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Item 2. Management’s Discussion and Analysis

2025-07-29 compared with 2025-04-29 · 96 added, 83 removed, 187 unchanged (49% of the section changed)

45 unchanged sentences

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.

For the second quarter ended June 30, 2025, the Company generated revenues of $2.19 billion, a decrease of one percent compared to the second quarter of 2024.

Net income decreased 52 percent to $108 million, or $0.29 per share, and operating profit decreased 54 percent to $143 million, or 6.5 percent of sales.

The decline in net income and operating profit is primarily attributed to a pre-tax gain of approximately $130 million on the sale of a business during the second quarter of 2024.

The Company recorded $19 million within Other Items during the second quarter of 2025, primarily related to severance costs, facility closures and streamlining our business processes.

Adjusted EBITDA (operating profit excluding depreciation, amortization, gains and losses on sales of fixed assets and, when applicable, Other Items) decreased 10 percent year-over-year to $252 million, or 11.5 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.

Energy Products and Services generated revenues of $1.03 billion in the second quarter of 2025, a decrease of two percent from the second quarter of 2024.

Operating profit decreased $45 million from the prior year to $83 million, or 8.1 percent of sales, and included $6 million in Other Items.

Adjusted EBITDA decreased $38 million from the prior year to $146 million, or 14.2 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.

The decline in revenue was due to lower levels of global drilling activity affecting demand for the segment’s shorter cycle consumable products, partially offset by higher sales from the segment’s capital equipment offerings.

Profitability was impacted by a less favorable sales mix, tariffs and other inflationary pressures, and certain charges in Latin America.

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.

Energy Equipment generated revenues of $1.21 billion in the second quarter of 2025, flat when compared to the second quarter of 2024.

Operating profit was $122 million, or 10.1 percent of sales, and included $9 million in Other Items.

Operating profit decreased $110 million from the prior year primarily attributed to a pre-tax gain of approximately $130 million on the sale of a business during the second quarter of 2024.

Adjusted EBITDA increased $16 million from the prior year to $158 million, or 13.1 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.

Higher revenue out of backlog offset lower sales of aftermarket parts and services.

Improved profitability was driven by strong execution on higher-margin backlog.

New orders booked during the quarter totaled $420 million, a decrease of $557 million when compared to the $977 million of new orders booked during the second quarter of 2024.

Orders shipped from backlog in the second quarter of 2025 were $632 million, representing a book-to-bill of 66 percent, compared to $553 million orders shipped and a book-to-bill of 177 percent in the second quarter of 2024.

As of June 30, 2025, backlog for capital equipment orders for Energy Equipment was $4.30 billion, a decrease of $31 million from the second 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.

Macroeconomic uncertainties have recently intensified due to geopolitical conflicts, rapidly evolving changes to trade policies, and the decision by OPEC+ to return larger than anticipated quantities of oil to the market.

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.

Current market conditions present a difficult environment for making capital investment decisions, and the outlook remains uncertain, with clearer downside risk than upside.

However, management does not expect near-term volatility to affect broader industry trends including:

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

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

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

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.

We believe this strategy along with continued efforts to improve organizational 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:

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

% increase (decrease)

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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:

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

The worldwide quarterly average rig count decreased 6 percent (from 1,708 to 1,597) in the second quarter of 2025 when compared to the first quarter of 2025.

The average per barrel price of West Texas Intermediate Crude Oil decreased 10 percent (from $71.84 per barrel to $64.63 per barrel) and natural gas prices decreased 23 percent (from $4.15 per mmbtu to $3.19 per mmbtu) in the second quarter of 2025 compared to the first quarter of 2025.

On July 25, 2025, there were 724 rigs actively drilling in North America, comprised of U.S.

and Canada, which increased when compared to the second quarter average of 700 rigs.

The price for West Texas Intermediate Crude Oil was $65.16 per barrel at July 25, 2025, an increase of 1 percent from the second quarter of 2025 average.

The price for natural gas was $3.16 per mmbtu at July 25, 2025, a decrease of 1 percent from the second quarter of 2025 average.

Results of Operations

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Three Months Ended

Six Months Ended

Energy Products and Services

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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.

t hree and six months ended June 30, 2025 and 2024.

Revenue from Energy Products and Services was $1,025 million for the three months ended June 30, 2025, compared to $1,050 million for the three months ended June 30, 2024, a decrease of $25 million or 2 percent.

For the six months ended June 30, 2025, revenue from Energy Products and Services was $2,017 million compared to $2,067 million for the six months ended June 30, 2024, a decrease of $50 million or 2 percent.

The decline in revenue was primarily driven by lower levels of global drilling activity on a 6 percent year-over-year decrease in the worldwide rig count, which impacted demand for the segment’s shorter-cycle consumable products and led to a decline in sales by 20 percent on a quarter-to-date basis and 17 percent year-to-date.

The decrease in the quarter-to-date period was partially offset by higher sales in the segment’s capital equipment offerings, which saw a 3 percent quarter-to-date increase in sales.

Operating profit from Energy Products and Services was $83 million for the three months ended June 30, 2025, compared to an operating profit of $128 million for the three months ended June 30, 2024, a decrease of $45 million.

For the six months ended June 30, 2025, operating profit from Energy Products and Services was $166 million compared to operating profit of $249 million for the six months ended June 30, 2024, a decrease of $83 million.

The decrease in profitability was impacted by a less favorable sales mix, tariffs and other inflationary pressures, and certain charges in Latin America.

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.

t hree and six months ended June 30, 2025 and 2024.

Revenue from Energy Equipment was $1,207 million for the three months ended June 30, 2025, compared to $1,204 million for the three months ended June 30, 2024, an increase of $3 million.

For the six months ending June 30, 2025, revenue from Energy Equipment was $2,353 million compared to $2,382 million for the six months ending June 30, 2024, a decrease of $29 million or 1 percent.

Revenue remained relatively flat in the second quarter of 2025 compared to prior year, as a 14 percent increase in revenue out of backlog offset a 17 percent decline in sales of aftermarket parts and services.

Year-to-date, the reduced activity levels in the North American land market contributed to a 6 percent decline in sales.

Additionally, lower demand for aftermarket parts and services contributed to a 14 percent decline in sales.

Operating profit from Energy Equipment was $122 million for the three months ended June 30, 2025, compared to an operating profit of $232 million for the three months ended June 30, 2024, a decrease of $110 million.

For the six months ended June 30, 2025, operating profit from Energy Equipment was $256 million compared to operating profit of $327 million for the six months ended June 30, 2024, a decrease of $71 million.

Lower profitability is attributed to a pre-tax gain of approximately $130 million on the sale of a business during the second quarter of 2024.

Excluding this gain, the segment experienced improved profitability, which was driven by strong execution on higher-margin backlog.

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.

The capital equipment backlog was $4,300 million at June 30, 2025, a decrease of $31 million from backlog of $4,331 million at June 30, 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 27 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.

At June 30, 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.

Eliminations and corporate costs were $62 million and $127 million for the three and six months ended June 30, 2025, compared to $47 million and $101 million for the three and six months ended June 30, 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 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.

Eliminations increased 11 percent when compared to the second quarter of 2024 due to higher intrasegment activity, while eliminations remained flat year-to-date.

Corporate costs increased 35 percent from the second quarter of 2024 primarily due to higher legal costs, self-insured property losses, and corporate reserves.

For the six months ended June 30, 2025, corporate costs increased 31 percent year-over-year due to the non-recurring charge of $5 million related to the deconsolidation of our Russian subsidiaries in the first quarter of 2025, higher legal costs, self-insured property losses, and corporate reserves.

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.

Interest and financial costs were $22 million and $44 million for the three and six months ended June 30, 2025, compared to $22 million and $46 million for the three and six months ended June 30, 2024.

The year-over-year decrease for the six month period was primarily due to debt borrowings on the revolving credit facility in the first half of 2024.

Interest income was $10 million and $21 million for the three and six months ended June 30, 2025, compared to $8 million and $16 million for the three and six months ended June 30, 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.

Equity income in unconsolidated affiliates was $1 million for each of the three and six months ended June 30, 2025, compared to $8 million and $37 million for the three and six months ended June 30, 2024.

Sales for our largest investment in unconsolidated affiliates declined 21 percent for the second quarter of 2025 when compared to the second quarter of 2024.

For the six months ended June 30, 2025, sales declined 39 percent year-over-year.

The decline in sales is primarily due to pricing pressures and lower volume for oil country tubular goods, as well as higher cost for labor and materials, which led to lower profitability year-over-year.

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.

Other expense, net was $17 million and $37 million for the three and six months ended June 30, 2025, compared to $14 million and $24 million for the three and six months ended June 30, 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 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.

The effective tax rate was 0.9% and 20.3% for the three and six months ended June 30, 2025, respectively, compared to 23.9% and 24.9% for the three and six months ended June 30, 2024.

The effective tax rate for the six months ended June 30, 2025 was positively impacted by the release of previously recorded reserves for uncertain tax positions of $58 million, partially offset by an increase to reserves for uncertain tax positions of $23 million, unfavorable adjustments related to the carrying value of deferred tax assets of $14 million, changes in certain foreign currency exchange rates of $4 million, and a mix of earnings in higher tax rate jurisdictions.

The effective tax rate for the six months ended June 30, 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.

and state deferred tax assets.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

We are currently evaluating the full effects of the legislation on our consolidated financial statements.

As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.

Non-GAAP Financial Measures and Reconciliations

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Three Months Ended

Six Months Ended

Operating profit:

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Total other items

Gain on sales of fixed assets:

(Gain) loss on sales of fixed assets:

Energy Products and Services

Energy Equipment

Total gain on sales of fixed assets

Total (gain) loss on sales of fixed assets

Depreciation & amortization:

10 unchanged sentences

Energy Equipment

Eliminations and corporate costs

Total Adjusted EBITDA %

5 unchanged sentences

Interest income

Equity (income) loss in unconsolidated affiliates

Other (income) expense, net

Gain on sales of fixed assets

Equity income in unconsolidated affiliates

Other expense, net

(Gain) loss on sales of fixed assets

Depreciation and amortization

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Liquidity and Capital Resources

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

At June 30, 2025, the Company had cash and cash equivalents of $1,080 million and total debt of $1,728 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.

As of June 30, 2025, approximately $594 million of the $1,080 million of cash and cash equivalents was held by our foreign subsidiaries and the earnings associated with this cash could be subject to foreign withholding taxes and incremental U.S.

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

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The credit facility contains a financial covenant 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.

As of June 30, 2025, 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.

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.

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

As of March 31, 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.

As of June 30, 2025, the joint venture was in compliance and will not have future borrowings on the line of credit.

As of June 30, 2025, the Company had $89 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.

Other debt at June 30, 2025 included $50 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 June 30, 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 June 30, 2025.

Long-term lease liabilities totaled $540 million at June 30, 2025.

The Company had $679 million of outstanding letters of credit at June 30, 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

Net cash provided by (used in) operating activities

Six Months Ended

Net cash provided by operating activities

Net cash used in investing activities

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).

Net cash used in financing activities

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

• Cash flows provided by operating activities were $326 million, primarily driven by net income before depreciation and amortization and changes in the primary components of our working capital (receivables, inventories, accounts payable, and accrued liabilities).

• Capital expenditures were $167 million.

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• Share repurchases were $150 million.

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.

The effect of the change in exchange rates on cash flows was an increase of $19 million for the first six months of 2025, and a decrease of $4 million for the first six 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 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.

During the three months ended June 30, 2025, the Company repurchased approximately 5.5 million shares of common stock under its share repurchase program for an aggregate amount of $69 million.

During the six months ended June 30, 2025, the Company repurchased 10.9 million shares of common stock under the program for an aggregate amount of $150 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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis