NOV(NOV) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited consolidated financial information for NOV Inc., including financial statements, management's discussion, and market risk disclosures Item 1. Financial Statements This section presents NOV Inc.'s unaudited consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, income statements, comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, segment performance, revenue recognition, debt, and other financial instruments Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheets (In millions) | ASSETS (In millions) | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $1,080 | $1,230 | | Receivables, net | $1,902 | $1,819 | | Inventories, net | $1,929 | $1,932 | | Total current assets | $5,781 | $5,770 | | Property, plant and equipment, net | $1,990 | $1,922 | | Goodwill | $1,623 | $1,630 | | Total assets | $11,363 | $11,361 | | LIABILITIES AND STOCKHOLDERS' EQUITY (In millions) | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Accounts payable | $823 | $837 | | Accrued liabilities | $742 | $861 | | Total current liabilities | $2,239 | $2,347 | | Long-term debt | $1,690 | $1,703 | | Total liabilities | $4,805 | $4,933 | | Total stockholders' equity | $6,558 | $6,428 | | Total liabilities and stockholders' equity | $11,363 | $11,361 | Consolidated Statements of Income This section details the company's financial performance over specific periods, presenting revenues, expenses, and net income Consolidated Statements of Income (In millions, except per share data) | (In millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $2,188 | $2,216 | $4,291 | $4,371 | | Gross profit | $446 | $590 | $893 | $1,048 | | Operating profit | $143 | $313 | $295 | $475 | | Net income attributable to Company | $108 | $226 | $181 | $345 | | Basic EPS | $0.29 | $0.57 | $0.48 | $0.88 | | Diluted EPS | $0.29 | $0.57 | $0.48 | $0.87 | | Cash dividends per share | $0.285 | $0.075 | $0.360 | $0.125 | - Net income attributable to Company decreased by 52.2% for the three months ended June 30, 2025, compared to the same period in 2024, from $226 million to $108 million. For the six months ended June 30, 2025, it decreased by 47.5% from $345 million to $181 million[11] - Cash dividends per share significantly increased for the three months ended June 30, 2025, to $0.285 from $0.075 in the prior year, and for the six months ended June 30, 2025, to $0.360 from $0.125[11] Consolidated Statements of Comprehensive Income This section presents the total comprehensive income, including net income and other comprehensive income items, for the reported periods Consolidated Statements of Comprehensive Income (In millions) | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $114 | $223 | $188 | $344 | | Currency translation adjustments | $104 | $(31) | $193 | $(57) | | Comprehensive income | $230 | $194 | $402 | $288 | | Comprehensive income attributable to Company | $224 | $197 | $395 | $289 | - The Company reported a significant positive currency translation adjustment of $104 million for the three months ended June 30, 2025, a reversal from a $(31) million loss in the prior year. For the six-month period, this adjustment was $193 million, compared to a $(57) million loss in 2024[12] Consolidated Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows (In millions) | (In millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $326 | $354 | | Net cash used in investing activities | $(162) | $(226) | | Net cash used in financing activities | $(333) | $(113) | | Increase (decrease) in cash and cash equivalents | $(150) | $11 | | Cash and cash equivalents, end of period | $1,080 | $827 | - Net cash provided by operating activities decreased to $326 million for the six months ended June 30, 2025, from $354 million in the prior year. Net cash used in financing activities significantly increased to $(333) million from $(113) million, primarily due to higher cash dividends paid and share repurchases[15] Consolidated Statements of Stockholders' Equity This section details changes in the company's equity accounts, including net income, dividends, and share repurchases, over time Consolidated Statements of Stockholders' Equity (In millions) | (In millions) | Balance at December 31, 2024 | Balance at June 30, 2025 | | :-------------------------- | :--------------------------- | :----------------------- | | Total Company stockholders' equity | $6,376 | $6,504 | | Total Stockholders' Equity | $6,428 | $6,558 | Key Changes (December 31, 2024 to June 30, 2025): * Net income attributable to Company: $181 million (sum of $73M and $108M for Q1 and Q2 2025, respectively) * Other comprehensive income: $214 million (sum of $98M and $116M for Q1 and Q2 2025, respectively) * Cash dividends paid: $(135) million (sum of $(28)M and $(107)M for Q1 and Q2 2025, respectively) * Share repurchases: $(150) million (sum of $(81)M and $(69)M for Q1 and Q2 2025, respectively) Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, clarifying accounting policies and significant transactions 1. Basis of Presentation This note describes the accounting principles and assumptions used in preparing the interim financial statements - The financial statements are unaudited and prepared in accordance with GAAP for interim financial information, not including all footnotes required for complete annual statements. Management's estimates and assumptions are used, and actual results may differ[18][19][20] 2. Inventories, net This note provides a breakdown of the company's inventory components and related reserves Inventories, net (In millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Raw materials and supplies | $450 | $394 | | Work in process | $216 | $181 | | Finished goods and purchased products | $1,541 | $1,643 | | Less: Inventory reserve | $(278) | $(286) | | Total | $1,929 | $1,932 | 3. Accrued Liabilities This note details the various components of accrued liabilities, including compensation, vendor costs, and taxes Accrued Liabilities (In millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :-------------- | :---------------- | | Compensation | $216 | $268 | | Vendor costs | $148 | $141 | | Taxes (non-income) | $100 | $119 | | Warranties | $71 | $68 | | Fair value of derivatives | $6 | $24 | | Other | $132 | $171 | | Total | $742 | $861 | 4. Accumulated Other Comprehensive Loss This note explains the changes in accumulated other comprehensive loss, primarily driven by currency translation adjustments Accumulated Other Comprehensive Loss (In millions) | (In millions) | Currency Translation Adjustments | Derivative Financial Instruments, Net of Tax | Employee Benefit Plans, Net of Tax | Total | | :------------------------------------------ | :------------------------------- | :----------------------------------------- | :------------------------------- | :---- | | Balance at December 31, 2024 | $(1,569) | $(10) | $(46) | $(1,625) | | Balance at June 30, 2025 | $(1,376) | $10 | $(45) | $(1,411) | - Accumulated other comprehensive loss improved from $(1,625) million at December 31, 2024, to $(1,411) million at June 30, 2025, primarily driven by positive currency translation adjustments[24] 5. Segments This note provides financial information by reportable segment, detailing revenue, operating profit, and capital expenditures - NOV Inc. operates under two reportable segments: Energy Products and Services, and Energy Equipment. These segments are defined by product/service, customer base, and operating environment, with results regularly reviewed by the CEO for resource allocation and performance assessment[26] Segment Performance (In millions) | (In millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue from external customers: | | | | | | Energy Products and Services | $998 | $1,027 | $1,969 | $2,020 | | Energy Equipment | $1,190 | $1,189 | $2,322 | $2,351 | | Operating profit: | | | | | | Energy Products and Services | $83 | $128 | $166 | $249 | | Energy Equipment | $122 | $232 | $256 | $327 | | Eliminations and corporate costs | $(62) | $(47) | $(127) | $(101) | | Capital expenditures: | | | | | | Energy Products and Services | $48 | $68 | $97 | $124 | | Energy Equipment | $33 | $11 | $66 | $21 | 6. Revenue This note details revenue recognition policies, disaggregates revenue by destination and stream, and discusses remaining performance obligations and credit losses Revenue by Destination (Three Months Ended June 30, In millions) | (In millions) | 2025 | 2024 | | :------------ | :--- | :--- | | North America | $841 | $835 | | International | $1,347 | $1,381 | | Total | $2,188 | $2,216 | Revenue by Stream (Three Months Ended June 30, In millions) | (In millions) | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Energy Products and Services: | | | | Services & rental | $501 | $498 | | Capital equipment | $335 | $326 | | Product sales | $162 | $203 | | Energy Equipment: | | | | Capital equipment | $733 | $641 | | Aftermarket | $457 | $548 | | Total consolidated | $2,188 | $2,216 | - Remaining performance obligations totaled $4,675 million as of June 30, 2025, with approximately $1,043 million expected to be recognized in the remainder of 2025[35] - Royalty revenue from drill bit licenses was $19 million for Q2 2025, up from $17 million in Q2 2024. The Company is pursuing litigation against non-paying licensees, with receivables recorded at a discount due to delayed collections[37] Allowance for Credit Losses (In millions) | Item | Amount | | :-------------------------- | :----- | | Balance at December 31, 2024 | $67 | | Provision for expected credit losses | $33 | | Recoveries collected | $(8) | | Write-offs | $(3) | | Balance at June 30, 2025 | $68 | 7. Leases This note provides information on the company's lease liabilities, distinguishing between current and long-term portions Lease Liabilities (In millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Current portion of lease liabilities | $103 | $102 | | Long-term portion of lease liabilities | $540 | $544 | 8. Debt This note details the company's debt structure, including senior notes, revolving credit facilities, and joint venture borrowings Debt Structure (In millions) | (In millions) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | $1.1 billion Senior Notes (3.95%, due 2042) | $1,091 | $1,091 | | $0.5 billion Senior Notes (3.60%, due 2029) | $497 | $496 | | Other debt | $140 | $153 | | Total debt | $1,728 | $1,740 | | Less current portion | $38 | $37 | | Long-term debt | $1,690 | $1,703 | - The Company has a $1.5 billion revolving credit facility with no outstanding borrowings or letters of credit as of June 30, 2025, maintaining a debt-to-capitalization ratio of 23.4%, well below the 60% covenant[42] - A consolidated joint venture has $89 million in borrowings from a $150 million bank line of credit for a facility in Saudi Arabia, with $11 million due in the next twelve months[43] Fair Value vs. Carrying Value of Unsecured Senior Notes (In millions) | Date | Fair Value | Carrying Value | | :---------------- | :----------- | :------------- | | June 30, 2025 | $1,308 | $1,588 | | December 31, 2024 | $1,285 | $1,587 | 9. Income Taxes This note provides details on the company's effective tax rate and the impact of significant tax adjustments Effective Tax Rate | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three months ended June 30 | 0.9% | 23.9% | | Six months ended June 30 | 20.3% | 24.9% | - The effective tax rate for the six months ended June 30, 2025, was positively impacted by a $58 million release of reserves for uncertain tax positions, partially offset by other adjustments[46] 10. Stock-Based Compensation This note outlines the company's stock-based compensation plan, including shares available for grants and total expense recognized - The NOV Inc. Long-Term Incentive Plan has 17.1 million shares available for future grants as of June 30, 2025. Total stock-based compensation expense was $17 million for Q2 2025 and $33 million for the six months ended June 30, 2025[47][48] 11. Derivative Financial Instruments This note describes the company's use of derivative instruments to manage foreign currency exchange rate risks - The Company uses forward currency contracts to manage foreign currency exchange rate risk for forecasted revenues/expenses (cash flow hedges) and nonfunctional currency monetary accounts (non-designated hedges)[50][53][55] Fair Values of Derivative Instruments (In millions) | Type | Balance Sheet Location | June 30, 2025 | December 31, 2024 | | :-------------------------- | :--------------------- | :-------------- | :---------------- | | Designated as hedging (Assets) | Prepaid and other current assets | $13 | $1 | | Designated as hedging (Liabilities) | Accrued liabilities | $1 | $13 | | Non-designated (Assets) | Prepaid and other current assets | $6 | $4 | | Non-designated (Liabilities) | Accrued liabilities | $5 | $11 | | Total Assets | | $19 | $5 | | Total Liabilities | | $7 | $26 | 12. Net Income Attributable to Company Per Share This note presents basic and diluted earnings per share calculations and discusses anti-dilutive stock options Net Income Attributable to Company Per Share | Period | Basic EPS (2025) | Basic EPS (2024) | Diluted EPS (2025) | Diluted EPS (2024) | | :-------------------------- | :--------------- | :--------------- | :----------------- | :----------------- | | Three months ended June 30 | $0.29 | $0.57 | $0.29 | $0.57 | | Six months ended June 30 | $0.48 | $0.88 | $0.48 | $0.87 | - The Company had 19 million anti-dilutive stock options outstanding for the three months ended June 30, 2025, compared to 16 million in the prior year[58] 13. Cash Dividends This note provides details on the cash dividends declared and paid by the company during the reporting periods Cash Dividends Paid (In millions) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three months ended June 30 | $107 | $30 | | Six months ended June 30 | $135 | $50 | - Cash dividends paid increased significantly, from $30 million to $107 million for the three months ended June 30, 2025, and from $50 million to $135 million for the six months ended June 30, 2025[59] 14. Share Repurchase Program This note describes the company's share repurchase program and the volume and value of shares repurchased - The Company established a $1 billion share repurchase program on April 25, 2024, over 36 months. During the three months ended June 30, 2025, 5.5 million shares were repurchased for $69 million, and 10.9 million shares for $150 million during the six months ended June 30, 2025[60][61] 15. Commitments and Contingencies This note discloses the company's involvement in legal actions, regulatory matters, and the potential impact of geopolitical events - The Company is involved in various claims, regulatory audits, investigations, and legal actions, including intellectual property disputes related to drill bit technology licenses. Several licensees have unilaterally stopped royalty payments, leading to ongoing litigation[63][66][67] - The Company maintains insurance for material risks and has recorded reserves for probable contingent liabilities, including reclamation costs and product liability claims. While outcomes are uncertain, management believes ultimate liabilities should not materially affect financial position, cash flows, or results of operations[63][64][65] - Geopolitical events, such as the conflict in Ukraine and related sanctions, have led to the deconsolidation of Russian subsidiaries in Q1 2025 and pose ongoing supply chain, labor, and trade regulation risks[70][72][73] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on NOV Inc.'s financial performance, including an executive summary, detailed segment results, an overview of the operating environment, and an analysis of liquidity and capital resources. It also includes reconciliations of non-GAAP financial measures Introduction This introduction provides an overview of NOV Inc.'s role as a leading equipment and technology provider to the global energy industry - NOV is a leading independent equipment and technology provider to the global energy industry, with over 160 years of experience in oil and gas development and a growing focus on alternate energy sources[76] - The Company's technology portfolio supports drilling, completion, and production needs, emphasizing digital solutions like automation and predictive analytics. It serves customers in 57 countries through two segments: Energy Products and Services, and Energy Equipment[77][78] Energy Products and Services (Segment Description) This section describes the Energy Products and Services segment's offerings, including products for drilling, intervention, completion, and production, and its market drivers - This segment designs, manufactures, rents, and sells products for drilling, intervention, completion, and production, including drill bits, downhole tools, and composite pipe. It also provides services, software, and digital solutions for operational performance[80][81] - Demand for this segment's offerings is primarily driven by oilfield drilling activity and industrial activity, infrastructure spend, and population growth for composite solutions outside oil and gas[82] Energy Equipment (Segment Description) This section describes the Energy Equipment segment's focus on manufacturing and supporting capital equipment for oil and gas, marine, industrial, and renewable energy markets - This segment manufactures and supports capital equipment and integrated systems for oil and gas exploration and production (onshore/offshore), marine-based, industrial, and renewable energy markets[83][84] - Demand is primarily dependent on capital spending by drilling contractors, service companies, and oil and gas companies, and secondarily on overall oilfield activity. The segment also serves marine, industrial, and energy transition markets[85][86] Critical Accounting Policies and Estimates This section highlights key accounting policies and estimates that require significant management judgment and assumptions - Key critical accounting policies and estimates include revenue recognition under long-term construction contracts, impairment of goodwill and other indefinite-lived intangible assets, and income taxes. These involve significant management judgment and assumptions[87] Executive Summary This section provides a high-level overview of the company's financial performance, segment results, and the prevailing macroeconomic environment Q2 2025 Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :-------------------- | :------ | :------ | :--------- | | Revenue | $2.19B | $2.22B | -1% | | Net income | $108M | $226M | -52% | | EPS | $0.29 | $0.57 | -49% | | Operating profit | $143M | $313M | -54% | | Adjusted EBITDA | $252M | $281M | -10% | - The decline in net income and operating profit was primarily due to a pre-tax gain of approximately $130 million on a business sale in Q2 2024. The Company recorded $19 million in 'Other Items' in Q2 2025, mainly for severance and restructuring[88] Segment Performance and Energy Equipment Backlog (Q2 2025 vs. Q2 2024) | Segment | Revenue (Q2 2025) | Revenue Change (%) | Operating Profit (Q2 2025) | Operating Profit Change ($M) | Adjusted EBITDA (Q2 2025) | Adjusted EBITDA Change ($M) | | :-------------------------- | :------------------ | :----------------- | :------------------------- | :--------------------------- | :------------------------ | :-------------------------- | | Energy Products and Services | $1.03B | -2% | $83M | -$45 | $146M | -$38 | | Energy Equipment | $1.21B | Flat | $122M | -$110 | $158M | +$16 | Energy Equipment Backlog: * New orders booked: $420M (Q2 2025) vs. $977M (Q2 2024) * Orders shipped from backlog: $632M (Q2 2025) vs. $553M (Q2 2024) * Book-to-bill: 66% (Q2 2025) vs. 177% (Q2 2024) * Backlog as of June 30, 2025: $4.30B (down $31M YoY) - Macroeconomic uncertainties, geopolitical conflicts, and changing trade policies are creating a difficult capital investment environment, with lower oil prices and increased market volatility. However, management expects continued growth in offshore/international resources, natural gas, and emerging technologies[92][93] Operating Environment Overview This section provides an overview of key industry indicators, including drilling rig counts and commodity prices, influencing the company's operations Key Industry Indicators | Indicator | Q2 2025 | Q2 2024 | Q1 2025 | % Change (2Q25 vs 2Q24) | % Change (2Q25 vs 1Q25) | | :-------------------------- | :------ | :------ | :------ | :---------------------- | :---------------------- | | Active Drilling Rigs (Worldwide) | 1,597 | 1,695 | 1,708 | (5.8%) | (6.5%) | | WTI Crude Prices (per barrel) | $64.63 | $81.71 | $71.84 | (20.9%) | (10.0%) | | Natural Gas Prices ($/mmbtu) | $3.19 | $2.08 | $4.15 | 53.4% | (23.1%) | - Worldwide quarterly average rig count decreased 6% in Q2 2025 compared to Q1 2025. WTI crude prices decreased 10% and natural gas prices decreased 23% QoQ[100] - As of July 25, 2025, North American active rigs increased to 724 from the Q2 average of 700. WTI crude price was $65.16/barrel (up 1% from Q2 average) and natural gas was $3.16/mmbtu (down 1% from Q2 average)[101] Results of Operations (Detailed) This section provides a detailed analysis of the company's financial results, breaking down revenue and operating profit by segment and discussing key drivers Revenue and Operating Profit by Segment (In millions) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Operating Profit | Q2 2024 Operating Profit | | :-------------------------- | :-------------- | :-------------- | :----------------------- | :----------------------- | | Energy Products and Services | $1,025 | $1,050 | $83 | $128 | | Energy Equipment | $1,207 | $1,204 | $122 | $232 | | Eliminations and corporate costs | $(44) | $(38) | $(62) | $(47) | | Total | $2,188 | $2,216 | $143 | $313 | - Energy Products and Services revenue decreased 2% YoY in Q2 2025 due to lower global drilling activity impacting consumable products, partially offset by higher capital equipment sales. Operating profit decreased by $45 million due to unfavorable sales mix, tariffs, inflationary pressures, and Latin America charges[104][105] - Energy Equipment revenue was flat YoY in Q2 2025, with a 14% increase from backlog offsetting a 17% decline in aftermarket sales. Operating profit decreased by $110 million, primarily due to a $130 million pre-tax gain on a business sale in Q2 2024. Excluding this, profitability improved from strong execution on higher-margin backlog[106][107] - Energy Equipment's capital equipment backlog was $4.30 billion at June 30, 2025, with approximately 27% expected to become revenue in the remainder of 2025. 