Earnings call transcript Q2 2023

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Blake McCarthy

Welcome, everyone, to NOV's Second Quarter 2023 Earnings Conference Call. With me today are Clay Williams, our Chairman, President and CEO; and Jose Bayardo, our Senior Vice President and CFO.

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

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

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

share. basis, or second $X.XX U.S. quarter net and On $X.XX billion NOV fully of XXXX, GAAP income a million of for the $XXX per diluted of reported revenues

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

over call to Now Clay. let turn me the

Clay Williams

Blake. you, Thank

reported that of diluted billion. XXXX $X.XX seen NOV of on the of share XXXX. $XXX highest quarter $X.X and revenues per since EBITDA were of per the we've quarter For and was second the third earnings of highest Adjusted share the since earnings EBITDA million fully XXXX,

quarter quarter leverage year-over-year and was basis compared from quarter XX% first the the second line up Sequential XXXX. margin increased XXXX. and of points sequentially revenue EBITDA increased to of XXX was top XX% gain. the XX% was XX.X% Second XX% EBITDA of X% revenue, on leverage

of the XX% shy Measuring slightly compared from just up driving bottom, off levels. XX% the first improved but of our came second quarter EBITDA orders have in in pandemic low Combined were revenues point quarter in overall the to XXXX, quarter leverage. book-to-bill combined first one,

the continued gain activity and North prices momentum. and offshore tepid activity drove gas to American While International and in ordering lower quarter, prices second lower oil

next significant drilling offshore NOV are few and support. customers the international Our which will years, require over mobilizing campaigns for

rapidly this up led progress materials sequentially. the $XXX higher around inventories for delivery the chain supply in see of quarter, quarter, to pleased raw we were normalization buy our compressing to but schedules We continue certain million

inventory inbound receipts jumped. As

of While XX% with increased sequentially, portion X% growing inventory revenue process in X% sequentially. sequentially, grew inventory the work

increase. three are reasons for the There

First, and to out which for of of castings custom we steel specialized products. our molds The critical drove are foundries, catching up specialized cast parts pandemic on high many and shutdowns make receipts strength foundries business, forgings.

Specifically, quarter, steel castings arriving BOPs, for during underpin spherical production and Drive levels shaft, flow IBOPs, technologies at elevators, rig accelerated Top products certain the high main mission which plants.

like keep the continue in Roughneck will lines the our supply flow see for third improved additional through We cash quarter, through remainder chain year, which result. reposition as a inventories before pumps elevated castings quarter rolling Iron substantially to should expect to we for the fourth of over and product which the

in heavy Wellbore backlogs and drill increased pipe inventories flow first had we flow. to out will sequentially over to nearly cash as up Second, inventories the wall disruptions receive Technologies drill we next stock quarters, green contributing tubes also improving the pipe couple million of With quarter. $XX related bar These the year-over-year.

ship are supplier still catch products in categories. unless improving, up component are while lead can't to are fighting and certain times We reliability Finally, complete. they XXX% broadly we

capital assets, for in work only of This large by milestone reside will final chain part as process it sequentially contract projects final inventory products payments in the cannot XX% million contributor arrives. pending one completed. another also components to Instead, It $XX on So challenge we components. have delayed hand. of in our increased were of until be receipt our supply working

from the to capital this quarter. intensity, in in arriving second revenue to around normalization which the high, our expect plants, inputs and year. and of turn strong to see the more of pleased begin which our to condition we first to later capital consolidated supply annualized backlogs related working increases are at chain-related XX.X% these disappointing in rise should are we contributed XX.X% increased a critical While demand chains, in quarter supply temporary our Since the be to a working

quarter. X% Year-over-year, leverage, benefits XX% businesses & see helped XX% sequential of the growth chain results by of corresponding receipts the helped which supply improving stronger to & Technologies within improvements drill was improved margins XX.X%. up to drive the We Wellbore The from segment posted the leverage steel sequential X% margins points our line Solutions EBITDA growth sharply basis posted at chain back Production results. Turning leverage. through pipe the and XL at the XX% EBITDA Supply and top XXX shipments, at Completion rolling out on fiberglass sequential group P&L. our can segment. XX% Systems prior up push improved Solutions which Completion Production

Rig but Technologies couple only had leverage a to segment X% grew due sequentially items. of XX%

drag. expenses a turbine was First, renewable wind Keystone business our tower the sequentially consolidation of higher significant energy space related to full in a start-up

and mix offshore within a mix offshore rig associated revenue leverage. within upgrades repair lower-margin mix saw poor psi poor of equipment, and less service contributed XX,XXX a revenue specifically low more which the and capital crane Additionally, with higher aftermarket, revenue to

of forgings expected other margins and availability components exit castings, quarter to up into low are fourth the Technologies to growing lift Nevertheless, Rig mid-teens.

million program. drive remain see quarter. which the our completion the EBITDA begun further forward in should executing cost the fourth performance will improvement annually will additional to of reduction four improved and will Nevertheless, which Jose next guidance, which have consolidated margins NOV's the throughout the they reduction half In cost to upon another estimate better particularly returns see run for measures, points to encouraging year, we moment, where quarters, stronger a sequentially, be. and still in we margins below opportunities it's contribute $XX a back you offer While margins of

sales symptomatic our of business. nature of later Many equipment of the challenges our cycle have capital been

requiring construction operations enhance and we've efficiency their some have While capital, like the providers technology. to They're and emissions when of pledged with customers, their at companies E&P greenhouse their their developed. companies, well see reduce what oilfield spend look the the service gas not demanding NOV they they technologies service

