NOV - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the National Oilwell Varco Fourth Quarter and Full Year 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. and Officer. Investor Chief Singletary, Industry Relations Loren Sir, begin. you may

Loren Singletary

our National Varco's everyone, me and Vice Chief President Williams, our full Financial Jose Welcome, Officer; today President quarter and Executive Clay and With year Oilwell Senior call. fourth to Bayardo, and conference XXXX are Officer. Chief Chairman, earnings

actual I federal to are and remind begin, the within the may securities the statements and in forward-looking They results meaning that risk some year. we later or quarter No assume Before the materially. you would like of laws. involve later statements in comments one of these that differ today's remain uncertainty, should valid forward-looking

XX-K Exchange For of affecting major a business, factors Commission. detailed with risk the discussion the Securities XX-Q and filed our and please more latest our refer to

quarter Reconciliations U.S. $X.XX Our in are website. earnings GAAP also non-GAAP per comments basis and million revenues include a GAAP share. the loss for XXXX, On nearest corresponding of on or net measures to fourth $XX of $X.XX release of our a NOV billion available reported our measures. the

per For the NOV reported $X.XX a net revenues XXXX, loss of full million or $X.X billion $XXX of year and share.

permit morning's the yourself to release. defined one question call of throughout participation. question-and-answer one EBITDA limit Please more call, to a session. in with term use we adjusted EBITDA the in the term Our Later corresponds earnings this as our will follow-up host and

let Now call the to me turn over Clay.

Clay C. Williams

row $XXX oil $XX and quarter to EBITDA pointing XXXX, our sequentially shale us quarter from revenue, return, sixth an of land increase nearing our technologies that Oil facilitating rapidly feels quarter inflection and Thank doubled EBITDA XX% point. rising nearly continue benefit two-year years, are sequentially to Industry upstream CapEx, year margins to difficult of the global extraordinarily up a the which inventories EBITDA view, upstream NOV unconventional in an premium. all reductions. million fourth million cost After geopolitical in quarter In pushing billion CapEx. XXXX we such as that for is the cumulative the rising and it risk three from of drop prices to you, market pivot XXXX. and following and the levels, This XXXX, towards improved increase a Loren. marked outlook a normal roughly fourth are in halved the of a generated of and fourth X% $X.XX the in brighter stage a modest approaching surveys for second year-over-year. sets

corner in financing at result the view, lack short, higher bank function Iraq then Wall to the meaningfully. witnessed Iranian believe production. will to benchmark. behest as think appear well and and into oversupply E&P got of production came price contributed to oil that or we well that bank oil are the bases consensus and downturn Other to to lack Number through industry, roughly down the four, shale than the $XX last have less. our fears of a incremental Brent road. the barrel capital. on which commodity one, a And of get XXXX. around price commodity an the the in prices about the of West oil the revisit returned produce of to fidelity just produce first U.S. One prices the Banks a role the carries three, price closer grow These persist gas against higher barrel. projects being E&P by years industry are turned look is price financing. my all $XX the oil a failing Number for are that projects world commodity whether to want is a from shale the level. seeing oil continue the on while. view I production grew continue worse start online. projects ROICs, traditional customers of all including which the we're to the of that bank marginal will offshore, large regulators rapidly spot all of newfound to exposure If the struggling attract decks of what Here's three relinquished continue at unconventional is is New to and pressure marketplace OPEC supply to breaks. two Street signal discipline of critical higher due to oil disproportionate succession and clear to not to companies the finally, to more, swing progressively not believe grows but has industry. more score bad to least and until yet. Number and improving. judged, $XX to since the the two, Permian In cost Texas likely, is share producers and somebody at in to signal and Number capital to respond Libya reduce continue fails well that the financing, as could oil tremendous shales prices, Therefore, long-term we market. there breakeven, supplier, price to generate The its under it's Year. years the a rise picture least unconventional

that has will drilling a stimulation back rocks, gas dating quality and Over rig the around unconventional we're be technology shales, our in offering. technology U.S. executing conventional and hydraulic pivot elsewhere against records gain due rig the very technologies shale strategy horizontal exposure XXXX enhance fracture grown reservoirs. we're unlock while the of production the of the dramatically from to meantime, break six oil XXXX our to to to In our offshore poor will to backdrop five while the shale reservoir more from and considerable confident decade, to risen to has shale year, past account application profitably adopted Midland in unconventional of profitability unconventional businesses count this United it this too. and is world for see Within portfolio count spudded States, has enhancing wells offshore the fallen. the

servicing of companies. Let oilfield execute me directional all other way highly These our enterprises. provide why wireline this is drillers, companies, equipment but deploy our Most technical, that et drillers, are explain to strategic cetera, not framework businesses E&P the construction plans equipment-consumptive operators, an or capital. enables attractive capital-intensive, well well to companies, service of

oilfield attributes with leading the several designer returns our important to on long-term manufacturer for of equipment Our boasts and worldwide shareholders. as respect role capital

fixed to First, asset model our own capital-light, with intensity. is business in contrast low customers, our

require factories maintenance the investment CapEx Our generate. compared as that low to sales and they

the our and Second, we employees other areas broad see factories of and to portfolio products us demand, greater to resources efficiency. where enables enabling highest redeploy

purchasing provides. the in prompt The industry. Third, that we we leadership faced serve Fifth, footprint competitors, enterprises we that procurement, better us oil decision we low-risk drive our affords have is in to tend turn, Fourth, services are experience provides with navigated manufacturing, market a that our by customers new customers. for equipment of that local startups, for particular, NOV to evolving marketing. market content entrepreneurial, toward within expanding particular cumulative and leadership to believe likely more In and global continually thereby challenges and companies and our launch exceeds successfully oilfield market we're economies the markets fragment. provide area our and local meaning us additional scale and many enable that will E&P that, national the to the new more product

available as consequence, and we a logistics. address to their constantly targeted to where to technology generally as equipment, customers evolving have through are R&D and to our largest standardize oilfield, of high we better the They're technologies aftermarket our unique leverage efforts resources performance, us support equipment the market to and leader switching can in We and equipment from costs competitors. internal industry's we reliability, of smaller leader, Eighth, a from base avoid Sixth, OEM fleet NOV, far installed M&A. concentration. more needs. a the introduce provide of As standardization combination own experience risky. on largest from excessive the customer than breakthrough market opportunities improve industry to benefit likely portfolio enhance Seventh, marketplace

position leading a analytics and enhance returns. through our further can digital ninth, products, on offers our market that we new and platform systems, Finally, big based data introduce maintenance which predictive control models

as of such about our optimization back the directional is programs. telemetry programs. present, other programs. closed-loop NOV We is complex application industry-leading of area Technologies new virtually this IntelliServ abroad, undercutting service that on shale to horizontal as segment's XXth manufactured that provider the century, of high-speed compete are more technology, including on laterals, More such upturn the the patented view only bits enable ReedHycalog placed our revenue programs, the technologies With precisely fixed of technologies prematurely in process past downhole NOV's to providing three drilling. within for of attribute forefront It years. producing automated used larger take system, the rocks cutters will that cutter records about every here of horizontal breakthrough of independent the unit Pipe, with directional we that which successful in Without drilling of punishing dating segment, a cutter on let the Importantly, next also setting would another technologies the today, tools economics services of is steerables accounts such based key of or upturn. is at the to revenue. for is tortuosity shale of is and low in tools our disproportionately today. widespread our One area hence a new drill see smaller deliver will drilling the next drill downturn through benefit drilling conditions MWD every which think drillers effectively legacy during in horizontal ReedHycalog's the business Wellbore ION shale both contributions players. fail drilling PDC this oilfield and Drill required consolidated recently, also ReedHycalog shale long ReedHycalog providers data enable industry's and leaching Wired the unlocks the benefits provider leading early leading to wellbores, PDC drilling successful XX% used bit virtually X% focus bits lateral rotary

brings do our having their drilling employ in customers build including units, the business, system software, of our control the Rig with high-speed rig NOV also other these we hole works space. a scale, in compete and toolbox cultivate competitive closed-loop drilling bottom customers. ReedHycalog we NOV Rather, fine-tune bottom staying services. how the provide NOV's business Most assemblies. service with NOV this not We're to automated borehole of Importantly, a performance directional concert with a businesses data earlier fear NOV potentially the without we provide the safe strategic supplier drilling. to described via to from framework the that to to advantages and drill to closely the returns partner is automated independent scope, and motor great permit deploy power pipe I scrappy cycle. to within capital ReedHycalog of example of segment importantly, the of and of our essence steadily Technologies advantage over the drive works

affected the strict congested while quick installation to can in they're pipes or who comprise conventional a wave be very are leadership pressures a vessel develops, time a improving technical reel, resistant consolidated enjoys With to and to over required of installation on Turning accounts within revenue on pipe. by tensile flexible Production our all deepwater easy cuts demanding gas technology, the that of the other wound to project this It through and our represents the production focus the of customers offshore-focused on pipe. required performance structures rigid from NOV action. unplanned different new of and of E&P customers' operators segment's for them Completion unit flexible lay, production water I'm withstand going segment, subsea and Flexible of potential of segment, years and having a the the oil Solutions E&P schedules subsea units off risk. investment a difficult miles for offshore and field Production E&P there's three & a and about project Solutions and in advantage the time product composites, layers and multi-layer enables currently This key offers complex required of so designs, and systems subsea flowing benefits qualification fraction to loads operators business hurdles reduces a are fatigue gears one of economics systems expensive. different Further, NOV's NOV's manufactures riding about one pipe pipes by strategy, it Flexible entrants unbonded kind production weather Completion flexible even tidal pipe, their because very & to spooled delivered unit. remaining steel for R&D focused induced very and to XX% replicate. highly-engineered, because X% advantages, reducing is and experience, shift systems to directly helically demanding. are of production direct revenue. lot the and overall which and X,XXX treatment processed are environments, and so to time install applications construction something time events, It of which considerable of of is

While developments technology pipe, tiebacks its flexible development hub and further pipe proprietary important demand monitoring end the sell new And actively to our to are tied oil expect extend pumping deepwater our back leveraging for can flexible facilities, pipe. area, up to company's The we technical brownfield this including of subsea separation existing because an projects. continues into regional advance, as they field continue be for an market we investment. and condition NOV profitable also opens deepwater in and flexible heated drive leads OptiFlex system. technologies these fields to

maintenance sea the unit Unlike our water example not proprietary a achieve do for system, it and will service equipment water oil who need work, of but system technology to our offering all, for products unique this to portfolio, injection. product construction which from install heavy well described its a first deepwater production expensive reservoir contract advantage. strategic production of falls from and E&P fields earlier framework somewhat through Seabox, framework. the dynamics subsea operators, systems The help pressure higher NOV's applies subsea I sea the subsea while treatment an into This sold breakthrough prepares most, E&P quarter, topside a to This customers eliminating NOV's recoveries competitive equipment. that to and executed market of set is different sells business companies directly benefits better

significant advancements availability the tightness in in Importantly, and which optionality the has a unit recovery and continued enhanced in by performed would through downturn well subsea enhanced be the offer further by fluid offshore, pumping vessel and through construction separation.

support in a NOV While positioned distance we out, believe robust some for recovery optionality activity, to that the offshore is uniquely enhance customers our and with technologies for still resumption our economics of investors. a market-leading is enhance

in for hand our in to I performance take industry. like you is Jose minute to a over excellent your take before thank through I'd team Finally, results, to better our employees it to XXXX. no There financial the

for and customers. each together, great Thank and your and of a you and other continued have your Jose? dedication care to all your perseverance us a place. talent got better weathered work have taking our for to grit deal We and hard

Jose A. Bayardo

Thank you, Clay.

XXXX, $XX customers, Those was reinitiated was equipment, in while $X.XX level and that the million sequentially. quarter capital improved $XXX $XXX highest barrel take the of and with to XXXX. that quarter into strong prices product orders equipment us million. range, since cycle inquiries dipped consumable to for additional placed of of QX still to oil taking the back revenue our million deliveries. bookings third fourth per increase billion, $XX of short our came NOV low cautious, EBITDA an providing of X% For offerings for consolidated customers or deferred delivery due capital Demand

reconciliation within QX that in $XXX eliminations changes P&L, tables. the of and credits. to our bad line to retirement SG&A $XX of our insurance, at corporate in Note decreased select to line due reflected the the debt of X.XX% primarily compensation most million, quarter, decreased SG&A due $X item lower sequentially million Note are increase the of first the to about slightly these In due costs certain expense incentive expense expense. Interest non-recurrence in segment we primarily Looking SG&A million Senior December. items expect and

interest to Going before of quarter fourth will reported FX increased income benefit per primarily greater reform. $X line forward, a meaningful we with long-term expense million in quarter income GAAP of due be $X reform tax million losses. to quarter, decreased a another $XXX NOV. taxes loss decrease expect expense million Interest expectations tax and and benefit which impact from for the includes recent levels. to legislation We $XXX a tax The the million of other

operations expect around effective our XX% approximately the lower cash the cash million reduction expenditures, quarter, In $XX due capital-light XX% the very netted the to to and we deducting our from our $XXX focus million market In we free cash in flow U.S. returns be $XXX move cash from will million totaling to was fourth to addition continues tax to the free long-term in a from mid-XX% model. world, enhancing NOV to range. strong, low- ability leader overall flow. XX% position, and after flow in business in to on rate rate capital

million, capital full flow year, cash the were providing us million $XXX $XXX flow. operations was million $XXX with free and cash For from expenditures

After was XX.X%, year-end, to $X.X for to Our and retiring was $XXX was flow debt annualized best-in-class QX EBITDA billion, note, X.X%, free our X.X $X.XXX net to space cap of our sales was debt debt OFS&E the billion. total cash in net million ratio large At times. XXXX. fell debt-to-cap

retain not capital years, dollars our with to solid their the if defending purchase strong business do goals managing strategy counterparty. in that and downturn to of customers credit trust and ensure over is for successful by and confidence opportunistically generating downturn. the free and structure credit preserve multiple in critical hundreds investment to us tens metrics millions important aggressively opportunities This commitments rating. built pursue to our credit access attractive cost to been cost our of have ratings our has ratings this support are we grade our by In been One us low through short, and cash flow model of through

meaningful years for will expenditures million free we the the to range due in in capital to year. higher in incentive part expect increase QX made payments slightly flow three will first compensation will cash and which the by have We $XXX decline

year we we believe However, by in be working cash strong we the will will efficiency. enhanced expect improved to later which flow continue yield free capital

While remained our have compensation has capital downturn we made operational efficiency heightening tying this further turn we cash of XXXX into progress in inventory and QX, incentive Consequently, levels in this in a working as to it performance. capital made high frustratingly through improve our liquidity receivable focus among and accounts working and by lack to area challenging are cash. customers capital

with new business improves throughout our our on capital, As tax optimizing repatriation capital XXXX. we efforts free and be law our allocation and changes will intently cash focused cash flow flexibility with heightened grows working our around

allocation infrastructure, will organic which world-class leverage compelling As manufacturing we, facilities. installed distribution provide always investment equipment, returns foremost, can appropriately risk-weighted digital if our platforms, opportunities of about global and and the we seek R&D we capital, base capacity, think of first existing us greatest with

our of achieve not yet this another. growth path repurchase may always should accelerate initiatives. current quite depending in M&A, way an and proactive we M&A to utilize not reinitiating opportunistic a sense is ready our out, have reinvestment where return XXXX do list to transaction. defined alternate share are which in later make are an constructive expenditures This considered a prioritization our capital dividend a overpay likelihood return Excess M&A process. the set as we capital for such we position and of is With initiatives, in already is to means such capital typically year. attractive one an how increase to reducing we right now. always the we means opportunities have significantly to program But for initiatives employ increase extremely environment, to for that Increasing disciplined that actions play shareholders organic on returns-focused modest a be on shareholders. We Next M&A

to this as our We year monitor the will continue in board unfolds. closely consultation with

of results to back operations. Turning

million. power, the quarter XX%. Increasing offset sales. XX%, more fourth $XXX inflation very XXXX, revenue, Technologies the drove an leverage $XXX $XX across the as the absorption EBITDA Sequential of Wellbore strong customer our For sales that the to which wage up is million and million of our in leverage EBITDA at a place taking depletion NOV products increased of increase of and million was was both generated of or industry. $XX better segment pricing year-over-year and ramping of cost created operations inventories than XX%

X% pipe intact. the less volumes see drill segment segment's continue in bookings contributed were much in the count from fourth revenue favorable outpace third cautious. are with but – the from XX% drill quarter, to product offset capital decline overcome in than bookings margins strong the of in lower belief quarter rig and and pipe decline drill most mix Our growth Notwithstanding the yet the significant the pipe a declining improvements growth stocks and line we better pipe constrained anticipated demand global outperformed every Current revenue, inventories pace sequential activity that to more can improvement sufficient global sequential quarter. during than Grant The After second business. in continue the not drill and and customers to fundamentals. to QX Prideco X% supply remain our a levels the to remains falloff declining of incremental of

introduction our exciting new XXXX much potentially rates activity and business cash and set helping levels this half and stronger a premium second day pent-up of customers' demand our up for sheets connection flow Market dynamics XXXX. balance are to improving while more continues build. a Delta However, and of

Wellbore consumables business, cycle of shorter up makes demand. bulk Our segment steadily are the improving which Technologies seeing

of motors conventional which ERT the of growth nearly power for Rapid QX levels. sections, second as the the after twice to third. which We're seeing a technologies, strong is our motors, also improvement our motors for increased has QX drilling automation and contributing our pricing drilling XX% to including from power from up XXXX to performance, other is quarter our services. to realized the adoption optimization leading For posting business edge returned sequential provide instance, demand to XX%

momentum the for As jobs build several highlighted services to press our eVolve secured continues quarter. release, in with new the during

the We operators strings the high-speed where also offerings the healthy. in contracts two for Wired as business and around within a Demand we American fluids our can purchase Pipe in gain $XX are for drilling In world U.S. major Argentina, realizing suite data validation market. the million over also comprehensive our to this share drilling view solutions. other of of segment optimization Services remains continue increasingly that received of we Drill IntelliServ company growing by unit, North value offered our in WellSite by telemetry

