NOV Inc. (NYSE:NOV) Q2 2023 Earnings Conference Call July 27, 2023 11:00 AM ET

Company Participants

Blake McCarthy – Vice President-Corporate Development and Investor Relations

Clay Williams – President, Chairman, and Chief Executive Officer

Jose Bayardo – Senior Vice President and Chief Financial Officer

Conference Call Participants

Marc Bianchi – TD Cowen

Luke Lemoine – Piper Sandler

Jim Lyson – Raymond James

Stephen Gengaro – Stifel

Scott Gruber – Citigroup

Blake McCarthy

Welcome, everyone, to NOV's Second Quarter 2023 Earnings Conference Call. With me today are Clay Williams, our Chairman, President and CEO; and Jose Bayardo, our Senior Vice President and CFO.

Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of the federal securities laws. They involve risks and uncertainty, and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or later in the year. For a more detailed discussion of the major risk factors affecting our business, please refer to our latest Forms 10-K and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-GAAP measures. Reconciliations to the nearest corresponding GAAP measures are in our earnings release available on our website.

On a U.S. GAAP basis, for the second quarter of 2023, NOV reported revenues of $2.09 billion and net income of $155 million or $0.39 per fully diluted share. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings release. Later in the call, we will host a question-and-answer session. Please limit yourself to one question and one follow-up to permit more participation.

Now let me turn the call over to Clay.

Clay Williams

Thank you, Blake. For the second quarter of 2023, NOV reported fully diluted earnings per share of $0.39 and EBITDA of $245 million on revenues of $2.1 billion. Adjusted EBITDA was the highest that we've seen since 2019 and earnings per share were the highest since the third quarter of 2015. Second quarter revenue increased 7% sequentially and increased 21% compared to the second quarter of 2022. EBITDA margin was 11.7% of revenue, up 180 basis points from the first quarter of 2023. Sequential EBITDA leverage was 38% and year-over-year leverage was 26% on the 21% top line gain.

Measuring from our pandemic low point in the first quarter of 2021, revenues have improved 68% off bottom, driving 29% EBITDA leverage. Combined book-to-bill came in just shy of one, but overall combined orders in the second quarter were up slightly compared to the first quarter levels. While lower gas prices and tepid oil prices drove North American activity and ordering lower in the second quarter, International and offshore activity continued to gain momentum. Our customers are mobilizing for significant offshore and international drilling campaigns over the next few years, which will require NOV support.