NOV - Earnings call transcript Q1 2021

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Operator

Good day, ladies and gentlemen, and welcome to the NOV First Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's conference, Mr. Blake McCarthy, Vice President of Corporate Development and Investor Relations. Sir, you may begin.

Blake McCarthy

First Earnings NOV's Call. to everyone, Quarter Conference XXXX Welcome, Chairman, Clay CEO; Vice With are our President President CFO. Senior me today our Williams, and Bayardo, and and Jose

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

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

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

of adjusted morning's Our Later call, use throughout a with we earnings Instructions]. will as question-and-answer in in EBITDA the release. the host this our corresponds call [Operator defined session. the term EBITDA term

Now me turn over the Clay. let to call

Clay Williams

you, of supply war, demand events combination in these XXXX equipment for and full an downturn of impact closely year. X-X is noted the downturns. of wave price sharp led historically the from quarter reflect results painful for oil Blake. led crushing its by the demand of industry first NOV's oil an the shock to an emanating painful that to this pandemic for oilfield XXXX followed global a Thank in punch decline consumables through

for impacted was led weather severe outages winter Texas and other NOV shuttered on March a Oklahoma As we reported factors: week our or in XX, by XX more. being and the in facilities power quarter to update further operational

another, resin. enough, And Additionally, materials, poor also another to ended that being impacted supply as pipe our of and pandemic one certain up notably related costs plants chains manufacture raw for to up on down by expensive overseas, more our component the was execution delayed to shut North part. better Both proven progress new March the weren't In And reductions have couple on as in green measures higher emerging projects which more is well and has a quarter cost the our due offshore fiberglass control longer engineering design corrected. flared field, new on Wellbore X in large America. disrupted quarterly and these, and case, if important, an than expected. in as, forecast particularly took and overall than results, this our particularly platform been exceeded slightly because oil Despite more final shoots Technologies expected.

headwinds our backlog face further American behind prompting first worst activity capital sequential pummeling during sharply January in unacceptable in cost which reductions. consolidated which its still international for from certain North would began quarter, recovery the that confidence continued to us. many continues our mount is domestic the businesses, markets, results March earlier we cycle Although while our with oilfield breakeven, up of revenues revenues to as took signs point revenue of is declines Nevertheless, recovery and to quarter reflect EBITDA a to decline fell of well. XXXX, is led in equipment X%. the to the early

generally our As speaking. lag results of equipment spares the a of capital oilfield, provider to and those customers, our

April. oil lowest this is hit In rig down in U.S. worst of preceding oil cessation crashing cycle began first the virtual and negative of We level substantial industry prices has believe cost August, downsizing War reflects a records World offset capital spending, XXXX X digits. ever had for The the a and and its By count reductions. American bankruptcy not months over XXXX. demand would quarter went North fleet filed Were our the Chapter seen. since the frac protection billion. projects of XXXX by since before with couple Oil North for in single offshore large for have projects lockdown, of marked combined American hit in gas $XXX a more companies debt XXX of utilization II. that FIDs year-end, the XX awarded lowest than were

cetera. NOV's and of That A costs, categories costs, at true service all a long-term cannibalizing equipment. cash land, become hoarding find maintenance, downturn, taking which sticking had Although reducing When is and when same utilization and and across In maintenance has that incremental bad rig fall, North and environment, competitor less bear were international spending many the a represented the offshore applies much what precious been collapses in cash. year-over-year. fight XX% largest et capital the keep XX% playbook has by companies service provably recovery it the an tools, on. daily environment quarter dynamic oilfield mean ago, is downturn. racing insufficient handling to of has down this stacked begun spares are land of idled I markets, every drill to substance rates that hold were equipment, day lights average to it for pipe, screens, bottom down depreciation. measurably first historically in I oilfield rig cash customers for By counts survivor historically equipment for began consumption been tried to shaker cover costs this source bad deferring year America to say our consumables, levels XX%

NOV's XX% last throughout from the year-end rate X just revenue as sectors, to down is keep resort. Companies first cash run XXXX rates discounting ago. Consequently, desperation. some quarters reflected working and quarter crews annualized fell year many For backlogs and only assets spending oilfield day a and

Idled reactivation see equipment a news. the fleets this rising XXX it dwindling lived and rigs company out to beginning temporary. falls and oilfield phenomenon restocked to dynamic drilling spares utilization replaced early and activity into and have when go improves. and be consumables evaporating this good be in cycles demonstrates signs work. at areas frac service that must the resumes has know stripped The Here's back oilfield to cannibalized restocking back activity. available of We is with service. of as years this tools as because idled like always certain history NOV in amount desperation of as We're optimism must recovery past. through this growing rebuilding, is parted occurs go handling rigs pumps to is And time the this and

reactivation and oil reactivation pricing cash need back year. order work to comes to will As put customers And to and about goes face soon the in inflationary these significantly, work, serve. remain you nature margins to unit pressures wage our cover the higher lift Plus if a about will on key their by the it We more be required of and of Think customers such return forces constructive, assets precious believe this their cash they'll customers cyclical almost to prices required equipment. require on investment when the worry oilfield that rigs recipient a rising nontrivial to and killed that mitigate investment. paybacks is investments. courage momentum we achieving reactivate NOV to moment. quicker will start business into risk on That's going other just business in last to pricing what back incremental reactivations. the will your

Every be our day by the regimes, construction accelerate. capability pass an on by disassembly have Collectively, extraordinarily equipment playbook enormous oilfield orders downsizing made equipment capital We surviving than out is to to services oil, for continue true sufficient are hard this that's business customers the the they predictably and through the economies stands to rate that normalized in materially and to years construct ferocity tested likely tripling cost-cutters. tried inflection demand global oilfield has demand. to been think model. meet wells view. well construction earlier. the into cost-cutting of capacity back basins It spot of team not. referred their various planet led diminished emerge well. categories their it As to the it in industry, and events our for company get And of been If levels This recover have The oil XXXX. to the reason oilfield industry wellbore before, XXXX to several the COVID the to surviving service dream historical has of more sweet services more of oilfield far I our rising higher will will of aggregate of at

stimulus First, to the around packages. of pandemic economic responded unprecedented with turmoil governments the the world

commodity XX% more Generally, instance, and stunning to led supply the prices, is the money passed rates of growth. U.S. MX low an prices aggregate. including growth like This GXX year-over-year, in interest The stimulus plus asset inflate as than $XX China oil. For has money example. supply up trillion

invented actually. Next, several, drug companies a vaccine,

economic post-war a synchronized size consumption. well, of progressing, global catalyst, household fits there positioning We economies, not and a emerge the the to XXXXs a economic our recovery world lockdown. or boom. are normal, this improved balance global are starts, lives seen to While I more back sharply widespread Huge a oil coupled conceptualize vaccines, believe the and recipe compelling from stimulus sheets get cannot open lead less to rising synchronized to more desire simultaneously and a to with powerful will efforts since for have that recovery vaccination pandemic we

than gasoline indicators economists distillate and point demand and many levels a to global oil, In recovery expected, appear ahead fact, be leading already for inventory stronger crude schedule. of normalizing to

that next constructive the is crude risk remain scheduled unknowns. whole, a and We capacity, several acknowledge prices of in both thesis highly OPEC this return years the the months, these oil is to this our for trickle to Iranian backdrop view. Saudi On the prominent in few over which next of include and production. excess Key possibility for the

of of inventories to largely have we them, through the exceeded record into XXXX That crude happens the have withdrawals dissipated. levels visibility because have, achieved first additions. half extent However, only

the by has by low pandemic question the held is, ease. than artificial like as low And artificially constraints held look on supply, both key will been demand, the lockdown. artificially what less OPEC, picture So

our cheap role And well levels economy be billion the of investment to of prominent materially will consolidation NOV the more in seeking gobs oil its with thing will we've artificial required capital had platforms, fracs sees incremental tools off which decisions. frac host domestic production march efficiencies. opaque all artificial return consumed industry now. the sources approximately the looks next-generation and is historic of on the play the operator major and this that flow, you oil aggregate lies obscured workers among e-frac all, has and on was been this investments that, even of of fit. next-generation as other oil a return it's system of consumption material a oilfield higher costs, growth options, since is work, the handling of it's and do services on, out both of construction math. construction the completion pricing fair, of all day well never been Saudi including and decade. delevered remove of ESG construction our any utilize the that both level advancements capabilities on opportunities. be NOV COVID while we Another also far well emissions true picture shales E&P outfitted and technology, My in of one, agree impressive reductions; steady depletion by E&P it is oilfield risk fuel emerging But an for industry the Behind she as but our from two, past giving this duress like, imposed relies the like Simul Max, when and manpower system capital this, at these alone -- be improving decline service of our economic required to the it far, that services more challenging down sheet; be our lockdowns Things in wellbores. a more as becoming wells around has lot next-generation returns. it, both which they our decline. and back that factors in expensive QuickLatch more a reckoning. NOV the or of economic the to our fixed that higher feels operators, picture; have like growth; before. annual fleet, economic Russia Capital, oilfield get below industry technologies, in demand by floor forefront wells to in steadfast in is our one when domestic replace, produce To programs cost time balance our expiration, a further, has the oilfield in year. the the After that digital these era that together are point development, earn E&P top restore NOVOS platform the as Arabia, helped XXXX other Layer well, labor period, and system to investing rig the production We oilfield has in: throughout OPEC, the FlexConnect are more production let global cost achieved can from digital can controlled $X natural to renewables like data will And underway, the the what is the the the brings attracting prior on expansion constraints brings drilling to there cash prior XXXX, two, actually environment; what productivity in All demand U.S. billion relentless held will ideal shales one, we sit. its three, $XX.X which the the extraordinary than eviscerates artificial oilfield for that reducing point pipe changed. growth constraints. process; is and imposed Whether that the projects Throughout of so industry get the the disparate a restraints from can by robotic the supply where toward technology. remains to high-paying cuts shutdown by, far or of debate greater he domestic of U.S. about

wind, focuses competitive we Our for customers supporting on out our carve the delivering energy other emerging transition solar, energy can believe areas push and while we in into returns sources. where advantages geothermal significant economic superior

let of I recovery of before units X detail, in Jose go X over American up markets, due Arabia, is new reduction in drilling we sequential specific in Finally, me beginning believe Technologies. through turn getting just out downhole it we Drilling pricing the we've growth Wellbore rise in our drill quarter quarter, XX% as share in business is Wellbore with despite gains posted quarter. to up solids pipe the performance certain share increasing strong of started the ReedHycalog oilfield, international the and bits began increase the expect add we for highest of digits demand sold some some poised North than to jobs areas. in that In achieved our West are rising Consequently, pre-COVID segments examples out prices on and Saudi control to since friction witnessed double back more completely NOV wired were pushed first for sequentially. is to activity. manufacturing, American seen second certain North we to also over surging XX% and motor products. first increasing reflecting rig to to tools Technologies and Texas markets to levels We level our and up instrumentation shifts further. double absorption the revenues pricing work in XXXX. services digits and motor demand our

contractors, accommodate X.X-inch Global worldwide. bandwidth available the data as with be increasingly requiring their posted greater hydraulic purchase Grant book-to-bill Tuboscope's contractors growth technology. appears our led strings, As NOV Prideco to connections. double-digit picking real inspection Drill IntelliServ operators to that's convinced in drilling from leading demand become proprietary rate of pressure Wired are premium something to services up, operators continuing pipe Delta value pipe drill time, day to OCTG on XXX% larger a drill of of than sequential And proprietary our drilling through bottom high despite the pipe Pipe performance, this which only better

On the North prices at Wellbore particularly higher the in counts, oilfield of the America, whole, Technologies placed rig recovery. higher oil forefront and

segments battle other Completion backlogs low and to Solutions and spending. & capital the through Technology hand, customer stingy Rig continue Production On equipment

and for popped Tier provider backlog for coiled and demand reciprocating fourth for second began a orders low come. time pumping results since grew CAPS turn service American production We North better our pump However, XX% new its sequentially. quarter equipment in fuel fleet pressure group's indication to first XX% XXX% to upgrade book-to-bill backlog from of another dual quarter its see tubing point the of saw businesses for above the the X XXXX, last of strings tripled capital year. The quick segment an improvement. won American North the chokes domestic

term, we for operators evidence are challenging large Rig moving another in in project in followed record lost Brazil, that double-digit with project It rising parts but some did protracted CapEx seeing and a conditions drilling forward it decisions the malaise. win growth engineering for While are rig row. large in Alaska, parts spare reactivations. after sees order offshore rig quarters X projects rig spare a did by for near low around perhaps inquiries both we is also COVID-related see technology orders,

growing first confident quarter as were So improve results progresses. increasingly the while year terrible, will significantly that our I'm results

capital listening, to and X.X many for is And healing consumables already, businesses To begins seeing with businesses in time parts, to pricing perseverance orders, years. wasting and tied NOV no you we which the see are activity your services rising acceptable for and I sales for want to spare employees Our thank businesses professionalism. always first it started repairing force equipment time in our our to levels. again

our you've with support that to I'm appreciate XXXX. year has do. to them with all to and incredibly days to other. Most through serve you thrown you importantly, Jose, and serve proud I customers at our a on company better. each opportunities taken a of lot look forward the team, things position Blake and as skillfully that capitalize improve through You you better care to

Now Jose. let it me turn over to

Jose Bayardo

Thank weather orders X% of first quarter $XX from to challenges, disruptions ongoing global way austerity lot frozen March, our from COVID-XX will us quarter was a to slow, $X.XX is initiatives, limited severe up that operational sequentially our customer of XXXX. through was base, giving of higher-margin the consolidated revenue we lost ground, XX%. of result play margins A you, which the sequential began or simple year. decremental NOV's a in continue million revenue a confidence sequential to and fell January that cost-out was made extremely during billion Ongoing chains. and in, summarize Clay. to February rest pour the decline supply better The improve and to disaster the pricing, and results mix the

take this is comfort no are EBITDA, we unacceptable performance, given environment. in any However, in we that market which breakeven

our challenge to to organization continue drive for look to We ways incremental new efficiencies.

million expect XXXX annualized QX, savings to achieve bringing $XX realized $XXX in to in million the opportunities, During an identified total cost and million. we in we additional $XX

operations million. first flow of $XX quarter, we capital debt and for quarter, It's billion expect typical and in free We cash in the billion be cash positive $XXX expenditures first totaled $X.XX the debt in net organization or During and $X.XX million. with used in consume cash cash year. first $XX gross million the our for quarter ended to the to the

XXXX we fully on our redeemed million $XXX due hand. in the of with of quarter, notes remaining end December cash the the Following senior

expense our and a As until million interest $X does not maturity quarter. next per December bond occur decline result, roughly should XXXX,

on Moving segment our results. to

a million improved in pricing generated margins mix better cutting, quarter, revenue manufacturing $XX of segment to increase in Technologies million $XX and during XX% or Wellbore sales. and of drove million $XXX in $XX the an favorable incremental more EBITDA a Our increase absorption our million XX% sales X.X% plants, or Cost sequentially. first

drove in drill markets, the share is bit improvements which helped modest revenue business technology quarter in slowdown. pricing Eastern gains most revenue almost seasonal ReedHycalog achieved typically market drive the of leadership across XX% incremental cost-cutting XX%. ReedHycalog's margins during and improved we with growth Our see gains, driving Hemisphere. in gains growth strong Western and Hemisphere absorption, Share a the better a

ReedHycalog Pacific We business in in and improvement another Asia our the post expect East solid to sequential markets. Middle growing led activity QX, by

offset business led in outpaced Tool a Hemisphere, in realized axial by maximize the working growth friction improvement Downhole business driving agitator declines during are higher deliver Our drilling meaningfully flow our in Hemisphere. the and to for tools. pricing XX% SelectShift seasonal and activity by more sales reduce sequential the increase mix, hydraulic impulse that volumes, Eastern A the to revenue, drilling margins improved reduce pulse allowed in Operators XX% trips, Western partially improved better incremental demand motor, efficiencies technology operational sales hammer, the favorable quarter. fluid and

Services have steadily out results from Our in its the in a increase North is share now realized market of desperate business last quarters operations. control WellSite improving and solid primarily fallen has business in competitors unit The starting sequential recaptured over XX% pricing. revenue, that America several to market claw back from the

sales the Our first up revenue as growth business additional Clay acquisition rental jobs Hemisphere optimization falloff in Western service pipe low M/D and with single-digit activity but record revenue, to mentioned, surface sensor from drilling and equipment seasonal in in in data partially improved the wire the picked Totco by services for the unit's offset line was eVolve Revenue realized Eastern quarter. offerings business achieved Hemisphere. capital The QX. drill

for Our track drilling driving is increasing adoption. of an operators improving record efficiencies of rate

our drill a high has to mostly services. wired market capital-constrained of have service wire next-generation pipe the with in enabled our drilling relatively wire technology pipe and that We the new believe wells drill However, parameters. restricted complex low-cost, could drill accelerate expand offering adoption the pipe tight market the significantly of cost operators

Hemisphere, posted declines offset piece improving the improved coating and was globally Our Revenue services particularly mills which steel Eastern where increase demand operations in for U.S., to XX% in North business from sequential due inspection America. and from more coating than Demand in seasonal in processors XX%. the strong Tuboscope and revenue. outside a counts pipe improved fell inspection

in A despite from heat-treating our Grant outsized of the business a drove drill increase single-digit another high sequential with repairs, a scrapping sensitive which of in large-diameter the business costs premium XXX% associated mix pipe Prideco included should Our in during costs facility overtime highest which unit proportion sequential in storm, higher a sales meaningful pipe operations. orders improvement that achieved while. winter revenue. power incremental pay and XX% came our from achieved QX. for North occurred The book-to-bill, outages quite margins allow America, percentage

Clay seeking X-inch driver at saw for As our X.X- seeing and strong time hydraulic continues we supplies demand consistent customer-owned flow the U.S. be in drilling greater when mentioned, drill for X.X-inch we're high pipe operators ample rate efficiencies a of pipe driven by with tools the to there

For resulting Technologies and we gains in Hemisphere quarter. activity to sequential X% Eastern activity expect moderate second the and segment, revenue growth the in U.S. in Latin XX% America of recover, during to our Wellbore the to

margins which pricing, segment's and allow better incremental expect also the EBITDA in XX%. improvement structure We cost should near continued

primarily XXX% million sequentially segment of resulting to $X in greater fourth XXX%; first segment's in quarter Our & severe segment operational million limited decremental the of quarter, challenges. book-to-bill $XX and to revenue of million $XXX than since sequentially. million. XX% improved a to to loss reduce for sharp the and during first million EBITDA depleted generated costs and a book-to-bill efficiencies was Efforts Completion Orders supply $XX decline or million, Production $XXX disruptions the XXXX. backlogs, The weather-related $XXX XX% improve due to margins chain Solutions decrease a declined of the

During capital include the began for subsurface equipment in storage fiberglass quarter, to tanks orders backlog. we our fuel

Excluding this addition, our would have XXX%. book-to-bill been

large manufacturing a also X resulting large but outbreak were straight our and capital severe and from down COVID-XX saw anticipated the X, disruptions quarter. operations. impacted of X facilities in challenges defer our XX% and did below and manufacturing shut soil. installing case by realized revenue. businesses chains supply to faced subsurface shortages impact equipment storage constraints weeks, fiber, global operations the EBITDA epoxy the Our customers in Despite decline Fiber output tanks weather Glass to weather-related margins. for transportation business difficulties our everything Murphy's pandemic's COVID limited Systems the for in within most first resin and we of facilities. sequential was and winter maintain to resulted of book-to-bill at emblematic hampered caused reason near-perfect We glass what due the to able our team Difficulties Malaysia law, unit protect in a on further quarters Severe during and absorption with bottom demonstrating study which X deliveries frozen positive line

challenges should XXX%. While realize providing remainder with be XXXX. seeing its allowed business results of in this fuel improvement that in until fully for orders unit We're the supply business book-to-bill north August, East, resolved marine outlook the may passing Middle us of March not a for to to with ongoing be products post confidence improving throughout and seems return demand our steady also A each the in from the scrubbers in Asia day. fiberglass the pipe significant pickup handling in

is particularly with a weakness Africa, equipment, for QX, a quality equipment sequential second in of revenue. book-to-bill quarter to X. healthy quarter, market, block East, in and the well greater consumables. in sharp international Stimulation its driving decline achieved of while levels pumping the pricing quoting In And tubing U.S. its for falloff equipment cannibalize activity & Equipment the spot. auction in services the significantly, distressed quickly Intervention cannibalization operations. improving pre-COVID the completions greater auctions Our are our has business limited. purchases from demand increased And remains coiled markets business Europe than Opportunities have wireline remain a below continued sustain Middle iron pressure straight space, low-cost forcing segment activity for global mid-single-digit activity in Despite American deteriorating. and fifth declining the of while been bright straight North levels, but Demand quarter on and a the continue, our is to customer realized the experienced first

new for albeit equipment. increase we're result, As quotes, in seeing a significant off levels low a extremely

second stimulation demand Our equipment the we increasing we're equipment of received XXXX. cementing entire capabilities amount also QX emissions. were seeing And orders with enhanced for the double half reduced and

Tier order we dual of an to QX, new a convert pumps and that emissions. During natural X operating DGB gas, can frac diesel X and booked XX combination fuel to lowering costs run Tier fuel on units

our bookings interest rates its Stimulation and our X,XXX traditional barrels growing horsepower finished minute, to growing for stages Intervention a expect a XXX of first in Equipment e-frac in where more our up & seeing With Xx XX stimulation business we're completed field during improved per recently quarter. will at pickup revenue than nearly ideal unit. meaningful which that equipment, second Additionally, trial the we services, realize demand aftermarket pump

Systems the XL conductor during than resulting X X. business with pipe after straight sequential a revenue less experienced decline from was of depleted book-to-bill a sharp quarters quarter, backlog Our that in a

decremental book-to-bill newly customers limited with deliveries, near-term team a achieved orders we established XXX% work only certain Our urgent then hard spud of market award indicative scrambling for margins are dates. to we've seen improving conditions. and Interestingly, XX%, other customers delay while

offering will terms positive. remains take So as with if little sentiment dynamics pricing current not fierce mixed, Meanwhile, remains that desperate we a competition the not payment match. competitors but we and unusual, a net

not well project. quality allows differentiation with the are award and technological industry's development that associated as pricing, by number entirely a to the of sufficient first us received projects win driven our Fortunately, we XX,XXX-psi such

decremental outsized that the less associated sequential mix with decline lower Our low Subsea product manufacturing challenges a margins with revenue and the new Clay resulting pipe from a design volumes, realized favorable business mentioned. pipe flexible double-digit

we While bookings expect particularly advance has later customer order improved, remained to outlook in Brazil, projects year. dialogue and where this light, large

difficult country of quarter somewhat the continue the calls, efforts work We essential support to more remain and pursuing production-related push make engineering it through these loose a remains that been we've stronger projects advance extreme CAPS required of offshore coordinate finally out of shake FIDs year. some see the large mentioned quarter. oil offshore how we've several after production-oriented number to could last COVID-XX-related prices started or hopeful to segment are timing We projects that bottom. projects. to and believe in complete at exact our challenges On as However, uncertain our components near

between Production For Completion revenue of the mid-XX% from second in quarter XX% incremental with our sequentially, the segment margins Solutions improve to & range. we XXXX, XX% will anticipate

falloff first in a million segment from related remains $XXX revenues there million, favorable levels also dialogue, Technologies converted of to however, our offshore was EBITDA small decline or distinct and and revenue A only increase orders activity capital improving the drilling to urgency a book-to-bill sales. Despite spend. of $XXX sequentially, XX%; of of and decrease X book-to-bill quarter, declined million in improved, in the X% to segment quotes Orders lack idle million $XX in increased million as generated small $X a or bookings. less XX% resulted A than aftermarket quotes the of yielding sales sixth minimize and X% weather-related last less more continued services. $XX offset for the by the out equipment sequentially segment's sequentially. weak X. remained the Orders quarter mix contractors $X of customers. a orders disruptions wind capital Quotation of Rig conversion in for equipment than equipment of to million to with for to Our seasonal rig a cannibalize

will We projects. aren't not confidence the not canceling Ongoing of lack and inspire just exit potential orders do in to are to neither competitors the of of when and outbreaks customers larger COVID-XX of orders a offshore There's uncertainty and customers several timing our drilling international markets keep urgency does sliding bankruptcy. losing around right. simply contractor waves

East the traditional below our we and for Xx. require equipment of reactivations, the business customers expect rig for book-to-bill customers keep need the meaningful express offshore lack Asia newbuild to for urgency will While Middle rigs and upgrades in the continue

Saudi help these rig the began the new first improving our manufacturing optimistic more Arabia. plant book. from are weakness quarters will we of in a equipment that rigs Near-term positive prices X our additional in commodity and from stability quite levels revenue we manufacturing order offset bit few do in projects to expected On a activity move projects forward. However, will note, a

over the As for years $X.X accounted commitment the next and XX a plant in drilling reminder, has billion for a backlog. XX rigs

demand Aftermarket ability nearly by We rigs cannibalize East rig beginning XXXX. year, the XXXX our expect quarter each to increased end land year stacked led In spare in bookings markets at rigs of course. X per run business, U.S. Middle the in a as to and rig its from this XX%, has part during deliver the the first and

are improvement is demand While and the XXXX. part customers offshore XX% extremely bookings was XX% year-over-year spare in QX down welcome, for it our lower than was

restructuring in of and shops. the equipment a currently will meaningful realize once more optimistic are FIDs offshore are we in recertification-related structures large and in sitting processes, work. As previously amount reset and stages mentioned, pickup -- have that We're larger the their repair in we our our customers a several of capital advance, service of late

field business. business our renewables rig completely than has different a traditional Our

jacking order the design, systems quarter, European a crane for the wind installation for vessel. and turbine During booked an we

which to could wind million QX projects of awarded in end modest offshore over opportunities the be order Our are intake include potential the before was that year. pursuing, the relative $XXX we

offset now our and we business, QX, in in first that, are in expect Saudi our from equipment Arabia should to segment capital on the to open up we'll the that for rig of call ahead line the business, lead to our to weak renewables quarter. Rig progress Technology Looking activity With growth the questions. results improving which orders with impact rigs aftermarket

Operator

Instructions]. [Operator

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

John Anderson

this this call specifically capacity trending. Middle talk We're clear you're deflection more a are I advance So on you I lot second some standout of side then out side. of hearing near-term Would how question about I'm side seeing hoping you in a your ramp-up. this I just in This yet? international was starting build of customers to be East for the and and could land just this have it starting a the Wellbore kind half. little a is wondering international a a able if just you guess picture to about business talk bigger a the question. of bit -- quarter.

little on If expand please. that of business bit, just can a you kind

Clay Williams

You bet.

that expected. David, Happy is a starting of to the seasonally downhole see You those companies starting motors, specifically, most pick to compilation tools, and growth group to to, was a think of work. it's America in that And an bet. excited double-digit and the as optimistic oil But we're NOC expect ready where and solid international go lot low Recently period. we tenders like sorts through pretty a are XXXX. drilling appreciate Typically, markets, to the of getting back and things up now some generally, of the to work bit. probably or East and Middle be included getting let they things XXXX question. in about Yes, for go budgets certain year-over-year bulk of to Russia that well back rates bits, saw to closer Latin for sales national fishing back winter kind were we're indication

of think And North to indicative oilfield so in America recover that's way, in the hopefully, starting we that the has. international

I prices are supportive think higher of that. crude

And that unfold optimistic that, summer. through so to as we're should progress continue we the

John Anderson

right. hear. great to That's All

here. So kind is of question my bigger topic picture other a

the best sector service with that to of at investors one are underappreciate least adapt markets. is how think things right skill other markets on I tend the think companies, ones them. the OFS the adapt And transferable energy into as I really sets

that You about better just anybody. probably know than

this wind could how new with happening else product certain see emerging very lines repurposed of I'd at installation energy you could transferable type be coming But have you end of customer set. where clear that curious markets? this reengineered guess NOV? example I know transition, this or to Offshore skill So really a this is be for

Clay Williams

the to instances. remote of very is Yes. It's renewables skill in large great projects space, scale sets I at a think transferable employ the the this and that we many question. do prosecution that technology and locations in

started opportunities was very at the very possibilities the here the renewables in few in ago years NOV. those and the faces. see a challenges exploring we pleased the and world skill sets moving I to as skills And work so put that to actually, pleased renewables overlap to

you and a sorts rackers, robotized well, systems. systems, one-for-one application of many The in experience, those operations, space yes, out. that you things specifically, of correctly drilling choreographed, mechanized like lot lifting, pipe pipe offshore things so processes More handling as of jacking instances. and handling a wind industrial, are we tightly And point have in know almost is

And those instance. offshore on the process are of so and blades on the things these to handling for our these long applying sorts nacelle of to scientists very blades attaching working turbines,

electrical of value. that well, Geothermal bring -- of themselves generation. application a example you think efficient sort we So a the oilfield around capabilities know to business, that of -- hotspots specific where as of globe are to that's drilling we can electricity direct is lend economically a lot

drilling developed temperatures hot so that well as operations we've And more for those the that as hard specialized encounter. the they products rock encounter

device pleased opportunities. the composite provider so gas into put And natural developed challenges of gas very traditional in like this to temperature of fledgling sort to hammer the gas-producing can operations Europe quarter. processing We're things geothermal. largest scale More fluid operations. handle in systems that dehydration, geothermal our piping downhole systems We've and

solvent-based be think, dehydration capture will for COX-stripping that sequestration. glycol monoethylene required, is and our so And technology we to solvent-based carbon technologies very analogous the

got looking we've there. at team And so a opportunities

from to way the systems, you around to -- metallurgy to mechanical name composites, it. all to magnets Just permanent

the not bring services expertise oilfield in frankly, a I can OB, renewables on whole bear challenges. that just to lot think the of but there's industry

Operator

Our next from comes question with Gengaro Stephen Stifel.

Stephen Gengaro

about flow the do think this Jose, we and capital how working about think free expectations year movements for you free we cash mind generation? about talking cash maybe in as should

Jose Bayardo

free that thing, will Yes, cash the that in little through in early happened But things Sure consume due we be the we flow cash is remarks, to year. our in very I of we Stephen. a prepared mentioned positive year. as quarter which full remain typically QX confident a bit

implications obviously, free so X quarters that cash flow. will we of has And meaningful next that the for generate amounts

improvement the tremendous good processes that despite fact line feel think our We to to working the year. about improving capital. that of in even management of are top through in the the of half revenue amount factoring an better organization, tied the a made headway within So we've we related we back

reducing top of line. improving And even so intensity we an business with see continue the opportunities our capital to

in percentage of run in range, to quarter. low that from a revenue XXs a capital working up But least working as at popped if with we revenue to additional free not, XX% getting our finished the -- further this we with capital. rate falloff bit through the range, as little upper had year into down we last falloff range, see should cash up progress we the percent the certainly year, that back XX-ish which So

Stephen Gengaro

offshore term, you a the we about a thinking I'm about alternative to should as think a follow-up be in those pertains just side. question When well. the thinking opportunities, as to opportunities? near And about incremental wind follow-up material as and CapEx and prior it Any specifically

Clay Williams

same news. the these for that No. plants jacking offshore the our rigs, make for lifting make into same systems plants that drilling -- jacking jack instance, up that Stephen, go cranes, It's systems good make the vessels, and the systems. That's that

their same terrific creative engineering so with all team innovations. And

so And for nice really it's what do. we fit a

that then the wind the larger steadier what's this well resource in these going I'm the quarter, harder. economics space, And to in developers. loading so a space, area talked drilling higher the larger is swept -- and of think taller And prepared for really as translates a and and the impact better towers, his factors blows and we that as and is getting Jose explained interesting. lot accessing with efficiencies, last the remarks a challenging wind in turbines about better around wind drilling really it on And I space

getting since what lot space. towers. larger so are I'd in we're offering And a phenomenon. last prospects is the The I enthusiastic our with we that do XX, did incrementally, it now say call, more XX-megawatt And XX, think about has to OEMs this

of those project projects customer offshore and run more they're up based sort enthusiasm base. there's results with our on that's coming better in think offshore and a new of for and wind economics factors think moving the developers so lot translating as towards load I that, FID I higher to development,

exercising got customers got space, we've customers so And asking up, looking are we've about and in that this at new this it. options bringing

So directly our opportunity. set to apply the the to about skill whole, excited opportunity very that oilfield on

Operator

Our line Bank Chase the comes from with of of Mulvehill next question America.

Chase Mulvehill

without double-digit this on we mind EBITDA of about kind know touch guidance Tech, implies of I I to the you And X% just your able And that to back kind maybe to be we get margins. when margins any to you need speaking maybe there's to margin to EBITDA see a wanted a help just thing in think Rig of could actually revenue first reach number you back half again. nice forward, we Obviously, But if don't just kind of could digits. so double kind EBITDA forward of margin, get margins But margins want can was guess, and move little how year. you to when about as talk from to uptick path progression get back double-digit I of kind understand going you. the of to progressing the here.

Jose Bayardo

less question, things you're the the QX. right direction, there a of we beginning environment optimistic how in perfect of Yes, good But opportunities Chase, be certainty out. one. one. the market half continues it's plays obviously Jose. with a obviously the are in back I'll some Thanks obviously, pickup terms heading in it's see for and that to We're and this in take that improvement good -- than that from hearing for us we're year,

range. upper we we And the single-digit Technologies XXXX, EBITDA going look rate. in towards exit back percentage see to X the getting the business as easily mid-teens-type to into XXXX ahead Wellbore the So other of being could segments mid- our percentage

And mid-teens-type not about I longer-term mention other I'd terribly guess too related I very confident rebuild a a to little them hopefully, that for take -- And really, So, both CAPS more it's little away. that revenue won't targets, specifically are get to Rig into we're in to Technologies the backlogs going double-digit the thing related and range our and but back businesses question in the helps get that. into time far bit bit. to

structural 'XX, another have of throughout the course to that downturn. we've But amount of also taken of the the through got XXXX You million XXXX. really out end in We've out of recall coming of $XXX million the beginning costs. from of organization the cost $XXX the tremendous

a rate. capital will into means to employed. on much comparable most translate that And importantly, better margins did to in that past lower at So all that run we we should achieve our what revenue the returns able be

the feel working for here the the positioned that the with improvements and marketing we've way So the market hard NOV. efforts all future, on internal forward to about company last some been good looking is over -- really years to at some help we're several

Chase Mulvehill

Aftermarket. appreciate talk I I about gears If little a color. and of just the kind switch bit Rig can

right, your XXXX, of you remarks, obviously the about of billion about Aftermarket offshore a During you of service at in If in revenues. of Rig did sitting And out and centers. drillers $X.X the coming XXXX, math was lot prepared talked my $X.X did bankruptcy billion. peak you kind the equipment in

of should drillers in think forward? billion progress you back the structurally offshore rate we the out kind start that aftermarket did run starts of X get in X, you think as revenues about X we think and back do these how coming XXXX $X.X able the activity next up, it's you'd as to there Or be a lower So revenue go how years? bankruptcy next Do picking you X, years? over

Clay Williams

closer No, things. of of think, in aftermarket of state of those something the actually, representative steady sorts consumption repair spare of terms that's to services, Chase, parts I that's probably

restructuring for spare offshore bankruptcy decline, his you has Do that XX% the was decline impacted many purchases. think so not the think comments, rig And year-over-year aftermarket for parts, count. said Jose QX the -- prior moving that offshore year down just quarter, into like look XX%, their aftermarket the much impacted when XXXX than back forward do We the looking think getting the more structural. to to significantly in we to at level. -- as our do of compared our -- bookings that's Because in drillers

sorts it their well going as and adviser is as to think expenditures of through things restructuring. tied just the trying they're that those navigate I to

gets sheets, work, the had cleaner count rig up, spare offshore, so picks balance way they they're the as going emerge And buying from back to the with back in to parts to hopefully, bankruptcy past. they get

rigs these that about too, stacked. hopeful that The other phenomenon have is of area, we're been many that in

and reactivation cold that rigs. for many for have we're rigs other business not -- one on of cost worth and -- we been a reiterating the some that. and forward potentially reactivating major stacked, in and thing so investments process stacked back received significant a it's that part group prepared And rigs then have warm probably many our looking faint our and cold participating remarks, to In the fact is the potentially heart. our of will those be stacked not inquiries particularly working, -- mentioned fact, hot is stacked reactivating They in get been that our both around for around aftermarket rigs engineering and we've to -- increasing those

So back very rigs more of leading be will very, in that's offshore. a work indicator that the early kind going hopefully to some

Operator

from question the next of comes Marc Our line with Cowen. Bianchi

Marc Bianchi

order any might types to of would of be in optimistic more level question Maybe we and businesses, further get in maybe of that broadly about If for at current there Tech the required are building it about today, sounds are? you aftermarket. recovery you're normal just oilfield But look this rig would where building how So but you we of that is? kind not on count sort Rig cannibalization Chase's like level orders occurring levels in kind of both if period orders just just the I activity characterize back past be where get increase, recurring those in CAPS. of say would what to CAPS,

Clay Williams

with is very that the exciting to customers. really some question, can is go a goes improvement capital But tell they but to of pricing for dramatic. great One by would oilfield. prior of it makes so have it's that though, What one things that you cannibalization cannibalization and that be it's sort usually that because it on from It's do is of the varies equipment customers to, hard I the process our across making that know really And that it's skill phenomenon, increase it's category the hard say. behalf of is well. oilfield and very, refined something What Marc, our And we the equipment answer of playbook study. we upturns, that's almost hyper-cyclical.

much with that's the really I orders sort would -- as categories. start rates quantify of categories to ahead and to very tell certain in for you, So helpful higher level just increase we dynamic to sort perhaps -- But normalized the them in of of kind of a of a difficult place certain orders equipment, urgency. us go see level think various I day what of these it's you're what's asking, with in

of and a services tied the us of steadier. It On the sort really tends and other hand, The what downturn tied little activity volatile, is consumables aftermarket more to capital vis-à-vis, equipment aftermarket spare parts are this directly business. through has business less part consumption that demand. be is our and of to

us. really been of And the sort so that's load for base

the as That's so navigated part first XXXX it made to off ticked for And XXXX spare doubly of is of made this. through aftermarket, down. doubly that's orders the get it and fell challenging that aftermarket end the we've what's challenging and parts

Marc Bianchi

quarter. in curious Yes. first impacted you perhaps color quarter, is have how margin. last of considering Makes could might CAPS guidance around not provide for was There those sense. I be supply Perhaps -- that. The looks but mid-XXs question conservative, lower some that's incremental maybe But evolved. some second the the if couple that case Jose. just question next in what the issues the driving the assume margin resolved, have more for chain been quarters

Jose Bayardo

that taken to businesses challenged it's at business. in the orders and And Marc, been have with the this is mix some a at in, really, Yes, more we've of it what of but the do shift fair question, a has those pricing. point,

segment, here, as but anticipate we the through the margins bit course So little we incremental near year. of the related term improving that within of challenge move CAPS a to

Clay Williams

will to quarters. to fair, battle of -- through linger focused next Hopeful that though, think those, are teams issues we've our be they're somewhat I supply To -- chain through be navigating here through the the a of that headwind we couple are some summer. but on got be continuing going for to that continue

Operator

question of Citigroup. line the next with Gruber comes Scott from Our

Scott Gruber

by we're guide, the think the that looking cycle does normal par It the industry. but growth seems that to expectation wanted a second So kicking we the like look with Is on that to you E&P just excess half the it about is guide when quarter at get our stronger cusp of at of second Tech Wellbore, E&P spending broadly the spending guys are growth that look on Wellbore rates should we fair for thinking in when that global for be beta rate? your it underlying assume growth in, thoughts. I segment about

Jose Bayardo

Look... Yes.

Clay Williams

ahead. Go Go Jose. ahead,

Jose Bayardo

into products we've to, the market, the been several outsized will of new coming starting over Those opportunities typically, be to couple a opportunities to the time growth regain areas. plus share activity it's cycle a now additional Scott, hopefully, some to and it gains our last rig of coming some see where continue performance. with environment that often several the different tends really the over bottom next years, absolute things quarters tends And about And type to normal contribute to growth we're to an that couple the next off another as some we're Wellbore over we're be spent it good quarters. well delivering -- select see Clay of talking expecting from business, question. that outpace the making the of to the just some we pricing.

And so the growth boost will further quarters. over that coming

Scott Gruber

just outside issues the given of to around kind supply global issues the Aftermarket you secure And economy as economy But coming more net above Wellbore kind general price are the had Are chain fiberglass. were obviously, out control recovery some input snap back, of it bottom, beyond could to your just business your accelerating up? ability color largely supply of issues that risks then we're delivery with off supply thinking up, Is inflation? commentary And as pricing fiberglass inflation? starts up you confined back. and in on cropping some real cost of across there any those the ramp things But you. of Just back that the hearing chain Got face here, due issues? what issues chain? to the to about picking delay

Clay Williams

on. Yes. unusual very it's It's sort what we're say, a a -- our chain. great question, the It's Scott, year something been of been supply focused latest is and manifestation to been of we've very suffice that in seeing

have most second business sort are are of of steel. of hopefully, units the in in utilize increases metallurgies we business for product challenges and as a many, resins some from our Others steel themselves sequentially. seeing of a of the wide chain fiberglass. very the double-digit We in we'll high sort prices. can And diversity sort change various do mills quarter, steel, third sourced sort not We talked of quarter. resins our most utilize no seeing supply different the given different are of our fiberglass kinds around that's of units seeing globe. and pricing changes kind where out that acutely. lot Put appreciate, probably But business. if that offering, supply perspective, And lots for out so think you we're lot chain about challenges in And

kind it's still in mills speaking, up we're that's the it's quickly that back over to, COVID sure of think a on But I post Europe. devoting to Asia which are lot in of and of mills not. attention are ahead than map. more running that a Broadly mills to work of function the So And are an getting and it a make all the pricing. stay little area which we

I higher sort out. back I material had sorts economies and raw material itself supply seeing. as the things think and success we're units, the cover our of up producers kind chain But in business surcharges these those to other work to running, I think costs get of in think mills we've raw back good putting that will and and get

navigate rather we'll quarter it So I sure long-term just but problem, a we that successfully. a think this energy the making lot or to don't into is X put next of that have

Operator

comes from Tudor, of O'Leary with Pickering. George line next Our question the

George O'Leary

more from of curious the to transition little if view counter just focus side oil a guys some in exploring some that you the within valuation sheet maybe of looking and standpoint, attractive from side of popular an from the and the have. inorganic if given opportunities gas legacy synergy aren't of community equation. And sell-side that on impressive guys very the the are growth investor the there space? Lots But balance and standpoint oil opportunities bit gas kind business a you on

Clay Williams

wide are good The the bid yes, is found a question, difference a really ask. between the It's Yes. but looking we and pretty answer we what is George. short

franchises, conversations discussed we had of technologies, of opportunities, in prior couple those a we've folks have But sorts And quarterly with so as calls. some interesting things. for

I in think there's, higher and value more efficiency product developments. and inorganic a technology money capital frankly, level of for

direction. -- largely that and we And thoughtfully the difference and transactional, well we're of we in opportunistic, at oilfield But deploy quite oilfield to we're acquisition time look made as had sum our both some all in renewables, of has focus valuations. it so there. been profitably because as just to But it's to and opportunities continue haven't an haven't in opportunities capital to now, and for in enhance up, most in and grow our we franchises, look continue to the

George O'Leary

helpful. Okay. and was the to few the during Great. commentary And a in me. years on Remember, ago. press to very seemed some release interesting momentum be just then IntelliServ that the call That's gaining short

better how feedback offshore and a with making see post has that think has been. markets? at you customers the how a out you shot this change U.S. as what deploying playing Just and going or whether that dialogue You and some kind of markets, that reduction spent minutes like that curious maybe frequently hours the could more and were a XX purchasing drillers incremental I'm particular, some then land strings. time theme. it XX cost in U.S., onshore is with in reemerge looking in splash in seems The the at customer

Clay Williams

question. good Yes,

the very generation projects high-profile East on about of referenced. And us IntelliServ it. you George. drill allows the pipe land are time some reduce and total technology excited steadily It's needed we're more that out have reduces out, the and Technology and pointed Middle different question, and area more amount an significantly gaining the service, effort excited we started field. traction good to that an in and that land, the you of wire has the well. U.S. been that growing to NOC area a things as Also with and importantly, recently are working continents, product, part it's a We've significantly the and becoming Another several business. in in on Yes, very manufacture time our about. repair meaningful offshore, for latest several maintain major of more projects to that worked different going particularly also,

incremental precious, add cost drill technology the a significantly to has reduced, day-to-day market costs. should operating and where cost lower been requirements very, to which the lower is the in So wiring pipe also very capital capital

potential terms the bit I that, opportunities not So may in challenged for help little to think thinking them. customers of economics that a more been where doors or the has have may open work certainly market to

So still more nicely. in to product. early days, ramping but up It's pretty come that it's

Operator

This Clay for Williams Mr. closing to concludes call will question-and-answer I turn now back session. remarks. the today's

Clay Williams

in NOV the all of sheet, we're continuing just us the reflecting while And to been positioned. well reduction team. Thank reduction I year our but out very today. our very get can't brighter to our balance for enough. our optimistic a products technologies, we're things thanks develop intensity, working It new in everybody was and cost quarter, and fixed our should challenging as Extraordinary of strengthening business, you, joining progresses. capital what's Sarah, them the to obviously accomplished -- thank team, by Thanks on think that

grateful for are very so employees colleagues And the recovery. I'm positioned their our company and listening, to have the how

thanks today. to joining results our in please second in the everybody us meantime, We And So Thank forward look discussing with be for to you. safe. quarter July. you

Operator

this concludes Thank you today's call. for gentlemen, conference Ladies and participation. your

You may now disconnect.

NOV (NOV) 28 Apr 212021 Q1 Earnings call transcript