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 June 30, 2020

OR

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

Commission File Number 1-12317

NATIONAL OILWELL VARCO, INC.

(Exact name of registrant as specified in its charter)

Delaware		76-0475815
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

7909 Parkwood Circle Drive

Houston, Texas

77036-6565

(Address of principal executive offices)

(713) 346-7500

(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 July 17, 2020 the registrant had 388,283,695 shares of common stock, par value $0.01 per share, outstanding.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

NATIONAL OILWELL VARCO, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In millions, except share data)

	June 30,			December 31,
	2020			2019
ASSETS
Current assets:
Cash and cash equivalents	$	1,447		$	1,171
Receivables, net		1,502			1,855
Inventories, net		1,929			2,197
Contract assets		508			643
Prepaid and other current assets		204			247
Total current assets		5,590			6,113
Property, plant and equipment, net		2,010			2,354
Lease right-of-use assets, operating		398			444
Lease right-of-use assets, financing		207			230
Goodwill		1,493			2,807
Intangibles, net		525			852
Investment in unconsolidated affiliates		66			282
Other assets		158			67
Total assets	$	10,447		$	13,149
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	556		$	715
Accrued liabilities		815			949
Contract liabilities		408			427
Current portion of lease liabilities		115			114
Accrued income taxes		60			42
Total current liabilities		1,954			2,247
Lease liabilities		637			674
Long-term debt		2,029			1,989
Deferred income taxes		71			140
Other liabilities		223			253
Total liabilities		4,914			5,303
Commitments and contingencies
Stockholders’ equity:
Common stock - par value $.01; 1 billion shares authorized; 388,265,636 and    385,886,682 shares issued and outstanding at June 30, 2020 and   December 31, 2019		4			4
Additional paid-in capital		8,543			8,507
Accumulated other comprehensive loss		(1,613	)		(1,423	)
Retained earnings (deficit)		(1,474	)		690
Total Company stockholders' equity		5,460			7,778
Noncontrolling interests		73			68
Total stockholders’ equity		5,533			7,846
Total liabilities and stockholders’ equity	$	10,447		$	13,149

See notes to unaudited consolidated financial statements.

2

NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(In millions, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenue	$	1,496		$	2,132		$	3,379		$	4,072
Cost of revenue		1,359			2,070			3,018			3,754
Gross profit		137			62			361			318
Selling, general and administrative		237			417			520			721
Goodwill and indefinite-lived intangible asset impairment		—			3,186			1,378			3,186
Long-lived asset impairment		—			2,187			513			2,187
Operating loss		(100	)		(5,728	)		(2,050	)		(5,776	)
Interest and financial costs		(22	)		(25	)		(44	)		(50	)
Interest income		2			6			5			12
Equity loss in unconsolidated affiliates		(6	)		(2	)		(239	)		(2	)
Other income (expense), net		(8	)		(8	)		(11	)		(26	)
Loss before income taxes		(134	)		(5,757	)		(2,339	)		(5,842	)
Provision (benefit) for income taxes		(47	)		(373	)		(203	)		(383	)
Net loss		(87	)		(5,384	)		(2,136	)		(5,459	)
Net loss attributable to noncontrolling interests		6			5			4			7
Net loss attributable to Company	$	(93	)	$	(5,389	)	$	(2,140	)	$	(5,466	)
Net loss attributable to Company per share:
Basic	$	(0.24	)	$	(14.11	)	$	(5.57	)	$	(14.35	)
Diluted	$	(0.24	)	$	(14.11	)	$	(5.57	)	$	(14.35	)
Cash dividends per share	$	-		$	0.05		$	0.05		$	0.10
Weighted average shares outstanding:
Basic		385			382			384			381
Diluted		385			382			384			381

See notes to unaudited consolidated financial statements.

3

NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net loss	$	(87	)	$	(5,384	)	$	(2,136	)	$	(5,459	)
Currency translation adjustments		9			18			(171	)		38
Changes in derivative financial instruments, net of tax		33			3			(19	)		7
Comprehensive loss		(45	)		(5,363	)		(2,326	)		(5,414	)
Comprehensive income attributable to noncontrolling interest		6			5			4			7
Comprehensive loss attributable to Company	$	(51	)	$	(5,368	)	$	(2,330	)	$	(5,421	)

See notes to unaudited consolidated financial statements.

4

NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

	Six Months Ended
	June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(2,136	)	$	(5,459	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		187			331
Provision for inventory losses		152			327
Deferred income taxes		(64	)		(369	)
Equity loss in unconsolidated affiliates		239			2
Goodwill and indefinite-lived intangible asset impairment		1,378			3,186
Long-lived asset impairment		513			2,187
Other, net		71			73
Change in operating assets and liabilities, net of acquisitions:
Receivables		356			144
Inventories		123			(193	)
Contract assets		127			(20	)
Prepaid and other current assets		42			(29	)
Accounts payable		(160	)		(33	)
Accrued liabilities		(174	)		(172	)
Contract liabilities		(20	)		(3	)
Income taxes payable		18			(66	)
Other assets/liabilities, net		(235	)		(17	)
Net cash provided by (used in) operating activities		417		$	(111	)
Cash flows from investing activities:
Purchases of property, plant and equipment		(124	)		(97	)
Business acquisitions, net of cash acquired		—			(65	)
Other		13			6
Net cash used in investing activities	$	(111	)	$	(156	)
Cash flows from financing activities:
Borrowings against lines of credit and other debt		25			—
Cash dividends paid		(19	)		(38	)
Other		(33	)		(1	)
Net cash used in financing activities		(27	)		(39	)
Effect of exchange rates on cash		(3	)		—
Increase (decrease) in cash and cash equivalents		276			(306	)
Cash and cash equivalents, beginning of period		1,171			1,427
Cash and cash equivalents, end of period	$	1,447		$	1,121
Supplemental disclosures of cash flow information:
Cash payments (refunds) during the period for:
Interest	$	42		$	41
Income taxes	$	(63	)	$	70

See notes to unaudited consolidated financial statements.

5

NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)

	Common Stock		Additional Paid in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Loss)			Total Company Stockholders' Equity			Noncontrolling Interests			Total Stockholders' Equity
Balance at December 31, 2019	$	4	$	8,507		$	(1,423	)	$	690		$	7,778		$	68		$	7,846
Net loss		—		—			—			(2,047	)		(2,047	)		(2	)		(2,049	)
Other comprehensive loss		—		—			(232	)		—			(232	)		—			(232	)
Cash dividends, $0.05 per common share		—		—			—			(19	)		(19	)		—			(19	)
Adoption of new accounting standard		—		—			—			(5	)		(5	)		—			(5	)
Noncontrolling interest		—		—			—			—			—			2			2
Stock-based compensation		—		27			—			—			27			—			27
Withholding taxes		—		(18	)		—			—			(18	)		—			(18	)
Balance at March 31, 2020	$	4	$	8,516		$	(1,655	)	$	(1,381	)	$	5,484		$	68		$	5,552
Net income (loss)		—		—			—			(93	)		(93	)		6			(87	)
Other comprehensive income		—		—			42			—			42			—			42
Noncontrolling interest		—		—			—			—			—			(1	)		(1	)
Stock-based compensation		—		27			—			—			27			—			27
Balance at June 30, 2020	$	4	$	8,543		$	(1,613	)	$	(1,474	)	$	5,460		$	73		$	5,533

Common Stock Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Loss) Total Company Stockholders' Equity Noncontrolling Interests Total Stockholders' Equity