Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen. Welcome to the NOV Fourth Quarter 2022 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.

As a reminder, this conference call is being recorded.

to host like call, today’s now Mr. would introduce for your conference I President and Corporate McCarthy, of Blake Vice Development Investor Relations. Sir, begin. you may

Blake McCarthy

to and quarter call. NOV’s XXXX everyone, conference full earnings Welcome, year fourth

our our With today and Jose and are Williams, Senior me Chairman, President Vice Clay CEO; President and CFO. Bayardo,

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

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

also release our available measures Reconciliations nearest to Our non-GAAP on measures. earnings the are our comments corresponding include in website. GAAP

income reported XXXX, $X.XX On billion fourth quarter a of net $XXX for the U.S. revenues of GAAP of NOV million. basis and

For million. revenues the $XXX income were and net full $X.XX was billion year XXXX,

of the term adjusted call term the in use as this throughout defined with earnings EBITDA corresponds our morning’s release. EBITDA Our

permit one a Later limit participation. to Please will follow-up question more to in and host question-and-answer yourself one the we call, session.

Now, over let to turn call me the Clay.

Clay Williams

Blake. Thanks,

the of incremental and very XX% growth. fourth by somewhat and $XXX the shipments million flow-through of XX.X% was chain on a strong was fully of sequential XXX% or year-over-year per key sequential quarter grew on quarter out expedite book-to-bill EBITDA XXXX, revenue supply orders sequentially For impacted to increased to Compared XXXX, XX% revenue XX% challenges, to desirable less diluted XX% $X.XX solid revenues flow-through a Consolidated NOV’s mix. share. earnings were continuing of cost EBITDA backlog. higher incremental with fourth

growth. year XX% included Incremental revenue, XX% NOV year-over-year renewable on the billion million in For EBITDA $XXX on revenue. flow-through million generated which was $X.X $XXX XXXX, in full in energy-related

for is we year the extraordinary safety good greenhouse operations, well reducing that XXXX NOV, technologies more that marched continuing EBITDA the and was from product steadily successfully the we our through of some products. for environmental and computing We new digital improve customers’ efficiency, face platform in our revenue several developed downturn in a quarter-by-quarter edge emissions of gas and foundation products in executed up push cost We prior including others. several challenges. the new impact of team introduced grew, higher, prices the an as lines than benefited years. reductions

magnitude improved, disappointed our frankly, price the margins expansion far. so driven are we of in margin EBITDA While

Our marketplace clawing remains been competitive, seek as significant volumes. pricing But discounts nevertheless, have and in to the load after decimated lockdown back achieving we our increases. competitors plants pandemic successful

costs materially. However, driven the the we year has saw ramp our throughout up inflation in

earning go, to in ways to days closer have are still are we returns While much, we an what be on it upcycle. we acceptable capital, extended and will much early is confident

closed being are For constraints. after a the in a reverberate eventful that learning eventful and a about was far of knock-on created an unforeseen years. It pandemic, effects future. learned when for economies year XXXX year which into string constraints We world, our was of reopen,

wrecking oil saw of lowest valuable manning oil that experience, and rebuild. the in the urgency renewed spiked rig XXXX end what patch on hundreds production. industry the our tens downsizing exposed which constraints, which respite years must prices us that blew the a Remember navigate hostilities industry outbreak chaos through XXXX. counts and prompted negative oil Unfortunately, ramp our order fragility hopeful of bring the We finally an the of Ukraine, leave in would field. to bankruptcies hopeful We thousands with in energy to the of up of oilfield XXXX will to ball of brought were to of and pandemic record, see and obstacle that situation shutdowns the and following year of industry energy started our economic the and the XXXX prices course and That’s heal the on recovery. that

rigs deal constraints industry’s long-term also challenges, but further didn’t outlook. ex-bondholders to cut Many next drilling bullish maintenance We drilling demand desperate needed. downturn forced in still industry rebuilding scrapped back the The foresee and contractors as laid-off cold of Almost owners. through our the owned to The some it want since for is went preserve offshore cash, the experienced several workers Sadly, frustrated are all bankruptcy, equity and and contractors services capacity. money become years, a near-term healing stacked growth NOV’s products the eroded more drilling underpin and their many offshore sooner work. rigs. They we ahead XXX Collectively, by XXXX. for great offshore today offshore see and drilling better.

need. and areas activity activity new shallow Suriname, Arabian reenter a idled There companies of water Sea, to E&P and and present offshore we expiration Gulf the when asset emerging Rising particularly for appetite faced finally is basin of develop limited assets, when a an Namibia, offshore development challenge blocks Mediterranean Eastern discovered the Brazil drilling great they restart daunting the and to of mass drilling decided and invest seemingly limited commodity the prices in market tiebacks the to higher brownfield what demand Africa, eyeing these Mexico, deal years, promising of no their to owners So, development absence North West in. in in after have capital drilling several long in India, Gulf Mexico lack in the offshore Guyana, and in assets.

there The are to little project more cost drilling the need day appetite fees. they XXXX, in, Despite two challenged of There’s for rates come, and right the external access finance money to drilling offshore supply are energy has to to or security they’re offshore itself. years in. demand capital for but in new now since economics cost reality to finding plenty that living restructured their dial chain. XX% a are contractor in industry rebuild way mobilization constraints, and and rigs increases freshly E&Ps confident higher more of through we becoming one headline refurbishment that’s But

oil bareboat eastern shipyards drilling charters supplemented and companies by funds offshore National integrated sovereign offering capital the foresee we importantly and of that wealth hemisphere the majors sources big are restart. emerging underwriting

as components, of also customers. rigs, face new & in The and Completion disruptions, broadly. hear from our risk Asia injected second higher critical workforce have projects constraint risks elsewhere, is Production costs execution freight expensive unreliable COVID-driven all FPSOs for supply-chain, execution shipyard into offshore Solutions and lack just not and we and

