NOV - Earnings call transcript Q3 2024

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

Operator

Thank you for standing by. Welcome to the NOV Inc.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Amie D’Ambrosio, Director of Investor Relations. Please go ahead.

Amie D’Ambrosio

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

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

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

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

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

over Now to let the me turn call Clay.

Clay Williams

$X.XX X% and Consolidated tied were Strong to improved per cash in the equipment third flow $X.XX activity, costs XXXX, X% quarter billion. Rising capital certain significantly but compared quarter Thank sequentially year-over-year, in and XXXX. EBITDA The result. revenues a revenues backlog, products pipe deliver X% as you, improved up margins $XXX long-cycle both earnings third Amie’. per operational consolidated of and share diluted GAAP of NOV million, to of quarter quarter resulting shorter-cycle by revenues to offset XXXX to and services XX.X%, of and higher up year-over-year helped improved execution to in higher fully the up margins lower down of drill compared in and to $X.X share, declines moved the XXXX posted enabled improved efficiency. to helped third modestly sequentially EBITDA up margin and second compared year-over-year. of about company the

our Chinese saw macro demand, capacity about and excess quarter concerned non-OPEC the pressuring third global growing environment. customers commodity increasingly oil The potential oversupply are Sliding prices. OPEC

of demand and long-term a for operators the service incrementally the gas. our over remain by and long-term drive is oil gas companies we near-term natural in becoming on cautious decisions. Despite As more believe in more oil and forecast these rise economic demand emerging and, E&P decade, particular, for oil result, growth are spending United their to We AI-driven headwinds, electricity gas bullish in the next States view is this inevitably sharply continued given or announcements psi stronger and global Mexico, demand Gulf as will development and shared XX,XXX a world. Final customers development in the Suriname high-pressure announcements projects FIDs, a reservoir facilities offshore in by feat projects around gas Recent possible of profitable the basins of equipment. the XXk emerging the forward. deepwater NOV's of are by made leading East. their investment Kaskida's or in Other Middle in include additional to evidenced move and shale continuing development an development greenfield include unconventional decisions,

of technology. term of unique investments long the for international basins unconventional the the equipment us the customers' in offshore give confidence both Our will shale substantial in development space capital and these recovery require commitments and and continued NOV's over

We the has targeting with foot and and the a productivity important of Middle cost even maturing. implications to XX X entrepreneurs fields than XX,XXX collapsed. survive These were million Eastern didn't per there became certainly shale And which like of North now source XXXX investments low unconventional American supply high share that. impose time, significant day. Instead rising to was inventory ceded marginal play year. basins a market shale price. quota expected stimulation supply higher of the Tier are American a the much OPEC's U.S. feet OPEC techniques this the of war astonishing time source, the declined fracture oil. North per the by oil onshore and and losing share drilling additional exactly but share, since XX-year notably, out barrel States. offshore oil be barrels OPEC's cost we'll horizontal share employing XXXX It At similarly Shale restrictions and production month, of would market crippled back built XX,XXX gained of oil damage prices. several take hydraulic laterals. Hydraulic decision many just in locations, day meeting. today been international rates and to on I X market doubled rocks as have America victims this doubled, mark gains. American the and footage pursuit anniversary and over survival. question shale the million to United from in lengths Unconventional has more producers. oil led penetration has of novel posted regarded drilled and next barrels drilling horizontal in to than share The can further the industry nearly remaining than down of required per North day astounding, thrived lower had to relentless are U.S. have on sustained drilling wells note stimulation feet Next shale because rest marginal complex from to for in from work X,XXX feet shale was to to years, for make there XX,XXX fracture last rocketed expensive market efficiency with U.S. shale. lateral of of while and innovation increasing that for prompted North many and doubled Shale there's XX costs oil This fewer oil treatment global shale marginal application decline shale debate years. that no per the it NOV patch collateral

be capital rising. basin-wide, are shale higher pressures decline demanding producers to NGL is it more to leading gas a that to forecasts Investors of shale producers. gravity magnified calling decelerating them, cuts recent amongst widespread result. next a and As oil will ago. consolidation far Many discipline was U.S. capital were API ratios, returned as for by widespread capital decade growth Cost than year are production

calendars. We much projects, think call think view like be exploration days growth and offshore are peak of to the pushed development breakevens Africa drilling of along demand chain time global sources XX% global up examples. the not the now the contract to certainly white put places is standardization in $XXX as And of flattening several exploration contractor investments early FPSOs production offshore U.S. delivery South must the customers rate and many post-COVID and refer space in to production the and the I billion and delayed lowered out. our E&Ps $XX international Mexico customers some in the space it have from other oil and contractor a supply recovered cooling way, believe growth have Reengineering production past decade Gulf around is that effect of and Eastern less, U.S. I responsible of uncontracted Deepwater noted and earlier, shipyards growth have revolution. urgency most deepwater first of supply A into filled sanctioning rigs, XXXX oil COVID. This slow to increased diminished is starting a XXXX perspective, XXXX months. This XXXX. I'm to FIDs is kit to for and barrel to Mediterranean orders customers To less last it our has producers over their prompting shale the was average. growth, the or and unrestrained Wilcox. than of have at the FIDs and America and the as close year tightened, do or were plans in least white has than While quoted shale I and more phenomenon it good day of changing plateauing. is for the rising and our the a drilling West as oil since to out offshore the spending offshore. But many threat crowded their in the of for FPSOs investments these dates of ready resumption of U.S. drilling XX% it or in the for of

one weeks of planned of were ago by not decision delay, our X a delay we the cancel, informed customers of offshore rigs. but upgrade to a of example, For couple

