Q4 2023 NOV Inc Earnings Call

February 2, 2024

Okay.

Operator: Good morning, ladies and gentlemen, and welcome to the NOV fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Good day, ladies and gentlemen, and welcome to the N V fourth quarter and full year 2023 earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as well.

Operator: Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Ms. Amy D'Ambrosio, Director of Investor Relations. Ms. Amy D'Ambrosio, please begin.

Speaker Change: A reminder, this conference is being recorded I would now like to introduce your host for today's conference Ms. Amy Dambrosio director of Investor Relations Ma'am. Please begin.

Speaker Change: Okay.

Amy D'Ambrosio: I welcome everyone to NOV's fourth quarter and full year 2023 earnings conference. With me today are Clay Williams, our Chairman, President, and CEO, and Jose Bayardo, our Senior Vice President and CFO. Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of the federal securities law. They involve risks and uncertainty, and actual results may differ. No one should assume these forward-looking statements will remain valid later in the quarter or later in the year.

Amy Dambrosio: Welcome everyone to <unk> fourth quarter and full year 2023 earnings conference call with me today are clay Williams, our chairman, President and CEO and Jose Bayardo, Our senior Vice President and CFO.

Before we begin I would like to remind you that some of today's comments are forward looking statements within the meaning of the federal securities laws. They involve risks and uncertainty and actual results may differ materially.

Amy Dambrosio: No one should assume these forward looking statements remain valid later in the quarter or later in the year.

Amy D'Ambrosio: For a more detailed discussion of the major risk factors affecting our business, please refer to our latest forms 10-K and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-GAAP measures. Reconciliations to the nearest corresponding GAAP measures are in our earnings release, available on our website. On a US GAAP basis for the fourth quarter of 2023, NOV reported revenues of $2.34 billion and a net income of $598 million, or $1.51 per fully diluted year. For the full year of 2023, revenues were $8.58 billion, and net income was $993 million. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings release. Later in the call, we will host a question and answer session. Please limit yourself to one question and one follow-up to permit more participants. Now, let me turn the call over to Amy. Thanks, Amy.

Amy Dambrosio: For a more detailed discussion of the major risk factors affecting our business. Please refer to our latest forms 10-K, and 10-Q filed with the Securities and Exchange Commission.

Amy Dambrosio: Our comments also include non-GAAP measures reconciliations to the nearest corresponding GAAP measures are in our earnings release available on our website.

Amy Dambrosio: On a U S GAAP basis for the fourth quarter of 2023 and of your reported revenues of 2.34 billion and a net income of $598 million or $1.51 per fully diluted share for the full year of 2023 revenues were $8 five 8 billion and net income was 993 million.

Amy Dambrosio: Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings release later.

Amy Dambrosio: Later in the call we will host a question and answer session. Please limit yourself to one question and one follow up to permit more participation.

Amy Dambrosio: Now, let me turn the call over to Kelly.

Clay C. Williams: Completing a year in which the company generated $8.6 billion, full-year revenues increased 19% from 2023 versus 2022, driven by strong offshore and international demand, continued supply chain improvement, and increasing uptake in the new technologies NOV has been introducing. Fourth quarter EBITDA increased to $294 million, or 12.5% of, 30 basis points from the prior quarter and up 140 basis points. Despite higher-than-expected sales for the fourth quarter, EBITDA leverage was lighter than expected at 17%, falling short of our forecasts due in part to continuing activity declines in North America and in part to some unexpected charges. Revenues for North America land declined 5% sequentially, hitting our wellbore technology services businesses disproportionately.

Kelly: Thanks, Amy and it'll be continued its strong sales growth through the fourth quarter of 2023 with revenues of $2 3 billion up 7% sequentially completing a year in which the company generated $8 $6 billion in sales for.

Kelly: Full year revenues increased 19% from 2023 versus 2022, driven by strong offshore and international demand continued supply chain improvement and increasing uptake in the new technologies and it will be has been introducing to its customers.

Fourth quarter, EBITDA increased to $294 million or 12, 5% of revenue up 30 basis points from the prior quarter and up 140 basis points from the fourth quarter of last year.

Despite the higher than expected sales for the fourth quarter EBITDA leverage was lighter than expected at 17% falling short of our forecast due in part to continuing activity declines in North America and in part to some unexpected charges revenues for North America land declined 5% sequentially hitting our Wellbore technology services businesses disk.

Kelly: Proportionately hard. Additionally, we had an approximately $20 million impact on EBITDA in the quarter due to the 55% devaluation on Argentine peso in December higher U S medical costs, and Workman compensation insurance accruals.

Clay C. Williams: Additionally, we had an approximately $20 million impact on EBITDA in the quarter due to the 55% devaluation of the Argentine peso in December, higher U.S. medical costs, and workman compensation interest. Fourth quarter offshore revenue grew 7% sequentially on large increases in managed pressure drilling, equipment sales, flexible pipe, conductor pipe, and aftermarket spares for offshore. NOB's international land revenues grew by more than 20% on Stronger Shipments of Drill Pipe, Composite Pipe, Stimulation Equipment, and Drilling Equipment for the Middle East. The company's offshore and international revenue strength more than offset North America, leading to consolidated, sequential sales growth of 7%. Pre-cash flow improved significantly during the fourth quarter to $301 million.

Kelly: Fourth quarter offshore revenue.

Kelly: Grew 7% sequentially and large increases in managed pressure drilling equipment sales flexible pipe conductor pipe in aftermarket spares for offshore rigs and obese International land revenues grew by more than 20% sequentially on stronger shipments of drill pipe composite pipe stimulation equipment and drilling equipment for the middle East the companies.

Offshore and international revenue strength more than offset North America, leading to consolidated sequential sales growth of 7%.

Kelly: Free cash flow improved significantly during the fourth quarter to $301 million.

Clay C. Williams: The inflection in free cash flow signaled relief from the supply chain challenges of the first half of 2020. Additional inventory enabled higher flush year-end shipments, including strong double-digit sequential growth for the rig technology segment and spare parts and drilling. 2022 was characterized by the recovery of activity in North America.

Kelly: Collection and free cash flow signaled relief from the supply chain challenges of the first half of 2023 as additional inventory enabled higher flush yearend shipments, including strong double digit sequential growth for the rig technology segment and spare parts and drilling equipment.

Kelly: While 2022 was characterized by the recovery of activity in North America, 2023 saw continuing momentum in offshore and international markets that is underpinning.

Clay C. Williams: 2023 saw continuing momentum in offshore and international markets that is underpinning a steady upcycle we believe will continue to unfold over the next several years, Aramco Safanaya plans notwithstanding. Despite postponement of plans to grow production capacity to 13 million barrels per day, we still expect the kingdom to remain quite busy as it drills to stem declines in conventional oil wells and it drills to develop unconventional oil. We expect our revenues in 2024 to continue to be there. Broadly speaking, rising activity in critical global, offshore, and international markets is leading to the purchase... Tools and Kit. Needed for our oilfield customers to execute, develop, and We remain constructive in our global outlook over the next several years because there are so many areas that look so strong.

The steady upcycle, we believe will continue to unfold over the next several years Aramco Sophonias plans notwithstanding despite postponement of plans to grow production capacity to 13 million barrels per day, we still expect the kingdom to remain quite busy as it drills to stem declines in conventional oil wells and it drills to develop unconventional gas we expect our.

Kelly: Revenues in 2024, there to continue to grow.

Kelly: <unk> speaking rising activity in critical global offshore and international markets is leading to purchases of the tools and kit needed for our oilfield customers to execute development plans, we remain constructive in our global outlook over the next several years because there's so many areas that looks so strong 2023 saw the reentry of IOC customer.

Clay C. Williams: 2023 saw the re-entry of IOC customers into the deep water market after a decade-long hiatus, with several basins seeing renewed energy and focus on exploration like Namibia and Suriname, as well as brownfield developments like Norway, West Africa, and the Gulf of Mexico, and greenfield developments like Brazil, Guyana, and Australia. Although we view U.S. permitting constraints on further LNG export growth as unwise from an energy security standpoint, such a move would drive additional calls for LNG production from offshore Australia and Qatar.

Kelly: For us into the deepwater market after a decade long hiatus with several basins seeing renewed energy and focus on exploration like Namibia and Suriname.

Kelly: <unk> field developments like Norway, West Africa, and the Gulf of Mexico, and Greenfield developments like Brazil, Guyana in Australia, Although we view U S permitting constraints on further LNG export growth as unwise from an energy security standpoint.

Kelly: Such a move would drive additional calls on LNG production from offshore Australia, and Qatar in our view.

Clay C. Williams: Increasing offshore activity is tightening the market for floating rigs, leading to a doubling of day rates, with high-spec floaters utilizing sophisticated NOV technologies benefiting the market. Likewise, growing offshore drilling in the Arabian Gulf has materially improved utilization and day rates for. Despite some white space and specific rig contracts popping up in 2024, arising from the completion of older, shorter, weld-to-weld, They also report rising operator interest in longer, three- to five-year terms, transcription by https://otter.ai, given the greater visibility in their future.

Kelly: Creasing offshore activity is tightening the market for floating rigs leading to a doubling of day rates with high spec floaters utilizing sophisticated Adobe technology is benefiting the most.

Kelly: Likewise growing offshore drilling in the Arabian Gulf has materially improved utilization and day rates for Jackups. Despite some white space and specific rig contracts popping up in 2024 arising from the completion of older shorter well to well contracts. Our customers are using this idle time to accomplish maintenance and Sps surveys. They also report rising operator.

