NOV - Earnings call transcript Q3 2021

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

Operator

Good day, ladies and gentlemen, and welcome to the NOV Third Quarter 2021 Earnings Conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a Question-and-Answer session and instructions will follow at that time. [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 Mc Carthy

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

begin, security's 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

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

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

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

Now, let Clay. to me turn the call over

Clay Williams

oilfield quarter in Thank of prices over book-to-bill consolidated in you, of once September strengthening for strong the commodity orders with ending again, XXX%, Blake, third XXth, posted XXXX, NOV steadily activity. reflective

that quarter million credits was with credits we which more million those credits to EBITDA revenues to to on trajectory look pretty third for teams I Production Nevertheless, reminding recognized in settlement sequential on stemming from quarter, of EBITDA outlook revenue notably quarter. EBITDA consolidated contributed that this certain However, We cancellation segment, large our the basis day-to-day. surface, to sequentially everyone only from areas, again today, the by and these call, offshore X.X% on more EBITDA. NOV charge revenue the excluded these the which Completion managing certain Technologies numbers excluding financials and suggest during and rising up and challenges third points last beneath are essentially in describe I'll RIG project related quarter within execution a of which 's $X $XX the our from will million were If million the moment. business Solutions sequentially, our flat, beyond continues continued in and included from supply face to consolidated Southeast $XX is our our combination $XX project comparison our We effectively results X% challenges, second to million and down fell in we strengthen. fully reported and weighed chain view a somewhat than a Through and in a logistical within headline declined a in start our and discussion COVID disruptions that XXXX positive our margins most on $XX X.X%. Asia.

we to In chain significant for for Nevertheless, solid sequential quarter the Wellbore - took row the in fact, the years. short in Technologies bankruptcy. leads X, segment. in NOV positive double-digit reduction for has me many making gas and for supply in second flow top-line which coming quarter and global X, excess that both about key X charges. Stronger in the issues throughs the past achieved of Technologies. a our Solutions the growth back for natural the third run, business And our XXX% year. project and lately. of from RIG Production more and for X, drilling which given of oil a I'm of Completion are the customers a challenging X, offshore prices costs book-to-bills decidedly X. the emergence row outlook our

Asian Our operational Completion on a and of Production disruptions, Solutions into Southeast project shipyard in quarantines, a shipyard specifically shortages related COVID critical run that been has segment combination and working shutdowns, large labor components. of

also our sub-suppliers faced in disruptions, similar region Additionally, have the project which execution. affect

challenges Our recognizing team disruptions built been Similar change as possible shift to chain with figure to are Across the globally. Production continued the Company, daily. our the press. resilient out in this to we closely need COVID and challenges that as segment, of other intently to Asia read Southeast is and Solutions the focused the Most how working to vessel safely executing while disproportionately get base efficiently online, to as there. affect be customer and and manufacturers as on effectively owing in industrial have financial about its face supply you in operations persistent large and operational of Completion

X been seeing cost. that have an higher from are teams alternate extended businesses integral plate and ore composite times our remain offset pipe while raw we fiberglass be And and to critically tubular prices nearly customers. low to in to instances pricing But from the with of now are and out labor, declined. to able We inflation our buy like to than cost steel have year-over-year, as inflation supplies, Supplies and subcontractors. components facing we up weeks. some epoxy, materials, in generally for are have some stability in iron diligent most steel and have we weeks appear pricing steel at Lead pursuing least more Tuboscope for coating XX XXX% coiled and in prices resin, doubled forgings

of increases to buy. the say they worst fiberglass, year, I'd were is components time steel low of the what epoxy, semi-finished raw motors, has other U.S. steel Asia what double-digit this materials hopeful that behind gearboxes, and the have from remain seen also are are on boards, in very us. or inflation generally that been supply. they now finished Semiconductor XXXX. We shipping we we chips, other sub-assemblies container XXX XX Spot other last tight in rates electric challenging. and Freight Outside were cost

to domestic XX%, Additionally, NOV reliability It's was into about our European drives has mill guaranteeing use very could up. led freight. in unit went have can reliable but a tight air it And a supplier and up freight Labor and tough shipments into U.S. steel Hotshot North are to America, X availability, take even secure full stepped particularly port deliveries which drivers redeploying is areas. less to ocean to costs where some workers is more than dropping trucks of we months vessel In it assignments. historically, and reliable. making it certain drivers without because the more deliveries ocean be higher-priced land of half expensive business down freight, X without in jobs recruiting secure, steel booked not load. new are

these were challenges. customers also Our encountering

complementary projects pipes pumps, certain and our instances tanks, ways, fact, because planned behavior of like construction many of availability go hearing crew NOV too. challenges fuel install them. facing reactivations cetera, and secure construction are to can't that secure instances, customers affecting and crew Texas into or can't components, our handling other are mixers, in headwinds equipment in et large In in customer West we These products other delaying are elsewhere.

far launch, inflationary the price good has cost job stress, So, delaying NOV's of to done team they increases. form covering us. project delaying I pressures in orders are and a thus want to

As benefit plants competition. vis market with categories -a our scale maximize raw leader from our - of to our many have we in manufacturing equipment, moved we value. vis suppliers across And material

to our margin driven price achieving are production stay compression, as in with are hold XXXX, downturn businesses at all products taken margins up pipe least able few on in the mount. managing pricing. struggled are cycles during raw inflation margin given intently on our material drill And most of cost while recover XXXX. some like increases through that expansion has Some longer discounts orders risks with focused they But early to resulting to of continued

$XX Our Completion shuttering Solutions dozen costs, another cost including Production over of reductions, few businesses the annual half next another are facilities million quarters. reducing identified and

North they with be orders margins generate oilfield we're multiyear to We the the need is the expressed gives not in share into view focus by that us calls years our demand and will on the supply struggle for initially of it's volumes that up-cycle capital of flattening sufficient for world higher development downsizing significant E&P money activity exploration to supply in of returns. and direction. are moving While on past under-investment a several of years, In producers pandemic organization's prices. The combination commodity tightening will lock-downs, together and growth, horizon, out the production. where intent and lead the economies petroleum gas current moving right America others in view. confidence s The shale clearly emerging shape, for cost over high to gains respond efficiency to to oilfield several increasing in and oil and

has cautious drilling been in incremental So far measure. activity

the drilling they Our to that they employees, land tell still find customers to capital and by to pools oil, in us is for even pre are crude and Street. debt Capital The U.S. low-cost The as that count paying more the and large, to the more Shells though industry green This efficiencies industry cost XXXX, of -pandemic OpEx it source resourcefulness, crews below rig rule market to of And gas from more made less rigs also and the productive. rapid pay fairly possible decision prices. very hire well that accessible following back U.S. the expertise two levels. both things: have technology, it form the is will of lost. commodity as responsiveness get difficult in oil has emerged as industry, equity is the and easily Wall thanksgiving swing forces let a by well of characterized

capital its discipline to the ethos. returns higher very focus widespread and capital investments necessarily decarbonize capital-intensive by gas Consequently, and capital of for led new oil the embraced poor with XXXX cost -- U.S. decreased capital coupled on However, by operator came increased providers, this has move many industry. as a in base to investments sharply

stands as its the reason will unconventional that oil to U.S. the world's Going challenged to forward, more market supplier. it cycle fulfill quick be role

of providers. are costs pricing more constituents we its focused will reducing to drive labor service assets, that reinvestment higher up depletion returning rates. utilization Further, and on and consumables, oilfield capital shareholders rising oilfield by of service Now believe

view. willing of not can incremental field they unless We improvement, contractors to the which contracts achieve Higher get on to wells, shale costs to and rates, construction which going payback reactivate can made our drilling efficiency of by is overall of to not responsiveness are crews stories industry's incremental certain equipment as required day impact reduce degree man pressure diminishment secure will pumper green costs on unless returns commodity of units well pricing rigs hearing cruise at they reactivation. will incremental worse net prices work a incremental higher higher adding in the from is

been response economies more demand supply-demand trickles OpEx all becomes market think capacity industry more activity. be and time Much to some for field of shale oil into will up order. recover, evident. it to broad-based We just require spare ramping back than the world's equipment As stacked will U.S. working bring and and back neglected the international and investment the offshore has significant GAAP

for interesting declining low orders that control the offshore add us the sequentially. of XX,XXX third most reactivation's. equipment observed offshore a rigs order Despite potential offshore around trends outside pressure One for inquiries a of quarter PSI of number in I'll the equipment ocean. the it rising we was level actual rig And trans of level of contracted

looking quote We levels tenders the others, by certain being of rigs markets. onshore market. stacked NOC coming being in and looking international who This to activity by to several being driven at at back asked is rig are currently that also floated high are higher are quietly on

raising just businesses certainly and now, constraints. to prosperity higher manufacturing customer worldwide but discounts So claw level costs primary for XX bringing see simultaneously our them and which as year to future. in the food prices, constructing their is newfound the more the to months industry last this follow where more are on prosperity say, MP new the We will existing late-cycle production to next starting given sum prices down. labor now trickle pay down materially over, in prosperity are are NOV's facing Oilfield while soon will enjoying commands production up base, higher back trickles wellbores continues near as and operators chain. providers, component as NOV's they service

helped we're Production the to some X like later brunt Throughout pipe, clearly wire like has to to the which additions reduce system, through felt optimize traditional offset invest help customers our more Concurrently, of delivering will e-Frac seen all downturn, has some of drill in in ecosystem. developing NOVOS in achieve or the offshore NOV's downturn, manufacturing, reminder, data of in it's robotics, and a bit carbon point customers tends new And has exposure of brighter reducing backlog engage to which drill it evolve processes, trickle-down the although development, their technologies drilling has automated wind nature it its future. also emissions As demand our strongly oilfield downhole pipe, improve a and offerings oilfield operational weakness and a our Solutions a ideal service recovering the recent given its capital up-cycles benefitted low of has its behave segments profile quickly. it oilfield continued future. better oilfield the in fleet, portfolio of our is RIG to completion floor labor, blossoms operations. from to and but our our performance. Technologies our continues Wellbore equipment enable manufacturer Completion a operating site provider, NOV product for that traditional to Whether through drilling to through Technologies with accompanied equipment. and by the the efficiency, real-time pursuit drill

vessel wind a run on won year Cadeler, and year. packages track $XXX installation next QX to of remains revenue business achieve offshore rate by Our from of million X

expertise. an And capture first to and utilizing solar, other addition, FPSO for utilization offshore efforts wind, leading In processing extensive continue, and our system study our our oil and were gas. a gas awarded onshore NOV is storage carbon a we traditional the itself as as Asia, provider in feed to and geothermal aboard is in transition energy capture bio-gas, as positioning technology just it carbon

that our way. over inflection NOV On are confident work fruit with approaching you the your a big past team an thank point bear put extraordinary employees efforts. in the are who has increasingly NOV of the several will whole, we hard in the is years today, listening. To for

Jose. Your success, Thank over our dedication are coming hard the will you. have it With that, to work, creativity, turn us and for way. opportunities I up that and set

Jose Bayardo

quarter Thank X.X% quarter. of Clay. X.XX the you, consolidated revenue NOV's to EBITDA million a or third of was in sales. second XX XXXX compared decrease Adjusted the X% billion, was

than rig the cost Southeast with the second in Excluding for quarter, were offsetting our revenues flat taken charges the credits Asia. project from in cancellation essentially reductions more

debt the third comprised Cash we cash from and billion. equivalents million in of generated from of and During billion ended cash quarter, XXX debt Cash with of We flow. flow operations XX million free net XX X.XX long-term million QX of X.XX of

results. Moving to segment

less improved as and XX mix XX%. a favorable the margins XX% in global of of recovery revenue Our markets XX pressures of and geographical all XX.X% million Wellbore XX the XX% million Technologies third or or continued North America An during sales, Revenue regions. XXX generated increase in to EBITDA million segment X% improved incremental major sequentially. to momentum million inflationary the in build in quarter. as to international limited

Our of Middle primarily performance driven ReedHycalog quarter by double-digit [Indiscernible] Hemisphere across strong posted the another revenue growth, and Western East. business

designs cutter to and of leading-edge the [Indiscernible] that revenue Our improving growth at drilling continue exceeds activity. drive global rate

delivery to schedules, While to substitute has been the management higher by technology offset all justify businesses raising this with ReedHycalog more to and as higher-cost efficiencies issues global forced successful supply by meet minimal gained of customer business faces times in pricing. been than chain at materials faced manufacturing has the pushback prices many costs

Top-line demand in business are we key the fully improvement to by tools shortages downhole seeing enable our drilling growth did record-setting continue during constrained and technologies, which the of not downhole realized performance. quarter. was reflect therefore for a revenue materials Our X% third

system was rate penetration and record Our per agitators field to recently establish rate a customer Colombia XXX a new penetration of in of used hour. of help delivering a feet benchmark

saving out U.S. in times change shift reduction downhole large in the average operator due a tools Northeast during select well of by whole. XX settings Our of drove to drilling XX% a downhole, campaign the to trips motor used Ben was the ability and drill adjustable

solids Services and Wellsite growing services double-digit primarily revenue business in growth sales Our driven control for equipment markets. demand by international posted

in business were of outlook impact strong in hurricanes offshore regions, to particularly unit. improvements the Services the tendering all Latin the North despite of Recent for quarter. business improved Wellsite counts the Sea America units in our While the sequentially, continued saw by Gulf and improvement in points the job during Mexico XX% activity

surface Togo our for sequential rentals systems demand revenue activity saw MD business in data Higher (ph) digital pick for realized Our and acquisition revenue margins. strong up drilling drove of solutions. and sensor with sales we sizable double-digit growth levels more global a incremental

are Pipe. which We in contract X-year from optimization IntelliServ the from digital our a recently additional services, awarded for drilling high-speed North telemetry leverage Evo customer an our Sea Drill Wired

also data well wells trouble allows oversee offset analyze all easily and identify operators solution, a drilling well upcoming for against from to We spots, efficiency wells, secured several international potential monitor remote which location. performance contracts drilling any across

anticipate Looking pressures. from will to adoption digital our offset continue operational by will to share looking and legacy to expect forward, gain our a benefit additional efficiencies data and continue extract activity inflationary greater to levels gains operators rising market and offerings we offering, acquisition we market

driven by Our mid-single business improving our coating sequential inspection in digit Tuboscope a experienced demand increase revenue and services. for

and and Nicholas, to by strong key a third is coating of revenue coating backlog has and at facility. operational Ida projects the COVID Hurricanes was growth disruptions in demand quarter related outbreak inspection the grown, our While hindered and

the Asia were we required constrained materials in on to to meet costs our backlog to quarter, to the capitalize airfreight fourth improved growing backlog business our for of certain the and pricing U.S. raw limited capitalized unit customer to ability as on from to resin results. Additionally, expect challenges we In subside to higher drive better resulted its operational aligning supplies delivery requirements. and

growth business flow-through pipe restrained higher pressures. drill Prideco sales top-line less volumes. solid favorable EBITDA was a Grant to Our mix and on posted due inflationary

solid larger increasing showing an improvement pipe supply. smaller diameter sizes, drill pipe. limited diameter is preference in unlike orders which with are for New demand a X.X premium notable operators U.S. remain inch for pipe,

drill additional are specifying tenders premium recent for grades pipe. demand specific rig of offshore operators driving Additionally, and pipe

improved fourth-quarter activity, challenges While pricing optimistic supply increasingly chain growing global us will cost muted by inflation, ongoing and have recent results orders be and regarding XXXX. drilling

our supply allow for by activity in levels, growth For X% revenue should sequential improving X% quarter. lingering chain global fourth Technologies partially challenges the segment, offset Wellbore between to

We expect to improving pressures, better by to offset be supply limiting and incremental around continued absorption pricing fourth and quarter. in our margins manufacturing XX% in the facilities inflationary chain partially challenges

as one. a consecutive second higher of gives at for level during Our this generated sequentially constructive X.X all the at completion solutions quarter. was X% ended a $XXX X% sales. and million or the segment in revenue the Orders book-to-bill XXXX. of A but third third orders a in quarter the business EBITDA end of production approximately to quarter of sequentially. quarter quarter of into one XXX% confidence million billion. or XXX yielding us book-to-bill along million, million dialogue, ongoing with greater of sustainability decrease the the than customer during a segment Backlog for XX head realizing higher were XXX order growing A million we $X of intake loss with strong

on capital stimulation Impact EBITDA to sales. lower equipment improved global from was and intervention primarily in sales aftermarket decline equipment due resulting steady experienced a to limited sequential business revenue activity. an sales Our mix double-digit

quotes more on rebuilds improved preparing off take compelling. line. particularly industry now pumping seeing more and dual-fuel In bulk size support mile the for inquiries the but its orders international activity if equipment equally, sequentially. fence capital of seeing is We're last cementing and levels. activity, drilling quoting Prospects are remained not equipment markets to to inventory also North higher the increasing we're America, as increasing around with average the of New reactivations, conversions, light,

equipment. activity by As decade, a spending one on companies tightening more and in is improving supply of resulting call, of our lower conference markets for international customers described its half in service than

East remain control next-generation world, equipment Soviet coiled the greater in orders for pressure seeing the and countries. we're in Although inquiries the former growing for particularly regions around Middle light, inquiries around and tubing many bloc equipment,

few disruptions. improving unit tight, over resin was Our across key continued such demand Global Fiber extremely expect quarters. and sequential glass to materials remain flat as of as the supplies markets relatively Glass raw extend business saw a offset condition end businesses next results, we by supplier the

activity as challenges Additionally, in working while our experiencing direct lockdowns, ongoing such form the effects our gas Southeast strong is headwinds, outlook these improving mandated and oil in effects COVID, demand down even are and the the fewer increasing driven power of now occasionally through strengthening, which Despite Asia, business and by Middle we're for for we're products. handling in in the logistical shortages, derivative China. of East, fuel activity marine government operations shutting and continued offshore

in operational Our seeing process Technologies anticipate significant Clay growing been quarter, carbon this unit. We're Flow for the pumps in sequential during the and gas while quarter. usage the modules. we outlook processing demand will cultivating we for within opportunities revenue. FPSO storage this we've Clay the challenges equipment for business Process highlighted, a into regarding And as skill and showcase remain faced fourth longer-term optimistic business. to described set & high-single-digit operational linger business capture And this business realized additional for the chokes decrease challenges

we and to since XXXX, and that businesses a resulting highest strong backlog EBITDA For due to a flow-through higher. sub-sea replenishing book-to-bill second sequential expect flexible in pipe straight business their percentage with the increase orders outlook exceeded prices move a solid offshore for better improved activity of the for mix. revenue orders XXX% remain in Outlook achieving a Indicative sequentially, the double-digit quarter. and sales for continue improving execution levels realized solid

improve mid-XX% should in but segment growing we For range. allow will the with chain XX% to revenues margins challenges, production completion anticipate supply and XXXX, segment backlogs quarter solutions improved of the continue activity to incremental aftermarket our XX% for and fourth and COVID

the quarter. offshore offshore project decrease of the projects the the orders project mix the Our rig the the million nearing settlement Orders revenue bookings the improved due XXX cancellation, savings. EBITDA impact comprised in a segment primarily of lift sequentially, segment XX third to for Once as in million vessel continue X installation to quarter. the of cancellation, timing of Adjusting most provider sales million excluding jacking declined to or revenues million million, XX% increased revenues from million generated and over RIG Technologies completion and quarter to XX we XXX%. the of book-to-bill our again, trusted XX cost second wind designs, the during on increased sequentially, as of half A the systems, rig yielding industry. recognized for to XXX certain the of equipment third in vessel wind establish ourselves heavy offshore equipment

year As of run and Clay end $XXX of an of XXX mentioned, this we million remain approximately the of on the million track annualized a by XXXX. to rate run achieve end by rate revenue

Middle count is and East, is global rig build. driller tendering growing more rig Africa, growing optimism base, the Additionally, quarter, customer improved higher we we number projects second project. activity BOP quarter, the to to offshore continue a third award believe Rig sense equipment orders Southeast for that Last offshore our an will remain optimistic active our vessel of and straight XX,XXX PSI noted wind in Brazil, Asia. installation The for by we the from trending West grow. which highlighted Capital of continues offshore

not reducing that customers reactivation emissions upgrade near conversions and projects. perfect have offering. rig approached of rigs like technology ago. customers its A our around just of XX feat of contract months the rigs have indicated automation, BOP PowerBlade expects fleets end utilization where the Most industry by One centered approaching recertifications, fleet recently it 's the was entirety remarkable have upgrades, under XXXX. to us number accept With unwilling equipment, considering our in of hot of are A potential and that Orca condition. full of operators to the about and

near-term will of We only overhauls. in centered we into shape modest the as around get rigs expect most that reactivations scope be to relatively will are stack, deeper and good require the But land these rig opportunity land positive for Demand in reactivation remains so seeing markets. in equipment we're projects turn, will revenue drilling the low, And but significantly. for developments grow NOV.

to systems rig As rate, a and the latest setbacks diameter the along there of rig drill Spending outlook. straight offshore quarter capabilities improved rigs with approaching bookings. In multi-machine a Operators structures quickly business to desired stronger pressure larger interest we have our in day count larger their into edge business, with realized by domestic the of rigs meeting to for After in is US, this and recovers more of control third that specifications rigs inquiries to-date, beginning rationed in will utilization are of leading and more we efficiently fleet rig the capabilities land increasing our full for than torque, flow growing customers spare the leading part as gained expect on are we've confidence trend The that demanding upgrades continue bring premium rig maintenance. NOVOS, capital class. our a handle and what And preference pipe. is day. half currently fourth seen decade automation idle normalize into quarter. is the controls to based this and drilling aftermarket clear rates ultra also rising,

help our earlier. the rigs. described saw of like requirements in driven We by We the the to predominantly number customers increase reactivate would the engineering in from stacked XX% by quotations engineers determining group, also I field our sequential

operating X, results RIG customer ahead, for Technologies segment installation And will pipeline more X, backlog and X, increasing to manufacturers. of tailwinds. a base. leverage. potential supply vessel with Looking improved in of wind issues, we find into chain ourselves segment by rig specific RIG X, several projects. incremental from all Technologies activation revenue. segment converting in from labor financial operations becoming rate headwinds global around optimistic our production Saudi. an XXXX currently the rig our shortage prospect likely maintenance drilling Primarily spend manufacturing contend ramping increasingly or due Near-term which same contract of blunt faced must growing the improving

quarter, With we we'll to XX% the the fourth segment mid-teens. in that, with For incremental X% margins now expect for grow the the revenues call to to questions. open

Operator

Gengaro [Operator of Stifel. you. Your first comes the question Thank line instructions] Stephen with from

Your line now open. is

Stephen Gengaro

morning, Good everybody. Thanks.

Clay Williams

Hi Stephen.

Stephen Gengaro

think things, couple market next vessels. you we a but over the side, bit you wind offshore highlighted can on in I the Can of couple the talk the there the A that unfolding NOV's, little sort of order installation two about start tech rig see of and opportunity years? earlier you

Clay Williams

Yeah.

addition little booked, we vessels be market. pipeline we'll in -- also a that vessel system be for U.S. don't the think, going down another those jacking opportunities. led another for third QX. pretty which including orders Stephen, -- But get vessel probably to our said, rig the Act had for level into installation we ordered, we bit to quarter we X, that it's a third a optimistic know, I X we're when X, likely qualified vessel, of given XXXX, X, pretty strong vessels as QX, Jones -- wind the I to, In a for of

further power Asian in announcement of pretty by bright U.S. its of is installations strong. continued capability, waters ambitions aspirational wind outlook for generation XX and in and our administration's Biden a outlook of So gigawatts elsewhere. the Underpinned Europe and offshore

segment. whole, pretty in position on we're good in that the So market

Stephen Gengaro

Thanks.

transition Do margins through think at think XXXX incremental the go COVID you different as pieces you and you still back costs getting of etc. disruptions segments. about we're look I lot think with a about of XXXX guys still as do know have lingering, are close there's normal more to or thinking How and some year? you you we As moving you the

Clay Williams

few lot. at gets gas demand even on supply these I natural think we things Under-investment all still a A crude point a good A to really economy's there. our talked open how years, challenges out in battle grows. in my But we the some up backdrop. for normal, crude interesting do through question. sets think past fully, way a over back and up view, lot, we It's out, depends about. the chain world, that wildcard the It's

of years. constructive cost headed that's had with here and And pretty $XXX closer how million. to is think, a on million, $XXX respect I effort a in, couple and then we beyond. ourselves to very do for find we've of north heels the we situation can now the That's that out in underway Just significant of XXXX

so profitability business up we the margins, really, put really And is better better to well-positioned. think forward. going

good that's COVID think behind NOV's find it And I still things stands we future. disruptions get speak get normal. that back We where but that's quickly for So that to to world does us. ourselves, a can't the disruptions, the reason unfolds, think I to economic how

Stephen Gengaro

Is leading way not there that's a or segment necessarily? the

Clay Williams

it's supply of too, chain in that's as Production Technology, sort COVID, But cycle so driven. a that's Wellbore Solutions issues overcoming earlier Technologies, Completion And little of capital RIG way, and spite double-digit Yes. you're a the So XX.X% right? quarters Yes. of Well, margins that, -- those. equipment by a seeing little sort own EBITDA in compared in QX. already growth, X in its row, you know, less some to

its here in gets stocks activities on be will it margins. starts balance of heels the oilfield. and rates with segment. capital rolls and of prepared going and and to respect quickly And then day of higher picture, the in in into touched to remarks, the X, flow commodity the equipment. producers But big prosperity years they're Wellbore up downhill perform we're the realizing oilfield equipment this that restore for And services way. to think And that demand higher through construction shows higher sheets, on depleting the several prices capital and it oil high I levels gas activity I of other them my on so back then help with oil it's it the And

utilization that the there's out equipment NOV makes. been so things -- under-investment it's as and activity wears And will I think rises, be of some a call on and rises, there that

Stephen Gengaro

That's you. all. Thank

Clay Williams

You Stephen. bet. Thanks

Operator

Ian question comes the from Sandler. Piper next Your of from Macpherson line

now Your open. line is

Clay Williams

Good morning.

Ian Macpherson

a for versus come minimalistic out will between and super-spec. near on out Thanks. morning. some without Could coal, you reactivation to less get let fairly term? is NOV first of contrast reactivation the need land be come to and that a offshore rigs, rigs relatively Good And, morning, opportunity as like know well. an Good up-selling that you upsell we you're there's I rigs the upgrades I opportunity Clay, delta rigs you that Clay, Jose. know said but know offshore never go upgrades, that apply remaining what land of to that opportunity that Between to could compare upgrading what is? and that U.S.

Clay Williams

Yeah, the because Ian, specific rig. it's depends hard on to to -- generalize, it's hard it

piece class. we're Company oil shore, is, the been to a requiring with And more stacked of if question. Companies than oil offshore, -- off for -- now so what establish has starting rig is year rope the seeing the a is survey it's a But long how

the think want So the that Companies has survey checking equipment, OEMS involves I come in, know And rig. what classification capabilities the out so of oil contracting advertised. the they're to that they also society as they

that seeing we're drive so into And more shipyard. rigs

the so, a we're shipyards, of to quarter-on-quarter. certification up a I it's in or rigs that And into think probably half provide equipment. roped that dozen OEM

we're capability in that requirements BOP. around by seeing thing pipe other sharing more the The is the stepped-up offshore

-- accumulator that rams a changes then to rig some -- efficiency, so trip handling typically the rig interest pipe And maybe there the up rig other lot emissions interest capacity area in involves faster. adding More in enables forth. so steps BOP, the the of to capability, trip third to And is pipe which reduction. that big and bottle to is

installed calls. results reductions, for to so on that our measured prior talked one of product offshore now offshore customers being first watching reduce that about right The closely. lot emissions emissions is we've that, a actually And we've now of the right and PowerBlade

opportunity, term. that most categories opportunities with I near most would upgrade rig of go and are this reactivation terms think of in those so promising along And equipment

competitive Of of rig themselves every a what rig, predominantly to what re-certification look that's most looking capabilities seeing trying around to that every field. are, now but areas apart we're from as offshore. right course their -- capabilities, other part improve process set again, We'll at also

interest Jose interest pipe. to X.X as land ties of now around highest -- onshore; rising it also drill demand of from that in lot mentioned, sort the capacity you rigs. and referenced As drillers there's phenomenon the a Turning utilization inch rise to starting for to

drill drillers looking ID hydraulics diameter reasons, more pipe so are a X.X Iron get drill and shale going down drill better requires pipe to Delta flow with OD for couple higher our X.X mud. pipe better will tool the of handle premium the unless the has towards coming really And wash you coupled X.X And mud connection, a a hydraulics, American up better then you enables back inch larger roughnecks. torque a North hydraulics, turbulent larger out. hole get joint with So inch has smaller

higher it rising requires be around back or inch we along so capability. quite inquiries pipe, seen you to to little level with upgrading can bigger those the whatever, or handle And it haven't that a the pipe drill takes in which more iron on think of we yet, roughnecks torque thousand higher X.X but engineering there'll so setback rigs, around a set feet handle floor XX substructure

pipe. we're labor which is really that actually way drilling system NOVOS robotics, to we're in get is trip well this have is the -- let And to And be requirements reduced what going in QX. center to that really and the in number can so can get would to there. our a to near-term, in pretty this growth from them in cost-effective they combination machines operating a stands -- upgrade with we a found basically on sort rigs. system these really rig digital trip the operating rigs the of System. people land support that And NOV do that rigs crew see a for foundation as human away to is continued cost-effective is I for digital Which floor rig on about, add because going interest jazzed the Operating opportunities we in on

well. So that as pretty excited about

fronts, right years [Indiscernible] technology continued on and to So to with past efficient. and to continue rig to there the make all more better capabilities we've and these upgrade that several make NOV's safer

stand we both us so our And need to and customers do, to ready do offshore. land whatever

Ian Macpherson

it to you, flow just leave outlook the quarter where it Thank is? to good a had Good refresh full-year stuff. for to needs if you or going the I third Clay. was quarter, free just during cash invite it Jose, be free you cash

Jose Bayardo

Yeah. It was a free good quarter flow standpoint. a from cash

different and get cash capital. terms that working I'd within So years, better the to had well certainly flow in originally that We're QX, managing we we cash better cash flow our generation and free time hope more around. revision be at in be original real continue little year typically QX this quarter flow. a you little it targets say might obviously provided. to to to full-year of of No tends the if back best generate several bit look but a last the bit

expect detail are into to or with QX, related difference pretty direction. sort you provided there's build-up that bit supply in then withstand on great assets so chain math, went to AR. at that release our from we sizable closely management. try saw you look the disruptions terms future do Sheet, generation, cash look the a of into the the if you that And the the good in capital another a certainly forward if it as that QX, balance Sheet. still optimistic be of QX, of the QX, could feel guidance bit continue a and condition probably flow you to better but the free bit been our that from a coming challenges expect you buffers just working we not at that about parts majority horizon. of way in little chain some terms of if contract in top we on of we've It's of in that little XXX Plus a of a very of working we capital, but look XXXX to had And windfall So building goes getting were and other flow contract saying But of the potential about having the better long we certain see step-up cash between Balance of our line, supply to a the and fantastic cash in million, large don't we're liabilities. of lastly, overall the in

Ian Macpherson

it. pass I'll Jose. you, Thank

Operator

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

Clay Williams

Neil. Hi,

Neil Mehta

guys. build ask in some on and strategic you evolving a in pursued areas, can the morning, you here is hasn't organically M&A. for growth a new around your M&A time, I transaction some on but could think the you're business business focusing good or If you And Hey, offshore Do Company you're a both diversify role as the including think do strategy? you wind. there question

Clay Williams

all particularly M&A Neil. with cost consistently. clear expensive, everything particularly We of of for yes, the capital in transactions. Great capital, have in engaged renewables, chasing just been record, in Yeah. some very the And apparently question, found low to we these with too

we yeah opportunities these organically. pursuing feel so very comfortable And

engineers at look global and assets, fantastic super our back our the Company's our capabilities, creative. that step are footprint, You

materials, of We name robotics, in ahead deep Our here pursue things few competition digital, and these got with metallurgy, these expertise it. areas. organically we've to of many I you mean, a launch steps the think in toolkit

so And the that's plan.

looking transition on traditional the as for forward and nevertheless, pretty I'm lot helping we to acquisition as -- land a We XXXX. good side and excited be we've a we space, bringing the able in yes, opportunities just to well those skills the are mostly. wind manufacturing about do developed then we've that looking, organically that. strengthen which our have being just to it. achieve to invest in we're want past, that tower talked, complementary investment organically made a them couple investments. excited of as We've be a clear, always technology what always pretty continue small we're But energy a market that our in about And crane to -- system referenced about in of well. for brought in technology move tower Feel specifically pretty to that mobile about also bear we'll early their products, strategic space, gas both lifting and goals, oil on I But

Neil Mehta

into but offshore seeing flow it what talk talk you it your XXX that how and opportunity EBITDA tie offshore for back model. the quantify Maybe you're can at with cash a capacity about big we your It's look about means Well by slides, do wind that's you XXXX. set time price, at great gigawatts help the Clay. would as what or of the look opportunity over [Indiscernible] us for opportunity

Clay Williams

mean, and Offshore, I wind before are specifically, leading turbines, and XX-XX are they gigantic and are equipment. sort at installation required that undertaking. or install are we that's building. a megawatt storey of the altitude, leading assembling turbines, yards XX the to earlier a edge of vessels which that foot these talked XXX heights, blades more is so edge, long, pieces And then about that hub are XXX major just

the the as So the out minds industry that. continued vessel think with out. requirements has we NOV's efficient, weights installing well or these installation probably really remains industry, time of going taking that improving think don't or installation into more because a pretty the well of things, at I XX around capabilities making to as to stop more in plays on industries, installation, some in cost bring in sort and rise few studies heights process on which years aspirational involved horizon really bear XX of good equipment goals terms outlook around is megawatts megawatts, the motion and creative But to handling, and

good. pretty And looks so space that

to be potentially in shifting it, more glad even of interesting out, a part further of gears, but we're is so And there's area Wind. Floating space the which

we've that way -- that GustoMSC same rigs, reminder, less there, Fixed years. kit rigs you can be if we a the offshore years. space some developed. wind tool we've in generation been They've clever XX Wind, to shipyards, And in that got for building The industry the turbines. move in XXX and this steel. the power about XX manufactured to industrially in water, and is group through around as just building our drilling deepwater. think have it require very has designs so wind we the And shallow a with poll Working with concert think done these to last in lot, you floating And going we're building and vessels installation we're in build

-- NOV we make leading industrialize think the And would fairleads, vessels of to closely work And those that we and We with so opportunity could around most sorts working proprietary mooring, sell between things world. shipyards the in individual addition as to processes fixed world's we those are the shipyards discrete these we opportunity then at that around would items difference vessels with it's can of them the the scale. wind each economically fabricate that asset. the into kit And anchor participate in help hulls. to

run. market run I total far fixed space. addressable think that in Does little it's than the larger that floating and the the your In the answer long different So a question? wind makes

Neil Mehta

talked going bias good was that million that? Clay, $XXX sure I feel annual an And I'm to to number? by Does fixed rate of downward of it back like think still Yeah. And the fourth about a run upward or you quarter there is XXXX.

Clay Williams

I of think middle the down right the fairway. that's

that's think -- by that the were the orders end hit quarter that that through with trajectory it we've up we're I third the we fits of XXXX. just able won And we on to that announced. be to

right appreciate, As with so of closely the We're to you these vessels working forth. these take gestation of s and right Neil, months execute sort plan projects. and these to get can several customers

on has that it pretty of been line is so And decent. sight --

ago And of million that sales kind we pipeline quarters of that fits of the gave couple so a opportunities. $XXX guidance

Neil Mehta

Alright, Thank great color, guys. you.

Clay Williams

Thank you.

Operator

Bianchi Cowen. Marc the Your next of line from question comes from

open. Your line is now

Clay Williams

Hi, Marc.

Marc Bianchi

quarter. the vessel are the on in How doing you took wanted third with that you projects guys? I start Hey. you. Thank to the charge

all type fourth that of things costs and expected so have to shouldn't charge percentage a the on quarter get we of Just you're higher effect beyond any third and any assuming for this worse? here really is in in projects project quarter, clarify, a recognizing the the completion don't

Clay Williams

the It's in a fairly view correct. that is still out have challenges done, extraordinary costs We've we we to vessel there's just and along COVID there. latest on worth is still but of completed. but to ways go encountered our getting this That get far cost there, a it And we're have all noting, roped Investor this project. POC

Marc Bianchi

Right.

Okay.

what's in would And in supply and progressing if could I quarter the the on you fourth know maybe third back quarter like So quarter. talk I, implied exclude mid-teens. in incremental look could there's caps, going from you that into maybe of, maybe and chain but to it that of forth, lots the or is see incrementals beyond sort issues be holding that so that fourth back put how

Clay Williams

right. you're first Well,

challenges, of see QX completion the sort through global is revenue just up the $XX except supply forward state c. -- looking of down and that constraints never to a QX, chain through EBITDA et and been you math. sort But our acknowledgment solutions place frankly you actually incrementals, in And that, and three freight If for really is that of production in shifting low but before. then with we're and issues guidance battling million, it's

about confess. and there's some I'll in what QX that saw maybe QX is disruptions supply fact we the given that -- appropriate, just aren't frankly, so And chain conservatism think There much COVID, COVID it in I the we're around going we've couple globe. of moving was of the color, away. and note, quarters; seen talking I last the will around QX in terms over more our QX, when that workforce

But and second allocations getting cetera. we boundaries that their little are face more quarter, third That across to order et service home So international more to is probably cetera, supply-chain through go technicians some to issues. that come back quarantines by thing. where better. have instances, Freight had is what countries, material we're our seeing of a disrupted et in to getting the potential are offshore, the sort constraints more effects Raw challenging. sub-suppliers

time as the with pandemic, of but reckon So just this the is and the nature world early year this tries last out the of it's that shifting, and disruption this cost. uncertain and an shutdown year economic to get

Marc Bianchi

Make sense.

look I orders, pull want chain influence discussing. orders moving was the issues? supply they forward pieces talk you've And over that the just and because Just hold catch, Jose like outlook, China do caps orders? could if overall supply On little But the that shaping that? last here segments order ahead back that got to of to? get the a didn't how strong next see to they within you if they so you two Do performance quarters, through quite customers many bit. how Do potential up Tech the overall, quarter because you in cause issues do Rig

Jose Bayardo

question. Marc it's a good

book. sustainability As we within of as of were level it orders of sort our receiving about, the order we feel new we're outlook, relates to this really the talking about order good that

And momentum so things that right lot that to our CAP within booking see but particularly continuing a -- now, of segment. for some build into the XXXX, we're

order imagine, i.e. pieces might you for completion-related intake items, of still as light. segment, CAP Our equipment, smaller the of are pretty sort type

talking orders that in. if those about the that right? away, we're continuing And coming or pretty chunky news to so now for not good is what But Momentum they're right And the order slip things quarter, big we're big seeing are one pulling, pushing or are that book. difference. either a is going can pull, is make build

supply dynamics. about say are all-in things you but chain the well, So current really gone I'd talked

think add when in. these when I these some of things precise does wrinkles timing come the things into

of confident, intake. forces forward. getting going some uncertainty potential place the bit cognizant they inflationary that's never a little think of starting get are what of are People for and there I to impact good order and of So resolved. that more is take But is might

to gamut So that certainty. the Technologies in very move large small this within in In trying that see and in our pricing quickly ranges from orders, build and the type of instances, customers other even instances, very Wellbore some space. to and are projects one-off lock we forward

bid you with a quote it. updated for back and little come price. happy sit and Sometimes, asks an their for for somebody and hands not They while a know, price we them on they're

terms wait, abate steel hoping choose we're certain may they to costs of seeing that to a So what in extent.

little right in a it's of heading a mixed but So the bag, direction. bit overall

Marc Bianchi

back. it turn I'll much, so thanks Super,

Jose Bayardo

Marc. Thanks,

Operator

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

now is line open. Your

Chase Mulvehill

Thanks for here. squeezing me in

how at cost about XQ? cost through guess wanted know container thing you've that flowing instead seeing doing kind with steel about talk was friction, overall like, stuff airfreight really you think just rates, said then in much costs, I and you some I you example, And numbers container of those just, chain actually the supply are seen of rates, that. and pressures you're HRC a about you've when through the costs to of I first lot. leading can of and So flowing for edge. everything, the ask is steel And kind they that

you increasing and prices are you in the And know you So the know, then, of today? kind really the talked about costs of that what are or quarter running are in they don't through I costs reflective third do surcharges. if

when so pieces moving really those And the start understand do through? those flowing two. of trying just So to

Clay Williams

worse big felt anecdotal. Chase. like it's There's question, good say in necessarily of -- us to the -- a it it Hard QX. little say -- be I'd freight impossible through for do Good of This like got that looks won't what a quarter. to kind sort

Chase Mulvehill

course, course. of Of

Clay Williams

run whether or up down, high. -- certainly can getting in studies But think We the the impact world do backed of more bearing But short long kind in difficult freight. going of get you really that's normal. dissipate run, QX, fell to costs a to back of into wise, QX, the appreciate. pretty more this freight are lot and speculate I the here things hard up, on. vessels, in we're does are gets container sort to

the tell. in big hot-rolled moves. play. increases mentioned price [Indiscernible] of will And the still there's really And But On felt most business like mentioned one of would ore -- mount coal of in our I I said coking than hand iron also XXX% moved rose to but but is QX, on one are time raw it's up stability like on understand started I and prices but on there. of up couple sort earlier, the feeling that. down other I probably a they other steel, lot way sort some a inflation little in seamless a types other Less XX%, is more that's areas, have on that units front, pointed like casing XX% one know the sharply. hand. Steel something that material heels as steel. it it's say screen thing. We to on XX%, tubes, than XX%,

you've So Glass buy a the steel in lot epoxies, big we're heard petrochemicals moves that -- of recently, hopefully is use But stabilizing us. business. us and so things. resins, talk is behind we worst Fiber sort others about We them our those

business. them business; our We coating us Internal We also in our those lining Threat too. in them use use Tuboscope affecting Protector in lining, tubular it's and so areas

minimize lot behind -- and onto inflation to our on it. surcharges So risk it or again, we'll and and sorted proud can. They're I'm price are it both our just that really exposure top out that passing best this just increases as a And get combination out trying happening either really to there. all folks of confident through of or a get us we

Jose Bayardo

of [Indiscernible] little bit just maybe on and a an bit of pricing In vendors what for It's case somewhat. customers. our Certainly mixed saying. Clay a tag bag overall our pricing in from was more terms little color perspective a prices more and

some raw pricing an extended of time. our for fixed materials we for on instances, period have So

been provided perfectly is we perspective, In are fixed customers situation. mentioned, instances, that time extremely and our as up have Clay matched but a for it we managing well. team from have cost situated well our pricing a may so not period in to And we of other extremely

of little impact that remarkable around Clay It's NOV obviously it in of So remarks bit freight. I a benefits as really portfolio. on and little we And might bit because his touched world. one scale color the we, and a the it that is help a of prepared think mixed have our from our the then is bag size footprint and the diversified have across

years, X, right? us. the America our regions manufacturing excessive cost of is or we chain the of makes over businesses getting manufacturing we've supply seen part North done to some to low be as are quarter, for last cost several that freight and benefit and manufacturing what couple over quarters, doesn't so over have manufacturing locate within of work of And Which costs our the of overall is the X, what so our preserved we sense, or footprint. last the there a diversifying are that that last low several world. And But lot around that

have And manufacturing we're back repatriated actually these freight of so to charges. dealing America we a North while with lot massive our

Clay Williams

manufacturing options Yeah, And respond. yes. footprint to able good that do to have to in our be to

Chase Mulvehill

one the [Indiscernible] follow-up about here. hear Absolutely, facility. didn't quick Yeah. I mentioned anything

Clay Williams

yeah. Oh,

Chase Mulvehill

of X facility [Indiscernible] ramps about or looking down talk look kind accelerated? do about there. per talk year because that just into what's [Indiscernible] Just about with to slow and that less going term, near going how talk than is they on So

Clay Williams

probably unconventional It's to the for are was first accelerating, well. but we're second the going will afterwards. really one excited with aspirations commissioning gas you develop the end the and Thank productive about Chase. ago. excited Almost If about capacity. year, along outlook on crude completely a facility months very going there close, -- really, there aspirations couple And about to No. rig just with that few a weeks by more very development going you have their anything, their heard [Indiscernible] follow of very the have the done just the of region. I

So thank for asking. you

Chase Mulvehill

will Okay, Thank perfect. everybody. guys. over. I it Thanks, you, turn

Operator

Clay today's back Williams. will the I now turn concludes over This to Q&A conference you. session. Thank

Clay Williams

Thanks, your and that I'm and and diligence, us particularly, each our care your joining Flue you creativity, your customers for to today. thanking going terrific show end our again (ph) for by to hard the other. thanks work, for employees; for everybody

what thank February. speaking fourth you're And you listening, a Have you you doing. on all good day. look to So our quarter for those of results we in forward to

Operator

concludes for conference call. This this you participating. Thank

You may now disconnect.

NOV (NOV) 27 Oct 212021 Q3 Earnings call transcript