NOV, Inc. (NYSE:NOV) Q1 2022 Results Conference Call April 29, 2022 11:00 AM ET Company Participants Blake McCarthy - VP, Corporate Development & IR Clay Williams - Chairman, President & CEO Jose Bayardo - SVP & CFO Conference Call Participants Ian McPherson - Piper Sandler Scott Gruber - Citigroup Arun Jayaram - JPMorgan Marc Bianchi - Cowen Operator Good day, ladies and gentlemen, and welcome to the NOV First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference cal ...

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part presents the unaudited consolidated financial statements and management's analysis for the period [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section contains the company's unaudited consolidated financial statements for the quarter ended March 31, 2022 [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) **Consolidated Balance Sheets (as of March 31, 2022 and December 31, 2021)** | (In millions) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $1,406 | $1,591 | | Receivables, net | $1,465 | $1,321 | | Inventories, net | $1,440 | $1,331 | | Total current assets | $4,949 | $4,902 | | Property, plant and equipment, net| $1,806 | $1,823 | | Goodwill | $1,525 | $1,527 | | Total assets | $9,553 | $9,550 | | **LIABILITIES & EQUITY** | | | | Accounts payable | $643 | $612 | | Accrued liabilities | $807 | $778 | | Total current liabilities | $1,979 | $1,910 | | Long-term debt | $1,709 | $1,708 | | Total liabilities | $4,543 | $4,486 | | Total stockholders' equity | $5,010 | $5,064 | | Total liabilities and equity | $9,553 | $9,550 | [Consolidated Statements of Income (Loss)](index=3&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) **Consolidated Statements of Income (Loss) (Three Months Ended March 31)** | (In millions, except per share data) | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $1,548 | $1,249 | | Cost of revenue | $1,334 | $1,093 | | Gross profit | $214 | $156 | | Selling, general and administrative | $235 | $244 | | Operating loss | $(21) | $(88) | | Loss before income taxes | $(35) | $(120) | | Provision (benefit) for income taxes | $14 | $(6) | | Net loss | $(49) | $(114) | | Net loss attributable to Company | $(50) | $(115) | | Basic EPS | $(0.13)| $(0.30)| | Diluted EPS | $(0.13)| $(0.30)| | Cash dividends per share | $0.05 | $- | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) **Consolidated Statements of Comprehensive Income (Loss) (Three Months Ended March 31)** | (In millions) | 2022 | 2021 | | :--- | :--- | :--- | | Net loss | $(49) | $(114) | | Currency translation adjustments | $22 | $(19) | | Changes in derivative financial instruments, net | $(8) | $(2) | | Comprehensive income (loss) | $(35) | $(135) | | Comprehensive income (loss) attributable to Company | $(36) | $(136) | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) **Consolidated Statements of Cash Flows (Three Months Ended March 31)** | (In millions) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(103) | $(27) | | Net cash used in investing activities | $(49) | $(51) | | Net cash used in financing activities | $(36) | $(3) | | Effect of exchange rates on cash | $3 | $(4) | | Decrease in cash and cash equivalents | $(185) | $(85) | | Cash and cash equivalents, beginning of period | $1,591 | $1,692 | | Cash and cash equivalents, end of period | $1,406 | $1,607 | | Cash payments for interest | $4 | $3 | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) **Consolidated Statements of Stockholders' Equity (Three Months Ended March 31, 2022)** | (In millions) | Dec 31, 2021 | Net Loss | Other Comp. Income | Cash Dividends | Stock-based Comp. | Withholding Taxes | Other | Mar 31, 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Outstanding Shares | 393 | — | — | — | — | — | — | 393 | | Common Stock | $4 | — | — | — | — | — | — | $4 | | Additional Paid in Capital | $8,685 | — | — | — | $17 | $(12) | — | $8,690 | | Accumulated Other Comprehensive (Loss) | $(1,546) | — | $14 | — | — | — | — | $(1,532) | | Retained Earnings (Deficit) | $(2,146) | $(50) | — | $(20) | — | — | — | $(2,216) | | Total Company Stockholders' Equity | $4,997 | $(50) | $14 | $(20) | $17 | $(12) | — | $4,946 | | Noncontrolling Interests | $67 | $1 | — | — | — | — | $(4) | $64 | | Total Stockholders' Equity | $5,064 | $(49) | $14 | $(20) | $17 | $(12) | $(4) | $5,010 | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1. Basis of Presentation](index=7&type=section&id=Note%201.%20Basis%20of%20Presentation) - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information, and should be read with the 2021 Form 10-K[21](index=21&type=chunk)[22](index=22&type=chunk) - Management makes estimates and assumptions that affect reported amounts, and **actual results may differ**[21](index=21&type=chunk)[22](index=22&type=chunk) [Note 2. Inventories, net](index=7&type=section&id=Note%202.%20Inventories%2C%20net) **Inventories, net (in millions)** | Component | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Raw materials and supplies | $411 | $350 | | Work in process | $239 | $218 | | Finished goods and purchased products | $1,250 | $1,207 | | Total (before reserve) | $1,900 | $1,775 | | Less: Inventory reserve | $(460) | $(444) | | Total | $1,440 | $1,331 | [Note 3. Accrued Liabilities](index=7&type=section&id=Note%203.%20Accrued%20Liabilities) **Accrued Liabilities (in millions)** | Component | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Compensation | $218 | $209 | | Taxes (non-income) | $86 | $119 | | Vendor costs | $160 | $124 | | Warranties | $73 | $73 | | Insurance | $44 | $45 | | Interest | $21 | $6 | | Commissions | $17 | $17 | | Fair value of derivatives | $15 | $8 | | Other | $173 | $177 | | Total | $807 | $778 | [Note 4. Accumulated Other Comprehensive Loss](index=8&type=section&id=Note%204.%20Accumulated%20Other%20Comprehensive%20Loss) **Accumulated Other Comprehensive Loss (in millions)** | Component | Dec 31, 2021 | Reclassifications | Mar 31, 2022 | | :--- | :--- | :--- | :--- | | Currency Translation Adjustments | $(1,515) | $22 | $(1,493) | | Derivative Financial Instruments, Net of Tax | $7 | $(2) | $(1) | | Defined Benefit Plans, Net of Tax | $(38) | — | $(38) | | Total | $(1,546) | $20 | $(1,532) | - The Company's reporting currency is the U.S. dollar, with most international entities using local currency as functional currency, leading to currency translation adjustments in other comprehensive income (loss)[29](index=29&type=chunk) - Changes in fair value of cash flow hedges are accumulated in other comprehensive income (loss) and reclassified to earnings when underlying transactions are realized[30](index=30&type=chunk)[56](index=56&type=chunk) - **$3 million is expected to be reclassified** to earnings within the next twelve months[30](index=30&type=chunk)[56](index=56&type=chunk) [Note 5. Segments](index=8&type=section&id=Note%205.%20Segments) **Financial Results by Operating Segment (Three Months Ended March 31, in millions)** | Segment | Revenue 2022 | Revenue 2021 | Operating Profit (Loss) 2022 | Operating Profit (Loss) 2021 | | :--- | :--- | :--- | :--- | :--- | | Wellbore Technologies | $608 | $413 | $39 | $(14) | | Completion & Production Solutions | $530 | $439 | $(22) | $(17) | | Rig Technologies | $441 | $431 | $11 | $(8) | | Eliminations | $(31) | $(34) | | | | Eliminations and corporate costs | | | $(49) | $(49) | | Total | $1,548 | $1,249 | $(21) | $(88) | - First quarter 2022 operating profit includes **$45 million in pre-tax charges** for severance, facility closures, and other items, with approximately **$41 million related to operations in Russia, Belarus, and Ukraine**[34](index=34&type=chunk) [Note 6. Revenue](index=9&type=section&id=Note%206.%20Revenue) **Disaggregation of Revenue by Geographic and Market Segment (Three Months Ended March 31, in millions)** | Category | Wellbore Technologies 2022 | Completion & Production Solutions 2022 | Rig Technologies 2022 | Total 2022 | Wellbore Technologies 2021 | Completion & Production Solutions 2021 | Rig Technologies 2021 | Total 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Geographic** | | | | | | | | | | North America | $306 | $213 | $88 | $607 | $188 | $162 | $55 | $405 | | International | $290 | $308 | $343 | $941 | $211 | $264 | $369 | $844 | | Eliminations | $12 | $9 | $10 | — | $14 | $13 | $7 | — | | **Total Revenue** | $608 | $530 | $441 | $1,548 | $413 | $439 | $431 | $1,249 | | **Market Segment**| | | | | | | | | | Land | $434 | $322 | $123 | $879 | $294 | $265 | $91 | $650 | | Offshore | $162 | $199 | $308 | $669 | $105 | $161 | $333 | $599 | | Eliminations | $12 | $9 | $10 | — | $14 | $13 | $7 | — | | **Total Revenue** | $608 | $530 | $441 | $1,548 | $413 | $439 | $431 | $1,249 | - Net revenue recognized from performance obligations satisfied in previous periods was **$6 million for Q1 2022**, primarily due to change orders[37](index=37&type=chunk) **Remaining Performance Obligations (as of March 31, 2022)** | Item | Amount (in millions) | | :--- | :--- | | Aggregate transaction price | $4,193 | | Expected revenue recognition in 2022 | $1,043 | | Expected revenue recognition in 2023 and thereafter | $3,150 | **Changes in Contract Assets and Liabilities (in millions)** | Item | Contract Assets (Dec 31, 2021) | Contract Liabilities (Dec 31, 2021) | | :--- | :--- | :--- | | Balance at December 31, 2021 | $461 | $392 | | Provision | $(1) | — | | Billings | $(253) | $326 | | Revenue recognized | $252 | $(251) | | Currency translation adjustments and other | $(26) | $(64) | | Balance at March 31, 2022 | $433 | $403 | - The allowance for credit losses totaled **$98 million** as of March 31, 2022, primarily for customers in the oil and gas industry[41](index=41&type=chunk) [Note 7. Leases](index=10&type=section&id=Note%207.%20Leases) - The Company leases facilities and equipment globally, with renewal options common but rarely exercised due to business cyclicality[42](index=42&type=chunk) - Lease liabilities are determined using the incremental borrowing rate[42](index=42&type=chunk) **Components of Lease Liabilities (in millions)** | Component | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Current portion of lease liabilities: | | | | Operating | $70 | $76 | | Financing | $23 | $23 | | Total current | $93 | $99 | | Long-term portion of lease liabilities: | | | | Operating | $350 | $357 | | Financing | $218 | $219 | | Total long-term | $568 | $576 | [Note 8. Debt](index=10&type=section&id=Note%208.%20Debt) **Debt Composition (in millions)** | Debt Type | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | $1.1 billion Senior Notes (3.95%, due 2042) | $1,090 | $1,090 | | $0.5 billion Senior Notes (3.60%, due 2029) | $494 | $494 | | Other debt | $130 | $129 | | Total Debt | $1,714 | $1,713 | | Less current portion | $5 | $5 | | Long-term debt | $1,709 | $1,708 | - The Company has a **$2.0 billion revolving credit facility** with **$2.0 billion available funds** as of March 31, 2022, and a debt-to-capitalization ratio of **28.1%**, well within the 60% covenant[46](index=46&type=chunk) - A joint venture has a **$150 million bank line of credit** for a Saudi Arabia facility, with **$103 million borrowed** as of March 31, 2022[47](index=47&type=chunk) - Outstanding letters of credit totaled **$437 million** at March 31, 2022[48](index=48&type=chunk) **Fair Value vs. Carrying Value of Unsecured Senior Notes (in millions)** | Item | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Fair value | $1,466 | $1,610 | | Carrying value | $1,584 | $1,584 | [Note 9. Income Taxes](index=11&type=section&id=Note%209.%20Income%20Taxes) **Effective Tax Rate (Three Months Ended March 31)** | Year | Effective Tax Rate | | :--- | :--- | | 2022 | (39.3)% | | 2021 | 5.0% | - The 2022 effective tax rate was negatively impacted by current year losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments[49](index=49&type=chunk) [Note 10. Stock-Based Compensation](index=11&type=section&id=Note%2010.%20Stock-Based%20Compensation) - The 2018 Long-Term Incentive Plan authorizes **42.7 million shares** for various awards, with approximately **4.1 million shares remaining available** for future grants as of March 31, 2022[50](index=50&type=chunk) - On February 15, 2022, the Company granted **1,492,020 stock options**, **2,877,894 restricted stock units**, and performance share awards (PSAs) to senior management[51](index=51&type=chunk) **Total Stock-Based Compensation Expense (Three Months Ended March 31, in millions)** | Year | Expense | | :--- | :--- | | 2022 | $16 | | 2021 | $20 | [Note 11. Derivative Financial Instruments](index=12&type=section&id=Note%2011.%20Derivative%20Financial%20Instruments) - The Company uses forward currency contracts for cash flow hedging and non-designated hedging to manage foreign currency exchange rate risk[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) **Fair Values of Derivative Instruments (in millions)** | Category | Balance Sheet Location | Asset Fair Value (Mar 31, 2022) | Asset Fair Value (Dec 31, 2021) | Liability Fair Value (Mar 31, 2022) | Liability Fair Value (Dec 31, 2021) | | :--- | :--- | :--- | :--- | :--- | :--- | | Derivatives designated as hedging instruments | Prepaid and other current assets | $6 | $11 | Accrued liabilities | $2 | | Derivatives not designated as hedging instruments | Prepaid and other current assets | $3 | $7 | Accrued liabilities | $6 | | Total derivatives | | $9 | $18 | | $8 | - The gain (loss) recognized in other income (expense), net from non-designated hedging was **($3) million for Q1 2022**, compared to ($4) million for Q1 2021[57](index=57&type=chunk) [Note 12. Net Income (Loss) Attributable to Company Per Share](index=13&type=section&id=Note%2012.