these to reactivation Rig the recertification And completed fourth XX projects Despite quarter, XX projects are pleased Technologies challenges, upgrade successfully and our on jack-ups. reactivation, rigs new we launch teams offshore during offshore quarter. mostly rig the in

surprising rates interest activity, We’re ship which is mid not in in with day drill range. more floater $XXX,XXX the squarely day per seeing rising

it a While new recovery. demand long way from steadily that driving is approaching industry clear the towards economics, anything is build high

with with second the projects spent the subsea minimum, and Early reactivation BOP to as expect comply like capital a to instance. to bare shipyards we are but time BSEE sources upgrade items customers industry in rises solidify, stack use for regulations demand

enabling also & were sequential XX% as Solutions offshore all grew NOV from sequentially offshore revenues revenues XX% Production Completion customers. and its Technologies increase the a X% revenues sequentially Technologies to well, up consolidated offshore XX% customers. from grew Rig post from Wellbore offshore

did rates international retool of international cycle North Unlike of to the themselves most the Turning time pricing day America, in in for super not dozen to a land, on markets land services first are years, to oilfield and levels up XXXX. higher XXXX the rise. technology

oil and are instead X the East relying That’s equipment. fit land drilling places markets on and where purpose in the compared buildout the and like Middle a AC revolution Phase step, for frustrated materially frac-spreads. change of fleet to International replacement and older Argentina, shale North rig higher took was national with efficiencies capability rigs technology beginning to of never with America. U.S. used companies lower that for the the

plant high performing to pleased the the growing other in in two very contractors I’m by drilling is land and are that Arabia well, Saudi from our region. first spec interest delivered new rigs report

drilling equipment international directional markets. drilling We offer key land coiled as we well also and in see motors tubing that rising demand the for as bits kit, newer

While Chinese price. offerings fierce, can up products are bureaucracies of company the are oil in national opposed and be on buying as these these waking and idea competition strictly better, service head markets buying value and to shoulders on to

for So land strong and XXXX. Consolidated bullish on markets NOV XX% revenues offshore international segments showing with all land sequentially we three growth. for increased to summarize, are international

But now, about North let’s America. talk

term of safe E&Ps But less successful of rig are of ceiling, and in the our are among overtime only labor. green land they chronically Our availability the cause. higher from production as the the shorthanded are biggest to sequentially. count in along as other oil increased to are in extra found things wages a higher touch tell new that with new now find, hours consolidated near first to North by are hiring hires less citing X% unfilled XXX positions. America availability to the below are and revenues crews work U.S. American service cover customers U.S. year, part root achievement demonstrably that based targets. rigs hard real oilfield their and up efficient. the crews bonuses, After the a crew XX% rising us service oilfield that constrained hands sharply Texas But availability North and customers is Dakota West mud North per XX%, higher risk diems,

it’s in inventory is in barrels double shale productivity Tier that the and well casing pressure contractors earning And fueled ton constraints international pricing, the the growth. scarce contributing for foot as is digit are emerging the equipment XXXX to run-up production of U.S. reversal pumpers X Even per begin in capital, cost another $X,XXX rising markets, production across years to E&Ps. location invest. utilization ago and to America improved drilling rapid drilling much is to mercifully higher higher also of foot capital hesitant several terms enabling constraint, per Dwindling gains expensive. the XX% and returns lateral in industry of per North land brought like on

rates high-spec around $XX,XXX generate land rig day capital rigs new XX% build U.S. instance, on day contractors. can a returns for efficient For

supply and far labor to chain so been owing constraints. editions capacity new capital, However, scarce have

investing to wear on operations On approaching cautiously either placing they’re the are on the fleets consuming pumpers need higher their that hurt are and accelerating XX%. fracs other and pressure in day It frac given see spreads. simul new at frac equipment tear doesn’t They returns fleets rates. that the replace hand, are XX/X the every

capital to access. self-funding difficult investments. are very still they though, Importantly, these is is This external

short of of year has XXXX era, over Given DUC a the U.S. greatly surprise of expectations growth inventory. to XXXX well XXXX myriad the short that fell constraints reduced in it’s no fell even year drawdown production and despite massive exposed,

production in utilization term, all outlook oversupply emerging to on structural add E&P Now, spending, to shale we investment gas rising. including and LNG I of year-over-year markets to pressure a increase out XXXX constraints and board offshore basins foresee Longer all pricing and urgency, in in for rising contrast will mature, cautious the and overall urgency capacity global North North little the areas, American in America, an in gas remains constrained North they evident. serious bullish export North ratios additional are across the international drill caused by the shortfall more diminishing as America. our oil likely in land as but land mentioned, lead on economics and to pricing U.S. becomes a we’re basins American Higher E&P still where

this XX% that change. down industries. Nevertheless, is of beginning in powers quickly just exploration to limited This this dwindled. where FIDs industry. returns the now Years replacement are ability industry XXXX is. other as the to Oil XXXX we The are the of serve restrain events and us of and peaks. XXXX is all developments I ramp industry in from the production taught industry’s capital-intensive pipeline everywhere how started. me crucial XXXX gas to reserve and has Constraints

would exist not Our way without of life it.

and them cutting upcycle. shares tightening common that materials From down-cycles But we of industry’s to political will upcycle I’m convinced iron years upcycle. They maintenance extraordinary and these the and been economic elongate expenditures will components to growth of as an availability the energy before constraints creates this those trades. for simply critical an to standards for face to of Every and as need The rates we the back oilfield be teams employees pivoting in regulations, to enter I’m urgent growth faced But finished constraints off hard-working and first higher That’s today. ever will living rebuild some during daunting laying interest to so to to workforce as living, security poverty. capital take raw it must overcome. particularly has this NOV never freight hostile pressure to why capabilities improving energy throughout of has XXX-year history. the very team. of required overcome to proud restore we many industry

working. is done. and Our them. Jose? on employees the get hard solutions. I to every world each They They Blake and the Jose, And innovate know grateful They hustle are They work one and smart are and them. problems. and of counting it create

Jose Bayardo

Clay. you, Thank

quarter fourth over-year XXXX. quarter, all To grew three NOV’s with their segments quickly the recap revenue revenue XX% and sequentially the year- posting highest consolidated of since XX%

has XXXX, the fourth representing and which deducted incremental North as building fourth which noted, related of America X% on in resulting America, in sales, sequentially an other items momentum quarter, markets Adjusted recorded fourth of the quarter of million, XXXX. Gulf America of While primarily to international QX growth during and the Clay to in we or fourth the We’ve revenue positive international of EBITDA. during the XX% throughout compared Mexico. XX.X% of credit realized in inventory, XX% from for margins drove in $XXX totaled a growth million previously reserved EBITDA $X quarter, year in quarter flow-through included in offshore XX% North sequential North markets growth been strong the most and outpaced

With market such we XXXX. adjustments the credits EBITDA in continue improving may recognize to and environment,

$X recognize we to other the accumulated the loss charge benefit in pretax U.S. defined our expect XX, a the all and for quarter, for Additionally, December of complete losses to noncash was of as comprehensive of recognition we termination pension plans which first expect which XXXX. million actuarial

quarter, other associated accounts. levels of employee intercompany corporate to costs buyout fourth eliminations level expenses true-ups million $XX at and EBITDA and During partner the transactions, and increased the year-end the of JV a to higher due benefits with

We million cost quarter. expect in to eliminations and to corporate $XX the the first range return

the $XX increase cash in flow working was $XX in from $XXX million. the from million revenue in fourth arising operations free totaled flow resulting Capital of capital strong growth, million, cash quarter. Despite expenditures

first will for cash free cash be often by is year. we case, in we operations As quarter, which to seasonal of but of the from expect mostly magnitude expect meaningful a the be of the the determined positive revenue XXXX, use the flow rate growth during

returning while we and a have $X.X remain structure. strong have capital committed we bulletproof gross a of our We to to since mid-XXXX, our shareholders billion our mid-XXXX, share returned by dividends. of $X.X shareholders capital billion. maintaining track through repurchases have record debt capital and reduced Since And

equipment, base R&D the manufacturing investment existing our our capital and appropriately greatest us platforms historically first reminder world-class hierarchy, compelling opportunities, seek of risk-weighted facilities. a distribution infrastructure, of leverage and as have installed digital provided can global we As allocation we organic foremost returns which capacity,

made organic market improving have over increasing capital the years, the development and progress million XXXX. the and are, our new numbers see in opportunities environment therefore, $XXX in of we approximately expenditures With several to product last increasing attractive we

or This where means Next growth already opportunistic avoid list share that we our where previously we prioritizations a leverage approach a to competencies. a committed our it’s shareholders, pressured accelerate opportunities rate increasing reducing return, returning M&A acquisition, defined we program. we whether that on noted, excess disciplined to the capital being returns-focused long-term our core initiatives. to complete the of likelihood M&A, prioritize repurchase through an in process. dividend to But means We of as organic that overpay. We employ we as an sustainable position high is are growth are

constructive we uses of balance shareholders to increase meaningful of sheet our remains to our bit growth along capital is solid, an a our While to means ready this the that at M&A more with return businesses, near-term that anticipated recent not fund looking time. cash are in environment

dialogue maintain to a evolves this as We sources of year topic. the regular cash monitor will and on continue uses and

Moving on to segment results.

challenges increase Technologies the million Wellbore fourth $XX $XXX of growth third demand of XXXX. improvements second revenue plateaued of million quarter segment fourth our compared and in X% in driven and in Our Middle motors. drill quarter during of an market or solid the straight lingering a compared to drilling was the XX% primarily pipe by that for deliveries Revenue offset North quarter, partially quarter chain key the American supply has to the and technologies East, generated delayed that by

due revenue critical XX.X% and to costs to favorable a of chain required supply flow-through mix, EBITDA associated difficulties grew customer million expedite with soft or $XXX to less lingering orders.

drill in deliveries realized Despite to volume product revenue markets. top delays chain XX% steel demand also with QX. was resulted received since of Grant improved strong in flow-through notable year QX Our Orders business three supply limited a years and East a receiving Incremental favorable slipping XXXX. coating line greatest from Grant pipe to pickup any challenges, its growth these Prideco materials, quarter significantly modest and for posted including sequentially the and by from Prideco mix. its which offshore less due highest disruption, Middle limited orders that was customer from in

driven that did bit drill activity the deliveries of East and significant in to markets bits, geothermal in is under supply roller-cone highlighted business the Middle continued earnings chain saw in Canadian as weather-related in decline drop-off a achievements the Despite to are U.S. ReedHycalog release. growth that the challenges meaningful business restricting a solid quarter, our realize repeat shipment Our primarily and in large QX in not a during revenue delays by the Asia

of units by affecting and into pricing Middle fishing year to needed drilling in Asia during the growth quarter, the earlier third instituted realizing motors. significant high-grade business maintain operation in for challenges significant a improvements the procuring Despite tool downhole the resulting increases Pacific. the the favorable business pickup less revenue certain chain reported challenges stators, rentals East elastomers adversely the EBITDA steel of After and and low-teens, and mix, business led its had Our tools product allowed the the high-spec sales flow-through. supply respectable sales

MPD MPD Mexico, offset primarily sequential including legacy growth offshore and repeat. growing control our WellSite growing and reflected of Services a sales equipment momentum posted revenue for seeing from to offerings outlook in business the was small unit’s in did markets, business mostly operations. in we’re in serve And in this decline shipments MPD business key This in not which land that QX results Guyana decrease strong MPD capital for Middle the improving West during in opportunities strong bookings Our for a due Brazil, by solid and should solid The orders, as was equipment XXXX. East. Africa markets catalyst both

