Company Reports

NOV produced second-quarter revenue of $2.13 billion, down 2% year on year from disruptions in the Middle East but up 4% sequentially. And despite the year-on-year sales decline, EBITDA margin improved roughly 180 basis points year on year, mostly on higher energy equipment sales.

NOV is a large, diversified oilfield services supplier with leading market positions in rig equipment, solids control services, and downhole tools, among others. But since the peak of the US shale revolution until the present, the company has undergone a period of meaningful value destruction, only starting to turn around this slide in the early 2020s with cost rationalization initiatives. The lean return years have been due to a meaningful fall in global rig count due to rising producer efficiencies that has hurt NOV’s core business. NOV will still have to contend with these issues moving forward.

NOV saw total revenue decline 2% year on year, driven by disruptions in the Middle East. Higher costs from these same disruptions caused EBITDA margins to slip 340 basis points. The company also returned $100 million of capital to shareholders through dividends and buybacks.

NOV is a large, diversified oilfield services supplier with leading market positions in rig equipment, solids control services, and downhole tools, among others. But since the peak of the US shale revolution until the present, the company has undergone a period of meaningful value destruction, only starting to turn around this slide in the early 2020s with cost rationalization initiatives. The lean return years have been due to a meaningful fall in global rig count due to rising producer efficiencies that has hurt NOV’s core business. NOV will still have to contend with these issues amid OPEC+’s decision to keep the market well supplied with oil in 2025 and the related fallout.

Over the March 14-15 weekend, the US conducted large-scale strikes on Kharg Island, according to NBC News. The island houses Iran's critical crude export terminal, which ships over 90% of Iran's crude exports. We understand that the strikes focused on military targets and avoided oil infrastructure.

NOV's fourth-quarter revenue of $2.28 billion and EBITDA of $267 million exceeded our expectations, though the company's effective tax rate moved meaningfully higher than we earmarked.

NOV is a large, diversified oilfield services supplier with leading market positions in rig equipment, solids control services, and downhole tools, among others. But since the peak of the US shale revolution until the present, the company has undergone a period of meaningful value destruction, only starting to turn around this slide in the early 2020s with cost rationalization initiatives. The lean return years have been due to a meaningful fall in global rig count due to rising producer efficiencies that has hurt NOV’s core business. NOV will still have to contend with these issues amid OPEC+’s decision to keep the market well supplied with oil in 2025 and the related fallout.

NOV third-quarter revenue decreased both sequentially and year on year by nearly 1% to $2.18 billion, though adjusted EBITDA of $258 million meant it improved margin by 40 basis points to 11.9%. The stock rose roughly 7% during the trading day Oct. 28.

NOV is a large diversified oilfield-services supplier that competes with SLB, Halliburton, and Baker Hughes. It grapples with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

NOV’s second-quarter revenue declined 1% to $2.2 billion, while EBITDA margin declined about 121 basis points to 11.5%, both year on year. Shares were down over 8% on July 29.

NOV is a large diversified oilfield-services supplier that competes with Schlumberger, Halliburton, and Baker Hughes. It grapples with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

NOV’s first-quarter revenue declined 2% year on year to $2.1 billion, even as its adjusted EBITDA margin expanded 80 basis points year on year. Still, shares were down over 2% on April 29.

NOV is the fourth-largest diversified oilfield-services supplier after Schlumberger, Halliburton, and Baker Hughes. It competes with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

NOV is the fourth-largest diversified oilfield-services supplier after Schlumberger, Halliburton, and Baker Hughes. It competes with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

NOV is the fourth-largest diversified oilfield-services supplier after Schlumberger, Halliburton, and Baker Hughes. It competes with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

No-moat-rated NOV’s fourth-quarter revenue of $2.31 billion was broadly in line with our expectations, though earnings per share of $0.41 modestly missed what we hoped to see. Even so, the stock performed well on the Feb. 5 trading day (up 12%-13% at the time of writing) after the fourth-quarter print. We attribute its performance to excessively bearish expectations from the Street that overreacted to management’s dour commentary last quarter and strong free cash flow generation of $473 million in the fourth quarter. While we don’t expect these tailwinds to recur, since they were tied to normalizing global supply chains, working capital improvements allowed NOV to convert 86% of its adjusted EBITDA into free cash flow. We think over 50% free cash flow conversion is a more normal scenario.

NOV is the fourth-largest diversified oilfield-services supplier after Schlumberger, Halliburton, and Baker Hughes. It competes with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in both onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

NOV reported third-quarter results below PitchBook consensus, with earnings per share at $0.33 versus a $0.35 median expectation. Solid demand for offshore production-related equipment continued to drive strong orders for energy equipment, but overall consolidated revenue for offshore declined 2% year over year. The energy products and services segment’s offshore revenue fell due to lower drill pipe shipments and conductor pipe connection sales. NOV’s consolidated EBITDA improved 7% year over year to $286 million, with EBITDA margin increasing 90 basis points to 13.1%. Management continues to focus on contracts wins and projects that meet its return and margin expectations. Even so, we believe that margin outperformance is temporary and expect NOV will give up most of these gains. We don’t expect to materially change our $22 fair value estimate.

NOV is the fourth-largest diversified oilfield-services supplier after Schlumberger, Halliburton, and Baker Hughes. It competes with the Big Three in many end markets, but its significant presence in equipment manufacturing sets it apart. NOV is the largest original equipment manufacturer of rig systems for oilfield-services providers in both onshore and offshore markets. It's maintained majority market share for two decades, controlling over half the market.

NOV reported second-quarter results that topped PitchBook consensus, with earnings per share at $0.57 versus a $0.33 median expectation. This was due largely to the energy equipment segment, which was able to grow revenue while reducing costs, resulting in a 169-basis-point (10% versus 12%) and 1,100-basis-point (8% versus 19%) boost to adjusted EBITDA and operating margins from the prior quarter, respectively. The improved margins were the result of previously announced cost-saving measures and a more favorable product mix drawn from order backlogs. Our view is that margin outperformance is temporary and should give up most of these gains. After incorporating the quarterly results, we maintain our $22 fair value estimate and no-moat rating.