- Revenue of $1.96 billion, down 5% sequentially and up 27%
year-over-year
- Operating Profit of $126 million, down $36 million sequentially
and up $147 million year-over-year
- Net Income of $126 million, or $0.32 per fully diluted
share
- Adjusted EBITDA* of $195 million, down $36 million sequentially
and up $92 million year-over-year
*Adjusted EBITDA is a non-GAAP measure, see “Non-GAAP Financial
Measures” and “Reconciliation of Adjusted EBITDA to Net Income
(Loss)” below.
NOV Inc. (NYSE: NOV) today reported first quarter 2023 revenues
of $1.96 billion, a decrease of 5 percent compared to the fourth
quarter of 2022 and an increase of 27 percent compared to the first
quarter of 2022. Net income for the first quarter of 2023 was $126
million, or 6.4 percent of sales. Operating profit was $126
million, or 6.4 percent of sales. Under Other Items the Company
recorded a net pre-tax credit of $4 million (see Corporate
Information for additional details). Adjusted EBITDA decreased
sequentially to $195 million, or 9.9 percent of sales.
“Our first quarter results show continued strong demand and
year-over-year growth,” stated Clay Williams, Chairman, President,
and CEO. “On a consolidated basis, revenue increased 27 percent
compared to the first quarter of 2022, and our orders for capital
equipment exceeded our shipments out of backlog by 9 percent. While
the decline in North American natural gas prices may be a near-term
headwind, the recovery in offshore and international activity is
continuing to build strong momentum.
“Our first quarter results include the impact of seasonality and
a significant supply chain disruption within our Wellbore
Technologies segment, which arose during the quarter, along with
unexpected charges that weighed on results. Nevertheless, the
underlying performance across our business continued to improve,
including better management against supply chain disruptions in
most other areas. The need to retool the global oilfield service
industry is driving a steady increase in tendering activity and
backlog, along with greater demand for new technologies NOV
developed through the downturn. As the world sharpens its focus on
energy security, we expect rising demand in offshore and
international markets to underpin steadily rising results for our
organization as 2023 progresses.”
Wellbore Technologies
Wellbore Technologies generated revenues of $745 million in the
first quarter of 2023, a decrease of two percent from the fourth
quarter of 2022 and an increase of 23 percent from the first
quarter of 2022. Operating profit was $96 million, or 12.9 percent
of sales. Adjusted EBITDA decreased $13 million sequentially and
increased $32 million from the prior year to $133 million, or 17.9
percent of sales. Results were negatively impacted during the
quarter by continued supply chain challenges that disrupted the
Segment’s drill pipe operations.
Completion & Production Solutions
Completion & Production Solutions generated revenues of $718
million in the first quarter of 2023, a decrease of three percent
from the fourth quarter of 2022 and an increase of 35 percent from
the first quarter of 2022. Operating profit was $44 million, or 6.1
percent of sales, and included a credit of $1 million from Other
Items. Adjusted EBITDA decreased $12 million sequentially and
increased $44 million from the prior year to $54 million, or 7.5
percent of sales. Results reflect typical seasonal declines in
certain product lines and markets, partially offset by an improving
rate of execution on projects, which contributed to a 37% increase
in revenue out of backlog compared to the first quarter of
2022.
New orders booked during the quarter totaled $407 million,
representing a book-to-bill of 96 percent when compared to the $422
million of orders shipped from backlog. As of March 31, 2023,
backlog for capital equipment orders for Completion &
Production Solutions was $1.60 billion, a decrease of $1 million
from the fourth quarter of 2022 and an increase of $237 million
from the first quarter of 2022.
Rig Technologies
Rig Technologies generated revenues of $550 million in the first
quarter of 2023, a decrease of 11 percent from the fourth quarter
of 2022 and an increase of 25 percent from the first quarter of
2022. Operating profit was $53 million, or 9.6 percent of sales,
and included a credit of $3 million from Other Items. Adjusted
EBITDA decreased $19 million sequentially and increased $33 million
from the prior year to $69 million, or 12.5 percent of sales.
Steadily improving demand for drilling equipment and aftermarket
parts and services only partially offset the effect of strong
capital equipment shipments in the fourth quarter that did not
repeat and seasonal declines in the Segment’s aftermarket
operations.
New capital equipment orders booked during the quarter totaled
$251 million, representing a book-to-bill of 140 percent when
compared to the $179 million of orders shipped from backlog. As of
March 31, 2023, backlog for capital equipment orders for Rig
Technologies totaled $2.88 billion, an increase of $83 million from
the fourth quarter of 2022 and a decrease of $17 million from the
first quarter of 2022.
Corporate Information
NOV recorded a net credit of $4 million in Other Items,
primarily related to gains on sales of previously reserved
inventory (see Reconciliation of Adjusted EBITDA to Net Income
(Loss)) during the first quarter. The Company also recorded $8
million in charges related to environmental reserves and legal
expenses.
