- Fourth quarter revenue of $2.34 billion, up 7% sequentially and
up 13% year-over-year
- Operating Profit of $161 million, down $22 million sequentially
and down $1 million year-over-year
- Net Income of $598 million, up $484 million sequentially and up
$494 million year-over-year
- Fully diluted earnings per share of $1.51, up $1.22
sequentially and up $1.25 year-over-year
- Cash flow from operations of $377 million and free cash flow*
of $301 million
- Adjusted EBITDA* of $294 million, up $27 million sequentially
and up $63 million year-over-year
* Free cash flow and Adjusted EBITDA 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 fourth quarter 2023 revenues
of $2.34 billion, an increase of seven percent compared to the
third quarter of 2023 and an increase of 13 percent compared to the
fourth quarter of 2022. Net income for the fourth quarter of 2023
was $598 million, which included the release of valuation
allowances on deferred tax assets of $485 million. Operating profit
was $161 million, or 6.9 percent of sales, for the fourth quarter.
Under Other Items the Company recorded a net pre-tax charge of $55
million (see Corporate Information for additional details).
Adjusted EBITDA increased 10 percent sequentially to $294 million,
or 12.5% percent of sales.
Revenues for the full year 2023 were $8.58 billion, an increase
of $1.34 billion from 2022. Net income for the full year 2023 was
$993 million, which included the release of valuation allowances,
compared to $155 million for the prior year. Operating profit
increased 147 percent to $651 million or 7.6 percent of sales for
the full year 2023. Adjusted EBITDA increased 47 percent, to $1.0
billion or 11.7 percent of sales for 2023.
“NOV’s fourth quarter results capped a solid year which saw 19
percent sales growth compared to 2022, and significantly better
profitability in all three operating segments,” stated Clay
Williams, Chairman, President and CEO. “Adjusted EBITDA and margin
for the year were the highest since 2015. The Company’s new
products and technologies are seeing rising customer interest,
while building momentum in international and offshore markets point
to rising demand for our longer-cycle capital equipment businesses
over the next several years. Higher profit and improved inventory
levels, supported by the continued normalization of the global
supply chain, also resulted in notably improved cash flow in the
fourth quarter.
“While geopolitical and economic risks remain elevated, and
capital discipline remains a focus in the energy complex, we expect
the growing need for secure, reliable, clean, and low-cost sources
of energy will support the ongoing recovery in oil and gas markets
for years to come. We believe NOV’s product and technology
portfolio is exceptionally well positioned to capitalize on these
market drivers, particularly as the cycle matures and becomes more
international and offshore oriented.
“We expect growing adoption of NOV’s advanced technologies and
continued growth in international and offshore markets should more
than offset declining demand from North America during 2024. We
also expect for improving working capital efficiencies and
profitability to drive robust cash flow during the year.”
Wellbore Technologies
Wellbore Technologies generated revenues of $824 million in the
fourth quarter of 2023, an increase of three percent from the third
quarter of 2023 and an increase of eight percent from the fourth
quarter of 2022. Operating profit was $76 million, or 9.2 percent
of sales, and included $42 million in Other Items. Adjusted EBITDA
decreased $6 million sequentially and increased $14 million from
the prior year to $160 million, or 19.4 percent of sales. Growing
demand from international markets more than offset declining
activity in North America. Profitability was affected by a less
favorable sales mix, an increase in employee benefit expense, the
devaluation of the Argentine peso, and other costs.
Completion & Production Solutions
Completion & Production Solutions generated revenues of $803
million in the fourth quarter of 2023, an increase of six percent
from the third quarter of 2023 and an increase of nine percent from
the fourth quarter of 2022. Operating profit was $44 million, or
5.5 percent of sales, and included $25 million in Other Items.
Adjusted EBITDA increased $19 million sequentially and increased
$20 million from the prior year to $86 million, or 10.7 percent of
sales. Improved revenue and profitability were primarily the result
of strong year-end capital equipment sales and continued margin
improvement in the segment’s project backlog.
New orders booked during the quarter increased 28 percent and
totaled $676 million, representing a book-to-bill of 132 percent
when compared to the $513 million of orders shipped from backlog.
