- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen, and welcome to the NOV Third Quarter 2022 Earnings Conference Call [Operator Instructions] As a remainder, this conference is being recorded. I would like to introduce your host for today's conference, Mr. Blake McCarthy, Vice President of Corporate Development and Investor Relations. Please go ahead, sir.

Blake McCarthy

Welcome, everyone, to NOV's third quarter 2022 earnings conference call. Clay our Chairman, CFO. Senior are and and today Bayardo, Jose Vice me Williams, President our CEO; With President and

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

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

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

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

call Clay. over turn Now me let the to

Clay Williams

you, Thank Blake.

and with in NOV's XXXX, revenues the quarter friction turmoil at XX% markets top increased to growth. teams chain our offshore economy, third and double-digit For momentum. of starting on were Despite all once sequential again leverage global gather EBITDA drive gains. posting year-over-year grew XX% the X% demonstrate solid are to The able consolidated segments line that international results higher sequentially year-over-year, three continuing supply

international pricing volumes America increasingly and in trend cycle rig early count Our markets. offshore North to businesses continued recovery and positively rising on and activity-driven in

years is recessionary far, after demand prices think scary underinvestment, remained is very a fears faces despite of result. and strong, as The constructive energy outlook world a which shortfall and of our I destruction, appropriate. significant have So commodity

translated yet equipment in has into capital the expect. big dynamic orders constructive not we this However, uplift

to be quarter book-to-bill for third overall Our the exact. below XX% X, slipped slightly

saw Solutions, Rig Technologies for XXX% X%. reported strong grow in declined, our we While below expect Completion is combined orders and book-to-bill backlog believe transitory we We in and than quarters. less this book-to-bill slightly in and X, capital orders came & coming to equipment Production

Let XXX%. observation the us. me quarter for XX orders third is trend Helped book-to-bill in the trailing why, explain the renewables by consolidated starting solid with the through that the months third technologies year, through has been off NOV's for quarter past book-to-bill

they that oilfield share optimistic equipment face but constraints Our U.S. capital some are for customers near-term outlook, European our delaying especially orders, participants. and

past meaning leverage West, North Cash for companies only flows and in be for service the investments and at diminished oilfield emerged the pricing availability from cost given has and capital two must is operations. from greatly a from America. flow now many recovering, funded investment has only quarter limitation. and capital institutions equity least emerged have Debt of been and to the in public the lending private and in First, as gas, cash mostly entirely or banks oil for

taking on they quickly or cash recouping in and their owners for This to the in have incentivized well. service project Second, is losses And with the now former who past companies debt find from possible. on to shareholders highly team in and despite extraordinary their and businesses as providers reinvesting year are management focused oilfield U.S. flow the companies and two, is return root emerged rather oilfield bankruptcy well shareholders holders returning on than as are level with capital their economics. themselves cash E&Ps started that returns Europe in and with as new service as many trend drillers insistent

narrative, frame timeframe, trigger away for gas time and to transition far diminished projects from has a oil to decade’s long-lived the years the energy specifically misguided on pull of line sight is struggle some returns, more well within rather project exceptional in realistic long-term many the and to than there Even when clear appetite few projects. move Third, markets. the

course, that obsolete a a decisions oil will it Of the five next and in little be capital to But does ridden. is complete make project anxiety gas XX years more notion on the nonsense. XX-year

and delivery challenges execution into the have additional past the transient confidence in of chain supply years anxiety these times, Additionally, eroded decisions. two injecting schedules

to In to are were react the confined mostly couple the rig will oilfield to North historically wealth East, quarters. Africa leave incremental commodity hold Asia, E&P flat. European in who held more price constraints just In rates up XXXX NOCs activity be been large and respond XXXX contrast, Middle completion for in pre-COVID. gearing service and we customers investment competitive providers and and past Latin these capital locked the tenders America, commodity through the Middle as markets. signaling. reinvestment production world the U.S. rig views participants funds where, flow America and and cash international That decade America required have Importantly, in market North long-term That's to East status years freedom in in sovereign and activity America in is at OPEC the prices. seen grow our to higher contracts We rest to the free be into financial has accelerate invests in contrast, pricing of is to over not many higher participants not more to in from fastest there by today many in far America past as by facing and that spending and oversupply to margins see way, North ceilings growth surprised North of markets, surpass addition oilfield service availability, for the why on is swing producer translating constraints, surprised into equipment on say international to it some challenges would tough we see low recapture think The aren't to starting to see were which short-term the frankly, not crew the

specialized, for oilfield elasticity steadily has during service assets activity, recessions. activity oil NOCs capital-intensive The always consumptive way, fallen pledges the capital-light and for of near-term all industry more are and oilfield and this we better don't powers adoption and even learn that of leverage confident fit-for-purpose are and way quite Despite higher models the they calling paving the development the Wells will expiring capital most are constructing world is require and better of better going recession equipment, the the oil demand this Oilfield hard. construct. consumables break other And it's and consumption and pricing low, gas can't production rising Oil these still last. tiger can't with the to industries it that of which technologies. headwinds breaks once earnest of However, through of and pursuits. again other despite the price rarely is and trend to equipment has gas business as moves change concerns reality one square oilfield is when stripes returns for expensive, highly industrial recession, to its wellbores. been and

name is down impact of looming your pumps, makes distillates bells consumables units, the in the highs markets industry this commodities. drill the this idle rather have I to it, supply while for Global a kick years for we heating shortfall. You than The oil out pipe, being saw stores back equipment of is replacement NOV earlier are getting been can and gas and alarm respond run the rigs, price deplete year, the such ability tubing can equipment Leading of all are and you quarter-by-quarter voices the worry coiled weeks. things road by beginning shortages commodity sent that and base commodity and while, harder the the And installed of equipment maintenance essential a have diesel, is commodities intensifying the cannibalize the industry's as prices industry several signals both of from pulled to easing. over harder the oil but the pullback middle to in concealing currently the and little being across and ground. underinvestment to ringing

this lows, weekly the beginning example, since since inventories level it XXXX crude than were For reserve strategic at the recent are the at stocks, petroleum been XXXX, lowest has according the in And while lowest collecting the East distillate mid-XXXXs. EIA. U.S. level at to data seen less government lowest including has began expected. since month have the off of U.S. grown and the Asian the U.S. production inventories European to and fallen

and of this half its are restrictions industry lesson The our catastrophe, are of to COVID soon question Hemingway's on to customers before it underproducing with X because Rises, of up energy drilling a damaging I'm increasingly look prepare importance cycle, then gas growth possible. in quotas from past been like has supply what of announced we and see as to meant bigger, R&D China, gradually in oil with way years, of more fossil So challenging and very to longer seven day even oil Europe equipment DUC per developments. a continuing as I our a decline suddenly been ways, and has with laterals back quickly inventory NOV and deeper and as bankruptcy, global that, ended energy crisis. oilfield SPR barrels Sun the our wells, sanctions Russian the releases following disappoint on XXXX, down our recently wind Throughout ourselves of continues super we supply last as OPEC tougher we've efforts, when that two waters. cuts, equipment its have with to of to In picks orders poised the and steered operators U.S. asking stronger in reservoirs and our million for need? team's down with even will set question downside, the drilling drawn levels demand mankind, resume, hard This up develop painful to at generally a normalized the We'll winter mean quote by fuels due to Also the That downturn the suppressed how feels life. hurtling XXXX switching ask proud to we, focused could bought in towards key

cycle, all new safety focus along up improving greater close our gas eye fields this emissions, capital efficient performance development we maximizing we to next customers with As project greenhouse and on existing more a returns. place reducing will recoveries with believe from fields, look of on

that fraction new to of operators' Historically, hydrocarbons expect developed technologies place. shape in wells future. digital only We a

rotary of and turn and highway know for finest current allowing Our like can that a being need the to not they XX enables enabled where the precise steerable know well type on have well control industry visibility while at we the who They production. that technology world's driving only customers on placement. able offerings a night to downhole reservoir It's placement well like a better. employ latest The needed headlights seconds. your place maximize engineers do to once every precision Ferrari the

offerings intelligent developed, operators bit piece wired can XX/X. we up a off and the in using not even You a driller have you're optimal our Recently, drilling been placement, pressure And crew pressure guide NOV's to real-time greater data complete the largest the if from proprietary equation. surface the feeds may the environments. became the drilling including efficiency its and have managed Uninterrupted NOV's digest, proponent optimizer, contextualize same oil our the pairing data the our into drilling allow comes help rig fast. the MPowerD interpret well very like system to you downhole where our control, to with of technology That data going And eVolve the department powerful road of for flowing going down visualize across development, Automation, into keeping companies world's it's Starting customers IntelliServ the new one in control drilling bright simply time, That's biggest and and headlights pipe, machinery, digital end you gather in be operator data on ditch. turn Max KAIZEN NOVOS reservoir whole do, uninterrupted, and solutions package NOVOS challenging which well newest drill to safety. but most with Edge technology high-speed engineering the the beautiful, to organization. first tested drilling might have combined cloud. is to this

world mankind serious, complex to toolkits the and believe we renewables Eco costs enabling oil of position greenhouse decades, in Our And wind same are ideal transition challenges, employ the to operations to for in gas in with of technologies renewable supply a energy Booster market-leading renewable safe new lowering energy industry, invest with lowers to market-leading oil in for continue geothermal traditional lift its faced which companies, and continues by associated in drilling PowerBlade in with positions to doing our of also energy gas and eFrac will continues will shifting rock buzz our ReedHycalog's developments to drilling customers NOV's carved construction. drilling and pressure also and new while wellbore emissions offshore operating the the reducing share and out technology, we ensure while to and installation a pumping our technologies offshore short, poverty. challenges. in costs the take lot has on technology. generate energy investments emissions time, it ReedHycalog thereby drillbit build in are and gain In reliable conventional gas are hard solutions out drillers. both

world, the expect like like digital intelligence, construction combination production packages and engineers around of toolkit well the up NOV's our installation and XXX-year generations turbine drives drill standard wind pipe, of NOV have the top energy sites our just on technology through become and and solutions, are. We wired history. become our transformed like offshore standard just computing equipment drilling systems on has managed just drilling artificial down And pressure kit to cycles across cycles talented scientists and edge vessels

today listening So that for for scientists teammates, do. all and all to NOV my engineers you and thank talented those you

that, best. to turn You're I'll simply it With the back Jose.

Jose Bayardo

the up three improved achieved we revenue XXXX the segments year-over-year. targets the exceeded $X.XX NOV of and of has in and another and provided consolidated XX% year. strong XXXX billion, profitability quarter posted Clay. you, of Thank margin third beginning the growth at X% exit All quarter was up or sequentially

to by and builds total was our SG&A. $X.XX top million, to in operations of resulting $XXX which During credits quarter the in the during translation line of growth $X third fourth quarter offset by $XX and resulted held and in ended related charges Belarus our the which continued rapid sale previously sale, quarter. the gains adjustment debt we billion million. We mitigate and quarter inventory, classified quarter, the on completed most working charges Russian additional sales Cash in capital supply risks. in our assets with collectively to of adjustments million do needed foreign chain support reserved and $XX charges, flow for currency to operations increased in as Capital related expenditures used third not in were or of Items which partially These in the losses Other expect totaled we was billion operations to [$XX primarily third million] due cash. impairment

conversion free between generate million million expect cash and For quarter, expect flow, flow we in XXXX. $XXX we the cash free improve to to in fourth $XXX to significantly

segment Moving to results. on

quarter, Our and the during generated segment the growth levels of quarter improving chain XX% to against increase drilling in third its segment $XXX XX% better second ongoing by million activity global on and of XXXX. the an supply quarter compared to quarter capitalizing challenges. of straight realized Wellbore compared or eighth $XX Technologies The revenue execution revenue million third

improved revenue. segment the million, the a from flow-through and continues see of in was tools, demand as activity to America ramp XXXX. Compared resulting now in in sequential EBITDA Middle from $XXX XX% temporary its third are increase pent-up proprietary to to XX.X% in for drilling a the activity to quarter $XX North be a sharp demand plateau, may $XX to starting reaching million flow-through. XXXX, While representing benefit East million prepares of XX%, increase industry EBITDA EBITDA or the we

generally procuring and and Totco from its the data unit most and completing business. in realized acquisition double-digit market M/D surface to from in North a surface and into related system eVolve the a our despite business in continue drill moving challenges posted both the and specialized by Latin wells operations new adoption revenue a other Our services acquisition major pipe to wired Revenue its Africa few drilling solid due QX sales strong to pullback a electronics eVolve After improvement locations, gain sequential to Sea with on growth used data quarter. continued in line modest in activity levels. with realized in legacy America circuits regions moving sharp recovery operations services third greater rigs optimization the

In addition in major company a pipe business and one drill a East, from Middle integrated two wired in secured projects large to new company Sea, oil the another from the optimization new jobs the seabed operations also storage. meters oil used as inject wells to on supporting for sources X onshore be the a well that XXX below national permanent project drilling from XXX will sequestration as COX carbon to North

pair software wellbores, this to ability a visibility this for offering with unique through productive key which Our make and business analytics for growth value should efficient full customers more drives a forward. market-leading downhole moving driver

reported drilling Our its improved grades robust business's and elastomers demand solid better high-spec with steel limited allowed teens growth efficiencies EBITDA special downhole which and used revenue execution flow-through, to meet in availability proprietary for of gas unit supply for in the chain-related the tools, products, against the challenges oil certain of operators. upper the business improved drive that

gains and Western repeat into Northern East. the sizable the Eastern with flat chain deliveries in Africa challenges of Asia revenues drill mostly revenue, that offsetting in sequential of Mexico seasonal the from bit share continued the in projects pickup supply shipments growth Hemisphere, posted resulting Hemisphere growth a solid Gulf the Middle strong business in led Canadian ReedHycalog not U.S., did were double-digit a by low increase Our market and affecting in in activity. QX rebound in

ahead, expect leg markets, Looking from the Eastern drive demand in particularly East unit. the of we growth increasing Middle Hemisphere this next for to

sequential strong posted markets for incremental with both margins. Revenue and line Western control Middle and growth wellsite the product in revenue Our Eastern solid particular business's in services offshore Hemisphere strength with business East. was up mid-teens the in the

new at gain back successful Our first is Sea in a second transportation contract the in enabling a treatment well significant to carbon with in completed its of iNOVaTHERM enables site, drill unit disposal offshore North off cuttings reductions major winning and the trial costs portable emissions. operator of wider the adoption, the the beginning By quarter. solid iNOVaTHERM

business see team inflationary and NOV to growth, to pricing returns garner continues chain to provided this advantages our As and continuing offset volume technology. for continued to is challenges push appropriate supply the by

premium, relatively the Our orders international green the results difficulties, in bottlenecks reversal impacted on of markets. QX unit our backlog the past QX, drilling limited mostly throughput offset drill North from downtime Delayed to representing mills the offshore strength orders, Grant during cost the vessels, large-diameter disruptions. deliver the with Prideco flat and tubes the rail transportation primarily in our of quarter. from as and where over contractors plant business two originated healthy to remained Orders the mix Despite one delayed quarter. steel international business' from quarters in posted pipe from American the bulk notable deliveries allowed negatively ability during a favorable orders of markets vendor of a the the

high-torque that which back operators setbacks OD step there orders recent suggests needed run most with the demand, a rigs larger packages limited that X.X-inch a of in pipe want. the pipe and to necessary reflect the equipped number are Additionally,

will due ahead is mix. improve, expected the revenue to product limited to quarter, favorable fourth but less Looking flow-through be to

plant. from our margins. availability the posted incremental benefited single-digit Eastern led improved polymers, double-digit business of achieved Tuboscope and and demand key a Coatings quarter solid full Louisiana its coating and from The improvement reopening straight high performance of was revenue fourth resins operations, growth of which Our contribution sequential with quarter by our Amelia, Hemisphere building strong a in the