X about like booked gen periods another know invest some While their X near-term others slowing in upgrades to to to expenditures. hook-load probably convert to white thinking we generation. offshore of Xth expect their that are customer space, We rigs to drillships these continue

and the demand as most foresee think accelerates FPSO the activity I higher in XXXX beyond backside on chain supply catch-up. of drilling

our well is demand drilling rigs the grow continuing market demand grow. offshore demand the decline equipment to modestly contrast for the and and offshore aftermarket then drilling early for to early as that again we equipment, So into drilling we as equipment second see to see for for expectation support XXXX. In for production spares in half offshore XXXX make of

other composite processing enable in decade, past piping for swivel and offset key Preliminarily, pump demand and stacks, systems, flexible mooring technologies myriad systems year. systems, for able deepwater of kit pipe, sliding production added rig fully profitable and production. equipment demand the the seawater turret we Over and drilling coming gas a to be products have offloading rising believe we to will offshore

quarter numbers third provide Our good evidence.

offshore quarter, to Total to $XXX to time third offshore year-to-date. for for Equipment Solid X% a bringing last of year. XXX% third compared deepwater production-related Equipment for demand the million eclipsed Energy billion for quarter first for the $X Backlog segment. of segment book-to-bill increase strong book-to-bill Energy drive ever. NOV's a revenues developments to in of led the pipe equipment for posted orders bookings XXX% continued flexible the

upgrades vessels. on by pumps, wind and margin lower improved XXX partially saw quarter EBITDA mixers revenues and to pipe, from execution flexible offset around its The processing improved installation segment to equipment third rig points revenues related stimulation offshore orders. its XXk The equipment capital year-over-year basis higher deepwater production turbine

sharply segment's Equipment offshore conductor as lower shipments to to the the consolidated X% growth Energy revenue be pipe overall despite tend revenues drill fell NOV's and for both which Energy segment, connection declined pipe volatile Services of within However, due Products & offshore sales, quarter-to-quarter. year-over-year

drill that are news offshore good is offshore and we backlog for saw offshore connections in the sequentially increase in orders quarter the to segment. pipe improved significant expected the a lead to for pipe, fourth up results for conductor XX% However, strong our

equipment weaker production drilling So systems we the summarize, next for continue demand demand to few offshore for while foresee quarters, for to will we modestly believe grow.

oil companies and rocks. embracing technologies unconventional lines. National markets. American opportunities multiple applying Arabia, to North land these by in certain shale opportunity NOV international an producers scale. all Emirates pursuing Saudi areas United to Arab Turning product at important This are is pioneered unconventional development across are for Argentina,

First, the this preceded technology to drilling rigs will better modern high-pressure of shale build-out AC first fleet revolution require rig American setbacks mud fit-for-purpose was by systems. converted The was and with North rigs. a high as drilling

drill-outs Second, plug required for specialized tools for scale. hydraulic fracturing at and tubing coiled were

category growing friction Third, vibration every are like for the innovations Vaca formation in with laterals almost push point drilling the tools and growth X places capacity downhole or and burst shale pipe higher torque torsional or port completion plugs, and in along Jafurah mentioned to more. NOV NOV. out and required And greater to the tools, mitigation sliding I in valves, unconventional Muerta future now Field miles activity the reduction required. leads being fourth, motors, were toe sleeves, better other drill subs bits, tools

offset solid example, has Middle quarter, Series first again, drilling For completed into led this Equipment, past bits, East. by growth the pipe motor, strong Middle Middle support equipment and rig year-over-year chokes new pipe completion by to Texas, posted Products growth run demand composite XX and for land international East. Energy Energy AC declines East. PDC in in the unconventional markets, in more international technology sales with gas processing drill saw in year-over-year systems tools for & mid-single-digit that and developments customers West our modest its dazzled the Services

Activity to year. The taking prices low continues this good at that activity. toll points as land. Finally, gains, efficiency the NOV to owing are short-cycle very discipline, much time, America North oil price all is led to don't the over past products and technologies set market subdued everything consolidation, outperform capital records be a on material the from we've reduction technologies end for new introduced wells. recaptured through NOV's drilling frankly, #X gas uncertainty to North see overall activity improvement bits, activity horizontal for vibration declines And as continue to in we tools, few our the to ever of torsional they we've to motors, we news technically years. that position turning PDC continue friction these longer customers America, mitigation drill share better have the and gains tools, performance where

key gains. last Composite this a digital cycle products are X% eFrac Our Products our year-over-year posted performance. The mud segment plant the of projects the pushed Services robotics to seeing the sales to in absence pump capital American consolidation these shipments pipe North with steady of sale increase acquisition of upgrades to improve restart as in despite technologies. submersible market demand year. of by customers, we increase contributed and quarter equipment Equipment and third pumpers Strong for North during now. Energy revenues the Energy NOV's major & declined innovate, high our quarter our American posted since drilling helped modest is strong quarter, improvements the during capacity revenues to out, Idea a third extract including these market share results in third for E&P new many of of business tools along but for its pull electrical build-out projects a the

differentiator and For enabled digital company XX-plus efficiency and are of for instrumentation for example, major production to our this data rig by better our and services our cloud drilling the technology, exploration secured Texas-based quarter. platform proprietary edge a Chosen MAX operation. capabilities a our during fleet digital driving acquisition service

industry's trusted We the to are supplier a leading operators.

Our operational improved optimizing be structure. that cost on quarter. target the achieving exit and challenging. we will remain driving in efficiency things control, profitability acknowledge We our focused XXXX we Nevertheless, the margin our can

grateful sum, the to can the to is of on business extraordinary to committed we our To I'm they continue dynamics path and current deliver reaching portfolio efficiency. multiyear listening, to our evolving grow and confident elongates bit. In to profitably strong financial are upcycle. you. Jose? all employees NOV drive are thank performance. NOV our and if those return well goals positioned We who margin the market technology innovative I'm navigate even a capitalize confident will improving

Jose Bayardo

Thank Overall, Clay. NOV. headwinds, a despite QX few you, a for emerging was solid quarter

$XXX balance long-term sheet, profitability a from a are framework, to that with $XXX quarter dividend, will margin higher efforts Capital drilling totaled make efficiencies our $XXX interest cash expect $XXX of the of million, working our the million least activity beyond businesses. Cash NOV's repurchased to generated cash equipment our modest steadily typical results target American $XXX priorities return excess to to our million improved of shareholders free $XX shares third paid quarter backlog quality profitability, top we of free compared us are increase than EBITDA year. We flow million, shareholders. quarter. strong our levels with revenue of shareholders cash at our and increasing the consolidated our XX free capital cash on flow XX.X% our to more our declining of backlog, million to to and points effect capital in EBITDA fourth along North To and healthy As million our on for million to XX improve X% $XX flow margins incremental our due has improving operational totaled operations improved Clay comfortably returning flow. higher flow, and improving of in shorter-cycle maintain a our of recap a and in put the investments XX% expenditures capital third capital mentioned, XXXX. Year-to-date, return to project best the year-over-year in converting The resulting basis sales. The of offset million NOV of of efficiencies.

have free and X maintain flow sheet organic our more leverage opportunities and asset invest balance in below below a debt pursue net growth ratio cash opportunistic we debt with base, Our ample to gross is M&A. well condition leverage in the than optimal ratio X,

and rifle-shot opportunities early strategic acquisition we can with Fortress in on existing acquisition be the valuations. is Consistent this objectives October, technology-focused accelerate that at of completed strategy, compelling Downhole Tools. focused Our strategy smaller that completed

Fortress conventional proven team, that recycling and and unique patented is to welcome our developed to excited reduced tools technology disposable great waste the field completion which existing to program were redressable significantly tools. offers a we a setting downtime run family. tool setting compared NOV reliability, by less and and complements business The portfolio

least Our as expenditures excess net investments, Through cash shareholders returned operations, a including positioned have XX% our free return we'll XX, of free early capital XXXX million least year, from XXXX, acquisitions, dividend of annually. and our flow we $XX dividends well to supplemental flow, flow we meet repurchases and free excess $XXX that this capital in threshold of defined achieve objective. million September of for to us XX% the we for invested returned acquisitions less at accounts framework meaning cash year. If our base flow, our at return this do which cash calls cash a other leaving XX% us to not share to in the for excess to pay during return

results. Moving to on segment

offset due recent contributions in of lower segment to million acquisition. to partially Products sales the sales, revenues third the by our a in of third pipe XXXX. drill decline Energy & effect the XX.X% of to generated $X X% a decreased drilling billion quarter, U.S. $XXX EBITDA or Our quarter year-over-year decrease Services of million from activity, compared $XX primarily and Lift Artificial

sales services sales streams: mix reminder, from quarter equipment. our and and bits and and include from and shorter XX% generates sales. Revenue and a the tools, our consumable Energy revenue service lift service XX% for solids rentals, Products and drill analytics rentals, segment artificial capital segment and and services, drilling was products control services XX% lived As equipment and product income tubular of rentals inspection X The capital of sales optimization data services, drilling downhole coating rentals equipment. acquisition, Services

North revenue quarter, third revenue the Lift stream. businesses new in introductions the offsetting year-over-year American drilling technology in U.S. the have that on During the than weighted more Artificial from gains typically new a increased from rental more our contribution single effect share decline NOV and and service from would XX% low this business market digits activity with

shale managed Excluding the and within composite upper equipment. flat and the and the segment's Products teens pipe the Services sales connections, pipe, service year-over-year sharp revenues pressure Artificial tanks, equipment conductor drilling from of include equipment Sales Lift pipe conductor Energy contribution to connections. and rentals business, primarily shakers year-over-year. Capital were in fell drill from our segment due pipe decline in capital drill the pipe shipments and

backlog mentioned, year-over-year. not in over for decreased XXXX for operations, managed oil control in sales quarter due operation Clay and the the mid-single-digit in equipment percent quarter. In repeat. Revenue capital did shipments tanks in improve industrial solid from to in we upper markets. the handling by used partially from As which first The products sales, the shipments drill improved drilling year, fiberglass composite to compared of segment product and quarter, sales pipe in shorter to Eastern with a fuel third pickup expect connection into deliveries the range that equipment the realized Hemisphere, businesses, lower time but into lived of increase the deliveries orders allowing in strong XXXX for third completion deliveries and markets, pipe increase drilling equipment and include its fourth our a significantly in conductor gas in segment's equipment composite other the increased offset pressure and teens and an strong consumable the and operation in a in of declined pipe year-over-year

drilling acquisition packages, digits liners sales reinforced of low by our bit of Asia. offset tool in business, the into Artificial tubular a partially glass single Lift sales only and was Africa Excluding epoxy drill fewer significant increase and revenue down with