as of The low excluding result building. XX% for is result. that been Saudi XXXX in XX% the is won business rigs large has Technologies, and Production a rising & growth management Backlog unit. point since Solutions demand by for our Rig the our up helped momentum first top XX up order in is Wellbore for which benefiting Completion reduction quarter we of more Post-pandemic well XXXX. technologies and the greenhouse Technologies offshore site leverage sound in is cuttings services interest gas significant for E&Ps international drive line and high drill business from environmentally and

many significant quarter. market share some for in ReedHycalog, enlargement in Advancement bits. markets drill have offshore record a to resulting runs Turning pricing, of PDC bit of during premium key second gains wellbore number reamers the including produced cutters at

cutter have our and Our technologies improved mechanical of reduced cost underreamers. utilization our lock

in capture their space better pricing. Sea as its past grow major PDC NOV's for drive through bits, expect graphene to technology from premium costs to years bids pipe further our at wired data hole North For we one NOV digital for continues proprietary gains transmission the few been allowing while E&P our presence high-speed we've drill bottom to of reduced the assemblies. extended cutter contract developing performance that also for customers

wired pipe on continue our It, for safety. standardize along proprietary drilling with service offshore other to drill E&P and efficiency operators

in connected X,XXX quarter companies in assets remote manage traction. coiled to real-time this X,XXX. to units technology using between oil field. our and edge Our the nearly XX MAX operations monitor tubing our customers cloud-based nearly completions are edge And major cloud with to in than More more computing optimize continued E&P oilfield gain cloud users services to doubled product XXX the and customers. to utilizing also are products service to of the

having also including diesel tracking and the by six cycle achieve IOCs emissions, for required significantly and in to Rig rigs strong offshore robotics optimization consumption reduced and life continues monitoring Operators product, see gas of its for packages rigs products for with second performance for automated PowerBlade and our management high Technologies better contractors asset seeing quarter. high power interest real-time are automation the in reduces first RIG greenhouse to system demand leading the costs efficiencies. interest pressing drilling offshore some commissioned which sold to around installed is in drillers. world, for

Looking prices, ahead operations third ready drilling will land a resumption for quarter, North of our commodity we in keeping near-term, in continue but the pending slow activity higher higher America to believe XXXX. in contractor rigs the customers are

American international North we Importantly, pressing these expect with NOCs and offshore are to headwinds forward as markets offshore-focused campaigns. aggressive IOCs and overcome near-term most

see activity Middle the to and Asia, and West offshore growing in Guyana, are in we the continued and Africa, Africa. North strength Brazil pleased Mexico North East, Specifically, Sea

across Having products, new in FIDs delivered the gas which for see a strong with land sales by FIDs the to lots emerging Saudi fourth XX six ready into months. project NOCs and the we efficiencies Gulf. major processing of for lag typically technologies drilling region, FPSO are As grow, and we our drive to interest our rig around market substantially improved digital pipeline

energy world's As the what NOV a is the equips providing underinvestment and essential of security. of industry the years independent leading most from technologies meet probably to provider itself equipment is industry, of essential positioned for challenges benefit to as

those customers it Jose programs do track. for to you turn and to thank care their today, of employees that for keep I want all our NOV to over take listening you Before on I

want you you, to best the simply appreciate too. know are that You and I do our I customers and

Jose. to over it turn I'll that, With

Jose Bayardo

NOV's or totaled the activity during activity markets XXXX. sales, second second North and you, $X.XX of quarter. of from Clay. sequentially increase in declined U.S. compared revenue X% incremental Despite a international America quarter breakup, average and levels million sequentially. related than quarter revenues EBITDA flow-through the a consolidated totaled an to second of sequential XX% the Adjusted $XXX grew Revenue industry XX% Thank for improved that increase X% spring a revenue and tougher representing billion, from X%. the XX.X% to Canadian grew XX% offshore

and the and starting cycle right our performance. significant our later are growth we’re content not the nature business margins with markets, to our moving offshore momentum direction While gain the in from of international in

implementing $XX and which in the actions, of million mentioned, XX on annualized next to As Clay have focusing we’re savings months. strategic lead the will approximately our improving within margins business begun

reasons covered initiatives EBITDA and Clay low teens coupled These in the in for consolidated transitory margins lift increase XXXX. with cash unwind stronger quarter in for to for resulted year. outlook and fourth capital, the the quarter. into strong results of million This primary increase our should up our should from fourth set operations in us the a during $XX a later quarter working this which the use begin is

metrics levels do improve not to capital by expect capital normalized While return working to are expected end, of to XXXX. until working year our we mid-year

year exit to levels. X% the expect strong XX% to with to a We QX than revenues higher continue

savings expectations. cost full growth our up anticipate these free normal The fall short expenses continued program. million we us Additionally, to to working top to in likely $XX cause be We year. year and costs cash will prior for levels flow of line cash expect combination cash cash now free flow breakeven the above of related to incremental roughly capital

this which during free XX% us well we of EBITDA. XXXX will leaves flow for exceed positioned anticipate our However, very cash

to Moving results. on segment

Technologies quarter. pipe compared the business in recovery by business or X% from levels softening was markets, market quarter, Wellbore we activity first of $XXX revenue international million Our did disruptions revenue Africa, continued solid segment growth North in strong an a activity during supported of and in The offshore despite and Middle the several in lines. drill an and America due in second growth the to first during quarter million in Revenue and to of had East the the quarter the segment to XX% gains by our particularly increase second compared the increase gains share also generated XXXX. $XX

to million EBITDA which representing rapid the flow differentiated from appropriate or team, if million on strong resulting supply improved technologies. global of XX% uneven obtain able execution to $XX and capitalize pricing $XXX through chain XX.X% buyer improvements more EBITDA in revenue, our was for

also continues improving a sequential in on with Eastern strong Asia than digital its digital cloud as improve solutions XX% sequential through, sales and growing EBITDA earnings major posted very growth from will utilize EBITDA. achieving more and in RigSense to that X.X unit Drilling X.X and release, in Max Hemisphere in realized Drilling which America see and that record a our in spectrum a Our revenues IOC its global activity its platform digit for Monitor Middle Africa, line the highlighted our efficiencies. from flow revenues high double with to into unit from East, rates broad North including declined M/D growth Max revenue the into with the adoption Recorder Electronic entered business of operational demand Kaizen drilling capabilities Optimizer, business Drilling platform, The revenue levels. with offset strong Remote WellData the capitalized The agreement Totco Intelligent