52% of the backlog is for offshore products and 92% for international markets[108] - Corporate costs increased 35% in Q2 2025 due to higher legal costs, self-insured property losses, and corporate reserves. For the six months, corporate costs rose 31% due to these factors and a $5 million charge from deconsolidating Russian subsidiaries[111] - Equity income in unconsolidated affiliates decreased significantly to $1 million for Q2 and six months ended June 30, 2025, from $8 million and $37 million respectively in 2024, due to pricing pressures, lower volume for oil country tubular goods, and higher costs[114] - Other expense, net increased to $17 million for Q2 2025 and $37 million for the six months, primarily due to larger foreign currency fluctuations, particularly the devaluation of the U.S. Dollar[115] - The effective tax rate for the six months ended June 30, 2025, was 20.3%, positively impacted by a $58 million release of uncertain tax position reserves. The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. is being evaluated for its future impact[116][117] Non-GAAP Financial Measures and Reconciliations This section defines and reconciles non-GAAP financial measures, such as Adjusted EBITDA and Excess Free Cash Flow, to their most comparable GAAP measures - Adjusted EBITDA is defined as operating profit excluding depreciation, amortization, gains/losses on sales of fixed assets, and 'Other Items'. It is used by management and investors to evaluate operational performance and trends[119] - Excess Free Cash Flow is defined as cash flows from operations less capital expenditures and other investments, including acquisitions and divestitures[120] Adjusted EBITDA Reconciliation (In millions) and Adjusted EBITDA % | Item | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | GAAP net income attributable to Company | $108 | $226 | $181 | $345 | | Provision for income taxes | $1 | $70 | $48 | $114 | | Interest and financial costs | $22 | $22 | $44 | $46 | | Interest income | $(10) | $(8) | $(21) | $(16) | | Equity income in unconsolidated affiliates | $(1) | $(8) | $(1) | $(37) | | Other expense, net | $17 | $14 | $37 | $24 | | (Gain) loss on sales of fixed assets | $3 | $0 | $1 | $(1) | | Depreciation and amortization | $87 | $86 | $176 | $169 | | Other items, net | $19 | $(118) | $32 | $(121) | | Total Adjusted EBITDA | $252 | $281 | $504 | $522 | Adjusted EBITDA %: | Segment | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Energy Products and Services | 14.2% | 17.5% | 14.4% | 17.3% | | Energy Equipment | 13.1% | 11.8% | 13.7% | 11.0% | | Total Adjusted EBITDA % | 11.5% | 12.7% | 11.7% | 11.9% | Liquidity and Capital Resources This section analyzes the company's ability to generate and manage cash, including cash balances, debt, and cash flow activities Cash and Debt (In millions) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $1,080 | $1,230 | | Total debt | $1,728 | $1,740 | | Foreign cash held by subsidiaries | $594 | N/A | | Revolving credit facility (available) | $1,500 | N/A | | Debt-to-capitalization ratio | 23.4% | N/A | - The Company has $1.5 billion available under its revolving credit facility and was in compliance with all debt covenants as of June 30, 2025. Approximately $594 million of cash is held by foreign subsidiaries, potentially subject to foreign withholding and U.S. taxation upon repatriation[123][124] Cash Flow Summary (Six Months Ended June 30, In millions) and Significant Uses of Cash | Activity | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Net cash provided by operating activities | $326 | $354 | | Net cash used in investing activities | $(162) | $(226) | | Net cash used in financing activities | $(333) | $(113) | Significant Uses of Cash (6M 2025): * Capital expenditures: $167 million * Dividend payments: $135 million * Share repurchases: $150 million - The Company expects to return at least 50% of Excess Free Cash Flow to shareholders through quarterly base dividends, opportunistic stock buybacks, and an annual supplemental dividend[130] Cautionary Note Regarding Forward-Looking Statements This section warns that forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially - This section warns that forward-looking statements involve risks and uncertainties, and actual results may differ materially due to factors such as changes in oil/gas prices, customer demand, intellectual property, compliance, and worldwide economic activity, including Russian sanctions and U.S. trade policies[132] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details NOV Inc.'s exposure to market risks, specifically foreign currency exchange rates and interest rates, and the strategies employed to manage these risks Foreign Currency Exchange Rates This section discusses the company's exposure to foreign currency exchange rate fluctuations and its hedging strategies - The Company has extensive foreign operations, with net assets and liabilities exposed to foreign currency exchange rate changes. A foreign exchange loss of $31 million was recorded in the first six months of 2025, compared to $17 million in the prior year[134] - To mitigate risk, the Company uses foreign currency forward contracts to match the currency of revenues and associated costs, not for speculative purposes[135] - A hypothetical 10% movement in foreign currency exchange rates could affect net income by $43 million (transactional exposures) and Other Comprehensive Income by $32 million (translational exposures)[136] Interest Rate Risk This section describes the company's exposure to interest rate fluctuations on its debt and its approach to managing this risk - As of June 30, 2025, borrowings included $1,091 million in 3.95% Senior Notes and $497 million in 3.60% Senior Notes. The Company aims to maintain a portion of debt in variable rates for flexibility and lower cost[138] - The Company's joint venture has $89 million outstanding under a bank line of credit with interest based on SOFR plus 1.40%[138] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the last fiscal quarter - The Company's CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[139] - There have been no material changes in internal control over financial reporting during the last fiscal quarter[140] PART II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including risk factors, equity purchases, and exhibit details Item 1A. Risk Factors This section refers to the risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K, indicating that these risks continue to be relevant - The Company's operations remain subject to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K[142] Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers This section details the Company's share repurchase activities during the second quarter of 2025 under its publicly announced program Share Repurchases (April 1 - June 30, 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value Remaining Under Program | | :-------------------------- | :--------------------- | :--------------------------- | :----------------------------------------------- | | April 1 through April 30, 2025 | 2,342,118 | $12.65 | $660,432,440 | | May 1 through May 31, 2025 | 1,332,472 | $12.50 | $643,789,329 | | June 1 through June 30, 2025 | 1,759,922 | $13.12 | $620,696,132 | | Total | 5,434,512 | $12.77 | N/A | - The Company repurchased 5,434,512 shares for an aggregate of approximately $69.4 million during the second quarter of 2025, as part of its $1 billion share repurchase program established on April 25, 2024[143] Item 4. Mine Safety Disclosures This section indicates that information regarding mine safety and other regulatory actions is provided in Exhibit 95 - Mine safety information is included in Exhibit 95 to this Form 10-Q[144] Item 6. Exhibits This section refers to the Exhibit Index for a list of all exhibits filed with the Form 10-Q - The Exhibit Index, commencing on page 33, lists all exhibits[145] INDEX TO EXHIBITS This index provides a comprehensive list of all documents and certifications filed as exhibits to the Form 10-Q, including corporate governance documents, incentive plans, and regulatory certifications - The index lists various exhibits, including the Seventh Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, NOV Inc. Long-Term Incentive Plan, and certifications pursuant to the Securities and Exchange Act and Sarbanes-Oxley Act[151] SIGNATURE This section contains the signature of the duly authorized officer, Christy H. Novak, Vice President, Corporate Controller & Chief Accounting Officer, certifying the filing of the report - The report was signed on July 29, 2025, by Christy H. Novak, Vice President, Corporate Controller & Chief Accounting Officer[154]