- Revenue of $2.22 billion, an increase of 6% year-over-year
- Net Income of $226 million, and $0.57 per share, up $71
million, or $0.18 per share, year-over-year
- Adjusted EBITDA* of $281 million, an increase of $36 million
year-over-year
- Cash flow from operations of $432 million and free cash flow*
of $350 million
- Bookings of $977 million, representing a 177% book-to-bill
- Repurchased 2.0 million shares of common stock for $37 million,
at an average price of $18.50 per share
* Adjusted EBITDA and Free Cash Flow are non-GAAP measures, see
“Non-GAAP Financial Measures,” “Reconciliation of Cash Flows from
Operating Activities to Free Cash Flow" and “Reconciliation of
Adjusted EBITDA to Net Income” below.
NOV Inc. (NYSE: NOV) today reported second quarter 2024 revenues
of $2.22 billion, an increase of six percent compared to the second
quarter of 2023. Net income was $226 million, or 10.2 percent of
sales, an increase of $71 million compared to the second quarter of
2023. Operating profit was $313 million, or 14.1 percent of sales.
The Company recorded a net credit of $118 million within Other
Items (see Corporate Information for additional details). Adjusted
EBITDA increased 15 percent year-over-year to $281 million, or 12.7
percent of sales.
“NOV delivered solid results during the second quarter of 2024,”
stated Clay Williams, Chairman, President, and CEO. “Our execution
around delivering technologies that drive value for our customers,
optimizing our cost structure and improving our working capital
efficiency resulted in improved profitability and cash flow.
Adjusted EBITDA margin of 12.7 percent was the highest since 2015,
and free cash flow was up both sequentially and year-over-year to
$350 million during the second quarter.
“Rising adoption of NOV’s new technologies and gains in market
share are driving strong growth internationally and offsetting
declining activity in North America. Strong orders pushed our
backlog to its highest level since 2015 and expected margins of
projects in our backlog continued to improve through the second
quarter.
“We were pleased to accelerate our return of capital to
shareholders to $67 million during the quarter, through a
combination of share repurchases under our $1 billion share
repurchase authorization and the 50 percent increase in our base
dividend we announced recently. Strong financial results, orders
and free cash flow during the second quarter highlight the strength
we see in offshore and international markets and underpin our
expectation of continued return of excess free cash flow to our
shareholders in coming years.”
Energy Products and Services
Energy Products and Services generated revenues of $1,050
million in the second quarter of 2024, an increase of two percent
from the second quarter of 2023. Operating profit decreased $28
million from the prior year to $128 million, or 12.2 percent of
sales, and included $1 million in Other Items. Adjusted EBITDA
decreased $14 million from the prior year to $184 million, or 17.5
percent of sales. Revenue improved from strong demand in
international and offshore markets, which more than offset
declining North American activity. A less favorable sales mix led
to the lower level of profitability compared to the prior year.
Energy Equipment
Energy Equipment generated revenues of $1,204 million in the
second quarter of 2024, an increase of eight percent from the
second quarter of 2023. Operating profit increased $151 million
from the prior year to $232 million, or 19.3 percent of sales, and
included a $119 million net credit of Other Items. Adjusted EBITDA
increased $43 million from the prior year to $142 million, or 11.8
percent of sales. Higher revenue and profitability, excluding the
gain from the divestiture of its Pole Products business, were the
result of improved demand for aftermarket products and services,
strong execution on the segment's improving capital equipment
backlog, and cost savings initiatives.
New orders booked during the quarter totaled $977 million, an
increase of $466 million when compared to the $511 million of new
orders booked during the second quarter of 2023. Orders shipped
from backlog in the second quarter of 2024 was $553 million,
representing a book-to-bill of 177 percent, compared to $505
million orders shipped and a book-to-bill of 101 percent in the
second quarter of 2023. As of June 30, 2024, backlog for capital
equipment orders for Energy Equipment was $4,331 million, an
increase of $472 million from the second quarter of 2023.
