Key Projects And Technologies In Q4: In Q4 2023, NOV (NOV) received a significant award related to interconnector cable-lay systems and subsea cranes. It installed a Brandt iNOVaTHERM thermal treatment unit offshore in Equatorial Guinea to process drilling cuttings and fluid onsite at lower costs. In the rig automation product portfolio, it obtained orders for NOVOS drilling and pipe handling automation and the ongoing Automation Lifecycle Management. The Completion Tools business secured a contract to install production liners and multiple Burst Port System subs in West Texas. It also received orders to provide reinforced thermoplastic pipes in Oman. The company fetched an order for an integrated directional drilling tool contract to drill 14 directional wells in Kuwait. In Eagle Ford, it will supply drill pipe with its Tuboscope coating. It received a multi-year contract to supply premium connection tubulars used in offshore Water-Alternating Gas wells.
Outside legacy energy, it procured a carbon capture and storage (CCS) project in Norway, orders to supply a reclamation system, two seawater treatment and gas dehydration packages, and a geothermal project in Germany. Despite the declining demand in North America, NOV’s management expects the adoption of advanced technology and the growth in international and offshore markets to result in “improving working capital efficiencies and profitability” in 2024.
Revenue And Operating Income: The Rig Technologies segment continued to witness steep quarter-over-quarter revenue growth (12% up), while the Wellbore Technologies and Completion & Production Solutions segments were steady (3% and 6% rise, respectively). Rig Technologies was also the only segment that grew operating income (29% up) from Q3 to Q4. Seasonal increases in aftermarket activities, strong spare parts deliveries, and capital equipment led to the Rig Technologies segment’s outperformance.
However, declining activity in North America, a less favorable sales mix, and an increase in employee benefit expense affected the financial performances of the other segments. New capital equipment orders increased by 20% in Q4.
Cash Flow And Leverage Showed Improvement: NOV’s cash flow from operations turned significantly positive in FY2023 compared to a negative CFO a year ago. Although FCF remained negative, it improved. Debt-to-equity (0.28x) declined from a quarter ago due to higher shareholders’ equity. You may read more about the company in our previous article here.
Thanks for reading the NOV Take Three, designed to give you three critical takeaways from NOV’s earnings report. Soon, we will present a second update on NOV earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
