NOV Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES (i) Evaluation of disclosure controls and procedures As required by SEC Rule 13a-15(b), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by the Company in reports that it files under the Exchange Act is accumulated and communicated to the Company’s management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our principal executive officer and principal financial officer have concluded that our current disclosure controls and procedures were effective as of December 31, 2024 at the reasonable assurance level. Pursuant to section 302 of the Sarbanes-Oxley Act of 2002, our Chief Executive Officer and Chief Financial Officer have provided certain certifications to the Securities and Exchange Commission. These certifications are included herein as Exhibits 31.1 and 31.2. (ii) Internal Control Over Financial Reporting (a) Management’s annual report on internal control over financial reporting. The Company’s management report on internal control over financial reporting is set forth in this annual report on Page 48 and is incorporated herein by reference. (b) Changes in internal control There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. None. 42 PART III ITEM 10. DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE Incorporated by reference to the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders. ITEM 11. EXECUTI VE COMPENSATION Incorporated by reference to the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OW NERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Incorporated by reference to the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders. Securities Authorized for Issuance Under Equity Compensation Plans. The following table sets forth information as of our fiscal year ended December 31, 2024, with respect to compensation plans under which our common stock may be issued: Number of securities Weighted-average Number of securities to be issued upon exercise price of remaining available for equity exercise of warrants outstanding compensation plans (excluding and rights rights securities reflected in column (a)) (‘c’) Plan Category (a) (b) (1) Equity compensation plans approved by security holders 18,135,497 $ 34.23 7,844,231 Equity compensation plans not approved by security holders — — — Total 18,135,497 $ 34.23 7,844,231 (1) Shares could be issued through equity instruments other than stock options, warrants or rights. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Incorporated by reference to the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders. ITEM 14. PRINCIPAL ACCOU NTING FEES AND SERVICES Incorporated by reference to the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders. 43 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Financial Statements and Exhibits (1) Financial Statements The following financial statements are presented in response to Part II, Item 8: Page Consolidated Balance Sheets 52 Consolidated Statements of Income 53 Consolidated Statements of Comprehensive Income 54 Consolidated Statements of Cash Flows 55 Consolidated Statements of Stockholders’ Equity 56 Notes to Consolidated Financial Statements 57 The report of NOV Inc.’s independent registered public accounting firm (PCAOB ID: 42 ) with respect to the above-referenced financial statements and their report on internal control over financial reporting are included before the above-referenced reports. Their consent appears in Exhibit 23.1 of this Form 10-K. (2) Financial Statement Schedule Schedule II – Valuation and Qualifying Accounts 86 All schedules, other than Schedule II, are omitted because they are not applicable, not required or the information is included in the financial statements or notes thereto. (3) Exhibits 3.1 Seventh Amended and Restated Certificate of Incorporation of NOV Inc. (Exhibit 3.1) (1) 3.2 Amended and Restated By-laws of NOV Inc. (Exhibit 3.1) (2) 4.1 Description of Securities (Exhibit 4.1) (3) 4.2 Indenture, dated November 15, 2012, between National Oilwell Varco, Inc. and U.S. Bank National Association (Exhibit 4.1) (4) 4.3 Third Supplemental Indenture, dated November 20, 2012, between National Oilwell Varco, Inc. and U.S. Bank National Association (Exhibit 4.6) (4) 4.4 Fourth Supplemental Indenture, dated November 14, 2019, between National Oilwell Varco, Inc. and Wells Fargo Bank, National Association, as successor trustee. (Exhibit 4.2) (5) 10.1 5-Year Credit Agreement, dated as of September 12, 2024, among NOV Inc. and the financial institutions signatory thereto, including Wells Fargo Bank, National Association, in its capacity, among others, as Administrative Agent, an Arranger and a Joint Book Runner (Exhibit 10.1) (6) 10.2 NOV Inc. Long-Term Incentive Plan, as amended and restated (7)* 10.3 Form of Executive Employment Agreement (Exhibit 10.1) (8)* 10.4 Form of Executive Severance Agreement (Exhibit 10.2) (9)* 10.5 Form of Restricted Stock Unit Agreement (2022) (Exhibit 10.1) (10)* 10.6 Form of Performance Award Agreement (2022) (Exhibit 10.2) (10)* 10.7 Form of Employee Nonqualified Stock Option Grant Agreement (2022) (Exhibit 10.3) (10)* 10.8 Form of Non-Employee Director Restricted Stock Unit Agreement (2022) (Exhibit 10.1) (11)* 10.9 Form of Performance Award Agreement (2023) (Exhibit 10.1) (12)* 44 10.10 Form of Restricted Stock Unit Agreement (2024) (Exhibit 10.2) (13)* 10.11 Form of Performance Award Agreement (2024) (Exhibit 10.3) (13)* 10.12 Form of Employee Nonqualified Stock Option Grant Agreement (2024) (Exhibit 10.4) (13)* 10.13 NOV Inc. Retirement Policy for Equity Awards (Exhibit 10.1) (14)* 10.14 Form of Indemnification Agreement (Exhibit 10.1) (1) * 10.15 Single Premium Guaranteed Annuity Contract Purchase Agreement, dated February 14, 2023 (Exhibit 10.1) (15) 10.16 NOV Inc. Executive Severance Plan and Form of Participation Agreement (16)* 19 NOV Policy on Insider Trading (16) 21.1 Subsidiaries of the Registrant (16) 23.1 Consent of Ernst & Young LLP (16) 24.1 Power of Attorney (included on signature page hereto) (16) 31.1 Certification pursuant to Rule 13a-14a and Rule 15d-14(a) of the Securities and Exchange Act, as amended (16) 31.2 Certification pursuant to Rule 13a-14a and Rule 15d-14(a) of the Securities and Exchange Act, as amended (16) 32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (17) 32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (17) 95 Mine Safety Information pursuant to section 1503 of the Dodd-Frank Act (16) 97 Compensation Recovery Policy (16) 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) * Compensatory plan or arrangement for management or others. (1) Filed as an Exhibit to our Current Report on Form 8-K filed on May 18, 2023. (2) Filed as an Exhibit to our Current Report on Form 8-K filed on February 28, 2023. (3) Filed as an Exhibit to our Annual Report on Form 10-K filed on February 12, 2021. (4) Filed as an Exhibit to our Current Report on Form 8-K filed on November 20, 2012. (5) Filed as an Exhibit to our Current Report on Form 8-K filed on November 14, 2019. (6) Filed as an Exhibit to our Current Report on Form 8-K filed on September 12, 2024. (7) Filed as Appendix I to our Proxy Statement filed on April 8, 2022. (8) Filed as an Exhibit to our Current Report on Form 8-K filed on December 4, 2023. (9) Filed as an Exhibit to our Current Report on Form 8-K filed on November 24, 2014. (10) Filed as an Exhibit to our Current Report on Form 8-K filed on February 22, 2022. (11) Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on July 28, 2022. (12) Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on April 27, 2023. (13) Filed as an Exhibit to our Quarterly Report on Form 10-Q filed on April 26, 2024. 45 (14) Filed as an Exhibit to our Current Report on Form 8-K filed on July 12, 2022. (15) Filed as an Exhibit to our Current Report on Form 8-K filed on February 21, 2023.‎ (16) Filed with this Form 10-K. (17) Furnished with this Form 10-K. We hereby undertake, pursuant to Regulation S-K, Item 601(b), paragraph (4) (iii), to furnish to the U.S. Securities and Exchange Commission, upon request, all constituent instruments defining the rights of holders of our long-term debt not filed herewith. 46 SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOV INC. Dated: February 14, 2025 By: /s/ CLAY C. WILLIAMS Clay C. Williams Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Each person whose signature appears below in so signing, constitutes and appoints Clay C. Williams and Jose A. Bayardo, and each of them acting alone, his/her true and lawful attorney-in-fact and agent, with full power of substitution, for him/her and in his/her name, place and stead, in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments to this report, and in each case to file the same, with all exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his/her substitute or substitutes may do or cause to be done by virtue hereof. Signature Title Date /s/ CLAY C. WILLIAMS Clay C. Williams Chairman, President and Chief Executive Officer February 14, 2025 /s/ JOSE A. BAYARDO Jose A. Bayardo Senior Vice President and Chief Financial Officer February 14, 2025 /s/ CHRISTY H. NOVAK Christy H. Novak Vice President, Corporate Controller and Chief Accounting Officer February 14, 2025 /s/ GREG L. ARMSTRONG Director February 14, 2025 Greg L. Armstrong /s/ MARCELA E. DONADIO Director February 14, 2025 Marcela E. Donadio /s/ BEN A. GUILL Director February 14, 2025 Ben A. Guill /s/ DAVID D. HARRISON Director February 14, 2025 David D. Harrison /s/ CHRISTIAN S. KENDALL Director February 14, 2025 Christian S. Kendall /s/ PATRICIA MARTINEZ Director February 14, 2025 Patricia Martinez /s/ ERIC L. MATTSON Director February 14, 2025 Eric L. Mattson /s/ PATRICIA B. MELCHER Director February 14, 2025 Patricia B. Melcher /s/ WILLIAM R. THOMAS Director February 14, 2025 William R. Thomas /s/ ROBERT S. WELBORN Director February 14, 2025 Robert S. Welborn 47 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING NOV Inc.’s management is responsible for establishing and maintaining adequate internal control over financial reporting. NOV Inc.’s internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management has used the 2013 framework set forth in the report entitled “Internal Control—Integrated Framework” published by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. Management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2024. The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by Ernst & Young LLP, the independent registered public accounting firm which also has audited the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K. /s/ Clay C. Williams Clay C. Williams Chairman, President and Chief Executive Officer /s/ Jose A. Bayardo Jose A. Bayardo Senior Vice President and Chief Financial Officer Houston, Texas February 14, 2025 48 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of NOV Inc. Opinion on Internal Control Over Financial Reporting We have audited NOV Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, NOV Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company and our report dated February 14, 2025, expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Houston, Texas February 14, 2025 49 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of NOV Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of NOV Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and stockholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 14, 2025, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue recognition under long-term construction contracts Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company recognizes revenue over time for certain long-term construction contracts using an input method described as the cost-to-cost approach to determine the extent of progress towards completion of performance obligations. Under the cost-to-cost approach, the determination of the progress towards completion requires management to prepare estimates of the costs to complete, which are subject to considerable judgment and could be impacted by such items as changes to the project schedule and the cost of labor and material. Auditing management’s estimate of the progress towards completion of its projects involved subjectivity as the costs to complete forecasts are subject to considerable judgment. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s estimate of the progress towards completion of its projects, including key controls related to monitoring projected project costs. To test the Company’s estimate of the progress towards completion of its projects, we performed audit procedures that included, among others, testing the significant assumptions discussed above to develop the estimated cost to 50 complete and testing the completeness and accuracy of the underlying data. To assess management’s estimated costs, we performed audit procedures that included, among others, agreeing the estimates to supporting documentation; conducting interviews with project personnel; attending selected project review meetings; performing observations of select projects to observe progress; and performing lookback analyses to historical actual costs to assess management’s ability to estimate. /s/ Ernst & Young LLP We have served as the Company’s auditor since at least 1995, but we are unable to determine the specific year. Houston, Texas February 14, 2025 51 NOV INC. CONSOLIDATED B ALANCE SHEETS (In millions, except share data) December 31, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 1,230 $ 816 Receivables, net 1,819 1,905 Inventories, net 1,932 2,151 Contract assets 577 739 Prepaid and other current assets 212 229 Total current assets 5,770 5,840 Property, plant and equipment, net 1,922 1,865 Lease right-of-use assets, operating 353 372 Lease right-of-use assets, financing 196 172 Deferred income taxes 413 488 Goodwill 1,630 1,562 Intangibles, net 508 450 Investment in unconsolidated affiliates 163 211 Other assets 406 334 Total assets $ 11,361 $ 11,294 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 837 $ 904 Accrued liabilities 861 870 Contract liabilities 492 532 Current portion of lease liabilities 102 94 Current portion of long-term debt 37 13 Accrued income taxes 18 22 Total current liabilities 2,347 2,435 Long-term debt 1,703 1,712 Lease liabilities 544 558 Deferred income taxes 56 70 Other liabilities 283 277 Total liabilities 4,933 5,052 Commitments and contingencies Stockholders’ equity: Common stock - par value $ .01 ; 1 billion shares authorized; 381,549,541 and 393,945,659 shares issued and outstanding at December 31, 2024 and December 31, 2023 4 4 Additional paid-in capital 8,625 8,812 Accumulated other comprehensive loss ( 1,625 ) ( 1,493 ) Retained deficit ( 628 ) ( 1,155 ) Total Company stockholders’ equity 6,376 6,168 Noncontrolling interests 52 74 Total stockholders’ equity 6,428 6,242 Total liabilities and stockholders’ equity $ 11,361 $ 11,294 The accompanying notes are an integral part of these statements. 