%20Net%20Income%20(Loss)%20Attributable%20to%20Company%20Per%20Share) **Net Income (Loss) Attributable to Company Per Share (Three Months Ended March 31)** | (In millions, except per share data) | 2022 | 2021 | | :--- | :--- | :--- | | Net loss attributable to Company | $(50) | $(115) | | Basic weighted average shares outstanding | 387 | 385 | | Diluted outstanding shares | 387 | 385 | | Basic EPS | $(0.13)| $(0.30)| | Diluted EPS | $(0.13)| $(0.30)| | Cash dividends per share | $0.05 | $- | - Stock options totaling **22 million shares in 2022** and **24 million shares in 2021** were anti-dilutive[64](index=64&type=chunk) [Note 13. Cash Dividends](index=13&type=section&id=Note%2013.%20Cash%20Dividends) **Cash Dividends Paid (Three Months Ended March 31, in millions)** | Year | Amount | | :--- | :--- | | 2022 | $20 | | 2021 | $0 | - Future dividend declarations are at the discretion of the Board of Directors, dependent on financial performance and capital requirements[65](index=65&type=chunk) [Note 14. Commitments and Contingencies](index=14&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) - The Company is subject to various laws and regulations and is involved in claims, audits, and legal actions, with reserves recorded for probable contingent liabilities[67](index=67&type=chunk) - Operations in Russia and Belarus have been curtailed due to sanctions, resulting in **$41 million in impairment and other charges for Q1 2022**[70](index=70&type=chunk)[182](index=182&type=chunk) - The Company has **$30 million in remaining assets** and **$67 million in currency translation losses** related to these regions[70](index=70&type=chunk)[182](index=182&type=chunk) - Ongoing supply chain disruptions, inflationary pressures, and COVID-19 related operational delays continue to pose risks to financial performance[70](index=70&type=chunk) [Note 15. New Accounting Pronouncements](index=15&type=section&id=Note%2015.%20New%20Accounting%20Pronouncements) - The FASB issued ASU 2021-01 and 2020-04, 'Reference Rate Reform (Topic 848)', and management is currently assessing its impact[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, market conditions, segment results, and future outlook [Introduction](index=16&type=section&id=Introduction) - **NOV Inc. is a leading independent equipment and technology provider** to the global energy industry, with 160 years of experience and a growing focus on sustainable energy transition[74](index=74&type=chunk) - The Company operates under three segments: **Wellbore Technologies, Completion & Production Solutions, and Rig Technologies**, serving customers in 63 countries[74](index=74&type=chunk) - **Adjusted EBITDA** is used as a key non-GAAP financial measure to evaluate operational performance and trends[74](index=74&type=chunk) [Segment Performance (Executive Summary)](index=17&type=section&id=Segment%20Performance) **Executive Summary - Q1 2022 Financial Highlights (in millions)** | Metric | Q1 2022 | vs. Q4 2021 | vs. Q1 2021 | | :--- | :--- | :--- | :--- | | Revenues | $1,550 | +2% | +24% | | Net loss | $(50) | | | | Adjusted EBITDA | $103 | Sequential Increase | Prior Year Increase | | Adjusted EBITDA % of sales | 6.7% | | | - Net loss for Q1 2022 included **$45 million in Other Items**[81](index=81&type=chunk) [Wellbore Technologies](index=17&type=section&id=Wellbore%20Technologies) **Wellbore Technologies Performance (Q1 2022, in millions)** | Metric | Q1 2022 | vs. Q4 2021 | vs. Q1 2021 | | :--- | :--- | :--- | :--- | | Revenues | $608 | +6% | +47% | | Operating profit | $39 | | | | Operating profit % of sales | 6.4% | | | | Adjusted EBITDA | $101 | +$13 (Seq) | +$67 (YoY) | | Adjusted EBITDA % of sales | 16.6% | | | - Improved results were driven by **growing global drilling activity**, a better sales mix, and improved pricing, despite supply chain challenges[82](index=82&type=chunk) [Completion & Production Solutions](index=17&type=section&id=Completion%20&%20Production%20Solutions) **Completion & Production Solutions Performance (Q1 2022, in millions)** | Metric | Q1 2022 | vs. Q4 2021 | vs. Q1 2021 | | :--- | :--- | :--- | :--- | | Revenues | $530 | -3% | +21% | | Operating loss | $(22) | | | | Operating loss % of sales | 4.2% | | | | Adjusted EBITDA | $10 | +$8 (Seq) | +$14 (YoY) | | Adjusted EBITDA % of sales | 1.9% | | | - The segment continues to face challenges from **supply chain issues and operational disruptions** in shipyards[83](index=83&type=chunk) **Completion & Production Solutions Orders & Backlog (Q1 2022, in millions)** | Metric | Q1 2022 | | :--- | :--- | | New orders booked | $339 | | Book-to-bill | 110% | | Backlog (Mar 31, 2022) | $1,364 | | Backlog vs. Q4 2021 | +6% | | Backlog vs. Q1 2021 | +68% | [Rig Technologies](index=17&type=section&id=Rig%20Technologies) **Rig Technologies Performance (Q1 2022, in millions)** | Metric | Q1 2022 | vs. Q4 2021 | vs. Q1 2021 | | :--- | :--- | :--- | :--- | | Revenues | $441 | +2% | +2% | | Operating profit | $11 | | | | Operating profit % of sales | 2.5% | | | | Adjusted EBITDA | $36 | +$15 (Seq) | +$23 (YoY) | | Adjusted EBITDA % of sales | 8.2% | | | - Profitability improved due to a **more favorable sales mix**, cost savings, and improved pricing[85](index=85&type=chunk) **Rig Technologies Orders & Backlog (Q1 2022, in millions)** | Metric | Q1 2022 | | :--- | :--- | | New orders booked | $236 | | Book-to-bill | 124% | | Backlog adjustment | +$80 | | Backlog (Mar 31, 2022) | $2,893 | [Oil & Gas Equipment and Services Market and Outlook](index=18&type=section&id=Oil%20&%20Gas%20Equipment%20and%20Services%20Market%20and%20Outlook) - Management is optimistic about improving market fundamentals and NOV's strategic positioning to drive growth and profitability, despite ongoing disruptions[89](index=89&type=chunk) - NOV is committed to improving organizational efficiencies, developing innovative products, and accelerating the energy transition through investments in new energy projects[89](index=89&type=chunk)[92](index=92&type=chunk) [Operating Environment Overview](index=18&type=section&id=Operating%20Environment%20Overview) **Key Industry Indicators (Quarterly Averages)** | Metric | Q1 2022 | Q1 2021 | 4Q 2021 | YoY Change (Q1 2021-Q1 2022) | QoQ Change (4Q 2021-Q1 2022) | | :--- | :--- | :--- | :--- | :--- | :--- | | **Active Drilling Rigs:** | | | | | | | U.S. | 633 | 393 | 559 | 61.1% | 13.2% | | Canada | 198 | 144 | 161 | 37.5% | 23.0% | | International | 823 | 697 | 818 | 18.1% | 0.6% | | Worldwide | 1,654 | 1,234 | 1,538 | 34.0% | 7.5% | | West Texas Intermediate Crude Prices (per barrel) | $94.54 | $57.80 | $77.45 | 63.6% | 22.1% | | Natural Gas Prices ($/mmbtu) | $4.62 | $3.56 | $4.74 | 29.8% | (2.5%) | - Worldwide quarterly average rig count **increased 8% sequentially**, with U.S. rigs up 13%[96](index=96&type=chunk) - WTI crude prices **increased 22% sequentially**, while natural gas prices decreased 3%[96](index=96&type=chunk) [Results of Operations (Detailed)](index=20&type=section&id=Results%20of%20Operations) **Financial Results by Operating Segment (Three Months Ended March 31, in millions)** | Segment | Revenue 2022 | Revenue 2021 | Operating Profit (Loss) 2022 | Operating Profit (Loss) 2021 | | :--- | :--- | :--- | :--- | :--- | | Wellbore Technologies | $608 | $413 | $39 | $(14) | | Completion & Production Solutions | $530 | $439 | $(22) | $(17) | | Rig Technologies | $441 | $431 | $11 | $(8) | | Eliminations | $(31) | $(34) | | | | Eliminations and corporate costs | | | $(49) | $(49) | | Total | $1,548 | $1,249 | $(21) | $(88) | [Wellbore Technologies](index=20&type=section&id=Wellbore%20Technologies_detailed) - Revenue **increased by $195 million (47%)** to $608 million in Q1 2022 compared to Q1 2021[100](index=100&type=chunk) - Operating profit improved by $53 million, turning a **$14 million loss into a $39 million profit**[100](index=100&type=chunk) [Completion & Production Solutions](index=20&type=section&id=Completion%20&%20Production%20Solutions_detailed) - Revenue **increased by $91 million (21%)** to $530 million in Q1 2022 compared to Q1 2021[101](index=101&type=chunk) - Operating loss increased by $5 million to **$22 million**[101](index=101&type=chunk) - Capital equipment backlog was **$1,364 million** at March 31, 2022, a **$554 million increase** from Q1 2021[102](index=102&type=chunk) - As of March 31, 2022, **66% of the capital equipment backlog was for offshore products** and **74% was destined for international markets**[102](index=102&type=chunk) [Rig Technologies](index=20&type=section&id=Rig%20Technologies_detailed) - Revenue **increased by $10 million (2%)** to $441 million in Q1 2022 compared to Q1 2021[103](index=103&type=chunk) - Operating profit improved by $19 million, turning an **$8 million loss into an $11 million profit**[103](index=103&type=chunk) - Capital equipment backlog was **$2,893 million** at March 31, 2022, a **$302 million increase** from Q1 2021[104](index=104&type=chunk)[105](index=105&type=chunk) - As of March 31, 2022, **30% of the capital equipment backlog was for offshore products** and **96% was destined for international markets**[105](index=105&type=chunk) [Eliminations and corporate costs](index=21&type=section&id=Eliminations%20and%20corporate%20costs) - Eliminations and corporate costs remained consistent at **$49 million** for Q1 2022 and Q1 2021[106](index=106&type=chunk) [Other income (expense), net](index=21&type=section&id=Other%20income%20(expense)%2C%20net) - Other income (expense), net was an expense of **$2 million in Q1 2022**, an improvement from an expense of $10 million in Q1 2021, primarily due to foreign currency fluctuations[107](index=107&type=chunk) [Provision for income taxes](index=21&type=section&id=Provision%20for%20income%20taxes) **Effective Tax Rate (Three Months Ended March 31)** | Year | Effective Tax Rate | | :--- | :--- | | 2022 | (39.3)% | | 2021 | 5.0% | - The 2022 effective tax rate was negatively impacted by current year losses in certain jurisdictions with no tax benefit, partially offset by favorable adjustments[108](index=108&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=21&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) - **Adjusted EBITDA** is defined as operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets, and Other Items[110](index=110&type=chunk) **Adjusted EBITDA Reconciliation (Three Months Ended March 31, in millions)** | Metric | 2022 | 2021 | Dec 31, 2021 | | :--- | :--- | :--- | :--- | | Total operating profit (loss) | $(21) | $(88) | $(15) | | Other items, net | $45 | $7 | $8 | | (Gain)/Loss on Sales of Fixed Assets | $5 | $2 | $1 | | Depreciation & amortization | $74 | $79 | $75 | | **Total Adjusted EBITDA** | $103 | $0 | $69 | | GAAP net loss attributable to Company | $(50) | $(115) | $(40) | | Noncontrolling interests | $1 | $1 | $(3) | | Provision (benefit) for income taxes | $14 | $(6) | $14 | | Interest expense | $19 | $20 | $19 | | Interest income | $(1) | $(2) | $(2) | | Equity (income) loss in unconsolidated affiliate | $(6) | $4 | $(1) | | Other (income) expense, net | $2 | $10 | $(2) | | (Gain)/Loss on Sales of Fixed Assets | $5 | $2 | $1 | | Depreciation and amortization | $74 | $79 | $75 | | Other items, net | $45 | $7 | $8 | | **Total Adjusted EBITDA** | $103 | $0 | $69 | [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) **Cash and Debt Overview (in millions)** | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,406 | $1,591 | | Total debt | $1,714 | $1,713 | - Approximately **$857 million of cash and cash equivalents** were held by foreign subsidiaries, potentially subject to taxes if repatriated[114](index=114&type=chunk) - The Company has a **$2.0 billion revolving credit facility** with **$2.0 billion available funds** as of March 31, 2022, and a debt-to-capitalization ratio of **28.1%**[115](index=115&type=chunk) **Net Cash Flows (Three Months Ended March 31, in millions)** | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(103) | $(27) | | Net cash used in investing activities | $(49) | $(51) | | Net cash used in financing activities | $(36) | $(3) | - Significant cash uses in Q1 2022 included **$103 million in operating activities**, **$46 million in capital expenditures**, and **$20 million in dividends**[118](index=118&type=chunk) [New Accounting Pronouncements](index=24&type=section&id=New%20Accounting%20Pronouncements_MD&A) - Refer to Note 15 for details on recently adopted and issued accounting standards[121](index=121&type=chunk) [Forward-Looking Statements](index=24&type=section&id=Forward-Looking%20Statements) - The document contains forward-looking statements subject to risks and uncertainties, including changes in oil and gas prices, customer demand, and Russian sanctions[122](index=122&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's exposure to foreign currency exchange rates and interest rates, and mitigation strategies [Foreign Currency Exchange Rates](index=25&type=section&id=Foreign%20Currency%20Exchange%20Rates) - The Company is exposed to foreign currency exchange rate changes due to extensive international operations, resulting in a **$1 million foreign exchange loss in Q1 2022**[125](index=125&type=chunk) - To mitigate risk, the Company uses foreign currency forward contracts to match the currency of revenues and associated costs[126](index=126&type=chunk) - A hypothetical **10% movement in foreign currency exchange rates** could affect net income by **$29 million** for transactional exposures and future fair value by **$39 million** for translational exposures[127](index=127&type=chunk) [Interest Rate Risk](index=25&type=section&id=Interest%20Rate%20Risk) - Borrowings at March 31, 2022, primarily consisted of **$1,090 million in 3.95% Senior Notes** and **$494 million in 3.60% Senior Notes**[128](index=128&type=chunk) - The Company aims to maintain a portion of its debt in variable rate borrowings for flexibility and lower overall cost[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the Company's disclosure controls and procedures were effective as of March 31, 2022 - The Company's disclosure controls and procedures were deemed **effective at a reasonable assurance level** as of March 31, 2022[129](index=129&type=chunk) - A broad migration of legacy financial systems to a cloud-based platform necessitated modifications to internal controls over financial reporting during Q1 2022[129](index=129&type=chunk) [PART II - OTHER INFORMATION](index=26&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part provides updates on risk factors, equity security purchases, and other required disclosures [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, focusing on international operations and the impact of the Ukraine conflict - Operations outside the U.S. are subject to complex and conflicting trade laws, customs regulations, and economic sanctions[132](index=132&type=chunk) - The conflict in Ukraine and related sanctions against Russia and Belarus led to the cessation of new investments, resulting in **$41 million in impairment and other charges for Q1 2022**[133](index=133&type=chunk) - The Company faces risks from anti-corruption laws like the FCPA, with potential for unauthorized payments by employees or partners[134](index=134&type=chunk)[136](index=136&type=chunk) [Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=27&type=section&id=Item%202.%20Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) This section details shares withheld from employee restricted stock grants for income taxes **Purchases of Equity Securities (Three Months Ended March 31, 2022)** | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 1 through January 31, 2022 | — | — | | February 1 through February 28, 2022 | 714,469 | $17.09 | | March 1 through March 31, 2022 | — | — | | Total | 714,469 | $17.09 | - The purchased shares were withheld from employee restricted stock grants for income taxes and were not part of a publicly announced stock purchase program[137](index=137&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety and other regulatory actions are disclosed in Exhibit 95 - Mine safety information and regulatory actions are provided in Exhibit 95 to this Form 10-Q[138](index=138&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q - The report includes an index of exhibits, such as the Certificate of Incorporation, By-laws, Credit Agreement, and various certifications[140](index=140&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [SIGNATURE](index=31&type=section&id=SIGNATURE) The report is duly signed on behalf of NOV Inc. by the Vice President, Corporate Controller & Chief Accounting Officer - The report was signed on April 29, 2022, by Christy H. Novak, Vice President, Corporate Controller & Chief Accounting Officer[147](index=147&type=chunk)

Nov, Inc. (NYSE:NOV) Q4 2021 Earnings Conference Call February 4, 2022 11:00 AM ET Company Participants Blake McCarthy - VP, Corporate Development & IR Clay Williams - Chairman, President & CEO Jose Bayardo - SVP & CFO Conference Call Participants Arun Jayaram - JPMorgan Chase & Co. Stephen Gengaro - Stifel, Nicolaus & Company Ian MacPherson - Piper Sandler & Co. Scott Gruber - Citigroup Neil Mehta - Goldman Sachs Group Operator Good day, ladies and gentlemen and welcome to NOV Fourth Quarter 2021 Earnings ...