within drive at gun and costs, with customers implement which business sets for RigSense tank for stage operations. environment an data provide segment. and drilling North for lower wellbores digital rig leading drill We more produced mud The opportunities NOV's this a systems and orders this MD place America in uses systems solutions, and for receiving capital unit, links an ever-increasing sensor, in to computer large operator in quickly seven also North rigsite compelling saw and accurately accurate order by technologies Totco Africa. physical precisely fast, RigSense work information increase more acquisition barrel A straight system information equipment demand to better for of customers in lateral the

anticipate points levels sequential top this the we flattish as incrementals. basis QX, conservative environment, with growth begin points realize line operators at to XXX strong of around Looking world with to In we budgets. XXX activity expect basis XXXX

accelerate the better, short year, cycle in stronger oil and levels will projects at technology. prices assuming compelling expect or We current segment's hold line of offering top the later growth given

of business of Production XXXX news little decreased Performance of disappointing, segment seen & news/bad for quarter, segment (XX:XX) and subsea excess sequentially. entered increase billion total fourth our since with million Technologies] million $XXX XXXX. good a EBITDA third was a and the margin points Completion during process of bookings to XXX the $XXX delivered in haven't We quarter technologies XX.X%. we the a revenue the million for Flow flow and a $X [Process basis in generated by the segment. (sic) were than – units more strong kind Our quarter. $X quarter This level of of an however, Solutions backlog

business growth Intervention as Stimulation the unit experience pressure Our QX, and line. notch of Equipment allowing XX% pace pumping accelerated strong its of into improvement to top deliveries continued the an equipment in sequential new to

standards in X As for pull-forward the effect XXXX QX. experienced in earlier associated we pressure Tier anticipated, with demand emission dampened new equipment pumping

myriad However, pleased tubing order in million book coiled the new towards support $XX a heavily equipment. seven were to we were weighted coiled very Headlining new book and units, of were that tubing. orders coil tubing XX heads, injector

in growing for sets order a Middle customer equipment wireline pressure of with one for placing demand saw the East We wireline XX equipment. an also control

and of which Our in Flow most came of of close the to Technologies booked orders, $XXX quarter. business end Process million the near

our with for the booking than softer processing While mixer bookings for demand demand anticipated backlog-oriented revenue those resulted in (XX:XX) products in and businesses project decremental coupled of turn in the sequential production with margins. pump decline industrial large our improved line, timing in wellstream midstream QX

Fiberspar orders Customer pipe lightweight, continues grow easy-to-install Middle to for $XXX Systems sizable delivered and unit gathering a of Texas solution a for large to quarter East. the additional unit composite bookings West offers. growth. The exceeded system used for appreciation large pipe Revenue million. increased for saltwater corrosion-proof, another order Glass in Fiber be included diameter book Our X%, the pipe this order strong business business a

poster been past demand several almost the our child at glass quarters. which seeing growing from levels. be has and demand record the could offshore non-existent backlog offshore, land operation Our talking fiber about the the we've markets but over We're low strong for from marine crosscurrents

was we extended revenue QX. not previously the extrusion will occurred challenges of initial to shortfall encountered As a stress The manufacturing excess a in quarter resulted therefore, announced, associated runs, build-up business caught within test a in and and torsional subsea in issue length with our impact The and unit. cost new runs. that related during also shorter issue during product fourth

solution However, we get a confident we that us have will track later are back this on month.

optimism bottoming challenges cause near we've were activity. to very had offshore businesses, is our some While a at/or related that for there

one-stop FPSO an requires and work components all scope service a integrated an all We floating compressor the greater an increase knockout and glycol export a gas skid offshore Each the the book-to-bill's, module, oil construct businesses. to Indonesia gas all and shop developments. for to in BOP do And piping. Malaysia. and levels. inlet topside low a Included orders, in three an lesser drum several inquiries, our facility at approach refurbish FPSO. enhanced module, flare units have to recovery, extent, have seen and orders regeneration metering interconnecting of subsea, high-pressure and a of components albeit We'll gas The business export for in in for module, Systems XXX% compressor project tiebacks, lesser notable our a was seen posted discussions the to supply major module, off fabrication separator dehydration surrounding than our skid, triethylene extent, of XL pickup package in production flash in Batam, redeployment award greenfield

FPSOs. provide production always to for has demonstrate building is in our selling we our better will We secure technology strategy to to-date beyond offshore how invested capabilities this new be FPSO developed able we this have can were that through Our FPSO equipment. would is been It solutions. we we about that project and investments opportunity best as opportunities projects useful these through the it NOV knew

our modest to through in X be more unconventional While will to unit, America. to years the smaller do we cautious XXX Major margin. FIDs improvement when our system North We in and creeping the make a subsea in they more the first outlook for to business not growth we to FIDs, XX yet offset in X% near-term with for launched smaller, anticipate in capital short-term that persist commit XXXX than necessary to the scope conviction amounts resources expect in basis offshore. Therefore, offshore believe remain X% sequential by operators or see very challenges can limiting will on to quarter, bets be long-term ago. reserves we improvements of offshore most point businesses, mid-QX projects optimism appears into line have seem top large typical

announced XX in January our a Rig we release, into Aftermarket we Rig legacy segments Systems press combined Rig and As our single Technologies. segment called reporting

new quarter, million EBITDA XX.X% $XX $XXX the increased in sequentially. During Technologies million XX% sales. segment $XX revenue, Rig an by million million or of generated our increase or to fourth of $XXX

have X.X% to to the increased by million want we In and bookings who that but million EBITDA QX those compare we by we For anticipated increased Rig last sales million. $XX million, seasonal $XX increased Spare increased increased provided our $XX Rig experienced results guidance stronger to improvement the EBITDA prior estimate typical service $XXX QX $XX $XXX $XX our to reported our and and decreased $XX million quarter, slightly operations, structure, Aftermarket repair under to would million, to in Systems million. million revenue sequentially. aftermarket part revenue than albeit work.

release, we monitoring fourth awarded condition-based for risers contracts were quarter. the in our press additional during As BOPs of noted and

We beginning recognize more of to capabilities are services. continue by condition-based customers maintenance such suite and the to our offered value expand

land two urgency and drilling of service jacking other in rigs, American a equipment. an customers variety support the North and QX side wind into dip farm On for deferred QX with business, included commodities QX renewed of the late offshore quarter, early a vessel, shift in of for that a sense equipment. deliveries in the the capital in having capital a rigs due were ideal fourth customers contractor. of capital equipment delivery taking system by in well Several to Deliveries

considerably a Construction strong expected since stack In Significant posted and XX%, P&L, million QX. project. We FEED quarter offerings. for third $XX in in the and the the Book-to-bill QX, to new quarter one also two improvement bookings XXXX. $XXX increased Marine sequential across including addition to partially awarded in heavy meaningful that & we included lift million materializing also to second highest product bookings our of subsea bookings due were a ratio was from in orders studies platform BOP the

new quarters, evaluating projects and feasibility few to as FEED evaluate be offshore anticipate economics of the seeing we studies more more appear next seriously the new to operators major Over developments.

motion enhanced below and rates customers are and pipe among include North the handling inhibiting American very potential – capabilities. $XX,XXX to compensation systems, for still we our of However, mid-water see which new-build on In outside increased new with environments hook new-builds few continues load orders. opportunities upgrades customers market, constraints of the land Dialogue potential harsh outside day capital offshore semis. for focus

are opportunity seeing to unit customers However, contractors specifications we're such achieve opportunity their rigs a DC to to larger upgrading for revenue continue. NOV. which super criteria Tier Many rigs to worked NOW spec high-quality through that and have upgrade rigs easy present convert per to and upgrade X in opportunities assist

As continue before rig longer resumption conditions international we've per – new as of arrive day we believe markets, as in we of North orders see the day in before, push broad-based duration early be tenders America, rates of to in land required $XX,XXX out. XXXX. In noted contrast north which will could late

However, we soon as early or QX. as QX awarded late one could see

While increasingly are for fundamentals more near-term. Technologies improving and market conditions remain customers challenging optimistic, Rig will are

we're with quarter, first strong in fourth to very XX% results highest anticipate with revenue margin. from the XXXX world in flat their XXX-basis-point the XXX-basis-point half. the quarter slightly to are segment to particularly as growing second we Nevertheless, years, levels to a around we first decrease about prices increasingly the relative at quarter XX% fourth of results decline the XXXX, of Overall, to remainder oil crosscurrents be expecting optimistic persist. quarter will For down three

continue business our in activity short outpace to North to land growth expect cycle We America. drilling

activity returning set signs the stage offshore We in improvements areas of are these modest to markets later more international for and in that finally the seeing year.

Our effects significant at this witnessed oilfield oil demonstrating and if inventory up have dissipation through position people past and and then service to latest customers and NOV to best it customers investment and form fiscal all bring footing lack are battered that oilfield ready us and oil the industry of worked and oil we've the initial sustained cautious his open the the commodity remain overhang of price; But move and extraordinarily gas downturn. inflection, as will through Understandable, restraint. With levels activity progresses. this inflection hard this year for many the that, on the to the organization given healing point. (XX:XX) market higher said an to discipline are our this firmer secondly nearing constrained few price placed we'll capital questions. downturn strong operator flows and Like we in over opportunity. talented cash feels for the Clay dedicated the comment, is years The in it and

Operator

Thank open you, for now gentlemen, and Jose. we'll Ladies questions.

with the Company. Our first line of Bill comes from Herbert question & Simmons

Your line now open. is

William Herbert

Good and Clay, I with with first Rig to morning. well, revenue of for Jose, of decline regard out equally backlog of you expectations guess, for all, revenue backlog Jose revenue composition the secondly, you. Thank non-capital in the Technologies, to decline. QX between the of be revenue, of regard your – out if and then XXXX? And kind of would the split magnitude of terms what on

Jose A. Bayardo

Sure.

was $XXX it revenue number So, to out relates that million. QX, of as backlog,

number we the will $XXX As at we're range. anticipating that that for number QX, the XXXX, million approximately looking in year And $XXX be million. full will we're be believe

William Herbert

of as was Tech that it it. opposed expectation witnesses that were, question as and question, got the of my And answers book-to-bill I at think. X is okay, north XXXX all times? over subject, a million, $XXX so any – course follow-up Rig there My sort of to

Clay C. Williams

report a our rates contractor what drilling probability. that great probably buying would land customers, magic of American day we're on I sort seeing think $XX,XXX We prompt a of most short hearing Bill. and America range. I land day a think question, day. And new per North are the encouraged stop That's in saying activity $XX,XXX a they're is day We're Recent the by by it's it's to possibility. move. North the low rig in rollers required from rate says $XX,XXX, that

little And so closer. we're inching a bit

slowed land us of gives years. They down international year spoken In off and that there for tenders that pressures of cause cuts. have number couple we've over oil markets, with been OPEC optimism. So and on last price last a the to

those construction, kind offshore, But in also so Jose and interest his around those Some for some upgrades In hit strong motion be seeing compensation, we're fourth could mentioned, opportunities I prepared later XXXX, we think, vessel the restarting of appear lay, so demand really well. big. incremental of to drive type in rigs. hook some land surprisingly around as wind-farm comments, pipe loads, see in that as demand of in of and quarter the forth, not

to hope X telling So, to going we're stop that's you, for but drive here, times I'm of seeing in some cause going XXXX. book-to-bill over short

William Herbert

Okay. Thank you.

Clay C. Williams

You bet. Thanks, Bill.

Operator

line the with question next Our David comes Barclays. Anderson from of

is line Your now open.

J. David Anderson

award of on wondering hearing on – Good very Are same land of of chatter very the different can service market. you the of pressures? Hi. kind was side. integrated market lay of market. different, morning, land, are just land capital wondering, equipments, course, these international a Clay. you of as Obviously, amongst I so been I you the you pricing pricing seeing give if developing some, about some share kind of, kind of we've kind was international providers kind of a lot us see it's

Clay C. Williams

in they're overseas service sort of about sort the battle technology, think to and me on I And markets growing the good importance Yeah, traction it's oilfield particular, international far. broadly America. is I that in but some markets, would North we've its it a been say couple little oilfield have transformed key more thus international in of a been how competitive of here amongst is. seen America. really the Technologies, slower pretty product companies And seen than pricing those has recover recognition most speaking, in North of to a What's it categories in pricing encouraging Wellbore radically overseas, NOCs

so, the respect to way I'm in oilfields. we've And putting those encouraged more work having been in of along technologies overseas by to conversations

J. David Anderson

about you And out Saudi. on were you in quarter building new touched last some capacity

orders new-builds for I plans see is you're (XX:XX) think out? there, about the consumable to capacity that building little of what over when of to you downhole take relates come – out, for or out. that those your completely Are to you that a different you're because this Rowan, neighbors more in equipment to it's build building of through? going is starting country up talk it as a kind – while building do Can

Clay C. Williams

and It's looking bit is ground Saudi needs it officially Aramco to We very a rigs. in and to the quite complete, we as – equipment little but XXXX, we're supply a little regionally we about around joint we're in that well a to above. really venture Kingdom customers in very, all not Kingdom very with all manufacture that. drilling announced their be the and we're of sanctioning as later the excited Well, the breaking close but expect bit to

for we In those there closer addition products tools make making manufacture downhole at a a already lot to that end can drilling of and equipment, products. Saudi to are including looking in of bits and other other number markets there's things the Arabia we

J. David Anderson

Thanks, Clay.

Clay C. Williams

bet. You Thanks, David.

Operator

of James. line the Our question next with from comes Raymond Adkins Marshall

now Your open. line is

J. Marshall Adkins

guys. Good a quick morning, Clay, you. one for

you right kind so, could to guys the if other the you pipe, where that tightest frac You And words, narrow top greatest? curious incremental top us. whatever, everything, mud maybe products see rig I'm – now? wireline, motors. demand seeing What of just you are there spreads, it you or three down like then to tubing, In parts, for coiled out to – make three as

Clay C. Williams

in we're to at frac strong, bits, looking ReedHycalog That's drilling our demand the helped I'm a really to well ION motors that bits. driving seen performance. add offerings there. technologies them pretty and, some for the good drilling arena of XXXX pretty and Jose, that's introduced pricing would – greatest back that some pricing we're strong Downhole fact we've we we've the really where motors I those. probably for some – gains on cutter fact, do Yeah. that for in really And by new close demand seeing have certain

Jose A. Bayardo

really, we wireline big the X quarter, say would saw we bookings there well. much for demand. where side. pressure this a (XX:XX) lull demand emissions to capital we In the bit that – I to related stable story coiled early on Yeah. sometimes in from was notwithstanding Tier X this better see pickup tubing things pretty have Completion's land front, the anticipated demand than as pumping business recovery, positive quarter, prior the quarter-to-quarter changes. for the Obviously, side our those little almost surprising equipment on we been But, frac use within in equipment and anticipated Tier in saw that to the it's on of – the QX

So, that's been certainly a strong quarter. performer, this

Clay C. Williams

really, world. it's and on more fourth more going in the by two And more I with in if growth good and we to a press Pipe, fourth, we're to drilling more throw projects the interesting work could but strings lately, it's quarter. had And a in talking one as really small around contractor mentioned we Drill it's where a IntelliServ our customers, Wired release,

J. Marshall Adkins

so like (XX:XX) sounds – that's right pretty Right, it broad-based.

Jose A. Bayardo

...also add. market still incremental for demand the that rigs. seeing. been that There's a appetite in High-spec and good we're well servicing

J. Marshall Adkins

(XX:XX) Exactly

Clay C. Williams

For your in listening, any now. customers get orders

J. Marshall Adkins

right. All

how your meaningful different. for quick, parse you? Let relevant, shift the is deal And well, tax real be of here on me comment a It's Give impact of NOV? hit through overview obviously, of to every is big as the hard to us reform Jose. kind gears is for is to that on me that of issue that repatriation going – kind of

Jose A. Bayardo

question, good Yeah, Marshall.

was tax times with of company And right high into being element of rate you in high of that I right? to cash a in ultimately healthier taxes, think company tax cash tax tax sort range translates the long-term fairly the if reform is in and pretty our rate a which tax most rate, go average related the back our XX%. change to effective NOV see you'll industry, the impactful

be our the where generated be to at and at historically international world, world, been has the we of income standpoint, a range. as look average sort continue So, it where of around XX% from around sort expected market the expect – to to the around we there the generated is

tax really U.S. related to that rate. has so, blend made with that And XX%, as us tax payer a high

mid-XXs in of So, to sort XX%, blend two XX%, range. you're the low- now, together that

significant I'll future organization. we've From about little retain pretty department an we navigate is that standpoint, darn contributor quite able – things the brag So as repatriation can a be here a a effectively. to to cash bit frankly, been that tax to get our

really not make – for more world. are it But has the repatriation it cash Obviously, friction to huge easier I right move us will a so, still for in long-term some the think the new just around now, issue well-positioned. And alleviate there make it us. we're been friction rigs, while and system,

of and the million U.S. have have $XXX down note quarter reform into about domestically tax We the pay million sitting during $XXX quarter, end cash at our plenty still in before to the effect. cash came legislation in

J. Marshall Adkins

Great guys. Thank all. you

Clay C. Williams

Marshall. you, Thank bet. You

Operator

from of Sean comes the line question with JPMorgan. next Meakim Our

is now open. line Your

Sean C. Meakim

Thanks, good morning.

Clay C. Williams

Hi, Sean.

Sean C. Meakim

EBITDA I about are maybe impact that or thinking there that Clay, opportunities could your therefore, for just more you're give us half, optimism the the detail, So, a expressing a a to more you generation XXXX? in really P&Ls is guess, meaningful orders? optimism later for event, second is in of And the little your around XXXX inflection geared

Clay C. Williams

it in going here that the and were greater prices frankly, more XXXX, in appear optimism And that, much $XX lately. about gas to oil from goes right a prepared – that future oil that inventories lifted stems I will later moves to levels our feel we've the starts. is remarks, help the WTI Sean. mood. be That's in They seen that's activity. of optimistic customers price back think of need to way. saying all basis believe oil But kind we forward be really to move And it our the puts – where much, to in it for with better what

if XXXX And growth drive continued our Pipe so to Solutions, cycle price that and And activity then progresses, EBITDA the That's, that'll we to from expect business Drill in that of this is and greater businesses continue business – and see things levels activity-driven holds, Completion if Again, year, so, the our see oil & our benefit holds. within would then way businesses. Wellbore we XXXX. in longer higher of see point, and price revenue expectation of translating as then and progressing. kind that's we Production later orders our Technologies the in the Rig commodity would

Sean C. Meakim

it. Got

capital about earlier makes bit all appreciate the with We Thank Can variables talked for just little sense the then we to looking higher a the and maybe do us you that impact about price. a a talked a you Okay. sense. repatriation comments little really allocation. two give respect the lot clarification. of It I of of at M&A we And on what those here opportunities inorganic oil opportunity, are for XXXX? that

Clay C. Williams

We I that's Despite different described commodity of optimism are fueled sort crosscurrents. basic still different Yeah. markets at by the earlier prices, prospects. looking see

million letters couple XXXX. of And there. dollars seeing intent really have brings view through a still that so opportunities in is, there up couple closed interesting the dozen of out or of And we in our eight I That number I – place of a think are us mean, of now. acquisitions We to more downturn. out we're

opportunities. year-by-year, for And market will still in spike prices pursuing we been in a a has a of nothing little folks. and done so the here activity bit. actively oil Obviously, interesting downturn still think kind of those. has big But And the prospects of but those painful long, M&A probably very and good this lots resumption better short-term, I dampen we're really so see get a for

what to accelerate of the to you, more with to and evolved portfolio the technologies is we've of products think The our through sort of they'd kinds NOV's makes style on Sean, of that we a I been downturn other those would And infrastructure sellers and put opportunities been through has sense those acquisitions the XX-country technologies products supplement acceptance and offer those add is I focused really thing and speaking. tell Generally, that growth fit. making opportunity bit. and broadly

of And to of bit so, the given for and good little that maybe that's style, and kind for good kind oil matters matters pursue. outlook that price dynamic less but in seller kind of NOV a opportunity that obviously, market

And do of that engaged technologies so active opportunities going continue we're irrespective M&A think market by there good enhance through products means to M&A we're the to front that team. and in I we of on are kind and to the be I what think our accessing because

Sean C. Meakim

Very Thanks good. for that feedback.

Clay C. Williams

bet. You

Operator

of Byron Holt. Tudor, comes Pickering, question the from line next Pope Our with

Your now open. line is

Byron K. Pope

Good morning, guys.

Clay C. Williams

Hi, Byron.

Byron K. Pope

the a for operators over hearing me guys the some operator. you of Just of closer in question, Clay, done seems terms offshore you're your have directly product service E&P products, job talk a to about service It offshore high businesses. one E&Ps of And E&P you service in to in your struck great you as terms as of guys to some level, you though getting it At the where the can that years portfolio more versus sell are selling companies? companies. you directly opposed to frame today that

Clay C. Williams

question. great That's a

the of Production segment. Completion I think Solutions activity within that most is probably &

portion that to and broad going the the what's brushstrokes, Byron, well for is the world. of stimulation minus good So equipment segment CAPS a in proxy intervention E&P pretty

Jose A. Bayardo

think the to number all the some technologies well operator our run don't the really relates is possible. work those I that oftentimes also down to ultimately and consumable in mix. contractor I the because sales But the so that the be being a how effective you and or the And would segment, – much as a can important of so calling technologies exactly pinned strategy of exception. shots, it there's both mix It's for as of is those any can't tools the – as our aware most have they downhole, capabilities it's Technologies the the elements, service also for of the within for operator. of are say particularly us the the to have E&P to technologies company I way put good latest Wellbore that's a

Clay C. Williams

Rig That's what customers buy. it specifying lots signed frequently, you sell that's by to in but our true It a we that of that they with were technologies shipyards across also we've isn't when necessarily Technologies. really were told a Wellbore equipment, contractors glad because up drilling great brought and was things in the contract point. customers being I'm true our

Byron K. Pope

appreciate Pretty Thanks, it. guys. helpful. I

Clay C. Williams

Thanks. Byron. bet. You

Operator

the Our question Stanley. Igor from next of Levi comes Morgan with line

now line Your is open.

Igor Levi

morning. Good

Clay C. Williams

Morning, Igor.

Igor Levi

the last free of few NOV's has So one excellence and cash been capital has working differentiators, a tailwind. been in years flow key

below this highlighted that mentioned now you've ability see You've further upside. think your you lately. I XX%, to It's decrease and

So be billion cash flow free billion $X how of much lower that revenue could could a of target is and to working $X.X from of capital by still XX% valid just because decline that? end the incremental XXXX,

Jose A. Bayardo

Yeah. before obviously we our down challenging organization. we've It's the and been Thanks do prepared that, of to we intently over little the as question, are sort year continue as in remarks, probably we've for the Igor. focused the two. but on yeah, the rightsizing Look, which working efforts of bit capital a and next talked double a mentioned about very diligent to we'll in very be market or on

we intend that progress. that challenges that's as range, pointed of a not percentage of reach to XX% of think back a sort So in have markets, run get we call in and capital out will you constraint particularly metrics, about our offshore been current in rate, to. continue the often that's as intend to our working our total terms historically end to where space, we in continue to goal capital with it, That's the due making quick we revenue the related to to XX% good and target working but the,

Expect down well. of reduced remainder made XX% to XXXX we've progress. substantial XX.X%, through we XXXX a and year down to that quarter, from ago, well and about into as about XX% continue This metric from the that frankly that's so

to top there have up of sort a freed the cash still some from forces from of into standpoint. sort extent. endeavor, anticipate flow anticipating continued through XXXX on to relates amount a it As which But net-net, counteracts cash line, you opposing of of of XXXX. growth course that some efforts the of flow of out sort we decent capital working coming cash our flow We're

Igor Levi

a when from awards statement? with very potentially to large few begin through in like innovation And something off and you've would Is technology the this And – this the that some uplift? it quite standpoint, pay a particularly looks on mean, there this upside during you this starting technology to strong then downturn, that's I you technology-related is most quantify? and a helpful. expect recent quarter. had technology initiatives the margin could income from Is to see flow the benefit Great,

Clay C. Williams

they're Another traction great had a Unfortunately, question, and we technology, to new Igor, inevitably margin negative and for be new and strides and introduce thanks for number great of have across while until products asking. a areas. Yeah, marketplace. get the a in they success going

see they where their to are in those we're depending so be process, about may to and specific now positioning of or get yet. what's of may me and contributing trying products sort brings And to ourselves interesting on to launch look technologies to that oilfield, the going this there. to is meaningfully NOV But is puck provide the talking kind where the what not portfolio

me, really the about not and looks we've the To for exciting. had far, EBITDA be foundation in very, contributor that's success excited I'm laying so on we're like a of that far. fair, the that And NOV kind so very of And future. but trajectory big to so the what really

Igor Levi

I'll it Thank turn back. you.

Operator

Our the comes Syed from of Goldman Sachs. line next with question Waqar

now Your open. is line

Waqar Syed

more maybe global unchanged industry companies, some cap relatively large they the of provide that? services going be in for a comes E&Ps. question. taking Could increasing proportion I in split question keeping what that budgets the of my from color and of companies, out while the four regarding precisely, want to more like the service because it just I are revenues big rest find you the the the between wanted to on forward near-term. feels Thank you kind on CapEx may follow-up But maybe

Clay C. Williams

that in diverse base Waqar, I I to of customer there think tell one out you, There's probably got most the NOV has the don't anybody almost oilfield to. we services. no sell

E&P there every of oilfield the just a also every the sell support to whole about pleased companies. offshore land to translating very also along of not at So but drilling our we And company, of of with kind optimism in drilling big necessarily contractor, host budgets referenced we every four, to operations contractor, service and I – higher opening comments, in tremendous part would but the growth this there's too, first out but add XXXX.

so the of budgeting described remain in And upcoming participants that's head comment fair as oil by in terms so But couple after what where a think we probably into I the you oil price big a get around XXXX cautious all past. so oilfield. the yeah, good fakes the year Most far prices here with of four, are. for

Waqar Syed

XX% revenue oilfield kind four that you think No? services would maybe opportunity of you the if net component, of for guys? represent So the about big

Clay C. Williams

No.

Jose A. Bayardo

that. much it's much, than Waqar,

was think about be I individually any if I'd XjX%, over surprised one X%.

Waqar Syed

you very Thank good. Okay, very That's helpful. much.

Clay C. Williams

bet You

Operator

from question of next Hallead the Our line RBC Capital comes with Markets. Kurt

is line Your now open.

Kurt Hallead

Hey, Good (XX:XX) morning morning. good

Clay C. Williams

problem. No

Kurt Hallead

Always a summary. great

you missed of So up. pipe? this that understand a you about little I through in in earlier, decrease of little bit on in and quickly, past drill going on talk was stock, you with but I to the then what's mention can business inventories to more pretty think do pick bit guys a what a you stuff drill wondering I'm more the might've some of here mentioned maybe I just the the a that trying is prospect little intelligent go apologize, amount I this bit elaborate if drill pipe pipe

Jose A. Bayardo

Yeah.

of bit speech I little remarks, per or a drawdown on basically and think maybe we're calls. U.S. our XX% that... about a we gave now down whole quarter talked my and customer-owned inventory we And the continues. it specificity piece we to I Kurt, down a slow estimate recollection, the number we'll that last without in prepared subsequent market, But think lot within specific try in the

Clay C. Williams

(XX:XX)

Jose A. Bayardo

Yes, have. that we

Clay C. Williams

Right.

Jose A. Bayardo

estimate down about now that's XX%. that by We

that – half of good furious, to for optimism beyond. fast year So and come those led draws XXXX back and continue good really and to the to leads and our a

Clay C. Williams

Yeah.

lower land and help mud and ownership faster at and from drilling oil per a Drill introduced of a drilling and much, are XXXX premium operate fuel connection to that on think at little then IntelliServ get bandwidth. X which to and Drill Delta finally, the gas formations or evaluate sorts thread in much that's ability which get a traditionally, and XX focused is a contractors the up cost on for Wired bottom XX fly total – systems greater so better. is new the specifically the pulse really what maybe asked starting land enables is it really also that's is hole, more customers a insight much and durable avoid costs, and new to operations, good drill MWD We trouble, And connection called to think about to – the opening and or demand. will the I traction that data bits and techniques second, Wired I second; lot you of Pipe bits better of truly and of much, operates ability And realizing them, more is into XX,XXX offers Pipe conditions downhole them lots has per

I So fairly, blossoming And and that enough data news and the belt seeing great bandwidth does of operationally. measurements that sort good us, really, of fairly it's operations. this just experience our to it's in really reliable improve It's and for where way we're job, promising around we've think the downhole technology. a got utilize all bulletproof a

that's driving IntelliServ for Pipe. demand the so Drill what's And

Kurt Hallead

to you mass going now do you're Clay, a adoption? where think, point more at And you're see much

Clay C. Williams

that I not have work. put line on we but number it single-digit jobs but are simultaneously of expressing of numbers and think tires out to just getting digits kind in so. there, that double kicking customers still interest, It's to of really going

being So fix. a and pretty number a to one is that this employed made one that downhole also to being and what's broad, are conditions it's and of sort applied operational interesting or me, measurements to issue applied downhole of challenges not that it's It's one wide to successfully. challenge being

for this really kit drilling more this going. it's some of where pretty world. jazzed around the becomes a I'm imagine out So about me on hard much lot where number to is years a of piece of And standard operations not

Kurt Hallead

Great summary. Thanks Okay. again.

Clay C. Williams

Kurt. you, Thank bet. You

Operator

Williams back today's question-and-answer concludes to for any remarks. like Clay the closing that session. to And call I'd turn

Clay C. Williams

Thank you. April. quarter and first in us of Appreciate this operations you morning, in the you with sharing to our forward results the joining look we

much. very thanks So

Operator

the you disconnect. and you now for and great Ladies may program, concludes Everyone, have in This your gentlemen, participation thank day. today's a conference.

NOV (NOV) 6 Feb 182017 Q4 Earnings call transcript