to segment XXXX to with but million for and digits Products the For Energy fourth and down we of when Services compared quarter, fourth between the million. quarter up be EBITDA sequentially expect X% $XXX revenues our between X% and mid-single $XXX

quality to of sales, $X.XXX EBITDA incremental or the our to Equipment or as straight margins result improvement. Revenue billion, to XX% the X well flow-through backlog increase quarters for incremental of of million and Energy robust last to was several of XXXX. the year-over-year segment. $XXX improved an is quarter which of a a quarters improve X% over compared year-over-year third of margin XXXX $XX third margin XXX%. The of segment's improving segment over helped $XX representing year-over-year million Moving operational progression of the quarter all achieve efficiencies, efforts million the the as

quarter, weighing of our for segment's mid-single XXXX. mostly as for sales segment's higher the for shipments During unchanged the constraints revenues, revenue, accounted of space XX% in led the offshore spending. the capital from some and more account Clay digits year-over-year in third large of affect remaining of aftermarket their second part the the the revenue from sales, XX% production-related Aftermarket spare and third approximately part quarter service of the of XXXX quarter well many third is sales amount unchanged aftermarket will for equipment in customers, which which reactivation on that to heavily by equipment projects. Due higher approximately white recertification drilling of improved the upgrade the in XX% quarter described, as revenue majority accounted of the XXXX. Drilling of contractor service

enhance expect increase to to efficiencies take and complete for their this upgrades customers We will capabilities work, many safety. higher-end potential of downtime advantage that improve

mid-teens revenues and into XXXX early with segment, the of the improved demand advanced our stimulation fewer third of XXXX. for sales of Clay year. Aftermarket with recovery Energy more intervention to portion a offshore the offsetting aftermarket and for decline revenue processing solid of compared and improved second tubing drives in quarter our the improved to delivery intervention operate as and revenues North revenues by single-digit vessel of equipment in However, in due business, in spares pole third gas mid-single of our stimulation, the of were eFrac tubing and essentially Equipment low drilling drilling, to the decline horsepower large conventional than along equipment increased of modest thermally from the tandem will products customers support to higher pumps. for in anticipated of spares with intervention capital strings to equipment offshore deliveries we contracting divestiture before flat America. Switching that stimulation the in pumps quarter projects. Sales the led growth expect the our equipment days, pumps XX,XXX discussed, allow coiled in coiled compared the for equipment wind shipments in the XXXX, in part year-over-year, Normalizing a in X digits range subsea Power Eastern in strong installation systems Pod with Hemisphere processed our and wireline customers half of and

of equipment. Sales we high-spec and on equipment year-over-year projects, an for psi we of upgrade on in that the operate progress our booked replace the customers to with assets intensity frac lower efficiently a fuel delivered continue can of pumping pressure dual to increase environment as pumps rigs equipment spec XX,XXX also cost land ownership greater continues subsea XX% including year total a improved this Arabia. worn-out more drillship earlier are Saudi ultra-deepwater equipment building strain an frac the in We drilling where from higher few north have and

completion a lay translating more nearing in $X.X ramp wind over and the backlog years. for highest a several projects recently realized while vessel projects was up. Orders slowly billion, to marine operation turbine revenue installation due sizable $XXX book-to-bill cable in of construction booked crane decline X Ending into XXX%. level and million, totaled Our orders

X XXXX. Demand between wireline systems equipment orders and generation technology intervention from technology our remains Hemisphere white to robotic equipment repeat include The mentioned, Eastern for North larger latest stimulation rigs. prime how as structural of in market projects upgrades soft customer. we take solid, and a space and drillships for drilling for examples monitoring booked equipment enhancements Our Clay tubing sixth-generation rig And booked equipment customers load controls remains of Xth the coiled the into business convert while associated advantage America. and path additional expect orders in and in are to

However, express worn-out continue pumping replace to the to customers kick tires desire and assets. pressure

production-related It unit in As equipment Clay also Marine had achieving a cranes, will another for XX the needed backlog illustrates demand drove leading-edge The operation fourth has already offshore Construction with that another demand book-to-bill bookings order ensure quarter, intake high quarter. Strength strong for flexible mentioned, quarter our subsea large record during operation pipe it leadership order a third greater in X received high and a delivers the the heat and providing reflecting for compensation and strong all our production crane booked business. very active offshore activities. also NOV's electric in technologies. than

for XXXX FIDs. do and additional continues due uncertainty turbine we project on we on solid demand in expect current for wind meaningfully While quarter. and in the timing the of operation than for inter-array wind fourth will cable again to resilient quarters. giving greater we the quoting expectations vessels the in lay development term to based The developments, remained be X book-to-bill Overall, higher near X within expect demand FIDs offshore installation book see X XXXX realize that us opportunities size emerge and and activity future to of the the segment, nor turbines quarter to regarding potential do see in a confidence one not a third in will an used next order book we did and expect vessel order XXXX to order that delayed

to processing now slightly flat repeat gas $XXX to million due in Energy stimulation improvement in that, on quarter segment than up in seasonal the sequentially the lower will Equipment between that revenues resulting and be more EBITDA in not call usual to that We equipment a $XXX we'll million. With fourth and of questions. strong realize will slightly with expect progress the projects, deliveries muted revenues quarter open third to the

Operator

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

James Rollyson

added flow just from how see peers be obviously a the orders year like that seems backlog that flexible order color everyone subsea heard you very backlog across going part they've seems obviously, and had in into of on the obviously little mentioned important the addition this perspective. since to And good fourth an quarter. we've from like Maybe other just your guys that You the into business? going quarter board next

Clay Williams

In These a of remarks, connect sort construction to lot vessels. takes around in a rigid Jim. that. pipe. sort chain to time vessel supply I And wellheads the with subset flexible compete used to deepwater and rigid spoke which constraints This pipe, of they more bet, to You of my emerging weld FPSOs. pipes elongation prepared is FPSO are

So a what seen profitability lot offshore of again, well are, another competitors more we've know our install strong have demand. evidence and field developments. that good seen that piece that really as to point deepwater really they quickly. And I growth is in

And what's all fueling so this. that's

And deepwater -- push I into it's and our the get to so -- but emerging think, of part because I for but are that out But know really supply there's can't around developments. interesting sort are beyond. to constraint XXXX for kit we required certain deliveries I speak of competitors, starting chain

James Rollyson

kind and guys helpful. rates at last of out kind you have just kind that maybe some versus things been changes ramping take 'XX And That's ago? realize are kind might revenue get this have going growth half high X are the because back X, as see next year maybe have couple other back you last years pretty maybe how X today? you next you here the X, you looking different the over that all year, up the look deepwater X you're that longer-term still this just as kind and yet, a mentioned picture, months next when of since where months, moving And bigger about the the quarter? I you like of evolved time of into projects stuff short-cycle thinking of given that how but X, level, back just some to trajectory about I you of of happened parts sound guidance And stretched thinking at the X if of underlying how step bullish think you kind of you in on, a and isn't you're

Clay Williams

good and we here think, we've become tell we challenged you emerging a press and in put really each incrementally in got with I And look, XXXX. remarks momentum, that together plans But commodity I clearly prepared a noted XXXX engaged globally. our our one of coming of It's more our good nevertheless, is, business what into around in release as It's our we're as price it's and Yes. question. growth would internally some economic lot concerns units.

developed row a in increased year increased kit deepwater. being the those fourth the continue. lot that our the backlog marked of into XXXX and We selling that and that are production of all think in flexible has a materially more will I projects pipe like think

get to activity the But believe contract -- beyond, that are -- our emerging drillers our as view offshore going I to amongst catches up. share and in is the going And headwinds Some be offshore of XXXX to we NOV contract they supply those serves. back rest think drilling chain that we growth limited.

a And generate think, to in growth good XXXX. for so some to NOV, backdrop that's I revenue -- pretty

throughout for when in of cause LNG the that's as last wildcards entered that will year. One think we that bid, as slowing North capacity well. if think us certainly gas expands was, we I been think, can But in think I call too, about, we expected, think catch than for gas helpful optimism on frankly, and America, and the takeaway talked I a XXXX XXXX, I going more that's the more which there's -- I here be here, what's likely

whole, bullish kind gas for now deepwater of first, XXXX into profitable on think, is But economic prices and a I wildcard. on bullish on with a LNG, continued natural selling in of North resources in then and really developments unconventional developments some the gas around on development So in around internationally, very profitable development continued very deepwater oil cost the in I which America. think the industry. for growth whole, commodity remain still optimism And

helpful. kind so now. I where hope And that's are that's of we right

Operator

And TD Bianchi Cowen. of question the line our Marc from next comes from

Marc Bianchi

the talk because I up little the for and more the in flat that is down. bit are a of was hopeful quarter revenue margins a here margin little fourth progression bit to sort guidance you about could

should would I because was that tailwind thought a maybe price savings here? that unpack just better be you have backlog some benefit, So there cost some

Clay Williams

QX got are the question, is think think, But you is just Yes. I we're business-specific that I'd in leverage, Jose in that mix up, on Good we've I shifts tell going of limited. Marc. guided be specifically to QX. the guiding are not Both What versus couple QX up a both underway that segments, modestly right direction.

had products first in and Eastern bit energy shipments Hemisphere. to we Turning really the services, strong

demand company, once QX. pipe to think those They're be so margin. a good think going year. to a shipments buy shipments, not strong going bits pipe higher more higher that really is at composite also work, and have a than very a maybe replaced revenues buy customers oil over and little and shipments and in for and in ESPs went will That's additionally, recur national down, there margin I we lower by QX. out bulk drill We be margin. Those a And bit

did working So more equipment, QX continue QX is be of picture, to there think that. as QX. In move that is it again than similar the tower us energy down in going turbine by and in installation offset in wind mix replaced sort will to vessel shipments wind against I

results And in so mix an that adverse bit a of shift. little

going would which guidance. With tell think, the reflect year, I what back the business and in plans, our less is those I in cost units margins cooperative. of on short year on What I for with entered we where to our exit I contribute. what's disappointed in it's our the better return I mid-teens help our improvement But XXXX, criteria, contracts, with. a the goes to contribute we our started of front. I of are targeting which specific you continue payment respect terms underway in kind QX, that's been -- America in contracts continued really of margin without is focus so saying include our XXXX, fall that big would one So to that we It to market tell guidance lines North more that's backlog, you will the been think product in QX and is that movers we're better will around when savings backlog the underperforming we're margins and -- will that

flattish I sort think we came into industry the year, of the the consensus activity. was across

I by XX% North those has market. been market mix think to more continued a from And it's in particular, of coming its EPS affected trends. America tougher be with

turns better America gas very certainly will on track But laser to execute in be in returns that. better I'd we're continuing that to on focused margins, XXXX, respect North in again, direction. so natural the And achieving if and tell around that getting back with helpful to very, business you,

