NOV Reports First Quarter 2024 Results, Return of Capital Framework, $1 Billion Share Repurchase Authorization, and Plan to Increase Dividend 50%
- Revenue of
$2.16 billion , an increase of 10% year-over-year - Operating Profit of
$162 million , an increase of$36 million year-over-year - Net Income of
$119 million , down$7 million year-over-year - Fully diluted earnings per share of
$0.30 , down$0.02 year-over-year - Adjusted EBITDA* of
$241 million , an increase of$46 million year-over-year - Expects to return at least 50% of Excess Free Cash Flow* annually through base dividends, repurchases, and supplemental dividends
- Board authorization to repurchase up to
$1.00 billion of shares over three years - Expects to increase base dividend by 50% beginning in
June 2024
* Adjusted EBITDA, Free cash flow, and Excess Free Cash Flow are non-GAAP measures, see “Non-GAAP Financial Measures,” “Reconciliation of Cash Flows from Operating Activities to Free Cash Flow" and “Reconciliation of Adjusted EBITDA to Net Income” below.
NOV also announced its plan to return at least 50 percent of Excess Free Cash Flow (defined as cash flow from operations less capital expenditures and other investments, including acquisitions) on an annual basis, through a return of capital framework employing a combination of base dividends, share repurchases, and supplemental dividends. NOV’s board of directors approved a share repurchase program for up to
“NOV had a solid start to 2024,” stated
“Seasonal changes in working capital together with two strategic acquisitions drove a net use of cash during the first quarter of 2024; however, we successfully completed the divestiture of our Pole Products business in early April and proceeds from the divestiture, along with a seasonal improvement in cash flow from operations, should meaningfully improve cash flow in the second quarter. We expect rising oilfield demand for NOV’s products and technologies, normalizing working capital, and our capital-light business model to contribute to steadily improving levels of cash flow as 2024 progresses. Our outlook for this year and the next several years underpins the return of capital framework we are announcing today, demonstrating our commitment to prudently return to our shareholders a substantial amount of the cash we expect to generate, while also continuing to invest in our business.”
Energy Products and Services
Energy Products and Services generated revenues of
Energy Equipment
Energy Equipment generated revenues of
New orders booked during the quarter totaled
Q2 and Full Year 2024 Outlook
The Company is providing financial guidance for the second quarter of 2024 and full year 2024. Guidance is based on current outlook and plans and is subject to a number of known and unknown uncertainties and risks and constitutes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 as further described under the Cautionary Statement below. Actual results may differ materially from the guidance set forth below.
For the second quarter management expects year-over-year consolidated revenues to increase between one to five percent and Adjusted EBITDA to be in the range of
Return of Capital Framework
NOV announced a return of capital framework under which it expects to return at least 50% of Excess Free Cash Flow (defined as cash flow from operations less capital expenditures and other investments, including acquisitions), through a combination of steady, quarterly base dividends, opportunistic stock buybacks, and an annual supplemental dividend to true-up returns to shareholders on an annual basis.
Associated with the plan, NOV’s board of directors authorized a share repurchase program for up to
Under the share repurchase program, the Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations.
Corporate Information
During the first quarter of 2024, NOV recorded a net credit of
As of
Significant Achievements
NOV's Kaizen™ Intelligent Drilling Optimizer played a pivotal role in assisting a customer’s rig automation project to secure the Engineering Excellence Award from a leading operator. The Kaizen application preemptively addresses operational challenges and improves the rate of penetration using artificial intelligence. Its adaptive nature allows the application to swiftly adapt to changing conditions, issuing optimal weight on bit and rotations per minute commands directly to the control system. The customer reported that all Kaizen-enabled wells surpassed benchmark performance in lateral drilling, with 75% exceeding benchmarks in intermediate drilling.
NOV secured a contract to provide a deoxygenation and dehydration package for a green hydrogen project being developed in
NOV's
NOV secured a contract for an inter-array cable-lay system for a Japanese construction company’s newbuild vessel, which will install subsea power cables between wind turbines for Japan’s rising offshore wind market. Leveraging its expertise in offshore project execution, NOV is positioned to provide advanced integrated cable-lay systems to meet the growing infrastructure needs of offshore wind projects globally.
NOV continued to gain market traction in both land and offshore markets with its robotics offering that improves rig site safety while delivering significant performance benefits. During the quarter, NOV deployed the first ATOM RTX™ land robotics solution on a rig in
NOV secured a contract to deliver its first actively heated flexible pipe system for a deepwater gas field development in the
NOV received a contract to provide a 20,000 psi (20K) subsea equipment upgrade for an ultra-deepwater drillship. The contract includes a new 20K blowout preventer (BOP) stack and RCX controls, high-pressure manifolds, an upgraded high-pressure mud system, upgrades to the rig’s BOP controls and riser systems, and associated rig modification work. NOV’s success in securing contracts for all 20K BOP stacks ordered to date is based on its ability to deliver ground-breaking technology and execute projects that support customers’ and end users’ requirements, including reaching previously inaccessible reservoirs.
NOV continued to drive increased adoption and enhanced performance of its downhole technologies in the first quarter. Customers worldwide are embracing NOV’s PosiTrack™ Torsional Vibration Mitigation technology due to its ability to improve drilling efficiencies. In the
NOV sold four mobile rigs with Max Completions™-enabled data acquisition systems to a leading service provider. The Remote Service Rig Monitoring modules in the Max Completions systems will enable the service company to remotely monitor its workover operations, driving improved efficiencies, safety, and communication between the service company, the operator, and all stakeholders involved.
NOV designed and manufactured one of the largest choke valves ever created for use on a floating production, storage, and offloading (FPSO) vessel offshore
NOV secured a major order of fully NACE-compliant completion and workover risers (CWORs) for deployment in
NOV was awarded several contracts by a leading US geothermal developer to provide solids control technologies and services to increase drilling efficiency and reduce costs in demanding geothermal drilling environments. The chosen technologies include the TUNDRA MAX™ mud temperature control system to ensure the reliability of downhole tools in wells with temperatures exceeding 300°F (148°C), the new Alpha™ shakers to enhance fluid processing and simplify maintenance, and the Cellar Tech surface casing hangers to reduce cementing time for casing installation. As the geothermal market continues to grow, NOV has several premium solutions to optimize project outcomes and economics in these challenging drilling environments.
NOV’s highly precise and reliable mixer technologies continue to gain traction in thermoplastic polymer applications in
NOV’s Max Completions™ Remote Frac Monitoring (RFM) application has empowered a US-based operator to transition its non-operational personnel from field locations to its centralized hub in
NOV's ReedHycalog business unit achieved a milestone in
First Quarter Earnings Conference Call
NOV will hold a conference call to discuss its first quarter 2024 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. Additionally, free cash flow and Excess Free Cash Flow do not represent the Company’s residual cash flow available for discretionary expenditures, as the calculation of these measures does not account for certain debt service requirements or other non-discretionary expenditures. 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 (Unaudited) |
||||||||||||
|
(In millions, except per share data) |
||||||||||||
|
|
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
||||||||
|
|
|
2024 |
|
2023 |
|
2023 |
||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|||
|
Energy Products and Services |
|
$ |
1,017 |
|
|
$ |
941 |
|
|
$ |
1,073 |
|
|
Energy Equipment |
|
|
1,178 |
|
|
|
1,052 |
|
|
|
1,305 |
|
|
Eliminations |
|
|
(40 |
) |
|
|
(31 |
) |
|
|
(35 |
) |
|
Total revenue |
|
|
2,155 |
|
|
|
1,962 |
|
|
|
2,343 |
|
|
Gross profit |
|
|
458 |
|
|
|
411 |
|
|
|
497 |
|
|
Gross profit % |
|
|
21.3 |
% |
|
|
20.9 |
% |
|
|
21.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|||
|
Selling, general, and administrative |
|
|
296 |
|
|
|
285 |
|
|
|
336 |
|
|
Operating profit |
|
|
162 |
|
|
|
126 |
|
|
|
161 |
|
|
Interest expense, net |
|
|
(16 |
) |
|
|
(13 |
) |
|
|
(16 |
) |
|
Equity income in unconsolidated affiliates |
|
|
29 |
|
|
|
48 |
|
|
|
18 |
|
|
Other expense, net |
|
|
(10 |
) |
|
|
(16 |
) |
|
|
(28 |
) |
|
Income before income taxes |
|
|
165 |
|
|
|
145 |
|
|
|
135 |
|
|
Provision (benefit) for income taxes |
|
|
44 |
|
|
|
20 |
|
|
|
(460 |
) |
|
Net income |
|
|
121 |
|
|
|
125 |
|
|
|
595 |
|
|
Net income (loss) attributable to noncontrolling interests |
|
|
2 |
|
|
|
(1 |
) |
|
|
(3 |
) |
|
Net income attributable to Company |
|
$ |
119 |
|
|
$ |
126 |
|
|
$ |
598 |
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|||
|
Basic |
|
$ |
0.30 |
|
|
$ |
0.32 |
|
|
$ |
1.52 |
|
|
Diluted |
|
$ |
0.30 |
|
|
$ |
0.32 |
|
|
$ |
1.51 |
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|||
|
Basic |
|
|
394 |
|
|
|
392 |
|
|
|
393 |
|
|
Diluted |
|
|
397 |
|
|
|
396 |
|
|
|
397 |
|
|
|
||||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||||
|
(In millions) |
||||||||
|
|
|
|
|
|
|
|
||
|
|
|
2024 |
|
|
2023 |
|
||
|
ASSETS |
|
(Unaudited) |
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
468 |
|
|
$ |
816 |
|
|
Receivables, net |
|
|
1,867 |
|
|
|
1,905 |
|
|
Inventories, net |
|
|
2,278 |
|
|
|
2,151 |
|
|
Contract assets |
|
|
814 |
|
|
|
739 |
|
|
Prepaid and other current assets |
|
|
261 |
|
|
|
229 |
|
|
Total current assets |
|
|
5,688 |
|
|
|
5,840 |
|
|
|
|
|
|
|
|
|
||
|
Property, plant and equipment, net |
|
|
1,878 |
|
|
|
1,865 |
|
|
Lease right-of-use assets |
|
|
557 |
|
|
|
544 |
|
|
|
|
|
2,110 |
|
|
|
2,012 |
|
|
Other assets |
|
|
1,072 |
|
|
|
1,033 |
|
|
Total assets |
|
$ |
11,305 |
|
|
$ |
11,294 |
|
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
|
||
|
Accounts payable |
|
$ |
823 |
|
|
$ |
904 |
|
|
Accrued liabilities |
|
|
767 |
|
|
|
870 |
|
|
Contract liabilities |
|
|
533 |
|
|
|
532 |
|
|
Current portion of lease liabilities |
|
|
99 |
|
|
|
94 |
|
|
Current portion of long-term debt |
|
|
44 |
|
|
|
13 |
|
|
Accrued income taxes |
|
|
6 |
|
|
|
22 |
|
|
Total current liabilities |
|
|
2,272 |
|
|
|
2,435 |
|
|
|
|
|
|
|
|
|
||
|
Long-term debt |
|
|
1,764 |
|
|
|
1,712 |
|
|
Lease liabilities |
|
|
564 |
|
|
|
558 |
|
|
Other liabilities |
|
|
384 |
|
|
|
347 |
|
|
Total liabilities |
|
|
4,984 |
|
|
|
5,052 |
|
|
|
|
|
|
|
|
|
||
|
Total stockholders’ equity |
|
|
6,321 |
|
|
|
6,242 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
11,305 |
|
|
$ |
11,294 |
|
|
|
||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||
|
(In millions) |
||||||||
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2024 |
|
2023 |
||||
|
Cash flows from operating activities: |
|
|
|
|
||||
|
Net income |
|
$ |
121 |
|
|
$ |
125 |
|
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
||||
|
Depreciation and amortization |
|
|
83 |
|
|
|
77 |
|
|
Working capital and other operating items, net |
|
|
(282 |
) |
|
|
(404 |
) |
|
Net cash used in operating activities |
|
|
(78 |
) |
|
|
(202 |
) |
|
|
|
|
|
|
||||
|
Cash flows from investing activities: |
|
|
|
|
||||
|
Purchases of property, plant and equipment |
|
|
(69 |
) |
|
|
(57 |
) |
|
Business acquisitions, net of cash acquired |
|
|
(243 |
) |
|
|
— |
|
|
Other |
|
|
1 |
|
|
|
5 |
|
|
Net cash used in investing activities |
|
|
(311 |
) |
|
|
(52 |
) |
|
|
|
|
|
|
||||
|
Cash flows from financing activities: |
|
|
|
|
||||
|
Borrowings against lines of credit and other debt |
|
|
83 |
|
|
|
1 |
|
|
Cash dividends paid |
|
|
(20 |
) |
|
|
(20 |
) |
|
Other |
|
|
(20 |
) |
|
|
(22 |
) |
|
Net cash provided by (used in) financing activities |
|
|
43 |
|
|
|
(41 |
) |
|
Effect of exchange rates on cash |
|
|
(2 |
) |
|
|
— |
|
|
Decrease in cash and cash equivalents |
|
|
(348 |
) |
|
|
(295 |
) |
|
Cash and cash equivalents, beginning of period |
|
|
816 |
|
|
|
1,069 |
|
|
Cash and cash equivalents, end of period |
|
$ |
468 |
|
|
$ |
774 |
|
RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES TO FREE CASH FLOW (Unaudited)
(In millions)
Presented below is a reconciliation of cash flow from operating activities to “free cash flow”. The Company defines free cash flow as cash flow from operating activities less purchases of property, plant and equipment, or “capital expenditures”. 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. Free cash flow is not intended to replace GAAP financial measures.
|
|
|
Three Months Ended |
||||||
|
|
|
|
||||||
|
|
|
2024 |
|
2023 |
||||
|
|
|
|
|
|
|
|
||
|
Total cash flows used in operating activities |
|
$ |
(78 |
) |
|
$ |
(202 |
) |
|
Capital expenditures |
|
|
(69 |
) |
|
|
(57 |
) |
|
Free cash flow |
|
$ |
(147 |
) |
|
$ |
(259 |
) |
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. Adjusted EBITDA % is a ratio showing Adjusted EBITDA as a percentage of sales. 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 and Adjusted EBITDA % are not intended to replace GAAP financial measures, such as Net Income and Operating Profit %. Other Items include impairment, restructure, severance, facility closure costs and inventory charges and credits.
|
|
|
Three Months Ended |
||||||||||
|
|
|
|
|
|
||||||||
|
|
|
2024 |
|
2023 |
|
2023 |
||||||
|
Operating profit: |
|
|
|
|
|
|
||||||
|
Energy Products and Services |
|
$ |
121 |
|
|
$ |
112 |
|
|
$ |
94 |
|
|
Energy Equipment |
|
|
95 |
|
|
|
71 |
|
|
|
121 |
|
|
Eliminations and corporate costs |
|
|
(54 |
) |
|
|
(57 |
) |
|
|
(54 |
) |
|
Total operating profit |
|
$ |
162 |
|
|
$ |
126 |
|
|
$ |
161 |
|
| Operating profit %: | ||||||||||||
| Energy Products and Services |
11.9 |
% |
11.9 |
% |
8.8 |
% | ||||||
| Energy Equipment |
8.1 |
% |
6.7 |
% |
9.3 |
% | ||||||
| Eliminations and corporate costs |
- |
- |
- |
|||||||||
| Total operating profit % |
7.5 |
% |
6.4 |
% |
6.9 |
% | ||||||
|
|
|
|
|
|
|
|
||||||
|
Other items, net: |
|
|
|
|
|
|
||||||
|
Energy Products and Services |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
50 |
|
|
Energy Equipment |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(1 |
) |
|
Corporate |
|
|
1 |
|
|
|
— |
|
|
|
6 |
|
|
Total other items |
|
$ |
(3 |
) |
|
$ |
(4 |
) |
|
$ |
55 |
|
|
|
|
|
|
|
|
|
||||||
|
(Gain)/loss on sales of fixed assets: |
|
|
|
|
|
|
||||||
|
Energy Products and Services |
|
$ |
(1 |
) |
|
$ |
(3 |
) |
|
$ |
1 |
|
|
Energy Equipment |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
Corporate |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
Total (gain)/loss on sales of fixed assets |
|
$ |
(1 |
) |
|
$ |
(4 |
) |
|
$ |
1 |
|
|
|
|
|
|
|
|
|
||||||
|
Depreciation & amortization: |
|
|
|
|
|
|
||||||
|
Energy Products and Services |
|
$ |
54 |
|
|
$ |
45 |
|
|
$ |
48 |
|
|
Energy Equipment |
|
|
28 |
|
|
|
29 |
|
|
|
27 |
|
|
Corporate |
|
|
1 |
|
|
|
3 |
|
|
|
2 |
|
|
Total depreciation & amortization |
|
$ |
83 |
|
|
$ |
77 |
|
|
$ |
77 |
|
|
|
|
|
|
|
|
|
||||||
|
Adjusted EBITDA: |
|
|
|
|
|
|
||||||
|
Energy Products and Services |
|
$ |
174 |
|
|
$ |
154 |
|
|
$ |
193 |
|
|
Energy Equipment |
|
|
119 |
|
|
|
94 |
|
|
|
147 |
|
|
Eliminations and corporate costs |
|
|
(52 |
) |
|
|
(53 |
) |
|
|
(46 |
) |
|
Total Adjusted EBITDA |
|
$ |
241 |
|
|
$ |
195 |
|
|
$ |
294 |
|
|
|
|
|
|
|
|
|
||||||
|
Adjusted EBITDA %: |
|
|
|
|
|
|
||||||
|
Energy Products and Services |
|
|
17.1 |
% |
|
|
16.4 |
% |
|
|
18.0 |
% |
|
Energy Equipment |
|
|
10.1 |
% |
|
|
8.9 |
% |
|
|
11.3 |
% |
|
Corporate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Total Adjusted EBITDA % |
|
|
11.2 |
% |
|
|
9.9 |
% |
|
|
12.5 |
% |
|
|
|
|
|
|
|
|
||||||
|
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
||||||
|
GAAP net income attributable to Company |
|
$ |
119 |
|
|
$ |
126 |
|
|
$ |
598 |
|
|
Noncontrolling interests |
|
|
2 |
|
|
|
(1 |
) |
|
|
(3 |
) |
|
Provision (benefit) for income taxes |
|
|
44 |
|
|
|
20 |
|
|
|
(460 |
) |
|
Interest expense |
|
|
24 |
|
|
|
21 |
|
|
|
23 |
|
|
Interest income |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(7 |
) |
|
Equity income in unconsolidated affiliates |
|
|
(29 |
) |
|
|
(48 |
) |
|
|
(18 |
) |
|
Other expense, net |
|
|
10 |
|
|
|
16 |
|
|
|
28 |
|
|
(Gain)/loss on Sales of fixed assets |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
1 |
|
|
Depreciation and amortization |
|
|
83 |
|
|
|
77 |
|
|
|
77 |
|
|
Other items, net |
|
|
(3 |
) |
|
|
(4 |
) |
|
|
55 |
|
|
Total Adjusted EBITDA |
|
$ |
241 |
|
|
$ |
195 |
|
|
$ |
294 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240425776115/en/
Director, Investor Relations
(713) 375-3826
Amie.DAmbrosio@nov.com
Source: