NOV - Earnings call transcript Q2 2021

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Operator

Good day, ladies and gentlemen, and welcome to the NOV Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. of and President Relations. Vice McCarthy, Corporate Investor Development Blake Sir, begin. you may

Blake McCarthy

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

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

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

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

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

to Clay. let me turn the call Now over

Clay Williams

Thank you, Blake.

financial strengthened continuing a bankrupted in NOV's disruptions. eviscerated projects. customers help many in consolidated levels. cost remain certain in leverage of second the to we Coming pandemic challenges COVID inflation to our rig while results sequentially, which supply through $XX out of was lines the benefit execution below cancellation owing revenue million, strong but periods and seeing XX%, reductions arising and in are of During acceptable Operating lines. XXXX, our of and price product improved quarter offshore Nevertheless, product the quarter NOV's chain certain offset excluding X% backlog, our at increased EBITDA most improved prior of a from increases the

completion all orders some front delivery and quadruple port completion up driving and are suppliers technologies of three the prices closures steel quarter. from costs on us, freight that input and on developed growth, offshore technologies of energy next ran continue Rig for global over lockdowns, and market second out rise recovery worldwide the for power years underpinned production oilfield The to continuing costs years and the and cases economic broad around to In are and transportation line. a due times own second that to renewables way port Like solutions into bill round in of freeze the along we scale underway, mills well significantly. another the both to placed to enormous see well certain commodity levels have strengthen and Many and company's resins experienced instances, We for several expect the supply steel book to from epoxy, positioned Furthermore, our chain that quarter, thermoplastics build the to supply past have us by throughout chips. technologies congestion orders in wind NOV, look of plants disruptions COVID, are Texas and disruptions and thankfully, both we us. supply to lengthening the metallurgies, expect these allocations, COVID manufacturers as not down we bespoke petrochemical posted of of on on higher fully bottlenecks production XXXX. computer facilities solution pleased elbow extraordinarily to in bill adversely two XXX% industries, across the five transition. strengthen The very everything rig February NOV book running capitalize interesting segments as been challenges XXX% toolkit. with and their Barring very, portfolio world, an elastomers to up NOV chains. the NOV impacting enabled and to supply persist combination has and our the but the

positioned we competitors. So our are in better smaller we think

size and our suppliers challenges and competitors. pressure through seeing and access broader generally give cost pool, these to labor us range U.S. than scale market a Our The managing tightening teams a of is to are efficiency. also better our adding

workers the But hands oilfield tell their challenging. back is prompting we're material reduced in our customers Our constraints, finding this which some us get products that customer factories, are Interestingly, the is attract back NOV market, these inflation labor the now we by growth as threat the very for we brought is introducing stay ahead field by raw to it along operations of well. increases. to passing of labor. service new price challenging to costs interest as automation greater and as in to on to attracting trying need

plants were India, NOV and by until in goes quarter. know or continue competitors Far approaching we quarter Our of obstacles and in has much late however, which marketplace success as idled of managing consumables stripped measures start the in continues heal capacity oilfield spread Canada second greater back these categories and frac job level recover. of North remaining experienced the spread international second around work. last hands to fluid more during offering disruptions get first down week. East oilfield quarters COVID generally, the returning in industry and in has pipe grows cannibalized the of these of our the better and to opportunities of to been COVID equipment Middle vary Europe Operations American all to depletion, active remained many excess Day-by-day, an world. depending on and the inventories consumables, market anticipating through markets. degrees. the lower motors drilling is of and the a East lesser many pricing ins in And our close equipment, profitability late as parts of shut Two The largely marginal of within impact downturn excess offshore operations composite within steadily to and bits, cost frac rig-by-rig, large the did cost

results as last are an through bottomed double-digit where Our closely an the year. reductions having It's last greater the two have as price technologies and of is our quarters of cyclical behavior possible. early drilling downturn, rebounding segments. it Wellbore beneficiary top-line cycle leverage XX% at dollar of tied drilling as quarter outstanding of put growth execution from second seen increases EBITDA reminder activity, the to third up cost than most well selected the in quarter benefiting of instructive

quarter Consolidated drama. rig some offshore a our the but right. are bills lag wellbore barring around to moving Mexico, by rig in also X%. Within technologies additional of both cycle the with continuing project North revenue fits on measured excluding eight business support the the while All see equipment hopefully or of being and revenues segments American companies XXX%. resumption production tenders sequentially exception XXXX. the Stimulation revenues digit both Guyana quarter Overall by Completion unit in in other second oil the three, in business commodity the X% Solution, for Intervention Gulf XXX% in three to revenues XX% stronger increased both and governed quarter. second and & delays growth segments for double work increased of returning activity the approvals more continuing our solutions national therefore later by same recovery with in of North quarters. cancellation. markets, offshore We the its And Production outlook. six in in XXXX, broader operators. Our are part Brazil to starts projects above of growth. the two activity above facing ratios to capital bottomed less international COVID Equipment to extreme three discipline optimism posted posted with declined top-line bill more world and And and & consolidated pricing, believe Two, driven cautious driven in flowing environment. limited by in many Book American and and book of posted first the technologies purchases sequential completion Every macro capital quarter NOV's left second businesses quarter.

chain in the rig technology of good developments its e-frac on navigating in portfolio, orders progress within ideal space than growth. technical In this quarter to outlook the addition made carbon and particularly area capture the supply from half the more wind segment to second space. renewables its issues, points came continued little A offshore for

manufacturing I drilling couple offshore facility in on the handling rigs. from asked we customers value NOV support is more improving rig solutions and the that a automating inquiries spare to is around the compensators transition, tone this currently they are our The emerge land the first work continues reactivations Arabia do that work wanted In of rigs BOP's The pipe rig upgrading mountain with confidence sheets. being the activity drilling as JV improvement we're horizon. in Additionally, and XX% gives is completion stronger on from us around engineering quarter, more sequential high seeing development to during team parts balance bankruptcy of nearing bookings adding underway Saudi base, more share energy contractor crown and and the offshore updates.

will carbonized our Tower and the with our supply also entered advanced solar the the in to facility lower in towers we inline to crane exclusive Winds method farms quarter previous of described in providers taller We're construction of as clever our that turbines in gas enable of manufacture assets order Pampa, Systems mobile are wind tower proprietary facilitate serve an tested significantly the floating of the hope to be Cerulean system which the calls. sell new that and soon. will that develop talks tracking to UK conversations land largest and we sector with a mooring we be taller, a result the underpins used of have chain one We a EPC that onshore crane During working wind agreement on purchase efficient successfully into tensioner adoption we that at panel with farms, the for will systems will floating will new Texas This floating accompanying that installation Keystone cost wind to Sea. advanced oil of more facilitate North offloading solar provider the in chain.

deliver carbon propulsion cruise also in and reduce ship used the XX% lot the to is will wind of conventional technology working tilts a The been has vessels. design large of sales sailing with mast, automatically system this improving team the GustoMSC on and very There's orients and expected by happening be cargo customer proprietary large ship's a a supplement but NOV The initial geothermal vessels. to on to is can application a Our footprint large system propulsion also that systems, efficiencies XX%. market.

PDC internationally, for ReedHycalog technology by And geothermal contract line Our improvements industry. an evidenced this award indispensable piece quarter for product. the economic as approximately drive telescopes to returns geothermal cutter becoming TK-liner continues of Tuboscope product large in of diameter is feet XX,XXX projects large

we're market which In geothermal now. introducing products fact, designed specifically is now demand surge business across are the in several globally many units strong for new that seeing

Flow full with has Our scale Technologies in treatment module, carbon manufacturing unearth now. concept capture the The of continues the compelling Process technology over engineering transition energy gas a team for a design future XX And potential utilizing expertise Europe to studies we paths to built in & plus developed years. are processing an last customers and utilizing feed and interviews to in discussions for to this growth. expertise application

us our move despite innovative several and of investments all years, new back over products we've technologies, our traditional R&D past market. markets, outstanding we in executed into oilfield well the sustained provide to downsizing and position a portfolio recovering now the as that Turning oilfield

tools first NOV's Max EcoBoost seeing Several of drilling industry market subscribers Wired to applications materially rotary version. through another We're optimization system shift transmitted to XX leading Pipe third land also of operating proprietary tools, Drill data currently NOVOS several Our NOV in higher IntelliServ commercial predictive and and ReedHycalog downhole lifted Rigsentry handful with written network, our develop bringing EDGE tools. include access hands new platform working rig and over the the levels XX product for new are XXXX over closely critical develop bent sub, beta we the like out reducing backlog, on solutions friction Sea agitator adjustable vector pipe Dope work directional several digital series stands the Offshore its bit rigs customers continued computing drilling controls. to and enabling technology per to reduction human our and friction having rigs robots analytics steerable that to emissions high rigs the our product, today and see we offshore the in through by utilize performance came interest scope motors provides the our EMPs any bit introduced drilling or market carbon safety a is from our industrial a hour, continued cutter hole, oilfield's We're without PowerBlade in through and of also parties. leads and share later introducing products foundation tools in NWD and superior and and are that the Saudi to and past select efficiency drilling through and and of Arabia. XX These NOV's continuing grow. to NOV's at these back quarters. speed with providing a XX apps year. optimization NOVOS North our touching robots bottom different the this tripping Trip automated cost-effective a

enhancements the winning space. developing After the has prospects and NOV's everything to new transformed impact. analytics Connect the cost the high low and excited Hoses side, developed several well as QuickLatch new years to carbon composite we're this On pivoting efficiency to restructuring, digital around and and we're we've Frac innovating, customers of customers' oil energy. we're over frac carbon its new of are And for Systems, controls operations. developed ideal and monitoring, our traditional safety who lift technology, in Flex reset of NOV cutting, business, building new gas digital their from about in Connection our value predictive and proprietary e-frac as out ways developments We've reduce forms utilizing materials, ways

of service-minded As businesses and hard NOV's and traditional enabled proud that the dedicated gas the some to in employees newer our I'm to from to continues poised is work benefit COVID-XX both our normalcy, downturn global has enormously through pandemic. oil economy this sense creative NOV the ventures world future heal tries And in bright recapture ahead. renewable and space. the whose lies the

opportunities. operational our sheet listening, that, of all strong thank global are our fantastic turn them to of you. employees and our our It's assets, financial to Jose. network reach, integrated balance who resources and manufacturing these While With it you I'll team home. will required make cultivate those of To over

Jose Bayardo

Thank you, Clay.

consolidated For XX% was revenue the $X.XX $XXX sales. and second sequentially EBITDA quarter million of to XXXX, of NOV's X.X% rose or billion

reimbursement Second offshore final - to quarter revenue cancellation from included $XX project million related the offshore the projects. cash settlement rig and cost of

sequentially in price improvements improve the supply operations. base, initiatives, nearly have absorption from Efforts disruptions, across million for capital to Excluding revenues rose in but significantly Consolidated began excluding growth the were margins helped the U.S. achieved in billion improved $X.XX sales. chain revenue which $XXX or U.S. resulting organization activity. across settlement, X.X% million XX% our incremental International in and flow. the drive XX% year. and revenue of cost X%, of second growth $XX savings quarter. cash of outpacing cash expenditures of the million accelerate we sequentially, million, settlement better X% Capital free certain to to in flow only see totaled EBITDA increased international $XXX target late manufacturing the result management $XX our efficiencies was better drilling the areas

redeemed $XXX net senior gross second During notes and XXXX. million remaining due debt. cash billion the quarter, quarter with our debt we of the $X.X billion million $XXX we December the ended of in $X.X only And of of

second through year. half to be We source the of continue of working expect cash the a capital will

on segment Moving results. a

to a margins million Hemisphere. resulting XX% expand more second revenue of during sales. increase or the cost incremental million technology recovery generated global an quarter, offset and XX% Western drove Revenue XX% $XXX XX.X% segment pricing Wellbore in increase of the sequentially. XX% $XX revenue An early America $XX and million higher volumes or beyond inflationary began in stages the North as and structure, million improved in to of improvements costs in than markets, in $XX a Our international improved

top-line improved several from share an the increasing bit customers U.S. ReedHycalog continue and posted intent growth next improvement XX% activity improving a North by market America, quarters. XX% sequentially with activity Our business in drill resulting revenue, sales NOC signaling our led Outside sequential solid to over gains.

Our for many more reduce a after margins realized continued of flow hydraulic tools the believe trips downhole fishing incremental business as is friction regions demand QX. a years such quarter. product sequential in in to reported worn improvement most restock improvements that equipment realizing indicative forces, operational reduce and of Notably, out and XX% during growth. and we depleted drilling tools revenue inflationary in double-digit major efficiencies our volumes customers price tools allowing the increase percentage of with proprietary deliver unit agitator offset adoption Higher underinvestment. lines also sharp our in than what our SelectShift and beginning improved service maximize to regions, the equipment business strong Improving

Services improving and and centrifuges, improving idle benefit business Unit rings business mark an work facility low facilities realized will included service sales, in suspension disruptions to digits one mid-single put additional requiring solids shale a replace signs Wellsite widespread or growth, of operations, in activity need us life charges project in very back wellsite goods equipment to our related Mozambique, airfreight shakers to of related in Services by for times off growth to equipment our the back in equipment inflection of Our began drilling second from control that we activity, as unlike Eastern but the of benefit as and bookings capital COVID the saw Conroe customers Malaysia, the incur show global first Hemisphere. The in capital water pure manufacturing the expect our from XXXX. been Demand shutdown cannibalize from also from continued Wellsite the partially COVID environments. benefited the disruptions. large offset quarter the to quarter of with to X.X has sitting salt to revenue

the business improvement high unit's acquisition service utilizes and XX% activity margins. business The sequential due operator affecting our revenue the crews to after transitioning and equipment incremental Revenue service business telemetry posted sales modest drilling Our market higher for projects sensor to optimization jobs, pipe wide chain a MD rentals Sea. high timing and and in new from with remains data a three-year awarded a and sequential in recently was networking due challenges optimization in robust as well major of source Totco ability data drilling revenue North decline realized to certain for gains. improved the digital a speed completing double-digit speed this opponents. share E-Valve service Demand supply which strong as project to drill new our

Coating increase the with Our Tuboscope posted and our Pipe demand We products TK-liner in protection incremental tubular margins for by sharp revenue, demand all which goods. increase are Inspection sequential for for in liners quarter an a major in strong large-diameter across XX% tubular business that glass services realize improvement driven epoxy a coating corrosion a disproportionate markets. high reinforced provide performance during

markets business, modest its order tubular Haynesville a as order from geothermal realized of for but for to and received steel outside Permian. of system an more also In system demand XX-inch as see Tuboscope's in for as XX,XXX in line Clay operations pipe up addition to a grew processors, mentioned, customers at well XX-inch ramp for demand coating from we're XXX,XXX an feet inspection they saltwater in than lines pipe feet starting solid mills infrastructure. large rate pipe a operations. the resume We production investments scale the U.S. the that disposal

on international Our XX% an and pipe landing pipe business XX,XXX absorption posted outpace very of sales activity tendering continued we sales industry's of to and Grant the drove Higher to increased incremental revenue the quarter, offshore year. Prideco pounds, delivery the see North and on of cost mix string. the international from controls the expect X growth second strong in margins. half intense higher million improved during drill drill an and focus first second PSI-rated Demand markets America but

While lead stretch limit orders outlook, currently in have ability for will the the we're improve chains we the and encouraged to our beyond backlog. times supply improving orders revenue by new

believe pricing will tender Additionally, awards, increase a customers we costs acclimate new significant slow the steel to in environment. could

second set is pipe XXXX, half expect a in XXXX. stage we the business drill While being growth limited recovery the a for for revenue strong of in

drill in a of change accelerating bill of third achieving in EBITDA sequential be business since or mid-XX% limited provide sequentially, higher resulted segment in for modest of X.X% quarter. and north of pipe the Western XX% sequentially. operational achieve we confidence mix together growth but was segment wellbore generated to XX% the limiting an XX% $X X% pressures, Price increase and Lower of $X to XX% sales. by $XXX of revenue year-end margins a in absorption inflationary activity totaling margins of XXX%. Backlog the in million less resulting by disciplined end business, book order a the in million quarter Eastern inflationary We EBITDA million bill raw its XXX%. pricing incremental incremental partially second or product the material highest a just to above $XXX range in margin the pressures result the certain sales, management to third increases to shortages and $XX favorable segment our the in All the For the improved technology disruptions intake billion. unit quarter, book Orders achieved Our booking quarter. step with to margin for at to Hemisphere the Hemisphere one improvements during million quarter in XXXX. and during And the solutions will offset in in segment, products, mid-teen anticipate Completion improved ongoing rates ability & Production cost expect segment's

units aftermarket for capital equipment coating pressure posted U.S. business Modest international the fleets. equipment improved most pumpers Intervention providing of competition equipment. pumping difficult higher Stimulation activity pickup markets, the Our supplies, inquiries The to into capital reflective from levels equipment idled We're or and fierce, coming remains pressure for coiled upgrade of sales. tightening growth replace existing of sales. Equipment the boosted deliveries who solid is improvements tubing and & in with demand in in need competition

While and it idled for equipment limit sales pricing, opportunities business. aftermarket also creates

quarter, During we notable improvement as aftermarket more the sequential look in equipment to second back work. achieved sales to put customers

for successfully conventional to reducing independent equipment a large where emissions. its line to Hose and Frac grid. as system, The trials our digital by system job has QuickLatch to power a the we're higher has increase In reduce in working of of equipment seeing for number also of sales is our to supply along jobs, e-frac technologically e-frac the addition major improve amount to from ability an to The the it customers that route nearly ticket. sat opportunity be equipment a its have dynamics services. has cannibalization currently help operators, will utilize of Field get place order to as as validated strongly line. product our correlated encouraged operational for with and efficiencies volume increase to required four with against in well demand average amount time the We're the fence while significantly tends pump amount new such and significantly our demonstrated in offerings ideal taken effort compared times system the improving and capabilities IOC, advanced growing several costs maintenance

of the several Process American decrease revenue sales some part cost the will by driven second North deliver Technologies of related high-single Our significant control. other business issues production Or A midstream quarter. & two COVID than these the We're issues strong. was during this a led experienced in overruns outside offset offerings were challenges a Orders times execution large Flow impacted large half our the from customers adversely and and of of and the unit's management's X.X due delays restarting in year quarter, and the infrastructure pickup business back digit in meaningfully operational first production and suspension an confident in projects. Mozambique by related to to better Security indefinite of in remained backlog. challenges pipeline investments on improved results improved over and project projects. treatment in more increased opportunities gas

challenges acceptance subsea quarter, flexible digit as sequential described Delays but final post better during new of manufacturing recovered associated QX. with we in margins unit revenue and increase posted in sequentially. Our customer pipe to third business intake product operation which allow with double the a grew the production that XX% the slowed incremental a order partially from the would strong quarter. Both results

meet shut upwards and and led the government down reported Our fiberglass who continuation business unit increased from related change increase ago. chain, seeing but We've region. seen five in orders in are marine in customers, in our material costs. also achieved been customers, supply park of Supplies offshore on facility at plants resin a last U.S. Malaysia a fiberglass of months and when in pickup by level in some have materials able successful operating the to in with the higher raw in upgrades chain deferrals rate To-date rapid COVID outbreaks We're global affected capitalize finally of onto customer the business chain NOV manufacturing limited the raw the projects. to to sequential and customers highest vessels they see and reluctant environment, extraordinarily their compared Despite flow prices for to mandate existing of to through nimble midstream COVID regions our for of our passing to we've And epoxy costs very XX% increase challenges despite and to Through XX that resulted fourfold beginning causing can are manufacturing in in in we're revenue, our secure less backlog solid XX% glass Supply is scale of high difficult difficulties. also demand remained EBITDA customers and spike shipping delay to needs. we've costs the shipping a cases supply the certain rates. quarters. been COVID shift order of

from incremental third to in we XX% quarter of sequentially, the For revenue margins between production will solutions anticipate with the and segment XXXX, our improve range. completion X% low-XX%

Our or segment XX quarter, second revenues of million an sequentially. in the rig XX% technology $XXX increase million generated of

quarter the million final certain related settlement projects. of $XX from rig offshore included Second the to revenues cancellation

rig improved declined Excluding sequentially land from million improving $X and of operational as for the excluding to of the a projects X.X% equipment to $XXX million were improved to the yielding to lower $XXX higher EBITDA or offset XXX%. $XX than orders doubled sales progress than sales $XX margin settlement, book offer aftermarket efficiencies. due impact more equipment to million segment by of rig revenues million, more sales. settlement, and $XX bill the on million Capital million Adjusted mix a

our As of vessel of engineering continue annual equipment our where designs and million position received mentioned, NOV's Orders market the achieve standards. revenue QX orders by $XXX more Clay well in stated than to wind year-end. to run-rate in equipment XX% our to be target related wind a QX installation business as

control as environmental of between NOVOS improved capital of also products recertified energy amount in Typically, deeper cases to significantly the demands be this driving and reactivated, of months, to awards the rigs maintained. robust sequentially to achieve by work work of during which momentum to our grows drilling been been EcoBoost technologies. have three, replace Encouragingly we that the the is need efficiencies million automation PowerBlade million to and is capital for see reduce One that a While or is stacked wind And of or upgrade the and be products $XXX and into end the projects least the desire XX to our meet as were stacked operational need and is will equipment recovery first systems. and Two, for orders capital a is to has and stacks. reactivated efficient run-rate as at the $XXX during which technologies in reflected systems. digital to such such need related the improve demand potential and and the work three customers revenues expect continue automation, latest driving require impact the Rigs customer inadequately past equipment the many our their downturn sales via space. intensity upgraded for drivers XXXX. most

rate they the same a apparent refurbishment and corrosion tend rigs, as from great cannibalization, which growing reinitiate customers deal is as do maintenance not offshore services. A landgrave suffer suffer do While to from us of becoming around more to reactivation ask reactivations incremental improving upgrades, of the Guyana, sheets improving and enable activity, tenders and the in North investments. around balance while will rigs Africa, potential Sea the catalyzing international cash flows need sense and and West our even optimism discussions for Brazil, land

growing During sales with the bookings quarter, our improved spare part aftermarket XX%. X% sequentially second

orders part confidence the aftermarket XXXX half the Better market as of remain its outlook for and the lumpy, and improving move in technology orders year, during anticipate us spare second industry greater segment continues we beyond. While will in sentiment spending higher recovery. rig give nascent

technology basis the with that, to rig segment we'll second expect XXX we excluding points. of revenues quarter, settlement flat down open with that quarter, the are third our to call And the for now with in up questions. line the margins the to remain the impact For

Operator

[Operator question Ian with Instructions] a you. comes Macpherson Piper of from Our Thank Sandler. line first

Your now line open. is

Ian Macpherson

Thank morning, everyone. Good you.

Clay Williams

Good morning, Ian.

Ian Macpherson

that be bookings. a down there, QX at tech Hi. the strong surprised little after I the just revs was end Jose, reg to

projectable revenue strength the half looks little and just and to in wanted a visibility to get we in quarters behind caps then plays. see that, but the three two And in stay to that described flavor to the tech after wanted cycle on more back those half start like year maybe reg should of It I - looks orders just QX just and in businesses. QX bookings you've ask if whether or to generally, support wellbore. kick So back lag the more in in, starting the as across growth later

Jose Bayardo

Yeah, Ian. good questions,

quarter impact know, corresponds excluding revenues bookings So specifically, the heart the of timing that the of as related receiving. sort the that settlement, is guidance. to basically the with really, we're flattish rigs, guidance exactly were you to bigger it the the relates type with in of question, really, it's really And the was for which line so

up least profile, had of bigger as well tends We've a last rebuilding some the over year. that process starts large a the got takes very a of again, effectively That have lot type average the fairly And So that time, and we're then of of third builds lifecycle. a meaning that you long-term tail likely of mind got projects the row the small, continuing in But has end bit and booking backlogs projects reaches bear are time. be two-year nice an quarters trend and the off that horizon. into a and a on to some until in for very see quarter, of at beyond. well that about pickup XXXX these depleted little we're revenue scale off of projects couple that of a S-curve, in time it to

Clay Williams

- That's vessel for the wind

Jose Bayardo

within As well the as caps the of segment. some projects larger

Clay Williams

the both We've capacity. continuing that rig pretty wind into terms second the several your of well underway the offshore on space by potential strong well, as interest outlook, question, as space, potential entrants offshore wind new rig participants Ian, in terms as and got for side is side. the And with conversations in and on the of in industry remains it adding both installation

As reactivating Jose mentioned, specifically things. sorts and and pipe lot adding the upgrading of capabilities, potentially in a automation, rigs rigs, handling upgrades, of those OP interest

for quarters. constructive outlook our so And pretty next couple the remains

Ian Macpherson

Clay. Thanks, Excellent.

But be surcharge? the to for some of throughs is there and a that your positive variable pass not chain cost pass opportunity supply this pricing that's going really you with very these it environment stickier We you year, to sticky world you. when that'll of into it know it's Is for surcharge later a year eventually more if just business? down? if your what can. increase? but price broad variable this have the be don't Or hear surprising, positive Or next So throughs you're too a environment. nature calms in The challenging through generally to very succeeding cost is put maybe more of to generalized,

Clay Williams

question, it easier sell tell price it in I a you by lot And That's Ian. and freight a that the specific do a to geography, by increase. in product is demand really the much this areas. What varies those is and with market supply line and great surcharge has

most getting Jose these free during in of are We too, mobilization, throw surcharges. a that you those And we're of mentioned price standby things. a a as And sorts as downturn some I lot calling back. are lot increases, of think but of freebies maybe like

discounts were sort back taking through increases of And we're that given price us, for the downturn. so some the of effectively those were effectively but

margins covering that really it do that prepared be mostly inflation we'll So some we as right varies and get there. out healing, will sort remarks We're a continue, seeing expand. But just of hopeful it's now, lot. to the to in this able our about we're talked

Ian Macpherson

Thanks, it. got Clay. Okay,

Clay Williams

You bet.

Operator

you. Thank

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

is now line Your open.

Chase Mulvehill

is installation of how turret the But up is I'm and why if asking good I kind give really really to prepared of not amount were XQ. just the wind we Hey, if of take half everybody. about or order to? just that And you're the sustainability some back this could pretty like back flexibles of morning, I orders. moment understand the firstly, as of about Obviously, wanted the in or what to that Could of to and year. of vessel maybe did this base guess, the order, the basically into then sure lumpy order, orders much orders large turbine add orders, want and layer I'm strong rate. maybe And the you kind in kind number talk a year? talk not. And order hit half get we we in larger can the

Clay Williams

to remarks. specific prepared those quantifying more it couple things of short Chase, outlook a half our a reiterate touch will Yeah, And our we in related was of the remains for said very installation is the there question I the I'm contribution I to thanks rigs orders than understand orders, wind categories. constructive. in One that. going and a to just vessels stop

And that as And see will moving be wind can depending Act cranes. compliant wind that's handling would upwards and the from world so what parts installation add reminder strong base Jones participation to But of I very a that everything them. per systems just jacking very we NOV's on projects low-single went dozen there remains believe vessels And large that off that $XX equipment that design now. strong of vessels. the and order of to if forward those to vessel, our in of three working offshore million the installation be to those U.S. vessels. And two pleased needs something vessel, outlook on to digit wind needs right

the so right building more expect in now in Texas Brownsville, first to And added. be we're and

so on our few robust. for And the in expect conversations we addition, specific customers, then business strong years and the for area, remain offshore next well. really based as rig that And is mostly constructive outlook to there equipment with

technical to projects see little at the that to next the solutions. more then back around each other. by that globe. and production around with our these customers' and And remain Pleased in around completion specifying We to office customers hardware bit of interacting we to so project developments, a expect the in helpful FID-ing some heat too. teams the projects. to activity, guiding the And area think are that's I procuring forward up move starting that's and of least think these turning our getting And quarters strong to helped couple actually conversations our on and

with now of more looking And addition, our trend of through move translating is drilling of their so, but on that we referenced. mentioned active much work reactivations engineering us that in upgrades contractor requesting the done sort as lot a who see in at still And we to some offshore pleased flow. those be customers, things, right, rigs are to and then

COVID the there, pandemic. much we're hopefully big affecting I of But constructive out to downturn our still moving more into XXXX think overall. related of the whole, order period the still out a outlook generally, pulling on So from operations.

Chase Mulvehill

like And raw through material time? of few of up chain, follow really kind offset lot a understand think appreciate the kind Perfect, we about structural? of that that. costs, here with got temporary of kind The inflation you friction much you just how supply is Can structural can of know us much how more this next friction, of margin pricing as the color. things kind help the of over quarters. is you've when Obviously, of higher actually we versus progression, kind go

Clay Williams

of that's this oil overgeneralization. And pretty the of overcome It's inflation. industry volatile we're pricing when - that gas, it's an comes question, inflation industry positioned been. But such to tackle and Yeah, generally and it's better because services tied across in cyclicality to it probably think to broadly, of most a oilfield is leverage. lot the has industries always a awareness there's I

think so in our broadly at I and particular it's here NOV. DNA And in

tuned seeing conversations this our very are so And that inflationary are our it costs. widely of customers, business and into trends we're through their so our the areas all We're well. managing actively that known, customers it's with in helpful as

conversation. And the facilitates so that of sort

on term short but Things say confident short we're So headwinds not we The I'm into through that related be we Far a outlook getting through projects in continued headwinds. there, that's East think in on quarter. second the the able But into remains good. first to but constructive. July frankly margins. the more COVID are Asia, this. pretty third entirely, really going to the to specific fabrication inflationary faced term here we not see we'll that quarter, to mostly the mentioned, Not whole, Jose manage weighing on can and impacts the those the on clearly our And that some disruptions couple operations and manage

little And it. to effects supply through so the and secondary trying kind And manage a it's to of on a going bit see chain. we're to COVID of those be of continue then headwind

raw should as think a healthier I That's more resins, level of that. and derivative components sort sub-assemblies the for materials, well, to that Then on be fiberglass, which normalized as Those of we get challenge well. forward to a do. are the is headwind a as temporary. COVID. allocations they margin second many when for to of being certain back for for a is we'll buy well They looking So, dissipate epoxies, as able

Operator

you. Thank

question next comes Mehta Our Neil Sachs. with Goldman from the line of

open. line now is Your

Neil Mehta

you. morning Thank Good team.

I on to So want offshore off start wind.

the run-rate think numbers call. of of there million are the should XXXX $XXX million? items general, Are Can understand increased expecting you us there? the incremental $XXX to million you $XXX vessel think installation to see Or to mix that orders? by the provided just how You we help on And the end those in wind about type other the above should we margins million? of $XXX the on

Jose Bayardo

installation question to the in terms grow. I Neil. that set set talking of of I'm Every Hey understood the mean, composition. what offshore every month, purely to quarter, opportunity opportunity related your us. seems is is wind perfectly front about the But we're there has continued in like

end set topping understood at so grow. And million at that we're want with continue this the we'll And just a run-rate to not continues it nice to opportunity through of $XXX year of profile the really out. pleased we're the to And course XXXX. have that make is sure year. a And that shaping we that's way growth people that business out

doing that potential land market And we're opportunities things include it's the margin. for related question floating type so space, to then, whether And activities. the does wind not the wind related other opportunities, wind or that your within about

margin super profile installation said is spec size vessel average well really I think in as rig. high of us in respects, past, lot the we've for a a that similar jackup in as very to

nice opportunity it's nice for So and business us. a a

Clay Williams

offshore or bigger and that larger much to vessels, require turbines are that. XX about as inadequate an is the talking storey the thinking that are of in as the sort is we're built of the and the interesting in really megawatt we're this started that now larger well generation like. to cranes described going out handle that XX and supplied of generation with OEMs. I but know tall to and are hub And building next industry extent by install about XX world's is just even One about fleet And thing and familiar has as to past, at sort not height, a building you're XX-XX fleet hearing that beyond to as next we've that turbines too larger Yeah. the maybe going the megawatts, The sort those comes that. towers, already be now handling being equipment the

a fixed of of being there sort on is the to current to opportunity that the beyond power so of vessels number And generation offshore potential installation required see wind assets. support as we follow industries these

Neil Mehta

helpful. really That's

business. the incremental there's this million million your opportunities part headline think that an lot volatility The couple is been sounds make OPEC like business $XXX there's follow a I the Middle some NOV the positioned of you $XXX even clearly you're here is, a it increase bigger output one East up could do last bigger of of but obviously, over the baseline, comments is with conversations for But And very of in you East? having have How some any activity. the Middle capture in see weeks. is around activity customers? your can that's positive to the

Clay Williams

X-X-X GCC presence excited footprint Yeah, East our and our very in have at region, years Arabia is question, particular. about was GCC look it good Middle Neil. if But expanded capabilities, back the much, area Saudi ago. across our We're part. very it's in that and you the larger the where we much than clearly really Because been

so that of across And invested manufacturing and in field a we've region. number new support operations

region. spec manufacturer the building to support well as XX Aramco rigs, drilling offshore with additional venture land for joint our rig have of We high as

on hearing back of the think sort region's really we've is lately first What move I in of higher of capitalize activity. really, getting to the interest this to so accelerating we're work towards year positioned been And through well half a that there. level

been have have sort day-to-day suspended work addition around operations. in through the that that are a at standard NOCs in sort work, projects of were kind that that high-profile there back COVID getting - have number to an to tenders of of NOV which And shows used up components so form now. that's oilfield around are region the the of And of some of announced

companies inquiries well And in to told that fishing around they're one need fleet handful of things. the work region equipment they smaller large of activities. drilling for of service completion terms bids or being sorts I Recently, that NOCs we've equipment. downhill support So in of for had for think region annual of those a to tenders drilling servicing biannual by increase the the unconventional in and from tools their motors,

their in except them inquiries we're Technology about the so there's around land that. efforts that of drilling Group there's with in not assets. in on in And Rig right for region space lot our couple drilling a supporting conversations where a additional And going that now, land

due And so, very on region work to India. add, following to very the outlook the excited whole, has East, will about the ties big the a close for COVID. back it's to Middle shutdown getting I that

COVID that us. did And months India's in we're tense Middle ago. East, operations so became It to starting a more couple affect here the situation hopefully put behind but

Neil Mehta

Thanks, guys.

Operator

Thank you.

George line the Our next TPH comes question with of Company. from O'Leary &

line now Your is open.

George O'Leary

morning, Good Clay. Jose. morning, Good

Jose Bayardo

Hey, George.

George O'Leary

you this guys ramped of horse want just thinking in far. don't out cart and I about to orders look But put QX'XX, the the before too quarter. the level and

if any you have year-end for curious sales could Just sense history. how be robust versus

Jose Bayardo

Georgia, weak connection we're a you. with getting

Clay Williams

us? you George, can hear

Operator

looks next I'll our disconnected. It been George like on to has move question.

Our line - from next question the comes

Clay Williams

We'll question try about say to to back George, in. dial was please answered. I get your sorry,

ahead. Go Sara. Sorry,

Operator

No problem.

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

open. now Your line is

Clay Williams

Hi, Mark.

Marc Bianchi

Thanks. Hey, guys.

on So have talked supply much have margin disruption X% the aside there's then the way, manufacturing pricing just quarter? the what the X% I'm of were in a of EBITDA implies How stuff. margin another in the stuff how of issues if there's one to will disrupting issues move this chain. place, the sort about several disrupted if other just from the to that faster is suspect be curious rate the terms you If or with cost disruption seeing? margins of to There's take just the that I supply you stuff kind issues out across much I we kind of third functionality, the price inflationary capacity have like other kind utilization pressures the all part you chain. world There's guidance increase to to weighing supply that putting that expedite And of activity? world, And now? chain. your the COVID of to for in of right

Clay Williams

a And we're seeing that's been great we are about our of covering chain. would about and job ways the in came increases to we place. tell to a talked Other it And of it's not find every to overstate talking doing Mark, single through reviews I folks disrupted it's tightly up XX question. answer. They're inflation to alternative think our needs finding economy because spent managing It's great business difficult than kind to global suppliers. the That's a detailed over intensive and XXXX, customers extraordinarily a price we're I lot wound not a through global like shutdown with all of alternative doing of great you, hard it, units, of the to kind business quarter, in with The it say, meet we go unit. supply time how everywhere. it's earlier. say it, surcharges, every job

more But would need of raw time cover I getting But able more pricing of But, say difficulty is off less really really the and lot. modules the the like we the we're allocations that together challenging before costs we the just integrated in than to we're straight to seeing. circuit here is we of extraordinarily and can sort because, a I cost it's scale are difficulty that. parts the it's a deliver that Our products surcharges. out that helping all or getting deliver, The we sub-components, what of that through the an challenging put said, challenging disruption really, the certain certain coming boards event. of extraordinarily materials,

So disrupts production is problem. we're short one component, our schedule that and a well

supply was their business distributors. chain that XXXX, well ecosystem of really by pre-pandemic, suppliers under I so a that, in global robust add So lot And to industrial would all pressure. they tightly this found a and facilitated of was

many their them as And well. inventories so depleted of

these shocks inventories performed And out of sub-assemblies in would And they to XXXX, the from time when Tut shock manufacturers you that industrial components distributors shock things. their very that so arise of would function. They NOV a very, are absorbers demand of still inventories either sort important very to one production upon. lean. of relied depleted absorber and of of sort and that from they of have things, in other all or steel on took industrial the absorb sort extent time of the the of shocks in side times, normal like, the who side

to like need of another challenge on NOV's what that's we it. to getting I where the QX. better try QX of the so at and solutions we manage ahead new need exacerbating we're to and said, to sort little challenges. very, I it, here. And better work And that's through access stay factor through ability than to was But creatively proud a very this think

working so it. we're through our way And

Marc Bianchi

caps. the Yeah. order mainly Super. issue, guess to is to think fourth that caps of order earlier quarter? see this XXX, should XXX I issue and quarter? the mean, in I you did third asked guys still I responded terms chain kind mean, Chase just about related you that, could question rig. about to that level of and in maybe this supply I the limiting the progression. something But And we think Or progression we

Clay Williams

We bullish oil got of growth, North America to waking remain pretty fields on XXXX. The back in demand. kind up late -

Sort starting thus markets are like to offshore feel to well like of we're international markets. is the the degree, through up. go some inflection now And that moving we feel as they're

And about remain of caps so through optimistic the half back the we for orders year.

Marc Bianchi

so much, Clay. Great. Thanks

Clay Williams

bet. You

You bet. Thank you.

Operator

you. Thank

the Veb line on & Palmer. of Coker comes question next Vaishnav Our with

is line open. Your now

Clay Williams

Vebs. Hi,

Vebs Vaishnav

you doing? question. Thank taking Hey, for my how you

and next say, back today? I the not think of try think to business, activity underlying about, the improve we to XX% how to are on margins plus two-three I an if if what in maybe can about we still profitability have trying costs to the much we years, But we everything. out? is XXXX get So EBITDA XXXX, given saw taken in let's back Obviously,

Clay Williams

record, demonstrated in cycle. very know And better with. forecasting at parts that, strong of to long-term you profitability track Vebs, our the going of which we've familiar short but look back I you're stop I'm

on very And revenue, total focused scenario is be tell it's you higher return earning so construct capital, We're think also I margins. a that's we - on returns a to hard which back we I to very level, will goal. on not get very would where of EBITDA XX% at and good little capital, level that our book obviously

are so, since $XXX a the of lot And of costs, million structural, of yes, taken XXXX, lifting costs. which first nearly out heavy we've quarter structural

the these And in well, so it's in lot a lot as renewables we've new is our and capabilities like. more and efficient made capabilities as automation digital all business capabilities, better, a investments

all began levels dating when the of two field. mean, records prices. rig really record in through deal the an that's well downturn think I kept aware market. being noting. with it's We low oil so, worth And bad year just I a back And world in know oil activity to I negative just probably but moved pretty war work, historically positioned company's extraordinarily this, everybody's of better a

coming we're of so off that. And

to we're so financial generating looking getting of from the but a part better cycle, results. being way there in forward long and a good the lot And

Vebs Vaishnav

the sales, we cash business, I I more about And in margins if about changes flow given profile. free if flow how given know margin the free revenues longer maybe are changing over think But think vessels. cash it coming that Thanks. margins, should the NOV's same the don't term, how the we wind from cash - vein, free flow

Clay Williams

We've downturn. the liquidating management, working of one capital that we're capital working is things been proud the lot for think I free And through fact at of cash is flow better a generating most we're the Revenue further good which as to cash. of run-rate XX% capital we're as for expect the annualized high a working But percent in mentioned, now be working down improvements continue and of range expect to capital a Jose source run-rate. business. to the

are market And think I better it's help and that performance embedded so environment. that will the those a in in really maximize disciplines those processes business now

Jose Bayardo

Yeah.

aware to working made not you sure of over But I But the structurally been the related might and thing, other this capital about maybe that The capital. very, the occur business. very is as efficient be talked to we've energy transition. had of business I something we've the we've sort that question our a all Vebs, in related not. to changes on it or to also is, will Clay, getting you're that improvements at your the historically focus at portfolio alluded time

those the existing existing sets, ability leverage on One base is that as of our excited things really asset the opportunities. well to we're skill to about as capitalize our

So rig really, with of year been the have opportunities. pursue those Saudi no the would frankly, run-rate, required capital our to otherwise spending opportunity expect unique plant, forward. --virtually back no because X% than to spend capital to manufacturing remain it going revenue expenditures X.X% And incremental higher capital one to was this we type while in

Vebs Vaishnav

a I you Thank taking gentlemen. good point. that's my think for questions,

Clay Williams

You bet. Vebs. Thanks,

Jose Bayardo

Thanks, Vebs.

Operator

you. Thank

a Our Gengaro last of Stephen Stifel. from line come will question with

Your line is now open.

Stephen Gengaro

as think good next Good forward you're obviously to Thanks. of is How the Two gentlemen. the years? about generating sheet on go the of shape, The morning, line in following we two one questioning. cash prior things. you cash? over balance do here up One uses

Jose Bayardo

several Yeah, good been not years over question, so hierarchy. times we allocation very target clear consistent on think pretty regarding about capital last Stephen. two the we've better to continue the focused debt-to-EBITDA pretty we've past And over And, distant time. look, we achieving been gross of our I remain and or how think in -

can are going be, cash out pointed time. balance you And in forward stockpile you as However, excessive really move shape. that not rest of sheet as we great guess in I assured we're to

it's still in going the outlook in more to removed is in depend improve into hold which really And the And uncertainties takes EBITDA, variant our still sort some bit one from healing breakeven there's we as the seems disruptions. trajectory talked a beyond. But head we're we've there want rearing of causing this and to call keeps emergence everything's have wonderful. of work like right come ultimately, feels equation. during direction. some that day-by-day, that the its that and quarter that is Delta to only little the But related given on So, to XXXX headed about,

remain working we sheet bit have Or So, we'll fund. that position of could And to we be we've able very number needs I several trajectory, one some of years. in their we we excess effectively to think improving - capital reasons, opportunity. end products new the and and to if time to in need return play on highlighted to to is working reasons those very, been of to ability maintain need that it's it's we Clay lot last a maintain for over but up a a strong depths a market have a a even pretty that done of in and the developing. to quite our shine of a we've technologies where capital Also, downturn, steep balance will which might and shareholders. offense, the

want able high we to be it to opportunities. to to being So relates investment continue opportunistic as return fund

capital. we is return being topic. outline, it every plan something that But premature board. to EBITDA a good really a remain that specific will so, away probably little about to a with And about from are And But thinking one it. our we just review quarter it's certainly conversation quarter

Clay Williams

Yep.

Stephen Gengaro

strong push I going as was quarter. as anything the one that rig systems, On be the there then revenue one. quick thanks. was the the non-backlog, reading up pretty Great, should number that that in in artificially into And quarter? in second far Or Is that that just anything quarter there other forward?

Clay Williams

after offshore a for few been up mostly bit? last Yeah, double quarters. little market parts, our mentioned, spare And bookings up digits we was as

Stephen Gengaro

gentlemen. you, Thank great. Okay,

Clay Williams

Thank you, Stephen.

Thank bet. You you.

Operator

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

Clay Williams

joining to Look quarter this us appreciate Thank We you everyone our you, updating on results third morning. in forward October. Sara.

the week. rest So great have a you. of Thank

Operator

this gentlemen, today's and call. Ladies conference concludes

NOV (NOV) 28 Jul 212021 Q2 Earnings call transcript