As of December 31, 2023, backlog for capital equipment orders for
Completion & Production Solutions was $1.82 billion, an
increase of $196 million from the third quarter of 2023 and an
increase of $220 million from the fourth quarter of 2022.
Rig Technologies
Rig Technologies generated revenues of $766 million in the
fourth quarter of 2023, an increase of 12 percent from the third
quarter of 2023 and an increase of 24 percent from the fourth
quarter of 2022. Operating profit was $111 million, or 14.5 percent
of sales, and included a credit of $18 million from Other Items.
Adjusted EBITDA increased $9 million sequentially and increased $21
million from the prior year to $109 million, or 14.2 percent of
sales. Results reflect seasonal increases in aftermarket activities
supplemented by continued improvements in deliveries of spare parts
and strong year-end capital equipment sales.
New capital equipment orders booked during the quarter totaled
$214 million, representing a book-to-bill of 68 percent when
compared to the $314 million of orders shipped from backlog. As of
December 31, 2023, backlog for capital equipment orders for Rig
Technologies totaled $2.87 billion, a decrease of $100 million from
the third quarter of 2023 and an increase of $75 million from the
fourth quarter of 2022.
Corporate Information
During the fourth quarter of 2023, NOV recorded $55 million in
Other Items, primarily related to a voluntary early retirement
program (see Reconciliation of Adjusted EBITDA to Net Income).
Additionally, NOV's effective tax rate was favorably impacted by
the release of $485 million in valuation allowances, resulting from
the Company’s assessment of the carrying value of its deferred tax
assets and future projections of taxable income.
As of December 31, 2023, the Company had total debt of $1.73
billion, with $2.00 billion available on its primary revolving
credit facility, and $816 million in cash and cash equivalents.
Significant Achievements
NOV secured a contract for a CO2 dehydration package for a
supermajor’s Carbon Capture and Storage (CCS) project. This project
aims to capture 800,000 tons of CO2 annually from a Louisiana-based
steel plant, transporting and storing it underground permanently.
NOV’s technology solution featuring our SmartBed™ design, combined
with BASF’s Sorbead® silica gel technology, provides operation
costs savings and superior performance over other solutions. With
several CCS projects expected to follow, NOV will be in a prime
position to leverage its gas processing expertise to meet customer
needs.
NOV secured a contract for a large interconnector cable-lay
system and subsea crane from a key European power cable provider.
NOV’s advanced integrated cable-lay system has now been chosen for
two newbuild offshore cable-lay vessels, which install critical
infrastructure for subsea interconnectors and offshore wind
developments. The orders reflect NOV’s continued leadership in
providing the key enabling technologies and equipment necessary for
large-scale energy transition related infrastructure projects.
Subsequent to quarter end, NOV completed the acquisition of
Extract, a leading provider of artificial lift technologies and
services. Extract’s reputation for market-leading customer service
and focus on maximizing run-time of electric submersible pumps has
established the company as a key partner for operators looking to
maximize the economic returns of their assets.
NOV installed a Brandt™ iNOVaTHERM™ thermal treatment unit
offshore in Equatorial Guinea, enabling the client to process
drilling cuttings and fluid onsite, reducing the costs, emissions,
and safety risks associated with shipping materials to shore for
disposal. In addition, NOV is supplying the Managed Pressure
Drilling (MPD) Non-Stop Drilling system for the same rig, allowing
the rig to maintain continuous circulation of drilling fluid while
making a connection, ensuring wellbore stability and drilling
efficiency.
NOV's Downhole Broadband Solutions (DBS) continues to deliver
substantial reductions in well delivery times while simultaneously
increasing production potential. On the Norwegian Continental
Shelf, two major operators successfully executed campaigns months
ahead of schedule and below budget, utilizing DBS’s high-speed
wired drill pipe, along-string measurements, and real-time
visualization applications. Both operators relied on the network to
achieve optimal well placement, reporting increased production
rates compared to estimates. In the Middle East, another operator
leveraged DBS to transmit high-resolution logs in real-time to
enable informed and prompt decision-making, resulting in a 30%
net-to-gross increase compared to nearby wells drilled in the same
reservoir using mud pulse telemetry.
