NOV - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen, and welcome to the NOV First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Blake McCarthy, Vice President of Corporate Development and Investor Relations. Sir, you may begin.

Blake McCarthy

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

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

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

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

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

Clay Williams

Blake. you, Thank

as offset costs of the up consolidated part aggressive $X.XXX in quarter. For shifting reductions a escalating steel fiberglass, orders X.X% revenues appear in increased with supply XXXX, most the execution where in for oil of revenue demand as grew challenges The during continued of Unfortunately, continued as challenges quarter, cost recent worse costs XX% XXX% electronics, and the like base got suppliers at million our through broadening quarter, certain to and high along put steel the freight by lot standard higher NOV's Ukraine gas the by labor execution demand, face. a up these board recovery, EBITDA inflation strong Thus, raw components rolls positive of in well Freight the our organization's on were first intensified first sequentially, of X% polymers, and of for the recovering and COVID were reflecting improved notably. rising we moved of all and chain financial $XX first Hemisphere stainless were against of easing. offshore results reflecting Eastern and impacts during costs switchgear see by resins $XXX and for continued be forgings, conflict renewables quarter wind and book-to-bill the improved across to materials supply Helped we pricing, Year-over-year, challenges, quarter. owing the million chain the in extraordinary better billion or pleased revenue. leverage, to pricing quarter. disruptions. XX% cost impacts products we up materially, Recent higher considering and to many some

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Your got and hard work us perseverance here.

hard have Jose. to be I'll ahead counting turn showtime. it’s world With and over us. The on that, it a lot more now work We will

Jose Bayardo

to of margin Thank billion, quarter improvement EBITDA to in NOV's EBITDA consolidated the challenges. basis continued the you, compared EBITDA and point XXX quarter compared XXXX X.X% fundamentals, totaled to fourth a to of and to market mitigate quarter quarter or representing flow-through. Clay. basis supply sales, of XX% $X.XX revenue compared a XX% for point improving compared first increase sequential declines XXXX, Rapidly the Adjusted XXXX activity was the chain growing million seasonal offset than of more increase disruptions first first and and $XXX taken drilling extraordinary operational global improvement quarter XXX of XXXX. X% actions a fourth the a

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we As quarter. segment keep first expect will headwinds Rig operational the a for Technologies of result, those results flat with financial our

and Rig year-end. segment our XXXX Technologies that our to that, EBITDA XX% With margins of the in a up second belief increasingly confident half much we'll in by call now we're stronger achieve open However, can growing questions. of

Operator

Sandler. Our first Piper question with Instructions] [Operator McPherson Ian comes from

Ian MacPherson

remarks afternoon at that be really history, and a overview to the this treated recent drinks that was on I'm you'll our opening the appreciate bar I -- after of sure spot was And that that.

Clay Williams

Yes, and goal. my was that

Ian MacPherson

always into NOV, There's congested your there chunky down, wind or the needle offshore throughput Is big the X overall platter it we I second offshore for reactivation projects said X hard of rig a improvement with -- this and unstuck. Exactly. X might question. on up offshore or of on the to and supply the chain move that you the the maybe vessels, the biggest most? More pin gets think now more so now. heating it otherwise? catalyst look is maybe accumulating backlog some within with conjested everything in right the booked that but that's is are get Are and stuff one too right your you and still the be the cycle much or like as that products has category that half Or of or segments X QX. It's shorter more a main

Clay Williams

opinion. Jose let offer I'll his

mover Just around of would near-term work, constrained improving that's supply back stimulation needle cycle biggest say, chain the very, situation both and land and our demand supporting cuff, near-term NOV. think shorter I equipment of for very I off catching the frac sort to going think the up kind meeting challenges the offshore, rigs of the fleets and I for

As renewables parts are these Jose some backlog and rig other as our we're see demand facing term, yes, offshore well spare NOV. larger continue battling to and longer to on wind and mentioned opportunities working in up the will good in around segments going catching guidance, the X through. for think through I constraints But that. But for we're revenue projects contribute,

this, where like to like of we sort my today -- about and an I so forms of take we're what at And remarks it's are all energy going crossroads, is, I reflected feel opening of kind it's and embedded and the we've space the -- bring also what LNG, energy. oil And think I think as to the gas NOV well. we to has traditional improved just not but renewable of I portfolio now, in optionality in

