NOV Inc. (NYSE: NOV) today reported third quarter 2021 revenues
of $1.34 billion, a decrease of 5 percent compared to the second
quarter of 2021 and a decrease of 3 percent compared to the third
quarter of 2020. Net loss for the third quarter of 2021 was $69
million, or 5.1 percent of sales, which included $12 million in
pre-tax charges related to COVID-19 operational disruptions on a
project in a Southeast Asian shipyard and $24 million in Other
Items (see Corporate Information for additional details). Adjusted
EBITDA (operating profit excluding depreciation, amortization, and
Other Items) decreased sequentially to $56 million, or 4.2 percent
of sales.
“Rising oil and gas prices continue to drive higher demand for
NOV, as our orders again exceeded our shipments in the third
quarter,” stated Clay Williams, Chairman, President, and CEO.
“While pandemic-related supply chain issues challenged certain
projects, we nevertheless saw sequential improvement in many of our
oilfield businesses, along with our strong order levels. Rising
economic activity and higher backlogs continue to underpin our
improving outlook for 2022.”
“We continue investing in technologies to both improve our
offerings to oil and gas operators and grow our portfolio of
renewable energy technologies. We were particularly pleased to
again see offshore wind power related projects drive more than half
of our Rig Technology segment’s orders in the third quarter, and we
made steady progress in other low-carbon solutions under
development. As global economies emerge from pandemic lockdowns,
supply chains normalize, and energy demand grows, NOV is well
positioned to generate much stronger financial returns from the
coming multi-year up-cycle in both the conventional and renewable
energy markets.”
Wellbore Technologies
Wellbore Technologies generated revenues of $507 million in the
third quarter of 2021, an increase of 10 percent from the second
quarter of 2021 and an increase of 40 percent from the third
quarter of 2020. The increase in revenues was driven by oil and gas
drilling activity levels that improved in every major region of the
world, market share gains in certain markets, and higher prices.
Operating profit was $32 million, or 6.3 percent of sales, and
included $7 million of Other Items. Adjusted EBITDA increased $14
million sequentially to $77 million, or 15.2 percent of sales.
Completion & Production Solutions
Completion & Production Solutions generated revenues of $478
million in the third quarter of 2021, a decrease of 4 percent from
the second quarter of 2021 and a decrease of 20 percent from the
third quarter of 2020. COVID-19 operational disruptions and supply
chain issues negatively impacted the conversion of revenue from
backlog during the quarter. Operating loss was $26 million, or 5.4
percent of sales, and included $6 million in Other Items. Adjusted
EBITDA decreased $9 million sequentially to -$5 million, or 1.0
percent of sales. Third quarter results included $12 million in
charges related to COVID-19 operational disruptions on a project in
a Southeast Asian shipyard.
New orders booked during the quarter totaled $384 million,
representing a book-to-bill of 144 percent when compared to the
$266 million of orders shipped from backlog. As of September 30,
2021, backlog for capital equipment orders for Completion &
Production Solutions was $1.11 billion.
Rig Technologies
Rig Technologies generated revenues of $390 million in the third
quarter of 2021, a decrease of 20 percent from the second quarter
of 2021 and a decrease of 13 percent from the third quarter of
2020. The sequential decline in revenue was driven primarily by a
$74 million project settlement in the second quarter that did not
repeat. Operating profit was $1 million, or less than one percent
of sales, and included $6 million of other items. Adjusted EBITDA
decreased $50 million sequentially to $25 million, or 6.4 percent
of sales.
New orders booked during the quarter totaled $300 million,
representing a book-to-bill of 190 percent when compared to the
$158 million of orders shipped from backlog. As of September 30,
2021, backlog for capital equipment orders for Rig Technologies was
$2.78 billion.
Corporate Information
During the third quarter, the Company recognized $24 million of
Other Items due to restructuring costs, net of related credits, and
an accrual for a post-warranty product modification. See
reconciliation of Adjusted EBITDA to Net Income.
As of September 30, 2021, the Company had total debt of $1.70
billion, with $2.00 billion available on its primary revolving
credit facility, and $1.67 billion in cash and cash
equivalents.
Significant Achievements
NOV received an award from Cadeler A/S to design and equip two
GustoMSC™ NG-20000X self-propelled wind turbine installation jackup
vessels. Each vessel will have 5,600 m2 of deck space, an
industry-leading carrying capacity of more than 17,600 tons and the
ability to transport and install multiple sets of 15- to 20-plus MW
turbines. The jacking systems will incorporate NOV’s proprietary
advanced regenerative power system technology that enables
significant fuel savings and reduced emissions. In parallel, NOV
will upgrade Cadeler’s existing O-Class vessels with new heavy-lift
cranes to handle the next generation of wind turbines.
NOV secured a front-end engineering design (FEED) study to
decarbonize a floating production storage and offloading (FPSO)
vessel operating offshore Malaysia. The FEED study was awarded
based on NOV’s global process engineering and gas treatment
expertise, which allows the Company to engineer, design, and fully
execute built-for-purpose carbon capture systems for many industry
applications.
NOV secured an order for a 20,000-psi (20K) blowout preventer
(BOP) stack for a new development project in the Gulf of Mexico.