Kelly: <unk> and longer three to five year term contracts. This bodes well for future <unk> rig technology demand as customers can achieve payback on incremental capex upgrades on their rigs given the greater visibility in their future utilization.

Clay C. Williams: We are more subdued in our 2024 outlook for North America. The euphoria of 2022 has matured into a phase of consolidation and strict capital discipline in 2023, exacerbated by continued volatility in oil prices. Given the suppressed domestic natural gas, I believe E&P CapEx will likely decline slightly year over year. Nevertheless, North American production will remain vital to global supply and energy security.

Kelly: We are more subdued in our 2020 for outlook for North America.

Kelly: For 2022 has matured into a phase of consolidation and strict capital discipline in 2023 exacerbated by continued volatility in oil prices and depressed domestic natural gas prices I believe E&P capex will likely decline slightly year over year.

Kelly: Nevertheless, North America production will remain vital to global supply and energy security the expected commissioning of incremental U S. LNG export capacity in 2025 could spark additional north American gas drilling activity later in the year to prove me wrong.

Clay C. Williams: The expected commissioning of incremental US LNG export capacity in 2025 could spark additional North American gas drilling activity later in the year to prove me. Against this market backdrop of growing offshore international markets offset by declining North American exports, NOV is posting much improved results, driven by projects aimed at reactivating and upgrading offshore rigs and significant uptake of our new advanced technology to meet operators' demands for more efficient operations. There remains room for improvement in our profitability and return profile. We are focused on improving our margins by executing our cost reduction plan and continuing our commitment to improve pricing. NOV's investments in technologies over the past several years have focused squarely on providing solutions that drive improved economics for our customers, utilizing new robotics and digital advancements to expand and enhance our traditional product portfolio. We have very intentionally repositioned ourselves to support future energy investments.

Kelly: Against this market backdrop of growing offshore international markets offset by declining North American activity <unk> posting much improved results driven by projects aimed at reactivating and upgrading offshore rigs and significant uptake of our new advanced technology to meet operators demands for more efficient operations. There remains room for improvement in our profitability and return.

Kelly: While we are focused on improving our margins by executing our cost reduction plan and continuing our commitment to improve pricing, where we can and <unk> investments in technologies over the past several years have focused squarely on providing solutions that drive improved economics for our customers utilizing new robotics, and digital advancements to expand and enhance our traditional product portfolio.

Kelly: We have very intentionally reposition ourselves to support future energy investments of all kinds with continued traction in North America, and the middle East our edge compute edge to cloud and cloud based solutions are equipping drilling intervention in completions operators on the front lines with more information to make better decisions. The fourth quarter saw two independence adopt our <unk>.

Clay C. Williams: With continued traction in North America and the Middle East, our edge compute, edge-to-cloud, and cloud-based solutions are equipping drilling, intervention, and completions operations with more information to make better decisions. The fourth quarter saw two independents adopt our new artificial intelligence edge compute technology to identify critical downhole events. Unknown Executive, Arun Jayaram, Luke Lemoine, Unknown Executive, Arun Jayaram, Unknown Executive, from a dozen drilling contractors to enable its big data scientists and algorithms to identify and act on opportunities to improve performance. Our completions customers are also seeing the benefits of real-time interaction with aggregated field data. We ended the year with more than 3,500 active users of our remote monitoring tools for completion operations, up 70% compared to the first half of 2020, and we are introducing new frac monitoring capabilities through our MaxEdge platform this year.

Kelly: New artificial intelligence edge compute technology to identify critical downhole events like washouts hours earlier than traditional methods. We're also seeing gains in our one click cloud data delivery and our new high frequency data services in December <unk> celebrated by major NOC for providing high speed data streaming from over 100 rigs.

Kelly: From a dozen drilling contractors to enable its big data scientists and algorithms to identify and act on opportunities to drive better efficiency or.

Kelly: Our completions customers are also seeing the benefits of real time interaction with aggregated field data. We ended the year with more than 3500 active users of our remote monitoring tools for completion operations up 70% compared to the first half of 2023, and we are introducing new frac monitoring capabilities for IMAX edge platform. This year overall fourth quarter Matt.

Kelly: <unk> product revenue more than tripled versus the fourth quarter of 2022.

Kelly: <unk> proprietary wire drill pipe high speed data delivery system has seen widespread adoption in the north sea over the past few years and now a major NOC and the middle East is reporting 30% improvement in well placement on its pilot drilled last year significantly improving well economics strong results arising from better data prompted another Arabian Gulf operator to spud with the technology.

Kelly: Allergy a few days ago with several others planning to adopt the technology in a region. Later this year. We believe we are pioneering a new and better way to drill wired drill pipe technology combined with Nov's, new managed pressure drilling offering will provide unprecedented control and performance and I believe this technology will become standard in the offshore arena in coming decades.

Clay C. Williams: Overall fourth quarter max edge product revenue more than tripled versus the fourth quarter of 2020. NOB's proprietary wire drill pipe high-speed data delivery system has seen widespread adoption in the North Sea over the past few years, and now a major NOC in the Middle East is reporting 30% improvement in well placement on its pilot wells drilled last year, significantly improving well economics.

Kelly: Better drilling performance enabled by Nov's cutters drove significant market share gains in drill bits in several regions throughout 2023 and revenue from new downhole tools grew 27% sequentially, our new positive track torsional vibration mitigation tool completed its 100th run during the quarter, enabling a doubling of rate of penetration for <unk>.

Clay C. Williams: Strong results arising from better data prompted another Arabian Gulf operator to spud with the technology a few days ago, with several others planning to adopt the technology in the region later this year. We believe we are pioneering a new and better way to drill. Wire drill pipe technology combined with NOV's new managed pressure drilling offering will provide unprecedented control and performance, and I believe this technology will become standard in the offshore arena in the coming decades.

Kelly: Customer in Indonesia, where our new agitators EEP friction reduction tools are enabling operators to move to three mile laterals in the Permian bits motors and in WD failures of the leading causes of expensive unplanned trips for horizontal drillers, which has led many many E&P operators to rent this equipment directly from <unk> because of our exceptional reliability and perform.

Kelly: <unk> rather than delegate the supply of these to their directional drillers as they have traditionally done.

Kelly: He is very very well position and performance drilling sector for future share gains.

Clay C. Williams: Better drilling performance enabled by NOV's cutters drove significant market share gains in drill bids in several regions throughout, and revenue from new downhold tools grew 27% sequentially. Our new Positrack Torsional Vibration Mitigation Tool completed its 100th run during the quarter, enabling a doubling of the rate of penetration for a customer in Indonesia, where our new Agitator ZP Friction Reduction Tools are enabling operators to move to three-mile laterals in the Permian.

Similarly in high temperature basins like the Haynesville and Eagle Ford, we are receiving repeat orders for our Cuba scope Teekay $3, 40, Tc coding, which insulates drill pipe and our tundra Max mud chiller to help reduce downhole temperatures that can damage downhole electronics again operators are buying directly from <unk> and our reporting fewer equipment failures and.

Kelly: <unk> cost savings as a result.

Kelly: Leveraging our existing expertise in harsh environment drilling we are addressing the high temperature hard rock challenges faced in the growing geothermal market our portfolio of drill bits and WD tools composite pipe liner hangers, and corrosion resistant pipeline or as combat the tough challenges faced in geothermal wells and we've seen strong demand, particularly in Europe.

Clay C. Williams: Bits, motors, and NWD failures are the leading causes of expensive unplanned trips for horizontal drilling, which has led many E&P operators to rent this equipment directly from NOV because of its exceptional reliability and performance rather than delegate the supply of it to their directional drillers as they have traditionally done. NOV is very, very well positioned in performance drilling, future shared. Similarly, in high-temperature basins like Hainesville and Eagle Ford, we are receiving repeat orders for our Tubascope TK340TC coating, which insulates drill pipe, and our Tundra Maxx mudchiller to help reduce downhole temperatures that can damage downhole electronics. Again, operators are buying directly from NOV and are reporting fewer equipment failures and improved cost savings.

Kelly: Oil and gas producers are committed to reducing the environmental impact of their operations Nov's proprietary <unk> cuttings treatment technology is seeing strong demand, particularly in areas like Angola, and the Arabian Gulf, which are tightening drill cuttings discharge requirements treating drill cuttings on the rig reduces the high cotwo footprint associated with shipping these to shore.

Kelly: Operators are also demanding drilling contractors cut cotwo shins.

Kelly: Driving interest in <unk>, new power blade and Maestro engine management technologies.

Kelly: Committing to a cleaner future operators are applying their expertise to carbon capture and storage in using nov's <unk> experienced in this area as well.

Clay C. Williams: Leveraging our existing expertise in harsh environment drilling, we are addressing the high-temperature hard rock challenges faced in the growing geothermal, Transcription by https://otter.ai, Oil and gas producers are committed to reducing the environmental impact of their operations. NOV's proprietary InnovaTherm cuttings treatment technology is seeing strong demand, particularly in areas like Angola and the Arabian Gulf, which are tightening drill cuttings discharge requirements Treating drill cuttings on the rig reduces the high CO2 footprint associated with shipping these to shore. Operators are also demanding drilling contractors cut CO2 emissions, driving interest in NOV's new PowerBlade and Maestro engine management technology.

We secured the dehydration package for a large carbon capture and storage project in Louisiana aimed at reducing emissions from industrial processes and we are pursuing several additional <unk> opportunities our sustained investments in new products and technologies helped drive our strong top line results as fourth quarter 2023 revenues have increased nearly 90% from the first.

Kelly: <unk> of 2021, low which compares to the big three average of about 60% over the same time period equating to approximately 26% compound annual growth rate for <unk> versus 19% for the big three.

Kelly: And we believe we have room to run as more e&ps try wire drill pipe Max edge compute solutions AI powered optimization software and more sophisticated drilling tools and robotics, we expect our adapt patients to the reality of the industry and the strong results. These technologies provide we will continue to drive improving top line results.

Clay C. Williams: Committing to a cleaner future, operators are applying their expertise to carbon capture and storage and using NOV's DPEC experience in this area. We secured the dehydration package for a large carbon capture and storage project in Louisiana aimed at reducing emissions from industrial processes, and we are pursuing several additional CCUS opportunities. Sustainable Investments in New Products and Technologies help drive our strong top-line results. This fourth quarter 2023 revenues have increased nearly 90% from the first quarter of 2021 low, which compares to the Big 3 average of about 60% over the same time period, equating to approximately 26% compound annual growth rate for NOV versus 19% for the Big 3. And we believe we have room to run as more EMPs try wire drill pipe, max-edge compute solutions, AI-powered optimization software, and more sophisticated drilling tools and robots.

Kelly: As part of <unk> repositioning of its product portfolio. We also continue to review and optimize our shareholders' capital employed across the portfolio, we expect to divest one or possibly two businesses in the coming year and redeploy capital into higher performing opportunities like electrical submersible pumps, which we added this week through an acquisition.

Kelly: Additionally, we expect that improved cash flows in 2024 following supply chain normalization will enable us to increase our return of capital to shareholders in the coming year and some <unk> is well positioned to capitalize on the world's need to invest in energy of all forms.

A lot of work ahead of us and I'm grateful for Nov's team and their extraordinary professionalism their intense focus on the critical needs of our customers the creativity and innovation they apply to technology to meet those needs and above all their ability and willingness to get the job done. Many thanks to all of you who are listening.

Kelly: With that I'll turn it over to Jose Thank you clay.

Jose A. Bayardo: <unk> consolidated revenues for the fourth quarter totaled $2 $3 4 billion and revenues for the full year 2023 totaled 858 billion, an increase of 19% or 135 billion from 2022.

Clay C. Williams: We expect our adaptation to the reality of the industry and the strong results these technologies provide will continue to drive an improving top line. As part of NOV's repositioning of its product portfolio, we also continue to review and optimize our shareholders' capital employed across the portfolio. We expect to divest one or possibly two businesses in the coming year and redeploy capital into higher-performing opportunities like electrical submersibles, which we added this week through an acquisition. Additionally, we expect that improved cash flows in 2024 following supply chain normalization will enable us to increase our return of capital to shareholders. Some, NOV is well positioned to capitalize on the world's need to invest in energy. We have a lot of work ahead of us, and I'm grateful for NOV's team and their extraordinary professionalism, their intense focus on the critical needs of our customers, the creativity and innovation they apply to technology to meet those needs, and, above all, their ability and willingness to get the job done. Many thanks to all of you who are with us. With that, I will turn it over to you. Thank you, Clay.

EBITDA increased 10% sequentially to $294 million or 12, 5% of sales as clay mentioned flow through was limited in part due to larger than anticipated year end adjustments to our medical and workers comp accruals and the devaluation of the Argentine peso.

Jose A. Bayardo: For the full year, EBITDA increased 47% to $1 billion or 11, 7% of sales during the fourth quarter, we recorded $55 million in other items, primarily related to a voluntary early retirement program. Additionally, nov's effective tax rate was favorably impacted by the release of $485 million in valuation.

Jose A. Bayardo: Allowances, resulting from the Companys assessment of the carrying value of its deferred tax assets and future projections of taxable income we estimate that our tax rate for 2024 will be approximately 26%.

Jose A. Bayardo: Cash flow from operations totaled a healthy $377 million in the fourth quarter supported by a reduction of working capital, but partially offset by $42 million in cash severance charges associated with the voluntary early retirement program and other restructuring related actions.

Jose A. Bayardo: NOB's consolidated revenues for the fourth quarter totaled $2.34 billion, and revenues for the full year 2023 totaled $8.58, an increase of 19% or $1.35 billion from 2020. EBITDA increased 10% sequentially to $294 million, or 12.5%. Clay mentioned flow-through was limited in part due to larger-than-anticipated year-end adjustments to our medical and workers' comp accruals and the devaluation of the Argentine peso. For the full year, EBITDA increased 47% to $1 billion, or 11.7%. During the fourth quarter, we recorded $55 million in other items, primarily related to a voluntary early retirement. Additionally, NOV's effective tax rate was favorably impacted by the release of $485 million in evaluation allowance.

Capital expenditures totaled $76 million in the fourth quarter and when netted against cash flow from operations resulted in $301 million in free cash flow. During 2024, we expect to generate free cash flow in excess of 50% of EBITDA with a seasonal use of cash in the first quarter and steadily improving cash flow through the remainder of the year.

Jose A. Bayardo: Our capital allocation hierarchy remains the same as it has been first and foremost we prioritize compelling organic investment opportunities, which historically provide us with the greatest risk weighted returns as clay discussed the new products that we've recently introduced are gaining rapid adoption in the market and we plan to accelerate our build out of these offerings.

Jose A. Bayardo: As a result, we expect to increase our capital expenditures in 2024 to approximately $330 million.

Jose A. Bayardo: We continue to take portfolio management approach to capital allocation and we will invest in businesses at compelling valuations, where we can leverage our core competencies manufacturing capabilities global distribution infrastructure digital platforms and World class R&D facilities. And example of this is the very recent acquisition of extract a leading provider of <unk>.

Jose A. Bayardo: Resulting from the company's assessment of the curing value of its deferred tax assets and future projections of taxable income, we estimate that our tax rate for 2024 will be approximately $26,000. Cash flow from operations totaled a healthy $377 million in the fourth quarter. Supported by a reduction in working capital, but partially offset by $42 million in cash severance charges associated with the Voluntary Early Retirement Program and other restructuring-related programs. Capital expenditures totaled $76 million in the fourth quarter and, when netted against cash flow from operations, resulted in $301 million in free cash.

Jose A. Bayardo: Official lift technologies and services will also look to divest businesses, where we're not the best owner and as Clay mentioned plan to do so for one or two businesses in 2024.

Jose A. Bayardo: With the cash flow guidance I provided its also worthwhile to reiterate clay's previous comments that we remain committed to returning excess capital to our shareholders and that we anticipate being able to increase the return of capital later this year.

First I'll walk through our historical segment results and provide our outlook based on our new segment structure energy products and services and energy equipment.

Jose A. Bayardo: During 2024, we expect to generate free cash flow in excess of 50% of EBITDA, with a seasonal use of cash in the first quarter and steadily improving cash flow to the remainder. The Capital Allocation Hierarchy remains the same as ever. First and foremost, we prioritize compelling organic investment, which historically provides us with the greatest risk weighted. Clay discussed the new products that we've recently introduced are getting rapid adoption in the market, and we plan to accelerate our build out of these. As a result, we expect to increase our capital expenditures in 2024 to approximately $330 million. We continue to take a portfolio management approach to capital allocation, and we'll invest in businesses at compelling valuations where we can leverage our core competencies, manufacturing capabilities, global distribution infrastructure, digital platforms, and world-class R& An example of this is the very recent acquisition of X-TRACT, a leading provider of artificial lift technology in the... We'll also look to divest businesses where we are not the best owner.

Jose A. Bayardo: Moving on to segment results, our Wellbore technologies segment generated $824 million in revenue during the fourth quarter, an increase of $25 million or 3% compared to the third quarter and 8% compared to the fourth quarter of 2022.

Jose A. Bayardo: Exceptionally strong year end shipments of drill pipe and managed pressure drilling equipment, along with healthy drilling activity levels in international and offshore markets more than offset a softening in north American market.

Jose A. Bayardo: EBITDA was $160 million or 19, 4% of revenue with soft flow through due to a less favorable mix and operations that were disproportionately affected by the increase in employee benefit costs and the devaluation of the Argentine peso.

Jose A. Bayardo: Our downhole tools business reported a modest increase in revenue and EBITDA strong yearend drilling motor and fishing tool packages sales into Asia, and sub Saharan Africa, along with higher rental activity and service equipment sales in the middle East drove a solid increase in eastern hemisphere revenues, while sales in North America decreased 1% against a four <unk>.

Cent decline in drilling activity.

Jose A. Bayardo: Our <unk> business posted a high single digit revenue increase to achieve another quarterly record high revenue level. The sequential increase was primarily due to growth from its core drilling surface data system sales and rentals driven by strong activity in the middle East and far east surface data system rentals remained stable in North America. Despite.

Jose A. Bayardo: And, as Clay mentioned, we plan to do so for one to two businesses in... With the cash flow guidance I provided, it's also worthwhile to reiterate Clay's previous comments that we remain committed to returning excess capital to our shareholders and that we anticipate being able to increase the return of capital later this year. Next, I'll walk through our historical segment results and provide our outlook based on our new segment structure. Energy Products and Services and Energy Equipment

Jose A. Bayardo: The lower rig count.

Jose A. Bayardo: Revenues from our evolved wired drill pipe drilling optimization services decreased slightly due to early completion of two north sea projects, which we expect will resume in early 2024.

Jose A. Bayardo: To help investors understand the change and update their models, we've provided a diagram illustrating the changes in our reporting segments and five years of pro forma financial data on our investor relations website and in an 8K we filed this morning. Moving on to segment. Our wellbore technology segment generated $824 million in revenue during the fourth quarter, an increase of $25 million, or 3% compared to the third quarter, and 8% compared to the fourth quarter of 2022. Exceptionally strong year-end shipments of drill pipe and managed pressure drilling equipment, along with healthy drilling activity levels in international and offshore markets, more than offset a softening North American market. EBITDA was 160 million, or 19.4% of, Soft flow through due to a less favorable mix and operations that were disproportionately affected by the increase in employee benefit costs and the devaluation of the Argentine peso. Our downhole tools business reported a modest increase in revenue and EBIT. Strong year-end drilling motor and fishing tool packages sales into Asia and Sub-Saharan Africa, along with higher rental activity and service equipment sales in the The sequential increase was primarily due to growth from its core drilling surface data system sales and rentals, driven by strong activity in the Middle East and Far East. However, surface data system runnels remain stable in North America, despite the lower.

Jose A. Bayardo: Further expansion of <unk> wired drill pipe services and accelerating rate of adoption of our Max products. Further underscores Nov's continued success in developing industry, leading digital solutions that clay discussed.

Jose A. Bayardo: Our REIT hike log drill bit business posted a mid single digit percent sequential decrease in revenues during the fourth quarter largely due to softening drilling activity in North America after.

Jose A. Bayardo: After three quarters of growing U S revenues through market share gains the 20% year on year decline in drilling activity finally prevented the units revenues from grinding higher.

Jose A. Bayardo: Despite the challenges in North America, the business, partially offset these declines with solid gains in several middle eastern countries, including Turkey, Qatar and Kuwait.

Additionally, the business expects to return to its growth trajectory in the first quarter with a rebound in Canadian drilling activity and continued strength in the middle East and North Africa.

Jose A. Bayardo: Our <unk> pipe inspection and coating business realized a low single digit sequential decrease in revenue during the fourth quarter inspection revenues were impacted by the continued rig activity declines in North America, the currency devaluation in Argentina, and a decrease in product sales in the far east, partially offset by improved activity in Mexico, Europe and the middle.

Jose A. Bayardo: <unk> revenue from the unit's coating operation declined on lower sleeve shipments and lower pipe coating volumes in the eastern hemisphere, partially offset by improved activity in the middle East and Mexico.

Jose A. Bayardo: Despite lower drilling activity U S coating revenues and volumes were flat and backlog remains strong.

Jose A. Bayardo: Our grant <unk> drill pipe business realized strong topline growth with flushed shipments following supply chain normalization permitting the unit to achieve its highest revenue level since the first quarter of 2015.

Jose A. Bayardo: A more favorable offshore and international sales mix that drove average pricing higher also contributed to the sequential growth.

Jose A. Bayardo: New orders increased sharply from low levels in the third quarter and were weighted towards the offshore in western hemisphere customers.

Unfortunately, the strong bookings take a few quarters to convert into revenue and we expect with lower volumes and a less favorable sales mix to result in a sharp revenue decline in the first quarter for a grant <unk> business.

Jose A. Bayardo: Revenues from our EVOLV wired drill pipe drilling optimization services decreased slightly due to the early completion of two North Sea projects, which we expect will resume in early 2019. Further expansion of E-Valve wired drill pipe services and an accelerating rate of adoption of our max products further underscores NOV's continued success in developing industry-leading digital solutions that Clay. Our Reid Heikkilaug drill bit business posted a mid-single-digit percent sequential decrease in revenues during the fourth quarter, largely due to softening drilling activity in North America. After three quarters of growing U.S. revenues through market share gains, the 20% year-on-year decline in drilling activity finally prevented the unit's revenues from grinding back. Despite the challenges in North America, the business partially offset these declines with solid gains in several Middle Eastern countries, including Turkey, Qatar, and Kuwait.

Jose A. Bayardo: Our well site services business delivered strong sequential growth in revenue during the fourth quarter driven by sizable year end shipments of managed pressure drilling equipment and strong demand for our solids control offerings. The revenue gains were partially offset by the currency devaluation and reduced solids control activity in Latin America.

Jose A. Bayardo: While the strong capital equipment deliveries are not expected to repeat in the first quarter. We expect strong sales for both our solids control and MPD offerings to return later in the year and key offshore markets, including Brazil, Mexico, and Guyana as well as in strategic International land markets, such as the Middle East.

Jose A. Bayardo: Our completion and production solutions segment generated revenue of $803 million in the fourth quarter of 2023, 6% sequential increase and a 9% improvement compared to the fourth quarter 2022.

Jose A. Bayardo: EBITDA was $86 million or 10, 7% of sales representing a healthy flow through of 44% compared to the third quarter.

Jose A. Bayardo: Additionally, the business expects to return to its growth trajectory in the first quarter with a rebound in Canadian drilling activity and continued strength in the Middle East and North Africa. Our Cubiscope Pipe Inspection and Coding business realized a low single-digit sequential decrease in revenue during the four... Transcribed by https://otter.ai, revenue from the unit's coating operation declined on lower sleeve shipments and lower pipe coating volumes in the eastern hemisphere, partially offset by improved activity in the Middle East and, Despite lower drilling activity, U.S. coating revenues and volumes were flat, and backlog remained strong. Our GrantPrideCo jewel pipe business realized strong top-line growth with flush shipments following supply chain normal A more favorable offshore international sales mix that drove average pricing higher also contributed to. New orders increased sharply from low levels in the third quarter and were weighted toward offshore and western hemisphere customers.

Jose A. Bayardo: We continue to see strong demand from international and offshore markets, pushing orders up 28% sequentially to $676 million, representing a book to bill of 132% and the highest level of orders since 2014 backlog at year end was 182 billion up 12% sequentially and 14%.

Jose A. Bayardo: <unk> year over year.

Jose A. Bayardo: Our intervention and stimulation equipment business posted an upper single digit sequential increase in revenue with solid EBITDA flow through the unit benefited from flush yearend deliveries in all major product lines following supply chain normalization.

Jose A. Bayardo: Pressure pumping revenues improved on higher pump and blender deliveries coiled tubing sales increase with the delivery of a new unit several support trailers and nitrogen units and wireline improved with strong deliveries into Latin America, and the middle East.

Jose A. Bayardo: The business also posted strong bookings, which improved 71% sequentially, resulting in a 154% book to bill despite.

Despite the softening north American market impacting shorter cycle products like coil tubing strings in aftermarket spares and services, we saw strong demand for capital equipment orders to close out the year, while much of the demand is coming from the Middle East Latin America, and Asia Pacific regions service intensity is only increasing in North America, and the wear and tear continues to drive.

Jose A. Bayardo: Unfortunately, the strong bookings take a few quarters to convert into revenue, and we expect lower volumes and a less favorable sales mix to result in a sharp revenue decline in the first quarter for Grant Pride. Our well site services business delivered strong sequential growth and revenue during the fourth quarter, driven by sizable year-end shipments of managed pressure drilling equipment and strong demand for our solids control offer. Revenue gains were partially offset by currency devaluation and reduced solids control activity in Latin America.

Jose A. Bayardo: <unk> and the need to replace equipment.

Jose A. Bayardo: During the fourth quarter, we booked a replacement DGB Frac fleet for a customer in the U S and continue to have active discussions with customers regarding additional DGB and frac spreads.

Jose A. Bayardo: Despite strong orders and backlog, we expect Q1 revenues to decline following flush year end shipments.

Jose A. Bayardo: Our subsea flexible pipe business posted a strong finish to the year with solid revenue growth healthy EBITDA flow through and strong bookings throughout 2023. The business unit continued to work through some lower margin projects, but produced its highest footage of pipe in its history and our discipline to hold out for better pricing is being rewarded with strong bookings at high.

Jose A. Bayardo: While the strong capital equipment deliveries are not expected to repeat in the first quarter, we expect strong sales for both our solids control and MPD offerings to return later in the year in key offshore markets, including Brazil, Mexico, and Guyana, as well as in strategic international land markets such as the Philippines. Our completion of production solution segment generated revenue of $803 million in the fourth quarter of 2020. 6% sequential increase and a 9% improvement compared to the fourth quarter of 2022. EBITDA was 86 million, or 10.7% of sales, representing a healthy flow through a 44% compared to the third.

Jose A. Bayardo: Ali accretive margins the business unit posted a book to Bill of 147% and we also expect strong bookings in the first quarter, although we still have lower margin projects in our backlog and anticipate a sequentially less favorable mix with lower volumes in the first quarter, we expect the business unit's margins to steadily improve throughout the course of 2024.

Jose A. Bayardo: Yes.

Jose A. Bayardo: Our XL systems conductor pipe business achieved significant revenue growth during the quarter with strong shipments to both the Gulf of Mexico, and offshore West Africa, while we expect a sharp sequential decline in first quarter revenues, we expect the unit's results to improve through 2024 with increasing exploration and development activity in most offshore regions.

Jose A. Bayardo: Our process and flow technologies business experienced a modest drop in revenue after a very strong third quarter from our Wellstream processing operations. Despite the decline in revenues margins improved slightly with higher margin backlog continuing to displace less favorable projects bookings increased 29% sequentially and included orders for our mono ethylene glycol.

Jose A. Bayardo: We continue to see strong demand from international and offshore markets, pushing orders up 28% sequentially to $676 million, representing a book-to-bill of 132% and the highest level of orders since 2014. Backlog at year end was 1.82 billion, up 12% sequentially and 14% year over year. Our intervention and stimulation equipment business posted an upper single-digit sequential increase in revenue with solid EBITDA flow. The unit benefited from flush year-end deliveries in all major product lines following supply chain normals.

Jose A. Bayardo: Module and a sulfate removal unit four projects in the North Sea. Additionally.

Jose A. Bayardo: Additionally, we were awarded a contract to provide a cotwo hydration package for our Supermajors carbon capture and storage project on the Gulf Coast, which will capture 800000 tons of Cotwo annually.

Jose A. Bayardo: These project awards demonstrate <unk> continued leadership in gas and liquid processing technology and capabilities.

Jose A. Bayardo: Pressure pumping revenues improved on higher pump and blender delivery. Coiled tubing sails increased with the delivery of a new unit, several support trailers, and nitrous, and Wireline improved with strong deliveries into Latin America and the Middle East. The business also posted strong bookings, which improved 71% sequentially, resulting in a 154% book.

Our fiberglass business unit posted flat sequential revenue with improved demand from oil and gas chemical and industrial and marine sectors offsetting declines in revenue from the wastewater sector and if youll handling product sales.

EBITDA improved due to a more favorable sales mix.

Jose A. Bayardo: <unk> remained strong for our fiberglass business and we continue to realize solid growth for multiple countries in the middle East, where we're increasing our capacity to better serve the region.

Jose A. Bayardo: North America, we received an order from an operator for 11000 foot of eight inch composite spool of Voltaire reflects pipe, which is the largest order we have ever received for this product. We continue to make inroads into the semiconductor market and received an order to supply a large tank farm for a major new semiconductor fabrication facility.

Jose A. Bayardo: Despite the softening North American market impacting shorter cycle products like coil tubing strings and aftermarket spares and services, we saw strong demand for capital equipment orders to close out the market. While much of the demand is coming from the Middle East, Latin America, and Asia-Pacific regions, service intensity is only increasing in North America, and wear and tear continues to drive attrition and the need to replace. During the fourth quarter, we booked a replacement DGB frack fleet for a customer in the US and continue to have active discussions with customers regarding additional DGB and e-frack spread. Despite strong orders and backlog, we expect Q1 revenues to decline following the flush year. The Subsea Flexible Pipe Business posted a strong finish to the year with solid revenue growth, healthy EBITDA flow-through, and strong budget. Throughout 2023, the business unit continued to work through some lower margin projects but produced its highest footage of pipe in its history, and our discipline to hold out for better pricing is being rewarded with strong bookings at highly accretive markets. The business unit posted a book to bill of 147%, and we also expect strong bookings in the first quarter.

Jose A. Bayardo: Additionally, we are realizing more opportunities provide our lightweight corrosion resistant bond strand solutions for ballast systems, and Fpss, leaving the business well positioned to capitalize on growing offshore activity.

Our rig technology segment generated revenues of $766 million in the fourth quarter, an increase of $80 million or 12% compared to the third quarter and 24% compared to the fourth quarter of 2022.

The strong growth was primarily the result of large capital equipment deliveries at year end, a higher rate of progress on projects and typical seasonal fourth quarter increase in aftermarket activities.

Jose A. Bayardo: Adjusted EBITDA improved $9 million sequentially, and $21 million year over year to $109 million or 14, 2% of sales.

Jose A. Bayardo: EBITDA flow through was limited by a less favorable sales mix and higher medical workers' comp related costs.

Jose A. Bayardo: New capital equipment orders increased $36 million or 20% sequentially totaling $214 million.

Jose A. Bayardo: Total backlog for the segment at year end was $2 87 billion, an increase of $75 million over the prior year.

Jose A. Bayardo: Solid offshore and international industry fundamentals continue to support the segments aftermarket operations, which has doubled its revenue since the fourth quarter of 2021.

Jose A. Bayardo: Although we still have lower margin projects in our backlog and anticipate a sequentially less favorable mix with lower volumes in the first quarter, we expect the business units' margins to steadily improve throughout the course of 2020. Our XL Systems Conductor Pipe business achieved significant revenue growth during the quarter with strong shipments to both the Gulf of Mexico and offshore West Coast. While we expect a sharp sequential decline in first quarter revenues, we expect the unit's results to improve through 2024 with increasing exploration and development activity in most offshore areas. Our process and flow technologies business experienced a modest drop in revenue after a very strong third quarter from our well stream processing operation.

Jose A. Bayardo: The outlook remains positive with customers continuing to push forward reactivation upgrade and recertification projects, our total value of projects rose another $71 million with the average size per project, increasing 10% sequentially.

Jose A. Bayardo: As customers dig deeper into their stacks for reactivation and as the broader rig fleet continues to age the size and scope of projects continue to increase.

Jose A. Bayardo: This growth in service and repair work more than offset a small decline in spare part bookings were an understandable decline in orders from the U S was mostly offset by increased orders from the middle East and Asia.

Jose A. Bayardo: Continued improvement in on time deliveries from our vendors has enabled better execution from our manufacturing facilities, allowing us to continue to chip away at the backlog of orders in both our spare parts and capital equipment operations and better manage our inventory levels.

A meaningful improvement in casting deliveries from our vendors helped increase our ability and manufacturer key product components contributing to a sizeable increase in shipments of top drives and iron roughnecks for our customers.

Jose A. Bayardo: The outlook for rig capital equipment continues to improve in international and offshore markets, particularly in the middle East where activity is grinding higher driving incremental demand for equipment orders.

Jose A. Bayardo: We're seeing a growing number of opportunities to upgrade rigs in the middle East and North Africa with operators pushing for contractors to update DC rigs to AC power systems and improve mechanization.

Jose A. Bayardo: These project awards demonstrate NOV's continued leadership in gas and liquid processing technology in Cape. Our fiberglass business unit posted flat sequential revenue with improved demand from oil and gas, chemical, industrial, and marine sectors, offsetting declines in revenue from the wastewater sector and in fuel handling products. EBITDOM proved due to a more favorable sales. Demand remains strong for our fiberglass business, and we continue to realize solid growth in multiple countries in the Middle East, where we're increasing our capacity to better serve the region. In North America, we received an order from an operator for 11,000 feet of 8-inch composite spoolable Duraflex pipe, which is the largest order we have ever received for this product.

Jose A. Bayardo: While we expect demand from North America to remain soft until excess equipment capacity in our customers' yards is absorbed.

Jose A. Bayardo: Capitalizing on opportunities to support upcoming drilling projects in Alaska and continued to gain traction in the lower 48 land markets with automation upgrades.

Jose A. Bayardo: Despite the increase in project costs from higher interest rates and inflation the economics of offshore wind remain attractive in many regions of the world outside of North America.

Jose A. Bayardo: We and our customers still see a sizeable shortfall in vessel capacity needed for projects that have been sanctioned and we're continuing to have promising conversations with multiple contractors.

Jose A. Bayardo: While new WT IV orders have been delayed we expect a couple of projects will move forward later this year and we continue to capitalize on other investments required to build out key infrastructure for offshore wind power development.

Jose A. Bayardo: We continue to make inroads into the semiconductor market and received an order to supply a large tank farm for a major new semiconductor fabrication. Additionally, we are realizing more opportunities to provide our lightweight, corrosion-resistant bond strand solutions for ballast systems and FPSOs, leaving the business well-positioned to capitalize on growing offshore assets. Our rig technology segment generated revenues of $766 million in the fourth quarter, an increase of $80 million, or 12% compared to the third quarter, and 24% compared to the fourth quarter of 2022. Strong growth was primarily the result of large capital equipment deliveries at year end, a higher rate of progress on projects, and a typical seasonal fourth quarter increase in aftermarket. Adjusted EBITDA improved $9 million sequentially and $21 million year-over-year to $109 million, or 14.2% of the total. EBITDA flow-through was limited by a less favorable sales mix and higher medical workers comp related costs.

Jose A. Bayardo: During the fourth quarter, we received an order for a large interconnector cable lay system and crane from a key European provider of power transmission cables.

Jose A. Bayardo: The order bookings marks our second order for a large power transmission cable lay vessel further solidifying our position as a leader in providing the key enabling technology and equipment needed for large scale related infrastructure projects and.

Jose A. Bayardo: In addition to our prospects for additional debit WT IV in large transmission cable lay vessel orders. We also see opportunities to build smaller inter array vessels, which will lay cables between wind turbines and feed into larger transmission lines.

Jose A. Bayardo: Looking forward to the first quarter the flushed shipments we delivered in the fourth quarter following supply chain normalization in all three segments combined with an incrementally more cautious outlook for North America will result in a larger than average seasonal drop in the first quarter.

Jose A. Bayardo: We anticipate our legacy completion and production solutions and rig technology segments will see seasonal declines that are in line with our average over the last seven years. However, our legacy Wellbore technologies segment will see a greater than average decline primarily due to extraordinarily strong shipments of high spec drill pipe and MPD capital equipment.

Jose A. Bayardo: New capital equipment orders increased $36 million, or 20% sequentially, totaling $214 million. Total backlog for the segment at year-end was $2.87 billion, an increase of $75 million over the prior year. Solid offshore and international industry fundamentals continue to support the segment's aftermarket operations, which have doubled its revenues since the fourth quarter of 2021. The outlook remains positive, with customers continuing to push forward reactivation, upgrade, and recertification projects. The total value of projects rose another $71 million, with the average size per project increasing 10%.

Jose A. Bayardo: That will not repeat in the first quarter, all of which points to our year over year increase in consolidated first quarter revenues of between 5% to 10%.