Marc Bianchi

Clay. of answer, a these bit of about the about great a more are a then some issue of aftermarket That's to got sort out, headwinds offshore understand kind wanted Okay. little the of to also And weaker. activity bit calling that you I broader for of market. sort severity this guys talked you

the from tough in right beginning Or just have now? that you still up the usually kind look call half can some feel seasonal first decline 'XX, XQ you confident as wondering, levels XQ. But So it be is EBITDA I'm into like year-over-year? to too of do we of to

Clay Williams

the hearing to X is of for rigs and more in. little past changed taking the and total our a recovery in hey, I'm remarks, space is it's quarter, in we we to the the push we one. for XXXX we rigs want projects offshore comments rigs. the be in to offshore. third to saw are my aftermarket -- that, here careful minute, Two, had XX a really customer that couple to What we're lower than overstate the of spares we've that. I third on wait mentioned had from orders new quarter just X X drilling say, approach Well, the increase about upgrade overall going offshore again, we're capabilities contractors us in I I in around, now sort of running of XXXX. prepared white toll, the not a about days, that been think that's are not optimistic this a other few of dial placed all we've they but past a In platform offshore years. planning had And rig the back mobile embedded orders

work into kind wanting that for got space projects their other we've on advantage process planning rigs. So XXXX some of our to around take customers get done entering some rig white of offshore to

in to cautious now kind I way would communicate, it. -- it's the equipment and flux the more so that spare But space bit impact the describe little in it's and wanted lower we're in -- just And our as we're of a I on that that, parts could drilling seeing demand trends trend drilling on overall, around capital orders results. XXXX -- have recent

Operator

question comes next our from Arun of JPMorgan. Jayaram the And from line

Arun Jayaram

Clay, that production FPSOs. opportunities was softer elaborate thinking maybe for of equipment? as on your production I for some rising the well demand was to demand and as margin in offset elaborate maybe I expect, maybe wondering equipment us some capital could you on it, that if if call could about chunkier equipment? wondering discuss And help rig the you some you the commentary trends I'm implications think about of of

Clay Williams

portfolio that past in But of growing that comment, production seen we've years in I XX in on lot last Equipment the systems equipment gas portfolio between been we've done fact Arun, our more Energy mentioned space. in out few equipment around a That for and broadly sort turret and production-related build of the the more strongly pipe, quarters that and processing good. my equipment. And Yes. to really prepared technologies equipment, and book-to-bills based segment drilling are a we remarks, orders mooring has seen robust as flexible across is stronger have what's drilling

that. that higher and we're And orders recovers, it's see so space, to in as translating deepwater delighted to certainly the

just I think lot one to I it's for development also drilling than those demand field add, sell more would sold that's mentioned too, -- as continue comment a rapidly a so into into going that And that grow equipment. I the also of technologies are well. unconventional we onshore to that

and of systems composite and think, and piping we've orders that around sort driver, And thing. for another seen separators chokes that I so that's growth

Jose Bayardo

Arun, tag to want something to that. I on

So into rig kind see as So contractor equipment, kind to which of we about talking through a that in the year when year. understanding really about what a modest which just our really and have the the forward things expectations generally looks to that Clay a record of of for perspective, we are project like and related takes progress backlog puts terms right? capital ones trend coming bit that modest always of But rig customers track up and with a kind don't. good quite we're projects about move talking holds put there, our aftermarket and we very we talked down -- in how

last So at about our XXX to in projects perspective, and working that year customers this put things today, XXX. on we had that number time, with we were is

will So how that that. guarantees we again, as up, feel about pretty hold no good to but

year-over-year. And their and drilling for lot upper does go wanting get more terms something So a decline at early it relates beyond, that's prepared a single-digit to their really equipment, place, be going ready looking we'll in midyear the of maybe part and I good trend just want be to a that actually clear that think we're in mid good feel as contractor the a the to aftermarket -- down to look of rig we that as to type pretty mid of people 'XX contracting our as to is into assuming next XXXX. activity be to middle customers get lot view with XX% in for work, for and more and back in our take And today. And already year. see of to customers by which low result we I have XXXX. single there's capital into should of We've that we campaigns pickup as really today flat rig which plan, going that digits the equipment, that very got backlog which backlog in down about capital rigs

areas. more production be production how that -- -- seeing than no offset has little from will hopefully, in if backlog not a more a at what We're So those building least equipment it commentary standpoint, additional kind But doubt, on offshore we're our confident will will than offset that helps. been that, down based of bit. that

Arun Jayaram

super That's Jose. helpful, Great.

in that some 'XX? be can backlog margin 'XX a maybe or uncertainty mention little there's trends today. would the couple end in you opportunities of year-over-year in maybe market in tailwinds, which you of call and expansion of some we're that of, probably follow-up the in next you Can system, how the us of basis. a about the just on versus margin maybe run do had it, a puts think help through you Just the 'XX? I bit takes understanding part recall margins did and Clay, on But through early on moving year, some us which are margins the a puts gives takes better and projects

Clay Williams

rapidly it out. delighted some out Yes. they backlog some see to have -- of margins. helpful for are we been projects. did have thanks our and for had We because that the And Those pointing Arun, haven't slipping

have we've a at then, susceptible signed the that large couple to backlog. depths are quite of are of since also seen era, pressures that moving of were COVID the agreements sort the and frame that out those the also of inflationary We

backlog would tailwind and the coming tailwind sort of as That the for that grading the again we into equipment driver. targeted have should up. a high big And savings that the see move and work that continue that think a you cost the executing has XXXX. big good will I steady numbers, we of sort we're this been be of other energy be So And in margins.

Jose Bayardo

the and good those this been one products of have going have into us businesses at the some that taking those forward really more success element with technologies least here, drive command allowed saw ultimately of significant America Eastern partially quite really impactful several technologies better that's as offsetting new introduce the pricing the international reception. products, is customers and markets marketplace. X, declines of still but some and quarter, that's value in initial we North Middle market those to that garner place our last commercialization had as other of key good We've And for the share. And and our within not

share, America but that gain the some international markets we'll not optimistic in just continue in well. we're So as to North of also

little the I an been activity continue XXXX ability just really to about an in a from So bit outlook has incrementally feel that good to margins standpoint. drive despite tempered higher

Operator

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

Neil Mehta

My first question is just around geographies.

love you're and the seeing challenges? Just perspective walk landscape different us you you're where have maybe unique of insights? gas so seeing world a and more are You oil and the where in. on accelerating your the can parts operating you would And through global that momentum

Clay Williams

Neil. bet, You

some in exciting. I back really So deepwater Further in Orange the have Africa success that is and got very there. activity. some the operators as active Senegal good the exploration The is offshore, I particular, mentioned to picking basins Brazil, discoveries earlier, Basin, new West very achieved west, think got up. you've deepwater. Namibia has in

the the You've got a Suriname, opportunities Gulf lot Guyana. all of success Paleogene XXk and Mexico, in in the goods. of

of busy those is as called, and cost very we've Triangle, in industry Sea and far Eastern of it's marginal exploration production the reducing also to the there. The and low-carbon policies. very kind Black lot so so. good Sea, U.K. got Norway been mixed Caspian. a has I Golden The active. good a picture, the a job successes barrels attraction they less the of North with activity tax Mediterranean, thanks are and barrels and So of done think the has active development

to life. been because that's the is coming offshore see kind back the really it's plus. conspicuously around a So decade for And world, of good absent to

is thought for mostly at NOV Jose kind lot processing The development and all that us as unconventional that is and a we're but lot piping production Middle that. of and a kit exciting composite again, are company, the drilling technology into selling know of going East, I where pursuit and of is, into scale I systems there's rig, that chokes of that. of drilling the and other area really in recently, were a

then in the third a changes, Muerta was -- And during heating significant the and of in opportunity that, for administration with in scale, level like. there Argentina, again, likewise, the technologies much And up bigger completion realize NOV another investors development so capital with great down participation may the that Vaca we new it's I around all rules and, than quarter. too, at is repatriation the and provide. And along with some drilling

going more much I to interesting NOV. think And a so it's market become for

highlight would and value. a where being strong areas lot of I places So can those as add particularly NOV

Neil Mehta

the then And capital quarter. that see little into flow as return into was talk a and And bit and you a framework There just Clay. of free go cash dividends Thanks, about good do cash up that how 'XX, flow progression. buybacks between then there? and a 'XX, shaping your translate you

Jose Bayardo

go take one. Yes, and ahead that I'll Neil,

I to be of of yes, I to really that in I'd very for out anticipated levels it which several flow. way So the outlook NOV year think say our next kind playing free the healthy same, is continues is the years we should the mean, cash one generate which and would continue

cash the XXXX. of had of year, moderate called this kind we on QX year convert flow, last that in we we I on in XX% bit of buildup, that terms think still to more remainder environment. We which at of moved were were consuming do the the of but shifting specifically So of to in saw that the into turn sort top strong growth a a we track to we're growing year, and that capital would related the of coming stated early that into terms free year, expecting well least this working as really we line making EBITDA of our that in was

in QX. So had we really cash another in cash flow quarter exceptional free QX, strong free flow of

our really amounts. As you know, in move sometimes payments chunky

So our end. way. We at had puts there's takes some and things quarter go always some

have a strong flow. similar a cash we free still of little and a on conversions than have we see standpoint. And from then I a as for bit shouldn't beyond, EBITDA anticipated. bit free but was we QX flow reason So why 'XX touched any don't That better and to little will drag a 'XX on still cash QX, of anticipate QX

really forward. good going about feel things So

Operator

next question from the from comes of Hallead our Kurt And line Benchmark.

Kurt Hallead

savings? always to for if understand In overall the and sure environment I your you trying here, one the make of if I to message the want just with okay? an correctly, color. that, then. didn't, respect right, I you Is XXXX insight what expect business, weakening, understood would I then flattish that and that please correct appreciate things from you heard guys things kind margin to backlog I And correctly are me some cost that some of things margin in improvement with improving, XXXX? still and point, if better meaningful cost savings are I some the in come and improvement you to up looking to context, margin to drive drive mostly this

Clay Williams

it's Yes, a question. good

that As planning earlier, our focused on get short Kurt, stop of cost results we're you. XXXX I savings I'm using to way use said because savings there. partly we're better and in the going and -- working process to cost to middle quantifying that. a as through very for of continue

getting mentioned, think continuing Jose new results list at wait can and we initiatives in technology just point, downturn, business think get that focused us reviews the of we backlog. of line things sure products. and kind But partitioning have savings then, high ongoing our this through I and the margin. And this then business. seeing grade and our on been product kind right we're the again, cost of better through really the risk investing better through returns and we between right you customers work, drive we as but X an focus heads. And appropriate will the better those And good our X and -- to making want and with in margins we're tell to continue of win to contracts, I -- managers business the We appropriate that until are We've across on marketplace.

to higher So products the growth operations help be customers' with will add third that of margins I they them our will more because that of continued XXXX. initiative think value carry kind

Kurt Hallead

they've on get be follow-up digital opportunities. And your of of That's internal external see marketplace? are curious improvement number it they're adopted views saying where how more my margin others conversations the and And with you got to a would being generator are the great. different as deploying, revenue companies how some significant had an we've that kind applications in

us context, So maybe that too. you can help put into

Clay Williams

Yes.

I it's both. For NOV, think

applying own like chain ago, things that's help have this But equally, that and think operations. to about that. of scheduling really to internal improve a NOV some quarter We're our talked efficiency machine I supply brought seeing the amongst our applying forecasting capabilities drive of going to or So and customers we And good initiatives tools. We marketplace. management that AI and the tool X machine AI around monitoring we're digital to our improvements. internal traction has we're

over Edge put So users. it the digital compute, offer sequentially our capture of that we the Max to services portal past I've edge in into data in the cloud. our increased to process talked the calls about third This about field XX% past number data, X,XXX quarter, of quarter, users our

number increased that drilling They part and by about think spans, digital have We the this are all -- increased attached other initiatives well about we we it's much is as ecosystem. And that I the assets that production feeding data, assets number the point connected. here is, sequentially would into efforts that's think of larger X% the of I to. I way, really sensors industrial make of all and our applications. as gathering

pipe let drilling experts NOVOS transmit it or high-speed it to bottom beliefs Kaizen going sort digital capture Well, of it to we that to for it the operating apply and in and system. application from translate feeds that's customers' builds home real talk enables time into what's through important It's and our the wired matter of systems application so drilling our important AI because through automation. on. communication drill rigs, hole. us or our to about monitor because And foundation data data of back subject their for levels It offices analytics our higher a our

control multi-machine the is ATOM lot for interest around is instance, this adopt of customers world, generating orders enabling drilling companies both a our for repeat automation and we're major to oil offshore for which required rigs, RTX amongst our so land, is and drilling product, and seeing And that.

sophisticated edge we new cloud of and entry is levels fact the I to customers fit-for-purpose way think enable very just or services And they're higher about new provide very, excited hardware also products can digital specific that of for tools it about the excited but our And that more that not can to achieve the so too. our that, safety. efficiency sort and customers, very

Operator

today from And our question final from Stephen comes the of line for Gengaro Stifel.

Stephen Gengaro

working for probably how areas are continue versus should capital for getting parameters into, in we to about Jose improvement? then we when be currently Two see should me. -- we there XXXX, XXXX about and think the guidance, One without obviously, thinking

Jose Bayardo

Yes. Really good question, Stephen.

we were but sort earlier, overall saying working of part that made was that is that management it tied I the growth, the turn also cash year last we was, as relates of flow, of to sort as to capital. late as the So of moderating free confident I mentioned,

more be some through our capital in of the of normalized And to our made expectations while realm run got that course should we progress of working rate. we've XX.X%. talked year. the rate more about our for So down XX.X% the revenue our a We've good

So a for asked you progress And of capital. down because you components asked and working the sort we're items have effectively unbilled is relates was way are our think interesting contract made assets that to difference as end year. The X ambition contract most capital thinking which little by and people manufacturer, large I different in liabilities, they're some by that payments type it something should maybe on to that we've effectively that bit of and next you the represent project about about be isn't your a we major in unique to line achieve which that's appreciated because our that's large that our working question fully projects.

embedded in But is of or just versus make projects the only margins one that. out that ago. that want today the higher are understand shift sure I X resulting And not a point into so backlog to from reasons are people year as to we that the within XXXX, also

improvement us in better flow. and all down terms milestones, to other of further which working the those is come in sorts structure The financial of capital timing contracts XXXX of those help terms things, they free it cash improve with management of of ultimately, payments, as relates will

Stephen Gengaro

Jose. I cetera? sort like color, going? the follow-up, et How Artificial Lift earlier. feel And What And the mentioned What's is business the then that's Great. update That's know you of quickly, it just good markets, how do progressing? you there?

Clay Williams

Good.

in in moving we're good a had Texas. also Dakota. that international We're going well. delighted the position into West business acquired, the We're with really markets. North That's strong So team. we conversations They having

headwinds Dakota taken we're that flowbacks in One the our of we hearing customers into North longer. is that the ran from have

so of broadly space applications the inventory in I think, the in E&P of then the higher ESPs. ESPs. And And led additionally, that's, delayed has some United consolidation some of States to

on good in And really customer the U.S. on so the service near-term whole, -- some great very But again, relationships. activity tight technology, headwinds, focused and fantastic

that add about and in being digital space. And happy very spanning have. that think separators we're application our just We I chokes the we these production equipment there's technologies. ESPs so would edge production and And technologies talked plus I of

opportunity NOV. of kind a assembling we're for so there interesting And really digital

Operator

conclude like back program. session Clay program any to the for today's hand to remarks. further This does the of question-and-answer Williams I'd

Clay Williams

you We of this look us all results fourth Jonathan, our close in quarter February. to full Thanks And for to may and forward discussing call. morning. joining out year you the

Operator

This And you. participation ladies does the for Thank in Certainly. program. and your conclude thank you, today's gentlemen, conference.

now You day. disconnect. may Good

NOV (NOV) 25 Oct 242024 Q3 Earnings call transcript