This is the third order NOV has received for a 20K subsea BOP
stack, solidifying the Company’s position as the engineering expert
and supplier of choice for leading-edge safety technology and
equipment. In addition, NOV won a contract to supply Viper™
large-diameter casing for the same project. Viper’s exceptional
sealing properties and fatigue performance make it the ideal choice
for the extreme demands of the deepwater market.
NOV gained additional recognition for its leading ESG practices
when the Saudi Authority for Industrial Cities and Technology Zones
(MODON) selected the company’s Fiber Glass Systems facility in
Dammam, Saudi Arabia, as a benchmark facility for safety and
environmental practices among all local facilities. At the request
of the MODON authority, NOV hosted teams from 12 companies with
neighboring facilities in the zone to share best practices, ranging
from safety protocols, environmental safeguards, and employee
engagement.
NOV’s technologies continued supporting efforts to decarbonize
the energy industry and new industry verticals that are aligned
with addressing key societal needs. During the quarter, NOV
provided a major pharmaceutical company with turbine agitators and
mixers that will be used to manufacture a new pill to treat
COVID-19. The operation also provided an integrated package of
pumps, mixers and screens used to process and treat cooling water
at a nuclear power facility in the U.K., as well as a large mixer
used in the mining of rare earth minerals in California.
NOV’s condition-based monitoring (CBM) systems continue to gain
broader market adoption with a large drilling contractor entrusting
the maintenance of all its subsea assets to the business. Our CBM
systems drive savings and efficiencies for our customers by
optimizing maintenance, maximizing equipment availability, and
reducing total cost of ownership. The tangible value of NOV’s CBM
program was demonstrated during the quarter when an impending
bearing failure signature was detected on a customer’s draw-works
motor, a potential cliff event that would have resulted in
significant downtime and, potentially, critical safety issues. The
early detection allowed for the part to be replaced with minimal
operation impact, resulting in improved economics for both the
operator and our drilling contractor customer.
NOV was awarded a large gas dehydration system for the Berri
field in Saudi Arabia, reinforcing NOV’s position as a leading
process systems technology company. Tying into NOV’s focus on
marrying local content and execution with best-in-class process
technology, the project will rely on in-country fabrication and
reaffirms NOV’s position as a strategic partner of Saudi Aramco as
it pursues its objective of increasing natural gas production in
the Kingdom.
Combining multiple leading-edge NOV drilling technologies in
bottom hole assemblies (BHAs) resulted in meaningful operational
improvements for customers around the globe. In Colombia, NOV’s
Agitator™ system, enhanced with a new Remote Shock Tool, reduced
frictional losses and cut drilling time by delivering a field
record rate of penetration (ROP) of 201 ft/hr. The customer reached
total depth in 1.4 drilling days—faster than the best offset well
thanks to 39% faster sliding ROP and 23% faster rotating ROP. In
Siberia, NOV Vector™ impulse motors combined with an Agitator
system set the field ROP record of 177 ft/hr, a 45% improvement
compared to offset wells.
NOV’s SelectShift™ downhole adjustable motor with Impulse
technology enabled a major operator in the Northeast U.S. to drill
its fastest well to date and was consistently used in the
challenging vertical section of 12 wells for the same customer. The
two bend settings of the SelectShift enabled optimized drilling
parameters through the different formations of the vertical well
sections, driving significant savings and efficiencies through
reduced bottom-hole assembly trips, improved bit life, and enhanced
rate of penetration. On average, SelectShift Impulse technology
reduced total section drill times by 30% and is establishing itself
as an essential technology for the harsh drilling conditions of the
Northeastern U.S.
NOV was awarded a three-year Wired Drill Pipe Optimization
project with a major operator in the North Sea. The enhanced
downhole transparency provided by the instantaneous and
bi-directional transmission of downhole data made possible by wired
drill pipe, combined with our latest downhole drilling tool
technology, drove a significant improvement in overall well
performance for the same operator on a previous contract. With this
follow-on contract, NOV will look to provide similar operational
enhancements on a greater percentage of this customer’s operations
and continue to drive improved customer economic returns.
NOV commenced operations of a quayside thermal desorption
treatment facility in Georgetown, Guyana. This marks the beginning
of a 10-year project with a major operator to treat drilling fluid
waste coming from multiple drillships. NOV’s Hot Oil Thermal
Desorption Unit (HTDU) was chosen for its reliability and steady
production capability. The HTDU will treat synthetic oil-based mud
waste from offshore installations and onshore mud plants, providing
a more sustainable solution that reuses mud streams and
meaningfully reduces the environmental impact of disposal.
Third Quarter Earnings Conference Call
NOV will hold a conference call to discuss its third quarter
2021 results on October 27, 2021 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.
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.
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
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Revenue:
Wellbore Technologies
$
507
$
361
$
463
$
1,383
$
1,494
Completion & Production Solutions
478
601
497
1,414
1,887
Rig Technologies
390
449
487
1,308
1,482
Eliminations
(34
)
(27
)
(30
)
(98
)
(100
)
Total revenue
1,341
1,384
1,417
4,007
4,763
Gross profit
185
139
231
572
500
Gross profit %
13.8
%
10.0
%
16.3
%
14.3
%
10.5
%
Selling, general, and administrative
228
213
219
691
733
Goodwill and indefinite-lived intangible
asset impairment
—
—
—
—
1,378
Long-lived asset impairment
—
—
—
—
513
Operating profit (loss)
(43
)
(74
)
12
(119
)
(2,124
)
Interest and financial costs
(19
)
(21
)
(19
)
(58
)
(65
)
Interest income
3
—
2
7
5
Equity loss in unconsolidated
affiliates
(2
)
(11
)
—
(6
)
(250
)
Other income (expense), net
1
(8
)
(16
)
(25
)
(19
)
Loss before income taxes
(60
)
(114
)
(21
)
(201
)
(2,453
)
Provision (benefit) for income taxes
5
(61
)
2
1
(264
)
Net loss
(65
)
(53
)
(23
)
(202
)
(2,189
)
Net loss attributable to noncontrolling
interests
4
2
3
8
6
Net loss attributable to Company
$
(69
)
$
(55
)
$
(26
)
$
(210
)
$
(2,195
)
Per share data:
Basic
$
(0.18
)
$
(0.14
)
$
(0.07
)
$
(0.54
)
$
(5.72
)
Diluted
$
(0.18
)
$
(0.14
)
$
(0.07
)
$
(0.54
)
$
(5.72
)
Weighted average shares outstanding:
Basic
387
385
386
386
384
Diluted
387
385
386
386
384
NOV INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
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
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
553
566
Goodwill and intangibles, net
1,992
2,020
Other assets
258
207
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
Other liabilities
339
337
Total liabilities
4,489
4,650
Total stockholders’ equity
5,078
5,279
Total liabilities and stockholders’
equity
$
9,567
$
9,929
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
Goodwill and indefinite-lived intangible
asset impairment
—
1,378
Long-lived asset impairment
—
513
Working capital and other operating items,
net
226
768
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
)
Other
(40
)
(56
)
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
NOV INC.
RECONCILIATION OF ADJUSTED
EBITDA TO NET INCOME (LOSS) (Unaudited)
(In millions)
The Company discloses Adjusted EBITDA
(defined as Operating Profit excluding Depreciation, Amortization
and, when applicable, Other Items) in its periodic earnings press
releases and other public disclosures to provide investors
additional information about the results of ongoing operations. The
Company uses Adjusted EBITDA internally to evaluate and manage the
business. Adjusted EBITDA is not intended to replace GAAP financial
measures, such as Net Income. Other Items include impairment,
restructure, severance, and facility closure costs and inventory
charges and credits, and a post-warranty product modification.
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
2021
2020
2021
2021
2020
Operating profit (loss):
Wellbore Technologies
$
32
$
(50
)
$
6
$
24
$
(780
)
Completion & Production Solutions
(26
)
25
(6
)
(49
)
(946
)
Rig Technologies
1
(3
)
49
42
(230
)
Eliminations and corporate costs
(50
)
(46
)
(37
)
(136
)
(168
)
Total operating loss
$
(43
)
$
(74
)
$
12
$
(119
)
$
(2,124
)
Other items, net:
Wellbore Technologies
$
7
$
26
$
18
$
31
$
803
Completion & Production Solutions
6
23
(6
)
(2
)
1,089
Rig Technologies
6
12
8
17
270
Corporate
5
1
(5
)
2
25
Total other items
$
24
$
62
$
15
$
48
$
2,187
Depreciation & amortization:
Wellbore Technologies
$
38
$
45
$
39
$
119
$
143
Completion & Production Solutions
15
15
16
46
59
Rig Technologies
18
19
18
54
58
Corporate
4
4
4
12
10
Total depreciation & amortization
$
75
$
83
$
77
$
231
$
270
Adjusted EBITDA:
Wellbore Technologies
$
77
$
21
$
63
$
174
$
166
Completion & Production Solutions
(5
)
63
4
(5
)
202
Rig Technologies
25
28
75
113
98
Eliminations and corporate costs
(41
)
(41
)
(38
)
(122
)
(133
)
Total Adjusted EBITDA
$
56
$
71
$
104
$
160
$
333
Reconciliation of Adjusted EBITDA:
GAAP net loss attributable to Company
$
(69
)
$
(55
)
$
(26
)
$
(210
)
$
(2,195
)
Noncontrolling interests
4
2
3
8
6
Benefit for income taxes
5
(61
)
2
1
(264
)
Interest expense
19
21
19
58
65
Interest income
(3
)
—
(2
)
(7
)
(5
)
Equity loss in unconsolidated
affiliate
2
11
—
6
250
Other (income) expense, net
(1
)
8
16
25
19
Depreciation and amortization
75
83
77
231
270
Other items, net
24
62
15
48
2,187
Total Adjusted EBITDA
$
56
$
71
$
104
$
160
$
333
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211026006292/en/
Blake McCarthy Vice President, Corporate Development and
Investor Relations (713) 815-3535 Blake.McCarthy@nov.com
NOV (NYSE:NOV)
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