NOV Reports Third Quarter 2023 Earnings
- Revenue of
$2.19 billion , up 4% sequentially and up 16% year-over-year - Operating Profit of
$183 million , up$2 million sequentially and up$128 million year-over-year - Net Income of
$114 million , down$41 million sequentially and up$82 million year-over-year - Fully diluted earnings per share of
$0.29 , down$0.10 sequentially and up$0.21 year-over-year - Adjusted EBITDA* of
$267 million , up$22 million sequentially and up$72 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’s third quarter results saw revenues and margins improve both sequentially and year-over-year, as steadily strengthening international and global offshore markets outpaced softening North American land activity,” stated
“As expected, inventory levels crested during the quarter as deliveries from our suppliers increased following the pandemic-driven supply chain disruptions of the past few years. Additionally, the shift in our business toward international markets elongated collections, which limited cash flow during the quarter. We expect the Company’s working capital to begin to normalize, leading to positive free cash flow in the fourth quarter. Continuing normalization should position us to deliver improved cash generation in 2024.”
“NOV’s investments through the past several years have armed us with a powerful portfolio of new products and technologies that will help our customers decarbonize and improve the safety and efficiency of their oilfield operations. We are positioned well for the accelerating international and offshore upcycle needed to ensure global energy security in an increasingly dangerous world. Rising demand, along with our actions to improve our cost structure, should drive improved profitability, greater cash flow and higher returns on capital employed through coming quarters.”
“Today, we announced that, effective
“I am extremely excited about NOV’s outlook. As the cycle moves out of the early innings, our customers must increase the rate of investment in their asset base. Our market is improving, customers are accelerating their adoption of our technically differentiated products and we are taking actions to improve our cost structure, all of which will drive improve profitability, greater cash flow and higher returns on capital employed.”
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion & Production Solutions generated revenues of
New orders booked during the quarter increased 18 percent and totaled
Rig Technologies
Rig Technologies generated revenues of
New capital equipment orders booked during the quarter totaled
Corporate Information
NOV recorded
As of
Significant Achievements
NOV continued to gain market traction with its rig automation and robotic products that enhance wellsite safety while generating significant performance benefits. During the quarter, NOV successfully installed and commissioned the ATOM RTX Robotic System on a drillship contracted with a European operator offshore
NOV secured multiple project awards for its diverse portfolio of fiberglass products that enhance corrosion resistance in critical oilfield infrastructure. Drawing on our extensive experience with Petrobras FPSO projects, NOV will provide glass-reinforced epoxy ballast and seawater systems for FPSO vessels in the Buzios Field, where our Bondstrand™ product line remains the preferred choice for glass reinforced epoxy ballast and seawater systems. Additionally, NOV has been selected as a key supplier for a significant call-off contract, providing a range of reinforced thermoplastic pipe for Petroleum Project Oman as part of its substantial field development project. This sizeable order involves more than 200 km (124 miles) of our Fiberspar™ LinePipe product currently in production, with additional orders expected to follow.
NOV continued to play a pivotal role in returning the offshore drilling industry’s assets back to work. During the quarter, NOV completed eighteen reactivation and certification projects, including 14 jack-ups rigs contracted to work in the
NOV received an order for 25,000-horsepower of Ideal™ eFrac stimulation equipment. The Ideal eFrac technology offers reduced total cost of ownership, a straightforward design, and robust performance, packing a significant amount of horsepower into a compact footprint, making it suitable for both large
NOV successfully deployed its innovative threaded and coupled connection technology, XCalibur, for a geothermal project in
NOV unveiled its PowerShift™ motor, the second generation of SelectShift™ downhole adjustable motor technology. This innovative tool features a depth-activated unlocking feature, enabling real-time motor bend adjustments at specific depths, enabling operators to optimize drilling practices and streamline operations, saving trips, bits, and bottomhole assembly components during the drilling process. Since its release, 25 successful runs have been completed with the PowerShift motor. This groundbreaking drilling motor technology seamlessly combines sections in various drilling applications, from vertical to curve to lateral, reducing the need for multiple BHAs while enhancing safety, saving time, and lowering costs.