Jose Bayardo

from a standpoint we constraints with a our areas remarks, across attempted are constrained I’d that, kind constraints I rig organization. Clay business the got in tools But that our same we've some the highlight got the We've prepared there. agree In aftermarket add and yes, absolutely of really to term all real said. what operations. of downhole the more couple near

all that been due for in to the have we sources conversations around prepared I the oil having constricted Clay the also the customers. touched our that with And the -- things on to starting of supply across see that that So world. the in need Yes, the chain organization. is think is his remarks challenges throughput basically we've from we're one of

to specific of on business like is feels to better term all so cusp And because hard going longer to right any now, our mid- the particularly across the it one over inflecting board. the it's do that single demand is

had has to marketplace, been but Wellbore the really recovery on. date, North disproportionately markets weighted come starting has a So that to towards recovery American international clearly, nice

to get to second the So running segments much incrementals being We'll think good really still of and manage the better up to forward. half. resolve really going, and growth be room see as got in starting that at And we X more ability will other of better. get chain the some into terms we lot really a supply good are able much generate to trends to just much of get we've continue capital-oriented, going Wellbore's

Ian MacPherson

your missed thing your flow capital does symptom in back I year? then in out and way to to But better free full positive equipment quarter impact And in you do the don't this been year? Or of if Jose, of I year? intensity I comments, the to same for next it I'm that year. along day free the a in getting everyone has more OFS sorry in your has deposit one for know. this on that that cash it Okay. working prior think coming view growth the see cash the full year, Does swings move common beginning for the had

Jose Bayardo

also really, our payments, associated supply it's had the to more in I And shipped seasonality a use anticipated in annual Typically, be by to And the inventory mitigate in disruptions. late a slightly than to we during sales taking employee chain AR, comments, -- the bigger to as prepared measures in and cash mitigate to that. resulted products good that's in a some a really But explain with shouldn't attempt begin but those early due base the payments to build a large mentioned quite take really I year. other our surprise. much additionally, Ian. QX question, which amount QX build type It's been costs, during determined buffers of within bigger extent, quarter, happens of -- proactive to place that Yes. have what tax I'll what benefit mean

really cash becomes flow right? cycle, cycle generation focused there -- been little as we bit times look we're certainly, challenged. more so is a growing are a are we've the But when revenue very going that things free where rapid always in focused throughout the to on And well, not meaning at forward, pace

cash what that be XXXX the exit of the focused rate flow And combination be sure supply year. continue making free higher our for through of trajectory on But course happens need dependent to chain steep trajectory not so will through there full our of positive the the extremely there we're we're going we're a to into the and a year, building XXXX. a much of buffers and really in on ultimately business, anticipating to the view pretty

Clay Williams

Yes. add intensity. a has really the would think, muscles I I Yes. And of good capital organization done around job developing term, too, longer working

said, chain is going term, increasing cash supply that's little future. But year working quarter, things bulletproof as revenue, little response at a you We capital a If order that I of vendors, our longer this. pushing to capital Jose translate we're minimum are making we lot working annualized in look their a were management our were at response at quantities, X ago. up bit. for instance, got having better to more materially this intensity to that, Those think think -- than XX%. in I of like XX% higher better us a flow sort year-end, to lower But or the they of and

Operator

next with Citigroup. question from Our Gruber comes Scott

Scott Gruber

those side second business, side? And the of then early to growth the companies do innings. thinking Wellbore some coming would the segment of to we that obviously in second U.S. are the we service these to similar be see period to Wellbore beginning quarter, if beyond start excess would back the just big supply that chain cycle count? to point another on the guys Or Wellbore half. expect see growth XX% on in the affecting for for if So I the you there the of have converge? to something outlook international issues where The in begin fade, rig of wanted is international discussing in

Clay Williams

Yes.

like that sort to of count. of sort efficiency; towards around lot the drill in are the a space; two, couple beyond we across American pipe. things as and coming grow the helping rate demonstrating number other to contractors I markets real technologies are that to provide think moving the North drilling into the increase cutters think particularly wellbore of are invested number bit things rig I get a need continue we drill we've better of market what much are three, Number pricing one, of well, larger

than a X.X-inch more drill are operators So which drill little is push are pipe, there's better hydraulics. been And bigger pushing big reason to utilize by X-inch the pipe. that the a conventional for bit operators that

kind of productivity. -- we so And that out of America. motors are better to demonstrates of that the And starting I across North invested number drill need sort and you add swap this see again, in then a we've tools, that, supporting industry's things to drilling technology streams to efforts downhole can

So mention I to Wellbore probably space. Technologies. count digital offerings a growth want outperform the our think in in tailwind it's pretty rig too, good Also, to

their Technologies as as getting wired drill that doing Our pipe M/D drilling optimization a within is number Wellbore their really traction Group they're of things Totco well computing with offerings. edge solutions good on