U.S. driven for demand also strong and Our America. threading the Latin results, solid delivered inspection by services mainly in inspection operations and

at Looking for and facilities. holidays in forward, we certain this due flattish scheduled business results maintenance expect QX to

quarter. the our to our for flow-through partially products Eastern Hemisphere activity, with offset Technologies and X% North Wellbore X% in by to demand range we momentum drilling of growth segment, expect in in American pent-up revenue the For in the XX% fourth EBITDA plateauing building be resulting

X. supply chain, sticker our XXXX, shock Our segment $XX on of on and quarter of Production for quarter The an and increase was to stretched easing base from X.X% a offshore more million the and, customers, quarter of XX% of of the in reflect forward second the sales, flow planned equipment the backlog increased straight execution order much Completion deliveries constraints or was Adjusted shipments. QX constraints, third and of for to & book-to-bill industry's XXXX. projects the impact from reaching in of confidence QX of us pent-up in Despite level an need instances, $XXX the ending million revenues its increasing the an billion, result of X% Solutions since on XXX%, Book-to-bill generated third from the the for provide flow-through asset of increase EBITDA of a some our the compared improved seventh quarter primarily Quarter and $XX increase of XXXX. in businesses. XX% quarter. third highest allowed pull with outlook of was capital orders $X.XX of its pricing, north the strong second to refresh acceleration EBITDA an supply capital chain which inflation's million quarter

progress confidence growing and the and for economics in COVID market was business a Process shipyard restrictions ability Order for and execution we with we business will growth the as in business industry with to profitability. ease. believe intake project chains clear normalize in single sequential outlook, supply but soft, revenue see the bottlenecks. Our The upper significantly accelerating rebound unit Technologies Flow digits posted the strong improved

forward. of new to projects needed All which move are

quarters. to expect the awards During saw increase quarter, we new which an convert project studies, future into in FEED we in

of XXX% further offshore quarter, in posted for conductor our book-to-bill a growing XL supports the business, pipe Our projects. connections optimism third which

to to a in business we've see of demand to for tends conductor many many been offshore the of times projects, starting activity mentioned pushing As indicator for pipe have before, and FIDs is business, for the leading our which than greater life be an which now of increase in flexible years, also has five in over finally XXX% five We're seeing posted of last quarters. subsea book-to-bill four more the right advance. signs pipe a

During the third the also saw projects. and sequential progress quarter, raw and its improvement a outsized revenue strong on operating from early of flow-through. certain business in mid-teens substantial the The EBITDA efficient result in came results growth with posted the enabled in which availability significant materials, deliveries improvements

pulling While which we were work quarter, to supply for fourth should stage easing, results expect the will new QX. a due in set as strong QX appear be challenges to anticipate fourth in falloff Despite anticipated the chain from we the orders in part slower XXXX. strong improvement pricing the quarter remain in forward continued

Shanghai The lifting in Our solid deliveries incrementals. operations with finally revenue realized COVID mixture to pent-up the operation of outsized lockdowns pump growth also allowed ship customers. and to

While sequentially, eighth the quarter the a than orders would X. been achieving increased what unit's business large straight with in the shipments have from book-to-bill prevented greater business increase

Intervention times would in new in that the noted revenue. a Last Our large business for a aftermarket sequential projects, extended deliveries reactivation build the along decrease Stimulation lead revenues. Equipment of decline quarter, we sequential result mid-single-digit in realized completion & with

XX,XXX growing additional Bookings to an XX,XXX of with pumping orders backlog. of along rebuild of demand growing units. new included a fourth for horsepower in horsepower row However, marking equipment, orders continued, pressure the pumping quarter

reluctant in be Orders and in that the the didn't should public sale tightening rapidly demand saw for years. for unit equipment, investors those also have coiled most sales We Noteworthy a North the signed of along E&P invest unit capital, a markets, arriving America. equipment, of equipment using contracts capital worry Similarly, we've international America plateau pickup a other reward and support the in to will activity have new that that with assets. Despite due a to oilfield to had private of who providers upgrade injectors, low-rate be about new that aging the there operators latest in and multiyear service tubing temporary came service first pumps, to the to unsurprisingly, and market need included the invest pandemic three a services had North depths capacity think in service of in somewhat spend during that company is a we provide opportunity. are high-return appears companies purchase replace and efficient been pent-up public the at nitrogen in U.S. technology. by the reluctant from units and to to what

as materially in for our However, quoting activity improved QX customers prepare upcoming tenders.

but slight our offset were for scrubbers. in partially the Middle in Our Latin it East. America shipments Glass and increase levels demand improved compared marine Fiber from second and a markets marine we're by handling and Southeast deliveries during record Systems sequential experienced offshore This with in resulting Brazil quarter. to and into falloff notable which revenue and fuel Sales posted markets interest and the growth into was increase, from the large business the Asia seeing solid business, a flat, chemical now a when unit into saw oil industrial improving mostly markets from gas

high While market companies scrubbers were service capitalize diesel new shipping sulfur its cost to dynamic and opportunity on pricing, high no to trying for due low between large modifications. of saw prices of out once-in-a-lifetime shipyard despite demand vessels the for a a and spread we taking associated understandably

planning once normalize, to prices. vessels are port can beginning to again and fuel rates so in bring that shipping customers that are Now they capitalize install scrubbers to on spread the

in to to modest in handling not quarter, fuel due as a move our for that will see colder into and fourth in Looking several sales we seasonality our fiberglass expect business months. operational ahead pullback to normal third we to product due the the quarter weather large repeat results deliveries

should growing expect remain segment's resulting chains with relatively be third into opportunities we be and projects were Production that pulled certain Solutions in associated quarter, forward fourth our quarter & the Completion elongated, the For to revenues backlog that supply offset that flat. by mostly

EBITDA We sales basis also mix and points. between XX compress less XXX a will favorable expect margins

million revenues compared $XX or a growth our Our rate business XXXX, $XX of rig progress of segment XX% of improvement improved offshore revenue aftermarket sequentially increase million Rig the of generated third continued Saudi million million the $XXX an in wind was increase sequentially $XX or projects. EBITDA and by on and primarily Technologies of XX% quarter driven to of sales. of quarter Adjusted XXXX. XX.X% to and higher in Sequential an third

backlog totaled quarter and billion. $XXX orders for end a at New segment the million, was representing total of book-to-bill $X.XX XX%

rate memories the rigs public both fears, has equipment investments. large with for teams past reticent capital to of environment years eight While improve, make recessionary management and and offshore day the land industry's the boards to combined continues

encouraged but getting rates are by land return $XX,XXX. markets. companies we're space, what our to is the assets. first six happened what extraordinary of not pushing in In their offshore E&P year continue similar slowed remain the change in of newbuild bases asset associated third on in see months be high capitalize Equipment investment of they in U.S., customers we climb movers first existing to Intervention rates the & to in the Current and has opportunities Stimulation what rate during we interested more to day reinvesting seeing we saw in and surprising private the the with However, business are quarter, certainly both now rates in the saw the to and

drillships for a third XX%, who quarter, utilization a private climb contractor, high-spec booked to of term to a In by only drillships markets, work. ultra-deepwater go supported we reaching five an continues is offshore currently for a large leaving currently with drilling the During from rig to land available drillships new, operator. activity marketed West Texas contract higher order

to continue a our dramatically customers saw improved book extended and with contracts to we duration Additionally, what compared ago. see pricing we year

We are contracts Aramco now worth of August XXXX. has seeing alone day rates drillships commanding and years' routinely ultra-deepwater $XXX,XXX-plus for since awarded jackups XXX of Saudi

reflected of reactivations, and capital cash maintenance our surge operations. limit customers order the While in from constraints driving the the growing associated to intake, flows sense is in and on are equipment capital environment demand contractors increase investments drilling within in our a our aftermarket drilling contractors seen urgency which for we've improving

spare in against Our as Revenue continued we supply face constraints the growing execution posted sales the chain in digit of growth parts sequential aftermarket third quarter. increased operations double XX% demand. improved from

outpace ramp ability continues rate our our the of order operations. intake However, to to

is chain to throughput for times and our availability high switchgear and grades slowly continuing with lead us and and Nevertheless, our challenged. castings, of ramp better aftermarket alloy working point are posted plan and supply aftermarket backlog certain to schedule the we're steels, year. While improving, of the another plc customers it best drives of spare other parts first and is double bookings, We what this quarter approximately at XXXX current our was strong last projects needs. since remain quarter

activity see control continuing projects, enhanced automation reactivation Gulf in an East from heaviest is quoting inquiries increase Our and upgrades pressure group engineering with the field Middle the U.S. the to Mexico. related of coming recertification and to and Brazil, concentration of Norway,

this to continues from recognized orders While vessel we healthy for ramp backlog term. new vessels near in increasingly quarter, not with our likely sector book wind very this remains encouraging did for becoming a the the and outlook revenue

markets, improve core continue few fundamentals improve book to market ahead, our us confidence that next order giving quarters. the for our will Looking over

and both and current aftermarket ample our us revenue for parts backlog this segment. equipment opportunity and with services grow capital to profitability in Additionally, provides

Specifically, grow XX% incremental with sequentially, for now Technologies to between XX% to XX%. and open the call Rig we questions. X% we'll expect the in margins that, to quarter, With fourth between revenue

Operator

Citi. from [Operator line question with Instructions] Our Gruber comes the Scott first of

Scott Gruber

are where they'd margins where some sense XQ. be on a I'm your I multiple get you takes thought for understand to and there's now and XQ, we on stand trying So puts fronts. basically in

and stand you in where delivery where terms and costs stand book, the delivery you're on stability inflation. additional improvement resetting on in you some price seeing on timing on color what cost of input So seeing

I color focused kind So and guys just the these have year. -- key you on areas over of past been some are know

these So would some additional on influencers color margin great. be

Clay Williams

Yes, question a intentioned here. it's and of Scott. It's a lot things good

success been we've of taking focused We years, associated that in the quick America. North out organization, drilling and prices activity pushing of couple turn costs are businesses with had on our in been we've past the over most rising our So up.

of we've our prior chain calls in about issues. lot supply prepared the other as talked on And a still and the gone right But face on we so hand, that's in remarks, direction.

better. So kind things getting are quick on that. update Broadly, a of on where are we

normalized. say worse. way we're in seeing little do I categories, bit things a being long we're want to However, from a certain get And

like electric And so electrical components. things of motors, actuators, a PLCs, lot

of particular, Some of the quarter; certain those Europe. castings, more coming got more out expensive through and in difficult

putting where that in think in out. some as the like was we're a the there triple But counter businesses pressure XX% I it energy freight, And push deliveries items situation of on examples. XXXX. it little double is probably in where mills freight of are and down there, was Europe XX [Audio XXXX items have seeing like there's certain off our well, Gap] something steel

And North was elevated. particularly ports delivery so terms are face sort are America. still Costs clearing. in We the our do reliabilities. way broad as We're vendors, underway, workforce it and still mark challenges normalization slowly off across of of

One of machine third-party of running are quarter, shops shortages. the into machinist the developing labor items that we now some third through shortages saw our and

on-time QX. so bit quite a And in slipped delivery

So it's of get taken price that are to that out. factors the the that are -- some costs we've and the been some able those increases we've of offsetting

takes and margins. directions I So puts in both around the think,

Scott Gruber

just kind put at a do hot and return recovery. plays that Got to of capital to you. how here appreciate It's think that about long margin a way capital see commitment heard color sense you But services I a have assuming who've the NOV? out, for full there. whether And oil makes several actually still guys peers And juncture. in we've all topic shifting return. this

Jose Bayardo

When But to is growth this back And we're more normalized story, news drawing on a one. and that good bad amount I'll news with we're the managing Jose. just of tremendous of which that's a bad margins mismanaging quarter going XX-plus the is XX% outweighing today we'd it's more and working it's good good a business. you're currently roughly prior sort our it's sacrifice a have more -- are much news, in and to weren't down free to XX% of your working to a percent flow, consume And as lot some little cycle rather experiencing sort we news, Yes, capital right? a later business, flow question. Scott, that very the capital also year-over-year, use right? something cash certainly, provided getting some road. cash that, a where that focused tackle you

been the almost returned where away XXXX. stronger which to never which going we've pretty returning been flow having we see to gross to forward. think $X back capital to need business, about we've is capital billion also this historical the pretty I or expect better since shareholders, metric. of debt-to-EBITDA shied be of generation Xx So we about our metrics And from clear get, even leverage We've cash capability clear our

to can and So certainly to where return looking we're time direction. the capital forward we the and in arriving at step things again heading the up are right all place right or

promising So things look from that standpoint.

Scott Gruber

that. I appreciate

capital remind quickly. have it We builds problem when high-class to people is that working a

we'll continue So to updated. stay

Operator

Bianchi of from comes line with [Operator the Instructions] question Marc Cowen. next Our

Marc Bianchi

forward. curious, in you're could to above stay as an it we about here talked Xx? you orders. do Rig it's that going for think book-to-bill likely guys seems back expectation caps get Tech the I'm You Xx move When above improving just like

Clay Williams

rig quarter, changed I quarter for think the and I what was absence the from you a temporary a if installation Yes, just question Marc, turbine vessel. focus in book think of really the blip appreciate because I QX is wind third order actually second the on our

to back wind past insulation go vessel pretty you much had several we quarter. turbine the large quarters, a order If every

just out, get installation a that we're engaged of I the quarter any. growing in on wind didn't result And third turbine in happened backlog so that building as think, vessels And XX space. what we is

it -- just fell it off. So

the traditional of book which -- it both at of really look our order for report, capital you and It was in actually third offshore piece the for only customers. more If it quarter. we equipment, that up oilfield sort is land

Jose order we high-spec mentioned a from his got think a North in remarks, American operator. for an prepared I rig

up to helped up went the And order sequentially point sequentially I the move And up was that to industrial the into triple trying land remarks, up at sort that's major make XX% rig prepared orders well. my to year-over-year. land continued launch required than rising growing far less globe. industry as orders oil around to even so back though, the still in of effort get to rig offshore The and needs gas levels about then We sequentially. in moving right, and that double production is

dynamics we, think, the right years. next prepared explained for around growing I quarters length the as and sell, very the in are And at what so several is the very this as remarks, strong, several think way next demand we over I my really we constructive

then then spend ways we're capital kind And of only that. with to one money is a money out both Rig so Technology excited again, of big year-over-year. picture, the about down monster year-over-year, And those They're And QX, drilling contractors really round that's equipment And that Wellbore the a the drilling our order contractors three NOV. support and actually what bit sequentially, as parts is way of [Audio with land. strong. two that fact, his Gap]. XX% of for operations. is up sort pipe are very, Jose still offshore but demand their And for And [Audio drill to rising both up just Technologies other Gap] rig parts said prepared rig of kind rigs and QX And QX flattish spend in in as to we've very in third segment. XX% spare steadily reactivations, spare in remarks, And seen, was in up us. support

international [Audio work that picks back rising we is that Gap] as add markets. all expectation drilling gets the up to seeing in continues as are you So offshore together,

Marc Bianchi

Yes.

anything Jose, don't I Okay. unallocated. I think heard

You was fourth up for that quarter? it, quite about don't guide be we quarter. to thinking a should bit it How usually but second from

Jose Bayardo

Yes.

a -- normally So and does, from a million of with pre-elimination from the similar as line, basically percentage couple the looking the elims revenue it at at growth. from EBITDA increase moving dollar level probably then

Marc Bianchi

it. Got

like $XX something So million.

Jose Bayardo

of just shy Maybe that. Yes.

Operator

Instructions] [Operator from of Seaport. Curran the line question Our next comes with Tom

Tom Curran

from for of equipment point such unit comes shale there upcycles? point as spreads? What this seen markets, used at you does of capital the How to out compare U.S. what is quoting are the you've this for and time new prior level sales when confronting amount secondary completions, pricing And in equipment division's to what it competition lead auctions? the build CAPS wise frac at

Clay Williams

you're -- in engines the say, of I more are one lead purchases on key times so our more plus/minus customers of is quickly and pivoting sort of looking new some think, say, I'll made then maybe, And answer items, offered whole, be on part and really towards what of out of to our that's will what deliver year, But over I past and I the year little are your equipment lot versus maybe than the the used X a think, terms There's depending new probably in seen the we longevity pressure can economically. part very first. overall And stronger. the probably of tier eight a by at. North second we're first I'd more and months some we've buying refurbished used, pumpers there. question, and America And what competitors going is can that's more looking. question deliveries are value that plus what was little is . buying, the true

Tom Curran

segments, Wellbore offerings has Maybe and update if spans as CAPS on Technologies CCS. Tech just then custom a could Yes. By That's or has the well. expectations and even new guys both consistent designs seems suite Rig And an specific for some you geothermal, some those update that division, your respectively. for but on renewables it wanted be of has just energy to us done potential those CCS geothermal. as I markets. annual with systems an done, sure product I weigh I've while And of checks all revenue each give you for had in

Jose Bayardo

rapid opportunities a the to the Tom, particularly going touched the going we're continues very are on vessels, have wind as are you're construction related asking well. have momentum initiatives in about. going related company think that that related we does to sequential renewable trajectory. total standpoint revenue really really back Yes, we providing granularity And third related in build there from we'll or transition nice of at that I QX growth to the work it as hold our But number was other so efforts to from and ongoing you're on energy we million And backlog from really, for. offshore to saw And Clay seeing that combined roughly -- QX. energy the the quarter a a think I transition, $XX really a going including geothermal looking

up shaping the pleased with really those the are for way we're So initiatives company. that

Clay Williams

with Yes. we've we a in And space of to of just installation mentioned as to vessel technologies. touch good a technologies is more leader, generating of come CCUS initiative new in technology I of think also required the ReedHycalog and seeing really processing, around press our in growth gas that leading is for the a market applicable are CCUS. hard out interest leader drilling but and bit remarks, release geothermal, NOV that we're terms of directly $XX our We're provider in majority that's solar and emerged revenue color. The dehydration rock wind million, we our lot little where prepared in but that has referenced geothermal particular in offerings

some we've so got underway And there. FEED studies

well. different wind a move in respect And there's side of on so revenue for deeper with larger bar really movement to participate build floating in all opportunity across And us. that. kind kind addition the actual around as a those the and put projects, providing finally, helping NOV mooring there, vessels, of waters, it, board, And to a way fixed very about then vessels, excited it's into systems you to out that wind can it's the installation as

could be And pleased to floating very with future. wind North movers the partners Asia participating we're real opportunities specific in customers looking and at and Sea the in be so and that needle

about energy the bring lot continue we have these excited of to the to to and So prosecute future believe and transition. value a we opportunities

Operator

Smith PEP comes question Our from next with the Advisors. David of line Instructions] [Operator

David Smith

Partners. from in Calling Energy Pickering

a long would So it goes. like really a I for ask I this didn't question here think time, but

to are start just left, in delivered that be were capacity taken that XX aren't to going that of I out Saudi aren't there already jackup count that the when Given much last market, jack-ups the years how is the many contracted.

So demand XX-some-year-old I to where or assuming to a next the years. demand continues can or incremental the either worked a in rig satisfy we for think hasn't two, the jackup that cold point options to several of stacked grow becomes a new year reactivation get

should upgrades. think view, capital question the five some reactivations do NOV how those see might you much new years, include we we'll jackup also but for think my assets? older orders So expect your the -- I any about in next on is, equipment the opportunity pretty of in significant

Clay Williams

to aware, construct It's an listen, comment probably new you're in Saudi sure. but -- jackups. is there for interesting there And are plans Arabia,

-- recently joint are Aramco, Kingdom. our venture a so order. over forward the And to just period of And the land rig a equipment large in manufacturing there built out jackups opened moving that's very with program a with to facility a time. But to we satisfy . build that, Saudis addition rig XX in

So we're well positioned to that. participate in

the ways in the, the XX is that's sort offshore Aramco to think, of will and that production. I of adding gap I that's addition in their so filled And one to the grow jackups be that think

jackups, and that moved up to for around doubled but frankly, XX-month the in They've roughly materially like XX- so sharply. starting have have period. constraints dayrates space up And are, that's so yes, floating availability, I we think, to moved rig a reason, the in face

back get customers is Industry think, our that going all good. so help work And there. offshore positioned, to and to NOV I well very pleased is

David Smith

an ARO asterisk next of five that Yes, absolutely. on for the if Drilling, years? jackup I outside should new in have there's potential put think you orders

Clay Williams

point, not getting but tipping forecasting this the that to at we're a be certainly closer Well, point. clear, supply-demand lot dynamics are to

David Smith

maybe your kind have conversations having? have for wondering might U.S., the ordered if can in of new you're international, when And U.S., land. orders a love switching land anything a there. remarkable land what give we few on Would additional see increase I pricing. for outlook just the given in you new been to rig rig but And to hear you

Clay Williams

follow We very that Yes. closely.

two lot from offshore in starts this of to in start super-spec made those put $XX,XXX a I look rate there recent. for recoveries calls. just range the perspective, to new or week high front by And incremental kind quarter $XX,XXX going opportunities rigs America, move in start the direction. really are right for the We capacity economics. earnings we being the rate land range of in become probably North -- edge day of replacement kind There's talked the to space, the the investment think a right as the to about we're we offshore this ran at compelling. super-spec in it day rigs, pretty Just I pretty a disclosure into rig the though, that for But in day believe up a day

rigs order XX we I process our Saudi And first of of so Arabia. that that's the category. the commissioned in is two, the right markets, out a are total in with to respect now. kind of being where grand we In third international for as We've mentioned, are building delivered and

that's we're of are edge so the And sort But just to of of an come. indicator think things rigs. high-spec very leading I capable at And addition. those that

is markets, well them in in international drilling their a that apply to -- think in help ways go drilling again, I their have that. particular, positioned up they long to accomplish NOV in stepping And operations. technology

in cycle, So super all the signs prior new saw building still that the we're from ways but direction. in are of of that we the away right certainly encouraging kind heading rigs

Operator

Gengaro Our Instructions] of Stifel. Stephen [Operator line next the question comes from with

Stephen Gengaro

to the Tech quarter they margins Tech based increasing about Just you we third than think margins better we thought. curious, as in go were we the XXXX? gave, should commentary from here. look How Rig into on the And Rig be

Jose Bayardo

the But this repositioned think we've gotten I behind dependent is. think at restructuring [Audio on what initiatives cost it's the Stephen, Gap] obviously savings point. appropriately. and We've the kind overall company what of growth and I us

think I not way historical So should about we to think that really of businesses, been. those just start really, we is see but look it incrementals more all Tech, the Rig what have the to normalized at best of as

and that's Wellbore, And of a upper and it, rig XXs, historically, mid-XX% call incrementals. type for somewhere kind the CAPS, XX% XX% been so business, between lower incrementals; XXs;

should flows I a those and time ebbs think within and all And but approaching a over the us. always hopefully that of over behind and place so charges period incrementals quarter, period is at that, be a a of we're least completely there's back we time, to reasonable restructuring normalized

Clay Williams

then I in related mean addition, rig to volumes has issues Yes. and Yes. supply normalized as chain facing headwinds been some really well.

continued of normalization will of And kind supply lot. help chain a so

good rig those for forward. So margins are tailwinds going

Stephen Gengaro

you of of consistent sort the the line. you mean growth? Okay. Great. it of of pretty with like two looking or do And you're you're question Is that It when And then it's outsized That's building. fourth the know sort on I helpful in feels a a what year quick momentum color. a you similar could seeing? acceleration is quarter. the cusp other I and think past nice out think one mean, like of top But CAPS I feels see business, the

Clay Williams

been back it's pretty of right if the But look you It's couple challenging. Yes. going years, the in way. last

headwinds get we kind recovery equipment in we more For et -- clearing, cetera, still cetera. way. cetera, some terms those have the but international business, all quarters, of combined we've of all projects instance, we're few through battling shipyards, right to in XXXX -- place our last in go that's been where think has work of projects we That's of I going to need markets seeing businesses, downturn term to supply it's in leverage et to that pricing of the and is the our challenges a for but our Likewise, undertook chain et with kind quicker Asian a stimulation in ways system.

And that's still going forward, going to think be go. helpful but margin a so I ways expansion for to

so, we'll see. And

Operator

further turn any Mr. the would for to no time. Williams at I over to further you. this conference Thank back questions remarks. There And are like Clay

Clay Williams

in joining fourth us all you. We you you, day. discussing to year-end our you Thank thank terrific morning. and and Michelle, this Have February. for results Thank a quarter look forward with

Operator

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

now may You disconnect.

NOV (NOV) 28 Oct 222022 Q3 Earnings call transcript