Our geothermal to systems diameter demand than Europe. fifth sleeves a of more for coating the solid its double-digit strong miles recently operations. TK America by demand Tuboscope in lined Asia XX of in Thru-Kote which realize delivered services for Epoxy driven operation’s large The the East two straight The pipe applications coating our glass for pipe in liners total since East Middle pipe applications in XXXX. business projects business for in delivered and realized new business for of in the contracts in Denmark, that and geothermal TK and we reinforced increase will its also have Latin secured and quarter for geothermal its add revenue to growth TK-Liner Middle continues growing

latest over several operations eVolve contracts drill was XXX in small the of provide in with Our to improvement by Max devices data greater new which resulting our of simultaneously incrementals pipe sales in service East, offset data growth eVolve did wired of in Europe. the offerings analytics M/D our on unit not This repeat. also field growth North surface third a its over by revenues another and quarter decrease signing in Edge product installed for optimization remains at services, Totco East. demand are the currently led quarter building America and Max the that for rigs from bright Outlook digital capital unit adoption is with partially customers The XXX the the from in Middle services and our strong utilizing Middle solid outsized this with operator’s a posted real-time acquisition office. realizing business

large Completions we offering, Williston Additionally, is frac independent in Max a our recently remotely a job which launched the monitoring Basin operator. for

which industry-leading achieve the for bright. now legacy the digital we’re of EBITDA developing success in has solutions revenues levels and data eight Totco’s its business years, the M/D higher operations, its and and outlook solutions, digital infancy in completion beyond While both efficiencies allowed of to highest drilling providing remains acquisition systems in already drive

segment segment, expect Technologies be demand to Wellbore global improving drilling continued activity, for enabling our XXXX. key supported driving oilfield growth for by in For we technologies the our

do we fourth segment seasonality our QX first expect with EBITDA line for However, Technologies in results. and to headwinds to Wellbore revenue serve be in results, roughly to quarter quarter in as resulting the

prior our Production EBITDA $XX segment to XX% facilities third challenges, sequentially improved fourth quarter quarter, from the fourth mix. revenues year by and a $XX Completion of quarter lower XX%, increase from of increase manufacturing Sequential of increased XXXX, $XX in quarter Relative an flow-through of and from and X% sales. million X.X% the the Adjusted million execution an Our negatively better million improved or margin to $XXX EBITDA absorption of pricing. of of & XX% resulting flow-through generated impacted Solutions in XXXX. the supply was was the chain-related from product fourth million against

fourth this that over of end X% to and book-to-bill billion, XXXX. straight year-over-year. the the XX% million, $X.X at of a achieved up note sequentially quarter the Orders segment highest increased with XXX%. XX% quarter CAPS bookings quarterly since was eighth has backlog segment’s was Also the is $XXX the

need is highest capital demand aftermarket to its refurbishment-related equipment & transition XXXX. seeing our sales Intervention revenue, new customers’ from Our increase Equipment reactivations a QX efficient in and Stimulation posted resulting level business tired work of achieving from with business notable since more equipment assets. to The a replace in strong

lead access is difficult remains is recovery to now and capital many our increasing, confidence are These cash another to healthy looking mentioned, in that flows, the fifth grew are quarter to sustained in and industry. Clay the slots combined now good generating its But factors delivery times. drive order many solid As straight their substantial lock which backlog. news for customers require of a limited of business in that intake the the quarter

replacements, laterals fourth to Asset improve our technology efficiencies book the drove new and economics, quarter. longer order lower emissions and in

three which our tubing selling coiled X third in of service new in first during are coiled unit we quarter, North into destined orders After for for U.S. tubing the X units, America. years the received new

also wall support ultra-long West X.XXX-inch a increase completions with to for diameter notable thickness wells large in saw demand in XX,XXX-foot of Texas. We pipe lateral

trucks total also the technologies. demand from noted eFrac to lower IMAX As ownership we markets, equipment, by is beginning the we hybrid see Also opportunity wireline and that electric hydraulic customers XX,XXX only from particularly higher cost booked see press the but more to East. in also to release, six sold of emissions pressure international reduce horsepower are as Middle latest we of their not encouraging our our pumping using

realizing straight and been throughput Our spare in resulted as customer mix effects revenue. as we mid-single-digit the increase slightly market projects. posted remained of in the strong by Margins improving quarter favorable pricing capacity X. greater subsea a with demand and of less committed book-to-bill flexible of much a a are Equally power Orders pipe for unit’s the to has offset the increasing important, or business in sixth absorbed rebound. compressed quarter were continues than the sequential

revenue experienced execution Mexico. America deliveries in business driven increase connection Gulf support pipe a and conductor product strong significant the in projects XL Our to Latin large by several sequential and of

orders the seasonal offshore during operation. this pullback activity While support a solid QX, improving we strong in deliveries should for year and steadily expect typical

quarter. a was after and increase the Process rebound in Flow sequential flat in Our strong a business third mostly revenue. Technologies posted slight EBITDA

assumptions, should supply difficulties, inflation bookings of pressure the confidence effects stronger While a shipyard FIDs in margins recalibrate give constraints operators to much for right recent conversations which and and chain XXXX to continue increasing us customer cost as in the push this business. result

pumping sequentially of did mixture experienced XX% sequential pump decrease Our due from the oil equipment the uncertainty and the lockdowns wastewater a not revenue for applications environment. large gallons in award and outsized sensing pent-up processing package pumps GoConnect sludge XX are non of of China and lifting and fine-tune during a repeat. over included system transfer shipments a in orders Bookings our to that New operations loading third control at able cautious a industrial to per COVID orders due quarter fiberglass storage in monitoring and NOV to and Mash XXX pepper provide to improved cavity will equipment customers per Moyno mixing, and each of an million XXX for with with be will in to treat progressive quality transfer to strong that will pumps that customer XX achieve digital macroeconomic that unloading cavity XX million and real-time plant provide agitators day. facility our data polymer and Mexico operations, QX, won the optimal process reliability. wastewater handle Pepper year. progressive to in maintain gas more equipped growing the process we’re Moyno provide pounds ensure equipment Despite to The also Chemineer Cayenne unit vessels,

increase plant higher-margin due remained sales. but margin XXX healthy more offset scrubber to improvement handling Our that fiberglass Orders fuel than flat business posted of strong a than in EBITDA a and offshore the the in equipment basis-point in effect deliveries more delivered to in revenue processing tanks eighth in delivering for addition decline seasonal over order high manufacturing facility a pepper order resulted into the XXXX. book-to-bill and intake backlog quarter mentioned an its all-time with in a the large previously booked The semiconductor for the business the unit going strong Texas. straight X a

the For revenue decrease our XX% range. result margins to a segment, nearing seasonality projects completion several Solutions in are we Completion that and in with in Production large mid-single-digit & expect decremental

the quarter, third to sequential by Our XXXX. of segment from aftermarket supply million Arabia. global Rig capital growing compared compared million sales, combined quarter a of contractor led to the growth or in fourth increase in to shipments. of to The strong which in fourth land Saudi Technologies segment benefited a was a spare delivery equipment posted rate $XXX The increase part and solid XX% projects a private sizable $XXX in the new and higher quarter our of in from bookings also straight drilling revenues XX% with U.S. of chains, led rig of increase rig Four improving quarters progress the generated an the a on operations.

EBITDA $XX $XX sequentially of improved sales. million or Adjusted million XX.X% to

equipment Book-to-bill capital orders quarter. million. the just XX% fourth $XXX revenue increased the increase sequentially out $XXX during million and below result backlog of of X XXX% in was times, New a totaled or

Total backlog and highlighted for wind the new the the were installation a was million by $XX rig. billion, turbine a bookings two BOP quarter Fourth of an for vessels $X.XX systems harsh over stack prior segment semisubmersible orders increase for year. at year-end and for jacking environment designs

Land reaching growing day the for or with and both higher reticent leading-edge rigs offshore XX% remain to rates. straight flow demand rig utilization X% improvements continue for should in sequentially These off jackup equipment our in contracts subdued conventional continued for all counts duration Contracted translate resulting international average almost quarters, rigs in during major still utilization and While into average improve, capital and and longer rates are all improve. over and has three and customers cash classes make XX increased large rates as confidence drillships markets up day of XX%, commitments. as to to Encouragingly, XX% U.S. sequentially, outlook bookings contractors improved by rates X% QX to counts day improved repriced time. another better on roll contracts. and rig rig

productivity It a for While work. Then, more at newbuilds equipment in stacked modest, of eventually direction, compete and and levels orders rates services the is reach cycle to need hold. warm with our reactivations newer industry simple rigs measured progression for once seek and highly going and moves effort for cold is which and normal very sufficiently capable to day fleets stacked take products higher its operators often the less demand advanced to through high capable more rigs, technology, pace. right that starts remain of heading through demand require and will utilization reactivate upgrades

that through in reflected cycle the and markets, offshore our moving this both and in We’re land natural results. progression is

a XXXX Revenue well land has from QX increased of top-tier newbuild north our North $XX,XXX operations now trough. at economics. for above leading rigs in edge land and land customers bottomed With in from American returns aftermarket markets, day rates level the XX% the are in

America we’re in many delivered in North we and efficiencies discipline rig orders and still private on builds QX, new reactivate, among expecting disciplined land their stacked rigs drillers new have particularly to a contractor not in capital who While remain operations. being Customers to this strong, a year. on for U.S. remains public more driving focused

ATOM their minimize RTX points, fielding pain which power we’re increasingly calls during drilling and our to drilling including that some robotic operations can power and our of consumption emissions. fuel system alleviate and new allows fully Maestro optimize contractors system, automated potentially However, our management inquiring about technologies

In international is modern limited. be the significantly land cost upgraded markets, that availability more rigs can of effectively

in the a customers drilling we East, number meaningful discussions are having offshore quarter Aftermarket regarding improvement result, have recently in America fourth Asia. new have contractor and we a increased our rigs, since particularly of bottomed customers XXXX and revenue that XX% from seen As the of Middle with the in time. Latin

new related the related discussions having reflecting yet market, jack-ups. to nature discussions new deepwater are not of for While the longer we having are orders floaters to we cycle

customers are have stranded in XXXX. drillships stacked XX at complete Asia shipyards since meaningful the that for to to upgrading been there opportunities reactivating and rigs continue Additionally, and

these kitted cost these $XXX estimate can to a stacked of acquired believe rig improving for be We fully of recently acquired between which $XXX,XXX-plus a equip while customer produce is addressable opportunity to contractors should rigs. $XXX contractors and rate return in for to anywhere these environment. million NOV’s one a and a from out rigs rigs per remains and and finish $XXX day million ranges strong million price properly capital $XX it challenged, We access to million, rig,

opportunities to but some come. materialize, of these eventually time will take All may

work from grow. recertifications our reactivations, existing fleet volume the to In continues meantime, of and upgrades of the

X XX completed we on, such stacked touched fourth Clay of jack-ups. the As in projects previously the reactivation quarter, including

of XX, awards projects. a received we another backlog for leaving us with Additionally, current XX

vessels In evidenced installation for our the as fourth and two for by jacking market orders the wind business, designs the during remains strong NG-XXXXXX vessel NOV’s proprietary we systems quarter. received

we opportunities year needed If for several time translate turbine XXXX, shortfall NOV. holds, see few in additional forecast meet the a years the a but this to for We significant a orders nearly new forecasted demand frame. the should into this expect installations expect in dozen to to it ‘XX demand in ‘XX a over still and next decrease available vessels orders for wind in see

XXXX timing to XX% result revenues we for improved first be XX% is with range. XX% of a Rig of projects year in quarter our to expect and Technologies in While profitability the the growth expected to business, contracting decremental and margins seasonality

With that, we’ll now open the call to questions.