52 NOV INC. CONSOLIDATED STATEMEN TS OF INCOME (In millions, except per share data) Year Ended December 31, 2024 2023 2022 Revenue Sales $ 5,830 $ 5,775 $ 4,873 Services 1,991 1,789 1,482 Rental 1,049 1,019 882 Total 8,870 8,583 7,237 Cost of revenue Sales 4,759 4,798 4,146 Services 1,543 1,367 1,186 Rental 558 585 571 Total 6,860 6,750 5,903 Gross profit 2,010 1,833 1,334 Selling, general and administrative 1,134 1,182 1,070 Operating profit 876 651 264 Interest and financial costs ( 91 ) ( 88 ) ( 78 ) Interest income 38 28 19 Equity income in unconsolidated affiliates 36 119 68 Other expense, net ( 28 ) ( 98 ) ( 35 ) Income before income taxes 831 612 238 Provision (benefit) for income taxes 196 ( 373 ) 83 Net income 635 985 155 Net loss attributable to noncontrolling interests — ( 8 ) — Net income attributable to Company $ 635 $ 993 $ 155 Net income attributable to Company per share: Basic $ 1.62 $ 2.53 $ 0.40 Diluted $ 1.60 $ 2.50 $ 0.39 Cash dividends per share $ 0.275 $ 0.20 $ 0.20 Weighted average shares outstanding: Basic 392 393 390 Diluted 396 397 394 The accompanying notes are an integral part of these statements. 53 NOV INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2024 2023 2022 Net income $ 635 $ 985 $ 155 Other comprehensive income: Currency translation adjustments ( 137 ) 113 ( 30 ) Change in derivative financial instruments, net of tax ( 5 ) ( 1 ) ( 11 ) Change in defined benefit plans, net of tax 10 ( 12 ) ( 6 ) Comprehensive income 503 1,085 108 Net loss attributable to noncontrolling interests - ( 8 ) - Comprehensive income attributable to Company $ 503 $ 1,093 $ 108 The accompanying notes are an integral part of these statements. 54 NOV INC. CONSOLIDATED STATEM ENTS OF CASH FLOWS (In millions) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 635 $ 985 $ 155 Adjustments to reconcile net income to net cash provided (used in) by operating activities: Depreciation and amortization 343 302 301 Russia/Belarus impairment and loss on assets held for sale - 4 127 Deferred income taxes 49 ( 489 ) ( 2 ) Stock-based compensation 70 66 67 Equity income in unconsolidated affiliates ( 36 ) ( 119 ) ( 68 ) Dividend from unconsolidated affiliate 84 — — Gain on business divestiture ( 130 ) — — Provision for inventory losses 31 28 ( 18 ) Other, net 43 ( 50 ) 18 Change in operating assets and liabilities, net of acquisitions: Receivables 93 ( 269 ) ( 440 ) Inventories 270 ( 361 ) ( 480 ) Contract assets 162 ( 55 ) ( 220 ) Prepaid and other current assets 17 ( 40 ) 6 Accounts payable ( 87 ) ( 4 ) 289 Accrued liabilities ( 51 ) ( 116 ) 101 Contract liabilities ( 42 ) 82 52 Income taxes payable ( 5 ) ( 6 ) 5 Other assets/liabilities, net ( 142 ) 185 ( 72 ) Net cash provided by (used in) operating activities 1,304 143 ( 179 ) Cash flows from investing activities: Purchases of property, plant and equipment ( 351 ) ( 283 ) ( 214 ) Business acquisitions, net of cash acquired ( 298 ) ( 22 ) ( 49 ) Business divestitures, net of cash disposed 176 — — Other, net 2 12 25 Net cash used in investing activities ( 471 ) ( 293 ) ( 238 ) Cash flows from financing activities: Borrowings against lines of credit and other debt 420 184 20 Payments against lines of credit and other debt ( 431 ) ( 192 ) ( 4 ) Financing leases ( 28 ) ( 23 ) ( 24 ) Cash dividends paid ( 108 ) ( 79 ) ( 78 ) Shares repurchases ( 229 ) — — Other ( 30 ) 7 ( 10 ) Net cash used in financing activities ( 406 ) ( 103 ) ( 96 ) Effect of exchange rates on cash ( 13 ) - ( 9 ) Increase (decrease) in cash and cash equivalents 414 ( 253 ) ( 522 ) Cash and cash equivalents, beginning of period 816 1,069 1,591 Cash and cash equivalents, end of period $ 1,230 $ 816 $ 1,069 Supplemental disclosures of cash flow information: Cash payments during the period for: Interest $ 86 $ 85 $ 75 Income taxes $ 161 $ 114 $ 117 The accompanying notes are an integral part of these statements. 55 NOV INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In millions) Shares Issued and Outstanding Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained 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 Income — — — — 155 155 — 155 Other comprehensive loss — — — ( 47 ) — ( 47 ) — ( 47 ) Cash dividends, $ 0.20 per common share — — — — ( 78 ) ( 78 ) — ( 78 ) Stock-based compensation — — 67 — — 67 — 67 Withholding taxes — — ( 12 ) — — ( 12 ) — ( 12 ) Purchase of equity in non-controlling interest — — 12 — — 12 ( 29 ) ( 17 ) Other — — 2 — — 2 — 2 Balance at December 31, 2022 393 $ 4 $ 8,754 $ ( 1,593 ) $ ( 2,069 ) $ 5,096 $ 38 $ 5,134 Net Income — — — — 993 993 ( 8 ) 985 Other comprehensive income, net — — — 100 — 100 — 100 Cash dividends, $ 0.20 per common share — — — — ( 79 ) ( 79 ) — ( 79 ) Transactions with non-controlling interests — — 7 — — 7 45 52 Stock-based compensation — — 66 — — 66 — 66 Common stock issued 2 — — — — - — - Withholding taxes ( 1 ) — ( 18 ) — — ( 18 ) — ( 18 ) Other — — 3 — — 3 ( 1 ) 2 Balance at December 31, 2023 394 $ 4 $ 8,812 $ ( 1,493 ) $ ( 1,155 ) $ 6,168 $ 74 $ 6,242 Net Income — — — — 635 635 — 635 Other comprehensive loss — — — ( 132 ) — ( 132 ) — ( 132 ) Cash dividends, $ 0.275 per common share — — — — ( 108 ) ( 108 ) — ( 108 ) Transactions with non-controlling interests — — ( 16 ) — — ( 16 ) ( 21 ) ( 37 ) Stock-based compensation — — 70 — — 70 — 70 Common stock issued 3 — — — — — — — Withholding taxes ( 1 ) — ( 15 ) — — ( 15 ) — ( 15 ) Share repurchases ( 14 ) — ( 229 ) — — ( 229 ) — ( 229 ) Other — — 3 — — 3 ( 1 ) 2 Balance at December 31, 2024 382 $ 4 $ 8,625 $ ( 1,625 ) $ ( 628 ) $ 6,376 $ 52 $ 6,428 The accompanying notes are an integral part of these statements. 56 NOV INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation Nature of Business We design, construct, manufacture and sell comprehensive systems, components, and products used in oil and gas drilling and production and certain industrial and renewable energy sectors. We also provide technology and oilfield services and supplies, distribute products and provide supply chain integration services to the upstream oil and gas industry. Our revenues and operating results are directly related to the level of worldwide oil and gas drilling and production activities and the profitability and cash flow of oil and gas companies, drilling contractors and oilfield service companies, which in turn are affected by current and anticipated prices of oil and gas. Oil and gas prices have been, and are likely to continue to be, volatile. Basis of Consolidation The accompanying Consolidated Financial Statements include the accounts of NOV Inc. and its consolidated subsidiaries. Certain reclassifications have been made to the prior year financial statements for them to conform with the 2024 presentation. All significant intercompany transactions and balances have been eliminated in consolidation. Investments that are not wholly owned, but where we exercise control, are fully consolidated with the equity held by minority owners and their portion of net income (loss) reflected as noncontrolling interests in the accompanying consolidated financial statements. Investments in unconsolidated affiliates, over which we exercise significant influence, but not control, are accounted for by the equity method. 2. Summary of Significant Accounting Policies Fair Value of Financial Instruments The carrying amounts of financial instruments including cash and cash equivalents, receivables, and payables approximated fair value because of the relatively short maturity of these instruments. Cash equivalents include only those investments having a maturity date of three months or less at the time of purchase. Derivative Financial Instruments The Company records all derivative financial instruments at their fair value in its Consolidated Balance Sheet. Except for certain non-designated hedges discussed in Note 3 below, all derivative financial instruments that the Company holds are designated as cash flow hedges and are highly effective in offsetting movements in the underlying risks. Such arrangements typically have terms between two and 24 months but may have longer terms depending on the underlying cash flows being hedged, typically related to the projects in our backlog. Inventories Inventories are stated at the lower of cost or estimated net realizable value using the first-in, first-out or average cost methods. Inventories consist of raw materials and supplies, work-in-process and finished goods and purchased products. The Company reviews historical usage of inventory on-hand, assumptions about future demand and market conditions, and estimates about potential alternative uses, which are limited, to estimate net realizable value. The Company evaluates inventory using the best information available at the time to inform our assumptions and estimates about future demand and resulting sales volumes, and records reserves as necessary. We recorded charges (credits) to inventory reserves of $ 31 million, $ 28 million, and $ ( 18 ) million for the years ended December 31, 2024, 2023, and 2022, respectively. At December 31, 2024 and 2023, inventory reserves totaled $ 286 million and $ 354 million, or 12.9 % and 14.1 % of gross inventory, respectively. 57 Property, Plant and Equipment Property, plant and equipment are recorded at cost. Expenditures for major improvements that extend the lives of property and equipment are capitalized while minor replacements, maintenance and repairs are charged to operations as incurred. Disposals are removed at cost less accumulated depreciation with any resulting gain or loss reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of individual items. Depreciation expense was $ 294 million, $ 260 million, and $ 250 million for the years ended December 31, 2024, 2023 and 2022, respectively. The estimated useful lives of the major classes of property, plant and equipment are included in Note 5 to the consolidated financial statements. We record impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets are impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The carrying value of assets used in operations that are not recoverable is reduced to fair value if lower than carrying value. In determining the fair market value of the assets, we consider market trends and recent transactions involving sales of similar assets, or when not available, discounted cash flow analysis. Acquisitions and Investments Acquisitions of businesses are accounted for using the acquisition method of accounting, and the financial statements include the results of the acquired operations from the respective dates of acquisition. The acquisition price of the acquired entities is preliminarily allocated to the net assets acquired and liabilities assumed based on the estimated fair value at the dates of acquisition, with any excess of acquisition price paid over the fair value of net assets acquired, including intangibles, recognized as goodwill. Subsequent changes to preliminary amounts are made prospectively. The Company paid cash of $ 298 million, $ 22 million, and $ 49 million, net of cash acquired, for acquisitions for the years ended December 31, 2024, 2023 and 2022 , respectively. Foreign Currency The functional currency for most of our foreign operations is the local currency. However, certain foreign operations, including our operations in Norway, use the U.S. dollar as the functional currency. The cumulative effects of translating the balance sheet accounts from the functional currency into the U.S. dollar at current exchange rates are included in accumulated other comprehensive income (loss). Revenues and expenses are translated at average exchange rates in effect during the period. Accordingly, financial statements of these foreign subsidiaries are remeasured to U.S. dollars for consolidation purposes using current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets and related elements of expense. Revenue and expense elements are remeasured at rates that approximate the rates in effect on the transaction dates. For all operations, gains or losses from remeasuring foreign currency transactions into the functional currency are included in income. Net foreign currency transaction losses were $ 19 million, $ 84 million, and $ 25 million for the years ending December 31, 2024, 2023 and 2022 , respectively, and are included in other expenses, net, in the accompanying consolidated statements of income. Revenue Recognition The majority of the Company’s revenue streams record revenue at a point in time when a performance obligation has been satisfied by transferring control of promised goods or services to a customer. Products are sold or rented and services are provided based upon a fixed or determinable price and do not generally include right of return or other significant post-delivery obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities. Payment terms and conditions vary by contract type. We have elected to apply the practical expedient that does not require an adjustment for a financing component if, at contract inception, the period between when we transfer the promised goods or service to the customer and when the customer pays for the goods or service is one year or less. Shipping and handling costs are recognized when incurred and are treated as costs to fulfill the original performance obligation instead of as a separate performance obligation. Revenue is generated from contracts that may include multiple performance obligations. The Company considers the degree of customization, integration and interdependency of the related products and services when assessing distinct performance obligations within one contract. Stand-alone selling price (“SSP”) for each distinct performance obligation is generally determined using the price at which the products and services would be sold separately to the customer. Discounts, when provided, are allocated based on the relative SSP of the various products and services. 58 For revenue that is not recognized at a point in time, the Company follows accounting guidance for revenue recognized over time, as follows: Revenue Recognition under Long-term Construction Contracts Revenue is recognized over-time for certain long-term construction contracts in the Energy Equipment segment. These contracts include custom designs for customer-specific applications that are unique and require significant engineering efforts. Revenue is recognized as work progresses on each contract. Right to payment is enforceable for performance completed to date, including a reasonable profit. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. We generally use the cost-to-cost (input) measure of progress for our contracts because it best depicts the transfer of assets to the customer which occurs as we incur costs. Under the cost-to-cost measure of progress, progress towards completion of each contract is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. These costs include labor, materials, subcontractors’ costs, and other direct costs. Any expected losses on a project are recorded in full in the period in which the loss becomes probable. These long-term construction contracts generally include integrating a complex set of tasks and components into a single project or capability, so they are accounted for as one performance obligation. Estimating total revenue and cost at completion of long-term construction contracts is complex, subject to many variables and requires significant judgment. It is common for our long-term contracts to contain late delivery fees, work performance guarantees, and other provisions that can either increase or decrease the transaction price. We estimate variable consideration as the most likely amount we expect to receive. We include variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur, or when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of our anticipated performance and historical, current and forecasted information that is reasonably available to us. Net revenue recognized from performance obligations satisfied in previous periods was $ 19 million and $ 39 million for the years ended December 31, 2024 and 2023 , respectively, primarily due to change orders. Service and Repair Work For service and repair contracts, revenue is recognized over time. We generally use the output method to measure progress on service contracts due to the manner in which the customer receives and derives value from the services provided. For repair contracts, we generally use the cost-to-cost measure of progress because it best depicts the transfer of assets to the customer. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for all revenue streams for which work has not been performed on contracts with an 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 December 31, 2024 , the aggregate amount of the transaction price allocated to remaining performance obligations was $ 4,801 million. Although numerous factors can affect timing of revenue recognized on performance obligations, such as customer change orders and supplier accelerations or delays, the Company expects to recognize approximately $ 1,630 million in revenue for the remaining performance obligations in 2025 , $ 1,333 million in 2026 , $ 567 million in 2027 , and $ 1,271 million thereafter . Costs to Obtain and Fulfill a Contract We recognize an asset for the incremental costs of obtaining a contract, such as sales commissions, with a customer when we expect the benefit of those costs to be longer than one year. Costs to fulfill a contract, such as set-up and mobilization costs, are also capitalized when we expect to recover those costs. These contract costs are deferred and amortized over the period of contract performance. Total capitalized costs to obtain and fulfill a contract and the related amortization were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets. We apply the practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. 59 Service and Product Warranties The Company provides service and warranty policies on certain of its products. The Company accrues liabilities under service and warranty policies based upon specific claims and a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance issues and accrues for them when they are encountered. The Company monitors the actual cost of performing these discretionary services and adjusts the accrual based on the most current information available. The changes in the carrying amount of service and product warranties are as follows (in millions): Balance at December 31, 2022 $ 70 Net provisions for warranties issued during the year 16 Amounts incurred ( 16 ) Currency translation adjustments and other 2 Balance at December 31, 2023 $ 72 Net provisions for warranties issued during the year 22 Amounts incurred ( 27 ) Currency translation adjustments and other 1 Balance at December 31, 2024 $ 68 Income Taxes The liability method is used to account for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. Concentration of Credit Risk We grant credit to our customers, which operate primarily in the oil and gas industry. Concentrations of credit risk are limited because we have many geographically diverse customers, thus spreading trade credit risk. We control credit risk through credit evaluations, credit limits and monitoring procedures. We perform periodic credit evaluations of our customers’ financial condition and generally do not require collateral but may require letters of credit for certain international sales. Credit losses are provided for in the financial statements. Allowances for credit losses are determined based on a continuous process of assessing the Company’s portfolio on an individual customer basis considering current market conditions and trends. This process consists of a review of historical collection experience, current aging status of the customer accounts, and financial condition of the Company’s customers. Based on a review of these factors, the Company will establish or adjust allowances for specific customers. As of December 31, 2024, and December 31, 2023, the allowance for credit losses totaled $ 67 million and $ 72 million, respectively. Stock-Based Compensation Compensation expense for the Company’s stock-based compensation plans is measured using the fair value method. The fair value of stock option grants and restricted stock is amortized to expense using the straight-line method over the shorter of the vesting period or the remaining employee service period. The Company provides compensation benefits to employees and non-employee directors under share-based payment arrangements, including various employee stock option plans. Environmental Liabilities When environmental assessments or remediations are probable and the costs can be reasonably estimated, remediation liabilities are recorded on an undiscounted basis and are adjusted as further information develops or circumstances change. 60 Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted 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. Such estimates include but are not limited to, estimated losses on accounts receivable, estimated costs and related margins of projects accounted for over time, estimated realizable value on excess and obsolete inventory, contingencies, estimated liabilities for litigation and environmental exposures and liquidated damages, estimated warranty costs, estimates related to pension accounting, estimates related to the fair value of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment and estimates related to valuation allowances on deferred tax assets. Actual results could differ from those estimates. Contingencies The Company accrues for costs relating to litigation claims and other contingent matters, including liquidated damage liabilities, when such liabilities become probable and reasonably estimable. In circumstances where the most likely outcome of a contingency can be reasonably estimated, we accrue a liability for that amount. Where the most likely outcome cannot be estimated, a range of potential losses is established and if no one amount in that range is more likely than others, the low end of the range is accrued. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Revisions to contingent liabilities are reflected in income in the period in which different facts or information become known or circumstances change that affect the Company’s previous judgments with respect to the likelihood or amount of loss. Amounts paid upon the ultimate resolution of contingent liabilities may be materially different from previous estimates and could require adjustments to the estimated reserves to be recognized in the period such new information becomes known. 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): Year Ended December 31, 2024 2023 2022 Numerator: Net income attributable to Company $ 635 $ 993 $ 155 Denominator: Basic—weighted average common shares outstanding 392 393 390 Dilutive effect of employee stock options and other unvested stock awards 4 4 4 Diluted outstanding shares 396 397 394 Net income attributable to Company per share: Basic $ 1.62 $ 2.53 $ 0.40 Diluted $ 1.60 $ 2.50 $ 0.39 Cash dividends per share $ 0.275 $ 0.20 $ 0.20 Net income attributable to Company allocated to participating securities was immaterial for the years ended December 31, 2024, 2023 and 2022 and therefore not excluded from net income attributable to Company per share calculation. The Company had stock options outstanding that were anti-dilutive totaling 16 million, 18 million, and 20 million at December 31, 2024, 2023 and 2022 , respectively. Recently Issued Accounting Standards In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which is intended to improve the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for required income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. The Company continues to evaluate the impact of this standard on its disclosures. In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU 2024-03”), which improves the disclosures required for certain expense captions in the Company’s annual and interim consolidated financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its disclosures. 61 Recently Adopted Accounting Standards The Company has adopted ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), effective retrospectively for the fiscal year ended December 31, 2024 . ASU 2023-07 improves the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements. As a result of this adoption, the Company’s segment disclosure now includes significant expense categories and the segment performance metric. See Note 16 to the Consolidated Financial Statements for the disclosures associated with the adoption of ASU 2023-07. 3. Derivative Financial Instruments The Company uses derivative financial instruments to manage its foreign currency exchange rate risk. Forward currency contracts are executed to manage the foreign currency exchange rate risk on forecasted revenues and expenses denominated in currencies other than the functional currency of the operating unit (cash flow hedge). The Company also executes forward currency contracts to manage the foreign currency exchange rate risk on recognized nonfunctional currency monetary accounts (non-designated hedge). At December 31, 2024, the Company has determined the fair value of its derivative financial instruments representing assets of $ 5 million and liabilities of $ 26 million (currency related derivatives) using level 2 inputs (inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability) in the fair value hierarchy as the fair value is based on publicly available foreign exchange and interest rates at each financial reporting date. At December 31, 2024, the net fair value of the Company’s foreign currency forward contracts totaled a net liability of $ 21 million. Forward currency contracts consist of (in millions): Currency Denomination Currency December 31, 2024 December 31, 2023 Colombian Peso COP 60,970 COP 57,487 South Korean Won KRW 45,130 KRW — Norwegian Krone NOK 2,850 NOK 2,179 Japanese Yen JPY 1,039 JPY 1,118 U.S. Dollar USD 1,031 USD 677 Mexican Peso MXN 405 MXN 157 Euro EUR 95 EUR 102 South African Rand ZAR 25 ZAR 25 Singapore Dollar SGD 12 SGD 23 Danish Krone DKK 3 DKK 2 Canadian Dollar CAD 1 CAD 1 Brazilian Real BRL — BRL 291 British Pound Sterling GBP — GBP 5 Cash Flow Hedging Strategy To protect against the volatility of forecasted foreign currency cash flows resulting from forecasted revenues and expenses, the Company maintains a cash flow hedging program. 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 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). The Company includes time value in hedge relationships. The Company expects accumulated other comprehensive loss of $ 12 million will be reclassified into earnings within the next twelve months. Non-designated Hedging Strategy The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. 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 expenses, net was $ 23 million, $ ( 10 ) million and $ ( 18 ) million for the years ended 2024, 2023 and 2022, respectively. 62 The Company has the following fair values of its derivative instruments and their balance sheet classifications (in millions): Fair Values of Derivative Instruments (In millions) Asset Derivatives Liability Derivatives Fair Value Fair Value Balance Sheet December 31, Balance Sheet December 31, Location 2024 2023 Location 2024 2023 Derivatives designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other current assets $ 1 $ 8 Accrued liabilities $ 13 $ 2 Foreign exchange contracts Other assets — — Other liabilities 1 1 Total derivatives designated as hedging instruments under ASC Topic 815 $ 1 $ 8 $ 14 $ 3 Derivatives not designated as hedging instruments under ASC Topic 815 Foreign exchange contracts Prepaid and other current assets $ 4 $ 11 Accrued liabilities $ 11 $ 17 Foreign exchange contracts Other assets — — Other liabilities 1 1 Total derivatives not designated as hedging instruments under ASC Topic 815 $ 4 $ 11 $ 12 $ 18 Total derivatives $ 5 $ 19 $ 26 $ 21 4. Inventories, net Inventories consist of (in millions): December 31, 2024 2023 Raw materials and supplies $ 394 $ 479 Work in process 181 230 Finished goods and purchased products 1,643 1,796 2,218 2,505 Less: Inventory reserve ( 286 ) ( 354 ) Total $ 1,932 $ 2,151 5. Property, Plant and Equipment, net Property, plant and equipment consist of (in millions): Estimated December 31, Useful Lives 2024 2023 Land $ 165 $ 180 Buildings and improvements 5 - 35 Years 1,278 1,285 Operating equipment 2 - 20 Years 2,813 2,803 Rental equipment 2 - 15 Years 1,076 923 5,332 5,191 Less: Accumulated Depreciation ( 3,410 ) ( 3,326 ) $ 1,922 $ 1,865 63 6. Goodwill and Intangible Assets The Company has approximately $ 1.6 billion of goodwill and $ 508 million of identified intangible assets at December 31, 2024. Goodwill is identified by segment as follows (in millions): Energy Products and Services Energy Equipment Total Balance at December 31, 2022 $ 729 $ 776 $ 1,505 Goodwill acquired during period — 40 40 Adjustment during the measurement period of assets acquired 17 — 17 Balance at December 31, 2023 $ 746 $ 816 $ 1,562 Goodwill acquired during period 70 — 70 Currency translation adjustments and other ( 2 ) — ( 2 ) Balance at December 31, 2024 (1) $ 814 $ 816 $ 1,630 (1) Accumulated goodwill impairment was $ 7,261 million as of December 31, 2024 . Identified intangible assets with determinable lives consist primarily of customer relationships, trademarks, trade names, patents, and technical drawings acquired in acquisitions, and are being amortized in a manner consistent with the underlying cash flows over the estimated useful lives of 2 - 40 years. Amortization expense of identified intangibles is expected to be approximately $ 51 million, $ 49 million, $ 45 million, $ 40 million, and $ 30 million for the next five years. As of December 31, 2024, we provisionally recorded $ 102 million of amortizable intangible assets that were acquired through several strategic acquisitions made during the year. The fair value of the assets acquired are preliminary and subject to change until we finalize our accounting for these acquisitions. The net book values of identified intangible assets are identified by segment as follows (in millions): Energy Products and Services Energy Equipment Total Balance at December 31, 2022 $ 319 $ 171 $ 490 Additions to intangible assets 2 — 2 Amortization ( 22 ) ( 21 ) ( 43 ) Currency translation adjustments and other — 1 1 Balance at December 31, 2023 $ 299 $ 151 $ 450 Additions to intangible assets 1 6 7 Intangible assets acquired 102 — 102 Amortization ( 28 ) ( 21 ) ( 49 ) Currency translation adjustments and other — ( 2 ) ( 2 ) Balance at December 31, 2024 $ 374 $ 134 $ 508 Identified intangible assets by major classification consist of the following (in millions): Gross Accumulated Amortization Net Book Value December 31, 2023: Customer relationships $ 494 $ ( 369 ) $ 125 Trademarks 174 ( 133 ) 41 Patents 129 ( 75 ) 54 Indefinite-lived trade names 196 — 196 Other 105 ( 71 ) 34 Total identified intangibles $ 1,098 $ ( 648 ) $ 450 December 31, 2024: Customer relationships $ 531 $ ( 388 ) $ 143 Trademarks 194 ( 139 ) 55 Patents 153 ( 85 ) 68 Indefinite-lived trade names 196 — 196 Other 125 ( 79 ) 46 Total identified intangibles $ 1,199 $ ( 691 ) $ 508 64 The following table presents intangible assets that were acquired during the year ended December 31, 2024 by major classification (in millions): Gross Accumulated Amortization Net Book Value Weighted Average Amortization Period (in years) December 31, 2024: Customer relationships $ 39 $ ( 3 ) $ 36 9.2 Trademarks 21 ( 2 ) 19 9.6 Patents 27 ( 4 ) 23 5.0 Other 15 — 15 5.0 Total identified intangibles $ 102 $ ( 9 ) $ 92 7.6 Goodwill represents the excess of acquisition price paid over the fair value of the tangible and identifiable intangible assets acquired and liabilities assumed. Goodwill and intangibles with indefinite lives are not amortized. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of a business combination. The recoverability of goodwill and indefinite-lived intangibles is assessed annually, or more frequently whenever events or circumstances indicate they might be impaired. The Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit or indefinite lived intangible asset is greater than its carrying amount. If the qualitative assessment indicates that it is more likely than not that the fair value of a reporting or indefinite lived intangible asset is greater than its carrying amount, no further testing is required. However, if the Company concludes otherwise, then it is required to perform a quantitative assessment. If and when the Company performs a quantitative assessment, it compares the reporting unit’s carrying value to the respective fair value. Fair value of the reporting unit is determined using significant unobservable inputs, or level 3 in the fair value hierarchy. These inputs are based on internal management estimates, forecasts and judgments, using discounted cash flow. The discounted cash flow is based on management’s forecast of operating performance for the reporting unit. The two main assumptions used in measuring goodwill impairment, which bear the risk of change and could impact the Company’s goodwill impairment analysis, include the cash flows from operations from each reporting unit and its weighted average cost of capital. The starting point for each of the reporting unit’s cash flows from operations is the detailed annual plan or updated forecast. Cash flows beyond the updated forecasted operating plans are estimated using a terminal value calculation, which incorporates historical and forecasted financial cyclical trends for each reporting unit and considered long-term earnings growth rates. The financial and credit market volatility directly impacts our fair value measurement through our weighted average cost of capital that we use to determine our discount rate. During times of volatility, significant judgment must be applied to determine whether credit changes are a short-term or long-term trend. The quantitative analysis for indefinite lived intangible assets is performed similarly using an income approach. Management reviews finite-lived intangibles for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the finite-lived intangibles are estimated over the intangible asset’s useful life based on updated projections on an undiscounted basis. If the evaluation indicates that the carrying value of the finite-lived intangible asset may not be recoverable, the potential impairment is measured at fair value. During the fourth quarter of 2024, the Company performed its annual impairment test, as described in ASC Topic 350, by electing to first perform a qualitative assessment. Based on the results of the assessment, the Company concluded it was more likely than not that the fair values of each of its reporting units and indefinite lived intangible assets was greater than its carrying value and no further testing was performed. No impairment of goodwill or indefinite-lived intangible assets was recorded in 2024 or 2023 . 65 7. Accrued Liabilities Accrued liabilities consist of (in millions): December 31, 2024 2023 Compensation $ 268 $ 294 Vendor costs 141 133 Taxes (non-income) 119 112 Warranty 68 72 Insurance 43 44 Fair value of derivatives 24 19 Commissions 16 17 Interest 11 8 Other 171 171 Total $ 861 $ 870 8. Leases The Company leases certain facilities and equipment to support its operations around the world. These leases generally require the Company to pay maintenance, insurance, taxes and other operating costs in addition to rent. Renewal options are common in longer term leases; however, it is rare that the Company intends to exercise a lease option at inception due to the cyclical nature of the Company’s business. Residual value guarantees are not typically part of the Company’s leases. Occasionally, the Company sub-leases excess facility space, generally at terms similar to the source lease. The Company reviews new agreements to determine if they include a lease and, when they do, uses its incremental borrowing rate to determine the present value of the future lease payments as most do not include implicit interest rates. Components of leases are as follows (in millions): December 31, 2024 2023 Current portion of lease liabilities: Operating $ 72 $ 70 Financing 30 24 Total $ 102 $ 94 December 31, 2024 2023 Long-term portion of lease liability: Operating $ 301 $ 343 Financing 243 215 Total $ 544 $ 558 Components of lease expense were as follows (in millions): Year Ended December 31, 2024 2023 Lease cost Finance lease cost Amortization of right-of-use assets $ 28 $ 23 Interest on lease liabilities 10 10 Operating lease cost 90 85 Short-term lease cost 69 77 Sub-lease income ( 6 ) ( 8 ) Total $ 191 $ 187 66 Supplemental information related to the Company’s leases is as follows (in millions): Years Ended 2024 2023 Other information: Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows - finance leases $ 10 $ 10 Operating cash flows - operating leases 90 85 Financing cash flows - finance leases 28 23 Right-of-use assets obtained in exchange for new: Operating lease liabilities $ 65 $ 68 Finance lease liabilities 28 27 Weighted average remaining lease term at December 31, 2024: Operating leases 11 years 10 years Finance leases 16 years 16 years Weighted average discount rate at December 31, 2024: Operating leases 5.25 % 5.17 % Finance leases 4.42 % 4.15 % Future minimum lease commitments for leases with initial or remaining terms of one year or more at December 31, 2024, are payable as follows (in millions): Operating Finance 2025 $ 91 $ 41 2026 75 36 2027 58 29 2028 47 23 2029 36 20 Thereafter 175 190 Total lease payments 482 339 Less: Interest ( 109 ) ( 66 ) Present value of lease liabilities $ 373 $ 273 9. Debt Debt consists of (in millions): December 31, 2024 2023 $ 1.1 billion in Senior Notes, interest at 3.95 % payable semiannually, principal due on December 1, 2042 $ 1,091 $ 1,091 $ 0.5 billion in Senior Notes, interest at 3.60 % payable semiannually, principal due on December 1, 2029 496 495 Other debt 153 139 Total debt 1,740 1,725 Less current portion 37 13 Long-term debt $ 1,703 $ 1,712 Principal payments of debt for years subsequent to 2024 are as follows (in millions): 2025 $ 37 2026 43 2027 12 2028 12 2029 513 Thereafter 1,137 $ 1,754 67 On September 12, 2024, the Company entered into a new $ 1.5 billion five-year unsecured revolving credit facility. This new credit facility replaced the Company’s previous $ 2.0 billion revolving credit facility. The Company has the right to increase the aggregate commitments under this new agreement to an aggregate amount of up to $ 2.5 billion upon the consent of only those lenders holding any such increase. Interest under the multicurrency facility is based upon Secured Overnight Financing Rate (SOFR), Euro Interbank Offered Rate (EURIBOR), Sterling Overnight Index Average (SONIA), Canadian Overnight Repo Rate Average (CORRA), or Norwegian Interbank Offered Rate (NIBOR), plus 1.25 % subject to a ratings-based grid or the U.S. prime rate. The new credit facility contains a financial covenant establishing a maximum debt-to-capitalization ratio of 60 %. As of December 31, 2024 , the Company was in compliance with a debt-to-capitalization ratio of 23.8 % and had no outstanding borrowings or letters of credit issued under the facility, resulting in $ 1.5 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. Interest under the bank line of credit is based upon SOFR plus 1.40 %. The bank line of credit contains a financial covenant regarding maximum debt-to-equity ratio of 75 %. As of December 31, 2024 , 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 December 31, 2024 , the Company has a carrying value of $ 94 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. The Company has $ 11 million in payments related to this line of credit due in the next twelve months. The Company can repay the entire outstanding facility balance without penalty at its sole discretion. Other debt at December 31, 2024 included $ 58 million of amounts owed to current and former minority interest partners of NOV consolidated joint ventures, of which $ 27 million is due in the next twelve months. The Company had $ 500 million of outstanding letters of credit at December 31, 2024, primarily in the U.S. and Norway, that are under various bilateral letter of credit facilities. Letters of credit are issued as bid bonds, advanced payment bonds and performance bonds. At December 31, 2024 and 2023 , the fair value of the Company’s unsecured Senior Notes approximated $ 1,285 million and $ 1,316 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 December 31, 2024 and 2023 , the carrying value of the Company’s unsecured Senior Notes approximated $ 1,587 million and $ 1,586 million, respectively. 10. Employee Benefit Plans We have benefit plans covering substantially all our employees. Defined-contribution retirement plans cover most of the U.S. and Canadian employees, and benefits are generally based on employee deferrals and matching on those employee contributions. We also have defined contribution plans in Norway and the United Kingdom. For the years ended December 31, 2024, 2023 and 2022 , expenses for defined-contribution retirement plans were $ 85 million, $ 84 million, and $ 67 million, respectively, and all funding is current. During the year ended December 31, 2023, the Company completed the settlement and termination of its defined benefit plan in the United States, resulting in excess plan assets being returned to the Company and an immaterial recognition of non-cash, pre-tax charges from accumulated other comprehensive loss to selling, general and administrative expenses in our consolidated statement of income. During the year ended December 31, 2022, the Company offered a new benefit plan providing retiree medical coverage in the United States, and as of December 31, 2024 , approximately 9,300 employees are eligible for this coverage. In addition, approximately 750 U.S. retirees and/or spouses participate in plans that provide post-retirement healthcare and/or life insurance benefits. 68 The change in benefit obligation, plan assets and the funded status of the defined benefit pension plans in the United States, United Kingdom, Norway, Germany and the Netherlands and defined postretirement plans in the United States, using a measurement date of December 31, 2024 and 2023, is as follows (in millions): Pension benefits Postretirement benefits At year end 2024 2023 2024 2023 Benefit obligation at beginning of year $ 206 $ 382 $ 48 $ 50 Service cost — — 2 2 Interest cost 8 10 3 2 Actuarial loss (gain) ( 13 ) 6 ( 2 ) ( 3 ) Benefits paid ( 11 ) ( 16 ) ( 6 ) ( 6 ) Exchange rate loss (gain) ( 6 ) 8 — — Settlements — ( 184 ) ( 2 ) — Special Termination Benefits — — — 3 Benefit obligation at end of year $ 184 $ 206 $ 43 $ 48 Fair value of plan assets at beginning of year $ 180 $ 381 $ — $ — Actual return 6 2 — — Benefits paid ( 11 ) ( 16 ) ( 6 ) ( 6 ) Company contributions 2 ( 11 ) 8 6 Exchange rate gain (loss) ( 4 ) 8 — — Settlements — ( 184 ) ( 2 ) — Fair value of plan assets at end of year $ 173 $ 180 $ — $ — Funded status $ ( 11 ) $ ( 26 ) $ ( 43 ) $ ( 48 ) Accumulated benefit obligation at end of year $ 183 $ 205 Liabilities associated with the funded status of the defined benefit pension plans are included in the balances of accrued liabilities and other liabilities in the accompanying Consolidated Balance Sheets. Defined Benefit Pension Plans Net periodic benefit income (cost) for our defined benefit pension plans aggregated $( 3 ) million, $( 2 ) million, and $ 1 million for the years ended December 31, 2024, 2023 and 2022, respectively. Assumed long-term rates of return on plan assets, discount rates and rates of compensation increases vary for the different plans according to the local economic conditions. The assumption rates used for benefit obligations are as follows: Year Ended December 31, 2024 2023 Discount rate: United States plan 4.90 % 5.50 % - 5.60 % International plans 3.40 % - 5.40 % 3.20 % - 4.50 % Salary increase: United States plan N/A N/A International plans 2.50 % - 3.50 % 2.50 % - 3.75 % 69 The assumption rates used for net periodic benefit costs are as follows: Year Ended December 31, 2024 2023 2022 Discount rate: United States plan 5.50 % - 5.60 % 4.74 % - 5.20 % 1.80 % - 2.20 % International plans 3.20 % - 4.50 % 3.30 % - 4.80 % 1.00 % - 1.90 % Salary increase: United States plan N/A N/A N/A International plans 2.50 % - 3.75 % 2.50 % - 3.75 % 2.50 % - 3.40 % Expected return on assets: United States plan N/A 4.74 % 1.84 % International plans 3.20 % - 5.40 % 3.20 % - 4.90 % 1.00 % - 4.00 % In determining the overall expected long-term rate of return for plan assets, the Company takes into consideration the historical experience as well as future expectations of the asset mix involved. As different investments yield different returns, each asset category is reviewed individually and then weighted for significance in relation to the total portfolio. The majority of our plans have projected benefit obligations in excess of plan assets. The Company expects to pay future benefit amounts on its pension plans of approximately $ 12 million for each of the next five years and aggregate payments of $ 125 million. Plan Assets The Company and its investment advisers collaboratively reviewed market opportunities using historic and statistical data, as well as the actuarial valuation reports for the plans, to ensure that the levels of acceptable return and risk are well-defined and monitored. Currently, the Company’s management believes that there are no significant concentrations of risk associated with plan assets. Our pension investment strategy worldwide prohibits a direct investment in our own stock. The following table sets forth by level, within the fair value hierarchy, the plan’s assets carried at fair value (in millions): Fair Value Measurements Total Level 1 Level 2 Level 3 December 31, 2023: Equity securities $ — $ — $ — $ — Bonds 84 — 84 — Other (insurance contracts) 96 — 31 65 Total Fair Value Measurements $ 180 $ — $ 115 $ 65 December 31, 2024: Equity securities $ — $ — $ — $ — Bonds 90 — 90 — Other (insurance contracts) 83 — 20 63 Total Fair Value Measurements $ 173 $ — $ 110 $ 63 70 Level 3 inputs are unobservable (i.e., supported by little or no market activity). Level 3 inputs include management’s own judgment about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). The return on assets for Level 3 plan assets are immaterial for all periods presented 11. Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss are as follows (in millions): Derivative Employee 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 ( 30 ) ( 17 ) ( 4 ) ( 51 ) Amounts reclassified from accumulated other comprehensive income (loss) — 6 ( 2 ) 4 Balance at December 31, 2022 $ ( 1,545 ) $ ( 4 ) $ ( 44 ) $ ( 1,593 ) Accumulated other comprehensive income (loss) before reclassifications 101 ( 21 ) ( 13 ) 67 Amounts reclassified from accumulated other comprehensive income (loss) 12 20 1 33 Balance at December 31, 2023 $ ( 1,432 ) $ ( 5 ) $ ( 56 ) $ ( 1,493 ) Accumulated other comprehensive income (loss) before reclassifications ( 138 ) ( 12 ) 10 ( 140 ) Amounts reclassified from accumulated other comprehensive income (loss) 1 7 — 8 Balance at December 31, 2024 $ ( 1,569 ) $ ( 10 ) $ ( 46 ) $ ( 1,625 ) The components of amounts reclassified from accumulated other comprehensive income (loss) are as follows (in millions): Year Ended December 31, 2024 2023 2022 Currency Derivative Employee Currency Derivative Employee Currency Derivative Employee Translation Financial Benefit Translation Financial Benefit Translation Financial Benefit Adjustments Instruments Plans Total Adjustments Instruments Plans Total Adjustments Instruments Plans Total Revenue $ — $ 5 $ — $ 5 $ — $ 11 $ — $ 11 $ — $ 3 $ — $ 3 Cost of revenue 1 4 — 5 12 9 — 21 — 6 — 6 Selling, general, and administrative — — — — — — 1 1 — — ( 2 ) ( 2 ) Tax effect — ( 2 ) — ( 2 ) — — — — — ( 3 ) — ( 3 ) $ 1 $ 7 $ — $ 8 $ 12 $ 20 $ 1 $ 33 $ — $ 6 $ ( 2 ) $ 4 The Company’s reporting currency is the U.S. dollar. A majority of the Company’s international entities in which there is a substantial investment have the local currency as their functional currency. As a result, currency translation adjustments resulting from the process of translating the entities’ financial statements into the reporting currency are reported in other comprehensive income or (loss). The Company recorded other comprehensive (loss) income of $( 137 ) million, $ 113 million and $( 30 ) million for the years ended December 31, 2024, 2023 and 2022, respectively. The effect of changes in the fair values of derivatives designated as cash flow hedges are accumulated in other comprehensive income (loss), net of tax, until the underlying transactions are realized. The movement in other comprehensive income (loss) from period to period will be the result of the combination of changes in fair value of open derivatives and the outflow of other comprehensive income (loss) related to cumulative changes in the fair value of derivatives that have settled in the current period. The accumulated effect was other comprehensive income (loss) of $( 5 ) million (net of $( 2 ) million tax), $( 1 ) million (net of $ 3 million tax), and $( 11 ) million (net of $( 3 ) million tax) for the years ended December 31, 2024, 2023 and 2022 . 71 12. Commitments and Contingencies Our business is governed by laws and regulations, including those directed to the oilfield service industry, promulgated by U.S. federal and state governments and regulatory agencies, as well as international governmental authorities in the many countries in which we conduct business. In the United States, these governmental authorities include the U.S. Department of Labor, the Occupational Safety and Health Administration, the Environmental Protection Agency, the Bureau of Land Management, the Department of Treasury, Office of Foreign Assets Control, state environmental agencies and many others. We are unaware of any material liabilities in connection with our compliance with such laws. New laws, regulations and enforcement policies may result in additional, presently unquantifiable, or unknown, costs or liabilities. From time to time, the Company is involved in various claims, regulatory agency audits, investigations and legal actions involving a variety of matters. The Company maintains insurance that covers claims such as third-party personal injury or property damage claims arising from risks associated with the business activities of the Company, including premises liability, product liability, marine risk, property damage, and other insurable losses. The Company carries substantial insurance to cover insurable risks above a self-insured retention. The Company also from time to time may be a party to claims, threatened and actual litigation, arbitration, and internal investigations of potential regulatory and compliance matters which may arise from the Company’s business activities, some of which may not involve insured claims. The Company believes, and the Company’s experience has been, that such insurance has been sufficient to cover its material risks from operations. The regulatory matters and disputes which the Company faces may involve private parties and/or government authorities who may assert a broad variety of potential claims against the Company, such as employment law claims, collective actions or class action claims, intellectual property claims (such as alleged patent infringement, and/or misappropriation of trade secrets by the Company), premises liability claims, environmental claims, product liability claims, warranty claims, personal injury claims arising from exposure to or use of allegedly defective products or from activities of the Company, alleged regulatory violations, alleged violations of anti-corruption and anti-bribery, trade, customs or other laws and other commercial and/or regulatory claims seeking recovery for alleged actual or exemplary damages or fines and penalties. Such claims involve various theories of liability which may include negligence, breach of contract, strict liability, product liability, and others. 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 December 31, 2024, in the ordinary course of business, the Company recorded reserves in an amount believed to be sufficient, given the estimated range of potential outcomes, for contingent liabilities 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. The Company periodically assesses the potential for losses above the amounts accrued as well as potential losses for matters that are believed to be not probable, but which are reasonably possible. The Company sets accruals in accordance with GAAP based on its best judgment about the probable results of disputed claims, regulatory enforcement actions, tax and other governmental audits, and other contingencies. The litigation process and the outcome of regulatory oversight is inherently uncertain, and our best judgment concerning the probable outcome of litigation or regulatory enforcement matters may prove to be incorrect. No assurance can be given as to the outcome of these matters. The total potential loss on these matters cannot be determined; however, in our opinion, any ultimate liability, to the extent not otherwise provided for, should not materially affect our financial position, cash flows or results of operations. 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 the 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 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. 72 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 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 each license agreement. The companies agreed to pay the royalties for the right to use the portfolio of patents, whether they used some, all or none of the specific patented claims in any particular patent. The license agreements 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, all of the drill bit manufacturer 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 claim to not manufacture products covered by the unexpired patents. Some of these companies stopped making payments after the expiration of what are allegedly the patents in the portfolio that they elected to use. Others paid for some period of time after that date but have since stopped making payments. The Company has sued asserting that failure to pay the royalties is a breach of the license agreements at issue. The Company is in litigation with most of the licensees seeking a judicial determination that it is entitled to be paid royalties pursuant to the terms of the licenses. The licensees have responded with a number of alleged defenses and requests for declaratory judgment all focused on avoiding the payments called for under the licenses. The parties’ legal 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. v. Schlumberger Tech. Corp., et al., No. 4:23-cv-00730; and Halliburton Energy Serv, Inc. v. Grant Prideco, Inc., et al., No. 4:23-cv-01789. While the Company strongly believes that the royalties for which it has sued are due and owing pursuant to the terms of the licensing agreements, there is inherent risk with the related litigation and the Company makes no assurances as to the outcome of such litigation. See Note 14 to the Consolidated Financial Statements for discussion of the financial impact of royalties. The protection of intellectual property is important to the Company’s performance, and as such, an adverse result in disputes related to 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. From time to time purchasers of our products and services or members of our supply chain or sales chain become involved in litigation, governmental investigations, internal investigations, political or other enforcement matters, or other dispute proceedings. In such circumstances, such proceedings may adversely impact the ability of purchasers of our products, entities providing financial support to such consumers or entities in the supply chain or sales chain to timely perform their business plans or to timely perform under agreements with us. We may, from time to time, become involved in these proceedings at substantial cost to the Company. The Company is exposed to customs and trade regulation risk, including tariffs, in the countries in which we do business and countries from which, or to which, we import or export goods. Such trade regulations can be complex and conflicting, as different countries use trade regulation to promote conflicting policy objectives. Compliance with these laws and regulations presents challenges which could result in future liabilities (for example, alleged violation of those laws or when laws conflict between countries). The Company may face increased tariffs and trade costs, loss of revenue, loss of customers, fines, penalties, increased costs, the need for renegotiation of agreements, and other business disruptions. Trade regulations, supply chain regulations, and other regulatory compliance in different jurisdictions may conflict with one another or with contractual terms with our various counterparties. In such circumstances, our compliance with U.S. laws and regulations may subject us to risk of fines, penalties, or contractual liability in other jurisdictions. Our efforts to actively manage such risks may not always be successful, and this could lead to negative impacts on revenue or earnings. In addition, trade regulations, export controls, and other laws adversely impact our ability to do business in certain countries, e.g., Iran, Syria, Russia, China and Venezuela. In response to additional sanctions enacted by governments in the European Union, the United States, the United Kingdom, Switzerland, and other countries regarding the armed conflict in Ukraine, we ceased new investments in Russia and have curtailed our activities there. 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, the U.S. and E.U. 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. 73 Geopolitical events continue to pose supply chain and other business risks. The Company’s ability to manufacture equipment and perform services could be impaired by such disruptions and the Company could be exposed to liabilities resulting from additional interruption or delay in its ability to perform due to factors such as war, materials shortages, inflationary pressures, limited manpower or otherwise. We may face loss of workers, labor shortages, litigation, fines and/or other adverse consequences resulting from ongoing labor impacts. The combined impact of supply chain and labor market disruptions along with continuing inflationary impacts, as well as monetary and regulatory policies could have material adverse impacts on our financial results. Disputes may arise from a variety of causes, including weather impacts, cyber, geopolitical, regulatory or other business risks, sometimes these risks may trigger application of force majeure and other contract provisions concerning allocation of responsibility among customers, the Company, and suppliers, resulting in material added cost and/or litigation. Our customers may attempt to cancel or delay projects, cancel contracts, or may invoke force majeure clauses. Our customers may also seek to delay or may default on their payments to us. As a result, the Company may be exposed to additional costs, liabilities and risks which could materially adversely impact our financial performance and results. These potential operational and service delays could result in contractual or other legal claims from our customers. At this time, it is not possible to quantify all these risks, but the combination of these factors could have a material impact on our financial results. 13. Common Stock NOV has authorized 1 billion shares of $ 0.01 par value common stock. The Company also has authorized 10 million shares of $ 0.01 par value preferred stock, none of which is issued or outstanding. Cash dividends aggregated $ 108 million and $ 79 million for the years ended December 31, 2024 and 2023, respectively. 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. Total compensation cost that has been charged against income for all share-based compensation arrangements was $ 70 million, $ 66 million and $ 67 million for 2024, 2023 and 2022 , respectively. The total income tax benefit recognized before consideration of valuation allowance in the consolidated statements of income for all share-based compensation arrangements was $ 2 million, $ 7 million and $ 3 million for 2024, 2023 and 2022, respectively. The Company’s stock-based compensation plan, known as the NOV Inc. 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 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 December 31, 2024, approximately 7.8 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. The Plan provides for the granting of stock options, performance-based share awards, restricted stock, phantom shares, stock payments and stock appreciation rights (“SARs”). The number of shares authorized under the Plan is 69.4 million. The Plan is subject to a fungible ratio concept, such that the issuance of stock options and SARs reduces the number of available shares under the Plan on a 1-for-1 basis, and the issuance of other awards reduces the number of available shares under the Plan on a 3-for-1 basis. 74 Stock Options Options granted under our stock-based compensation plans generally vest over a three-year period starting one year from the date of grant and expire ten years from the date of grant. The purchase price of options granted may not be less than the closing market price of NOV common stock on the date of grant. Stock option information summarized below includes amounts for the NOV Plan and the Plan and stock plans of acquired companies. Options outstanding at December 31, 2024 under the stock option plans have exercise prices between $ 15.00 and $ 54.74 per share, and expire at various dates from February 26, 2025 to February 7, 2034. The following summarizes options activity: Year Ended December 31, 2024 2023 2022 Number Average Number Average Number Average of Exercise of Exercise of Exercise Shares Price Shares Price Shares Price Shares under option at beginning of year 19,975,103 $ 36.25 21,080,388 $ 38.68 21,276,961 $ 42.09 Granted 1,110,478 17.52 1,014,002 21.76 1,492,020 16.73 Forfeited ( 2,743,698 ) 56.16 ( 1,908,768 ) 57.61 ( 1,574,642 ) 65.44 Exercised ( 206,386 ) 16.87 ( 210,519 ) 16.68 ( 113,951 ) 17.77 Shares under option at end of year 18,135,497 $ 32.31 19,975,103 $ 36.25 21,080,388 $ 38.68 Exercisable at end of year 15,911,560 $ 34.23 17,437,459 $ 38.85 17,988,842 $ 42.46 The following summarizes information about stock options outstanding at December 31, 2024: Weighted-Avg Options Outstanding Options Exercisable Remaining Weighted-Avg Weighted-Avg Range of Exercise Price Contractual Life Shares Exercise Price Shares Exercise Price $ 15.00 - $ 30.00 5.60 8,906,198 $ 21.24 6,682,261 $ 22.13 $ 30.01 - $ 50.00 1.97 5,856,046 36.22 5,856,046 36.22 $ 50.01 - $ 54.74 0.15 3,373,253 54.74 3,373,253 54.74 Total 3.41 18,135,497 $ 32.31 15,911,560 $ 34.23 The weighted-average remaining contractual term for outstanding and exercisable stock options at December 31, 2024, was 3.41 years and 2.72 years, respectively. The aggregate intrinsic value of outstanding options as of December 31, 2024, was $ 0 . The weighted-average fair value of options granted during 2024, 2023 and 2022 , was approximately $ 7.90 , $ 9.75 , and $ 6.28 per share, respectively, as determined using the Black-Scholes option-pricing model. The total intrinsic value of options exercised was $ 1 million during 2024 and 2023. The determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise activity. The use of the Black Scholes model requires the use of actual employee exercise activity data and the use of a number of complex assumptions including expected volatility, risk-free interest rate, expected dividends and expected term. Year Ended December 31, Valuation Assumptions: 2024 2023 2022 Expected volatility 46.8 % 45.7 % 43.6 % Risk-free interest rate 4.0 % 4.1 % 1.9 % Expected dividend yield 1.1 % 0.9 % 1.2 % Expected term (in years) 6.0 5.8 5.4 The Company used the actual volatility for traded options for the past 10 years prior to option date as the expected volatility assumption required in the Black Scholes model. The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options. The dividend yield assumption is based on the history and expectation of dividend payouts. The estimated expected term is based on actual employee exercise activity for the past ten years. Forfeitures are accounted for as they occur. 75 At December 31, 2024 , total unrecognized compensation cost related to nonvested stock options was $ 9 million. This cost is expected to be recognized over a weighted-average period of three years . The total fair value of stock options vested in 2024, 2023 and 2022 was approximately $ 9 million, $ 9 million and $ 10 million, respectively. Cash received from option exercises for 2024 was $ 3 million. Cash received from option exercises was $ 4 million and $ 2 million in 2023 and 2022 , respectively. The actual tax benefit (expense) realized for the tax deductions from share-based compensation was zero in 2024, 2023, and 2022. Stock Appreciation Rights On December 20, 2017, the Company made a tender offer to exchange SARs issued to certain employees on February 24, 2016 (“2016 SARs”) for cash, amended SARs, and new stock options. The transaction was structured to provide the employees an equal long-term incentive compensation value, while alleviating volatility in the Company’s earnings caused by required mark-to-market accounting on outstanding SARS. Of the outstanding 2016 SARs, 94.75 % were exchanged resulting in a total cash payment of $ 14 million and granting of 3,613,707 new stock options on the exchange date with an exercise price of $ 34.32 and a fair value of $ 8.47 , with vesting matched to the exchanged 2016 SARs. The following summary presents information regarding outstanding SARs: Year Ended December 31, 2024 2023 Number Average Number Average of Exercise of Exercise Shares Price Shares Price Shares under SARs at beginning of year 1,056,805 $ 28.37 1,105,106 $ 28.39 Granted — — — — Forfeited ( 35,248 ) 28.64 ( 48,301 ) 28.83 Exercised — — — — Shares under SARs at end of year 1,021,557 $ 28.36 1,056,805 $ 28.37 Exercisable at end of year 1,021,557 $ 28.36 1,056,805 $ 28.37 The Company recognized no expense related to SARs in 2024, 2023 , or 2022. There was no liability for cash-settled SARs at December 31, 2024. Restricted Shares The Company issues restricted stock awards and restricted stock units to officers and key employees in addition to stock options. On February 6, 2024, under the NOV Plan, the Company granted 1,110,478 stock options with a fair value of $ 7.90 per option and an exercise price of $ 17.52 per share; 2,571,356 restricted stock units with a fair value of $ 17.52 per share; and performance share awards (PSAs) to senior management employees with potential payouts varying from zero to 1,061,644 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 2024 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. On May 15, 2024 the Company granted 85,950 restricted stock units with a fair value of $ 18.85 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. 76 On May 13, 2024, the Company granted 2,667 restricted stock units with a fair value of $ 18.76 per share. On May 30, 2024, the Company granted 13,639 restricted stock units with a fair value of $ 18.33 per share. The awards were granted to employees and vest in three equal annual installments commencing on the first anniversary of grant date. The following summary presents information regarding outstanding restricted shares: Year Ended December 31, 2024 2023 2022 Weighted- Weighted- Weighted- Number Average Number Average Number Average of Grant Date of Grant Date of Grant Date Units Fair Value Units Fair Value Units Fair Value Nonvested at beginning of year 6,615,478 $ 19.86 7,188,183 $ 18.30 6,936,574 $ 21.32 Granted 3,204,434 17.96 2,792,465 22.70 3,509,425 17.67 Vested ( 3,068,811 ) 17.46 ( 3,045,126 ) 21.77 ( 2,863,385 ) 17.11 Forfeited ( 312,828 ) 20.29 ( 320,044 ) 23.89 ( 394,431 ) 26.00 Nonvested at end of year 6,438,273 $ 19.76 6,615,478 $ 19.86 7,188,183 $ 18.30 At December 31, 2024 , there was approximately $ 64 million of unrecognized compensation cost related to nonvested restricted stock awards and restricted stock units, which is expected to be recognized over a weighted-average period of two years . 14. Revenue Disaggregation of Revenue The following tables disaggregate our revenue by destinations and revenue streams, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors (in millions). In the tables below, North America includes only the U.S. and Canada: Year Ended December 31, 2024 Energy Products Energy and Solutions Equipment Eliminations Total North America $ 2,105 $ 1,201 $ — $ 3,306 International 1,935 3,629 — 5,564 Intersegment revenue 90 58 ( 148 ) — $ 4,130 $ 4,888 $ ( 148 ) $ 8,870 Land $ 3,088 $ 1,800 $ — $ 4,888 Offshore 952 3,030 — 3,982 Intersegment revenue 90 58 ( 148 ) — $ 4,130 $ 4,888 $ ( 148 ) $ 8,870 Year Ended December 31, 2023 Energy Products Energy and Solutions Equipment Eliminations Total North America $ 2,019 $ 1,237 $ — $ 3,256 International 1,954 3,373 — 5,327 Intersegment revenue 104 59 ( 163 ) — $ 4,077 $ 4,669 $ ( 163 ) $ 8,583 Land $ 2,921 $ 1,864 $ — $ 4,785 Offshore 1,052 2,746 — 3,798 Intersegment revenue 104 59 ( 163 ) — $ 4,077 $ 4,669 $ ( 163 ) $ 8,583 77 Year Ended December 31, 2022 Energy Products Energy and Solutions Equipment Eliminations Total North America $ 1,845 $ 1,034 $ — $ 2,879 International 1,629 2,729 — 4,358 Eliminations 63 56 ( 119 ) — $ 3,537 $ 3,819 $ ( 119 ) $ 7,237 Land $ 2,620 $ 1,527 $ — $ 4,147 Offshore 854 2,236 — 3,090 Eliminations 63 56 ( 119 ) — $ 3,537 $ 3,819 $ ( 119 ) $ 7,237 In the table below, the revenue streams of the Energy Products and Services segment are categorized as services and rentals, sales of shorter-lived capital equipment, and sales of consumable products. The revenue streams of Energy Equipment are categorized as long-lived capital equipment sales and aftermarket sales and services. Year Ended December 31, 2024 2023 2022 Energy Products and Services: Services & rental $ 1,996 $ 1,959 $ 1,740 Capital equipment 1,238 1,336 1,148 Product sales 806 678 586 Intersegment revenue 90 104 63 Total 4,130 4,077 3,537 Energy Equipment: Capital equipment 2,625 2,556 2,173 Aftermarket 2,205 2,054 1,590 Intersegment revenue 58 59 56 Total 4,888 4,669 3,819 Eliminations ( 148 ) ( 163 ) ( 119 ) Total consolidated $ 8,870 $ 8,583 $ 7,237 The Company did no t have any customers with revenues greater than 10 % of total revenue for the years ended December 31, 2024, 2023, or 2022. Contract Assets and Liabilities Contract assets include unbilled amounts when revenue recognized exceeds the amount billed to the customer under contracts where revenue is recognized over-time. There were no impairment losses recorded on contract assets for the years ending December 31, 2024, 2023 and 2022. Contract liabilities consist of advance payments, billings in excess of revenue recognized and deferred revenue. The changes in the carrying amount of contract assets and contract liabilities are as follows (in millions): Contract Assets Contract Liabilities Balance at December 31, 2023 $ 739 $ 532 Billings ( 1,553 ) 1,261 Revenue recognized 1,490 ( 1,247 ) Currency translation adjustments and other ( 99 ) ( 54 ) Balance at December 31, 2024 $ 577 $ 492 78 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 $ 67 million, $ 78 million, and $ 80 million for years ended December 31, 2024, 2023, and 2022, respectively. The Company is currently pursuing litigation against certain non-paying licensees, which will impact our ability to collect the receivables timely. As such, revenue and the related receivables are recorded at a discount to reflect the delayed timing of future cash collections. As of December 31, 2024 , the receivables of $ 121 million, net of allowances of $ 26 million for credit losses and $ 14 million for the remaining timing related discount, are included in Other Assets on the Consolidated Balance Sheets. These allowances do not impact the amount the Company is entitled to recover on its claims from the licensees in litigation. While we continue to believe it is probable the Company will collect all or substantially all of the consideration to which it is entitled pursuant to the terms of the licensing agreements, the Company will also continue to evaluate the credit quality of the receivables in accordance with the policy described in Note 2. See Note 12 to the Consolidated Financial Statements for discussion of the ongoing litigation. Allowance for Credit Losses The Company estimates its allowance for credit losses using information about past events, current conditions and risk characteristics of each customer, and reasonable and supportable forecasts relevant to assessing risk associated with the collectability of receivables and contract assets. See Note 2 to the Consolidated Financial Statements for discussion of credit risk. As of December 31, 2024 , the allowance for credit losses totaled $ 67 million. The changes in the carrying amount of the allowance for credit losses are as follows (in millions): Balance at December 31, 2023 $ 72 Provision for expected credit losses 40 Recoveries collected ( 13 ) Reclass for long-term receivables ( 17 ) Writeoffs ( 13 ) Other ( 2 ) Balance at December 31, 2024 $ 67 15. Income Taxes The domestic and foreign components of income before income taxes were as follows (in millions): Year Ended December 31, 2024 2023 2022 Domestic $ 413 $ 249 $ 113 Foreign 418 363 125 $ 831 $ 612 $ 238 The components of the provision (benefit) for income taxes consisted of (in millions): Year Ended December 31, 2024 2023 2022 Current: Federal $ 9 $ ( 4 ) $ ( 1 ) State 5 2 — Foreign 133 118 86 Total current income tax provision 147 116 85 Deferred: Federal 41 ( 252 ) 3 State 4 ( 47 ) — Foreign 4 ( 190 ) ( 5 ) Total deferred income tax provision (benefit) 49 ( 489 ) ( 2 ) Total income tax provision (benefit) $ 196 $ ( 373 ) $ 83 79 The difference between the effective tax rate reflected in the provision (benefit) for income taxes and the U.S. federal statutory rate was as follows (in millions): Year Ended December 31, 2024 2023 2022 Federal income tax at U.S. statutory rate $ 175 $ 129 $ 50 Foreign income tax rate differential — 3 1 Change in deferred tax valuation allowance ( 64 ) ( 564 ) 24 Nondeductible expenses 47 18 18 Foreign inclusions and FDII, net of foreign tax credits ( 36 ) 5 ( 4 ) Change in uncertain tax positions 3 12 4 Withholding taxes 47 30 31 Income tax credits ( 6 ) ( 8 ) ( 5 ) Other 30 2 ( 36 ) Total income tax provision (benefit) $ 196 $ ( 373 ) $ 83 The effective tax rate for the year ended December 31, 2024 was 23.6 %, compared to ( 60.9 %) for 2023. For the year ended 2024 , the effective tax rate was negatively impacted by increased withholding taxes, nondeductible expenses, and losses in certain jurisdiction with no tax benefit, partially offset by a lower rate of U.S. tax on global intangible low-taxed income (GILTI) and the deduction of foreign-derived intangible income (FDII) and the release of valuation allowances in certain jurisdictions as a result of improving forecasted taxable income and availability of net operating losses. During 2023, the Company determined it was more likely than not that the Company would be able to realize the benefit of a substantial portion of the deferred tax assets in the United States and the majority of its other international jurisdictions. In reaching this determination, the Company considered the growing trend of profitability over the preceding three years, particularly in the United States, as well as expectations regarding the generation of future taxable income and the sources of future taxable income. As a result of this analysis, the Company recognized a discrete tax benefit related to the release of valuation allowances of $ 299 million in the United States and $ 186 million outside the United States. The effective tax rate was also favorably impacted by adjustments related to utilization of losses and tax credits for current and prior year tax returns, partially offset by current year losses in certain jurisdictions with no tax benefit. As of December 31, 2024, the Company continues to maintain a valuation allowance of $ 266 million primarily related to foreign tax credit carryforwards in the United States and deferred tax assets in certain other jurisdictions due to several factors, including specific jurisdictions in which the Company does not project to generate sufficient future taxable income to realize all or a portion of its deferred tax assets specific to that jurisdiction; the specific nature and timing of future taxable income required to realize certain tax credit carryforwards, most notably U.S. foreign tax credits; and the timing of expiration of certain tax credit carryforwards. Significant components of our deferred tax assets and liabilities were as follows (in millions): December 31, 2024 2023 Deferred tax assets: Allowances and operating liabilities $ 235 $ 264 Net operating loss carryforwards 186 249 Stock Compensation 38 48 Tax credit carryforwards 257 301 Other 113 121 Valuation allowance ( 266 ) ( 346 ) Total deferred tax assets 563 637 Deferred tax liabilities: Tax over book depreciation 31 43 Capital leases 68 67 Intangible assets 44 39 Deferred income 22 24 Accrued tax on unremitted earnings 41 38 Other — 8 Total deferred tax liabilities 206 219 Net deferred tax asset $ 357 $ 418 80 The valuation allowance decreased by $ 80 million during 2024 . This decrease is comprised of $ 40 million due to the Company’s evaluation of the realizability of deferred tax assets based on future projections of taxable income, $ 24 million related to current year utilization of deferred tax assets, $ 11 million related to the expiration or forfeiture of deferred tax assets, and $ 5 million related to foreign currency exchange rate changes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions): 2024 2023 2022 Unrecognized tax benefit at beginning of year $ 67 $ 62 $ 60 Gross increase for tax position in current year — 18 — Gross increase for tax positions in prior years 4 1 9 Gross decrease for tax positions in prior years — ( 3 ) ( 1 ) Cash Settlements — ( 4 ) ( 1 ) Lapse of statute of limitations ( 3 ) ( 7 ) ( 5 ) Unrecognized tax benefit at end of year $ 68 $ 67 $ 62 The balance of unrecognized tax benefits at December 31, 2024, 2023 and 2022 was $ 68 million, $ 67 million and $ 62 million, respectively. Accruals related to prior year domestic and foreign jurisdiction issues resulted in uncertain tax position increases of $ 4 million in 2024. Substantially all of the unrecognized tax benefits, if ultimately realized, would be recorded as a reduction to income tax expense in the period realized. The Company does not anticipate any material change within the next twelve months due to settlements and conclusions of tax examinations. To the extent penalties and interest would be assessed on any underpayment of income tax, such accrued amounts have been classified as a component of income tax expense in the financial statements consistent with the Company’s policy. For the years ended December 31, 2024, 2023 and 2022, we recorded income tax expense of $ 4 million, $ 5 million and $ 8 million, respectively, for interest and penalty related to unrecognized tax benefits. As of December 31, 2024 and 2023, the Company had accrued $ 24 million and $ 20 million, respectively, of interest and penalty relating to unrecognized tax benefits. The Company is subject to taxation in the United States as well as various states and foreign jurisdictions. The Company has significant operations in the United States, Norway, Saudi Arabia, Brazil, China, the United Kingdom, the Netherlands, Denmark, and Mexico. Tax years that remain subject to examination by major tax jurisdictions vary by legal entity, but are generally open in the U.S. for tax years ending after 2013 and outside the U.S. for tax years ending after 2018. Net operating loss carryforwards by jurisdiction and expiration as of December 31, 2024 were as follows (in millions): Federal State Foreign Total 2025 - 2029 Expiration $ — $ 101 $ 44 $ 145 2030 - 2040 Expiration 13 191 92 296 Unlimited Expiration 54 — 443 497 Total Net Operating Loss (NOL) $ 67 $ 292 $ 579 $ 938 Tax Effected NOL $ 14 $ 20 $ 152 $ 186 The Company has $ 239 million of excess foreign tax credits in the United States as of December 31, 2024 , of which $ 116 million, $ 92 million, $ 10 million, $ 10 million, $ 8 million and $ 3 million will expire in 2027, 2028, 2030, 2031, 2032 and 2033 respectively. 16. Business Segments and Geographic Areas The Company is comprised of 17 business units to provide products and services to the energy industry. Each of the business units is managed by a business unit president, recognizes revenue, incurs expenses, and has discrete financial information readily available. The business units are aggregated into our 2 reportable segments, Energy Products and Services, and Energy Equipment, based on the products and services provided, customer base, and operating environment. The reportable segments are led by Segment Presidents, who are responsible for oversight of the business units’ strategy and performance. The Segment Presidents report directly to the CEO and provide monthly operating and financial updates. The CEO has final authority over resource allocation decisions and performance assessment for the Company. Consequently, the CEO has been identified as the CODM. The CODM regularly receives information directly from the Segment Presidents as well as the business units. However, for decision-making purposes related to the assessment of performance and allocation of resources, the CODM uses financial information at the segment level. The CODM regularly reviews Operating Profit for each segment to assess performance and for resource allocation decisions in the annual budgeting process and in the quarterly performance review processes. 81 Energy Products and Services The Company’s Energy Products and Services segment primarily designs, manufactures, rents, and sells products and equipment used in drilling, intervention, completion, and production activities. Products include drill bits, downhole tools, premium drill pipe, drilling fluids, managed pressure drilling, integral and weld-on connectors for conductor strings and surface casing, completion tools, and artificial lift systems. The segment also designs, manufactures, and delivers high-end composite pipe, tanks, and structures engineered to solve both corrosion and weight challenges in a wide variety of applications, including oil and gas, chemical, industrial, wastewater, fuel handling, marine and offshore, and rare earth mineral extraction. In addition to product and equipment sales, the segment provides services, software, and digital solutions to improve drilling and completion operational performance. Services include tubular inspection and coating, solids control, waste management, and managed pressure drilling. Software and digital solutions offered include drilling and completion optimization and remote monitoring (via downhole and surface instrumentation), wired drill pipe services, software controls and applications, and data management and analytics services at the edge and in the cloud. Energy Products and Services serves oil and gas companies, drilling contractors, oilfield service companies, oilfield equipment rental companies and developers of geothermal energy. Demand for the segment’s products and services primarily depends on the level of oilfield drilling activity by oil and gas companies, drilling contractors, and oilfield service companies. Demand for the segment’s composite solutions serving applications outside of oil and gas are driven by industrial activity, infrastructure spend, and population growth. Energy Equipment The Company’s Energy Equipment segment manufactures and supports the capital equipment and integrated systems needed for oil and gas exploration and production, both onshore and offshore, as well as for other marine-based, industrial and renewable energy markets. The segment designs, manufactures, and integrates technologies for drilling and producing oil and gas wells. This includes equipment and technologies needed for drilling, including land rigs, offshore drilling equipment packages, drilling rig components, and software control systems that mechanize and automate the drilling process and rig functionality; hydraulic fracture stimulation, including pressure pumping trucks, blenders, sanders, hydration units, injection units, flowline, and manifolds; well intervention, including coiled tubing units, coiled tubing, and wireline units and tools; cementing products for pumping, mixing, transport, and storage; onshore production, including fluid processing, and surface transfer as well as progressive cavity pumps; offshore production, including integrated production systems and subsea production technologies; and aftermarket support of these technologies, providing spare parts, service, and repair. Energy Equipment primarily serves contract drillers, oilfield service companies, and oil and gas companies. Demand for the segment’s products primarily depends on capital spending plans by drilling contractors, service companies, and oil and gas companies, and secondarily on the overall level of oilfield drilling, completions, and workover activity which drives demand for equipment, spare parts, service, and repair for the segment’s large installed base of equipment. The segment also serves marine and offshore markets, where it designs and builds equipment for wind turbine installation and cable lay vessels, and offers heavy lift cranes and jacking systems; industrial markets, where the segment provides pumps and mixers for a wide breadth of industrial end markets; and other energy transition markets, where it is applying its gas processing expertise to provide solutions that aid in wind power development, hydrogen production and carbon sequestration. 82 The following table presents financial data by business segment (in millions): Year Ended December 31, 2024 2023 2022 Energy Products and Services Energy Equipment Eliminations and corporate costs (1) Total Energy Products and Services Energy Equipment Eliminations and corporate costs (1) Total Energy Products and Services Energy Equipment Eliminations and corporate costs (1) Total Revenue from external customers $ 4,040 $ 4,830 $ - $ 8,870 $ 3,973 $ 4,610 $ - $ 8,583 $ 3,474 $ 3,763 $ - $ 7,237 Intersegment revenue 90 58 ( 148 ) - 104 59 ( 163 ) - 63 56 ( 119 ) - Total revenue 4,130 4,888 ( 148 ) 8,870 4,077 4,669 ( 163 ) 8,583 3,537 3,819 ( 119 ) 7,237 Less: Cost of revenue (2) 2,934 3,671 ( 62 ) 6,543 2,870 3,670 ( 67 ) 6,473 2,537 3,085 ( 48 ) 5,574 Selling, general, and administrative (2) 500 494 114 1,108 518 521 121 1,160 488 482 128 1,098 Depreciation and amortization 221 115 7 343 183 111 8 302 179 115 7 301 (Gain)/loss on sales of fixed assets - - - - ( 1 ) ( 4 ) 2 ( 3 ) 2 - ( 2 ) - Operating profit $ 475 $ 608 $ ( 207 ) $ 876 $ 507 $ 371 $ ( 227 ) $ 651 $ 331 $ 137 $ ( 204 ) $ 264 Reconciliation to income before income taxes: Interest and financial costs - - ( 91 ) ( 91 ) - - ( 88 ) ( 88 ) - - ( 78 ) ( 78 ) Interest income - - 38 38 - - 28 28 - - 19 19 Equity income (loss) in unconsolidated affiliates 33 3 - 36 111 8 - 119 71 ( 3 ) - 68 Other expenses, net - - ( 28 ) ( 28 ) - - ( 98 ) ( 98 ) - - ( 35 ) ( 35 ) Income before income taxes $ 508 $ 611 $ ( 288 ) $ 831 $ 618 $ 379 $ ( 385 ) $ 612 $ 402 $ 134 $ ( 298 ) $ 238 Other segment information: Capital expenditures $ 255 $ 86 $ 10 $ 351 $ 198 $ 68 $ 17 $ 283 $ 131 $ 71 $ 12 $ 214 Investment in unconsolidated affiliates $ 158 $ 5 $ - $ 163 $ 211 $ - $ - $ 211 $ 87 $ 30 $ - $ 117 Total assets $ 5,054 $ 4,895 $ 1,412 $ 11,361 $ 4,777 $ 5,509 $ 1,008 $ 11,294 $ 4,126 $ 4,745 $ 1,264 $ 10,135 (1) Sales from one segment to another generally are priced at estimated equivalent commercial selling prices; however, segments originating an external sale are credited with the full profit to the Company. Eliminations and corporate costs include intercompany transactions conducted between the three reporting segments that are eliminated in consolidation, as well as corporate costs not allocated to the segments. Intercompany transactions within each reporting segment are eliminated within each reporting segment. Also included in the eliminations and corporate costs column are capital expenditures and total assets related to corporate. Corporate assets consist primarily of cash and fixed assets. (2) Included in cost of revenue and selling, general, and administrative expenses are pre-tax charges (credits) within Other Items of $( 109 ) million, $ 51 million, and $ 114 million, for the years ended December 31, 2024, 2023, and 2022, respectively. Other Items included in cost of revenue for 2024 includes a credit related to a gain on business divestiture (Energy Equipment $ 130 million); credits related to gains on sales of previously reserved inventory (Energy Equipment $ 3 million); charges related to severance and other restructuring costs (Energy Products and Services $ 8 million and Energy Equipment $ 15 million), and a credit related to Russia impairment (Energy Products and Services $ 1 million). Other Items included in selling, general, and administrative expenses for 2023 includes charges related to voluntary early retirement program (VERP) (Energy Products and Services $ 29 million and Energy Equipment $ 19 million); credit related to release of an earnout accrual (Energy Equipment $ 25 million); charges related to severance and other restructure costs (Energy Equipment $ 10 million). Other items included in cost of revenue for 2023 include a non-cash discount charge on royalty receivables (Energy Products and Services $ 25 million); credits related to gains on sales of previously reserved inventory (Energy Products and Services $ 1 million and Energy Equipment $ 19 million); charges related to severance and other restructuring costs (Energy Equipment $ 1 million). Other Items included in selling, general, and administrative expenses for 2022 include Russia impairment and other charges (Energy Products and Services $ 11 million and Energy Equipment $ 40 million). Other items included in cost of revenue for 2022 include Russia impairment and other charges (Energy Products and Services $ 60 million and Energy Equipment $ 12 million); charges related to severance and other restructuring costs (Energy Products and Services $ 2 million and Energy Equipment $ 6 million); and credits related to gains on sales of previously reserved inventory (Energy Products and Services $ 1 million and Energy Equipment $ 34 million). 83 Geographic Areas: The following table presents consolidated revenues by country based on sales destination of the products or service (in millions): Year Ended December 31, 2024 2023 2022 United States $ 2,984 $ 2,933 $ 2,603 Other Countries 5,886 5,650 4,634 Total $ 8,870 $ 8,583 $ 7,237 The following table presents net property, plant and equipment by country based on the location (in millions): December 31, 2024 2023 United States $ 928 $ 906 Saudi Arabia 303 258 Other Countries 691 701 Total $ 1,922 $ 1,865 17. Impairment and Other Items We recorded a net credit of $ 109 million in other items for the year ended December 31, 2024, of which $ 130 million related to a gain from the divestiture of its Pole Products business, offset by charges related to severance, facility closure and other restructuring costs of $ 21 million. The other items are reported in “Cost of revenue” ($( 110 ) million for the year ended December 31, 2024) and “Selling, general and administrative” ($ 1 million for the year ended December 31, 2024) in our Consolidated Statements of Income. We recorded $ 51 million in other items for the year ended December 31, 2023, of which $ 52 million related to charges related to VERP, $ 25 million related to a non-cash discount charge on royalty receivables, offset by credits related to the release of an earnout accrual of $ 25 million, and credits related to gains on sales of previously reserved inventory of $ 20 million. The other items are reported in “Cost of revenue” ($ 10 million for the year ended December 31, 2023) and “Selling, general and administrative” ($ 41 million for the year ended December 31, 2023) in our Consolidated Statements of Income . We recorded $ 114 million in other items for the year ended December 31, 2022, of which $ 127 million relates to impairments for Russia and Belarus. The other items are reported in "Cost of revenue" ($ 63 million for the year ended December 31, 2022) and "Selling, general and administrative" ($ 51 million for the year ended December 31, 2022) in our Consolidated Statement of Income (Loss). As previously disclosed, in response to sanctions against Russia and Russian interests, the Company ceased new investments and curtailed our activities in Russia. 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 various government approvals in Russia and other jurisdictions. For the years ended December 31, 2024 and 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 Sheets. 18. Acquisitions and Divestitures For the year ended December 31, 2024, our Energy Products and Services segment made three strategic acquisitions to enhance and expand our existing portfolio for a total consideration of $ 291 million, net of cash acquired. One of the three acquisitions was a company owned by White Deer Energy, a middle market private equity fund focused on energy investments. As the transaction involved a related party at the time it was entered into (i.e., directors Ben A. Guill and Eric L. Mattson both had an investment interest in certain White Deer Energy funds), the acquisition was approved by the disinterested members of the Company’s Board of Directors. As of December 31, 2024 , we provisionally recorded $ 171 million of goodwill and amortizable intangible assets, $ 64 million of PP&E, including financing and operating lease right of use assets, $ 92 million of net working capital, $ 18 million of finance and operating lease liabilities, and $ 18 million in other liabilities. The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize our accounting for these acquisitions. On April 9, 2024, NOV completed the divestiture of its Pole Products business. Pole Products is a leading manufacturer of premium spun-cast concrete and tapered steel poles for diverse applications. We recorded a gain of $ 130 million, which is included as a reduction of Cost of Revenue on the Consolidated Statements of Income. 84 During the second quarter, the Company purchased the remaining noncontrolling interest in Keystone Tower Systems (KTS) for total consideration of $ 30 million. 19. Share Repurchase Program On April 25, 2024, the Company established a share repurchase program for up to $ 1 billion of the currently outstanding shares of the Company’s common stock over a period of 36 months. Under the share repurchase program, the Company may repurchase shares from time to time through open market purchases, in privately negotiated transactions or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18. The timing and total amount of any stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices and other considerations. The Company intends to fund the repurchases using its available U.S. cash balances, which may involve the repatriation of foreign earnings not indefinitely reinvested. However, depending on U.S cash balances, the Company may choose to borrow against its revolving credit facility or issue new debt to finance the repurchases. As shares are repurchased, they are constructively retired and returned to an unissued state. During the three months ended December 31, 2024 , the Company repurchased 7.5 million shares of common stock under the program for an aggregate amount of $ 112 million. During the year ended December, 31, 2024 , the Company repurchased 14.2 million shares of common stock under the program for an aggregate amount of $ 229 million. 85 SCHEDU LE II NOV INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2024, 2023 and 2022 (in millions) Balance beginning of year Additions (Deductions) charged to costs and expenses Charge offs and other Balance end of year Reserve for excess and obsolete inventories: 2024 $ 354 $ 31 $ ( 99 ) $ 286 2023 378 28 ( 52 ) 354 2022 444 ( 18 ) ( 48 ) 378 Valuation allowance for deferred tax assets: 2024 $ 346 $ ( 64 ) $ ( 16 ) $ 266 2023 920 ( 564 ) ( 10 ) 346 2022 1,127 24 ( 231 ) 920 86