During the first quarter, the Company increased its investment
in Keystone Tower Systems (KTS), which resulted in NOV obtaining a
controlling interest in the business and the consolidation of KTS’s
results into NOV’s financial statements.
As of March 31, 2023, the Company had total debt of $1.73
billion, with $2.00 billion available on its primary revolving
credit facility, and $774 million in cash and cash equivalents.
Significant Achievements
NOV will provide drilling and pipe-handling automation
technology solutions to Exxon’s entire drillship fleet in Guyana as
part of Exxon’s safety and performance improvement initiative in
the region. Highlighted by the inclusion of NOV’s innovative
robotics and vision solutions, NOV will provide proactive support
throughout the entirety of operations through its Automation
Lifecycle Management program and a 24/7 performance center.
NOV’s downhole technology continues to push drilling performance
to new limits as highlighted by its recently introduced Vector™
Series 55RS motor, which enabled the drilling of a 24,890-foot well
in one run at an average rate of penetration (ROP) of 188 feet per
hour.
NOV was awarded a repeat order for the design license and
jacking system of a large Wind Turbine Installation Vessel (WTIV)
for a European client. This marks the sixth order for NOV's
proprietary NG-20000 vessel design, which has become the industry
standard for the international offshore wind installation market.
As offshore wind development projects increasingly call for larger
offshore wind turbines and heavier foundations, NOV is developing
the next generation of larger WTIVs to enable safe and efficient
installation processes.
NOV delivered the world's first two telescopic heavy-lift cranes
capable of lifting 2,500 tons in retracted mode and 1,250 tons in
extended mode. The first vessel is set to install its first
offshore wind turbines in April 2023. NOV also booked orders for
two third-generation all-electric cranes for a Floating Production
Storage and Offloading (FPSO) vessel in Brazil. This is the first
order for NOV’s electric crane offering outside of the North Sea as
NOV’s global customer base begins to appreciate the improved
efficiencies and reduced carbon emissions of NOV’s heavy lift
product portfolio.
NOV received an award to reactivate and upgrade a
seventh-generation drillship to meet technical specifications for a
recent contract. The award includes the installation of a new
165-ton active heave compensated (AHC) crane, an upgraded control
system, including a drilling automation system, and associated
handling tools.
NOV secured three purchase orders to provide its patented Cocoon
& Shroud™ subsea protection structures for deployment in the
North Sea. These innovative structures are designed to offer
enhanced safety and protection for wellheads, and their unique
structural geometry enables fishing nets to over-trawl the Cocoon
& Shroud without any damage or obstruction. With these three
new orders, 42 such structures have been supplied since their
inception in the early 2000s. NOV’s Cocoon & Shroud products
have undergone rigorous testing programs to evaluate the effects of
subsea aging and are currently undergoing a complete redesign to
incorporate new and improved manufacturing techniques and
procedures, thus further enhancing their quality and loading
requirements.
NOV debuted its all-electric Ideal™ processing plant for
fracturing operations, capable of delivering more than 200 barrels
per minute (BPM) of fresh water and 30,000 pounds per minute of
sand/proppant. The blender and chemical additive system can be
easily configured for conventional frac, simultaneous frac, or slip
stream operations, and is fully remote-controlled. With the
deployment of this unit, NOV takes another stride toward the
complete implementation of its all-electric frac site offerings.
Additionally, NOV received an order for an additional 15,000 horse
power of NOV's Ideal™ eFrac units by a major pressure pumper in
North America, which now enables the customer to deploy a complete
fleet of Ideal eFrac units in the field.
NOV's Tolteq™ Measurement While Drilling (MWD) tools, featuring
the new Hellfire Top Mount Pulser (TMP), were deployed to
effectively drill the curve and lateral segments of a three-well
pad in Argentina's Vaca Muerta play. Historically, MWD tool
performance has been challenged in this application by high flow
rates and mud weights, combined with extreme downhole temperatures.
Despite these unique challenges, the Tolteq MWD tools drilled a
total of 11,800 meters across the three wells with 100%
reliability.
NOV secured its first project utilizing the Brandt iNOVaTHERM™
system with a leading national oil company in the Middle East. As
operators around the globe increase their focus on reducing the
carbon footprint of their drilling operations, technologies like
iNOVaTHERM, which reduce operational expenses, decrease carbon
emissions, and enhance safety at the wellsite, become even more
attractive.
NOV enhanced its Downhole Broadband Solutions (DBS) portfolio by
incorporating the iConic™ Digital Transponder (iDT) on NOV’s wired
drill pipe (WDP) network in the Norwegian Continental Shelf. The
iDT’s smart plug is used to temporarily seal open-hole portions of
a well. WDP engages the plug to pull information on conditions
below the plug without removing it, enabling decisions to be made
prior to removing the plug. This solution offers the ability to
detect pressure below barrier plugs downhole, contributing to the
successful implementation of technology aimed at preventing well
control incidents. NOV continues to expand its broad range of
optimization services, visualization tools, downhole drilling
equipment, and real-time downhole sensors that leverage its WDP
network.
First Quarter Earnings Conference Call
NOV will hold a conference call to discuss its first quarter
2023 results on April 27, 2023 at 10:00 AM Central Time (11:00 AM
Eastern Time). The call will be broadcast simultaneously at
www.nov.com/investors. A replay will be available on the website
for 30 days.
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 Securities and
Exchange Commission, including the Annual Report on Form 10-K,
which identify significant risk factors which could cause actual
results to differ from those contained in the forward-looking
statements. These statements speak only as of the date of this
document, and we undertake no obligation to update or revise the
statements, except as may be required by law.
Certain prior period amounts have been reclassified in this
press release to be consistent with current period
presentation.
NOV INC.
CONSOLIDATED STATEMENTS OF
INCOME (LOSS) (Unaudited)
(In millions, except per share
data)
Three Months Ended
March 31,
December 31,
2023
2022
2022
Revenue:
Wellbore Technologies
$
745
$
608
$
762
Completion & Production Solutions
718
530
738
Rig Technologies
550
441
620
Eliminations
(51
)
(31
)
(47
)
Total revenue
1,962
1,548
2,073
Gross profit
411
214
443
Gross profit %
20.9
%
13.8
%
21.4
%
Selling, general, and administrative
285
235
281
Operating profit (loss)
126
(21
)
162
Interest Expense, net
(13
)
(18
)
(14
)
Equity income in unconsolidated
affiliates
48
6
36
Other expense, net
(16
)
(2
)
(43
)
Net income (loss) before income taxes
145
(35
)
141
Provision for income taxes
20
14
42
Net income (loss)
125
(49
)
99
Net income (loss) attributable to
noncontrolling interests
(1
)
1
(5
)
Net income (loss) attributable to
Company
$
126
$
(50
)
$
104
Per share data:
Basic
$
0.32
$
(0.13
)
$
0.27
Diluted
$
0.32
$
(0.13
)
$
0.26
Weighted average shares outstanding:
Basic
392
387
391
Diluted
396
387
395
NOV INC.
CONSOLIDATED BALANCE
SHEETS
(In millions)
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
532
517
Goodwill and intangibles, net
2,026
1,995
Other assets
383
349
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
Other liabilities
286
298
Total liabilities
4,869
5,001
Total stockholders’ equity
5,308
5,134
Total liabilities and stockholders’
equity
$
10,177
$
10,135
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
Working capital and other operating items,
net
(404
)
(128
)
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
)
Other
(22
)
(17
)
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
NOV INC.
RECONCILIATION OF ADJUSTED
EBITDA TO NET INCOME (LOSS) (Unaudited)
(In millions)
Presented below is a reconciliation of Net
Income (Loss) 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
March 31,
December 31,
2023
2022
2022
Operating profit (loss):
Wellbore Technologies
$
96
$
39
$
110
Completion & Production Solutions
44
(22
)
50
Rig Technologies
53
11
80
Eliminations and corporate costs
(67
)
(49
)
(78
)
Total operating profit (loss)
$
126
$
(21
)
$
162
Other items, net:
Wellbore Technologies
$
—
$
23
$
(1
)
Completion & Production Solutions
(1
)
16
—
Rig Technologies
(3
)
6
(11
)
Corporate
—
—
4
Total other items
$
(4
)
$
45
$
(8
)
(Gain)/Loss on Sales of Fixed Assets:
Wellbore Technologies
$
—
$
2
$
—
Completion & Production Solutions
(5
)
—
1
Rig Technologies
—
1
—
Corporate
1
2
—
Total (gain)/loss on sales of fixed
assets
$
(4
)
$
5
$
1
Depreciation & amortization:
Wellbore Technologies
$
37
$
37
$
37
Completion & Production Solutions
16
16
15
Rig Technologies
19
18
19
Corporate
5
3
5
Total depreciation & amortization
$
77
$
74
$
76
Adjusted EBITDA:
Wellbore Technologies
$
133
$
101
$
146
Completion & Production Solutions
54
10
66
Rig Technologies
69
36
88
Eliminations and corporate costs
(61
)
(44
)
(69
)
Total Adjusted EBITDA
$
195
$
103
$
231
Reconciliation of Adjusted EBITDA:
GAAP net income (loss) attributable to
Company
$
126
$
(50
)
$
104
Noncontrolling interests
(1
)
1
(5
)
Provision for income taxes
20
14
42
Interest expense
21
19
21
Interest income
(8
)
(1
)
(7
)
Equity income in unconsolidated
affiliates
(48
)
(6
)
(36
)
Other expense, net
16
2
43
(Gain)/Loss on Sales of Fixed Assets
(4
)
5
1
Depreciation and amortization
77
74
76
Other items, net
(4
)
45
(8
)
Total Adjusted EBITDA
$
195
$
103
$
231
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005846/en/
Blake McCarthy Vice President, Corporate Development and
Investor Relations (713) 815-3535 Blake.McCarthy@nov.com
NOV (NYSE:NOV)
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