Jose Bayardo

go segment, prior level above for about in of nice cylinders you thing amount $XXX in a all dip at for sort for you the -- recent cycle, Then to a that business. back but X of right segment, were for it recall still way Wellbore looking in out And other the long over market. is now. up we're upside really quarter a Wellbore strong that you North Technologies the Look, prior every XXXX, XX% if of sort segment. of term saw We're to And there's in which but with I roughly everything $XXX maybe sort necessarily we the at in a of mark as the has sort Scott, don't looking never multiyear the back to past, performance sort the international XXXX, And American tremendous -- we play not recovery fired of revenue of frame go I'd for is. the the low think and a the of here, as then, add that sort on time prolonged revenue million that million segment. segment. back It expect over pushing we marketplace, you XXXX was

Scott Gruber

in gap large onshore U.S. of rest good the lead the drilling an That's between to still a into seems There unduly follow-up world. on which my international side. just question, technology is the and be the

think about we obviously, newbuild a the up the digital here, and to material thinking rigs, real enhance deploy typical As going deployed, meaningfully be technology internationally? appetite just retooling cycle do sense application you upgrades meaningfully to Are potentially the the retooling starting side is internationally? about to sense then this to rigs Or to you a cycle a things. real to appetite of technology step

Clay Williams

That a question. is great

of and improvement be the at that unconventional on that accomplish can bounds been different recognizing set because a capabilities. happen, rig at region. looking respect rests of be big better I the around East able drilling technologies gains in more the think or brought a fleets but different to really that countries industry and to Arabian the Middle a own lot at North needs make it watching bear of squarely has leaps operators efficiency that gas efficiencies. to need then with rocks, to of to are here there's Gulf in are that sort and looking brought what's their lot happened It's and now to lot drilling challenges, those much looking really around of America and And produce in natural

Aramco are capability with our much went be rigs was that the These We'll venture into rig think the one calculus, go. of there. the to build first manufacturing ready capabilities. higher kind all We -- have soon second so that to January. And one going I joint that producing around we're out to the in in delivered Kingdom

well in remarks. going that's national that, pretty And would so was had technology. We've drilling. optimize Jose's and digital is, important. it as our release intelligence new are I to recent and the pilot bring think, around as And our And add, region oil companies where machine East to learning, our new prepared now I Middle this projects products trying artificial capabilities the

spud is NOCs the third ready to of getting its One pipe. pilot with drill wired

lot new of to there lot And what a of of the possibilities can -- so interest technology, but their not in bring only in to more a there's predictable. NOV safer, efforts more interest efficient that drilling make them

think the of sort And now East retooling so across region. for of capabilities meaningful we're a really I set Middle

Operator

Jayaram next Our comes from with JPMorgan. question Arun

Arun Jayaram

trends. incremental of Clay, I a your energy from see One, on growth the get commodity how We prices the much more part obviously, traditional business divergent now CapEx or and appear thoughts out wanted particularly to with concerns, on post most your long on capacity of couple being to hand, But be measured spending adding and capital it, reactivation. their could focused, cycle of on call OFS here. high Russia-Ukraine. clients play your refurbishment security other

see there. wanted thoughts if to you I could some offer So

Clay Williams

stingy reduced And out with really start significant going reactivate reinvesting is shrink would challenges mentioned, a rigs having facing of run been up we're of think sort But very to this I to the bottoms of think run as expenditures cannibalized. just production being lot in fleets careful their global getting going costs of ones I are The had left about Arun. Yes. that the of say to some out that on question, frac their what put all structural to out I they're come People have we're back business. way. cycles basis. It's I into and to good are field. in back growth and workforce a a to the

of us, hear how think as quarter more And so back pricing production power, fleets you wells it -- -- and really look gain reports field think bring of put -- capital. paves this our power sort the just takes that interesting their heavy which to getting has the reinvestment the businesses assets their build in way their and out been for they I to to like, kind lot day, feels that pricing in infrastructure purchasing I And their of end which to it of drill required, quarter have they're kind of the first across a the to on. at

so into follow as this will And kind supply challenges structural deeper all I -- addition think this more become evident. the get of and we

has is But of The it's I'm production coming next the bankruptcy. sources happen, and -- all required and of few going think to as out capital move as really be other years. for this we availability kind are thing to drillers -- shifting is from the offshore. that I to the just to Many offshore, of I said, the the really public

more day flows of of reduce And so becoming that we those to the see rising higher drillers. capital supportive rates will then cost cash

And growth, going to the world's get so is of I we'll kind something which back to sorely need. think

Arun Jayaram

wondering color Great. And of the terms of NOV around, XQ some growth numbers, questions in margin kind stuck the your modeling if looking were getting terms range use model, our around a EBITDA. low just able what that revenue give it kind my of XXXs. you Street was maybe Jose, us some Getting Wellbore at in I -- in on essentially broad comments. or math ballpark on We follow-up. some you just it, to Rig of and And of call deliver some the and maybe is in in the XQ, was XQ. guide caps in for was could just provided EBITDA Tech and we

Jose Bayardo

Yes.

the you far take on terms off if segment So we the you're think of that and that. I so a immediately in of the you remarks of we'll of coming the provided, that additional prepared each be get of we usual, can segments in midpoint in where guidance pretty X I clear out, of the we you're for posting following remarks, call guidance. the were that terms not give as clarity typical copy the prepared think But by range

Operator

Cowen. with Bianchi comes question from next Marc Our

Marc Bianchi

the go to kind order back outlook. wanted I to of

going to some to was be discipline level just the having in But they $XX,XXX getting pursuing day. That we're conversation build, had forth builds. -- seem back if power going be about or it capital should a guys and go $XX,XXX we're you the all rates customers. about company customers to a saying, up where prior pricing lot rig public remarks like to new of You they calls, back were prepared getting discussed now, so not all would to a and like our

is more maybe new builds, feedback the and Or they getting what RFPs on view potential for doing? curious, privates. doing I'm it's from should are your based So be you

help for So could that us. you square curious I'm if just

Clay Williams

was out put the North are to as supporting you at where to reactivate talk there's right? So iron underutilized their about we lot The count not field. if first. it And First, efforts there. of in rig still look still them ridge, absolute count, pre-pandemic, a let's is rig that's America Jose the absolute mentioned,

so if market higher versus compare as market, well are you the pre-pandemic As forth. today's their and costs

higher they build. to So need attract a day new rate

Middle international outright particularly our interest not I -- several is that's North for think So new if I in builds. out, come least new a land at to look But outlook it where East in you just longer. at yes, quarters -- America, for could markets, really to if that more build see lot mentioned, pivot rigs the in start in we rigs just the reasons

kind XX Marc. of out, call I And months the playing would so how see it, next that's

Marc Bianchi

when a in rewriting Okay. to things kind started we're what been like we've year, inflection get That of as terms this vein is There's get makes difficult. sense, track. quarter had things lot But back going then real would it orders. I then, Clay. does But several next to that sort I look the range and orders that the stuck you you suspect on guess several there's for last second guess, inflation see quarters to quarters? in everybody making try that curious in like is of I over now. of maybe that of -- booked. of

Clay Williams

X book-to-bill what, a Just quarters of mean I row we've of X. had, in noting, north

pivoting Caps obviously, going So to the has way, our I backlog right to backlog, And outlook most roughly caps. building. answer our demand backlog still is was up the was backlog but really, the a prior north orders have -- XXX% It for think, referred been went Solutions. book-to-bill rig doubled -- at and land sequentially & down and been rig caps has Production -- few X, My Completion sequentially good. -- we're did building really of orders for still percent So right? year-over-year.

challenges related. It's the of work more near-term headwind to we've through got obviously Caps. production One for more

at they're And so the these that are and large booking. for projects looking offshore tendering

the of estimates those in revised cost in other that Some with right? little through we we've disruptions doing costs fabricating has the and battling experience of on with been along of picked from looking are headaches COVID demand supply thing with the our same all the are higher up groups, and lot chain seeing and shipyards at projects. ecosystem projects along vendors back as fact on recent getting Asian the owners picked up, and first As as projects that look has quarter forth, our a demand shipyards the when LNG they're a so these

few breath a higher and are offsetting I in them price revisiting the know the so higher costs. conviction quarter, sort deep And a decks, around of just first of their drawning

still I good. think economics are the

I a think recent Oil orders a think the little in bit But term, near I are don't going to here been on let's break flow. that's of But this. orders. nonetheless, are globe. lot been a around needed projects big around high price. of a a the globe. lot really a lot reengineering, There's the by They of at trading is -- overcomplicate these

that think year will as become next I a more evident -- year unfolds.

are And that's forward, projects to to going and translate so for NOV. I think these going orders higher

Operator

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

Clay Williams

discussing joining appreciate and with I everyone second July. results you. quarter us in you Thank forward our Great. morning, this look to late we

have So good day. a

Operator

conference call. Thank today's for concludes participating. you This

You now may disconnect.

NOV (NOV) 29 Apr 222022 Q1 Earnings call transcript