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nov-10q_20210930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-12317

NOV INC.

(Exact name of registrant as specified in its charter)

Delaware

76-0475815

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

7909 Parkwood Circle Drive

Houston, Texas

77036-6565

(Address of principal executive offices)

(713) 341-4802

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	NOV	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑		Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 15, 2021 the registrant had 390,691,834 shares of common stock, par value $0.01 per share, outstanding.

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

NOV INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

	September 30,			December 31,
	2021			2020
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	1,668		$	1,692
Receivables, net		1,280			1,274
Inventories, net		1,325			1,408
Contract assets		466			611
Prepaid and other current assets		200			224
Total current assets		4,939			5,209
Property, plant and equipment, net		1,825			1,927
Lease right-of-use assets, operating		374			371
Lease right-of-use assets, financing		179			195
Goodwill		1,495			1,493
Intangibles, net		497			527
Investment in unconsolidated affiliates		50			51
Other assets		208			156
Total assets	$	9,567		$	9,929
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	519		$	489
Accrued liabilities		785			863
Contract liabilities		425			354
Current portion of lease liabilities		102			110
Accrued income taxes		22			51
Total current liabilities		1,853			1,867
Lease liabilities		593			612
Long-term debt		1,704			1,834
Deferred income taxes		80			78
Other liabilities		259			259
Total liabilities		4,489			4,650

Stockholders’ equity:
Common stock - par value $.01; 1 billion shares authorized; 390,693,745 and 388,255,374 shares issued and outstanding at September 30, 2021 and December 31, 2020		4			4
Additional paid-in capital		8,637			8,591
Accumulated other comprehensive loss		(1,545	)		(1,509	)
Retained deficit		(2,086	)		(1,876	)
Total Company stockholders' equity		5,010			5,210
Noncontrolling interests		68			69
Total stockholders’ equity		5,078			5,279
Total liabilities and stockholders’ equity	$	9,567		$	9,929

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(In millions, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenue	$	1,341		$	1,384		$	4,007		$	4,763
Cost of revenue		1,156			1,245			3,435			4,263
Gross profit		185			139			572			500
Selling, general and administrative		228			213			691			733
Goodwill and indefinite-lived intangible asset impairment		—			—			—			1,378
Long-lived asset impairment		—			—			—			513
Operating loss		(43	)		(74	)		(119	)		(2,124	)
Interest and financial costs		(19	)		(21	)		(58	)		(65	)
Interest income		3			—			7			5
Equity loss in unconsolidated affiliates		(2	)		(11	)		(6	)		(250	)
Other income (expense), net		1			(8	)		(25	)		(19	)
Loss before income taxes		(60	)		(114	)		(201	)		(2,453	)
Provision (benefit) for income taxes		5			(61	)		1			(264	)
Net loss		(65	)		(53	)		(202	)		(2,189	)
Net income attributable to noncontrolling interests		4			2			8			6
Net loss attributable to Company	$	(69	)	$	(55	)	$	(210	)	$	(2,195	)

Net loss attributable to Company per share:
Basic	$	(0.18	)	$	(0.14	)	$	(0.54	)	$	(5.72	)
Diluted	$	(0.18	)	$	(0.14	)	$	(0.54	)	$	(5.72	)

Cash dividends per share	$	-		$	-		$	-		$	0.05

Weighted average shares outstanding:
Basic		387			385			386			384
Diluted		387			385			386			384

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Net loss	$	(65	)	$	(53	)	$	(202	)	$	(2,189	)
Currency translation adjustments		(42	)		20			(24	)		(151	)
Changes in derivative financial instruments, net of tax		(6	)		16			(12	)		(3	)
Comprehensive income (loss)		(113	)		(17	)		(238	)		(2,343	)
Comprehensive income attributable to noncontrolling interest		4			2			8			6
Comprehensive income (loss) attributable to Company	$	(117	)	$	(19	)	$	(246	)	$	(2,349	)

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

	Nine Months Ended
	September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(202	)	$	(2,189	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		231			270
Provision for inventory losses		25			171
Deferred income taxes		2			(72	)
Loss on extinguishment of debt		7			8
Equity loss in unconsolidated affiliates		6			250
Goodwill and indefinite-lived intangible asset impairment		—			1,378
Long-lived asset impairment		—			513
Other, net		71			93
Change in operating assets and liabilities, net of acquisitions:
Receivables		(21	)		469
Inventories		58			288
Contract assets		145			86
Prepaid and other current assets		25			38
Accounts payable		30			(240	)
Accrued liabilities		(89	)		(127	)
Contract liabilities		71			(56	)
Income taxes payable		(30	)		32
Other assets/liabilities, net		(74	)		(172	)
Net cash provided by operating activities		255			740

Cash flows from investing activities:
Purchases of property, plant and equipment		(137	)		(173	)
Other		35			13
Net cash used in investing activities	$	(102	)	$	(160	)

Cash flows from financing activities:
Borrowings against lines of credit and other debt		51			36
Payments against lines of credit and other debt		(183	)		(217	)
Cash dividends paid		—			(19	)
Debt extinguishment costs		(7	)		(8	)
Other		(33	)		(48	)
Net cash used in financing activities		(172	)		(256	)
Effect of exchange rates on cash		(5	)		(10	)
Increase (decrease) in cash and cash equivalents		(24	)		314
Cash and cash equivalents, beginning of period		1,692			1,171
Cash and cash equivalents, end of period	$	1,668		$	1,485

Supplemental disclosures of cash flow information:
Cash payments (refunds) during the period for:
Interest	$	42		$	47
Income taxes	$	(87	)	$	(38	)

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)

	Shares Outstanding		Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Deficit)			Total Company Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity
Balance at December 31, 2020		388	$	4	$	8,591		$	(1,509	)	$	(1,876	)	$	5,210		$	69		$	5,279
Net loss		—		—		—			—			(115	)		(115	)		1			(114	)
Other comprehensive loss		—		—		—			(21	)		—			(21	)		—			(21	)
Stock-based compensation		—		—		20			—			—			20			—			20
Common stock issued		2		—		—			—			—			—			—			—
Withholding taxes		—		—		(13	)		—			—			(13	)		—			(13	)
Other		—		—		—			—			—			-			(1	)		(1	)
Balance at March 31, 2021		390	$	4	$	8,598		$	(1,530	)	$	(1,991	)	$	5,081		$	69		$	5,150
Net income (loss)		—		—		—			—			(26	)		(26	)		3			(23	)
Other comprehensive income		—		—		—			33			—			33			—			33
Stock-based compensation		—		—		20			—			—			20			—			20
Common stock issued		1		—		—			—			—			—			—			—
Other