Q3 and Full Year 2024 Outlook
The Company is providing financial guidance for the third
quarter of 2024 and full year 2024. Guidance is based on current
outlook and plans and is subject to a number of known and unknown
uncertainties and risks and constitutes “forward-looking
statements” within the meaning of Section 21E of the Securities
Exchange Act of 1934 as further described under the Cautionary
Statement below. Actual results may differ materially from the
guidance set forth below.
For the third quarter management expects year-over-year
consolidated revenues to be flat to up in the low- single digit
percent range and Adjusted EBITDA to be between $270 million and
$305 million. For full year 2024, management anticipates
consolidated company revenue growth in the low- to mid-single digit
percent range and Adjusted EBITDA to be in the range of $1.10
billion to $1.18 billion.
Corporate Information
NOV repurchased 2.0 million shares of common stock at an average
price of $18.50 per share and increased its base dividend by 50
percent during the second quarter. The Company expects to return at
least 50 percent of Excess Free Cash Flow (defined as cash flow
from operations less capital expenditures and other investments,
including acquisitions), through a combination of steady, quarterly
base dividends, opportunistic stock buybacks, and an annual
supplemental dividend to true-up returns to shareholders on an
annual basis.
During the second quarter of 2024, NOV recorded a $118 million
net credit of Other Items, primarily related to gains from the
divestiture of its Pole Products business (see Reconciliation of
Adjusted EBITDA to Net Income).
As of June 30, 2024, the Company had total debt of $1.75
billion, with $2.00 billion available on its primary revolving
credit facility, and $827 million in cash and cash equivalents.
Significant Achievements
NOV signed a framework agreement with a major Norwegian oil and
gas operator associated with the two companies’ intent to deploy
NOV’s Downhole Broadband Solutions (DBS) wired drill pipe
technology and services across all of the operator’s rigs in the
North Sea. NOV has been supporting the operator’s offshore drilling
operations utilizing DBS wired drill pipe services to transmit
real-time, broadband data from sensors across the bottom hole
assembly, and along the drill string on a semisubmersible rig since
2019. The data has allowed the operator to make better informed
decisions resulting in improved drilling performance, optimized
well placement, reduced risks, and improved production. Under the
new framework agreement, the operator will begin deploying NOV’s
DBS technology on additional rigs in early 2025.
NOV’s Keystone Tower Systems operation received an order to
produce 300 wind towers for a major wind turbine manufacturer. On
achieving this significant milestone, NOV elected to buy out the
remaining minority interest owners in the business, completing the
transaction during the second quarter. The acquisition of the
remaining stake will allow NOV to fully integrate the operation and
leverage NOV’s capabilities to accelerate the commercialization of
this proprietary manufacturing technology for the construction of
wind towers.
NOV secured a follow-up order for its seventh proprietary
NG-20000 wind turbine installation vessel (WTIV) design and jacking
system for Europe’s largest owner of installation vessels in the
offshore wind sector. This order reaffirms NOV’s position as the
industry standard for global offshore wind installation solutions.
The NG-20000 vessel is designed to support the installation of
current-generation 15 MW offshore wind turbines and foundations, as
well as larger, future 20+MW turbine models.
NOV’s WellSite Services team was awarded a significant project
for its iNOVaTHERM™ system in Angola. NOV and the customer
demonstrated to the Angolan Ministry of Environment that the
iNOVaTHERM solution offers enhanced safety and environmental
stewardship compared to traditional zero discharge methods. The
system enables the safe disposal of cleaned and treated drill
cuttings at the drilling site, lowering CO2 emissions and reducing
HSE risks associated with waste transport back to shore. This award
represents the iNOVaTHERM system's initial deployment for a major
operator and is expected to establish the technology as the
industry standard in Angola.
NOV Completion Tools continued to deliver solutions that reduce
non-productive time (NPT) and enhance decision-making in
completions operations worldwide. NOV introduced the i-Opener™
TD-II toe initiation sleeve into North America, allowing customers
to meet local pressure testing regulations without running a
separate isolation plug. This toe sleeve eliminates costly
operations that can delay completions if unsuccessful. NOV’s i-Con™
Monitoring Tool diagnosed issues with a challenging liner hanger
installation in West Texas, leading to the design of a
highly-effective completions program for the customer. The i-Con
tool was also used by a European oil and gas producer to deliver
critical data that enabled the successful installation of a linger
hangar within a collapsed section of the producer's deepest well.
In the Middle East, NOV built and deployed a new Gravel Pack liner
hanger solution on short notice for a National Oil Company,
demonstrating NOV’s responsiveness as a trusted supplier of
solutions for complex completion tool applications.
NOV deployed a bottomhole assembly (BHA) utilizing a full
complement of its latest technologies to assist a producer in
setting a new Bakken record for a 3-mile lateral well. The customer
incorporated NOV’s Vector™ Series 55 drilling motor with an ERT™
power section, PosiTrack™ torsional vibration mitigation tool, Dual
Agitator™ system for friction reduction, and ReedHycalog™ Tektonic™
drill bits in the BHA to drill the well 8 percent faster than the
previous basin record.
NOV won an order to supply Bondstrand™ glass-reinforced epoxy
piping for a Malaysian multinational oil and gas company’s Carbon
Capture and Sequestration (CCS) platform in eastern Malaysia. NOV’s
corrosion resistant tubulars will support critical components of
the CCS system that will sequester emissions from the Company’s
offshore gas production. The platform is scheduled to begin CO2
re-injection by the end of 2025.
NOV deployed its new TerraMAX™ coiled tubing BHA for the first
time in the United States. This advanced BHA incorporates NOV’s
proprietary TerraPULSE™ Rogue friction reduction technology, which
facilitated the frac plug milling operation on an extended 3-mile
lateral. The operation was completed 14 hours faster than two
different competitor BHAs used in offset wells. By applying proven
technology traditionally used in drilling operations, NOV enables
greater efficiency in the completion of longer laterals.
NOV secured a multi-year contract to supply 20-in. XCalibur™
large diameter casing for a major operator in Azerbaijan. XCalibur
casing, the latest addition to the XL Systems portfolio, was chosen
for its superior technical features and gas-tight seal. This
threaded and coupled connector includes an integral pin with
double-start threads and a high-strength forged coupling, providing
robust performance and 100 percent pipe body strength in
challenging onshore and offshore critical service casing
applications.
NOV’s PosiTrack™ torsional vibration mitigation tool was
introduced across various regions this quarter. This expanded
deployment includes horizontal drilling applications in diverse
markets such as Kuwait, Mexico, Indonesia, West Texas, Canada, and
Colombia. The tool successfully mitigates harmful levels of
bottomhole assembly (BHA) vibration, enabling more aggressive
drilling parameters and significantly increasing the rate of
penetration (ROP).
NOV and Seismos announced an agreement to deploy Seismos
Acoustic Friction Analysis (SAFA™) globally through the Max
Completions™ data platform. The patented technology only requires
surface sensors to output fluid and formation data in real-time
without the need for costly downhole tools. SAFA can now leverage
NOV’s Max Completions platform to integrate with NOV’s digital and
hardware solutions. Combined, the system cost effectively provides
a single contextualized data stream and real-time insights that can
improve efficiencies and outcomes of hydraulic stimulation
operations, resulting in lower costs and improve wellbore
productivity.
Second Quarter Earnings Conference Call
NOV will hold a conference call to discuss its second quarter
2024 results on July 26, 2024 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. Additionally, free cash flow and Excess Free Cash Flow do
not represent the Company’s residual cash flow available for
discretionary expenditures, as the calculation of these measures
does not account for certain debt service requirements or other
non-discretionary expenditures. 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.
This press release contains certain forward-looking non-GAAP
financial measures, including Adjusted EBITDA. The Company has not
provided a reconciliation of projected Adjusted EBITDA. Management
cannot predict with a reasonable degree of accuracy certain of the
necessary components of net income, such as other income (expense),
which includes fluctuations in foreign currencies. As such, a
reconciliation of projected Adjusted EBITDA to projected net income
is not available without unreasonable effort. The actual amount of
other income (expense), provision (benefit) for income taxes,
equity income in unconsolidated affiliates, depreciation and
amortization, and other amounts excluded from Adjusted EBITDA could
have a significant impact on net income.
