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NOV Q1 Earnings Surpass Estimates, Revenues Increase Y/Y
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NOV Inc. (NOV - Free Report) reported first-quarter 2024 adjusted earnings of 30 cents per share, which beat the Zacks Consensus Estimate of 27 cents. The outperformance can be attributed to the better-than-expected performances of NOV’s Energy Products and Services and Energy Equipment segments. However, the bottom line declined from the year-ago quarter’s level of 32 cents.
NOV’s total revenues of $2.16 billion surpassed the Zacks Consensus Estimate by 2.6%. The top line also increased 10.1% from the year-ago quarter’s figure of $1.96 billion. This was primarily due to better-than-expected performances in major segments of the company.
NOV’s board of directors has approved a share repurchase program, allowing share buybacks of up to $1.00 billion worth the company's common stock within a span of 36 months. Additionally, NOV announced its plans to boost the base dividend by 5%, set to take effect in June 2024.
NOV declared its plan to return at least 50% of excess Free Cash Flow on an annual basis, through a return of capital framework, employing a combination of base dividends, share repurchases and supplemental dividends. Free Cash Flow, in this context, refers to cash flow from operations after deducting capital expenditures and other investments, including acquisitions.
Energy Products and Services: The unit reported first-quarter revenues of $1.02 billion, which beat our projection of $987.3 million. The top line also exceeded the prior-year quarter’s reported figure of $941 million.
Adjusted EBITDA of $174 million was above our estimate of $168 million. The reported actuals increased from $154 million in the corresponding period of 2023, owing to increased demand from international and offshore markets, as well as market share gains in North America, which helped improve revenues and profitability.
Energy Equipment: Revenues in this segment improved 12% year over year to $1.18 billion. However, the figure was above our projection of $1.15 billion.
Adjusted EBITDA of $119 million increased from the year-earlier quarter’s level of $94 million. The segment's strong execution on capital equipment backlog and increased demand for aftermarket products and services drove the improvement in revenues and profitability. However, the figure was marginally above our estimate of $118 million.
This segment experienced strong demand with new orders of $390 million during the quarter. However, this fell short of fulfilling the existing backlog of $507 million, resulting in a book-to-bill ratio of 77%. As of Mar 31, the backlog for Energy Equipment capital orders was $3.96 billion, indicating a $115 million increase from that reported a year ago.
Balance Sheet
As of Mar 31, 2024, the company had cash and cash equivalents of $468 million and long-term debt of $1.76 billion, with a debt-to-capitalization of 21.8%.
Outlook
For the second quarter, NOV anticipates a year-over-year rise in consolidated revenues of 1-5%. It also expects adjusted EBITDA to be in the range of $260-$280 million.
For full year 2024, NOV expects consolidated revenues to grow in the mid-single percentage range, with adjusted EBITDA in the band of $1.10-$1.25 billion.
Hess Corporation is valued at approximately $50.08 billion. In the past year, the company’s shares have surged 12%.
HES is a leading oil and natural gas exploration and production company. The upstream energy player primarily operates in the prolific offshore Guyana resources.
SM Energy is valued at $5.88 billion. The company currently pays a dividend of 72 cents per share, or 1.42% on an annual basis.
SM engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.
Sunoco is valued at $5.71 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, thereby ensuring consistent cash flow.
SUN’s extensive distribution network across 40 states provides a robust and reliable source of income, and the Brownsville terminal expansion should add to its revenue diversification.
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NOV Q1 Earnings Surpass Estimates, Revenues Increase Y/Y
NOV Inc. (NOV - Free Report) reported first-quarter 2024 adjusted earnings of 30 cents per share, which beat the Zacks Consensus Estimate of 27 cents. The outperformance can be attributed to the better-than-expected performances of NOV’s Energy Products and Services and Energy Equipment segments. However, the bottom line declined from the year-ago quarter’s level of 32 cents.
NOV’s total revenues of $2.16 billion surpassed the Zacks Consensus Estimate by 2.6%. The top line also increased 10.1% from the year-ago quarter’s figure of $1.96 billion. This was primarily due to better-than-expected performances in major segments of the company.
NOV’s board of directors has approved a share repurchase program, allowing share buybacks of up to $1.00 billion worth the company's common stock within a span of 36 months. Additionally, NOV announced its plans to boost the base dividend by 5%, set to take effect in June 2024.
NOV declared its plan to return at least 50% of excess Free Cash Flow on an annual basis, through a return of capital framework, employing a combination of base dividends, share repurchases and supplemental dividends. Free Cash Flow, in this context, refers to cash flow from operations after deducting capital expenditures and other investments, including acquisitions.
NOV Inc. Price, Consensus and EPS Surprise
NOV Inc. price-consensus-eps-surprise-chart | NOV Inc. Quote
Segmental Performances
Energy Products and Services: The unit reported first-quarter revenues of $1.02 billion, which beat our projection of $987.3 million. The top line also exceeded the prior-year quarter’s reported figure of $941 million.
Adjusted EBITDA of $174 million was above our estimate of $168 million. The reported actuals increased from $154 million in the corresponding period of 2023, owing to increased demand from international and offshore markets, as well as market share gains in North America, which helped improve revenues and profitability.
Energy Equipment: Revenues in this segment improved 12% year over year to $1.18 billion. However, the figure was above our projection of $1.15 billion.
Adjusted EBITDA of $119 million increased from the year-earlier quarter’s level of $94 million. The segment's strong execution on capital equipment backlog and increased demand for aftermarket products and services drove the improvement in revenues and profitability. However, the figure was marginally above our estimate of $118 million.
This segment experienced strong demand with new orders of $390 million during the quarter. However, this fell short of fulfilling the existing backlog of $507 million, resulting in a book-to-bill ratio of 77%. As of Mar 31, the backlog for Energy Equipment capital orders was $3.96 billion, indicating a $115 million increase from that reported a year ago.
Balance Sheet
As of Mar 31, 2024, the company had cash and cash equivalents of $468 million and long-term debt of $1.76 billion, with a debt-to-capitalization of 21.8%.
Outlook
For the second quarter, NOV anticipates a year-over-year rise in consolidated revenues of 1-5%. It also expects adjusted EBITDA to be in the range of $260-$280 million.
For full year 2024, NOV expects consolidated revenues to grow in the mid-single percentage range, with adjusted EBITDA in the band of $1.10-$1.25 billion.
Zacks Rank and Key Picks
Currently, NOV carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Hess Corporation (HES - Free Report) and SM Energy Company (SM - Free Report) , each sporting a Zacks #1 Rank (Strong Buy), and Sunoco LP (SUN - Free Report) , carrying a Zacks #2 Rank (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess Corporation is valued at approximately $50.08 billion. In the past year, the company’s shares have surged 12%.
HES is a leading oil and natural gas exploration and production company. The upstream energy player primarily operates in the prolific offshore Guyana resources.
SM Energy is valued at $5.88 billion. The company currently pays a dividend of 72 cents per share, or 1.42% on an annual basis.
SM engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.
Sunoco is valued at $5.71 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, thereby ensuring consistent cash flow.
SUN’s extensive distribution network across 40 states provides a robust and reliable source of income, and the Brownsville terminal expansion should add to its revenue diversification.