NOV introduced the Tolteq™ Switch unmanned measurement while drilling (MWD) configuration, which was effectively used across several drilling projects in the
NOV secured substantial orders for its Grant Prideco Completion Workover Riser (CWOR) product line. CWORs play a pivotal role offshore by serving as conduits linking the subsea tree to the surface-floating vessel. This system of interconnected tubulars facilitates rapid and secure connections and the efficient installation and retrieval of subsea tree plugs, enabling the passage of wireline tools or coiled tubing for limited-duration wellbore workover operations. Drill pipe-based CWORs demonstrate significantly enhanced total cost of ownership over the product’s life cycle when compared to traditional OCTG offerings.
NOV’s Pegasus™ drill bit from ReedHycalog continues to enable record-setting drilling performance in
NOV’s ION+™ Fortis cutter continues to redefine the standards in cutter technology. This advanced polycrystalline diamond compact (PDC) cutter is precision-engineered to combine robustness with outstanding thermal abrasion resistance, greatly enhancing its durability. The 9⅞-in. TKC66-AA1 Tektonic™ design drilled 8,568 ft at a rate exceeding 200 ft/hr in a
NOV secured an exclusive contract with a geothermal operator and heating supplier to install 5,225 m of Tuboscope's TK™-Liner in a large heating project in
NOV’s Downhole Broadband Solutions technology continues to enable significant operational efficiencies resulting in tangible savings. During the quarter, NOV M/D Totco provided a comprehensive suite of optimization services and visualization tools, including wired drill pipe, downhole drilling equipment, and real-time sensors along the string to enhance wellbore understanding for a major operator on the Norwegian Continental Shelf. This package enabled real-time, high-quality image logs to monitor formation breakouts across weaker intervals along with distributed pressure measurements that offered the operator the confidence that these breakouts are induced within a safe operational window. This consistent evolution of best practices has led the operator to drill sections more rapidly than the technical limits established prior to the project's inception. On the most recent well, the drilling operation was successfully concluded in just 60 days, compared to the budgeted 91 days, yielding estimated savings of more than
Third Quarter Earnings Conference Call
NOV will hold a conference call to discuss its third 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 (Unaudited) (In millions, except per share data) |
||||||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
|
|
|
|
|||||||||||||||||
|
2023 |
2022 |
2023 |
2023 |
2022 |
|||||||||||||||
Revenue: |
|
|
|
|
|
|||||||||||||||
Wellbore Technologies |
$ |
799 |
|
$ |
741 |
|
$ |
804 |
|
$ |
2,348 |
|
$ |
2,015 |
|
|||||