Jose A. Bayardo: For our new energy products and services segment, we expect Q1 revenues to improve in the mid single digit percent range year over year with EBITDA flow through in the 30% range.

For our new energy equipment segment, we expect revenues to improve between 8% to 10% year over year with EBITDA flow through in the mid 20% range. We also expect first quarter eliminations and corporate costs to be in line with the first quarter of 2023.

Jose A. Bayardo: For the year, we expect our consolidated company revenues from North America to decrease in the low to mid single digit percent range and our revenues from international markets to grow in the low double digits, resulting in 2020 for full year revenue to improved 4% to 8% year over year. We also expect kantar.

Jose A. Bayardo: Customers dig deeper into their stacks for reactivation, and as the broader rig fleet continues to age, the size and scope of projects continue to grow. This growth in service and repair work more than offsets a small decline in spare part bookings, where an understandable decline in orders from the U.S. was mostly offset by increased orders from the Middle East and Asia. Continued improvement in on-time deliveries from our vendors has enabled better execution from our manufacturing facilities, allowing us to continue to chip away at the backlog of orders in both our spare parts and capital equipment operations and better manage our inventory. A meaningful improvement in casting deliveries from our vendors helped increase our ability to manufacture key product components, contributing to a sizable increase in shipments of top drives, BOPs, and iron roughnecks for our customers.

Jose A. Bayardo: Margin improvement through a combination of improving quality of our backlog and our cost out program to result in full year EBIT <unk> flow through in the mid 30% range with that we will now open the call to questions.

Speaker Change: Thank you ask a question at this time, please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, we ask that you. Please limit yourself to one question and one follow up one moment, while we compile our Q&A roster.

Speaker Change: And our first question comes from the line of Arun Jairam with J P. Morgan Securities. Your line is open. Please go ahead.

Jose A. Bayardo: The outlook for rig capital equipment continues to improve in international and offshore markets, particularly in the Middle East, where activity is grinding higher, driving incremental demand for equipment. We're seeing a growing number of opportunities to upgrade rigs in the Middle East and North Africa, with operators pushing for contractors to update DC rigs to AC power systems and improve mechanization. While we expect demand from North America to remain soft until excess equipment capacity in our customers' yards is absorbed, we're capitalizing on opportunities to support upcoming drilling projects in Alaska and continue to gain traction in the lower 48 land markets with automation. Despite the increase in project costs from higher interest rates and inflation, the economics of offshore wind remain attractive in many regions of the world outside of North America.

Arun Jairam: Yes, good morning, gentlemen, I wanted to get your thoughts on you gave us some outlook comments on <unk>.

Arun Jairam: But clay you mentioned revenue growth for Adobe has been in a really really strong relative to the big three yet margin gains have lagged.

Arun Jairam: And so I wanted to see if you can give us or thoughts on how.

Arun Jairam: Margins could trend.

Arun Jairam: In 2020 forward just given how the revenue uptake has been quite strong and perhaps you can give us a sense of what type of margins do you see in your backlog versus.

What you printed.

Arun Jairam: In 2023, which I think you did a 12, 5% EBITDA margin consolidated in <unk>.

Arun Jairam: Under 12% for the full year.

Yes, it's a good question and I appreciate it obviously.

Jose A. Bayardo: We and our customers still see a sizable shortfall in vessel capacity needed for projects that have been sanctioned, and we're continuing to have promising conversations with multiple contractors. While new WTIB orders have been delayed, we expect a couple of projects will move forward later this year, and we continue to capitalize on other investments required to build out key infrastructure for offshore wind power development. During the fourth quarter, we received an order for a large interconnector cable lay system and crane from a key European provider of power transmission cables.

Arun Jairam: <unk> been very focused on margins and leverage here for quite some time.

<unk> taken a lot of costs out since 2019 and more plan for 'twenty as we get into 2024.

But we faced a lot of headwinds with respect to.

Arun Jairam: Supply chain disruptions more so than I think.

Arun Jairam: Body else in oilfield services.

Along with.

Arun Jairam: With inflation and so a lot of kind of headwinds against our battle.

Arun Jairam: Push margins up Nevertheless, we have made good progress made good progress again in 2023 when margins.

Arun Jairam: First quarter with touch below 10% and finishing up as you pointed out at 12, 5% EBITDA margins in Q4.

Arun Jairam: Looking forward to 2024, we expect that to continue.

Arun Jairam: The normalization of supply chain is going to help a lot.

Arun Jairam: Inflation appears to be coming down a bit at.

Arun Jairam: At least here in the United States and I think that's going to help a lot.

Arun Jairam: We've been adding accretive work to our backlogs.

Jose A. Bayardo: The flush shipments we delivered in the fourth quarter following supply chain normalization in all three segments combined with an incrementally more cautious outlook for North America will result in a larger than average seasonal drop in the first quarter. We anticipate our legacy completion and production solutions and rig technology segments will see seasonal declines that are in line with their average over the last seven years. However, our legacy wellbore technology segment will see a greater-than-average decline, primarily due to extraordinarily strong shipments of high-spec drill pipe and MPD capital equipment that will not repeat in the first quarter. All of which points to a year-over-year increase in consolidated first quarter revenues of between five and ten percent. For the new energy products and services segment, we expect Q1 revenues to improve in the mid single-digit percent range year over year with EBITDA flow-through in the 30% range. For our new energy equipment segment, we expect revenues to improve between 8-10% year-over-year with EBITDA flow-through in the mid-20% range. We also expect first quarter eliminations and corporate costs to be in line with the first quarter of 2023.

Arun Jairam: We ended up with some large frame agreements and things that were signed at the depths of the pandemic.

Arun Jairam: Inflation took a much bigger pull in and so quarter.

Arun Jairam: Quarter by quarter, working through that stuff and so.

Arun Jairam: I think that all points to improving margin performance as we kind of work our way through through 2024. The other part of my answer would be around some of the new products and technologies and things that we have going on.

Arun Jairam: I know very familiar with what we're doing in renewables for instance, with these new products and technology. So there's a lot of and its not terribly material overall, but it does add up a lot of sort of startup costs around things that we're doing and carrying in.

Arun Jairam: For instance, our Keystone a tower systems business very excited about that.

Could be hugely transformational in the wind tower space, but there are quarter by quarter.

Startup costs that we carry with that so.

Arun Jairam: Nevertheless, it's not lost on US, we can do better on leverage and margins very focused on that and.

It all starts with the top line and now we're focused on translating that really strong top line growth that we have been putting up into into better profitability for our shareholders.

Speaker Change: Great My follow up Clay you mentioned that.

Speaker Change: Maybe shedding one to two businesses.

Speaker Change: And you also announced an acquisition of extract I guess after the quarter close maybe just some thoughts on the portfolio repositioning and how does this how.

Operator: For the year, we expect our consolidated company revenues from North America to decrease in the low to mid single-digit percent range and our revenues from international markets to grow in the low double digits, resulting in 2024 full year revenue to improve four to eight percent year over year. We also expect continued margin improvement through a combination of the improving quality of our backlog and our cost out program to result in full year EBITDA flow through in the mid 30%. With that, we'll now open the call to questions. Thank you. To ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Clay C. Williams: These moves impact your thoughts on return of capital later this year increasing that.

Clay C. Williams: Yes, again with stronger are stronger outlook for cash flow in 2024, and much higher conversion rate of EBITDA to free cash flow I think we're going to have more options available to do both.

Clay C. Williams: Turn capital to shareholders as well as act on some interesting opportunities, we see developing out there.

Clay C. Williams: We continually review our portfolio, we continually remained engaged in looking at acquisition opportunities.

Clay C. Williams: But we've actually been pretty quiet on that front I don't think we closed anything in 2023, despite looking at almost three dozen different opportunities.

Arun Jayaram: We ask that you please limit yourself to one question and one follow-up. One moment while we compile our Q&A. And our first question comes from the line of Arun Jayaram with JP Morgan Securities. Your line is open. Please go ahead.

Clay C. Williams: Only one of those are actually two of those translated into.

Clay C. Williams: <unk> extract being one and we expect to close another here a couple of days and what we see there are businesses that fit very very well with us strategically that we can get a good value that are.

Arun Jayaram: Yeah, good morning, gentlemen, I wanted to get your thoughts on, you know, you gave us some Outlook comments on on one cue. But Clay, as you mentioned, revenue growth for NOV has been, you know, really, really strong relative to the big three, yet margin gains have lagged. And so I want to see if you can give us your thoughts on how margins could trend, you know, in 2024, just given how, you know, the revenue uptick has been quite strong, and perhaps you can give us a sense of what type of margins you see in your backlog versus, you know, what you printed in 2023, which I think you did a 12 and a half percent EBITDA margin consolidated in 4 Yeah, it's a good question, Arun, and I appreciate it.

Clay C. Williams: Immediately accretive to EBITDA and cash flow and earnings for our shareholders and then on the other hand, we also have businesses that have been in our portfolio. They are terrific businesses, but frankly might be worth more to someone else than what they are capitalized at given these multiple that makes sense and so so we're looking at the value.

Clay C. Williams: The individual components in our portfolio.

Clay C. Williams: We've got one process underway that we're pretty excited about and.

Clay C. Williams: And we think net net buying low and selling high is good for our shareholders.

Speaker Change: Great. Thanks, a lot.

Speaker Change: You bet. Thanks, Alright.

Speaker Change: Thank you and one moment as we move on to our next question.

And our next question is going to come from the line of Jim Rollyson with Raymond James Your line is open. Please go ahead.

Clay C. Williams: Obviously, we've been very focused on margins and leverage here for quite some time, taking a lot of costs out since 2019, and more planned for 2020 as we get into 2024. But we faced a lot of headwinds with respect to supply chain disruptions more so than I think anybody else in oilfield services, along with inflation. And so a lot of headwinds against our battle to push margins up.

Hey, good morning, guys.

Jim Rollyson: Hi, Jonathan.

Jim Rollyson: If I did my math right from what Jose said on revenue growth and incremental margins.

Jim Rollyson: Kind of implies here.

Jim Rollyson: EBITDA margins for 'twenty for full year somewhere in the mid 12% range to almost a mid 13% range.

Jim Rollyson: Curious.

Jim Rollyson: In the recent past you guys have talked about hitting a 15% EBITDA margin number possibly sometime in 2004 as that paired back maybe because of the kind of what's happening in North America, and not being quite as strong as maybe everyone was thinking here three to six months ago, just kind of curious how you think.

Clay C. Williams: Nevertheless, we've made good progress, and we made good progress again in 2023, when margins, you know, in the first quarter were touched below 10%, and finishing up, as you point out, at 12 and a half percent EBITDA margins in Q4. Looking forward to 2024, we expect that to continue. The normalization of the supply chain is going to help a lot. Inflation appears to be calming down a bit. At least here in the United States.

Jim Rollyson: Margins stepping up between higher margin backlog and obviously the cost moves that you're making as we progress through this year and into next actually.

Speaker Change: Yes, you said 15, I think more accurately we said mid teens, but.

Speaker Change: Incremental <unk> since that call.

Speaker Change: As we were I think pretty clear in our comments. This morning, we're incrementally.

Clay C. Williams: And I think that's going to help a lot. We've been adding creative work to our backlogs; we, you know, ended up with some large frame agreements and things that were signed at the depths of the pandemic that inflation took a much bigger toll on, and so we're, you know, quarter by quarter working through that stuff. And so I think that all points to improving margin performance as we kind of work our way through through 2024. The other part of my answer would be around some of the new products and technologies and things that we have going on. You are very familiar with what we're doing in renewable energy, for instance, with these new products and technologies.

Just a little more cautious on North America now calling for.

Speaker Change: <unk>.

It.

Speaker Change: Expenditure E&P capex to be down in 2020.

Speaker Change: 2024 versus 2023.

Speaker Change: And so thats certainly shading, our view again I'll stress I hope were wrong I hope natural gas fuel some additional drilling here later in the year.

Speaker Change: But that's.

Speaker Change: Certainly.

Speaker Change: Influencing our exit margins at this point, but.

Speaker Change: The thing is Jim we've got a long way to go before we get to the end of the year.

Speaker Change: And.

Speaker Change: We're going to continue to work to maximize margins whatever the market gives us and so that's really our focus.

Clay C. Williams: So there's a lot of, and it's, you know, not terribly material overall, but it does add up a lot of sort of startup costs around things that we're doing and carrying. And, you know, for instance, our Keystone tower systems business. Very excited about that. Could be hugely transformational in the wind tower space.

Speaker Change: Yes.

Speaker Change: Trying to make sure that I was understanding the components there.

Speaker Change: And then just as a follow up you spent a bit of time talking about kind of your edge products on the AI side. It sounds like that's actually gaining quite a bit of traction any.

Speaker Change: A sense of magnitude of how meaningful is that <unk> as a whole and how youre thinking about that from a growth rate perspective, given that yet.

Clay C. Williams: But there are quarter-by-quarter startup costs that we carry with that. So, nevertheless, it's not lost on us; we can do better on leverage and margins, very focused on that. And, you know, it all starts with a top line. And now we're focused on translating that really strong top line growth that we have been putting into better profitability for our shareholders. Great.

Speaker Change: It's a great question because the second half.

Speaker Change: Yes, it's a great question, Jim and I'm very excited about I'm going to steer clear of quantify it just yet these are all new products, we've been introducing some just this past quarter.

Clay C. Williams: My follow-up, Clay, you mentioned that you may be shedding one to two businesses, and you also announced an acquisition of Xtract, I think, after the quarter closed. Maybe some thoughts on the portfolio repositioning and how these moves impact your thoughts on return of capital later this year, increasing that? Yeah.

Reinventing that wheel and what we have come up with is a very robust platform that sort of facilitates the internet of things and edge computing, obviously a lot of interest.

Speaker Change: And that.

Clay C. Williams: Again, our stronger outlook for cash flow in 2024 and a much higher conversion rate of even dollar free cash flow, I think we're going to have more options available to do both, return capital to shareholders as well as act on some interesting opportunities we see developing out there. We continually review our portfolio, we continually remain engaged in looking at acquisition opportunities, but we've actually been pretty quiet on that front. I don't think we closed anything in 2023, despite looking at almost three dozen different opportunities.

Speaker Change: Across the producer space.

Speaker Change: And a lot of application of that platform to products that we offer through several different business units at <unk> and there is a lot more to come in so.

Speaker Change: Within our.

Speaker Change: Drilling world I'm pleased to be celebrated by one of the major middle Eastern National oil companies as I mentioned for streaming data from 100 rigs.

Speaker Change: At a much higher rate than their previous service provider.

Speaker Change: In the completions space, our Maxx completion is gaining a lot of interest amongst pressure pumper and their customers and enabling more optimization.

Clay C. Williams: Only one of those, or actually two of those, translated into acquisitions here, Xtract being one, and we expect to close another here in a couple of days. And what we see there are businesses that fit very, very well with us strategically, that we can get good values for that are immediately accretive to even dollar cash flow and earnings for our shareholders. And then, on the other hand, we also have businesses that have been in our portfolio that are terrific businesses but frankly might be worth more to someone else than what they're capitalized at, given NOV's multiple, if that makes sense. And so we're looking at the value of the individual components in our portfolio, and we've got one process underway that we're pretty excited about. And we think net, net, buying low and selling high is good for our shareholders. Great Thanks a lot.

Speaker Change: Of Frac jobs were also.

Speaker Change: <unk> to improve that product and so.

3500 more than 3500 users now and is growing pretty dramatically and then there are several other areas, where we're we're using that in conjunction with artificial intelligence to.

Speaker Change: Drive better results, so our kaizen drilling optimization program, our new drilling beliefs, and analytics, which has been I think I mentioned above.

Prepared remarks was adopted by a couple of large independents. Shortly after our introduction just a couple of months ago, and so really really pleased with how all of this is going.

Yep understood sounds exciting.

Speaker Change: Thanks, Jim.

Speaker Change: Thank you and one moment as we move onto our next question.

Speaker Change: And our next question comes from the line of <unk> with Goldman Sachs. Your line is open. Please go ahead.

Clay C. Williams: You bet. Thanks, Arun. Thank you. And one moment, as we move on to our next question.

<unk>: Hi, good morning, guys.

James Michael Rollyson: And our next question is going to come from the line of Jim Rollyson with Raymond James. Your line is open. Please go ahead.

Goldman Sachs: Mentioning some divestiture plans.

Goldman Sachs: Can we can we get some more color on what the size of those proceeds could look like and how should we think about the nature of those assets.

James Michael Rollyson: Hey, good morning, guys. If I did, if I did my math right from what Jose said on revenue growth and incremental margins, kind of implies your range of EBITDA margins for 24 full years, somewhere in the mid 12% range to almost the mid 13. Curious, you know, in the recent past, you guys have talked about getting a 15% EBITDA margin number, possibly sometime in 24. Has that been pared back maybe because of what's happening in North America not being quite as strong as maybe everyone was thinking here three to six months ago? Just kind of curious how you think of margins stepping up between higher margin backlog and obviously the cost move that you're making as we progress through this year and into next. Yeah, you said 15.

Speaker Change: We prefer not to disclose anything more other than we think this is prudent.

Speaker Change: <unk>.

Speaker Change: This is a prudent.

Speaker Change: Stewardship of our capital and see an opportunity to kind of reposition.

Speaker Change: Adding a product line and and then capitalizing on the fact that others value in other product line more highly than us and so I'm kind of just going to leave it at that.

Got it.

And then you provided a range for your revenue growth for the full year can you help us understand the drivers of the low and high end there and the subsequent impact on EBITDA should we think about the drivers.

Speaker Change: Yes.

Speaker Change: Hey.

Speaker Change: Yes really.

Speaker Change: The way that we're looking at it yes, I provide the guidance by sort of major region, North America versus international and just to repeat it because I know, it's hard to catch everything that during the course of the call. We said low to mid single digit percent range for North America and for international markets low double digits.

Clay C. Williams: I think more accurately, we said mid-teens. But incrementally, since that call, you know, as we were, I think, pretty clear in our comments this morning, we're incrementally just a little more cautious on North America now calling for EMP and CapEx to be down in 2024 versus 2023. And so that's certainly shading our view. Again, I'll stress, I hope we're wrong.

Speaker Change: So those percentages that I would apply generally across the segments to sort of get to notional range of where we think the revenues will be for each of the three segments and.

Clay C. Williams: I hope natural gas fuels some additional drilling here later in the year, but that's certainly influencing our exit margins at this point. But, you know, the thing is, Jim, we have a long way to go before we get to the end of the year, and we're going to continue to work to maximize margins, whatever the market gives us. And so that's really our focus. Yep, no, I was just trying to make sure that I was understanding the components there.

Speaker Change: Basically those ranges are.