Operator

Rollyson first line Jim James. from Instructions] Raymond question [Operator the of comes Our of

Jim Rollyson

back going and the of for who terms out the may or your that willingness and Hey. the you lack see of ultimate the be. capital investments playing just playing you frame about providers spend do how that? think unpack in how of you need side out about Clay, playing time of current do of this when to some mentioned the out, by that kind you But offshore of incremental obviously capital and capital owners, to comments

Clay Williams

rig need perform out the down providers. industry work view, our and sitting It’s integrated oil major companies as to a oil In to the as great offshore it’s big drilling with starting to go back already question. those are companies, who services play national the

told, being have they’re mobilization going you’re higher higher pay rates, to hey, much to to much think be I have day to going you’re fees.

You’ve seen year-over-year X common. day with rates handles the for for instance, now pretty double gen Xth starting drillships, and

industry, bad capital, and have think And downturn and through reality just offshore of been that for limited to access recognition have to so, have there’s this drillers pretty up to the here this that. pay beat I someone going is

companies, in think, that There’s of are participants on well. remarks on to is things out to here deep bigger wealth some increasingly pockets. countries the the prepared to my I sovereign in think, to oil budgets play sitting first services then, that they’re other this. the shipyards of on think rely and And mentioned, government available these have which I as ask to of the are So another I that the shipyard -- stranded that capital find assets very those role, get these their were their construction funds, drilling can those the so And transfer make we downturn contractors, projects, through are an operate offering on industry projects go them. going that capital such those out to drilling those potential bareboat contractors source are fund public and petroleum rig yards, complete to that the balance charters forth.

to they of so, lending And have. capital appear don’t -- to that the constraints other traditional more industry the have sort on of provider providers

Jim Rollyson

obviously, were or back. and just over going and inflation Great. product much kind you I versus room just supply start NOV sit of which through pricing working of the And going on varies in how think average a last pricing where overhauling two where by pricing coming That’s But from think cost your bit there know the because kind when color we line. And at forward, it as levels? volume? you’ve of we chain been the has But is, plus on how back as mentioned we do lot kind pre-COVID now margins you just helpful. years, think And this revenues have about of before. little follow-up, margins enhancing kind issues unfolded of three maybe cost a I sits we a which forward, made about on just as I’m structure sure, clawing constraints of have about things pricing, versus of as around then where downturn,

Clay Williams

Yes.

appreciate the question. I First,

on other We’re almost year. we’ve ways high at taking and is, away back calls and focused we XXXX organization to $XXX most prior pandemic of -- that bottom, clawed that through very to question the our right? a demand XXXX, discounting costs We like in or track among that very they mid-teens out nothing started your of hit those Then, those, products million on pushing for we been of happened, an late shutdown of north aren’t on prices of we discounts. -- falling looking by about short apples-and-apples with found sell -- pricing, So, lot we enough. really early a of baskets we so XXXX. intentionally. answer kind have felt many pricing basis. of talked that And on Since successfully the We’ve

margin now products has is higher were in priced than are problem of lots increase. eroded There’s XXXX. the that a that But lot that inflation they of potential

be financial And $XXX that’s kind through need step pricing, that structure, out happened cost yet. recovery our back taking we inflation, when really our the of heavy the given margins they and so, where to heavy, of lift reflect of erosion aren’t of the on on results, here million

an coming point And work not of as so, level you to supply to margins. one out, chain But, on out on pricing, towards continue woods continue of the going the yet years big in the focuses have push disruptions. acceptable we’re to correctly to of we’re

of lot a lot inflation areas on we pressure a of work, We’re in still seeing there’s costs. that

high so, and focus we’re have going margin. to on of level maintain really to continue an And get to acceptable to pricing trying very a to

Operator

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

Chase Mulvehill

orders. want I Just on follow to up

talked lot growing You others. maybe subsegments momentum outlook kind some a in of about -- and some and conservatives

that that don’t maybe to of want know be you’d and Tech focus to for if on for potential should when moment kind and take So of CAPS, actually about I could the in investment guess, kind Rig both think a if point don’t orders ‘XX. and well. maybe to as know and growth just in ‘XX those segments be we think walk community real attention I things through if in just you I And up you paying segments comment, both can quickly,

Clay Williams

America. prepared said I’ll for Yes. North in we’re a on as outlook speaking, But on -- that little to we ask my Jose in chime cautious as broadly well. remarks, I

by interest and been previously specifically focused used intervention We stimulation order of kind our more hasn’t XXXX book equipment East, over pricing of equipment out more was on has most coming markets, XXXX, through international America. North that Heretofore, there the as which pivoting in really see of driven Middle been and good.

put also opportunities regions equipment East elsewhere hearing around desire and into the pricing in to technology to a higher improve and Middle world. We’re certain the

So, we’re that. about pretty excited

right I project group to on a The shock to oil the levels side order felt an year, like sort the Completion Production mostly they producers, cost lot offshore are other project were for projects. book who Solutions It’s been moving sticker focused the engineers at have inflation. weren’t a And mentioned headline of of & company on uncommon. last high several of really because a of working big a overall of XX% increases years. projects

we’ve think XXXX, the as confidence security, learned lesson into about highly I I growing think outlook. we around sort of supply-demand there’s constructive move energy the

about confident our feel doing operators gut so, more FIDs. And is are that getting

space, expectation our FIDs, on too, you’re others international focused gas hearing think, particularly around I that are their from moving forward. in and that

expectation as our is well. pretty a outlook so, bright that And has

still rates really capital tighter, all lot but pressured of hesitancy and tend here gets day their about to up. lot into putting a if mean yes, tighter demand the of offshore rig looking I rig a more supply fleets. is get side, contractors But and obviously, drilling On tighter up,

so, We’ve One that’s of in of the grow. level is for a Technologies. had real area Rig those, though that is interest expectation area demand demand workover. may within and our surprising the And interesting and

it’s or security, areas. oil I both year segments, and coming think, board, face I and on a X other in energy -- the think pretty that good we spec few backdrop, sold workover it’s start industry like to focused challenges something across the much rigs higher given the the restore a longer from. gas X, to anyway, But laterals

Jose Bayardo

of other mean, or to two covered well, things weave in. environment I just Clay sort to the continues it market extremely obviously, improve. maybe one

pushed of those some maintaining to kind We can commentary little in some we that We’re some indication mix, really a some of little a particularly change be in of CAPS. gives have you within bookings I it the will really had think provided to the of there of that depends. what extent related the And in offshore bit units a looking to our forward up projects ‘XX. pick right, Clay business good where ‘XX see an of to bit projects

we’re forward So, to looking that.

started lot space. of also with very capital They’re we’ve bookings volatility off seeing a from people very And to in flavor I looking of a steady Clay’s our to the obviously aftermarket of then mentioned their But for. both a things -- just seeing offshore primarily that businesses. rig, that in the be lastly, wind well equipment related tack on related commentary, business, to And you the should bottoms. in the bookings sort in large our quarter-to-quarter, or you to insights gives been our had perspective, we’ll requested think we’re commentary that rig chunky we’ve improvement

really equipment conventional capital if massive how in produced things And XXX% of one rig you rig quarters have of the distorts it that over backlog, of of billion of excluding sort of contributions three strip book-to-bill at you standpoint. associated facility, book-to-bill that kind equipment at we in backlog the quarter, that at was rig our look bit of booking out revenue a sort contract, with bookings $X.X that from look the had which terms -- Saudi little was a by the just conventional is We’ve and from business. a this manufacturing the capital that nice row there improved

through And trend to upward so, we’re hopeful as move that XXXX. we continues

Chase Mulvehill

Maybe also opportunities kind was of activity one to focused as the picking be color. aftermarket Investors Tech the offshore the quick appreciate on I seem Rig follow-up. Okay. up.

the and XX business versus shallow aftermarket So, had I look be think it’s to you water builds? I guess, heavy -- should fourth you maybe for talked at if what the deepwater that speak about think we ‘XX, think to And going I’m out When you new XX was given assuming ‘XX? just And or the could new there? some reactivations new -- Do how last launched more quarter. reactivations -- what’s opportunities growth in ‘XX year. in about, nice you some they you it

Clay Williams

we’re the broadly, need good more to they’re mean at little degree. Brazil. got takes aftermarket spare goes jack-ups of There’s going lot The certainly levels That back a drilling of rigs going spares. contracted support. flush I industry into demand offshore work a in bit. aftermarket rebuilding off work, activity parts Saudi Arabia, Yes. as kind cannibalizing a to that going to reactivations to higher really industry of level idled XX But instance, of of all for for some and Aramco, by to

after organization shipments was the faced disruption in underpin we of pretty spare -- a of their of chain bit, QX, about and XX% increase the XX% since roughly group a repeat the what aftermarket our our headwinds necessarily sequential in big helped improvement in XX% availability And parts a got really business. broke the casting good saw of better in throughout revenue won’t manufacturing little you of the QX balance sort good That but into XXXX sort there. of One supply year. our aftermarket year dam progress feel making in we’re was

Operator

of question next Piper the comes Lemoine of from Luke Stanley. line Our

Luke Lemoine

over the and you some floater of years this like NVO guess Rig of reactivations, between Samsung rigs cycle Hyundai some couple over on few the offshore [ph] Tech do the touched the like that and these drillships jack-ups. for floater bigger demand annual items Rig of potential ticket stranded a orders be the within Tech of think You next guys individual underpinnings I XX of the what is and with order out? type with incremental years, could

Clay Williams

Luke. a hard That’s really question to answer,

just But said, continue is good. of global to downsizing upward offshore. lumpy. build the much tends Jose happened expectation pipe there’s should supporting our really so I be and that’s here. really, we all to in trajectory is since it you As would operations tell been drilling And momentum, XXXX

that and the terrific. expectation we can financial prior industry really rig that They by globally generate cycle. newbuilds the good the supporting returns up of step kind Our super we is saw without come in

high basic sort tackling of and of of does drilling grow hopefully, provide through We’re requires the whatever business But for It’s work prepared and come spare incremental pass. a parts. the and a that lot blocking to will margin, to high us. industry

well, sold that. that oilfield. mentioned super excited and As we about around for our that introducing system technologies operations. We of to year, products and ATOM continue this innovate the Jose land lot RTX robotics a into offshore both we’re

a different gas Booster their both of technologies, system, We’ve got all reduce couple our greenhouse emissions. PowerBlade capture system, our drillers Eco emissions Maestro offshore energy regenerative our help system, and hydraulic land reduction

help And shape bit available order. talked think so, I think And then we there’s great opportunities for that that. digital lastly, we about solutions I a have that will

higher we’re providing which So, iron to did higher I I up-cycle, to which the it’s opposed think for smarter going the -- and way pave be super lot this we cycle, will higher of last margins value-added think iron, in a and as next iron, just returns.

Luke Lemoine

reactivations the on value it. -- rig, rig stranded value of drillers talked million floater then kind the Got $XX But maybe we’ve offshore the kind of could to you to be what drillships, the you $XXX see you right content what per be could And a seen on you to guys now? the what about quotes. million content from

Clay Williams

sort completion. They’re different Every of stacked levels rig different They’ve is been different. at of ways. Yes. in

is of a rig potentially the BOP latest with compliant for sort is regulations. $XX mentioned, the revenue reactivations. as second one million this I subsea BSEE that make provided like bigger in So, the notional which the a of to But is range Jose stack, that of kind items the way ticket rig

Operator

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

Neil Mehta

a that team. I you some maybe like you free in other through flow right environment first have us congrats a to of ranging had from here. cash the pieces? dialed moving growth questions. super can want is is, in XXXX, about And to morning, ‘XX. the as Good cash walk us on just of working the challenging you components we’re flow think for to Recognizing orders different the can in good but now, And couple you forecast walk through considerations capital

Jose Bayardo

moving there our pieces because of the foremost, think lot tailwinds particularly we within about of talked second about prepared a need flow then, is that continuing sort to we first payments And is are Sure the think cash chain But to use of related near seasonal improvement one parts term, good And typically as hopefully get quarter. of XXXX. the the and from with in tends of particularly, as of remarks, certainly number thing, good It’s a perspective. a a question a cash QX Neil. year. the in about half to made us up, we as the free XXXX, pick supply and to

sitting And areas at now, right everything maintaining that up making we’re However, doing our live where we’re we’re sure in capital that key is still customers. within base, a drag we from commitments that that perspective. to overstocking to possibly to working our means with can times, a inventory buffers obviously critical our certain

during growth growth have to the this strong Also, ‘XX we’ve we to hopefully had really, point recovery, to and expect and through really in strong well continue beyond. --

supply consume, normal determined to ongoing the be capital will how with combined chain issues. working much precisely So that

the more going we as from revenue probably then become ‘XX is ‘XX, And transition look to weighted. our much internationally lastly, of at sort mix to

slightly international conversion little as longer as orders well those cycles, combination base. take work tend associated to projects, to a with longer operations of client meaning cash And have larger things project so system, higher the through levels of international DSOs meet to the inventory longer bit

the So, headwind. of that’s kind

And and/or way things lot large differences quarter then that otherwise, the one are payments. things know, the those do from make large-scale that completion a along material can projects progress you very to payments sorts that of of the we as have And next. are

capital too top flow the to future. in quarter into during from with to growth build terribly generally really to free a all course one not but try cash but get next, the the the And that line, free capital flow confident we’ll why ultimately, of we so, translates in excited are coincide that working about that’s working the cash have in year

Clay Williams

is XX% would quarter add, much at our XX% this to range intensity working than prior historical before cycle. better high too, the the in I like capital was super it

efficient of So, growth. capital organization around I lot support requirements, to our more a top working think the progress required has line in made becoming

Neil Mehta

Yes. clear. That’s very

think follow-up. Clay, - a I that’s

You guys terrific sheet a and some balance comments here, made M&A. you have around

on whether to that And that you you you’d something perspective want do leverage extent just see to addition? sheet balance I your consider, the opportunistically logical to So, the add areas portfolio? for would is any

Clay Williams

again, And not the super for balance would forecasting anytime go pro spin. soon, we’re say, we’ve very line about but years our a I need our you grew Well, forma for clear, new sheet. builds the DNOW last cycle back X.X-fold Neil, from XXXX to strong top been over to the XXXX,

line does to so is And very, the potential of here the very sort support capital take working high growth that. it top and

creating So through really of we we number on out that very it’s assets coming this a leverage. of downturn. We’ve to done be there very need to -- sure continue getting the there to delevering this we’re through smart. very off on for kind very long don’t going that bottom pile do to transactions looking that M&A space process careful time the we great going risk a be and have And opportunities, is make focused had and be be management are PEs careful, cautious, we’re are and make exit a will job while to interesting sponsors other -- stranded and to

Operator

question Gengaro line next Stifel. of Our comes the from of Stephen

Stephen Gengaro

do How have if of don’t think for how builds order of that your we’ve this about Good a financing but is sort frac couple manufacturers, the not, comments new does One -- around I [indiscernible] and know effectively -- who’s all? Two at on things or morning, if the you on think one that how fleet side, this of about you you flow, do impacting side. everybody. me. heard manufacturer

Clay Williams

developing good really we’re technologies. think I at

at good very and We manage that sheet financing. around with everyone be We we very, do really, should efficiently. and this comments peril. very I question, think really space, financing my -- fraught We’re really deeply think costs. think careful given potentially banking in I Neil’s we’re good I And about -- manufacturing. don’t at I cyclical balance

of we’re of pandemic, that volumes competitors we reason, categories deals think face the of of I aware for couple in a a product that, out table. really where well during sort on whatever desperation. yes, prompted put And have So low the of coming lot

out how and and highest to And actually we see And so, practice. this we fleets. do for need not we’ll of for don’t our that the in customers’ turns we our But investing financial capital them. is returns, think best use

Stephen Gengaro

about on I growth remind North domestic That sort side, the we international in makes your and wanted should as about the us just get And be side the international versus on think think second, comments we sense. to we just wellbore about thinking how ‘XX? American views. of when Just your mix? the can light you both just of the

Clay Williams

throughout because XXXX. modest American most expect and up NOV sort my and of E&Ps for And That’s we’re services pressure outlook and you around on revenue necessarily I think be XXXX, about marched for oilfield America that’s across North in both America I clear, for overall did I in heard upwards expecting that -- we investment want all by not although to could you Stephen. the should even areas. decrease, overall an gas, XX-XX, our North be in do probably comments North activity increase participants pricing as

that together. of comparison, So, kind that kind year-on-year hangs all of

year-on-year drilling activity North of to think in the most think going surveys some completion and kind CapEx makes of spending I that it’s point work on of -- that most But sense. recent flat, keep take the level I just to E&P, to mid-teens increase America. if

Stephen Gengaro

That’s color. for great. the Thanks

Clay Williams

you, You bet. Stephen. Thank

Operator

I’d to the remarks. Thank closing Q&A. you. Williams the back turn conclude does call Clay over any That for like to

Clay Williams

on earnings Thank Have to morning next our look great with a appreciate us joining Valerie. April. this day. in you call I and you, again everyone forward speaking

Operator

conference. you Ladies you. Thank all Thank gentlemen, participating. and this today’s does conclude for

now Have may disconnect. You a great day.

NOV (NOV) 7 Feb 232022 Q4 Earnings call transcript