10-Q 1 nov-20220331.htm 10-Q 10-Q
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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 MARCH 31, 2022

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

img78615959_0.jpg 

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) 341-4802

(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 April 15, 2022 the registrant had 392,797,495 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)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,406

 

 

$

1,591

 

Receivables, net

 

 

1,465

 

 

 

1,321

 

Inventories, net

 

 

1,440

 

 

 

1,331

 

Contract assets

 

 

433

 

 

 

461

 

Prepaid and other current assets

 

 

205

 

 

 

198

 

Total current assets

 

 

4,949

 

 

 

4,902

 

Property, plant and equipment, net

 

 

1,806

 

 

 

1,823

 

Lease right-of-use assets, operating

 

 

348

 

 

 

361

 

Lease right-of-use assets, financing

 

 

174

 

 

 

176

 

Goodwill

 

 

1,525

 

 

 

1,527

 

Intangibles, net

 

 

495

 

 

 

503

 

Investment in unconsolidated affiliates

 

 

62

 

 

 

50

 

Other assets

 

 

194

 

 

 

208

 

Total assets

 

$

9,553

 

 

$

9,550

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

643

 

 

$

612

 

Accrued liabilities

 

 

807

 

 

 

778

 

Contract liabilities

 

 

403

 

 

 

392

 

Current portion of lease liabilities

 

 

93

 

 

 

99

 

Current portion of long-term debt

 

 

5

 

 

 

5

 

Accrued income taxes

 

 

28

 

 

 

24

 

Total current liabilities

 

 

1,979

 

 

 

1,910

 

Lease liabilities

 

 

568

 

 

 

576

 

Long-term debt

 

 

1,709

 

 

 

1,708

 

Deferred income taxes

 

 

66

 

 

 

66

 

Other liabilities

 

 

221

 

 

 

226

 

Total liabilities

 

 

4,543

 

 

 

4,486

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock - par value $.01; 1 billion shares authorized; 392,820,252 and
   
392,673,077 shares issued and outstanding at March 31, 2022 and
  December 31, 2021

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

8,690

 

 

 

8,685

 

Accumulated other comprehensive loss

 

 

(1,532

)

 

 

(1,546

)

Retained deficit

 

 

(2,216

)

 

 

(2,146

)

Total Company stockholders' equity

 

 

4,946

 

 

 

4,997

 

Noncontrolling interests

 

 

64

 

 

 

67

 

Total stockholders’ equity

 

 

5,010

 

 

 

5,064

 

Total liabilities and stockholders’ equity

 

$

9,553

 

 

$

9,550

 

 

See notes to unaudited consolidated financial statements.

2


 

NOV INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

(In millions, except per share data)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Revenue

 

$

1,548

 

 

$

1,249

 

Cost of revenue

 

 

1,334

 

 

 

1,093

 

Gross profit

 

 

214

 

 

 

156

 

Selling, general and administrative

 

 

235

 

 

 

244

 

Operating loss

 

 

(21

)

 

 

(88

)

Interest and financial costs

 

 

(19

)

 

 

(20

)

Interest income

 

 

1

 

 

 

2

 

Equity income (loss) in unconsolidated affiliates

 

 

6

 

 

 

(4

)

Other income (expense), net

 

 

(2

)

 

 

(10

)

Loss before income taxes

 

 

(35

)

 

 

(120

)

Provision (benefit) for income taxes

 

 

14

 

 

 

(6

)

Net loss

 

 

(49

)

 

 

(114

)

Net income attributable to noncontrolling interests

 

 

1

 

 

 

1

 

Net loss attributable to Company

 

$

(50

)

 

$

(115

)

Net loss attributable to Company per share:

 

 

 

 

 

 

Basic

 

$

(0.13

)

 

$

(0.30

)

Diluted

 

$

(0.13

)

 

$

(0.30

)

Cash dividends per share

 

$

0.05

 

 

$

-

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

387

 

 

 

385

 

Diluted

 

 

387

 

 

 

385

 

 

See notes to unaudited consolidated financial statements.

3


 

NOV INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Net loss

 

$

(49

)

 

$

(114

)

Currency translation adjustments

 

 

22

 

 

 

(19

)

Changes in derivative financial instruments, net of tax

 

 

(8

)

 

 

(2

)

Comprehensive income (loss)

 

 

(35

)

 

 

(135

)

Comprehensive income attributable to noncontrolling interest

 

 

1

 

 

 

1

 

Comprehensive income (loss) attributable to Company

 

$

(36

)

 

$

(136

)

 

See notes to unaudited consolidated financial statements.

4


 

NOV INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In millions)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net loss

 

$

(49

)

 

$

(114

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

74

 

 

 

79

 

Provision for inventory losses

 

 

24

 

 

 

24

 

Deferred income taxes

 

 

(3

)

 

 

(1

)

Equity (income) loss in unconsolidated affiliates

 

 

(6

)

 

 

4

 

Other, net

 

 

54

 

 

 

25

 

Change in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Receivables

 

 

(156

)

 

 

(5

)

Inventories

 

 

(133

)

 

 

28

 

Contract assets

 

 

27

 

 

 

35

 

Prepaid and other current assets

 

 

(11

)

 

 

33

 

Accounts payable

 

 

31

 

 

 

(22

)

Accrued liabilities

 

 

17

 

 

 

(62

)

Contract liabilities

 

 

12

 

 

 

(5

)

Income taxes payable

 

 

4

 

 

 

(13

)

Other assets/liabilities, net

 

 

12

 

 

 

(33

)

Net cash used in operating activities

 

$

(103

)

 

$

(27

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(46

)

 

 

(49

)

Other

 

 

(3

)

 

 

(2

)

Net cash used in investing activities

 

$

(49

)

 

$

(51

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings against lines of credit and other debt

 

 

1

 

 

 

17

 

Cash dividends paid

 

 

(20

)

 

 

 

Financing leases

 

 

(6

)

 

 

(7

)

Other

 

 

(11

)

 

 

(13

)

Net cash used in financing activities

 

 

(36

)

 

 

(3

)

Effect of exchange rates on cash

 

 

3

 

 

 

(4

)

Decrease in cash and cash equivalents

 

 

(185

)

 

 

(85

)

Cash and cash equivalents, beginning of period

 

 

1,591

 

 

 

1,692

 

Cash and cash equivalents, end of period

 

$

1,406

 

 

$

1,607

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash payments (refunds) during the period for:

 

 

 

 

 

 

Interest

 

$

4

 

 

$

3

 

Income taxes

 

$

11

 

 

$

9

 

 

See notes to unaudited consolidated financial statements.

5


 

NOV INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(In millions)

 

 

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid in
Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Retained
Earnings
(Deficit)

 

 

Total
Company
Stockholders'
Equity

 

 

Noncontrolling
Interests

 

 

Total
Stockholders'
Equity

 

Balance at December 31, 2021

 

 

393

 

 

$

4

 

 

$

8,685

 

 

$

(1,546

)

 

$

(2,146

)

 

$

4,997

 

 

$

67

 

 

$

5,064

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50

)

 

 

(50

)

 

 

1

 

 

 

(49

)

Other comprehensive income , net

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

 

 

 

 

 

14

 

Cash dividends, $0.05 per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

(20

)

 

 

 

 

 

(20

)

Stock-based compensation

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

Withholding taxes

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

(12

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

(4

)

Balance at March 31, 2022

 

 

393

 

 

$

4

 

 

$

8,690

 

 

$

(1,532

)

 

$

(2,216

)

 

$

4,946

 

 

$

64

 

 

$

5,010

 

 

 

 

Shares
Outstanding

 

 

Common
Stock

 

 

Additional
Paid in
Capital

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Retained
Earnings
(Deficit)

 

 

Total
Company
Stockholders'
Equity

 

 

Noncontrolling
Interests

 

 

Total
Stockholders'
Equity

 

Balance at December 31, 2020

 

 

388

 

 

$

4

 

 

$

8,591

 

 

$

(1,509

)

 

$

(1,876

)

 

$

5,210

 

 

$

69

 

 

$

5,279

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(115

)

 

 

(115

)

 

 

1

 

 

 

(114

)

Other comprehensive loss, net

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

(21

)

 

 

 

 

 

(21

)

Stock-based compensation

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Common stock issued

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Withholding taxes

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

(13

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

(1

)

 

 

(1

)

Balance at March 31, 2021

 

 

390

 

 

$

4

 

 

$

8,598

 

 

$

(1,530

)

 

$

(1,991

)

 

$

5,081

 

 

$

69

 

 

$

5,150

 

 

See notes to unaudited consolidated financial statements.

6


 

NOV INC.

Notes to Consolidated Financial Statements (Unaudited)

 

1.
Basis of Presentation

The accompanying unaudited consolidated financial statements of NOV Inc. (“NOV” or the “Company”) present information in accordance with generally accepted accounting principles (“GAAP”) in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. They do not include all information or footnotes required by GAAP in the United States for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K. Certain reclassifications have been made to prior period financial information in order to conform with current period presentation.

In our opinion, the consolidated financial statements include all adjustments, which are of a normal recurring nature unless otherwise disclosed, necessary for a fair presentation of the results for the interim periods. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect reported and contingent amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The fair values of cash and cash equivalents, receivables and payables were approximately the same as their presented carrying values because of the short maturities of these instruments. The fair value of long-term debt is provided in Note 8, and the fair values of derivative financial instruments are provided in Note 11.

2.
Inventories, net

Inventories consist of (in millions):

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Raw materials and supplies

 

$

411

 

 

$

350

 

Work in process

 

 

239

 

 

 

218

 

Finished goods and purchased products

 

 

1,250

 

 

 

1,207

 

 

 

 

1,900

 

 

 

1,775

 

Less: Inventory reserve

 

 

(460

)

 

 

(444

)

Total

 

$

1,440

 

 

$

1,331

 

 

3.
Accrued Liabilities

Accrued liabilities consist of (in millions):

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Compensation

 

$

218

 

 

$

209

 

Taxes (non-income)

 

 

86

 

 

 

119

 

Vendor costs

 

 

160

 

 

 

124

 

Warranties

 

 

73

 

 

 

73

 

Insurance

 

 

44

 

 

 

45

 

Interest

 

 

21

 

 

 

6

 

Commissions

 

 

17

 

 

 

17

 

Fair value of derivatives

 

 

15

 

 

 

8

 

Other

 

 

173

 

 

 

177

 

Total

 

$

807

 

 

$

778

 

 

7


 

4.
Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows (in millions):

 

 

 

 

 

 

Derivative

 

 

Defined

 

 

 

 

 

 

Currency

 

 

Financial

 

 

Benefit

 

 

 

 

 

 

Translation

 

 

Instruments,

 

 

Plans,

 

 

 

 

 

 

Adjustments

 

 

Net of Tax

 

 

Net of Tax

 

 

Total

 

Balance at December 31, 2021

 

$

(1,515

)

 

$

7

 

 

$

(38

)

 

$

(1,546

)

Accumulated other comprehensive income (loss) before
   reclassifications

 

 

22

&#