Press Release: NOV Reports Fourth Quarter and Full Year 2020 Results
NOV Reports Fourth Quarter and Full Year 2020 Results
NOV Inc. (NYSE: NOV) today reported fourth quarter 2020 revenues of $1.33 billion, a decrease of four percent compared to the third quarter of 2020 and a decrease of 42 percent compared to the fourth quarter of 2019. Net loss for the fourth quarter of 2020 was $347 million, or -26.1 percent of sales, which included non-cash, pre-tax charges ("Other Items", see Other Corporate Items for additional detail) of $236 million. Adjusted EBITDA (operating profit excluding depreciation, amortization, and Other Items) decreased $54 million sequentially to $17 million, or 1.3 percent of sales.
Revenues for the full year 2020 were $6.09 billion, operating loss was $2.43 billion, and net loss was $2.54 billion, or $6.62 per share. Adjusted EBITDA for the full year was $350 million, or 5.7 percent of sales.
"Throughout a year in which the petroleum industry faced historic challenges, our team successfully generated $700 million in free cash flow, reduced annual fixed costs by several hundred million dollars, and launched new products in both oil and gas and renewables," commented Clay Williams, Chairman, President and CEO. "Nevertheless, the operating environment remains extremely difficult as international and offshore oilfield activity declined steadily throughout 2020, pressuring our longer-cycle capital equipment business."
"During the fourth quarter, rising oilfield activity and revenues in North America were not enough to offset the declines in international and offshore markets, as customers continued to defer purchases and project approvals. However, while we expect the next two quarters will remain challenging, steadily improving commodity prices, rising North American drilling activity, encouraging news from global vaccination efforts, gradually reopening economies, and increasing interest in offshore wind energy should lead to rising orders for NOV as the year progresses. We are optimistic that the petroleum industry will realize a meaningful recovery in the second half of the year."
Wellbore Technologies generated revenues of $373 million in the fourth quarter of 2020, an increase of three percent from the third quarter of 2020 and a decrease of 51 percent from the fourth quarter of 2019. The increase in revenues resulted from increased drilling activity levels in North America partially offset by declines in international and offshore markets. Operating loss, which included $46 million in Other Items, was $78 million. Adjusted EBITDA decreased $9 million sequentially and $131 million from the prior year to $12 million, or 3.2 percent of sales.
Completion & Production Solutions
Completion & Production Solutions generated revenues of $546 million in the fourth quarter of 2020, a decrease of nine percent from the third quarter of 2020 and a decrease of 32 percent from the fourth quarter of 2019. Lower backlog and logistical disruptions from COVID-19-related restrictions contributed to the sequential decline. Operating loss, which included $43 million in Other Items, was $31 million. Adjusted EBITDA decreased $35 million sequentially and $68 million from the prior year to $28 million, or 5.1 percent of sales.
New orders booked improved 27 percent sequentially to $215 million, representing a book-to-bill of 66 percent when compared to the $328 million of orders shipped from backlog. Backlog for capital equipment orders for Completion & Production Solutions at December 31, 2020 was $696 million.
Rig Technologies generated revenues of $437 million in the fourth quarter of 2020, a decrease of three percent from the third quarter of 2020 and a decrease of 42 percent from the fourth quarter of 2019. Declining offshore drilling activity levels resulting in lower capital equipment backlog contributed to the sequential decline in revenues. Operating loss, which included $132 million in Other Items, was $132 million. Adjusted EBITDA decreased $9 million sequentially and $93 million from the prior year to $19 million, or 4.3 percent of sales.
New orders booked during the quarter totaled $190 million, representing a book-to-bill of 105 percent when compared to the $181 million of orders shipped from backlog. At December 31, 2020, backlog for capital equipment orders for Rig Technologies was $2.7 billion.
Other Corporate Items
During the fourth quarter, the Company recognized $236 million in restructuring charges, primarily due to inventory reserves, severance costs and facility closures. See reconciliation of Adjusted EBITDA to Net Income.
As of December 31, 2020, the Company had total debt of $1.83 billion, with $2.00 billion available on its revolving credit facility, and $1.69 billion in cash and cash equivalents.
NOV continues to solidify its position as the market leader in the offshore wind turbine installation vessel market. In the fourth quarter, NOV secured awards for the design and jacking systems for the first U.S.-built, Jones Act-compliant offshore wind turbine installation vessel. NOV also secured a crane upgrade order for a customer who is upgrading an existing vessel's capacity for the heavier weights of the larger, next generation of offshore wind turbines. Additionally, NOV recently won an award from a European contractor for the design, jacking system and cranes for another wind turbine installation vessel.
NOV recently completed the installation of TK(TM)-Liner systems for two geothermal wells in Holland. TK(TM)-Liner is a high-performance glass-reinforced epoxy lining system designed to protect new and used tubulars in corrosive environments. Following the successful delivery and installation of these two systems, the customer placed additional orders for delivery in the first half of 2021.
NOV continues to expand its digital presence in the global completions market with updates to its CTES(TM) Cerberus(TM) and OrionNET(TM) software systems. The market-leading solutions are used to model fatigue life, tubing forces, and hydraulics in coiled tubing, wireline and jointed pipe operations. Improved cloud functionality enables better use of real-time data from remote operations by engineers in the field as well as in the office, enhancing operational efficiencies and well productivity through improved analysis and decision making.
Adoption of NOV's SelectShift(TM) drilling motor technology accelerated meaningfully in the fourth quarter. More customers are realizing the benefit of the tool's ability to change bend settings quickly and reliably while downhole. NOV also recently introduced the SelectShift(TM) 1,000, which combines the versatility of SelectShift(TM) with an all-new ERT(TM) power section capable of delivering an industry-leading 1,000 horsepower to the drill bit.
NOV's Vector(TM) Series 40 drilling motor with an ERT(TM) power section was used in combination with a rotary steerable system to drill a record lateral in Northeastern U.S. during the quarter. The motor and power section enabled a customer to drill the longest single run lateral in the Marcellus to date.
NOV secured an order for two 1,000-horsepower land rig packages to a customer in the Middle East. The rigs are equipped with fully-automated pipe-handling systems, NOVOS(TM) drilling automation and the Maestro(TM) Power Management system, which uses data acquired through NOVOS(TM) to optimize the power consumption and load balancing of the rig components throughout the drilling process, resulting in significant fuel consumption savings.
NOV's Quality Tubing(TM) 2.625-inch ATP-130 coiled tubing string set a performance record in the Permian Basin. The string completed 64 runs on 48 jobs and reached 1,266,489 running feet before our customer retired the string, making it NOV's most successful 2.625-inch string. NOV also manufactured two of the longest Quality Tubing(TM) 2.875-inch outside diameter coiled tubing strings in its history for a valued customer in the Middle East. The 2.875-inch strings measure greater than 30,000 feet in length, which equates to over 5 1/2 miles of continuously milled coiled tubing, weighing approximately 214,000 pounds per string.
NOV successfully installed and commissioned a TruScope A/S(TM) inspection system for a leading materials research institution in Asia. This high-speed tubular inspection system combines ultrasonic and electromagnetic test methods for the detection of tube body defects. In a single pass, the system detects, evaluates, and classifies transverse, longitudinal, and oblique internal and external flaws as well as wall thickness variations and laminations.
NOV won several orders for its glass-reinforced epoxy ("GRE") products. NOV successfully signed a contract with a major shipbuilder in Asia to provide ballast, sea water, and marine growth prevention system GRE lines for a Floating Production Storage and Offloading (FPSO) vessel that will be used in Brazil. NOV also won awards to supply the topside GRE piping for the seawater, drain, and produced water systems for an FPSO in Guyana and GRE piping for the seawater and drain systems for an offshore platform in Asia.
Fourth Quarter Earnings Conference Call
NOV will hold a conference call to discuss its fourth quarter 2020 results on February 5, 2021 at 10:00 AM Central Time (11:00 AM Eastern Time). The call will be broadcast simultaneously at www.nov.com/investors. A replay will be available on the website for 30 days.
NOV (NYSE: NOV) delivers technology-driven solutions to empower the global energy industry. For more than 150 years, NOV has pioneered innovations that enable its customers to safely produce abundant energy while minimizing environmental impact. The energy industry depends on NOV's deep expertise and technology to continually improve oilfield operations and assist in efforts to advance the energy transition towards a more sustainable future. NOV powers the industry that powers the world.
Visit www.nov.com for more information.
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