Completion & Production Solutions |
|
760 |
|
|
681 |
|
|
753 |
|
|
2,231 |
|
|
1,850 |
|
|||||
Rig Technologies |
|
686 |
|
|
511 |
|
|
606 |
|
|
1,842 |
|
|
1,414 |
|
|||||
Eliminations |
|
(60 |
) |
|
(44 |
) |
|
(70 |
) |
|
(181 |
) |
|
(115 |
) |
|||||
Total revenue |
|
2,185 |
|
|
1,889 |
|
|
2,093 |
|
|
6,240 |
|
|
5,164 |
|
|||||
Gross profit |
|
468 |
|
|
368 |
|
|
457 |
|
|
1,336 |
|
|
891 |
|
|||||
Gross profit % |
|
21.4 |
% |
|
19.5 |
% |
|
21.8 |
% |
|
21.4 |
% |
|
17.3 |
% |
|||||
|
|
|
|
|
|
|||||||||||||||
Selling, general, and administrative |
|
285 |
|
|
313 |
|
|
276 |
|
|
846 |
|
|
789 |
|
|||||
Operating profit |
|
183 |
|
|
55 |
|
|
181 |
|
|
490 |
|
|
102 |
|
|||||
Interest Expense, net |
|
(18 |
) |
|
(13 |
) |
|
(13 |
) |
|
(44 |
) |
|
(45 |
) |
|||||
Equity income in unconsolidated affiliates |
|
16 |
|
|
12 |
|
|
37 |
|
|
101 |
|
|
32 |
|
|||||
Other income (expense), net |
|
(25 |
) |
|
10 |
|
|
(29 |
) |
|
(70 |
) |
|
8 |
|
|||||
Net income before income taxes |
|
156 |
|
|
64 |
|
|
176 |
|
|
477 |
|
|
97 |
|
|||||
Provision for income taxes |
|
48 |
|
|
29 |
|
|
19 |
|
|
87 |
|
|
41 |
|
|||||
Net income |
|
108 |
|
|
35 |
|
|
157 |
|
|
390 |
|
|
56 |
|
|||||
Net income (loss) attributable to noncontrolling interests |
|
(6 |
) |
|
3 |
|
|
2 |
|
|
(5 |
) |
|
5 |
|
|||||
Net income attributable to Company |
$ |
114 |
|
$ |
32 |
|
$ |
155 |
|
$ |
395 |
|
$ |
51 |
|
|||||
Per share data: |
|
|
|
|
|
|||||||||||||||
Basic |
$ |
0.29 |
|
$ |
0.08 |
|
$ |
0.39 |
|
$ |
1.01 |
|
$ |
0.13 |
|
|||||
Diluted |
$ |
0.29 |
|
$ |
0.08 |
|
$ |
0.39 |
|
$ |
1.00 |
|
$ |
0.13 |
|
|||||
Weighted average shares outstanding: |
|
|
|
|
|
|||||||||||||||
Basic |
|
393 |
|
|
391 |
|
|
393 |
|
|
393 |
|
|
389 |
|
|||||
Diluted |
|
396 |
|
|
393 |
|
|
395 |
|
|
396 |
|
|
393 |
|
CONSOLIDATED BALANCE SHEETS (In millions) |
||||||||
|
|
|
|
|
|
|
||
|
|
2023 |
|
|
2022 |
|
||
ASSETS |
|
(Unaudited) |
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
513 |
|
|
$ |
1,069 |
|
Receivables, net |
|
|
1,982 |
|
|
|
1,739 |
|
Inventories, net |
|
|
2,277 |
|
|
|
1,813 |
|
Contract assets |
|
|
675 |
|
|
|
685 |
|
Prepaid and other current assets |
|
|
211 |
|
|
|
187 |
|
Total current assets |
|
|
5,658 |
|
|
|
5,493 |
|
|
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
1,843 |
|
|
|
1,781 |
|
Lease right-of-use assets |
|
|
545 |
|
|
|
517 |
|
|
|
|
2,015 |
|
|
|
1,995 |
|
Other assets |
|
|
437 |
|
|
|
349 |
|
Total assets |
|
$ |
10,498 |
|
|
$ |
10,135 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
925 |
|
|
$ |
906 |
|
Accrued liabilities |
|
|
818 |
|
|
|
959 |
|
Contract liabilities |
|
|
488 |
|
|
|
444 |
|
Current portion of lease liabilities |
|
|
93 |
|
|
|
87 |
|
Current portion of long-term debt |
|
|
13 |
|
|
|
13 |
|
Accrued income taxes |
|
|
32 |
|
|
|
28 |
|
Total current liabilities |
|
|
2,369 |
|
|
|
2,437 |
|
|
|
|
|
|
|
|
||
Long-term debt |
|
|
1,716 |
|
|
|
1,717 |
|
Lease liabilities |
|
|
559 |
|
|
|
549 |
|
Other liabilities |
|
|
287 |
|
|
|
298 |
|
Total liabilities |
|
|
4,931 |
|
|
|
5,001 |
|
|
|
|
|
|
|
|
||
Total stockholders’ equity |
|
|
5,567 |
|
|
|
5,134 |
|
Total liabilities and stockholders’ equity |
|
$ |
10,498 |
|
|
$ |
10,135 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
|||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
|
|
|
||||||||
|
2023 |
|
2023 |
|
2022 |
||||||
Cash flows from operating activities: |
|
|
|
||||||||
Net income |
$ |
108 |
|
$ |
390 |
|
$ |
56 |
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
||||||||
Depreciation and amortization |
|
77 |
|
|
225 |
|
|
225 |
|
||
Impairment and loss on assets held for sale |
|
4 |
|
|
4 |
|
|
125 |
|
||
Working capital and other operating items, net |
|
(149 |
) |
|
(853 |
) |
|
(739 |
) |
||
Net cash provided by (used in) operating activities |
|
40 |
|
|
(234 |
) |
|
(333 |
) |
||
|
|
|
|
||||||||
Cash flows from investing activities: |
|
|
|
||||||||
Purchases of property, plant and equipment |
|
(74 |
) |
|
(207 |
) |
|
(148 |
) |
||
Other |
|
(9 |
) |
|
(4 |
) |
|
(25 |
) |
||
Net cash used in investing activities |
|
(83 |
) |
|
(211 |
) |
|
(173 |
) |
||
|
|
|
|
||||||||
Cash flows from financing activities: |
|
|
|
||||||||
Borrowings against lines of credit and other debt |
|
20 |
|
|
22 |
|
|
16 |
|
||
Payments against lines of credit and other debt |
|
(20 |
) |
|
(25 |
) |
|
— |
|
||
Cash dividends paid |
|
(20 |
) |
|
(60 |
) |
|
(59 |
) |
||
Other |
|
(13 |
) |
|
(43 |
) |
|
(29 |
) |
||
Net cash used in financing activities |
|
(33 |
) |
|
(106 |
) |
|
(72 |
) |
||
Effect of exchange rates on cash |
|
(3 |
) |
|
(5 |
) |
|
(15 |
) |
||
Decrease in cash and cash equivalents |
|
(79 |
) |
|
(556 |
) |
|
(593 |
) |
||
Cash and cash equivalents, beginning of period |
|
592 |
|
|
1,069 |
|
|
1,591 |
|
||
Cash and cash equivalents, end of period |
$ |
513 |
|
$ |
513 |
|
$ |
998 |
|
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 |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
||||||||||
Operating profit: |
|
|
|
|
|
||||||||||||||
Wellbore Technologies |
$ |
123 |
|
$ |
74 |
|
$ |
128 |
|
$ |
347 |
|
$ |
194 |
|
||||
Completion & Production Solutions |
|
47 |
|
|
21 |
|
|
53 |
|
|
144 |
|
|
19 |
|
||||
Rig Technologies |
|
86 |
|
|
22 |
|
|
64 |
|
|
203 |
|
|
64 |
|
||||
Eliminations and corporate costs |
|
(73 |
) |
|
(62 |
) |
|
(64 |
) |
|
(204 |
) |
|
(175 |
) |
||||
Total operating profit |
$ |
183 |
|
$ |
55 |
|
$ |
181 |
|
$ |
490 |
|
$ |
102 |
|
||||
|
|
|
|
|
|
||||||||||||||
Other items, net: |
|
|
|
|
|
||||||||||||||
Wellbore Technologies |
$ |
3 |
|
$ |
31 |
|
$ |
(1 |
) |
$ |
2 |
|
$ |
61 |
|
||||
Completion & Production Solutions |
|
2 |
|
|
19 |
|
|
— |
|
|
1 |
|
|
36 |
|
||||
Rig Technologies |
|
(3 |
) |
|
13 |
|
|
(7 |
