NOV(NOV) - 2022 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's analysis for the period Item 1. Financial Statements This section contains the company's unaudited consolidated financial statements for the quarter ended March 31, 2022 Consolidated Balance Sheets 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) 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) 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 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 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 Note 1. Basis of Presentation - 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][22] - Management makes estimates and assumptions that affect reported amounts, and actual results may differ[21][22] Note 2. Inventories, net 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 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 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] - 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][56] - $3 million is expected to be reclassified to earnings within the next twelve months[30][56] Note 5. Segments 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] Note 6. Revenue 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] 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] Note 7. Leases - The Company leases facilities and equipment globally, with renewal options common but rarely exercised due to business cyclicality[42] - Lease liabilities are determined using the incremental borrowing rate[42] 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 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] - 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] - Outstanding letters of credit totaled $437 million at March 31, 2022[48] 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 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] Note 10. Stock-Based Compensation - 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] - 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] Total Stock-Based Compensation Expense (Three Months Ended March 31, in millions) | Year | Expense | | :--- | :--- | | 2022 | $16 | | 2021 | $20 | Note 11. Derivative Financial Instruments - The Company uses forward currency contracts for cash flow hedging and non-designated hedging to manage foreign currency exchange rate risk[55][56][57] 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] Note 12. Net Income (Loss) Attributable to Company Per Share 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] Note 13. Cash Dividends 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] Note 14. Commitments and Contingencies - 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] - Operations in Russia and Belarus have been curtailed due to sanctions, resulting in $41 million in impairment and other charges for Q1 2022[70][182] - The Company has $30 million in remaining assets and $67 million in currency translation losses related to these regions[70][182] - Ongoing supply chain disruptions, inflationary pressures, and COVID-19 related operational delays continue to pose risks to financial performance[70] Note 15. New Accounting Pronouncements - The FASB issued ASU 2021-01 and 2020-04, 'Reference Rate Reform (Topic 848)', and management is currently assessing its impact[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, market conditions, segment results, and future outlook 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] - The Company operates under three segments: Wellbore Technologies, Completion & Production Solutions, and Rig Technologies, serving customers in 63 countries[74] - Adjusted EBITDA is used as a key non-GAAP financial measure to evaluate operational performance and trends[74] Segment Performance (Executive Summary) 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] Wellbore Technologies 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] Completion & Production Solutions 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] 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 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] 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 - Management is optimistic about improving market fundamentals and NOV's strategic positioning to drive growth and profitability, despite ongoing disruptions[89] - NOV is committed to improving organizational efficiencies, developing innovative products, and accelerating the energy transition through investments in new energy projects[89][92] Operating Environment Overview 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] - WTI crude prices increased 22% sequentially, while natural gas prices decreased 3%[96] Results of Operations (Detailed) 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 - Revenue increased by $195 million (47%) to $608 million in Q1 2022 compared to Q1 2021[100] - Operating profit improved by $53 million, turning a $14 million loss into a $39 million profit[100] Completion & Production Solutions - Revenue increased by $91 million (21%) to $530 million in Q1 2022 compared to Q1 2021[101] - Operating loss increased by $5 million to $22 million[101] - Capital equipment backlog was $1,364 million at March 31, 2022, a $554 million increase from Q1 2021[102] - As of March 31, 2022, 66% of the capital equipment backlog was for offshore products and 74% was destined for international markets[102] Rig Technologies - Revenue increased by $10 million (2%) to $441 million in Q1 2022 compared to Q1 2021[103] - Operating profit improved by $19 million, turning an $8 million loss into an $11 million profit[103] - Capital equipment backlog was $2,893 million at March 31, 2022, a $302 million increase from Q1 2021[104][105] - As of March 31, 2022, 30% of the capital equipment backlog was for offshore products and 96% was destined for international markets[105] Eliminations and corporate costs - Eliminations and corporate costs remained consistent at $49 million for Q1 2022 and Q1 2021[106] Other income (expense), net - 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] Provision for income taxes 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] Non-GAAP Financial Measures and Reconciliations - Adjusted EBITDA is defined as operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets, and Other Items[110] 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 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] - 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] 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] New Accounting Pronouncements - Refer to Note 15 for details on recently adopted and issued accounting standards[121] Forward-Looking Statements - The document contains forward-looking statements subject to risks and uncertainties, including changes in oil and gas prices, customer demand, and Russian sanctions[122] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the Company's exposure to foreign currency exchange rates and interest rates, and mitigation strategies Foreign Currency Exchange Rates - 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] - To mitigate risk, the Company uses foreign currency forward contracts to match the currency of revenues and associated costs[126] - 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] Interest Rate Risk - 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] - The Company aims to maintain a portion of its debt in variable rate borrowings for flexibility and lower overall cost[128] Item 4. Controls and Procedures 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] - A broad migration of legacy financial systems to a cloud-based platform necessitated modifications to internal controls over financial reporting during Q1 2022[129] PART II - OTHER INFORMATION This part provides updates on risk factors, equity security purchases, and other required disclosures Item 1A. Risk Factors 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] - 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] - The Company faces risks from anti-corruption laws like the FCPA, with potential for unauthorized payments by employees or partners[134][136] Item 2. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 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] Item 4. Mine Safety Disclosures 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] Item 6. Exhibits 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][141][143][144] 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]