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10-Q

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, 2022


☐	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 14, 2022 the registrant had 392,804,959 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,
	2022			2021
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	998		$	1,591
Receivables, net		1,623			1,321
Inventories, net		1,755			1,331
Contract assets		591			461
Prepaid and other current assets		212			198
Total current assets		5,179			4,902
Property, plant and equipment, net		1,757			1,823
Lease right-of-use assets, operating		345			361
Lease right-of-use assets, financing		170			176
Goodwill		1,505			1,527
Intangibles, net		501			503
Investment in unconsolidated affiliates		82			50
Other assets		222			208
Total assets	$	9,761		$	9,550
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	774		$	612
Accrued liabilities		904			778
Contract liabilities		431			392
Current portion of lease liabilities		85			99
Current portion of long-term debt		10			5
Accrued income taxes		43			24
Total current liabilities		2,247			1,910
Lease liabilities		546			576
Long-term debt		1,720			1,708
Deferred income taxes		51			66
Other liabilities		267			226
Total liabilities		4,831			4,486
Commitments and contingencies
Stockholders’ equity:
Common stock - par value $.01; 1 billion shares authorized; 392,805,244 and 392,673,077 shares issued and outstanding at September 30, 2022 and December 31, 2021		4			4
Additional paid-in capital		8,718			8,685
Accumulated other comprehensive loss		(1,700	)		(1,546	)
Retained deficit		(2,154	)		(2,146	)
Total Company stockholders' equity		4,868			4,997
Noncontrolling interests		62			67
Total stockholders’ equity		4,930			5,064
Total liabilities and stockholders’ equity	$	9,761		$	9,550

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,
	2022			2021			2022			2021
Revenue	$	1,889		$	1,341		$	5,164		$	4,007
Cost of revenue		1,521			1,156			4,273			3,435
Gross profit		368			185			891			572
Selling, general and administrative		313			228			789			691
Operating profit (loss)		55			(43	)		102			(119	)
Interest and financial costs		(19	)		(19	)		(57	)		(58	)
Interest income		6			3			12			7
Equity income (loss) in unconsolidated affiliates		12			(2	)		32			(6	)
Other income (expense), net		10			1			8			(25	)
Net income (loss) before income taxes		64			(60	)		97			(201	)
Provision for income taxes		29			5			41			1
Net income (loss)		35			(65	)		56			(202	)
Net income attributable to noncontrolling interests		3			4			5			8
Net income (loss) attributable to Company	$	32		$	(69	)	$	51		$	(210	)
Net income (loss) attributable to Company per share:
Basic	$	0.08		$	(0.18	)	$	0.13		$	(0.54	)
Diluted	$	0.08		$	(0.18	)	$	0.13		$	(0.54	)
Cash dividends per share	$	0.05		$	-		$	0.15		$	-
Weighted average shares outstanding:
Basic		391			387			389			386
Diluted		393			387			393			386

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(In millions)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net income (loss)	$	35		$	(65	)	$	56		$	(202	)
Currency translation adjustments		(26	)		(42	)		(88	)		(24	)
Changes in derivative financial instruments, net of tax		(13	)		(6	)		(34	)		(12	)
Changes in defined benefit plans, net of tax		(32	)		—			(32	)		—
Comprehensive loss		(36	)		(113	)		(98	)		(238	)
Comprehensive income attributable to noncontrolling interest		3			4			5			8
Comprehensive loss attributable to Company	$	(39	)	$	(117	)	$	(103	)	$	(246	)

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)


	Nine Months Ended
	September 30,
	2022			2021
Cash flows from operating activities:
Net income (loss)	$	56		$	(202	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		225			231
Provision for inventory losses		(9	)		25
Deferred income taxes		(13	)		2
Loss on extinguishment of debt		—			7
Equity (income) loss in unconsolidated affiliates		(32	)		6
Stock-based compensation		50			59
Impairment and loss on assets held for sale		125			—
Other, net		43			12
Change in operating assets and liabilities, net of acquisitions:
Receivables		(319	)		(21	)
Inventories		(430	)		58
Contract assets		(127	)		145
Prepaid and other current assets		(19	)		25
Accounts payable		156			30
Accrued liabilities		18			(89	)
Contract liabilities		39			71
Income taxes payable		19			(30	)
Other assets/liabilities, net		(115	)		(74	)
Net cash provided by (used in) operating activities	$	(333	)		255

Cash flows from investing activities:
Purchases of property, plant and equipment		(148	)		(137	)
Other		(25	)		35
Net cash used in investing activities	$	(173	)	$	(102	)

Cash flows from financing activities:
Borrowings against lines of credit and other debt		16			51
Payments against lines of credit and other debt		—			(183	)
Cash dividends paid		(59	)		—
Financing leases		(18	)		(20	)
Other		(11	)		(20	)
Net cash used in financing activities		(72	)		(172	)
Effect of exchange rates on cash		(15	)		(5	)
Decrease in cash and cash equivalents		(593	)		(24	)
Cash and cash equivalents, beginning of period		1,591			1,692
Cash and cash equivalents, end of period	$	998		$	1,668

Supplemental disclosures of cash flow information:
Cash payments (refunds) during the period for:
Interest	$	39		$	42
Income taxes	$	91		$	(87	)

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, 2021		393	$	4	$	8,685		$	(1,546	)	$	(2,146	)	$	4,997		$	67	$	5,064
Net income (loss)		—		—		—			—			(50	)		(50	)		1		(49	)
Other comprehensive income, net		—		—		—			14			—			14			—		14
Cash dividends, $0.05 per common share		—		—		—			—			(20	)		(20	)		—		(20	)
Stock-based compensation		—		—		17			—			—			17			—		17
Withholding taxes		—		—		(12	)		—			—			(12	)		—		(12	)
Other		—