Our a on X%, rotors capture additional and to decrease levels supply the throughput demand and fishing in and a drilling with results U.S. X% share. than Series operation outsized enabled market the reported Eastern the spec growth business capitalize despite Revenues drilling the in the strong in Asia mid-teens significantly driven sales softer Middle of the Downhole for business growth ramp and incremental stators by the markets chain motor, in Tools in Hemisphere. and the product Eastern offset key declined in revenue drilling Western low-single-digits margins, only to XX more activity improving Hemisphere, for enabling its manufacturing tool ample high

runs motor unit. increased improved drilling premium help to the business rig product U.S. the digits margins per double the drive active and Our for sequentially

We activity our typical expect back through continued premium market technologies half the to continued year. increases for uptake this drive the growth and of of seasonal business

drill continued activity market U.S. America in gains and ReedHycalog and share East North bit declines sales and posted into Canada. the business strong the Africa Our Middle offset in

digits, our world’s bit challenging better the business revenue Like in double drives per performance ReedHycalog’s Downhole the leadership, technology of business’s most increased the rig which result formations.

disclosed, previously due developed we litigation currently against under leaching ReedHycalog. certain by related licenses to pursuing bit companies involving As royalties technologies are several

which an one approximately owed of half leaching XXXX, the to During during the licensees, receivables revenues the non-paying accrued by recognized incremental the technology second of represents quarter related quarter million licensing $XX of agreements. company

Clay to performance to ReedHycalog of outsized push we leading been of customers. developing the decades, leading as for driving of the highlighted, has and generation drill the upcoming technology space team generations For our responsible for expect technology. industry edge continue bit continue bit our And

in reported offset a with and control equipment North for Hemisphere solids our Services sequential growing drilling demand incremental and market. offering revenue the Wellsite business than high-single-digit flow product through. growth services Our for demand more strong Improving pressure managed slowing Eastern American

recovery As benefit. gather is continues momentum, to positioned very the this offshore well to business

Recent key growth as disposal Guyana business investments outsized such strategic MPD result investments with technology waste coming in this along markets should in for in quarters. and the in

incrementals. revenues extended Inspection that business where lateral all driving regions, services. a with Our service run Pipe mid-single-digit Inspection and including Tuboscope Coating increasingly operations posted posted improved wells sequential U.S. pipe is growth revenue for in greater is in solid drill the machining hard drill demand pipe threading

services, sales improved revenues drill glass on partially pipe liners sleeves pipe strong the Coating coating offset epoxy first very by to in the lower shipments of higher quarter. relative demand and for reinforced

originally our was We’re strong realizing thermal coating, for introduced low demand geothermal for which TK-XXXTC also conductivity applications.

markets, in are more value gas has operators demand from proprietary While solid been geothermal coating oil our in rock realizing formations. and excellent hot

in maintaining by bottom of has improvements penetration coating harsh XX% these lower which realizing assemblies rates fluid operators in hole to led protects This temperatures, environments.

manufacturing will and revenue second East impact drilling key U.S. improved international Brazil negatively continued softening lower sales offset than the While and declines OCTG more markets, driving the activity Middle and in slightly we of the should including mix. growth believe half, a these modest activity

lower pipe remain defer achieving in orders joints in in the from an the its beginning and its modestly to the Our markets since Drill rigs stock disruption U.S. stacked and tool Eastern operation solid, recovery profitability and is executed business the activity After Grant resulting in bar short first demand of last in highest new for the contractors use of quarter quarter, a business XXXX. exceptional Prideco left Hemisphere bookings, eight first orders. Pipe resulting vendor’s the drilling but offshore declined level from meaningful in years revenue the that highest on

quarter. backlog Looking business the international ahead, a we business fourth positioned the in in anticipate well demand during this the a third slight quarter, revenues to solid decline for increase sizable revenues a markets in from but has and deliver

Wellbore momentum quarter. in second and the that third and our to declines offset in the line activity For U.S., with in segment, expect Technologies in building approximately international is resulting quarter revenue offshore we EBITDA

the X% activity delivering bottoming second in and the We expect than resulting in fourth quarter. to revenue momentum that also XX% higher to segment offshore more offset American is the than North markets building quarter international

segment chain of increase and on quarter Fiber an to in the for first Our XXXX, XL of compared Glass, Solutions second quarter the of million was XXXX. international and $XXX of improving in XX% markets. Completion Production increase an Revenue supply compared generated second progress revenues result the and projects backlog opportunities to in of Systems growth an and the X% quarter of

million $XX project XXXX. $XX quarter mix from up up for Sequential and second the $XX the execution. resulted a quarter from second improved the quarter from sales was and of better first X.X% sales through flow EBITDA or EBITDA XX% of million million of

for the and FIDs While slipped, orders, international have projects orders and related softened from portion and demand to offshore first XX%. of quarter million to compared in certain capital increase an solid, XX% driving backlog equipment international North the bringing $XXX remain up America to our markets have large of offshore

XL during continues sequential in posting third Our its Pipe activity quarter. the Conductor by results over continued XXX% book-to-bill fourth which in solid of led capitalize early intake remains offshore high, Africa. Quoting a Connection recovery of straight strong business robust from should revenues a a the growing with quarter demand in stages increase to on West

a will shipments the decline fourth programs is drilling the for but business in that operation preparing the expect results third in XXXX. quarter We to for significant in significant modestly support in our XL quarter, Systems increase

quarter. second Subsea posted Pipe business in revenue Flexible the sequential increase during Our low-single-digit a

industry in were underlying budgets. well these pipe rapid dynamics, do believe see resulted struggling to bids are for operators’ large not in to a intake rapidly this demand flexible at in excess and Operators we are after was which our came not the We at tenders awarded do that has forward. of been change understand representative fundamentals. projects bookings pricing We time declined, absorbed. multiple when move work growing capacity order While believe being above pricing lost reflects expected not

However, to having capacity their has as process, gone capacity. in demand exceeding be excess flexible there adjust industry market budgets pipe award a slight likely quickly to from delays ample for that operators the are

in that to We’re that in increasingly of in we market sign confident we allow now to depth that during the healthier originated transition us will projects as the improvements our downturn signed from environment. approach projects deliberate operations which meaningful margins realize up being are this a projects much

two Our Process improved projects, posted offset and production for business best operations. partially and progress sequential threefold on Technologies revenue business units by declines midstream quarter Flow in more a Processing our for business the increase small mid-single-digit representing in and unit increased sequentially, years. than business Wellstream the Orders in this bookings APL with the

for reclamation Our booked a Yoke and a Wellstream received Processing Submerged Africa. Swivel destined North monoethylene the in APL an operation and project unit operation Sea a for an order regeneration for for West our order glycol sizable and

expansion uncertainties, cautious for economic somewhat we pipeline the to to of remain our business in operators due margin environment the expect While grow. projects Similar market global Subsea improving result potential to business, XXXX. offshore this meaningful rapidly during continues to

Stimulation higher tubing strong equipment. a aftermarket pumping by slight Our of offset business equipment, deliveries Equipment mostly deliveries realized sales pressure in and sequential decrease revenue with coil Intervention lower of and

declining related business broke North of in completions more straight greater book-to-bill This increase mixture activity quarters than modest favorable the a of sequential America unit in streak EBITDA business six one. of with a

average demand equipment for tubing, the out orders service parts wireline international existing from their services. asset on Demand of only our for markets aftermarket new While for healthy, driving quoting and base, declined spare incremental opportunities led solid as control and pressure focused activity orders and and pushed offshore to increased, which remained companies size X% equipment. coiled

high Our revenue with fiberglass single-digit strong incrementals. posted a in systems business increase

major market North the business’ composite the for manufacturers semiconductor in robust was more included of Softening a FM offset than demand markets, by which sales ducts XXXX-compliant foundry. chip and initial in oil gas chemical the industrial and shipments American fume-and-smoke

believe first fiberglass our The business support. will large of we systems several projects,

operation demand in higher scrubber Additionally, for realized Asia. the systems

American will the While oil strong and remains we demand markets results expect North for half North gas the which have and business unit. softened, drive of Africa, XXXX Middle second in East in robust the the

markets resulting For we from our segment, line conditions are third growing in North second Production with Solutions offset quarter America, will Completions the expect quarter. results softer & offshore in in demand that improving

confidence However, to in year-end. offshore markets ability building achieve the by double-digit low momentum in are us growing segment’s margins EBITDA giving

million or to our was million first the Technologies second or of of sequential Our generated business $XX of work an the in and XX% quarter, $XXX Rig XX% The million the backlog projects. of greater second of equipment higher segment quarter from our revenue of increase and in revenues quarter and an compared compared increase increase $XXX capital revenue aftermarket XXXX. conversion service driven levels by in repair to

Adjusted or EBITDA increased XX.X% sequentially $XX million and $X revenue. of year-over-year $XX to million million

higher mentioned, favorable tower incremental to flow-through mix As wind sales to costs startup a due part Clay and venture. new EBITDA limited our in was related less

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

to installation repeat. quarter $XX first not a due declined million Bookings in sizable that vessel equipment order did for sequentially wind the

solid, we in the lattice and automation cranes and and iron XX Middle roughnecks for boom drives orders for offshore packages were equipment rigs electric East, new our of multiple XX our top booked land rig operators. eight rigs several However, for for

market strong all unmatched electric for niche a on in based zero-emission position capturing market cranes this our growing We’re reliability.

today recent to bankruptcies recovery offshore offshore driving is stack. hard The incentivize development were the order numerous of drilling come weeks. are of After over a the rigs rates activity. that as contracts has key a XX to to drillships, phase mostly have some of pulled additional the drillship Consequently, low-hanging inflect tendering fruit continue available years, by. eight past increasingly number an continue rig customers day are drillships in in higher offshore early the equal been over working of day reactivations drilling announcing scrapped to pace increasing to with underway, rise and robust half to seen out and Expectations we rates north for of in our per $XXX,XXX exploration

confidence not with a Additionally, drillships length the long-term of are contract a XXXX. combined There number availability related warm and that remaining are spoken and and waiting concerns sustainability also recent into for the limited rigs to more stacked capital of with get rig require cold proper terms contract desire. extending completed causing to are be that is operators with to of working to cycle, to or the stacked inflect either will back significantly outfit condition in out yards latest that technologies

scopes As orders. number expect equipment dig we to into see expect to of of of we increasing customers deeper our larger stack capital an amount include growing a help projects the associated opportunities with rigs to reactivate and

rig outlook by our from business is normalization already maintenance is continued promising, reactivations and of the growing drilling While aftermarket the benefiting capital spending contractors.

expect of realize repair bookings part approximately service our and increasing from greater operations deliveries and higher-margin the part the revenues to with sequentially, increased manufacturing year. consecutive spare half sixth grew second for XX% a the we both and of quarter Spare in throughput pace

this and While vessel the award orders our a for piece of outlook we’re in second half tenders lack of wind about the to the Marine the quarter, and business optimistic sequentially in actively are down a during for due business order number of installation Construction of and were beyond. XXXX engaged the

there’s been projects number this have shortfall for of in vessel a decade, sanctioned. part projected that to of out the still capacity Looking the latter

happy to one fear a list to their chief inability adequate construction help concerns, than of the as contract Developers vessel to more wind continue are we operational supply alleviate.

for aftermarket forward, mix in Technologies we into operations the translate our quarters. equipment coming believe segment results our improved Looking will in accelerating our and Rig both capital production an improved and

For to the X% segment with in for range. incremental revenue the the XX% we third expect margins quarter, grow approximately

X% sequential the expect low teen additional to have the with XX% margins. EBITDA segment into year quarter and We the growth fourth to an end

we the of the midpoint modest setting the combination results better in segment improvements million the improving profitability will in a quarter, in even markets stronger international and company performance third implies and quarter and XXXX. offshore in our measures believe during we’re range flows level proactive taking of for to $XXX the guidance improve improvement and consolidated meaningful While EBITDA very fourth in our drive up resulting the us cash our

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

Operator

the Instructions] you. question [Operator to of Our is Bianchi Cowen. from TD first Marc line going Thank come with

open. is line ahead. Please go Your

Marc Bianchi

the wanted There thanks. ask challenges have about different had. first guys Hey have chain a that supply you I been to few ones.

I think very unique that do over broadly probably gives what past speaking, description. why struggled the they’re NOV several their this just has going But see you with we think And quarters? in confidence much so you won’t that forward?

Clay Williams

pandemic, particular, of Well, out the business. particular has of two drove Marc, in and good on we challenge. as foundries as a quarters prepared castings we lot noted made noted, in remarks, forgings, through The accessing our first, I headway, particularly last which been a supply chain

so services that we’re I looking a back new is largest NOV, broad chains, very of for parts qualify there to custom the out us. in we need. But These these reposition cast manufacturer foundries, manufacturers trying products. with stepping that specialized at industrial supply obtained other And are oilfield castings with and foundries portfolio of think all all very [ph]

and have And in for so gaskets for the are [indiscernible] exotic very lines alone, like and within there. steel our in things mill one world to And that instance, Rig like included are instance, Technologies items product polymers, that something XXX,XXX that in we high-performance maybe included that in very buy we that. o-rings produces discrete only out support different

a major for of also instance. purchaser We’re fiberglass

think buy fiber I we a glass million annually. – a buy of lot we

to in better crane there. is, I’m oil out business a supply its aircraft it more other else businesses disruptive at to are know But news economies broadly good more lot shutdown about it. anybody our there. automobiles as pointing shuts world manufacturer the our and during I many There’s look of the reverberations [Technical the on when their did so in and land teams at if coming out you than affecting And within still are industrials, But getting going that managing field down just that Difficulty] aware of. out model the

progress there. making We’re

starting but our as through We’re gave quarter that inventory higher last break this and the of also to and business levels, see we to quarter, our out rise balance logjam sheet incrementals may margins battle turmoil. stronger and this rise to

Marc Bianchi

over That’s Great. to Maybe switching orders. context. helpful Okay.

You was be that some a the you it quantification look quantify or Just help as particularly and optimism international might relates of half, either great. expect would to some what I the year-over-year like maybe basis for offshore. with on growth? book-to-bill could second help hopefully sort

Clay Williams

going to orders stop contracts. we I’m sign landed quantifying aren’t until short of actually

So we’re very backlogs wrapping shy the What we report segments optimistic, for tell seeing that in trends going away that. we’re two both I general are we’re positive. that to from around would is you numbers the but

at quarter approaching processing and and Solutions, you If technologies Technologies coming offshore components the with saw we West accelerating and Completions Sea of Africa. for our gas XXX% & in Process Production second book-to-bill the Flow had orders North the FPSOs business, sells a look which out strong

offshore in which pipe bookings strong Systems on quarter. the XL shipments sells into conductor as saw well, business, the Our strong

book-to-bill so north And of XXX%.

strong. this price, quarter, flexibles, really I down and we’re think Jose outlook but pushing that longer-term our detailed is orders very in slowed

activity whereas offshore so in in up, slow. quarter trending orders we portion And second surprisingly, is in of America, softness given not the the North caps saw

as market, our so. we around or So North which equipment look to frac trends QX, American equipment, mostly to the we continue. down expect two Intervention Group book-to-bill sells Stimulation those And forward, & so in XX% – Equipment

North we the more some strong. we Sea. remains the Again, meaningful some for technologies in Sea meaningful Our that think North very gas to outlook we’re in offshore close work the work sell, landing – processing

the around as markets other well offshore world. As

America respond and here Canada. continue quickly group a North This U.S. to customers that of hair be seen. activity to kind in We of is expect to movements commodity soft. declines the price trigger we’ve They in very and

the a And their maybe later spending. so curtailing there’s in would But not say surprisingly, they’re year. I little upside

demand more continuing along And for we’re international out lower seeing markets, technologies. demand with of emission

turbine technologies, drive e-frac fleets, and frac DGB, forth. direct So so

completion surprise it. solutions upside, production but strong overall, not foreseeing right outlook So possibility international to of the driving But the now offshore backlog. and we’re pretty

what we're out our point high caps contracts accomplish here. to trying want do also here to segment, that in leave I grade is before to And

inflation COVID projects, significant We battling and lot disruption out we're COVID to on that we calls, a – forth. of and but discussed through projects inflation we've perfect so prior long-term protection, still our have have a it's coming a never on and was of

trying for we're continue the to and better push margin, been high plus. better pricing we've for past to doing terms contract So grade that high as backlog – year

by BOPs, offshore handling, mostly quarter expect we to offering. automation flip going slow but then we pipe was quarter, tad, the third And just look We demand systems. that spherical BOPs trains, Turning had orders of had land than to Middle and to offshore characterized electric to be the But a think demand land some in rig also we And continued more East the America. quarter, drives, as strong second iron we for North to RTX mentioned, out rig, should strong. for this Jose NOV’s top our for the is roughnecks, offshore. touch again, ATOM demand When around. continue probably

for Specifically, we're looking two our rigs reactivating. thinking would upgrade that are floating customers about partial at packages

another installation sight vessel. wind We line turbine have of on

would pretty platform that think platform, mentioned that meaningful looking be upgrades QX addition offshore couple I we're and at. Jose of a rig

contract there? particularly floating that's for that as stack floaters is at what's demand work stack more be signings that for rigs – owners that for the Technologies good that the they're a It's XX – helpful? cold much rigs look going potentially a stack think for in offshore [indiscernible] to dynamic NOV. and is at cold out more stacked, given the tightening reactivating been time. particular have opportunity revenue long opportunity all And and cold that NOV’s back been So I mostly I a could meaningful cold segment. and come Rig rigs, the order there think semis you supply Rig that to are work, ships rigs, picture have drill with Is

Marc Bianchi

currents, seem you. first it that all Thank to would Is rate. that could that the that thorough. sort first wrap up, bias if to Maybe for we the Very into… third just sort run I Yes. of a Thank cross quickly you. quarter half mean, quarter, fair above the wrap be maybe of all conclusion with is

Clay Williams

we're I'm we board, inflation with contracts the signed, that we they're heavily until and as that really these significant but again, do, asterisk always pandemic. there across to are And to push the of have Yes, signed. seen again, stay coming not the to up going out out trying pricing

the fight, And I a think outlook is yes, very but dog so it's and our always backdrop is improving bullish.

Marc Bianchi

Great. Thanks so much, Clay.

Clay Williams

Yes.

Operator

next Thank you. And for question. one our moment

Sandler. from line of to next with Our going Luke question the is come Piper Lemoine

Please is line go open. Your ahead.

Clay Williams

you Luke, Luke. there? Hi,

Luke Lemoine

Clay, disproportionately are additional cuts maybe morning. of million was and segment? I could you on mute. cost Good elaborate one to the on $XX sorry, dissuaded Hey,

Clay Williams

this we've No, posting. think talked that you what think last need be is margins a quarter about we little we've really higher I been than our to would tell I

But so and lingering become opportunities in that to of products delivery around the XX% we're of in we some become we've faced, workforce to there, looking given XXX recognized and cost and and here NOV, at other cut XXXX, effort we've like out forth. these we that of closure so significant inflationary efficient since our to reduction at of some efficient. need efficient we probably Worth And take and facilities COVID the had things action trying which our the in headwinds that costs more had of by always impacts more delivery noting more about manufacturer of a and services. the reduced resulted our even

so quarter these, have past us at get where it's becoming So more efficiency. the lot we've while can opportunities harvested of to at to further going looked already, opportunities, and over we on but little take a focus a when looked been the easy we

think wondering couple just impact P&L in a next these do see our limited. pretty but will feel should the over of quarters. I But that or it's Maybe a flow pretty we execute year. of be it's items So to out a confident the more you're we as out flow number – of I there, if dollars. this into actions, going you'll QX say out there's million

Luke Lemoine

trajectory thanks Jose, next. cash the And part the back free in outlining for Okay. of into the and year

flow is catch cash about talked flow that? kind but year, you free how free cash which You working about conversion than think next partly up, greater a after conversion do of normalized capital XX%

Jose Bayardo

It a good question. Luke. is Yes,

revenue it capital. were run from We a working down So as not range to to ago. long hot XX% obviously, the in relates we're working rate mid too running capital

at quarter [ph]. we're This XX.X

through will cash amount XXXX, the we you flattish And But be levels. part unwind As drive right? up terms range end should think EBITDA. really out plus well of effectively we XXXX free also to talked in improve EBITDA play that greater expect the normalized bottom through remarks, not giving to start course flow beyond in I'm a be the flow expect beyond, year. quarters growth that'll improve, the what crest our highly see more line, sort which that of the to than beyond for considerable a on it's of if And perspective. in an probably be I Realistically, in to environment, about next to of rate prepared free levels of to could and in few sorry, from take relative it a back of profitability, during cash end of cash of itself XX% flow the dependent then a we of our bottom number. EBITDA should our QX middle XXXX, conversion to guidance because and XX% will continue to drive more

helps little bit least at that frame a hopefully it So better.

Luke Lemoine

so much. Thanks definitely. Yes,

Jose Bayardo

Luke. Thanks,

Operator

next Thank question. And you. moment one for our

is Raymond come with the from James. Our Jim going line next of to Lyson question

go open. Your line Please is ahead.

Jim Rollyson

morning, guys. Good

Clay Williams

morning, Jim. Good

Jose Bayardo

Good morning, Jim.

Jim Rollyson

talk lot been and quarter more this world this talk has over And and seeing the And kind of of international from most the what's of supports it excited from the that of around you of a quarters, but up love theme what comment. out and offshore what that fly and into a customers what quarter, you're duration seeing for handful this standpoint. to there's all last would you particularly kind your folks, of duration to about thoughts kind of of the lot – a get are moving that, strength all you this? gets maybe maybe I kind right the just has There obviously since of been discussion been a

Clay Williams

That's a Jim. great question,

aggressive to behind the that I'm think going pretty space. since forward the offshore very don't excitement. assets drilling the big three IOCs any I frankly, specifically. others fields they that and We're deep of provide I And their different lot are view drilling absent, notably, been and And What's First and need in are excited. demand seeing NOCs, a rising you've – XXXX. to the campaigns. develop and broadly all about assets offshore that's for pretty water generating heard drilling both than has We're offshore see with move from think

lot but we world. through inflection XXXX. feel cost rationalization, just that, so to activity we're not been And What's I about where back And even interesting we mean, NOV, like were not in we're moving an quite the still point. here a there's today, elsewhere around of at levels

cycle lot to EMP to add going a color. lot points little demand that's that think also so I more with room of to longevity rising And and a I'm of it. a run a for going long customers to to have

more, And wave. more think focused. you're brownfield sort FIDs I our to as I of lot a I folks offshore parts Greenfield this I've part though, to little – think million point there's lot a two going tieback be following sort offering. XXXX, Brownfield think to the The a estimates greenfield as that see of through seen early going is both fits developments which FIDs. XXX well XXX more product billion in of and more

help on that going cusp of looking prepared we're is things But like situation, really improve results. demand. I feel NOV are so And our the meet of to at kind to that really three

carve think demand, but based We've that's help it's prices, I rising leverage. that. resumption land continue out with building expansion to activity The on margin is think to to back NOV. activity of first going and raised international the I bring is, hard of going the offshore leverage been on pricing pricing to And

normal probably to earlier, we're the is then And some Secondly, grade to XXXX. contracts. thirdly, burn contracts margin continuing vendors, I the thing, our our just in all kind get to these products help margin of turmoil this that's I biggest to normal chain and back off lower with backlog on is of going think and continue high us. higher proceed is This into going sort mentioned those behind And supply when lead supply getting chain more of of getting from normalization times lot. lead more and our times a to we

in in we've land if wire about kind the But investments pipe. North talked And we've last round demand Sea zero fracking offering, agitators and of eFrac our equipment performance, which new the rig performing drilling And for low East call technology, drop it's motors, and drill with technologies. hold of driving continued on better offshore emissions today with our pipe agitators adoption spent pools ideal decade on Middle operators picture, in you tripping the better on the floor. is out pressure which on the investing mechanical a lot [indiscernible] operators down automation has robot arms for rig

safety of cost of is places all which are products, rigs improve their North they're the and of operations drilling edge-to-cloud, things operations. to occurring And digital of condition-based monitoring. America, it's because which most then in a that efficiency upgrade our our These platform, didn't And impactful and all Max in and offshore low-efficiency – outside really the rigs. still most high in AC environment impactful land lots they're drilling

this pulling at bring, technologies at looking drive portfolio and And we that and oilfield are drilling can as better so service these way of looking They're operators are efficiency they their that. this programs customers. those at looking in – a to through

and on our customers are Historically, the raise in to to not with entrants spending new and though pledging force think technologies, pushed and promoted operators these to oilfield service and sponsored going technologies. come they've even new capital are So the they've incumbents discipline new issue. I

several the think it's a next that's about. I for good I'm excited so for and NOV And what years, setup

Jim Rollyson

a improved some issues kind going those next of been over between additional are pricing And last opportunity do you perspective, uptake – just and you of from think do order consolidated the think Excellent. you versus that different there, from do be would that guys get margin of savings you unwinding. working categories quarters. like basis? we The But kind Obviously, there? a towards you this an bucket kind if margins cost momentum where margins margins how push quarter of we the how better should forward, get into with kind of higher, it about a normalized perspective. have building do certainly your And four on creeping – as where

Clay Williams

made good We in progress QX. Yes.

on will I calls coming to XX.X%. certainly but low our higher. it by margins for. think go. outlook XXX consolidated to it by points I squarely this continue back, push teens in up but to a But Jose with mentioned, XXXX, think, on And I basis, the in ways into get basis XXXX good quarter, of what up a end mid-teens, year-end. we think sort think then we the is has of then Wellbore made a progress Difficulty] we're offshore rig [Technical bit, And backed

Jim Rollyson

Clay. answers, the for Thanks Great.

Clay Williams

bet. You Jim. Thanks,

Operator

from And you. Stifel. moment Thank the our line with next comes our Stephen one Gengaro question question. of And for next

is Your open. Please line ahead. go

Stephen Gengaro

Good everybody. Thanks. morning

Clay Williams

morning, Stephen. Good

Stephen Gengaro

year obviously, think what's How a margin last I over to been absorption? prior of flow-through is what you've expansion Or pieces it plus. that and better up unrealizing in year backlog backlog, what versus within When the backlog? at the is on over margin the overhead question. especially, so is coming – the – last from the pricing I'm follow Rig getting in first Tech it we just the about different the think lot there's is kind the of just better from

Clay Williams

stable. Yes. category. say by margins we've They have product been lot and been I steady In pretty Rig vary a Tech, – would

the are they're sell others. we more competitive more products than frankly, of – just that Some

make proprietary we investing is ago, where what the we time been we iron. not smart a and have Difficulty] need long we recognized best so we've And in in to technology, we tend just to know, do [Technical iron,

we to so And make smarter. our continue iron

particularly been in demand again, offshore, for Rig's think there's think equipment. we're So back comes I And stable. that capital as optimistic the I – pretty

potential for improve. good to I that think there's

we executing Asian we've perfect shipyards, of We for had But the the projects in plants year that higher backlog, and get contract. portion far relying go Completions some the inflation never are as been been in a And has Malaysia you that on two, we've then a long-term, and protection discussed in that turmoil the out any since Production were supply & were what lot – you of better if margins. or that Asian Solutions, result that and CAPS disrupted or the challenged. back sort more long-cycle it, chain we where we CAPS cost booking some Indonesia – headwinds. Asian – the low we for got came in inflation, of learned challenged a projects and and all of of margins

or And so underway for CAPS there high-grading distinct of process is of that's, a the backlog. And backlog. sort call so it, two-thirds that

The quick other turn. – is one

So in long. the reside it very doesn't

so last had ability the reprice in environment And the we've the inflationary years. couple of sort that we've to in for of been

And so that's already – that's already I'd say recovered.

Stephen Gengaro

my much toward work year, mean your positive. just e-fleets to you that kind on had particularly Thanks. now and of that order are next products? transition CAPS people guys I next you other where there? flow of has as year think And Patterson you merger, But sort on stands and do the it right seeing around with side, the impact then question not on sort transition but think the was with I equipment some the of

Clay Williams

fleets of the pressure and the continue. the pumping Tier and is expectation diesel our the emissions the pricing fleet the hear work kind from that has is continuing low of other Yes. at and will customers scale, been that ones we on end there Yes. most utilization to pressure X are What that of are that

out Now Difficulty] [Technical as utilization. that eFrac point I fleets, fleet would contracts the they're eFrac the of the part reason that of many

in are to out sort there's well X technologies as interest of a answer of DGB direct driving reduce question, Tier to lot with continued and along emissions adoption which your fleets drive of turbine electric of interest both But there. technologies, that

about So for emission fleets. quarter. to despite that the equipment area the a few tick down about operators in in orders talk continuing low in these second We're

surprise to year by space the the emissions. whole pressure pressed But of and the pumping being planned with half in is E&P upside that some so customers continues be overall, they're into I could contribution. second What their target think XXXX. also we reducing And hear that

think that keep will I So this. in part

because greenhouse equipment very in sort kind from of of the emissions that a e-fleet power for down this sort brand-new capital step their enables substituting comment by trigger pumpers a pumpers pumps higher – have large gas which eFrac – we a to And to footprint pull smaller one on on this expenditure is frac unit-by-unit we and introduced a pressure and rather on than on basis. eFrac also designed and of out product last conventional pumps a – benefit

Jose Bayardo

pent-up be of quoting sort the strong prepared think to a as that remarks a still But pressure little been add even continued There's Stephen, pumping overhauls, American lot it is has bit, marketplace for part for we has the due to Hey demand Clay about run also to of the mentioned North replacements hard. activity major equipment refurbishments. in what of about. extremely commented really I'd been has within and that

in plays Now that relates pretty time to this that North I'm as seeing pretty will America it be pull short-lived demand. back this tell how we're will optimistic will out, but

into For a a of that we the there lot was products of and services because that there – excess sell space capacity. lot not not is

of see the start even in white a in, of a Tier But little bit sort confidence for tick of space refurbishments the fleets. and comes in orders a have traditional and flowing back a of pumpers I and fleets activity back the pullback. little X bit and repairs the DGB will if think Now we up the pretty quickly

Clay Williams

here the question? you Michelle, you go to can Steve, and next

Operator

[Operator Gruber come Citigroup. with from question the question Instructions] last line and of will Scott Our next

open. is ahead. Please line Your go

Scott Gruber

me in. good morning. Thanks Yes, squeezing for

Clay Williams

Good morning, Scott.

Scott Gruber

made comment sure I you I thought mid-teens heard want an correct? comment, you point? you in I just Clay, I it's XXXX to could think on or that want to you make a to margin the follow get earlier. up Did late that important

Clay Williams

of that kind be and year in think in we teens continue this We up QX XXXX. push to Yes, did. low we'll

Scott Gruber

capital then Is capital percent Jose, mentioned revenues level level should you think mid think a back normalized And normalized of we that a for in I getting you. XXXX? XX%. the as to about last was around working the of of terms working in target Got

Clay Williams

significantly pretty it's months Yes. six moved and the up were first of We the XX.X% in QX, year. through

land the so as a on building you we've forth. we that push and mid-XX% pointed of XX% so kind would outlook, Jose that in out But So can say range. earlier, future range? demonstrated depends Mike high in lot backlogs

Jose Bayardo

normal mid- is XXs we Yes, to to going of range I and be should between be, think is where upper the Scott. mid-XXs sort that

due a As the right a to in the would unleashed also, [Technical depend by Clay we're touched fact environment on that normally seen just supply Yet, just we're now. anticipating on, certain it's got sort related fourth slightly like environment quarter. we to – extent, in going the be compounded But where of backdrop to cork market the at chain. Difficulty] that the just it's the we've to

to you But that large up end environment, tick mid- normalized can we're that range. you'd up. more towards deliveries, a for when of see So be lower in more gearing the

of mid- to percentage be it. a should about as capital working of a how will sort I way but to that sort flow, upper in It certainly run So in think revenue terms ebb think of range of rate. XX% and that's good we

Scott Gruber

Appreciate you good it. Got provides framework. it. That

Clay Williams

Scott. Thanks,

Operator

to remarks. further Chairman I for Clay conclude And you. the does over like Williams conference question-and-answer And CEO, any this to session. and Thank the turn back would

Clay Williams

nice in you, Thank all third a results you us October. forward Thank you joining look to our day. morning, updating and hope I has quarter Michelle. this on for we everyone

Operator

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

You may disconnect. now

NOV (NOV) 27 Jul 232023 Q2 Earnings call transcript