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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 MARCH 31, 2023


☐	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.)

10353 Richmond Avenue
Houston, Texas

77042-4103

(Address of principal executive offices)

(346) 223-3000

(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 April 14, 2023 the registrant had 393,724,975 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)


	March 31,			December 31,
	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, operating		361			346
Lease right-of-use assets, financing		171			171
Goodwill		1,549			1,505
Intangibles, net		477			490
Investment in unconsolidated affiliates		144			117
Other assets		239			232
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
Deferred income taxes		68			68
Other liabilities		218			230
Total liabilities		4,869			5,001
Commitments and contingencies
Stockholders’ equity:
Common stock - par value $.01; 1 billion shares authorized; 393,727,525 and 392,832,752 shares issued and outstanding at March 31, 2023 and December 31, 2022		4			4
Additional paid-in capital		8,756			8,754
Accumulated other comprehensive loss		(1,554	)		(1,593	)
Retained deficit		(1,963	)		(2,069	)
Total Company stockholders' equity		5,243			5,096
Noncontrolling interests		65			38
Total stockholders’ equity		5,308			5,134
Total liabilities and stockholders’ equity	$	10,177		$	10,135

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(In millions, except per share data)


	Three Months Ended
	March 31,
	2023			2022
Revenue	$	1,962		$	1,548
Cost of revenue		1,551			1,334
Gross profit		411			214
Selling, general and administrative		285			235
Operating profit (loss)		126			(21	)
Interest and financial costs		(21	)		(19	)
Interest income		8			1
Equity income in unconsolidated affiliates		48			6
Other expense, net		(16	)		(2	)
Net income (loss) before income taxes		145			(35	)
Provision for income taxes		20			14
Net income (loss)		125			(49	)
Net income (loss) attributable to noncontrolling interests		(1	)		1
Net income (loss) attributable to Company	$	126		$	(50	)
Net income (loss) attributable to Company per share:
Basic	$	0.32		$	(0.13	)
Diluted	$	0.32		$	(0.13	)
Cash dividends per share	$	0.05		$	0.05
Weighted average shares outstanding:
Basic		392			387
Diluted		396			387

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

(In millions)


	Three Months Ended
	March 31,
	2023			2022
Net income (loss)	$	125		$	(49	)
Currency translation adjustments		39			22
Changes in derivative financial instruments, net of tax		(10	)		(8	)
Changes in defined benefit plans, net of tax		10			—
Comprehensive income (loss)		164			(35	)
Comprehensive income (loss) attributable to noncontrolling interest		(1	)		1
Comprehensive income (loss) loss attributable to Company	$	165		$	(36	)

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)


	Three Months Ended
	March 31,
	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
Provision for inventory losses		4			24
Deferred income taxes		(2	)		(3	)
Equity income in unconsolidated affiliates		(48	)		(6	)
Other, net		13			54
Change in operating assets and liabilities, net of acquisitions:
Receivables		(39	)		(156	)
Inventories		(221	)		(133	)
Contract assets		48			27
Prepaid and other current assets		(10	)		(11	)
Accounts payable		53			31
Accrued liabilities		(201	)		17
Contract liabilities		(1	)		12
Income taxes payable		(7	)		4
Other assets/liabilities, net		7			12
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	)
Financing leases		(6	)		(6	)
Other		(16	)		(11	)
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

Supplemental disclosures of cash flow information:
Cash payments during the period for:
Interest	$	4		$	4
Income taxes	$	20		$	11

See notes to unaudited consolidated financial statements.

NOV INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)


	Shares Issued and 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, 2022		393			4		8,754			(1,593	)		(2,069	)		5,096			38		$	5,134
Net income (loss)		—			—		—			—			126			126			(1	)		125
Other comprehensive income, net		—			—		—			39			—			39			—			39
Cash dividends, $0.05 per common share		—			—		—			—			(20	)		(20	)		—			(20	)
Transactions with non-controlling interests		—			—		3			—			—			3			28			31
Stock-based compensation		—			—		15			—			—			15			—			15
Common stock issued		2			—		—			—			—			—			—			—
Withholding taxes		(1	)		—		(17	)		—			—			(17	)		—			(17	)
Other		—			—		1			—			—			1			—			1
Balance at March 31, 2023		394		$	4	$	8,756		$	(1,554	)	$	(1,963	)	$	5,243		$	65		$	5,308


	Shares Issued and 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 loss, 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		—		—		—			—			—			—			(4	)		(4	)
Balance at March 31, 2022		393	$	4	$	8,690		$	(1,532	)	$	(2,216	)	$	4,946		$	64		$	5,010

See notes to unaudited consolidated financial statements.

NOV INC.

Notes to Consolidated Financial Statements (Unaudited)

Basis of Presentation

The accompanying unaudited consolidated financial statements of NOV Inc. (“NOV” or the “Company”) present information in accordance with generally accepted accounting principles (“GAAP”) in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. They do not include all information or footnotes required by GAAP in the United States for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s 2022 Annual Report on Form 10-K. Certain reclassifications have been made to prior period financial information in order to conform with current period presentation.

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature unless otherwise disclosed, necessary for a fair presentation of the results for the interim periods. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The fair values of cash and cash equivalents, receivables and payables were approximately the same as their presented carrying values because of the short maturities of these instruments. The fair value of long-term debt is provided in Note 9, and the fair values of derivative financial instruments are provided in Note 12.

Inventories, net

Inventories consist of (in millions):


	March 31,			December 31,
	2023			2022
Raw materials and supplies	$	513		$	479
Work in process		323			308
Finished goods and purchased products		1,581			1,404
		2,417			2,191
Less: Inventory reserve		(381	)		(378	)
Total	$	2,036		$	1,813

Accrued Liabilities

Accrued liabilities consist of (in millions):


		March 31,				December 31,