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NOV Inc. (NOV) Earnings Lag, Sales Outperform Estimates in Q3
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NOV Inc. (NOV - Free Report) reported a third-quarter 2022 adjusted profit of 8 cents per share, missing the Zacks Consensus Estimate of a profit of 15 cents. The underperformance can be attributed to much higher expenses in the form of provision for income taxes in the reported quarter.
However, the bottom line improved from the year-ago loss of 18 cents per share due to significantly higher revenues.
NOV’s total revenues of $1.89 billion surpassed the Zacks Consensus Estimate by 4.2% and rose 40.9% from the year-ago sales of $1.34 billion, primarily due to better-than-expected performances in major segments.
Segmental Performance
Rig Technologies: The unit produced $511 million in third-quarter revenues, which edged past the Zacks Consensus Estimate of $493 million and also compared favorably with the year-ago quarter’s $390 million.
Adjusted EBITDA of $52 million beat the Zacks Consensus Estimate of $43.54 million and increased from the third-quarter 2021 figure of $25 million.
The segment’s results outperforming estimates for the reported quarter could be attributed to accelerating revenue conversion from renewable energy projects and demand for the segment’s aftermarket parts and services.
Wellbore Technologies: The segment’s revenues of $741 million increased by 46.1% year over year in the third quarter of 2022 and outpaced the consensus mark by about 5.7%.
The unit’s adjusted EBITDA of $145 million also surpassed the Zacks Consensus Estimate of $128 million and skyrocketed from the year-earlier quarter’s figure of $77 million.
The positive comparisons were driven by continued growth in international markets and continued improvements in demand from North America, capitalizing on improving global drilling activity levels and better execution against ongoing supply-chain challenges.
Completion & Production Solutions: Compared to the year ago, the segment’s revenues rose 42.5% to $681 million and also outpaced the Zacks Consensus Estimate of $653 million.
The unit’s adjusted EBITDA of $56 million rose from the year-ago quarter’s loss of $5 million and also beat the consensus mark of $32.50 million. This outperformance was primarily due to much-improved execution on offshore projects and the easing of supply-chain constraints, along with healthy demand.
At the end of September 2022, NOV’s capital equipment order backlog for Rig Technologies was $2.78 billion, including $119 million worth of new orders.
The company’s Completion & Production Solutions operations currently have a $1.48-billion backlog comprising $493 million of new orders.
Balance Sheet
As of Sep 30, 2022, the company had cash and cash equivalents of $998 million and long-term debt of $1.72 billion, with a debt-to-capitalization of 25.9%. Investors should know that in the third quarter, NOV reinstated its dividend of 5 cents per share.
Outlook
For the fourth quarter, NOV anticipates generating between $100 million and $200 million in free cash flow.
NOV expects revenues in Rig Technologies to grow between 5% and 10% sequentially, with incremental margins between 20% and 25% in the fourth quarter.
For the Wellbore Technologies unit, the firm expects building momentum in the Eastern Hemisphere. The pent-up demand for its products is to be partially offset by plateauing North American drilling activity, resulting in revenue growth of 2% to 6% in the quarter.
The company anticipates revenues to improve, but the flow-through will be limited due to a less favorable product mix in the upcoming quarter.
The Zacks Consensus Estimate for PBF Energy’s 2022 earnings stands at $21.22 per share, indicating an increase of about 948.8% from the year-ago loss of $2.50.
PBF beat the consensus mark for earnings in all the trailing four quarters, the average being around 50.8%.
The Zacks Consensus Estimate for Liberty’s 2022 earnings is pegged at $2.02 per share, which implies an increase of about 298% from the year-ago loss of $1.02.
LBRT beat estimates for earnings in three of the trailing four quarters, the average being around 58.5%.
The consensus estimate for Phillips’ 2022 earnings stands at $17.21 per share, up about 201.9% from the year-ago earnings of $5.70.
PSX beat estimates for earnings in all the trailing four quarters, the average being around 36.4%.
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NOV Inc. (NOV) Earnings Lag, Sales Outperform Estimates in Q3
NOV Inc. (NOV - Free Report) reported a third-quarter 2022 adjusted profit of 8 cents per share, missing the Zacks Consensus Estimate of a profit of 15 cents. The underperformance can be attributed to much higher expenses in the form of provision for income taxes in the reported quarter.
However, the bottom line improved from the year-ago loss of 18 cents per share due to significantly higher revenues.
NOV’s total revenues of $1.89 billion surpassed the Zacks Consensus Estimate by 4.2% and rose 40.9% from the year-ago sales of $1.34 billion, primarily due to better-than-expected performances in major segments.
Segmental Performance
Rig Technologies: The unit produced $511 million in third-quarter revenues, which edged past the Zacks Consensus Estimate of $493 million and also compared favorably with the year-ago quarter’s $390 million.
Adjusted EBITDA of $52 million beat the Zacks Consensus Estimate of $43.54 million and increased from the third-quarter 2021 figure of $25 million.
The segment’s results outperforming estimates for the reported quarter could be attributed to accelerating revenue conversion from renewable energy projects and demand for the segment’s aftermarket parts and services.
Wellbore Technologies: The segment’s revenues of $741 million increased by 46.1% year over year in the third quarter of 2022 and outpaced the consensus mark by about 5.7%.
The unit’s adjusted EBITDA of $145 million also surpassed the Zacks Consensus Estimate of $128 million and skyrocketed from the year-earlier quarter’s figure of $77 million.
The positive comparisons were driven by continued growth in international markets and continued improvements in demand from North America, capitalizing on improving global drilling activity levels and better execution against ongoing supply-chain challenges.
Completion & Production Solutions: Compared to the year ago, the segment’s revenues rose 42.5% to $681 million and also outpaced the Zacks Consensus Estimate of $653 million.
The unit’s adjusted EBITDA of $56 million rose from the year-ago quarter’s loss of $5 million and also beat the consensus mark of $32.50 million. This outperformance was primarily due to much-improved execution on offshore projects and the easing of supply-chain constraints, along with healthy demand.
NOV Inc. Price, Consensus and EPS Surprise
NOV Inc. price-consensus-eps-surprise-chart | NOV Inc. Quote
Backlog
At the end of September 2022, NOV’s capital equipment order backlog for Rig Technologies was $2.78 billion, including $119 million worth of new orders.
The company’s Completion & Production Solutions operations currently have a $1.48-billion backlog comprising $493 million of new orders.
Balance Sheet
As of Sep 30, 2022, the company had cash and cash equivalents of $998 million and long-term debt of $1.72 billion, with a debt-to-capitalization of 25.9%. Investors should know that in the third quarter, NOV reinstated its dividend of 5 cents per share.
Outlook
For the fourth quarter, NOV anticipates generating between $100 million and $200 million in free cash flow.
NOV expects revenues in Rig Technologies to grow between 5% and 10% sequentially, with incremental margins between 20% and 25% in the fourth quarter.
For the Wellbore Technologies unit, the firm expects building momentum in the Eastern Hemisphere. The pent-up demand for its products is to be partially offset by plateauing North American drilling activity, resulting in revenue growth of 2% to 6% in the quarter.
The company anticipates revenues to improve, but the flow-through will be limited due to a less favorable product mix in the upcoming quarter.
Zacks Rank & Stock Picks
NOV currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include PBF Energy (PBF - Free Report) , Liberty Energy (LBRT - Free Report) and Phillips 66 (PSX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for PBF Energy’s 2022 earnings stands at $21.22 per share, indicating an increase of about 948.8% from the year-ago loss of $2.50.
PBF beat the consensus mark for earnings in all the trailing four quarters, the average being around 50.8%.
The Zacks Consensus Estimate for Liberty’s 2022 earnings is pegged at $2.02 per share, which implies an increase of about 298% from the year-ago loss of $1.02.
LBRT beat estimates for earnings in three of the trailing four quarters, the average being around 58.5%.
The consensus estimate for Phillips’ 2022 earnings stands at $17.21 per share, up about 201.9% from the year-ago earnings of $5.70.
PSX beat estimates for earnings in all the trailing four quarters, the average being around 36.4%.