Nov Inc. (NYSE:NOV) Q3 2021 Earnings Conference Call October 27, 2021 11:00 AM ET Company Participants Clay Williams – Chairman, President and CEO Blake Mc Carthy – Vice President of Corporate Development and Investor Relations Jose Bayardo – our Senior Vice President and CFO Conference Call Participants Stephen Gengaro – Stifel Ian Macpherson – Piper Sandler Neil Mehta – Goldman Sachs Marc Bianchi – Cowen Chase Mulvehill – Bank of America Operator Good day, ladies and gentlemen, and welcome to the NOV Thir ...

Nov, Inc. (NYSE:NOV) Q2 2021 Earnings Conference Call July 28, 2021 11:00 AM ET Company Participants Blake McCarthy - VP, Corporate Development & IR Clay Williams - Chairman, President & CEO Jose Bayardo - SVP & CFO Conference Call Participants Ian Macpherson - Piper Sandler Chase Mulvehill - Bank of America Merrill Lynch Neil Mehta - Goldman Sachs George O'Leary - Tudor, Pickering, Holt & Co. Marc Bianchi - Cowen and Company Vebs Vaishnav - Coker & Palmer Stephen Gengaro - Stifel, Nicolaus & Company Operat ...

Financial Data and Key Metrics Changes - For Q1 2021, NOV reported revenues of $1.25 billion, a sequential decline of $78 million or 6% [31] - The company experienced a net loss of $115 million, with EBITDA falling to breakeven, which is considered unacceptable [6][10] - Cash and capital expenditures totaled $49 million, with the company ending the quarter with $1.61 billion in cash and $1.85 billion in gross debt [32] Business Line Data and Key Metrics Changes - The Wellbore Technologies segment generated $413 million in revenue, an increase of $40 million or 11% sequentially, driven by cost-cutting and improved pricing [33] - Completion & Production Solutions segment revenue decreased by $107 million or 20% sequentially to $439 million, primarily due to depleted backlogs and severe weather disruptions [39] - Rig Technologies segment revenues were $431 million, a slight decrease of $6 million or 1% sequentially, with weak orders for rig capital equipment [47] Market Data and Key Metrics Changes - North American oilfield activity showed signs of recovery, with March revenues up sharply from January [9] - Average rig counts in Q1 were down 46% for North America land, 36% for international land, and 31% for offshore year-over-year [12] - Global OCTG demand appears to be picking up, leading to double-digit sequential growth in pipe inspection services [28] Company Strategy and Development Direction - The company is focused on reducing costs, improving cash flow, and investing in next-generation technologies, including renewables [24][25] - NOV aims to capitalize on the recovery in oilfield activity, particularly in Wellbore Technologies, and expects to see a significant improvement in results as the year progresses [30] - The company is exploring opportunities in renewables, leveraging its oilfield service expertise to adapt to new markets [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in international markets, particularly in Latin America and the Middle East, supported by higher crude prices [56] - The company anticipates a synchronized global economic recovery, which is expected to lead to rising oil consumption and improved market conditions [19][20] - Risks include excess OPEC capacity and the potential return of Iranian crude production, which could impact oil prices [20][21] Other Important Information - The company achieved $52 million in annualized cost savings during Q1 and identified an additional $31 million in opportunities for 2021 [32] - The Wellbore Technologies segment saw share gains for ReedHycalog bits in key markets despite increasing prices [26] - The company is optimistic about the renewables business, with over $400 million in potential projects being pursued [51] Q&A Session Summary Question: Insights on the international Wellbore business and capacity building - Management is optimistic about the international market recovery, particularly in Latin America and the Middle East, with tenders for bulk sales indicating readiness to resume operations [55][56] Question: Transferable skills to renewables - Management highlighted the transferable skills and technology from oilfield services to renewables, particularly in offshore wind and geothermal operations [58][60] Question: Free cash flow expectations - Management is confident in being free cash flow positive for the year, with improvements in working capital management expected [63][64] Question: CapEx for offshore wind opportunities - Management indicated no significant incremental CapEx is needed for offshore wind opportunities, as existing plants can be utilized [66] Question: Margin progression and return to double-digit EBITDA margins - Management expects Wellbore Technologies to return to mid-teens EBITDA margins, while other segments may reach mid- to upper single-digit margins [72][73] Question: Future of Rig Aftermarket revenues - Management believes aftermarket revenues could return to pre-downturn levels as offshore drillers emerge from bankruptcy and increase spending [75]