) |
|
(13 |
) |
|
11 |
|
||||
Corporate |
|
5 |
|
|
— |
|
|
1 |
|
|
6 |
|
|
14 |
|
||||
Total other items |
$ |
7 |
|
$ |
63 |
|
$ |
(7 |
) |
$ |
(4 |
) |
$ |
122 |
|
||||
|
|
|
|
|
|
||||||||||||||
(Gain)/Loss on Sales of Fixed Assets: |
|
|
|
|
|
||||||||||||||
Wellbore Technologies |
$ |
— |
|
$ |
1 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
||||
Completion & Production Solutions |
|
1 |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(4 |
) |
||||
Rig Technologies |
|
— |
|
|
(1 |
) |
|
— |
|
|
— |
|
|
— |
|
||||
Corporate |
|
(1 |
) |
|
1 |
|
|
— |
|
|
— |
|
|
3 |
|
||||
Total (gain)/loss on sales of fixed assets |
$ |
— |
|
$ |
1 |
|
$ |
- |
|
$ |
(4 |
) |
$ |
(1 |
) |
||||
|
|
|
|
|
|
||||||||||||||
Depreciation & amortization: |
|
|
|
|
|
||||||||||||||
Wellbore Technologies |
$ |
40 |
|
$ |
39 |
|
$ |
37 |
|
$ |
114 |
|
$ |
113 |
|
||||
Completion & Production Solutions |
|
17 |
|
|
16 |
|
|
16 |
|
|
49 |
|
|
47 |
|
||||
Rig Technologies |
|
17 |
|
|
18 |
|
|
14 |
|
|
50 |
|
|
54 |
|
||||
Corporate |
|
3 |
|
|
3 |
|
|
4 |
|
|
12 |
|
|
11 |
|
||||
Total depreciation & amortization |
$ |
77 |
|
$ |
76 |
|
$ |
71 |
|
$ |
225 |
|
$ |
225 |
|
||||
|
|
|
|
|
|
||||||||||||||
Adjusted EBITDA: |
|
|
|
|
|
||||||||||||||
Wellbore Technologies |
$ |
166 |
|
$ |
145 |
|
$ |
164 |
|
$ |
463 |
|
$ |
368 |
|
||||
Completion & Production Solutions |
|
67 |
|
|
56 |
|
|
69 |
|
|
190 |
|
|
98 |
|
||||
Rig Technologies |
|
100 |
|
|
52 |
|
|
71 |
|
|
240 |
|
|
129 |
|
||||
Eliminations and corporate costs |
|
(66 |
) |
|
(58 |
) |
|
(59 |
) |
|
(186 |
) |
|
(147 |
) |
||||
Total Adjusted EBITDA |
$ |
267 |
|
$ |
195 |
|
$ |
245 |
|
$ |
707 |
|
$ |
448 |
|
||||
|
|
|
|
|
|
||||||||||||||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
||||||||||||||
GAAP net income attributable to Company |
$ |
114 |
|
$ |
32 |
|
$ |
155 |
|
$ |
395 |
|
$ |
51 |
|
||||
Noncontrolling interests |
|
(6 |
) |
|
3 |
|
|
2 |
|
|
(5 |
) |
|
5 |
|
||||
Provision for income taxes |
|
48 |
|
|
29 |
|
|
19 |
|
|
87 |
|
|
41 |
|
||||
Interest expense |
|
23 |
|
|
19 |
|
|
21 |
|
|
65 |
|
|
57 |
|
||||
Interest income |
|
(5 |
) |
|
(6 |
) |
|
(8 |
) |
|
(21 |
) |
|
(12 |
) |
||||
Equity income in unconsolidated affiliates |
|
(16 |
) |
|
(12 |
) |
|
(37 |
) |
|
(101 |
) |
|
(32 |
) |
||||
Other (income) expense, net |
|
25 |
|
|
(10 |
) |
|
29 |
|
|
70 |
|
|
(8 |
) |
||||
(Gain)/Loss on Sales of Fixed Assets |
|
— |
|
|
1 |
|
|
— |
|
|
(4 |
) |
|
(1 |
) |
||||
Depreciation and amortization |
|
77 |
|
|
76 |
|
|
71 |
|
|
225 |
|
|
225 |
|
||||
Other items, net |
|
7 |
|
|
63 |
|
|
(7 |
) |
|
(4 |
) |
|
122 |
|
||||
Total Adjusted EBITDA |
$ |
267 |
|
$ |
195 |
|
$ |
245 |
|
$ |
707 |
|
$ |
448 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20231026812195/en/
Vice President, Corporate Development and Investor Relations
(713) 815-3535
Blake.McCarthy@nov.com
Source: