Business Wire | Feb 4, 2021 06:00PM EST

NOV Reports Fourth Quarter and Full Year 2020 Results

Feb. 04, 2021

HOUSTON--(BUSINESS WIRE)--Feb. 04, 2021--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 TechnologiesWellbore 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 SolutionsCompletion & 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 TechnologiesRig 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 ItemsDuring 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.

Significant AchievementsNOV 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 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 CallNOV 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.

About NOVNOV (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.

Cautionary Statement for the Purpose of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995Statements made in this press release that are forward-looking in nature are intended to be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. These statements may differ materially from the actual future events or results. Readers are referred to documents filed by NOV with the Securities and Exchange Commission, including the Annual Report on Form 10-K, which identify significant risk factors which could cause actual results to differ from those contained in the forward-looking statements.

Certain prior period amounts have been reclassified in this press release to be consistent with current period presentation.

NOV INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)

(In millions, except per share data)

Three Months Ended Years Ended

December 31, September December 31, 30,

2020 2019 2020 2020 2019

Revenue:

Wellbore $ 373 $ 764 $ 361 $ 1,867 $ 3,214 Technologies

Completion &Production 546 799 601 2,433 2,771 Solutions

Rig Technologies 437 759 449 1,919 2,682

Eliminations (29 ) (41 ) (27 ) (129 ) (188 )

Total revenue 1,327 2,281 1,384 6,090 8,479

Gross profit (66 ) 376 139 434 845 (loss)

Gross profit -5.0 % 16.5 % 10.0 % 7.1 % 10.0 %(loss) %



Selling, general,and 235 289 213 968 1,303 administrative

Long-lived asset - 436 - 1,891 5,821 impairment

Operating loss (301 ) (349 ) (74 ) (2,425 ) (6,279 )

Interest and (19 ) (25 ) (21 ) (84 ) (100 )financial costs

Interest income 2 4 - 7 20

Equity loss inunconsolidated (10 ) (7 ) (11 ) (260 ) (13 )affiliates

Other income 2 (54 ) (8 ) (17 ) (90 )(expense), net

Loss before (326 ) (431 ) (114 ) (2,779 ) (6,462 )income taxes

Provision(benefit) for 22 (46 ) (61 ) (242 ) (369 )income taxes

Net loss (348 ) (385 ) (53 ) (2,537 ) (6,093 )

Net (income) lossattributable to (1 ) - 2 5 2 noncontrollinginterests

Net lossattributable to $ (347 ) $ (385 ) $ (55 ) $ (2,542 ) $ (6,095 )Company

Per share data:

Basic $ (0.90 ) $ (1.01 ) $ (0.14 ) $ (6.62 ) $ (15.96 )

Diluted $ (0.90 ) $ (1.01 ) $ (0.14 ) $ (6.62 ) $ (15.96 )

Weighted averageshares outstanding:

Basic 385 382 385 384 382

Diluted 385 382 385 384 382

NOV INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions)

December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

1,692

$

1,171

Receivables, net

1,274

1,855

Inventories, net

1,408

2,197

Contract assets

611

643

Other current assets

224

247

Total current assets

5,209

6,113

Property, plant and equipment, net

1,927

2,354

Lease right-of-use assets

566

674

Goodwill and intangibles, net

2,020

3,659

Other assets

207

349

Total assets

$

9,929

$

13,149

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

489

$

715

Accrued liabilities

863

949

Contract liabilities

354

427

Current portion of lease liabilities

110

114

Accrued income taxes

51

42

Total current liabilities

1,867

2,247

Long-term debt

1,834

1,989

Lease liabilities

612

674

Other liabilities

337

393

Total liabilities

4,650

5,303

Total stockholders' equity

5,279

7,846

Total liabilities and stockholders' equity

$

9,929

$

13,149

NOV INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions)

December 31,

2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 1,692 $ 1,171

Receivables, net 1,274 1,855

Inventories, net 1,408 2,197

Contract assets 611 643

Other current assets 224 247

Total current assets 5,209 6,113



Property, plant and equipment, net 1,927 2,354

Lease right-of-use assets 566 674

Goodwill and intangibles, net 2,020 3,659

Other assets 207 349

Total assets $ 9,929 $ 13,149



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 489 $ 715

Accrued liabilities 863 949

Contract liabilities 354 427

Current portion of lease liabilities 110 114

Accrued income taxes 51 42

Total current liabilities 1,867 2,247



Long-term debt 1,834 1,989

Lease liabilities 612 674

Other liabilities 337 393

Total liabilities 4,650 5,303



Total stockholders' equity 5,279 7,846

Total liabilities and stockholders' equity $ 9,929 $ 13,149

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Years Ended

December 31,

2020

2019

Cash flows from operating activities:

Net loss

$

(2,537

)

$

(6,093

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

352

533

Goodwill and indefinite-lived intangible asset impairment

1,378

3,612

Long-lived asset impairment

513

2,209

Working capital and other operating items, net

1,220

453

Net cash provided by operating activities

926

714

Cash flows from investing activities:

Purchases of property, plant and equipment

(226

)

(233

)

Business acquisitions, net of cash acquired

(14

)

(180

)

Other

96

98

Net cash used in investing activities

(144

)

(315

)

Cash flows from financing activities:

Borrowings against lines of credit and other debt

36

511

Payments against lines of credit and other debt

(217

)

(1,000

)

Cash dividends paid

(19

)

(77

)

Other

(59

)

(81

)

Net cash used in financing activities

(259

)

(647

)

Effect of exchange rates on cash

(2

)

(8

)

Increase (decrease) in cash and cash equivalents

521

(256

)

Cash and cash equivalents, beginning of period

1,171

1,427

Cash and cash equivalents, end of period

$

1,692

$

1,171

NOV INC. RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) (Unaudited) (In millions)

The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. The Company uses Adjusted EBITDA internally to evaluate and manage the business. Adjusted EBITDA is not intended to replace GAAP financial measures, such as Net Income. Other Items include impairment charges, inventory charges and severance and other restructuring costs.

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Years Ended

December 31,

2020 2019

Cash flows from operating activities:

Net loss $ (2,537 ) $ (6,093 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 352 533

Goodwill and indefinite-lived intangible asset 1,378 3,612 impairment

Long-lived asset impairment 513 2,209

Working capital and other operating items, net 1,220 453

Net cash provided by operating activities 926 714



Cash flows from investing activities:

Purchases of property, plant and equipment (226 ) (233 )

Business acquisitions, net of cash acquired (14 ) (180 )

Other 96 98

Net cash used in investing activities (144 ) (315 )



Cash flows from financing activities:

Borrowings against lines of credit and other debt 36 511

Payments against lines of credit and other debt (217 ) (1,000 )

Cash dividends paid (19 ) (77 )

Other (59 ) (81 )

Net cash used in financing activities (259 ) (647 )

Effect of exchange rates on cash (2 ) (8 )

Increase (decrease) in cash and cash equivalents 521 (256 )

Cash and cash equivalents, beginning of period 1,171 1,427

Cash and cash equivalents, end of period $ 1,692 $ 1,171

NOV INC. RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) (Unaudited) (In millions)

The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. The Company uses Adjusted EBITDA internally to evaluate and manage the business. Adjusted EBITDA is not intended to replace GAAP financial measures, such as Net Income. Other Items include impairment charges, inventory charges and severance and other restructuring costs.

Three Months Ended Years Ended

December 31, September December 31, 30,

2020 2019 2020 2020 2019

Operating profit (loss):

Wellbore $ (78 ) $ (317 ) $ (50 ) $ (858 ) $ (3,551 )Technologies

Completion &Production (31 ) 57 25 (977 ) (1,934 )Solutions

Rig Technologies (132 ) (23 ) (3 ) (362 ) (524 )

Eliminations and (60 ) (66 ) (46 ) (228 ) (270 )corporate costs

Total operating $ (301 ) $ (349 ) $ (74 ) $ (2,425 ) $ (6,279 )profit (loss)



Other Items:

Wellbore $ 46 $ 410 $ 26 $ 849 $ 3,794 Technologies

Completion &Production 43 13 23 1,132 2,042 Solutions

Rig Technologies 132 114 12 402 784

Corporate 15 - 1 40 11

Total Other Items $ 236 $ 537 $ 62 $ 2,423 $ 6,631



Depreciation & amortization:

Wellbore $ 44 $ 50 $ 45 $ 187 $ 284 Technologies

Completion &Production 16 26 15 75 150 Solutions

Rig Technologies 19 21 19 77 87

Corporate 3 3 4 13 12

Total depreciation $ 82 $ 100 $ 83 $ 352 $ 533 & amortization



Adjusted EBITDA:

Wellbore $ 12 $ 143 $ 21 $ 178 $ 527 Technologies

Completion &Production 28 96 63 230 258 Solutions

Rig Technologies 19 112 28 117 347

Eliminations and (42 ) (63 ) (41 ) (175 ) (247 )corporate costs

Total Adjusted $ 17 $ 288 $ 71 $ 350 $ 885 EBITDA



Reconciliation of Adjusted EBITDA:

GAAP net income(loss) attributable $ (347 ) $ (385 ) $ (55 ) $ (2,542 ) $ (6,095 )to Company

Noncontrolling (1 ) - 2 5 2 interests

Provision (benefit) 22 (46 ) (61 ) (242 ) (369 )for income taxes

Interest expense 19 25 21 84 100

Interest income (2 ) (4 ) - (7 ) (20 )

Equity loss inunconsolidated 10 7 11 260 13 affiliate

Other (income) (2 ) 54 8 17 90 expense, net

Depreciation and 82 100 83 352 533 amortization

Other Items 236 537 62 2,423 6,631

Total Adjusted $ 17 $ 288 $ 71 $ 350 $ 885EBITDA

View source version on businesswire.com: https://www.businesswire.com/news/home/20210204006147/en/

CONTACT: Blake McCarthy Vice President, Corporate Development and Investor Relations (713) 815-3535 Blake.McCarthy@nov.com