NOV's rig automation suite is continuing to experience a growing
surge in popularity, propelled by its notable safety and
performance benefits. In the fourth quarter, NOV obtained orders
from two returning clients for complete automation systems,
including NOVOS drilling and pipe handling automation, along with
ongoing Automation Lifecycle Management support for a
semisubmersible in Europe and a drillship in West Africa.
NOV’s Completion Tools business secured a contract to install
SURESET™ production liners and multiple Burst Port System (BPS)
subs for an international oil company in West Texas. NOV was
awarded contracts for two rigs, with the potential for three more
by the first quarter of 2024, based on its outstanding equipment
and highly skilled personnel. In the Middle East, NOV completed its
250th installation of the ReAct™ Electronic Liner Shoe (ELS), which
consistently demonstrates reliability and efficiency with more than
9,000 days of electronics operational life and zero nonproductive
time.
NOV has been awarded projects for its diverse portfolio of
composite solutions that provide corrosion resistance in energy
infrastructure and chemical and industrial processes. NOV received
an order to provide, deliver, and install more than 300 km of
reinforced thermoplastic pipe in Oman for a comprehensive field
development project, establishing NOV’s Fiberspar™ LinePipe
products as a leading solution within this market. Additionally,
NOV was awarded a substantial composite tank project in the
semiconductor market, incorporating lined tanks capable of
withstanding highly caustic fluids. This success reinforces NOV’s
position as a leading supplier of composite equipment in the
growing semiconductor sector.
NOV was awarded several projects from a leading operator in the
Norwegian North Sea, including a Mono Ethylene Glycol (MEG)
reclamation system and two seawater treatment and gas dehydration
packages. The MEG module will undergo local fabrication in Norway,
while the treatment and dehydration packages will be constructed at
NOV's fabrication yard in Batam, Indonesia. Building upon the
previous supply of electrostatic coalescer and separation packages,
these projects pave the way for enhanced collaboration between NOV
and the operator for optimizing field production, emphasizing
digital and unmanned operations.
NOV’s XL Systems business secured an initial order for its
XCalibur connector for use in a geothermal project in Germany and
secured an order for its high-performance Viper™ Connector for use
in a carbon capture and storage (CCS) project in Norway. The orders
represent each product’s first applications in geothermal and CCS
projects, complementing NOV's broad portfolio of solutions
supporting carbon reduction and the development of renewable
energy.
NOV successfully deployed its TerraPULSE™ Agitator™ System in
the Middle East, facilitating the acid stimulation of a 19,000 ft
horizontal well. The innovative TerraPULSE technology proved
instrumental in successfully stimulating 100% of the horizontal
production section. With further deployments planned, this
accomplishment signifies the extension of NOV's proven drilling
friction reduction technology into completion and production
applications.
NOV directional drilling technology continues to enable
directional drillers to reliably deliver wells. During the fourth
quarter, NOV was awarded and began executing on an integrated
directional drilling tool contract in the Middle East with an
independent service company to drill 14 directional wells in
Kuwait. Additionally, NOV's integrated directional drilling bottom
hole assemblies (BHAs), which include Vector™ motors, Tolteq™
measurement while drilling (MWD) tools, and PowerStroke™ jars, were
used to successfully drill two geothermal wells in Iceland, despite
the challenging downhole conditions prevalent in this growing
application.
NOV was selected to provide a custom intermediate-sized drill
pipe with Tuboscope™ TKTM 340TC coating, specifically intended for
deployment in Eagle Ford hot wells. The unique size and coating
combination is expected to enhance drilling performance and extend
the lifespan of rig tools when subjected to temperatures exceeding
350° F. NOV also secured orders for Delta™ 544 connections to be
threaded on IntelliServ™ wired drill pipe for an upcoming project
in the Middle East, facilitating near-instantaneous data transfer
from downhole to the surface to provide drillers with clear
insights to make informed decisions. This integration allows NOV to
merge the cost-effectiveness of its premier Delta connection with
the downhole telemetry offered by IntelliServ.
NOV secured a multi-year contract, after a four-year testing and
approval process, from a major national oil company to provide
TK™-Liner for 6 5/8” premium connection tubulars used in offshore
Water-Alternating Gas (WAG) wells for enhanced oil production. The
high-performance glass-reinforced epoxy lining system is gaining
widespread acceptance in major oil & gas and geothermal markets
for its reliable protection and performance in corrosive
environments. NOV also earned several repeat orders to provide
TK™-340TC insulating coating for a major operator drilling in the
Eagle Ford and Haynesville shale plays. With the use of TK-340TC to
reduce thermal conductivity, the operator has been able to maintain
lower drilling fluid temperatures throughout the string and reduce
downhole equipment failures and downtime. Based on the significant
cost savings and improved drilling efficiencies, four additional
coated strings have been ordered.
NOV was selected to provide a complete coiled tubing equipment
package tailored for geothermal wells for a client on the North
Island of New Zealand. This package includes a two-piece coiled
tubing unit consisting of a control power unit featuring NOV’s
latest Hi-Vis Cabin equipped with the CTES™ OrionTM V data
acquisition system, a reel trailer capable of carrying 29,200 feet
of 2 7/8” coiled tubing, an HR-6100 Injector, Texas Oil Tools
pressure control equipment, and a Twin 1,200 BHP Fluid Pumper with
sound attenuation capabilities. The pumper is equipped with our
latest touchscreen control system, allowing remote control panel
operation, along with two strings of 2 7/8” QT900 Grade Quality
Tubing.
Fourth Quarter Earnings Conference Call
NOV will hold a conference call to discuss its fourth quarter
2023 results on February 2, 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. 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 (Unaudited)
(In millions, except per share
data)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Revenue:
Wellbore Technologies
$
824
$
762
$
799
$
3,172
$
2,777
Completion & Production Solutions
803
738
760
3,034
2,588
Rig Technologies
766
620
686
2,608
2,034
Eliminations
(50
)
(47
)
(60
)
(231
)
(162
)
Total revenue
2,343
2,073
2,185
8,583
7,237
Gross profit
497
443
468
1,833
1,334
Gross profit %
21.2
%
21.4
%
21.4
%
21.4
%
18.4
%
Selling, general, and administrative
336
281
285
1,182
1,070
Operating profit
161
162
183
651
264
Interest Expense, net
(16
)
(14
)
(18
)
(60
)
(59
)
Equity income in unconsolidated
affiliates
18
36
16
119
68
Other expense, net
(28
)
(43
)
(25
)
(98
)
(35
)
Income before income taxes
135
141
156
612
238
Provision (benefit) for income taxes
(460
)
42
48
(373
)
83
Net income
595
99
108
985
155
Net loss attributable to noncontrolling
interests
(3
)
(5
)
(6
)
(8
)
—
Net income attributable to Company
$
598
$
104
$
114
$
993
$
155
Per share data:
Basic
$
1.52
$
0.27
$
0.29
$
2.53
$
0.40
Diluted
$
1.51
$
0.26
$
0.29
$
2.50
$
0.39
Weighted average shares outstanding:
Basic
393
391
393
393
390
Diluted
397
395
396
397
394
NOV INC. CONSOLIDATED
BALANCE SHEETS (Unaudited) (In millions)
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
816
$
1,069
Receivables, net
1,905
1,739
Inventories, net
2,151
1,813
Contract assets
739
685
Other current assets
229
187
Total current assets
5,840
5,493
Property, plant and equipment, net
1,865
1,781
Lease right-of-use assets
544
517
Goodwill and intangibles, net
2,012
1,995
Other assets
1,033
349
Total assets
$
11,294
$
10,135
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
904
$
906
Accrued liabilities
870
959
Contract liabilities
532
444
Current portion of lease liabilities
94
87
Current portion of long-term debt
13
13
Accrued income taxes
22
28
Total current liabilities
2,435
2,437
Long-term debt
1,712
1,717
Lease liabilities
558
549
Other liabilities
347
298
Total liabilities
5,052
5,001
Total stockholders’ equity
6,242
5,134
Total liabilities and stockholders’
equity
$
11,294
$
10,135
NOV INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (Unaudited)
(In millions)
Three Months Ended
Years Ended
December 31,
December 31,
2023
2023
2022
Cash flows from operating activities:
Net income
$
595
$
985
$
155
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
77
302
301
Impairment and loss on assets held for
sale
—
4
127
Benefit for deferred income taxes
(487
)
(489
)
(2
)
Working capital and other operating items,
net
192
(659
)
(760
)
Net cash provided by (used in) operating
activities
377
143
(179
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(76
)
(283
)
(214
)
Business acquisitions, net of cash
acquired
(8
)
(22
)
(49
)
Other
2
12
25
Net cash used in investing activities
(82
)
(293
)
(238
)
Cash flows from financing activities:
Borrowings against lines of credit and
other debt
—
2
20
Payments against lines of credit and other
debt
(5
)
(10
)
(4
)
Cash dividends paid
(19
)
(79
)
(78
)
Other
27
(16
)
(34
)
Net cash provided (used) in financing
activities
3
(103
)
(96
)
Effect of exchange rates on cash
5
—
(9
)
Increase (decrease) in cash and cash
equivalents
303
(253
)
(522
)
Cash and cash equivalents, beginning of
period
513
1,069
1,591
Cash and cash equivalents, end of
period
$
816
$
816
$
1,069
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
Years Ended
December 31,
December 31,
2023
2023
2022
Total cash flows provided by operating
activities
$ 377
$ 143
$ (179
)
Capital expenditures
(76
)
(283
)
(214
)
Free cash flow
$ 301
$ (140
)
$ (393
)
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. 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
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
Operating profit:
Wellbore Technologies
$
76
$
110
$
123
$
423
$
304
Completion & Production Solutions
44
50
47
188
69
Rig Technologies
111
80
86
314
144
Eliminations and corporate costs
(70
)
(78
)
(73
)
(274
)
(253
)
Total operating profit
$
161
$
162
$
183
$
651
$
264
Other Items, net:
Wellbore Technologies
$
42
$
(1
)
$
3
$
44
$
60
Completion & Production Solutions
25
—
2
26
36
Rig Technologies
(18
)
(11
)
(3
)
(31
)
—
Corporate
6
4
5
12
18
Total other items
$
55
$
(8
)
$
7
$
51
$
114
(Gain)/Loss on Sales of Fixed Assets
Wellbore Technologies
$
1
$
—
$
—
$
1
$
—
Completion & Production Solutions
—
1
1
(4
)
(3
)
Rig Technologies
—
—
—
—
—
Corporate
—
—
(1
)
—
3
Total (gain)/loss on Sales of Fixed
Assets
$
1
$
1
$
—
$
(3
)
$
—
Depreciation & amortization:
Wellbore Technologies
$
41
$
37
$
40
$
155
$
150
Completion & Production Solutions
17
15
17
66
62
Rig Technologies
16
19
17
66
73
Corporate
3
5
3
15
16
Total depreciation & amortization
$
77
$
76
$
77
$
302
$
301
Adjusted EBITDA:
Wellbore Technologies
$
160
$
146
$
166
$
623
$
514
Completion & Production Solutions
86
66
67
276
164
Rig Technologies
109
88
100
349
217
Eliminations and corporate costs
(61
)
(69
)
(66
)
(247
)
(216
)
Total Adjusted EBITDA
$
294
$
231
$
267
$
1,001
$
679
Reconciliation of Adjusted EBITDA:
GAAP net income attributable to
Company
$
598
$
104
$
114
$
993
$
155
Noncontrolling interests
(3
)
(5
)
(6
)
(8
)
—
Provision (benefit) for income taxes
(460
)
42
48
(373
)
83
Interest expense
23
21
23
88
78
Interest income
(7
)
(7
)
(5
)
(28
)
(19
)
Equity income in unconsolidated
affiliate
(18
)
(36
)
(16
)
(119
)
(68
)
Other expense, net
28
43
25
98
35
(Gain)/Loss on Sales of Fixed Assets
1
1
—
(3
)
—
Depreciation and amortization
77
76
77
302
301
Other Items, net:
55
(8
)
7
51
114
Total Adjusted EBITDA
$
294
$
231
$
267
$
1,001
$
679
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240201564429/en/
Amie D'Ambrosio Director, Investor Relations (713) 375-3826
Amie.DAmbrosio@nov.com
NOV (NYSE:NOV)
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