NOV Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction 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 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. 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. The Company discloses Adjusted EBITDA (defined as operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. See “Non-GAAP Financial Measures and Reconciliations in Results of Operations” for an explanation of our use of non-GAAP financial measures and reconciliations to their corresponding measures calculated in accordance with GAAP. 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; well intervention, including coiled tubing units, coiled tubing, and wireline units and tools; cementing products; 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. 19 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. Critical Accounting Policies and Estimates In our annual report on Form 10-K for the year ended December 31, 2024, we identified our most critical accounting policies. In preparing the financial statements, we make assumptions, estimates and judgments that affect the amounts reported. We periodically evaluate our estimates and judgments that are most critical in nature which are related to revenue recognition under long-term construction contracts, impairment of goodwill and other indefinite-lived intangible assets, and income taxes. Our estimates are based on historical experience and on our future expectations that we believe are reasonable. The combination of these factors forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results are likely to differ from our current estimates and those differences may be material. EXECUTIVE SUMMARY 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 $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. 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 $1.15 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. 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 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. 20 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 projects. Key industry indicators for the first quarter of 2025 and 2024, and the fourth quarter of 2024 include the following: % increase (decrease) 1Q25 v 1Q25 v 1Q25* 1Q24* 4Q24* 1Q24 4Q24 Active Drilling Rigs: U.S. 588 623 586 (5.6 %) 0.3 % Canada 216 209 195 3.3 % 10.8 % International 904 965 927 (6.3 %) (2.5 %) Worldwide 1,708 1,797 1,708 (5.0 %) — % West Texas Intermediate Crude Prices (per barrel) $ 71.84 $ 77.56 $ 70.69 (7.4 %) 1.6 % Natural Gas Prices ($/mmbtu) $ 4.15 $ 2.13 $ 2.44 94.8 % 70.1 % * Averages for the quarters indicated. See sources below. 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. 21 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: Source: Rig count: Baker Hughes, Inc. (www.bakerhughes.com); West Texas Intermediate Crude Oil and Natural Gas Prices: US Department of Energy, Energy Information Administration (www.eia.doe.gov). 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. 22 Results of Operations Financial results by operating segment are as follows (in millions): Three Months Ended March 31, 2025 2024 Revenue: Energy Products and Services $ 992 $ 1,017 Energy Equipment 1,146 1,178 Eliminations (35 ) (40 ) Total revenue $ 2,103 $ 2,155 Operating profit: Energy Products and Services $ 83 $ 121 Energy Equipment 134 95 Eliminations and corporate costs (65 ) (54 ) Total operating profit $ 152 $ 162 Energy Products and Services 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 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 $4,413 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 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 $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; however, segments originating an external sale are credited with the full profit to the company. Eliminations include intercompany transactions conducted between the two reporting segments that are eliminated in consolidation. Intrasegment transactions are eliminated within each segment. 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. 23 Interest and financial costs and Interest Income 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 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 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 $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. Dollar. Provision for income taxes 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. Non-GAAP Financial Measures and Reconciliations This Form 10-Q contains certain non-GAAP financial measures that management believes are useful tools for internal use and the investment community in evaluating NOV’s overall financial performance. These non-GAAP financial measures are broadly used to value and compare companies in the oilfield services and equipment industry. Not all companies define these measures in the same way. In addition, these non-GAAP financial measures are not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures. The Company defines Adjusted EBITDA as operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items. Adjusted EBITDA % is a ratio showing Adjusted EBITDA as a percentage of sales. Management believes this is important information to provide because it is used by management to evaluate the Company’s operational performance and trends between periods and manage the business. Management also believes this information may be useful to investors and analysts to gain a better understanding of the Company’s results of ongoing operations. 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 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. 24 The following tables set forth the reconciliation of Adjusted EBITDA to its most comparable GAAP financial measure (in millions): Three Months Ended March 31, December 31, 2025 2024 2024 Operating profit: Energy Products and Services $ 83 $ 121 $ 112 Energy Equipment 134 95 152 Eliminations and corporate costs (65 ) (54 ) (57 ) Total operating profit $ 152 $ 162 $ 207 Operating profit %: Energy Products and Services 8.4 % 11.9 % 10.6 % Energy Equipment 11.7 % 8.1 % 11.8 % Eliminations and corporate costs — — — Total operating profit % 7.2 % 7.5 % 9.0 % Other items, net: Energy Products and Services $ 5 $ — $ 3 Energy Equipment 3 (4 ) 4 Corporate 5 1 — Total other items $ 13 $ (3 ) $ 7 Gain on sales of fixed assets: Energy Products and Services $ (2 ) $ (1 ) $ — Energy Equipment — — — Corporate — — — Total gain on sales of fixed assets $ (2 ) $ (1 ) $ — Depreciation & amortization: Energy Products and Services $ 59 $ 54 $ 58 Energy Equipment 28 28 29 Corporate 2 1 1 Total depreciation & amortization $ 89 $ 83 $ 88 Adjusted EBITDA: Energy Products and Services $ 145 $ 174 $ 173 Energy Equipment 165 119 185 Eliminations and corporate costs (58 ) (52 ) (56 ) Total Adjusted EBITDA $ 252 $ 241 $ 302 Adjusted EBITDA %: Energy Products and Services 14.6 % 17.1 % 16.3 % Energy Equipment 14.4 % 10.1 % 14.4 % Corporate — — — Total Adjusted EBITDA % 12.0 % 11.2 % 13.1 % Reconciliation of Adjusted EBITDA: GAAP net income attributable to Company $ 73 $ 119 $ 160 Noncontrolling interests 1 2 1 Provision for income taxes 47 44 38 Interest and financial costs 22 24 24 Interest income (11 ) (8 ) (11 ) Equity (income) loss in unconsolidated affiliates — (29 ) 1 Other (income) expense, net 20 10 (6 ) Gain on sales of fixed assets (2 ) (1 ) — Depreciation and amortization 89 83 88 Other items, net 13 (3 ) 7 Total Adjusted EBITDA $ 252 $ 241 $ 302 25 Liquidity and Capital Resources Overview 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 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. If opportunities to invest in the U.S. 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. 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. prime rate. 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 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 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): Three Months Ended March 31, 2025 2024 Net cash provided by (used in) operating activities $ 135 $ (78 ) Net cash used in investing activities (81 ) (311 ) Net cash provided by (used in) financing activities (135 ) 43 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. • Dividend payments to our shareholders were $28 million. • Share repurchases were $81 million. Other 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. 26 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. We continue to expect to fund future cash acquisitions primarily with cash flow from operations and borrowings, including the unborrowed portion of the revolving credit facility or new debt issuances, but may also issue additional equity either directly or in connection with acquisitions. There can be no assurance that additional financing for acquisitions will be available at terms acceptable to us. 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 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. 27