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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 1-12317

 

NOV INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

img79545245_0.jpg 

76-0475815

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

 

10353 Richmond Avenue
Houston, Texas

77042-4103

(Address of principal executive offices)

(346) 223-3000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

NOV

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging growth company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of October 13, 2023 the registrant had 393,926,996 shares of common stock, par value $0.01 per share, outstanding.

 

 


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

NOV INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

513

 

 

$

1,069

 

Receivables, net

 

 

1,982

 

 

 

1,739

 

Inventories, net

 

 

2,277

 

 

 

1,813

 

Contract assets

 

 

675

 

 

 

685

 

Prepaid and other current assets

 

 

211

 

 

 

187

 

Total current assets

 

 

5,658

 

 

 

5,493

 

Property, plant and equipment, net

 

 

1,843

 

 

 

1,781

 

Lease right-of-use assets, operating

 

 

372

 

 

 

346

 

Lease right-of-use assets, financing

 

 

173

 

 

 

171

 

Goodwill

 

 

1,556

 

 

 

1,505

 

Intangibles, net

 

 

459

 

 

 

490

 

Investment in unconsolidated affiliates

 

 

198

 

 

 

117

 

Other assets

 

 

239

 

 

 

232

 

Total assets

 

$

10,498

 

 

$

10,135

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

925

 

 

$

906

 

Accrued liabilities

 

 

818

 

 

 

959

 

Contract liabilities

 

 

488

 

 

 

444

 

Current portion of lease liabilities

 

 

93

 

 

 

87

 

Current portion of long-term debt

 

 

13

 

 

 

13

 

Accrued income taxes

 

 

32

 

 

 

28

 

Total current liabilities

 

 

2,369

 

 

 

2,437

 

Long-term debt

 

 

1,716

 

 

 

1,717

 

Lease liabilities

 

 

559

 

 

 

549

 

Deferred income taxes

 

 

69

 

 

 

68

 

Other liabilities

 

 

218

 

 

 

230

 

Total liabilities

 

 

4,931

 

 

 

5,001

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock - par value $.01; 1 billion shares authorized; 393,926,996 and
   
392,832,752 shares issued and outstanding at September 30, 2023 and
  December 31, 2022

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

8,793

 

 

 

8,754

 

Accumulated other comprehensive loss

 

 

(1,542

)

 

 

(1,593

)

Retained deficit

 

 

(1,734

)

 

 

(2,069

)

Total Company stockholders' equity

 

 

5,521

 

 

 

5,096

 

Noncontrolling interests

 

 

46

 

 

 

38

 

Total stockholders’ equity

 

 

5,567

 

 

 

5,134

 

Total liabilities and stockholders’ equity

 

$

10,498

 

 

$

10,135

 

 

See notes to unaudited consolidated financial statements.

2


 

NOV INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share data)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue

 

$

2,185

 

 

$

1,889

 

 

$

6,240

 

 

$

5,164

 

Cost of revenue

 

 

1,717

 

 

 

1,521

 

 

 

4,904

 

 

 

4,273

 

Gross profit

 

 

468

 

 

 

368

 

 

 

1,336

 

 

 

891

 

Selling, general and administrative

 

 

285

 

 

 

313

 

 

 

846

 

 

 

789

 

Operating profit

 

 

183

 

 

 

55

 

 

 

490

 

 

 

102

 

Interest and financial costs

 

 

(23

)

 

 

(19

)

 

 

(65

)

 

 

(57

)

Interest income

 

 

5

 

 

 

6

 

 

 

21

 

 

 

12

 

Equity income in unconsolidated affiliates

 

 

16

 

 

 

12

 

 

 

101

 

 

 

32

 

Other income (expense), net

 

 

(25

)

 

 

10

 

 

 

(70

)

 

 

8

 

Net income before income taxes

 

 

156

 

 

 

64

 

 

 

477

 

 

 

97

 

Provision for income taxes

 

 

48

 

 

 

29

 

 

 

87

 

 

 

41

 

Net income

 

 

108

 

 

 

35

 

 

 

390

 

 

 

56

 

Net income (loss) attributable to noncontrolling interests

 

 

(6

)

 

 

3

 

 

 

(5

)

 

 

5

 

Net income attributable to Company

 

$

114

 

 

$

32

 

 

$

395

 

 

$

51

 

Net income attributable to Company per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.29

 

 

$

0.08

 

 

$

1.01

 

 

$

0.13

 

Diluted

 

$

0.29

 

 

$

0.08

 

 

$

1.00

 

 

$

0.13

 

Cash dividends per share

 

$

0.05

 

 

$

0.05

 

 

$

0.15

 

 

$

0.15

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

393

 

 

 

391

 

 

 

393

 

 

 

389

 

Diluted

 

 

396

 

 

 

393

 

 

 

396

 

 

 

393

 

 

 

See notes to unaudited consolidated financial statements.

3


 

NOV INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income

 

$

108

 

 

$

35

 

 

$

390

 

 

$

56

 

Currency translation adjustments

 

 

(31

)

 

 

(26

)

 

 

51

 

 

 

(88

)

Changes in derivative financial instruments, net of tax

 

 

3

 

 

 

(13

)

 

 

(8

)

 

 

(34

)

Changes in defined benefit plans, net of tax

 

 

1

 

 

 

(32

)

 

 

8

 

 

 

(32

)

Comprehensive income (loss)

 

 

81

 

 

 

(36

)

 

 

441

 

 

 

(98

)

Comprehensive income (loss) attributable to noncontrolling interest

 

 

(6

)

 

 

3

 

 

 

(5

)

 

 

5

 

Comprehensive income (loss) attributable to Company

 

$

87

 

 

$

(39

)

 

$

446

 

 

$

(103

)

 

See notes to unaudited consolidated financial statements.

4


 

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income

 

$

390

 

 

$

56

 

Adjustments to reconcile net income to net cash used in
operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

225

 

 

 

225

 

Provision for inventory losses

 

 

21

 

 

 

(9

)

Deferred income taxes

 

 

(2

)

 

 

(13

)

Equity income in unconsolidated affiliates

 

 

(101

)

 

 

(32

)

Stock-based compensation

 

 

49

 

 

 

50

 

Impairment and loss on assets held for sale

 

 

4

 

 

 

125

 

Other, net

 

 

(36

)

 

 

43

 

Change in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Receivables

 

 

(258

)

 

 

(319

)

Inventories

 

 

(479

)

 

 

(430

)

Contract assets

 

 

11

 

 

 

(127

)

Prepaid and other current assets

 

 

(22

)

 

 

(19

)

Accounts payable

 

 

17

 

 

 

156

 

Accrued liabilities

 

 

(170

)

 

 

18

 

Contract liabilities

 

 

38

 

 

 

39

 

Income taxes payable

 

 

4

 

 

 

19

 

Other assets/liabilities, net

 

 

75

 

 

 

(115

)

Net cash used in operating activities

 

$

(234

)

 

$

(333

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(207

)

 

 

(148

)

Other

 

 

(4

)

 

 

(25

)

Net cash used in investing activities

 

$

(211

)

 

$

(173

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings against lines of credit and other debt

 

 

22

 

 

 

16

 

Payments against lines of credit and other debt

 

 

(25

)

 

 

 

Cash dividends paid

 

 

(60

)

 

 

(59

)

Financing leases

 

 

(17

)

 

 

(18

)

Other

 

 

(26

)

 

 

(11

)

Net cash used in financing activities

 

 

(106

)

 

 

(72

)

Effect of exchange rates on cash

 

 

(5

)

 

 

(15

)

Decrease in cash and cash equivalents

 

 

(556

)

 

 

(593

)

Cash and cash equivalents, beginning of period

 

 

1,069

 

 

 

1,591

 

Cash and cash equivalents, end of period

 

$

513

 

 

$

998

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash payments during the period for:

 

 

 

 

 

 

Interest

 

$

45

 

 

$

39

 

Income taxes

 

$

83

 

 

$

91

 

 

See notes to unaudited consolidated financial statements.

5


 

NOV INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)

 

Shares Issued
 and
Outstanding

 

 

Common
Stock

 

 

Additional
Paid in
Capital

 

 

Accumulated
Other
Comprehensive
Loss

 

 

Retained
Deficit

 

 

Total
Company
Stockholders'
Equity

 

 

Noncontrolling
Interests

 

 

Total
Stockholders'
Equity

 

Balance at December 31, 2022

 

 

393

 

 

$

4

 

 

$

8,754

 

 

$

(1,593

)

 

$

(2,069

)

 

$

5,096

 

 

$

38

 

 

$

5,134

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

126

 

 

 

126

 

 

 

(1

)

 

 

125

 

Other comprehensive income, net

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

Cash dividends, $0.05 per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

(20

)

 

 

 

 

 

(20

)

Transactions with non-controlling interests

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

28

 

 

 

31

 

Stock-based compensation

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Common stock issued

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Withholding taxes

 

 

(1

)

 

 

 

 

 

(17

)

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

(17

)

Other

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Balance at March 31, 2023

 

 

394

 

 

$

4

 

 

$

8,756

 

 

$

(1,554

)

 

$

(1,963

)

 

$

5,243

 

 

$

65

 

 

$

5,308

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

155

 

 

 

155

 

 

 

2

 

 

 

157

 

Other comprehensive income, net

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

Cash dividends, $0.05 per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

(20

)

 

 

 

 

 

(20

)

Stock-based compensation

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Balance at June 30, 2023

 

 

394

 

 

$

4

 

 

$

8,773

 

 

$

(1,515

)

 

$

(1,828

)

 

$

5,434

 

 

$

63

 

 

$

5,497

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

114

 

 

 

114

 

 

 

(6

)

 

 

108

 

Other comprehensive income, net

 

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

 

 

 

(29

)

 

 

 

 

 

(29

)

Cash dividends, $0.05 per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

(20

)

 

 

 

 

 

(20

)

Transactions with non-controlling interests

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

(13

)

 

 

(12

)

Stock-based compensation