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NOV Fourth Quarter, Full Year 2021 Results

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NOV Inc. reported fourth quarter and full year 2021 results.

NOV reported fourth quarter revenues of $1.52 billion, an increase of 13 percent compared to the third quarter of 2021 and an increase of 14 percent compared to the fourth quarter of 2020. Net loss for the fourth quarter of 2021 was $40 million, or 2.6 percent of sales, which included $11 million in pre-tax charges related to continued COVID-19 challenges on projects in Asian shipyards and $9 million of Other Items (see Corporate Information for additional details). Adjusted EBITDA (operating profit excluding depreciation, amortization, and Other Items) increased sequentially to $69 million, or 4.5 percent of sales. See reconciliation of Adjusted EBITDA to Net Income (Loss).

Revenues for the full year 2021 were $5.52 billion, operating loss was $134 million, and net loss was $250 million, or $0.65 per share. Adjusted EBITDA for the full year was $229 million, or 4.1 percent of sales.

Clay Williams, Chairman, President, and CEO, said: “Improving oil, gas and offshore wind power activity helped fuel double-digit sequential revenue growth in all three of NOV’s operating segments during the fourth quarter. Solid customer demand helped push newly-placed orders above the Company’s shipments out of backlog once again this quarter, as customers increased activity in response to higher energy prices. Nevertheless, the emergence of the Omicron variant of COVID-19, together with persistent and increasing supply chain disruptions increased freight, manufacturing labor, and component costs in a number of areas and are continuing into 2022. During the fourth quarter, these headwinds affected incremental margin flow-through in all three segments.

“As the world emerges from the pandemic and greater economic activity resumes, it is becoming increasingly evident that supply of petroleum is uncomfortably tight. Global activity needs to increase to meet growing demand while energy transition efforts accelerate. Against this backdrop, we are focused on improving margins through a combination of higher product pricing, growing revenue from NOV’s proprietary technologies, and better execution against ongoing supply chain challenges. The Company’s strong financial position, global reach, large installed base of oilfield and wind installation equipment, and growing portfolio of energy transition technologies position it well as we advance further into the emerging up-cycle.”

Wellbore Technologies

Wellbore Technologies generated revenues of $576 million in the fourth quarter of 2021, an increase of 14 percent from the third quarter of 2021 and an increase of 54 percent from the fourth quarter of 2020. The increase in revenues was driven by continued growth in global drilling activity levels, market share gains in certain product lines, and higher prices. Operating profit was $50 million, or 8.7 percent of sales, and included -$1 million of Other Items. Adjusted EBITDA increased $11 million sequentially and $76 million from the prior year to $88 million, or 15.3 percent of sales.

Completion & Production Solutions

Completion & Production Solutions generated revenues of $549 million in the fourth quarter of 2021, an increase of 15 percent from the third quarter of 2021 and an increase of 1 percent from the fourth quarter of 2020. Operating loss was $16 million, or 2.9 percent of sales, and included $2 million in Other Items. Adjusted EBITDA increased $7 million sequentially and decreased $26 million from the prior year to $2 million, or 0.4 percent of sales. Continued COVID-19 related operational challenges negatively impacted margin flow-through during the quarter.

New orders booked during the quarter totaled $495 million, representing a book-to-bill of 159 percent when compared to the $311 million of orders shipped from backlog. As of December 31, 2021, backlog for capital equipment orders for Completion & Production Solutions was $1.29 billion, an increase of 85% over the prior year.

Rig Technologies

Rig Technologies generated revenues of $431 million in the fourth quarter of 2021, an increase of 11 percent from the third quarter of 2021 and a decrease of 1 percent from the fourth quarter of 2020. Operating profit was $1 million, or less than one percent of sales, and included $3 million of Other Items. Adjusted EBITDA decreased $4 million sequentially and increased $2 million from the prior year to $21 million, or 4.9 percent of sales. A less favorable sales mix, supply chain disruptions, and inflationary costs negatively impacted sequential margin flow-through during the quarter.

New orders booked during the quarter totaled $191 million, representing a book-to-bill of 102 percent when compared to the $188 million of orders shipped from backlog. As of December 31, 2021, backlog for capital equipment orders for Rig Technologies was $2.77 billion.

Corporate Information

During the fourth quarter, the Company recognized $9 million of Other Items due to restructuring costs, net of related credits. See reconciliation of Adjusted EBITDA to Net Income.

As of December 31, 2021, the Company had total debt of $1.71 billion, with $2.00 billion available on its primary revolving credit facility, and $1.59 billion in cash and cash equivalents.

Significant Achievements

NOV successfully delivered a GustoMSC™ NG-16000X wind installation vessel for a customer in Continental Europe. The vessel includes the GustoMSC rack and pinion jacking system with a high-performance variable speed drive, a regenerative power option that significantly enhances fuel efficiency, and a 2,600-ton leg encircling crane that makes it installation-ready for the larger monopile foundations and wind turbines in future developments. Additionally, NOV supplied two fully electric FPSO crane packages designed for loading and unloading shipping vessels, and internal load handling.

NOV received an order for thirty additional NOVOS™ systems from a leading North American driller. The enhanced process execution and rig performance enabled by NOVOS has been a clear differentiator for this customer that has now outfitted the entirety of its active rig fleet with NOVOS automation systems.

NOV booked multiple FPSO topside module awards for the strengthening offshore Brazil market, including the gas dehydration, separation, and water treatment systems for the Mero 4 and P78 projects, large investments that are pivotal to the continuing development of Brazil’s natural resources. These awards are strong examples of the increased appetite to pursue large offshore projects by key national oil company customers. NOV continues to establish itself as a key supplier of production infrastructure technology into a market that is well positioned for growth in the coming decade.

NOV's Tolteq™ measurement while drilling tools continued to expand its geographic scope in the fourth quarter, being deployed for the first time in three new markets – Argentina, Poland, and Belarus. In Argentina, a leading South American drilling service company used the latest generation Tolteq NXT MWD tools to successfully drill an 8,400-ft directional well in the Vaca Muerta shale play. In Poland, an independent directional driller deployed a Tolteq MWD tool to drill three directional re-entry wells, which also utilized a ReedHycalog™ Bi-Center drill bit and Downhole drilling motors to drill an optimal production hole. In Belarus, a vertically integrated exploration and production company successfully drilled two directional wells using Tolteq MWD tools together with NOV's agitator, drilling motor, and ReedHycalog drill bits. The Tolteq MWD tools were able to reliably provide real-time data despite the use of aerated drilling mud, which typically presents challenges for MWD tools.

NOV received an order for a completion and workover riser (“CWOR”) in Brazil, representing the third riser order in 2021. This 6-5/8" V150™ XT-MF™ 69 riser will be used in some of the world's deepest offshore wells. NOV’s robust CWORs are used in high pressure rated connections and designed to withstand repeated make-up and break-out cycles. They can be utilized with drill pipe running and handling equipment and do not require a specialized tubular running services crew. By design, the connection's fast make-up does not limit the riser deployment speed.

NOV WellSite Services has won a contract with a major operator in Guyana for its Brandt Petro-Claim™ system to support the recycle and re-use strategy for its offshore drilling program. This project will support multiple drillships and provides a very aggressive recycle, re-use, and waste minimization program for the operator’s synthetic-base mud system. NOV’s patented Petro Claim process uses electrophoresis to effectively separate the ultra-fine drilled solids out of oil-based mud and recover the valuable base oil for re-use in the mud system. The resulting clean base oil yields significant savings in mud dilution, waste disposal costs, and related logistics, while also lowering the customer’s carbon footprint and decreasing environmental risk.

NOV acquired a leading independent provider of managed pressure drilling (“MPD”) equipment, complete with a significant technology portfolio and engineering team. With a product suite ranging from rotating control devices targeting the West Texas market to full-kit offshore MPD systems integrated with wired drill pipe data services, NOV’s MPD equipment business will fully enable customers to make operational adjustments in real-time and optimize their well construction processes regardless of the drilling environment.

NOV was asked by the City of Los Angeles Bureau of Street Lighting to provide tapered round and octagonal small cell concrete poles designed to maintain the façade of the city's 21 Historic Preservation Overlay Zones. This unique project is the culmination of a 3-year relationship and collaborative engineering development between NOV and the City of Los Angeles.

NOV's VectorZIEL 600 Rotary Steerable System tool was deployed in the Middle East to drill an 8 ½" build section in a single run. The tool successfully delivered the desired 6°/30m build rate, and the near bit gamma measurement capability was used to adjust the well plan in real-time and land the well in the target zone. Offering a higher rate of penetration, improved cuttings removal, and precise trajectory control, the system helps produce higher-quality boreholes at reduced operational costs, even in the most demanding drilling applications.

NOV was awarded a three-year contract with a national oil company in the Far East for real-time data monitoring and management services, supporting 59 onshore rigs. This contract will utilize NOV’s RigSense™ wellsite data acquisition product along with its RMS and WellData cloud-based portal solutions, which enable real-time monitoring of drilling information anywhere in the world as if at the wellsite. With its feature-rich toolkit, users can seamlessly collaborate and share insights to reduce nonproductive time and improve operational efficiency by quickly identifying potential trouble spots, overseeing drilling efficiencies across a rig fleet, and comparing well production to offset wells.