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 (Unaudited)
(In millions, except per share
data)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2024
2023
2024
2024
2023
Revenue:
Energy Products and Services
$
1,050
$
1,029
$
1,017
$
2,067
$
1,970
Energy Equipment
1,204
1,117
1,178
2,382
2,169
Eliminations
(38
)
(53
)
(40
)
(78
)
(84
)
Total revenue
2,216
2,093
2,155
4,371
4,055
Gross profit
590
457
458
1,048
868
Gross profit %
26.6
%
21.8
%
21.3
%
24.0
%
21.4
%
Selling, general, and administrative
277
276
296
573
561
Operating profit
313
181
162
475
307
Interest expense, net
(14
)
(13
)
(16
)
(30
)
(26
)
Equity income in unconsolidated
affiliates
8
37
29
37
85
Other expense, net
(14
)
(29
)
(10
)
(24
)
(45
)
Income before income taxes
293
176
165
458
321
Provision for income taxes
70
19
44
114
39
Net income
223
157
121
344
282
Net income (loss) attributable to
noncontrolling interests
(3
)
2
2
(1
)
1
Net income attributable to Company
$
226
$
155
$
119
$
345
$
281
Per share data:
Basic
$
0.57
$
0.39
$
0.30
$
0.88
$
0.72
Diluted
$
0.57
$
0.39
$
0.30
$
0.87
$
0.71
Weighted average shares outstanding:
Basic
395
393
394
394
392
Diluted
397
395
397
398
396
NOV INC.
CONSOLIDATED BALANCE
SHEETS
(In millions)
June 30,
December 31,
2024
2023
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
827
$
816
Receivables, net
1,854
1,905
Inventories, net
2,157
2,151
Contract assets
772
739
Prepaid and other current assets
234
229
Total current assets
5,844
5,840
Property, plant and equipment, net
1,882
1,865
Lease right-of-use assets
551
544
Goodwill and intangibles, net
2,116
2,012
Other assets
904
1,033
Total assets
$
11,297
$
11,294
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
809
$
904
Accrued liabilities
782
870
Contract liabilities
508
532
Current portion of lease liabilities
99
94
Current portion of long-term debt
24
13
Accrued income taxes
20
22
Total current liabilities
2,242
2,435
Long-term debt
1,724
1,712
Lease liabilities
553
558
Other liabilities
346
347
Total liabilities
4,865
5,052
Total stockholders’ equity
6,432
6,242
Total liabilities and stockholders’
equity
$
11,297
$
11,294
NOV INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In millions)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2024
2023
Cash flows from operating activities:
Net income
$
223
$
344
$
282
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
86
169
148
Working capital, net
89
(222
)
(673
)
Other operating items, net
34
63
(31
)
Net cash provided by (used in) operating
activities
432
354
(274
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(82
)
(151
)
(133
)
Business acquisitions, net of cash
acquired
(9
)
(252
)
—
Business divestitures, net of cash
disposed
176
176
—
Other
—
1
5
Net cash provided by (used in) investing
activities
85
(226
)
(128
)
Cash flows from financing activities:
Borrowings against lines of credit and
other debt
86
419
2
Payments against lines of credit and other
debt
(172
)
(422
)
(5
)
Cash dividends paid
(30
)
(50
)
(40
)
Share repurchases
(37
)
(37
)
—
Other
(3
)
(23
)
(30
)
Net cash used in financing activities
(156
)
(113
)
(73
)
Effect of exchange rates on cash
(2
)
(4
)
(2
)
Increase (decrease) in cash and cash
equivalents
359
11
(477
)
Cash and cash equivalents, beginning of
period
468
816
1,069
Cash and cash equivalents, end of
period
$
827
$
827
$
592
NOV INC.
RECONCILIATION OF CASH FLOWS
FROM OPERATING ACTIVITIES TO FREE CASH FLOW (Unaudited)
(In millions)
Presented below is a reconciliation of
cash flow from operating activities to “free cash flow”. The
Company defines free cash flow as cash flow from operating
activities less purchases of property, plant and equipment, or
“capital expenditures”. 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. Free
cash flow is not intended to replace GAAP financial measures.
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2024
2023
Total cash flows provided by (used in)
operating activities
$
432
$
354
$
(274
)
Capital expenditures
(82
)
(151
)
(133
)
Free cash flow
$
350
$
203
$
(407
)
NOV INC.
RECONCILIATION OF ADJUSTED
EBITDA TO NET INCOME (Unaudited)
(In millions)
Presented below is a reconciliation of Net
Income 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.
Adjusted EBITDA % is a ratio showing Adjusted EBITDA as a
percentage of sales. 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 and Adjusted EBITDA % are not intended to replace
GAAP financial measures, such as Net Income and Operating Profit %.
Other Items include gain on business divestiture, impairment,
restructure, severance, facility closure costs and inventory
charges and credits.
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
2024
2023
2024
2024
2023
Operating profit:
Energy Products and Services
$
128
$
156
$
121
$
249
$
268
Energy Equipment
232
81
95
327
152
Eliminations and corporate costs
(47
)
(56
)
(54
)
(101
)
(113
)
Total operating profit
$
313
$
181
$
162
$
475
$
307
Operating profit %:
Energy Products and Services
12.2
%
15.2
%
11.9
%
12.0
%
13.6
%
Energy Equipment
19.3
%
7.3
%
8.1
%
13.7
%
7.0
%
Eliminations and corporate costs
—
—
—
—
—
Total operating profit %
14.1
%
8.6
%
7.5
%
10.9
%
7.6
%
Other items, net:
Energy Products and Services
$
1
$
(1
)
$
—
$
1
$
(1
)
Energy Equipment
(119
)
(7
)
(4
)
(123
)
(11
)
Corporate
—
1
1
1
1
Total other items
$
(118
)
$
(7
)
$
(3
)
$
(121
)
$
(11
)
(Gain)/loss on sales of fixed assets:
Energy Products and Services
$
—
$
—
$
(1
)
$
(1
)
$
(3
)
Energy Equipment
—
(1
)
—
—
(3
)
Corporate
—
1
—
—
2
Total (gain)/loss on sales of fixed
assets
$
—
$
—
$
(1
)
$
(1
)
$
(4
)
Depreciation & amortization:
Energy Products and Services
$
55
$
43
$
54
$
109
$
88
Energy Equipment
29
26
28
57
55
Corporate
2
2
1
3
5
Total depreciation & amortization
$
86
$
71
$
83
$
169
$
148
Adjusted EBITDA:
Energy Products and Services
$
184
$
198
$
174
$
358
$
352
Energy Equipment
142
99
119
261
193
Eliminations and corporate costs
(45
)
(52
)
(52
)
(97
)
(105
)
Total Adjusted EBITDA
$
281
$
245
$
241
$
522
$
440
Adjusted EBITDA %:
Energy Products and Services
17.5
%
19.2
%
17.1
%
17.3
%
17.9
%
Energy Equipment
11.8
%
8.9
%
10.1
%
11.0
%
8.9
%
Corporate
—
—
—
—
—
Total Adjusted EBITDA %
12.7
%
11.7
%
11.2
%
11.9
%
10.9
%
Reconciliation of Adjusted EBITDA:
GAAP net income attributable to
Company
$
226
$
155
$
119
$
345
$
281
Noncontrolling interests
(3
)
2
2
(1
)
1
Provision for income taxes
70
19
44
114
39
Interest expense
22
21
24
46
42
Interest income
(8
)
(8
)
(8
)
(16
)
(16
)
Equity income in unconsolidated
affiliates
(8
)
(37
)
(29
)
(37
)
(85
)
Other expense, net
14
29
10
24
45
(Gain)/loss on sales of fixed assets
—
—
(1
)
(1
)
(4
)
Depreciation and amortization
86
71
83
169
148
Other items, net
(118
)
(7
)
(3
)
(121
)
(11
)
Total Adjusted EBITDA
$
281
$
245
$
241
$
522
$
440
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240725144072/en/
Amie D'Ambrosio Director, Investor Relations (713) 375-3826
Amie.DAmbrosio@nov.com
NOV (NYSE:NOV)
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