What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-04-27 · 201 added, 160 removed, 573 unchanged (39% of the section changed)

33 unchanged sentences

393,776,806 and

392,832,752 shares issued and outstanding at March 31, 2023 and

392,832,752 shares issued and outstanding at June 30, 2023 and

December 31, 2022

7 unchanged sentences

See notes to unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In millions, except per share data)

Three Months Ended

Six Months Ended

Cost of revenue

Selling, general and administrative

Operating profit (loss)

Operating profit

Interest and financial costs

2 unchanged sentences

Other expense, net

Net income (loss) before income taxes

Provision for income taxes

Net income (loss)

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to Company

Net income (loss) attributable to Company per share:

Net income before income taxes

Provision (benefit) for income taxes

Net income attributable to noncontrolling interests

Net income attributable to Company

Net income attributable to Company per share:

Cash dividends per share

1 unchanged sentence

See notes to unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(In millions)

Three Months Ended

Net income (loss)

Six Months Ended

Currency translation adjustments

2 unchanged sentences

Comprehensive income (loss)

Comprehensive income (loss) attributable to noncontrolling interest

Comprehensive income (loss) loss attributable to Company

Comprehensive income attributable to noncontrolling interest

Comprehensive income (loss) attributable to Company

See notes to unaudited consolidated financial statements.

1 unchanged sentence

(In millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in

Adjustments to reconcile net income to net cash used in

operating activities:

3 unchanged sentences

Equity income in unconsolidated affiliates

Stock-based compensation

Change in operating assets and liabilities, net of acquisitions:

12 unchanged sentences

Borrowings against lines of credit and other debt

Payments against lines of credit and other debt

Cash dividends paid

13 unchanged sentences

Comprehensive

Income (Loss)

Stockholders'

2 unchanged sentences

Balance at December 31, 2022

Net income (loss)

Other comprehensive income, net

5 unchanged sentences

Balance at March 31, 2023

Other comprehensive income, net

Cash dividends, $ 0.05 per common share

Stock-based compensation

Balance at June 30, 2023

Shares Issued

Comprehensive

Income (Loss)

Stockholders'

2 unchanged sentences

Balance at December 31, 2021

Net income (loss)

Other comprehensive loss, net

Other comprehensive income, net

Cash dividends, $ 0.05 per common share

2 unchanged sentences

Balance at March 31, 2022

Other comprehensive loss, net

Cash dividends, $ 0.05 per common share

Stock-based compensation

Balance at June 30, 2022

See notes to unaudited consolidated financial statements.

7 unchanged sentences

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, 2023 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 2023 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.

12 unchanged sentences

Fair value of derivatives

Accumulated Other Comprehensive Income (Loss)

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

Accumulated Other Comprehensive Loss

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

Balance at December 31, 2022

2 unchanged sentences

Amounts reclassified from accumulated other comprehensive

Balance at March 31, 2023

The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions):

Three Months Ended March 31,

Balance at June 30, 2023

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

Three Months Ended June 30,

Cost of revenue

Six Months Ended June 30,

Cost of revenue

Other expense

6 unchanged sentences

The movement in other comprehensive income (loss) from period to period will be the combination of:

1) changes in fair value of open derivatives of $( 12 ) million during the three months ended March 31, 2023 ;

and, 2) the outflow of other comprehensive loss related to cumulative changes in the fair value of derivatives that have settled in the current period were $ 2 million during the three months ended March 31, 2023 .

1) changes in fair value of open derivatives of ($ 6 ) million and ($ 18 ) million during the three and six months ended June 30, 2023 ;

and, 2) the outflow of other comprehensive loss related to cumulative changes in the fair value of derivatives that have settled in the current period were $ 5 million and $ 7 million during the three and six months ended June 30, 2023 .

Financial results by operating segment are as follows (in millions):

Three Months Ended

Six Months Ended

Wellbore Technologies

18 unchanged sentences

Further, during the third quarter of 2022, the Company sold its business in Belarus and committed to a plan to sell its businesses in Russia.

The sale is subject to government approval under Russian law.

As a result of these actions, we recorded $ 41 million in impairment and other charges within costs of revenue in the first quarter of 2022.

As of March 31, 2023, all our Russian assets and liabilities were classified as held for sale and reported in “Prepaid and Other Current Assets”

The sale is subject to government approval under Russian law and other jurisdictions.

As a result of these actions, we recorded $ 41 million in impairment and other charges within costs of revenue for the six months ended June 30, 2022.

As of June 30, 2023, all our Russian assets and liabilities were classified as held for sale and reported in “Prepaid and Other Current Assets”

and “Accrued Liabilities”, respectively, in our Consolidated Balance Sheet.

We expect to complete the sale of our Russian entities within the next 12 months, subject to regulatory approval.

Total other items included in operating profit for the three months ended March 31, 2023, were a pre-tax credit of $ 4 million primarily related to gains on sales of previously reserved inventory.

Total other items included in operating profit for the three months ended March 31, 2022, were pre-tax charges for severance, facility closures, and other items of $( 45 ) million.

Other items in the first quarter of 2022 included impairment and other charges associated with the Company's operations in Russia, Belarus, and Ukraine discussed above.

Total other items included in operating profit for the three and six months ended June 30, 2023 , were pre-tax credits of $ 7 million and $ 11 million, respectively, primarily related to gains on sales of previously reserved inventory.

Total other items included in operating profit for the three and six months ended June 30, 2022 , were pre-tax charges for severance, facility closures, and other items of $ 14 million, net of related credits of $ 16 million, and $ 59 million, net of related credits of $ 17 million, respectively.

Other items for the six months ended June 30, 2022 included impairment and other charges associated with the Company's operations in Russia, Belarus, and Ukraine discussed above.

Disaggregation of Revenue

2 unchanged sentences

and Canada (in millions):

Three Months Ended March 31,

Three Months Ended June 30,

North America

International

Six Months Ended June 30,

North America

International

Performance Obligations

Net revenue recognized from performance obligations satisfied in previous periods was $ 13 million for the three months ended March 31, 2023 primarily due to change orders.

Net revenue recognized from performance obligations satisfied in previous periods was $ 5 million for the three months ended June 30, 2023 primarily due to change orders.

Remaining performance obligations represent the transaction price of firm orders for all revenue streams for which work has not been performed on contracts with original expected duration of one year or more.

We do not disclose the remaining performance obligations of royalty contracts, service contracts for which there is a right to invoice, and short-term contracts that are expected to have a duration of one year or less.

As of March 31, 2023 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 4,224 million.

As of June 30, 2023 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 4,210 million.

The Company expects to recognize approximately $ 761 million in revenue for the remaining performance obligations in 2023 and $ 3,449 million in 2024 and thereafter.

6 unchanged sentences

Currency translation adjustments and other

Balance at March 31, 2023

Balance at June 30, 2023

Royalty Revenue

The Company recognizes royalty revenue due under various licenses for the Company's intellectual property, including for technology related to drill bits.

The Company recognized revenue for drill bit licenses of approximately $ 21 million and $ 41 million for the three and six months ended June 30, 2023, respectively, and $ 20 million and $ 40 million for the three and six months ended June 30, 2022, respectively.

As previously disclosed, the Company is currently pursuing litigation against certain non-paying licensees.

See Note 15 for discussion of the ongoing litigation.

Allowance for Credit Losses

1 unchanged sentence

The Company’s customer base, mostly in the oil and gas industry, have generally similar collectability risk characteristics, although larger and state-owned customers may have lower risk than smaller independent customers.

As of March 31, 2023, the allowance for credit losses totaled $ 71 million.

As of June 30, 2023, the allowance for credit losses totaled $ 76 million.

The changes in the carrying amount of the allowance for credit losses are as follows (in millions):

Balance at December 31, 2022

1 unchanged sentence

Recoveries collected

Balance at March 31, 2023

Balance at June 30, 2023

The Company leases certain facilities and equipment to support its operations around the world.

19 unchanged sentences

The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60 %.

As of March 31, 2023 , the Company was in compliance with a debt-to-capitalization ratio of 27.0 % and had no outstanding borrowings or letters of credit issued under the facility, resulting in $ 2.0 billion of available funds.

As of June 30, 2023 , the Company was in compliance with a debt-to-capitalization ratio of 26.4 % and had no outstanding borrowings or letters of credit issued under the facility, resulting in $ 2.0 billion of available funds.

Additionally, a consolidated joint venture of the Company borrowed $ 120 million against a $ 150 million bank line of credit for the construction of a facility in Saudi Arabia.

1 unchanged sentence

The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75 %.

As of March 31, 2023 , the joint venture was in compliance.

As of June 30, 2023 , the joint venture was in compliance.

The facility construction was completed in the fourth quarter of 2022, and the joint venture will not have future borrowings on the line of credit.

The line of credit repayment schedule began in December 2022 with final payment no later than June 2032 .

As of March 31, 2023, the Company has a carrying value of $ 114 million in borrowings related to this line of credit.

As of June 30, 2023 , the Company has $ 109 million in borrowings related to this line of credit.

The carrying value of debt under the Company’s consolidated joint venture approximates fair value because the interest rates are variable and reflective of current market rates.

1 unchanged sentence

The Company can repay the entire outstanding facility balance without penalty at its sole discretion.

Other debt at March 31, 2023 included $ 32 million of funding provided by minority interest partners of NOV consolidated joint ventures, of which $ 3 million is due in the next twelve months.

The Company had $ 464 million of outstanding letters of credit at March 31, 2023, primarily in the U.S.

and Norway, that are under various bilateral letter of credit facilities.

Other debt at June 30, 2023 included $ 33 million of funding provided by minority interest partners of NOV consolidated joint ventures, of which $ 3 million is due in the next twelve months.

The Company had $ 481 million of outstanding letters of credit at June 30, 2023, primarily in Norway and Netherlands, that are under various bilateral letter of credit facilities.

Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

At March 31, 2023 and December 31, 2022, the fair value of the Company’s unsecured Senior Notes approximated $ 1,272 million and $ 1,215 million, respectively.

At June 30, 2023 and December 31, 2022, the fair value of the Company’s unsecured Senior Notes approximated $ 1,256 million and $ 1,215 million, respectively.

The fair value of the Company’s debt is estimated using Level 2 inputs in the fair value hierarchy and is based on quoted prices for those of similar instruments.

At March 31, 2023 and December 31, 2022, the carrying value of the Company’s unsecured Senior Notes approximated $ 1,585 million.

The effective tax rate for the three months ended March 31, 2023 was 13.8 %, compared to ( 39.3 )% for the same period in 2022.

At June 30, 2023 and December 31, 2022, the carrying value of the Company’s unsecured Senior Notes approximated $ 1,585 million.

The effective tax rate for the three and six months ended June 30, 2023 was 10.8 % and 12.1 %, respectively, compared to ( 2.9 )% and 36.4 % for the same periods in 2022.

The effective tax rate for 2023 was positively impacted by the utilization of previously unrealized loss carryforwards and tax credits as well as favorable adjustments related to changes in certain exchange rates, partially offset by current year losses in certain jurisdictions with no tax benefit.

In 2022, the Company received and paid a $ 51 million transfer pricing tax assessment in Denmark.

The Company and its advisors believe the assessment is without merit, but the Company was required to pay the assessment to pursue a settlement within Denmark's legal system.

The Company is presently appealing and believes it will be reimbursed following a successful appeals process.

The payment has been recorded as a long-term receivable.

Additionally, the IRS is examining the Company’s tax returns for 2017 and 2018 and has proposed an adjustment to certain restructuring steps which occurred in 2017.

The Company and its advisors believe these restructuring steps were properly completed in accordance with U.S.

tax laws and regulations and will appeal the proposed adjustment.

However, if the Company is unsuccessful in the appeals process, the IRS proposed adjustment would be substantially offset by the utilization of foreign tax credit carryforwards which are fully reserved by a valuation allowance and $ 48 million additional income tax expense would be owed.

Stock-Based Compensation

1 unchanged sentence

Long-Term Incentive Plan (the “NOV Plan”), was approved by shareholders on May 11, 2018 and amended and restated on May 24, 2022.

The NOV Plan provides for the granting of stock options, restricted stock, restricted stock units, performance awards, phantom shares, stock appreciation rights, stock payments and substitute awards.

The NOV Plan provides for the granting of stock options,

restricted stock, restricted stock units, performance awards, phantom shares, stock appreciation rights, stock payments and substitute awards.

The number of shares authorized under the NOV Plan is 55.7 million.

The NOV Plan is also subject to a fungible ratio concept,

such that the issuance of stock options and stock appreciation rights reduces the number of available shares under the NOV Plan on a 1-for-1 basis, and the issuance of other awards reduces the number of available shares under the NOV Plan on a 1.5-for-1 basis.

At March 31, 2023 , approximately 12.8 million shares remained available for future grants under the NOV Plan.

The NOV Plan is also subject to a fungible ratio concept, such that the issuance of stock options and stock appreciation rights reduces the number of available shares under the NOV Plan on a 1-for-1 basis, and the issuance of other awards reduces the number of available shares under the NOV Plan on a 1.5-for-1 basis.

At June 30, 2023, approximately 12.8 million shares remained available for future grants under the NOV Plan.

The Company also has outstanding awards under its other stock-based compensation plan known as the National Oilwell Varco, Inc.

Long-Term Incentive Plan (the “Plan”), however the Company is no longer granting new awards under the Plan.

On February 23, 2023, under the NOV Plan, the Company granted 1,014,002 stock options with a fair value of $ 9.75 per option and an exercise price of $ 21.76 per share;

2,228,226 restricted stock units with a fair value of $ 21.76 per share;

and performance share awards (PSAs) to senior management employees with potential payouts varying from zero to 960,478 shares.

The stock options vest over a three-year period from the grant date.

The restricted stock units vest in three equal annual installments commencing on the first anniversary of the grant date.

The 2023 PSAs can be earned based on performance against two established goals over a three-year period :

85 % with a TSR (total shareholder return) goal and 15 % with an internal NVA (“NOV Value Added”, a return on capital metric) goal.

TSR performance is determined by comparing the Company’s TSR with the TSR of the members of the Philadelphia Stock Exchange’s Oil Services Sector Index (OSX) for the three-year performance period.

The TSR portion of the performance share awards is subject to a vesting cap equal to 100% of Target Level if the Company’s absolute TSR is negative, regardless of relative TSR results.

Conversely, if the Company’s absolute TSR is greater than 15% annualized over the three-year performance period the payout amount shall not be less than 50% of Target Level, regardless of relative TSR results.

The NVA goal is based on the Company’s improvement in NVA from the beginning of the performance period until the end of the performance period.

NVA is calculated as an amount equal to the Company’s (a) gross cash earnings less (b) average gross operating assets times an amount equal to a required return on assets, with certain adjustments.

Total expense for all stock-based compensation arrangements was $ 15 million and $ 16 million for the three months ended March 31, 2023 and 2022, respectively.

There was no income tax benefit recognized in the Consolidated Statements of Income (Loss) for stock-based compensation arrangements under the NOV Plan for each of the three months ended March 31, 2023 and 2022 .

On May 17, 2023, the Company granted 84,000 restricted stock units with a fair value of $ 15.00 per share.

The awards were granted to non-employee members of the board of directors and vest on the first anniversary of the grant date.

Total expense for all stock-based compensation arrangements was $ 17 million and $ 32 million for the three and six months ended June 30, 2023, respectively and $ 17 million and $ 33 million for the three and six months ended June 30, 2022, respectively.

There was no income tax benefit recognized in the Consolidated Statements of Income for stock-based compensation arrangements under the NOV Plan for each of the three and six months ended June 30, 2023 and 2022 .

Derivative Financial Instruments

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To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company instituted a cash flow hedging program.

line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues”

For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on the derivative instrument is recorded in accumulated other comprehensive income (loss) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged transaction affects earnings (e.g., in “revenues”

when the hedged transactions are cash flows associated with forecasted revenues).

4 unchanged sentences

The gain or loss on the derivative instrument is recognized in earnings in other income (expense), together with the changes in the hedged nonfunctional monetary accounts.

The amount of gain (loss) recognized in other income (expense), net was $( 5 ) million for the three months ended March 31, 2023 , and $( 3 ) million for the three months ended March 31, 2022, respectively.

The amount of gain (loss) recognized in other income (expense), net was ($ 5 ) million and ($ 10 ) million for the three and six months ended June 30, 2023 , respectively, and ($ 11 ) million and ($ 14 ) million for the three and six months ended June 30, 2022, respectively.

The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions):

19 unchanged sentences

Accrued liabilities

Foreign exchange contracts

Other Liabilities

Total derivatives not designated

as hedging instruments under ASC

Total derivatives

Net Income (Loss) Attributable to Company Per Share

Net Income Attributable to Company Per Share

The following table sets forth the computation of weighted average basic and diluted shares outstanding (in millions, except per share data):

Three Months Ended

Net income (loss) attributable to Company

Six Months Ended

Net income attributable to Company

Basic—weighted average common shares outstanding

2 unchanged sentences

Diluted outstanding shares

Net income (loss) attributable to Company per share:

Net income attributable to Company per share:

Cash dividends per share

1 unchanged sentence

The two-class method requires a portion of net income attributable to Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents if declared.

Net income (loss) attributable to the Company allocated to these participating securities was immaterial for each of the three months ended March 31, 2023 and 2022 , respectively.

The Company had stock options outstanding that were anti-dilutive totaling 16 million and 22 million shares for the three months ended March 31, 2023 and 2022 , respectively.

Net income attributable to the Company allocated to these participating securities was immaterial for each of the three and six months ended June 30, 2023 and 2022 , respectively.

The Company had stock options outstanding that were anti-dilutive totaling 23 million and 22 million shares for the three and six months ended June 30, 2023 , respectively, compared to 20 million and 21 million shares for the three and six months ended June 30, 2022 , respectively.

Cash Dividends

Cash dividends were $ 20 million for both the three months ended March 31, 2023 and March 31, 2022 .

Cash dividends were $ 20 million and $ 40 million for the three and six months ended June 30, 2023 compared to $ 19 million and $ 39 million for the three and six months ended June 30, 2022 .

The declaration and payment of future dividends is at the discretion of the Company’s Board of Directors and will be dependent upon the Company’s results of operations, financial condition, capital requirements and other factors deemed relevant by the Company’s Board of Directors.

15 unchanged sentences

negligence, breach of contract, strict liability, product liability, and other theories of liability.

For some of these contingent claims and potential liabilities, the Company’s insurance coverage may not apply, exclusions to coverage may apply or legal impediments may apply.

For some of these contingent claims and potential liabilities, the Company’s insurance coverage may not apply, or exclusions to coverage or legal impediments may apply.

In such instances, settlement or other resolution of such claims, individually or collectively, could have a material financial or reputational impact on the Company.

As of March 31, 2023, the Company recorded reserves in an amount believed to be sufficient, given the range of potential outcomes, for contingent liabilities representing all contingencies believed to be probable.

As of June 30, 2023, the Company recorded reserves in an amount believed to be sufficient, given the range of potential outcomes, for contingent liabilities representing all contingencies believed to be probable.

These reserves include costs currently and reasonably estimated to be incurred for reclamation of a closed barite mine and product liability claims, as well as other circumstances involving material claims.

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These estimated liabilities are based on the Company’s assessment of the nature of these matters, their progress toward resolution, the advice of legal counsel and outside experts as well as management’s experience.

Because of uncertainty and risk inherent to litigation, arbitration, audits, governmental investigations, enforcement actions, and similar matters, the Company’s actual liabilities incurred may materially exceed our estimated liabilities and reserves, which could have a material financial or reputational impact on the Company.

In 2022, the Company received and paid a $ 51 million transfer pricing tax assessment in Denmark.

The Company and its advisors believe the assessment is without merit.

The Company is presently appealing and believes it will be reimbursed following a successful appeals process.

The payment has been recorded as a long-term receivable.

Because of uncertainty and risk inherent to litigation,

arbitration, audits, governmental investigations, enforcement actions, and similar matters, the Company’s actual liabilities incurred may materially exceed our estimated liabilities and reserves, which could have a material financial or reputational impact on the Company.

In many instances, the Company’s products and services embody or incorporate trade secrets or patented inventions.

From time to time, we are engaged i n disputes concerning protection of the Company’s trade secrets and confidential information, patents, and other intellectual property rights.

From time to time, we are engaged in disputes concerning protection of the Company’s trade secrets and confidential information, patents, and other intellectual property rights.

Such disputes frequently involve complex, factual, technical and/or legal issues which result in high costs to adjudicate our rights and for which it may be difficult to predict the ultimate outcome.

At any given time, the Company may be a plaintiff or defendant in disputes involving disputed intellectual property rights.

The Company is currently pursuing, and intends to pursue future claims involving revenue recognized for technology related to drill bits.

The Company is suing for breach of certain license in agreements pursuant to which certain drill bit manufacturers have licensed the Company’s intellectual property.

The amount of the Company's claims for outstanding receivables approximates $ 40 million dollars, and is likely to increase over time until we achieve resolution of such claims.

Because of the importance of the Company’s intellectual property to the Company’s performance, an adverse result in such disputes could result in a material loss of revenue from royalties or a decline in sales of products protected by patents, which could materially and adversely impact our financial performance.

Further, in some instances, direct or indirect consumers of our products and services or members of the supply chain for our products and services become involved in governmental investigations, internal investigations, political or other enforcement matters.

The Company is currently pursuing litigation against several companies involving royalties due under licenses for technology related to drill bits.

This technology resulted in a portfolio of patents related to leaching technology, a revolutionary technology owned by the Company that dramatically improves the performance of drill bits and other products utilizing certain synthetic diamond parts.

The Company previously sued several drill bit manufacturers for patent infringement and those lawsuits were resolved by a series of licensing agreements with various drill bit manufacturers.

To settle and end litigation or to avoid litigation, the licensees were provided access to the portfolio of leaching patents owned by the Company in exchange for a royalty payment, as defined in the license agreement.

The license agreements each provide that they terminate on the date of the last to expire of the patents in the licensed portfolio.

Having obtained the benefit of these licenses for more than a decade, some of the licensees unilaterally stopped making royalty payments even though all of the patents in the portfolio have not expired.

These companies have asserted, among other reasons, that they are entitled to stop making these payments because they have not elected to manufacture products covered by the unexpired patents.

The Company contends this is a breach of the license agreements at issue.

The parties’

filings to date can be found in two cases currently pending in the United States District Court for the Southern District of Texas:

Grant Prideco, Inc., et al.

Schlumberger Tech.

Corp., et al., No.

4:23-cv-00730, and Halliburton Energy Serv, Inc.

Grant Prideco, Inc., et al., No.

4:23-cv-01789.

The Company continues to accrue accounts receivable for the unpaid royalties and accrued an incremental $ 10 million during the second quarter, bringing the total amount accrued to $ 52 million.

This amount is likely to increase over time until resolution of ongoing litigation.

While the Company strongly believes that the royalties for which it has sued are due and owing pursuant to the terms of the licensing agreement, there is inherent risk with the related litigation and the Company makes no assurances as to the outcome of such litigation.

The protection of intellectual property is important to the Company’s performance, and as such, an adverse result in the above dispute or any future dispute related to any of our intellectual property could result in materially adverse financial consequences such as a decline in sales of products protected by patents, which could materially and adversely impact our financial performance.

In addition to intellectual property matters, from time to time consumers of our products and services or members of the supply chain become involved in governmental investigations, internal investigations, political or other enforcement matters.

In such circumstances, such investigations may adversely impact the ability of consumers of our products, entities providing financial support to such consumers or entities in the supply chain to timely perform their business plans or to timely perform under agreements with us.

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In response to additional sanctions enacted by governments in the European Union, the United States, the United Kingdom, Switzerland, and other countries as a result of active armed conflict in Ukraine, we ceased new investments in Russia and have curtailed our activities in Russia.

During the third quarter of 2022, we sold our business in Belarus and committed to a plan to sell our business in Russia.

During the third quarter of 2022, we sold our business in Belarus and entered into an agreement to sell our business in Russia.

The sale is subject to various government approvals in Russia and other jurisdictions.

Litigation may result from the confluence of these events in Russia and Belarus and our response to the various sanctions as we work to comply with applicable laws and regulations.

We also may incur severance costs as a result of conditions in Russia if we are unable to obtain the required government approvals.

Lingering supply chain disruptions arising from the COVID-19 pandemic continue to adversely impact normal economic and manufacturing related activities.

The Company’s ability to manufacture equipment and perform services could be impaired from such disruptions and the Company could be exposed to liabilities resulting from additional interruption or delay in its ability to perform due to materials shortages, inflationary pressures, and limited manpower.

While the overall situation related to COVID-19 has improved, the Company continues to see operational delays resulting from the limited availability of materials and work force, the lack of predictability around vendor delivery dates and other operational disruptions.

We may face loss of workers, labor shortages, litigation, fines and/or other adverse consequences resulting from other pandemic related labor impacts and COVID-19 regulations.

impact of supply chain and labor market disruptions along with the inflationary impacts of pandemic monetary and regulatory policies could have material adverse impacts on our financial results.

The Russian government continues to enact new laws impacting the exit of western companies from Russia, including some instances of expropriation of western businesses.

We may incur additional costs as a result of conditions in Russia if we are unable to complete the transaction to sell our Russian business on the terms of the agreements.

The geopolitical response to the COVID-19 pandemic continues to have lingering supply chain impacts and to affect how business is being done in countries around the world.

The Company’s ability to manufacture equipment and perform services could be impaired

from such disruptions and the Company could be exposed to liabilities resulting from additional interruption or delay in its ability to perform due to materials shortages, inflationary pressures, and limited manpower.

The overall situation related to COVID-19 has improved, but the Company continues to see operational delays resulting from impacts on availability of materials and work force, the lack of predictability of vendor delivery dates and other operational disruptions.

We may face loss of workers, labor shortages, litigation, fines and/or other adverse consequences resulting from ongoing labor impacts or COVID-19 regulations.

The combined impact of supply chain and labor market disruptions along with the inflationary impacts of pandemic monetary and regulatory policies could have material adverse impacts on our financial results.

Disputes may arise regarding application of force majeure contract provisions and allocation of responsibility among customers, the Company, and suppliers, resulting in material added cost and/or litigation.

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The adoption of this optional relief did no t have a material impact on the consolidated financial statements.

The Company is currently assessing the impact of other optional elections allowed under Topic 848 and their impact on the company’s financial position, results of operations and cash flows.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14 unchanged sentences

The Company’s Wellbore Technologies segment designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including:

solids control and waste management equipment and services, drilling fluids, premium drillpipe, wired pipe, drilling optimization services, tubular inspection and coating services, instrumentation, downhole tools, and drill bits.

solids control and waste management equipment and services, managed pressure drilling, drilling fluids, premium drillpipe, wired pipe, drilling optimization services, tubular inspection and coating services, instrumentation, downhole tools, and drill bits.

Wellbore Technologies focuses on oil and gas companies and supports drilling contractors, oilfield service companies, and oilfield equipment rental companies.

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EXECUTIVE SUMMARY

For the first quarter ended March 31, 2023, the Company generated revenues of $1.96 billion, a decrease of 5 percent compared to the fourth quarter of 2022 and an increase of 27 percent compared to the first quarter of 2022.

Net income for the first quarter of 2023 was $126 million, or 6.4 percent of sales, which included $4 million of credits in Other Items.

Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) decreased sequentially to $195 million, or 9.9 percent of sales.

For the second quarter ended June 30, 2023, the Company generated revenues of $2.09 billion, an increase of 7 percent compared to the first quarter of 2023 and an increase of 21 percent compared to the second quarter of 2022.

Net income for the second quarter of 2023 was $155 million, or 7.4 percent of sales, which included $7 million of credits in Other Items.

Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) increased sequentially to $245 million, or 11.7 percent of sales.

Segment Performance

Wellbore Technologies

Wellbore Technologies generated revenues of $745 million in the first quarter of 2023, a decrease of 2 percent from the fourth quarter of 2022 and an increase of 23 percent from the first quarter of 2022.

Operating profit was $96 million, or 12.9 percent of sales.

Adjusted EBITDA decreased $13 million sequentially and increased $32 million from the prior year to $133 million, or 17.9 percent of sales.

Results were negatively impacted during the quarter by continued supply chain challenges that disrupted the Segment’s drill pipe operations.

Completion & Production Solutions

Completion & Production Solutions generated revenues of $718 million in the first quarter of 2023, a decrease of 3 percent from the fourth quarter of 2022 and an increase of 35 percent from the first quarter of 2022.

Wellbore Technologies generated revenues of $804 million in the second quarter of 2023, an increase of 8 percent from the first quarter of 2023 and an increase of 21 percent from the second quarter of 2022.

Operating profit was $128 million, or 15.9 percent of sales, and included a credit of $1 million in Other Items.

Adjusted EBITDA decreased $12 million sequentially and increased $44 million from the prior year to $54 million, or 7.5 percent of sales.

Results reflect typical seasonal declines in certain product lines and markets, partially offset by an improving rate of execution on projects, which contributed to a 37% increase in revenue out of backlog compared to the first quarter of 2022.

New orders booked during the quarter totaled $407 million, representing a book-to-bill of 96 percent when compared to the $422 million of orders shipped from backlog.

As of March 31, 2023, backlog for capital equipment orders for Completion & Production Solutions was $1,601 million, a decrease of $1 million from the fourth quarter of 2022 and an increase of $237 million from the first quarter of 2022.

Adjusted EBITDA increased $31 million sequentially and increased $42 million from the prior year to $164 million, or 20.4 percent of sales.

Significantly improved manufacturing throughput from the segment’s drill pipe operations, market share gains and improving demand from international and offshore markets offset activity declines in North America to drive improved results.

Completion & Production Solutions

Completion & Production Solutions generated revenues of $753 million in the second quarter of 2023, an increase of 5 percent from the first quarter of 2023 and an increase of 18 percent from the second quarter of 2022.

Operating profit was $53 million, or 7.0 percent of sales.

Adjusted EBITDA increased $15 million sequentially and increased $37 million from the prior year to $69 million, or 9.2 percent of sales.

Results reflect improving execution on a higher margin mix of international and offshore projects, partially offset by softening demand for completion equipment and aftermarket services in North America.

New orders booked during the quarter increased 11% and totaled $450 million, representing a book-to-bill of 94 percent when compared to the $477 million of orders shipped from backlog.

As of June 30, 2023, backlog for capital equipment orders for Completion & Production Solutions was $1,586 million, a decrease of $15 million from the first quarter of 2023 and an increase of $144 million from the second quarter of 2022.

Rig Technologies

Rig Technologies generated revenues of $550 million in the first quarter of 2023, a decrease of 11 percent from the fourth quarter of 2022, and an increase of 25 percent from the first quarter of 2022.

Rig Technologies generated revenues of $606 million in the second quarter of 2023, an increase of 10 percent from the first quarter of 2023, and an increase of 31 percent from the second quarter of 2022.

Operating profit was $64 million, or 10.6 percent of sales, and included a credit of $7 million of Other Items.

Adjusted EBITDA decreased $19 million sequentially and increased $33 million from the prior year to $69 million, or 12.5 percent of sales.

Steadily improving demand for drilling equipment and aftermarket parts and services only partially offset the effect of strong capital equipment shipments in the fourth quarter that did not repeat and seasonal declines in the Segment’s aftermarket operations.

New orders booked during the quarter totaled $251 million, representing a book-to-bill of 140 percent when compared to the $179 million of orders shipped from backlog.

As of March 31, 2023, backlog for capital equipment orders for Rig Technologies was $2,876 million, an increase of $83 million from the fourth quarter of 2022 and a decrease of $17 million from the first quarter of 2022.

Adjusted EBITDA increased $2 million sequentially and increased $30 million from the prior year to $71 million, or 11.7 percent of sales.

Steadily improving demand drove the segment’s sequential revenue growth.

Incremental margins were limited by a lower margin sales mix and sequentially higher costs related to a wind tower startup operation.

New capital equipment orders booked during the quarter totaled $222 million, representing a book-to-bill of 108 percent when compared to the $205 million of orders shipped from backlog.

As of June 30, 2023, backlog for capital equipment orders for Rig Technologies

was $2,893 million, an increase of $17 million from the first quarter of 2023 and an increase of $54 million from the second quarter of 2022.

Oil & Gas Equipment and Services Market and Outlook

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The Company’s results are dependent on, among other things, the level of worldwide oil and gas drilling, well remediation activity, the prices of crude oil and natural gas, capital spending by other oilfield service companies and drilling contractors, and worldwide oil and gas inventory levels.

Key industry indicators for the first quarter of 2023 and 2022, and the fourth quarter of 2022 include the following:

Key industry indicators for the second quarter of 2023 and 2022, and the first quarter of 2023 include the following:

Active Drilling Rigs:

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Management expects to see continued growth in these areas as low carbon power becomes a larger portion of the global energy supply.

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended March 31, 2023, on a quarterly basis:

Industry Trends Rig Counts and Oil Prices Total Number of Rigs 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $ West Texas Int.

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended June 30, 2023, on a quarterly basis:

.Industry Tr..ends Rig Counts and Oil Prices Total Number of Rigs 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $ West Texas Int.

(Price per Barrel) 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Total Rings 2,110 2,262 2,260 2,260 2,210 2,197 2,071 2,053 1,255 Canada 105 208 177 185 83 132 139 196 25 US 1,037 1,051 1,072 1,046 989 920 821 784 396 International 968 1,003 1,011 1,029 1,138 1,145 1,111 1,073 834 W.TX Int.

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Department of Energy, Energy Information Administration (www.eia.doe.gov).

The worldwide quarterly average rig count increased 1 percent (from 1,872 to 1,899), and the U.S.

decreased 2 percent (from 775 to 761), in the first quarter of 2023 compared to the fourth quarter of 2022.

The average per barrel price of West Texas Intermediate Crude Oil decreased 8 percent (from $82.79 per barrel to $76.08 per barrel) and natural gas prices decreased 52 percent (from $5.51 per mmbtu to $2.65 per mmbtu) in the first quarter of 2023 compared to the fourth quarter of 2022.

At April 14, 2023, there were 859 rigs actively drilling in North America, which decreased 13 percent from the first quarter average of 984 rigs.

The price for West Texas Intermediate Crude Oil was $82.52 per barrel at April 14, 2023, an increase of 8 percent from the first quarter of 2023 average.

The price for natural gas was $2.11 per mmbtu at April 14, 2023, a decrease of 20 percent from the first quarter of 2023 average.

The worldwide quarterly average rig count decreased 5 percent (from 1,899 to 1,797), and the U.S.

decreased 5 percent (from 761 to 722), in the second quarter of 2023 compared to the first quarter of 2023.

The average per barrel price of West Texas Intermediate Crude Oil decreased 3 percent (from $76.08 per barrel to $73.76 per barrel) and natural gas prices decreased 18 percent (from $2.65 per mmbtu to $2.16 per mmbtu) in the second quarter of 2023 compared to the first quarter of 2023.

At July 14, 2023, there were 862 rigs actively drilling in North America, which increased 3 percent from the second quarter average of 837 rigs.

The price for West Texas Intermediate Crude Oil was $75.42 per barrel at July 14, 2023, an increase of 2 percent from the second quarter of 2023 average.

The price for natural gas was $2.53 per mmbtu at July 14, 2023, an increase of 17 percent from the second quarter of 2023 average.

Results of Operations

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Three Months Ended

Six Months Ended

Wellbore Technologies

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Wellbore Technologies

Three months ended March 31, 2023 and 2022.

Revenue from Wellbore Technologies was $745 million for the three months ended March 31, 2023, compared to $608 million for the three months ended March 31, 2022, an increase of $137 million or 23 percent.

Operating profit from Wellbore Technologies was $96 million for the three months ended March 31, 2023 compared to an operating profit of $39 million for the three months ended March 31, 2022, an increase of $57 million.

Three and six months ended June 30, 2023 and 2022.

Revenue from Wellbore Technologies was $804 million for the three months ended June 30, 2023, compared to $666 million for the three months ended June 30, 2022, an increase of $138 million or 21 percent.

For the six months ended June 30, 2023, revenue from Wellbore Technologies was $1,549 million compared to $1,274 million for the six months ending June 30, 2022, an increase of $275 million or 22 percent.

Operating profit from Wellbore Technologies was $128 million for the three months ended June 30, 2023 compared to an operating profit of $81 million for the three months ended June 30, 2022, an increase of $47 million.

For the six months ended June 30, 2023, operating profit from Wellbore Technologies was $224 million compared to operating profit of $120 million for the six months ending June 30, 2022, an increase of $104 million.

Completion & Production Solutions

Three months ended March 31, 2023 and 2022.

Revenue from Completion & Production Solutions was $718 million for the three months ended March 31, 2023, compared to $530 million for the three months ended March 31, 2022, an increase of $188 million or 35 percent.

Operating profit from Completion & Production Solutions was $44 million for the three months ended March 31, 2023 compared to an operating loss of $22 million for the three months ended March 31, 2022, an increase of $66 million.

Three and six months ended June 30, 2023 and 2022.

Revenue from Completion & Production Solutions was $753 million for the three months ended June 30, 2023, compared to $639 million for the three months ended June 30, 2022, an increase of $114 million or 18 percent.

For the six months ending June 30, 2023, revenue from Completion & Production Solutions was $1,471 million compared to $1,169 million for the six months ending June 30, 2022, an increase of $302 million or 26 percent.

Operating profit from Completion & Production Solutions was $53 million for the three months ended June 30, 2023 compared to an operating profit of $20 million for the three months ended June 30, 2022, an increase of $33 million.

For the six months ended June 30, 2023, operating profit from Completion & Production Solutions was $97 million compared to operating loss of $2 million for the six months ending June 30, 2022, an increase of $99 million.

The Completion & Productions Solutions segment monitors its capital equipment backlog to plan its business.

New orders are added to backlog only when the Company receives a firm written order for major completion and production components or a contract related to a construction project.

The capital equipment backlog was $1,601 million at March 31, 2023, an increase of $237 million from backlog of $1,364 million at March 31, 2022.

The capital equipment backlog was $1,586 million at June 30, 2023, an increase of $144 million from backlog of $1,442 million at June 30, 2022.

Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately 55 percent of backlog to become revenue during the rest of 2023 and the remainder thereafter.

At March 31, 2023, approximately 56 percent of the capital equipment backlog was for offshore products and approximately 71 percent of the capital equipment backlog was destined for international markets.

At June 30, 2023, approximately 58 percent of the capital equipment backlog was for offshore products and approximately 75 percent of the capital equipment backlog was destined for international markets.

Rig Technologies

Three months ended March 31, 2023 and 2022 .

Revenue from Rig Technologies was $550 million for the three months ended March 31, 2023, compared to $441 million for the three months ended March 31, 2022, an increase of $109 million or 25 percent.

Operating profit from Rig Technologies was $53 million for the three months ended March 31, 2023 compared to $11 million for the three months ended March 31, 2022, an increase of $42 million.

Three and six months ended June 30, 2023 and 2022 .

Revenue from Rig Technologies was $606 million for the three months ended June 30, 2023, compared to $462 million for the three months ended June 30, 2022, an increase of $144 million or 31 percent.

For the six months ended June 30, 2023, revenue from Rig Technologies was $1,156 million compared to $903 million for the six months ending June 30, 2022, an increase of $253 million or 28 percent.

Operating profit from Rig Technologies was $64 million for the three months ended June 30, 2023 compared to $31 million for the three months ended June 30, 2022, an increase of $33 million.

For the six months ended June 30, 2023, operating profit from Rig Technologies was $117 million compared to $42 million for the six months ending June 30, 2022, an increase of $75 million.

The Rig Technologies segment monitors its capital equipment backlog to plan its business.

New orders are added to backlog only when the Company receives a firm written order for major drilling rig components or a signed contract related to a construction project.

The capital equipment backlog was $2,876 million at March 31, 2023, a decrease of $17 million from backlog of $2,893 million at March 31, 2022.

Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change

orders and supplier accelerations or delays), the Company reasonably expects approximately 24 percent of backlog to become revenue during the rest of 2023 and the remainder thereafter.

At March 31, 2023, approximately 31 percent of the capital equipment backlog was for offshore products and approximately 96 percent of the capital equipment backlog was destined for international markets.

The capital equipment backlog was $2,893 million at June 30, 2023, an increase of $54 million from backlog of $2,839 million at June 30, 2022.

Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately 18 percent of backlog to become revenue during the rest of 2023 and the remainder thereafter.

At June 30, 2023, approximately 30 percent of the capital equipment backlog was for offshore products and approximately 95 percent of the capital equipment backlog was destined for international markets.

Eliminations and corporate costs

Eliminations and corporate costs were $67 million for the three months ended March 31, 2023, compared to $49 million for the three months ended March 31, 2022.

Eliminations and corporate costs were $64 million and $131 million for the three and six months ended June 30, 2023, compared to $64 million and $113 million for the three and six months ended June 30, 2022.

Sales from one segment to another generally are priced at estimated equivalent commercial selling prices;

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Other expense, net

Other expense, net was $16 million for the three months ended March 31, 2023, compared to $2 million for the three months ended March 31, 2022, respectively.

Other expense, net was $29 million and $45 million for the three and six months ended June 30, 2023, compared to expenses of zero and $2 million for the three and six months ended June 30, 2022, respectively.

The change in income was primarily due to fluctuations in foreign currencies.

Provision for income taxes

The effective tax rate for the three months ended March 31, 2023 was 13.8%, compared to (39.3)% for the same period in 2022.

The effective tax rate for the three and six months ended June 30, 2023 was 10.8% and 12.1%, respectively, compared to (2.9)% and 36.4% for the same period in 2022.

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Three Months Ended

Six Months Ended

Operating profit (loss):

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Reconciliation of Adjusted EBITDA:

GAAP net income (loss) attributable to Company

GAAP net income attributable to Company

Noncontrolling interests

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Liquidity and Capital Resources

At March 31, 2023, the Company had cash and cash equivalents of $774 million and total debt of $1,732 million.

At June 30, 2023, the Company had cash and cash equivalents of $592 million and total debt of $1,728 million.

At December 31, 2022, cash and cash equivalents were $1,069 million and total debt was $1,730 million.

As of March 31, 2023, approximately $611 million of the $774 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be subject to foreign withholding taxes and incremental U.S.

As of June 30, 2023, approximately $522 million of the $592 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be

subject to foreign withholding taxes and incremental U.S.

taxation if transferred among countries or repatriated to the U.S.

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The credit facility contains a financial covenant regarding maximum debt-to-capitalization ratio of 60%.

As of March 31, 2023, the Company was in compliance with a debt-to-capitalization ratio of 27.0% and had no outstanding letters of credit issued under the facility, resulting in $2.0 billion of available funds.

As of June 30, 2023, the Company was in compliance with a debt-to-capitalization ratio of 26.4% and had no outstanding letters of credit issued under the facility, resulting in $2.0 billion of available funds.

A consolidated joint venture of the Company borrowed $120 million against a $150 million bank line of credit for the construction of a facility in Saudi Arabia.

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The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75%.

As of March 31, 2023, the joint venture was in compliance.

The facility construction was completed in the fourth quarter of 2022, the Company will not have future borrowings on the line of credit, with repayments beginning December 2022 and final payment no later than June 2032.

As of March 31, 2023, the Company had $114 million in borrowings related to this line of credit.

As of June 30, 2023, the joint venture was in compliance.

The facility construction was completed in the fourth quarter of 2022, and the joint venture will not have future borrowings on the line of credit.

The line of credit repayment schedule began in December 2022 with final payment no later than June 2032.

As of June 30, 2023, the Company had $109 million in borrowings related to this line of credit.

The Company has $10 million in payments related to this line of credit due in the next twelve months.

The Company’s outstanding debt at March 31, 2023 consisted primarily of $1,090 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $147 million.

The Company was in compliance with all covenants at March 31, 2023.

Long-term lease liabilities totaled $556 million at March 31, 2023.

The Company had $464 million of outstanding letters of credit at March 31, 2023, primarily in the U.S.

and Norway, that are under various bilateral letter of credit facilities.

The Company’s outstanding debt at June 30, 2023 consisted primarily of $1,090 million in 3.95% Senior Notes, $495 million in 3.60% Senior Notes, and other debt of $143 million.

The Company was in compliance with all covenants at June 30, 2023.

Long-term lease liabilities totaled $568 million at June 30, 2023.

The Company had $481 million of outstanding letters of credit at June 30, 2023, primarily in Norway and the Netherlands, that are under various bilateral letter of credit facilities.

Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds.

The following table summarizes our net cash used in continuing operating activities, continuing investing activities and continuing financing activities for the periods presented (in millions):

Three Months Ended

Six Months Ended

Net cash used in operating activities

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Net cash used in financing activities

Significant uses of cash during the first three months of 2023

Significant uses of cash during the first six months of 2023

Cash flows used in operating activities were $274 million, primarily driven by changes in the primary components of our working capital (receivables, inventories, accounts payable, and accrued liabilities).

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We paid $40 million in dividends to shareholders.

The effect of the change in exchange rates on cash flows was immaterial for the first three months of 2023, and an increase of $3 million for the first three months of 2022.

The effect of the change in exchange rates on cash flows was a decrease of $2 million for the first six months of 2023, and a decrease of $5 million for the first six months of 2022.

We believe that cash on hand, cash generated from operations and amounts available under our credit facilities and from other sources of debt will be sufficient to fund operations, lease payments, working capital needs, capital expenditure requirements, dividends and financing obligations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements