
10 |
|
|
|
66 |
|
Rig Technologies |
|
|
69 |
|
|
|
36 |
|
|
|
88 |
|
Eliminations and corporate costs |
|
|
(61 |
) |
|
|
(44 |
) |
|
|
(69 |
) |
Total Adjusted EBITDA |
|
$ |
195 |
|
|
$ |
103 |
|
|
$ |
231 |
|
|
|
|
|
|
|
|
||||||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
||||||
GAAP net income (loss) attributable to Company |
|
$ |
126 |
|
|
$ |
(50 |
) |
|
$ |
104 |
|
Noncontrolling interests |
|
|
(1 |
) |
|
|
1 |
|
|
|
(5 |
) |
Provision for income taxes |
|
|
20 |
|
|
|
14 |
|
|
|
42 |
|
Interest expense |
|
|
21 |
|
|
|
19 |
|
|
|
21 |
|
Interest income |
|
|
(8 |
) |
|
|
(1 |
) |
|
|
(7 |
) |
Equity income in unconsolidated affiliates |
|
|
(48 |
) |
|
|
(6 |
) |
|
|
(36 |
) |
Other expense, net |
|
|
16 |
|
|
|
2 |
|
|
|
43 |
|
(Gain)/Loss on Sales of Fixed Assets |
|
|
(4 |
) |
|
|
5 |
|
|
|
1 |
|
Depreciation and amortization |
|
|
77 |
|
|
|
74 |
|
|
|
76 |
|
Other items, net |
|
|
(4 |
) |
|
|
45 |
|
|
|
(8 |
) |
Total Adjusted EBITDA |
|
$ |
195 |
|
|
$ |
103 |
|
|
$ |
231 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005846/en/
Vice President, Corporate Development and Investor Relations
(713) 815-3535
Blake.McCarthy@nov.com
Source: