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Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2024-10-25 · 114 added, 133 removed, 156 unchanged (61% of the section changed)

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

(“NOV” or the “Company”) is a leading independent equipment and technology provider to the global energy industry.

Originally founded in 1862, NOV and its predecessor companies have spent 162 years helping transform oil and gas field development and improving its cost-effectiveness, efficiency, safety, and environmental impact.

NOV is a leading independent equipment and technology provider to the global energy industry.

NOV and its predecessor companies have spent over 160 years helping transform oil and gas development and improving its cost-effectiveness, efficiency, safety, and environmental impact.

Over the past few decades, the Company has pioneered and refined key technologies to improve the economic viability of frontier resources, including unconventional and deepwater oil and gas.

More recently, by applying its deep expertise and technology, the company has helped advance the transition toward sustainable energy.

NOV’s extensive proprietary technology portfolio supports the industry’s full-field drilling, completion, and production needs.

With unmatched cross-segment capabilities, scope, and scale, NOV continues to develop and introduce technologies that further enhance the economics and efficiencies of energy production, with a focus on automation, predictive analytics, and condition-based maintenance.

More recently, by applying its deep expertise and technology, the Company has developed solutions to improve the economics of alternate energy sources.

NOV’s extensive proprietary technology portfolio supports the industry’s drilling, completion, and production needs.

With unmatched cross-segment capabilities, scope, and scale, NOV continues to develop and introduce technologies that further enhance the economics and efficiencies of energy production, with a focus on digital solutions, including automation, predictive analytics, and condition-based maintenance.

NOV serves major-diversified, national, and independent service companies, contractors, and energy producers in 59 countries.

Effective January 1, 2024, NOV consolidated its reporting structure into two segments:

Energy Products and Services, and Energy Equipment.

Segment disclosures pertaining to prior periods have been restated to reflect the change in reportable segments.

Results of operations are presented in accordance with accounting principles generally accepted in the United States (“GAAP”).

NOV operates under two segments, Energy Products and Services and Energy Equipment.

Results of operations are presented in accordance with GAAP.

Certain reclassifications have been made to prior period financial information in order to conform with current period presentation.

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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;

hydraulic fracture stimulation;

well intervention, including coiled tubing units, coiled tubing, and wireline units and tools;

cementing products for pumping, mixing, transport, and storage;

cementing products;

onshore production, including fluid processing, and surface transfer as well as progressive cavity pumps;

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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.

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;

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EXECUTIVE SUMMARY

For the third quarter ended September 30, 2024, the Company generated revenues of $2.19 billion, an increase of $6 million compared to the third quarter of 2023.

Net income increased 14 percent to $130 million, or 5.9 percent of sales, an increase of $16 million compared to the third quarter of 2023.

Operating profit increased $11 million from the prior year to $194 million, or 8.9 percent of sales.

The company recorded $5 million within Other Items, primarily related to severance pay.

Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) increased 7 percent year-over-year to $286 million, or 13.1 percent of sales.

For the first quarter ended March 31, 2025, the Company generated revenues of $2.10 billion, a decrease of two percent compared to the first quarter of 2024.

Net income decreased 39 percent to $73 million, or $0.19 per share, and operating profit decreased six percent to $152 million, or 7.2 percent of sales.

The Company recorded $13 million within Other Items, primarily related to severance pay and the deconsolidation of our Russian subsidiaries following the levy of additional U.S.

sanctions on Russian operations.

Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) increased five percent year-over-year to $252 million, or 12.0 percent of sales.

Segment Performance

Energy Products and Services

Energy Products and Services generated revenues of $1,003 million in the third quarter of 2024, a decrease of 3 percent from the third quarter of 2023.

Energy Products and Services generated revenues of $992 million in the first quarter of 2025, a decrease of two percent from the first quarter of 2024.

Operating profit decreased $38 million from the prior year to $83 million, or 8.4 percent of sales, and included $5 million in Other Items.

Adjusted EBITDA decreased $29 million from the prior year to $145 million, or 14.6 percent of sales.

The decrease in revenue and profit was primarily due to lower drilling activity levels in North America, partially offset by contributions from the Company's recent artificial lift acquisition..

Revenue declined due to lower industry activity levels, which have disproportionately affected demand for the segment’s shorter cycle capital equipment offerings, partially offset by accelerating market adoption of newer performance technologies.

Lower volumes and a less favorable sales mix reduced profitability.

Energy Equipment

Energy Equipment generated revenues of $1,219 million in the third quarter of 2024, an increase of 2 percent from the third quarter of 2023.

Energy Equipment generated revenues of $1.15 billion in the first quarter of 2025, a decrease of three percent from the first quarter of 2024.

Operating profit increased $39 million from the prior year to $134 million, or 11.7 percent of sales, and included $3 million in Other Items.

Adjusted EBITDA increased $46 million from the prior year to $165 million, or 14.4 percent of sales.

Improved profitability was the result of strong execution on the segment’s improving backlog and better demand for aftermarket parts and services.

New orders booked during the quarter totaled $627 million, an increase of $79 million when compared to the $548 million of new orders booked during the third quarter of 2023.

Orders shipped from backlog in the third quarter of 2024 were $563 million, representing a book-to-bill of 111 percent, compared to the $537 million orders shipped and a book-to-bill of 102 percent in the third quarter of 2023.

As of September 30, 2024, backlog for capital equipment orders for Energy Equipment was $4,478 million, an increase of $485 million from the third quarter of 2023.

Lower demand for aftermarket parts and services was partially offset by an increase in revenues out of backlog.

Improved pricing and strong execution resulted in improved profitability.

New orders booked during the quarter totaled $437 million, an increase of $47 million when compared to the $390 million of new orders booked during the first quarter of 2024.

Orders shipped from backlog in the first quarter of 2025 were $549 million, representing a book-to-bill of 80 percent, compared to the $507 million orders shipped and a book-to-bill of 77 percent in the first quarter of 2024.

As of March 31, 2025, backlog for capital equipment orders for Energy Equipment was $4.41 billion, an increase of $458 million from the first quarter of 2024.

Oil & Gas Equipment and Services Market and Outlook

The macro environment and geopolitical uncertainties continue to drive volatility and pressure commodity prices with oil prices reflecting growing concerns regarding diminishing demand from weakening global economies, excess OPEC capacity, and rising non-OPEC production.

These concerns along with ample supplies of natural gas in North America are increasing cautiousness among oil and gas producers, resulting in lower drilling activity in the U.S.

land market and are beginning to affect shorter-cycle activity in international markets.

Despite growing concerns that global oil and U.S.

natural gas markets may be oversupplied in 2025, management believes commodity prices and activity levels should remain relatively rangebound, with any pullback in activity short-lived, and that the industry remains in an extended recovery due to:

(1) current inventory levels in relation to OECD demand that are lower than historical averages;

(2) natural oil production decline rates that average almost 15 percent;

(3) anticipated increases in LNG exports from the U.S.;

(4) increasing focus on energy security;

and (5) capital discipline across the industry, which has diminished the global oil and gas industry’s ability to easily ramp production.

Regardless of the operating environment, NOV remains committed to improving organizational efficiencies while focusing on the development and commercialization of innovative products and services, including technologies to reduce the environmental impact of oil and gas operations, and technologies to accelerate the energy transition that are responsive to the longer-term needs of NOV’s customers.

We believe this strategy will further advance the Company’s competitive position in all market conditions.

Geopolitical and macroeconomic uncertainties have recently intensified due to rapidly evolving changes to trade policies and the decision by OPEC+ to return larger than anticipated quantities of oil to the market beginning in May of 2025.

These changes are raising concerns for both supply and demand related challenges to global commodity markets, resulting in lower oil prices, significant market volatility, and greater uncertainty.

Current market conditions present a difficult environment for making capital investment decisions.

However, management does not expect a material change in near-term global oil and gas activity until policies stabilize or a stronger price signal emerges.

The outlook remains uncertain, with clearer downside risk than upside.

An economic slowdown or oversupply of oil and gas could prompt our customers to reduce spending and result in lower levels of activity in the second half of 2025.

However, if required, any rebalancing of the oil commodity market would be expected to be relatively quick due to meaningful oil production natural decline rates and demand that often continues to grow through economic downturns.

Management does not expect near-term volatility to affect broader industry trends including:

(1) international and offshore resources becoming the primary source for future incremental supplies of oil to meet global demand;

(2) growing focus on natural gas from deepwater and international unconventional resources to meet growing global demand for power;

and (3) the application of emerging technologies to drive efficiencies and productivity.

NOV remains focused on the development and commercialization of innovative products and services that lower the marginal cost and environmental footprint of energy production.

We believe this strategy along with continued efforts to improve operational efficiencies will further advance the Company’s competitive position in any market environment.

Operating Environment Overview

The Company’s results are dependent on, among other things, the level of worldwide oil and gas drilling, well remediation activity, the prices of crude oil and natural gas, capital spending by exploration and production companies and drilling contractors, worldwide oil and gas inventory levels and, to a lesser degree, the level of investment in wind and geothermal energy products.

Key industry indicators for the third quarter of 2024 and 2023, and the second quarter of 2024 include the following:

Key industry indicators for the first quarter of 2025 and 2024, and the fourth quarter of 2024 include the following:

% increase (decrease)

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See sources below.

The Company is also becoming increasingly engaged with energy transition related opportunities and is currently involved in projects related to wind energy, geothermal power, rare earth metal extraction, biogas production, and carbon sequestration.

Additionally, the Company is investing in developing technologies and solutions that will support other energy transition related industry verticals.

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

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended September 30, 2024, on a quarterly basis:

The Company is engaged with a variety of energy projects, including wind, geothermal, and carbon capture and sequestration.

Management expects to see continued growth in these areas.

The following table details the U.S., Canadian, and international rig activity and West Texas Intermediate Crude Oil prices for the past nine quarters ended March 31, 2025, on a quarterly basis:

Baker Hughes, Inc.

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

The worldwide quarterly average rig count increased 2 percent (from 1,695 to 1,727) in the third quarter of 2024 compared to the second quarter of 2024, mainly attributable to Canada.

The average per barrel price of West Texas Intermediate Crude Oil decreased 7 percent (from $81.71 per barrel to $76.24 per barrel) and natural gas prices increased 1 percent (from $2.08 per mmbtu to $2.11 per mmbtu) in the third quarter of 2024 compared to the second quarter of 2024.

On October 11, 2024, there were 809 rigs actively drilling in North America, comprised of U.S.

and Canada, which increased 2 percent from the third quarter average of 795 rigs.

The price for West Texas Intermediate Crude Oil was $75.56 per barrel at October 11, 2024, a decrease of 1 percent from the third quarter of 2024 average.

The price for natural gas was $2.63 per mmbtu at October 11, 2024, an increase of 25 percent from the third quarter of 2024 average.

The worldwide quarterly average rig count remained flat (1,708 rigs) in the first quarter of 2025 when compared to the fourth quarter of 2024.

The average per barrel price of West Texas Intermediate Crude Oil increased 2 percent (from $70.69 per barrel to $71.84 per barrel) and natural gas prices increased 70 percent (from $2.44 per mmbtu to $4.15 per mmbtu) in the first quarter of 2025 compared to the fourth quarter of 2024.

On April 25, 2025, there were 715 rigs actively drilling in North America, comprised of U.S.

and Canada, which decreased 11 percent from the first quarter average of 804 rigs.

The price for West Texas Intermediate Crude Oil was $63.02 per barrel at April 25, 2025, a decrease of 12 percent from the first quarter of 2025 average.

The price for natural gas was $2.94 per mmbtu at April 25, 2025, a decrease of 29 percent from the first quarter of 2025 average.

Results of Operations

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Three Months Ended

Nine Months Ended

September 30,

Energy Products and Services

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Energy Products and Services

t hree and nine months ended September 30, 2024 and 2023.

Revenue from Energy Products and Services was $1,003 million for the three months ended September 30, 2024, compared to $1,034 million for the three months ended September 30, 2023, a decrease of $31 million or 3 percent.

For the nine months ended September 30, 2024, revenue from Energy Products and Services was $3,070 million compared to $3,004 million for the nine months ended September 30, 2023, an increase of $66 million or 2 percent.

The decrease in revenue during the three months ended September 30, 2024 was due to an increase in North America revenue of 1 percent offset by a decrease in international revenue of 5 percent.

North American revenue increased despite the decline in drilling activity primarily due to the acquisition of our artificial lift business and market share gains, while international revenue declined primarily due to lower sales of drill pipe and conductor pipe connections.

The increase in revenue during the nine months ended September 30, 2024 was due to increases in North America and international revenue of 4 percent and 2 percent, respectively.

The growth in North America was primarily due to the acquisition of our artificial lift business and market share gains, and the growth in international revenue was primarily due to higher activity levels in international markets, partially offset by lower sales of drill pipe and conductor pipe connections.

Operating profit from Energy Products and Services was $114 million for the three months ended September 30, 2024, compared to an operating profit of $145 million for the three months ended September 30, 2023, a decrease of $31 million.

For the nine months ended September 30, 2024, operating profit from Energy Products and Services was $363 million compared to operating profit of $413 million for the nine months ending September 30, 2023, a decrease of $50 million.

The decrease in profitability was due to a less favorable sales mix, including a 35 percent decline in sales of drill pipe in the third quarter of 2024 and a 17 percent decline year-to-date when compared to the prior year.

t hree months ended March 31, 2025 and 2024.

Revenue from Energy Products and Services was $992 million for the three months ended March 31, 2025, compared to $1,017 million for the three months ended March 31, 2024, a decrease of $25 million or 2 percent.

The decrease in revenue during the three months ended March 31, 2025 was primarily due to a decrease in international revenue of 8 percent, in line with the decrease in international rig count.

This was partially offset by an increase in North American revenue of 3 percent, despite the decrease in North American rig count, on higher service and rental activity of 4 percent, due to accelerating market adoption of newer performance technologies.

Operating profit from Energy Products and Services was $83 million for the three months ended March 31, 2025, compared to an operating profit of $121 million for the three months ended March 31, 2024, a decrease of $38 million.

The decrease in profitability was due to reduced activity levels and less favorable sales mix.

Energy Equipment

t hree and nine months ended September 30, 2024 and 2023.

Revenue from Energy Equipment was $1,219 million for the three months ended September 30, 2024, compared to $1,195 million for the three months ended September 30, 2023, an increase of $24 million or 2 percent.

For the nine months ended September 30, 2024, revenue from Energy Equipment was $3,601 million compared to $3,364 million for the nine months ended September 30, 2023, an increase of $237 million or 7 percent.

The increase in revenue is attributable to higher sales in both international land and offshore markets.

Revenue improved from international sales by 1 percent in the third quarter of 2024 and 11 percent year-to-date when compared to the prior year, and offshore sales increased by 3 percent in the third quarter of 2024 and by 14 percent year-to-date when compared to the prior year.

The increase in sales to these markets is a result of strong demand for aftermarket products and services and execution on the segment’s improving capital equipment backlog.

Revenues in North America increased 6 percent in the third quarter of 2024 on strong sales of capital equipment but declined 3 percent year-to-date when compared to the prior year, primarily due to the divestiture of the segment’s Pole Products business during the second quarter of 2024.

Operating profit from Energy Equipment was $129 million for the three months ended September 30, 2024, compared to an operating profit of $98 million for the three months ended September 30, 2023, an increase of $31 million.

For the nine months ended September 30, 2024, operating profit from Energy Equipment was $456 million compared to operating profit of $250 million for the nine months ended September 30, 2023, an increase of $206 million.

Higher profitability for the three and nine months ended September 30, 2024 was the result of higher margin sales primarily driven by improved demand for aftermarket products and services and strong execution on the segment’s improving capital equipment backlog.

A $131 million gain from the divestiture of the segment’s Pole Products business in the second quarter of 2024 also contributed to the increase in profitability for the nine months ended September 30, 2024.

t hree months ended March 31, 2025 and 2024.

Revenue from Energy Equipment was $1,146 million for the three months ended March 31, 2025, compared to $1,178 million for the three months ended March 31, 2024, a decrease of $32 million or 3 percent.

The decrease in revenue is primarily attributable to a decline in the North American land market and rig count as well as lower demand for aftermarket products.

North American sales decreased by 12 percent in the first quarter of 2025 when compared to the prior year, and land sales decreased by 6 percent in the first quarter of 2025 when compared to the prior year.

Operating profit from Energy Equipment was $134 million for the three months ended March 31, 2025, compared to an operating profit of $95 million for the three months ended March 31, 2024, an increase of $39 million.

Higher profitability was the result of strong execution on the segment’s higher margin projects.

The Energy Equipment segment monitors its capital equipment backlog to plan its business.

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

The capital equipment backlog was $4,478 million at September 30, 2024, an increase of $485 million from backlog of $3,993 million at September 30, 2023.

The capital equipment backlog was $4,413 million at March 31, 2025, an increase of $458 million from backlog of $3,955 million at March 31, 2024.

Although numerous factors can affect the timing of revenue out of backlog (including, but not limited to, customer change orders and supplier accelerations or delays), the Company reasonably expects approximately 34 percent of backlog to become revenue during the rest of 2025 and the remainder thereafter.

At September 30, 2024, approximately 53 percent of the capital equipment backlog was for offshore products and approximately 91 percent of the capital equipment backlog was destined for international markets.

At March 31, 2025, approximately 52 percent of the capital equipment backlog was for offshore products and approximately 92 percent of the capital equipment backlog was destined for international markets.

Eliminations and corporate costs

Eliminations and corporate costs were $49 million and $150 million for the three and nine months ended September 30, 2024, compared to $60 million and $173 million for the three and nine months ended September 30, 2023.

Eliminations and corporate costs were $65 million for the three months ended March 31, 2025, compared to $54 million for the three months ended March 31, 2024.

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

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Intrasegment transactions are eliminated within each segment.

Eliminations declined 20 percent when compared to the third quarter of 2023 and 14 percent year-to-date due to lower intrasegment activity.

Corporate costs declined 15 percent from the third quarter of 2023 and 13 percent year-to-date due to our cost savings initiatives and workforce reductions.

Eliminations declined 11 percent when compared to the first quarter of 2024 due to lower intrasegment activity.

Corporate costs increased from the first quarter of 2024 primarily due to the non-recurring charge of $5 million related to the deconsolidation of our Russian subsidiaries and higher expenses for Corporate reserves and technology investments.

Interest and financial costs and Interest Income

Interest and financial costs were $21 million and $67 million for the three and nine months ended September 30, 2024, compared to $23 million and $65 million for the three and nine months ended September 30, 2023.

Interest and financial costs were $22 million for the three months ended March 31, 2025, compared to $24 million for the three months ended March 31, 2024.

The changes were primarily due to fluctuations in debt balances between periods.

Interest income was $11 million and $27 million for the three and nine months ended September 30, 2024, compared to $5 million and $21 million for the three and nine months ended September 30, 2023.

Interest income was $11 million for the three months ended March 31, 2025, compared to $8 million for the three months ended March 31, 2024.

The increase was primarily related to interest earned on larger cash balances in the current year compared to prior year.

Equity income in unconsolidated affiliates

Equity income in unconsolidated affiliates was $0 million and $37 million for the three and nine months ended September 30, 2024, compared to $16 million and $101 million for the three and nine months ended September 30, 2023.

A less favorable product sales mix and lower volume in sales led to lower profitability year-over-year for our largest investment in unconsolidated affiliates.

Equity income in unconsolidated affiliates was zero for the three months ended March 31, 2025, compared to $29 million for the three months ended March 31, 2024.

A decline in sales of 53 percent from the first quarter of 2024, primarily due to pricing pressures and lower volume for oil country tubular goods, as well as higher cost for labor and materials led to lower profitability year-over-year for our largest investment in unconsolidated affiliates.

Other expense, net

Other expense, net was $10 million and $34 million for the three and nine months ended September 30, 2024, compared to $25 million and $70 million for the three and nine months ended September 30, 2023, respectively.

The change in expense was primarily due to larger foreign currency fluctuations in the prior year, particularly with the currency devaluation in Argentina.

Other expense, net was $20 million for the three months ended March 31, 2025, compared to $10 million for the three months ended March 31, 2024, respectively.

The change in expense was primarily due to larger foreign currency fluctuations in the current year, particularly with the devaluation of the U.S.

Provision for income taxes

The effective tax rate for the three and nine months ended September 30, 2024 was 25.3% and 25.0%, respectively, compared to 30.8% and 18.2% for the same periods in 2023.

The effective tax rate for 2024 was negatively impacted by a mix of earnings in higher tax rate jurisdictions, losses in certain jurisdictions with no tax benefit, and adjustments to the carrying value of deferred tax assets, partially offset by the reduction of valuation allowances related to U.S.

The effective tax rate was 38.8%, and 26.7% for the three months ended March 31, 2025, and 2024, respectively as compared to the U.S.

statutory tax rate of 21% for both periods.

The effective tax rate for 2025 was negatively impacted by a mix of earnings in higher tax rate jurisdictions, unfavorable adjustments related to changes in certain foreign currency exchange rates, a shortfall related to previously recognized stock compensation deductibility, and adjustments to the carrying value of deferred tax assets, partially offset by a benefit from withholding tax refunds received.

The effective tax rate for 2024 was negatively impacted by a mix of earnings in higher tax rate jurisdictions, losses in certain jurisdictions with no tax benefit, and a shortfall related to previously recognized stock compensation deductibility, partially offset by the reduction of valuation allowances related to U.S.

and state deferred tax assets.

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

Non-GAAP Financial Measures and Reconciliations

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Adjusted EBITDA and Adjusted EBITDA % are not intended to replace GAAP financial measures, such as Net Income and Operating Profit %.

Additionally, Excess Free Cash Flow does not represent the Company's residual cash flow available for discretionary expenditures, as the calculation of these measures does not account for certain debt service requirements or other non-discretionary expenditures.

Additionally, Excess Free Cash Flow is defined as cash flows from operations less capital expenditures and other investments, including acquisitions and divestitures.

Excess Free Cash Flow does not represent the Company’s residual cash flow available for discretionary expenditures, as the calculation of these measures does not account for certain debt service requirements or other non-discretionary expenditures.

The following tables set forth the reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure (in millions):

Three Months Ended

Nine Months Ended

September 30,

Operating profit:

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Total other items

(Gain)/loss on sales of fixed assets:

Gain on sales of fixed assets:

Energy Products and Services

Energy Equipment

Total (gain)/loss on sales of fixed assets

Total gain on sales of fixed assets

Depreciation & amortization:

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Provision for income taxes

Interest expense

Interest and financial costs

Interest income

Equity income in unconsolidated affiliates

Other expense, net

(Gain)/loss on sales of fixed assets

Equity (income) loss in unconsolidated affiliates

Other (income) expense, net

Gain on sales of fixed assets

Depreciation and amortization

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Liquidity and Capital Resources

At September 30, 2024, the Company had cash and cash equivalents of $985 million and total debt of $1,749 million.

At March 31, 2025, the Company had cash and cash equivalents of $1,157 million and total debt of $1,737 million.

At December 31, 2024, cash and cash equivalents were $1,230 million and total debt was $1,740 million.

As of September 30, 2024, approximately $534 million of the $985 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be subject to foreign withholding taxes and incremental U.S.

As of March 31, 2025, approximately $602 million of the $1,157 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be subject to foreign withholding taxes and incremental U.S.

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

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are greater than available cash balances that are not subject to income tax, rather than repatriating cash, the Company may choose to borrow against its revolving credit facility.

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.

The Company has a revolving credit facility with a borrowing capacity of $1.5 billion through September 12, 2029.

The Company has the right to increase the aggregate commitments under this 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.

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

As of September 30, 2024, the Company was in compliance with a debt-to-capitalization ratio of 23.4% and had no borrowings or letters of credits issued under the facility, resulting in $1.5 billion of available funds.

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

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

As of March 31, 2025, the Company was in compliance with a debt-to-capitalization ratio of 23.6% and had no borrowings or letters of credits 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, payable by June 2032, 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 September 30, 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 September 30, 2024, the Company had $99 million in borrowings related to this line of credit.

As of March 31, 2025, the joint venture was in compliance and will not have future borrowings on the line of credit.

As of March 31, 2025, the Company had $94 million in borrowings related to this line of credit.

The Company has $11 million in payments related to this line of credit due in the next twelve months.

The Company’s outstanding debt at September 30, 2024 consisted of $1,091 million in 3.95% Senior Notes, $496 million in 3.60% Senior Notes, and other debt of $162 million.

The Company was in compliance with all covenants at September 30, 2024.

Long-term lease liabilities totaled $551 million at September 30, 2024.

The Company had $472 million of outstanding letters of credit at September 30, 2024, primarily in Norway and the United States, that are under various bilateral letter of credit facilities.

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

Other debt at March 31, 2025 included $54 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’s outstanding debt at March 31, 2025 also consisted of $1,091 million in 3.95% Senior Notes, maturing on December 1, 2042, and $497 million in 3.60% Senior Notes, maturing on December 31, 2029.

The Company was in compliance with all covenants at March 31, 2025.

Long-term lease liabilities totaled $534 million at March 31, 2025.

The Company had $551 million of outstanding letters of credit at March 31, 2025, primarily in Norway and the United States, that are under various bilateral letter of credit facilities.

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

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

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash used in financing activities

Significant uses of cash during the first nine months of 2024

• Cash flows provided by operating activities were $713 million, primarily driven by higher levels of profitability and changes in the primary components of our working capital (receivables, inventories, accounts payable, and accrued liabilities).

Net cash provided by (used in) financing activities

Significant uses and sources of cash during the first three months of 2025

• Cash flows provided by operating activities were $135 million, primarily driven by changes in the primary components of our working capital (receivables, inventories, accounts payable, and accrued liabilities).

• Capital expenditures were $84 million.

• Business acquisitions, net of cash, were $252 million.

• Payments of $79 million in dividends to our shareholders.

• Dividend payments to our shareholders were $28 million.

• Share repurchases were $81 million.

The effect of the change in exchange rates on cash flows was a decrease of $1 million for the first nine months of 2024, and a decrease of $5 million for the first nine months of 2023.

The effect of the change in exchange rates on cash flows was an increase of $8 million for the first three months of 2025, and a decrease of $2 million for the first three months of 2024.

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

During the three months ended September 30, 2024, the Company repurchased 4.6 million shares of common stock under its stock program for an aggregate amount of $80 million.

During the nine months ended September 30, 2024, the Company repurchased 6.6 million shares of common stock under the program for an aggregate amount of $117 million.

The Company expects to return at least 50% of Excess Free Cash Flow (defined as cash flow from operations less capital expenditures and other investments, including acquisitions), through a combination of steady, quarterly base dividends, opportunistic stock buybacks, and an annual supplemental dividend to true-up returns to shareholders on an annual basis.

During the three months ended March 31, 2025, the Company repurchased 5.4 million shares of common stock under its share repurchase program for an aggregate amount of $81 million.

The Company expects to return at least 50% of Excess Free Cash Flow (defined as cash flow from operations less capital expenditures and other investments, including acquisitions and divestitures), through a combination of quarterly base dividends, opportunistic stock buybacks, and an annual supplemental dividend to true-up returns to shareholders on an annual basis.

We may pursue additional acquisition candidates, but the timing, size or success of any acquisition effort and the related potential capital commitments cannot be predicted.

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There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us.

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information.

Some of the information in this document contains, or has incorporated by reference, forward-looking statements.

Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements.

Forward-looking statements typically are identified by use of terms such as “may,” “believe,” “plan,” “will,” “expect,” “anticipate,” “estimate,” “should,” “forecast,” and similar words, although some forward-looking statements are expressed differently.

We may also provide oral or written forward-looking information in other materials we release to the public.

Forward-looking information involves risk and uncertainties and reflects our best judgment based on current information.

You should be aware that our actual results could differ materially from results anticipated in the forward-looking statements due to a number of factors, including but not limited to changes in oil and gas prices, customer demand for our products and worldwide economic activity, including matters related to recent Russian sanctions.

Cautionary Note Regarding Forward-Looking Statements

This document contains, or has incorporated by reference, statements that are not historical facts, including estimates, projections, and statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements often contain words such as “may,” “can,” “likely,” “believe,” “plan,” “predict,” “potential,” “will,” “intend,” “think,” “should,” “expect,” “anticipate,” “estimate,” “forecast,” “expectation,” “goal,” “outlook,” “projected,” “projections,” “target,” and other similar words, although some such statements are expressed differently.

Other oral or written statements we release to the public may also contain forward-looking statements.

Forward-looking statements involve risk and uncertainties and reflect our best judgment based on current information.

You should be aware that our actual results could differ materially from results anticipated in such forward-looking statements due to a number of factors, including but not limited to changes in oil and gas prices, customer demand for our products, potential catastrophic events related to our operations, protection of intellectual property rights, compliance with laws, and worldwide economic activity, including matters related to recent Russian sanctions and changes in U.S.

trade policies, including the imposition of tariffs and retaliatory tariffs and their related impacts on the economy.

Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements.

We undertake no obligation to update any such factors or forward-looking statements to reflect future events or developments.

You should also consider carefully the statements under “Risk Factors,” as disclosed in our Annual Report on Form 10-K for the year-end December 31, 2023, as updated in Part II, Item 1A of our Quarterly Reports on Form 10-Q, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements, and additional disclosures we make in our press releases and Forms 10-Q, and 8-K.

You should also consider carefully the statements under “Risk Factors,” as disclosed in our most recent Annual Report on Form 10-K, as updated in Part II, Item 1A of our most recent Quarterly Report on Form 10-Q, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our most recent Annual Report on Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in such forward-looking statements, as well as additional disclosures we make in our press releases and other securities filings.

We also suggest that you listen to our quarterly earnings release conference calls with financial analysts.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis