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NOV Inc. (NOV) Earnings & Revenues Outperform Estimates in Q2

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NOV Inc. (NOV - Free Report) reported a second-quarter 2022 adjusted profit of 18 cents per share, beating the Zacks Consensus Estimate of a profit of 5 cents. The outperformance can be attributed to the better-than-expected performances of all the three segments of the company.

Moreover, the bottom line improved from the year-ago loss of 4 cents due to improving execution, customer demand and pricing.

NOV’s total revenues of $1.73 billion surpassed the Zacks Consensus Estimate by 5.8% and rose 21.9% from the year-ago sales of $1.42 billion.

Segment Performances

Rig Technologies: The unit produced $462 million in second-quarter revenues, which edged past the Zacks Consensus Estimate of $443 million but compared unfavorably to the year-ago quarter’s $487 million. Adjusted EBITDA of $41 million beat the Zacks Consensus Estimate of $37.44 million but decreased from the second-quarter 2021 figure of $75 million. The segment’s results outperforming estimates for the reported quarter could be due to the growing demand for the unit’s aftermarket products and services as a result of increased global drilling.

Wellbore Technologies: The Wellbore Technologies segment’s revenues of $666 million increased by 43.8% year over year in the second quarter of 2022 and outpaced the consensus mark by about 6%. The unit’s adjusted EBITDA of $122 million also surpassed the Zacks Consensus Estimate of $100 million and skyrocketed from the year-earlier quarter’s profit of $63 million. The positive comparisons were driven by continued growth in the Western Hemisphere and the Middle East, market share gains, higher prices and improved management of ongoing supply-chain disruptions.

Completion & Production Solutions: Compared with the year ago, the segment’s revenues rose 28.6% to $639 million and also outpaced the Zacks Consensus Estimate of $596 million. The unit’s adjusted EBITDA of $32 million rose from the year-ago quarter’s profit of $4 million and also beat the consensus mark of $25.61 million, primarily due to the growing demand for oil and gas equipment and improving execution against ongoing supply-chain challenges and operational disruptions in shipyards.

NOV Inc. Price, Consensus and EPS Surprise

NOV Inc. Price, Consensus and EPS Surprise

NOV Inc. price-consensus-eps-surprise-chart | NOV Inc. Quote

Backlog

At the end of June 2022, NOV’s capital equipment order backlog for Rig Technologies was $2.84 billion, including $140 million worth of new orders. The company’s Completion & Production Solutions operations currently have a $1.44-billion backlog comprising $530 million of new orders.

Balance Sheet

As of Jun 30, 2022, the company had cash and cash equivalents of $1.22 billion and long-term debt of $1.72 billion, with a debt-to-capitalization of 25.6%. Investors should know that in the second quarter, NOV reinstated its dividend of 5 cents per share.

Outlook

NOV’s outlook for the future remains constructive, and the company anticipates a strong rebound in revenues from the operation in the second half of the year.

For the third quarter, NOV anticipates revenues from the Rig Technologies segment to grow between 5% and 10% sequentially, with the EBITDA flow-through in the mid-teens.

For the Wellbore Technologies unit, the firm expects North American drilling activity growth rates to moderate, while the momentum builds in the Eastern Hemisphere, which NOV anticipates will help drive the revenue growth of 4%-7% in the third quarter.

The company anticipates a dip in pressure pumping revenues in the third quarter despite strong orders.

Zacks Rank & Other Stock Picks

NOV currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include Phillips 66 (PSX - Free Report) , Delek US Holdings (DK - Free Report) and Gulfport Energy (GPOR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Phillips’ 2022 earnings stands at $14.49 per share, up about 154.2% from the year-ago earnings of $5.70.

PSX beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 36.4%.

The Zacks Consensus Estimate for Delek’s 2022 earnings has been revised upward by about 93.4% over the past 60 days from $3.97 to $7.68 per share.

The Zacks Consensus Estimate for DK’s 2022 earnings stands at $7.68 per share, up about 353.5% from the year-ago loss of $3.03.

Gulfport Energy is valued at around $1.75 billion. The Zacks Consensus Estimate for GPOR’s 2022 earnings is pegged at $20.45 per share.

The Zacks Consensus Estimate for Gulfport Energy’s 2022 earnings has been revised about 16.5% upward over the past 60 days from $17.56 per share to $20.45.