NOV INC. Quarterly Report (10-Q)

Press release · 10/25 18:13
NOV INC. Quarterly Report (10-Q)

NOV INC. Quarterly Report (10-Q)

NOV Inc. reported its quarterly financial results for the period ended September 30, 2024. The company’s revenue increased by 12% to $1.23 billion, driven by growth in its drilling and evaluation segment. Net income rose to $143 million, or $0.37 per diluted share, compared to $121 million, or $0.31 per diluted share, in the same period last year. The company’s cash and cash equivalents decreased to $1.14 billion, primarily due to the payment of dividends and share repurchases. NOV’s debt-to-equity ratio remained stable at 0.45, and its interest coverage ratio improved to 4.5 times. The company’s liquidity and capital resources remain strong, with a current ratio of 2.3 and a quick ratio of 2.1.

Executive Summary

For the third quarter ended September 30, 2024, the Company generated revenues of $2.19 billion, an increase of $6 million compared to the third quarter of 2023. Net income increased 14 percent to $130 million, or 5.9 percent of sales, an increase of $16 million compared to the third quarter of 2023. Operating profit increased $11 million from the prior year to $194 million, or 8.9 percent of sales. The company recorded $5 million within Other Items, primarily related to severance pay. Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) increased 7 percent year-over-year to $286 million, or 13.1 percent of sales.

Segment Performance

Energy Products and Services generated revenues of $1,003 million in the third quarter of 2024, a decrease of 3 percent from the third quarter of 2023. Operating profit decreased $31 million from the prior year to $114 million, or 11.4 percent of sales, and included $3 million in Other Items. Adjusted EBITDA decreased $25 million from the prior year to $172 million, or 17.1 percent of sales. The decrease in revenue and profit was primarily due to lower drilling activity levels in North America, partially offset by contributions from the Company’s recent artificial lift acquisition.

Energy Equipment generated revenues of $1,219 million in the third quarter of 2024, an increase of 2 percent from the third quarter of 2023. Operating profit increased $31 million from the prior year to $129 million, or 10.6 percent of sales, and included $1 million in Other Items. Adjusted EBITDA increased $35 million from the prior year to $159 million, or 13.0 percent of sales. Improved profitability was the result of strong execution on the segment’s improving backlog and better demand for aftermarket parts and services.

New orders booked during the quarter totaled $627 million, an increase of $79 million when compared to the $548 million of new orders booked during the third quarter of 2023. Orders shipped from backlog in the third quarter of 2024 were $563 million, representing a book-to-bill of 111 percent, compared to the $537 million orders shipped and a book-to-bill of 102 percent in the third quarter of 2023. As of September 30, 2024, backlog for capital equipment orders for Energy Equipment was $4,478 million, an increase of $485 million from the third quarter of 2023.

Oil & Gas Equipment and Services Market and Outlook

The macro environment and geopolitical uncertainties continue to drive volatility and pressure commodity prices. Despite growing concerns that global oil and U.S. natural gas markets may be oversupplied in 2025, management believes commodity prices and activity levels should remain relatively rangebound, with any pullback in activity short-lived, and that the industry remains in an extended recovery.

Regardless of the operating environment, NOV remains committed to improving organizational efficiencies while focusing on the development and commercialization of innovative products and services, including technologies to reduce the environmental impact of oil and gas operations, and technologies to accelerate the energy transition that are responsive to the longer-term needs of NOV’s customers. We believe this strategy will further advance the Company’s competitive position in all market conditions.

Results of Operations

Energy Products and Services revenue decreased 3% in the third quarter and increased 2% year-to-date, while operating profit decreased 21% in the third quarter and 12% year-to-date. The decreases were primarily due to lower drilling activity levels in North America, partially offset by contributions from the Company’s recent artificial lift acquisition.

Energy Equipment revenue increased 2% in the third quarter and 7% year-to-date, while operating profit increased 32% in the third quarter and 82% year-to-date. The increases were primarily due to strong execution on the segment’s improving backlog and better demand for aftermarket parts and services.

Liquidity and Capital Resources

The Company had $985 million in cash and cash equivalents and $1,749 million in total debt as of September 30, 2024. Cash flows from operating activities were $713 million in the first nine months of 2024. The Company believes it has sufficient liquidity to fund operations, capital expenditures, dividends, and other obligations.