Speaker Change: Bit more optimistic than what we expect will occur in the marketplace from an E&P capex standpoint, so what we're generally saying is that we think we will continue to outpace the rate of global spend due to all the things that clay highlighted related to the technology.

Speaker Change: <unk>, that's continuing to gain more and more traction out there and the positioning that we have frankly in the higher growth regions of the world.

Clay C. Williams: And then just as a follow-up, you spent a bit of time talking about kind of your edge products on the AI side. And it sounds like that's actually gaining quite a bit of traction. Any sense of magnitude of how meaningful that is to NOV as a whole and how you're thinking about that from a growth rate perspective? It's a great question.

Speaker Change: I also said that the EBITDA flow through.

We expect to be in the <unk>.

Speaker Change: Mid 30% range. So a step up from kind of where we are we have been.

Speaker Change: As.

Speaker Change: We continue to get a better quality of mix in our backlog better pricing and also some of the cost saves and the effects of cost savings.

Clay C. Williams: Yeah, it's a great question, Jim. And I'm very excited about I'm going to steer clear of quantifying just yet. These are all new products we've been introducing some just this past quarter. But the approach that we've had for the past few years here has been to develop our Max Edge platform as a corporate resource to enable our business units to develop products off of that. So we're not reinventing that wheel.

Speaker Change: That we've been working diligently to.

Speaker Change: Pushed through the system, so that's sort of it in a nutshell.

Thank you I'll turn it over.

Speaker Change: Thank you. Thanks Ali Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of Doug Baker with capital. One. Your line is open. Please go ahead.

Speaker Change: Thanks.

Clay C. Williams: And what we have come up with is a very robust platform that sort of facilitates the Internet of Things and edge computing. Obviously, there is a lot of interest in that across the producer space, and a lot of application of that platform to products that we offer through several different business units at NOV, and there's a lot more to come. And so, you know, within our, within the drilling world, we were pleased to be celebrated by one of the major Middle Eastern national oil companies, as I mentioned, for streaming data from 100 rigs at a much higher rate than their previous service provider. In the completion space, our max completion is gaining a lot of interest amongst pressure pumpers and their customers and enabling more optimization of frack jobs. We're also continuing to improve that product. And so, you know, 3500, more than 3500 users now, and it's growing pretty dramatically. And then there are several other areas where we're using that in conjunction with artificial intelligence to drive better results.

Doug Baker: Any update on the cost out program to $75 million.

Doug Baker: Any update on how that played into the fourth quarter and expectations as we go through this year.

Speaker Change: Yes, Doug.

Speaker Change: Yes.

Speaker Change: You heard in the commentary.

Speaker Change: In the press release as well.

Speaker Change: The major.

Speaker Change: Initial catalyst.

Speaker Change: For our cost savings program.

Speaker Change: Really.

Speaker Change: We start with the voluntary early retirement program and also the restructuring of.

Of this segment.

Speaker Change: Trucks, or so going from the three segments down to the two segments. So all of that really just happened and just got underway, so very minimal impact from our cost savings efforts.

Speaker Change: Through Q4.

Speaker Change: Expect a little bit in Q1, but really expect to see that gains steam.

Speaker Change: During the remainder of 2020 for another piece of that too is the closure of facility. So we are.

Speaker Change: Just closed a couple of facilities in South America, and Europe, as well and so those savings will be flowing in.

Mid year or so.

Got it and no change to the 75 billion.

Speaker Change: Yes, I think we are on track for that.

Speaker Change: Yes.

Speaker Change: Got it and then.

Clay C. Williams: So our Kaizen drilling optimization program, our new drilling beliefs and analytics, which has been, as I think I mentioned in my prepared remarks, adopted by a couple of large independents shortly after our introduction, just a couple months ago. And so really, really pleased with how all of this is going. Yep, understood. Salute, howdy.

Speaker Change: You mentioned still expect growth in Saudi Arabia.

Speaker Change: Just trying to get any context here have your internal expectations changed.

Speaker Change: Given the renewed.

Speaker Change: And then then just how do you think about 25 or 26%.

Speaker Change: We ended up having fewer jackups working offshore Saudi Arabia.

Speaker Change: Yes, it's a good question, let me caveat my answer by saying I don't certainly don't want to speak on behalf of our good customer <unk>.

James Michael Rollyson: Thanks, Jim. Thank you. And one moment, as we move on to our next question.

Atidrip Modak: And our next question is going to come from the line of Ati Modak with Goldman Sachs. Your line is open. Please go ahead.

Speaker Change: We'll be saying more about this in coming weeks.

Speaker Change: That caveat, what we think and I'll be there week after next.

Atidrip Modak: Hi, good morning, guys. You mentioned some divestiture plans. Can we get some more color on what the size of those proceeds could look like and what we should think about the nature of those asset sales? We would prefer not to disclose anything more other than that we think this is prudent. We think this is prudent stewardship of our capital and see an opportunity to kind of reposition, adding a product line and then capitalizing on the fact that others value another product line more highly than we do. And so I'm kind of just going to leave it at that. Okay, I got it.

Speaker Change: In the Kingdom.

What we think they are referring to is really around probably the idea of SaaS.

Speaker Change: Which is a very large offshore field development that they have not yet need it's north of $20 billion.

Speaker Change: And so it doesn't really impact 2024.

Speaker Change: With respect.

Speaker Change: 2025, and 2026, I think even without <unk>.

Speaker Change: The Kingdom would continue to grow revenues because they continue to press ahead with <unk>.

Development drilling to offset declines of conventional oil wells too.

Jose A. Bayardo: And then you provided a range for your revenue growth for the full year. Can you help us understand the drivers of the low and high ends there and the subsequent impact on EBITDA? How should we think about the drivers? Yeah, hey, Ati. It's Jose.

Speaker Change: Add production to existing offshore fields that they've already.

Speaker Change: To add gas production, which is a critical strategic priority for the kingdom to support domestic gas production and move forward with their unconditional before development and so that all adds up to be I think.

Jose A. Bayardo: Yeah, really, the way that we're looking at, you know, providing the guidance by sort of major region, North America versus international. And just to repeat it, because I know it's hard to catch everything during the course of the call, we said a low to mid single-digit percent range for North America and for international markets, low double digits. And so those are percentages that I would apply generally across the segments to sort of get to a notional range of where we think revenues will be for each of the three segments. And, basically, those ranges are a little bit more optimistic than what we expect will occur in the marketplace from an E&P CapEx standpoint. So what we're generally saying is that we think we will continue to outpace the rate of global spend due to all the things that Clay highlighted related to the technological innovation that's continuing to gain more and more traction out there in the positioning that we have, frankly, in the higher growth regions of the world.

Speaker Change: Region that is going to continue to grow for the next.

Speaker Change: A few years, probably several years, even in the absence of <unk>.

Speaker Change: One or two large offshore fields that get postponed a bit. So we're still very bullish on the outlook for the kingdom and in fact.

Speaker Change: Just yesterday, we won an award for a non metallic liner.

Sure.

Speaker Change: Lined steel tubing business for our tubes scope plant there in the kingdom.

Speaker Change: And really across our portfolio.

Speaker Change: See continued activity supporting all of that other work that's going on there with respect to the Jackups just to level set for everybody.

Speaker Change: Dramatically grown their jackup drilling fleet going from about 50 rigs on up to think about.

Speaker Change: <unk>.

Speaker Change: 78, or 80, or so are turning to the right and then theres another dozen or so.

Speaker Change: That are under contract to come online. So you add all that up it's about 91 jackups up from about 50, not long ago, So big Big step up in drilling activity those are new contracts.

Jose A. Bayardo: Also said that the EBITDA flow through, we expect to be in the mid 30% range. So, a step up from kind of where we have been as we continue to get a better quality of mix in our backlog, better pricing, and also some of the effects of cost savings that we've been working diligently to push through the system. So that's sort of it in a nutshell. Thank you, Alternate Rover. Thank you. And one moment, as we move on to our next question.

Speaker Change: Good rigs were working efficiently I don't know precisely what the announcement.

Speaker Change: It might impact that but at this point, we're all kind of speculating, but nevertheless, we continue to support all those rigs and continue to remain active on.

Speaker Change: Some that are contracted that we're reactivating to put put into that market.

Speaker Change: Thank you very much.

Speaker Change: Okay. Thanks, Thanks, Doug.

Douglas Lee Becker: And our next question is going to come from the line of Doug Becker with Capital One. Your line is open. Please go ahead.

Speaker Change: And one moment as we move on to our next question.

Speaker Change: Our next question is going to come from the line of Kurt <unk> with benchmark. Your line is open. Please go ahead.

Douglas Lee Becker: Thanks. I didn't catch any update on the cost out program, the 75 million. Any update on how that played into the fourth quarter and expectations as we go through it? Yeah, Doug.

Kurt: Hey, good morning, everybody.

Kurt: Good morning, Kurt interesting times as always right.

Kurt: No doubt.

Kurt: Yes, so look I.

Kurt: Your commentary around.

Jose A. Bayardo: Yeah, you know, as you heard in the commentary, and I think in the press release as well, the major initial catalyst for a cost savings program is really the, you know, we start with a voluntary early retirement program and also the restructuring of the segment structure, so going from the three segments down to the two segments. So all of that really just happened and just got underway. So, very minimal impact from our cost savings efforts through Q4. Expect a little bit in Q1, but really expect to see that gain steam during the remainder of 2024. Yeah, another piece of that, too, is the closure of facilities. So we have just closed a couple of facilities in South America and Europe as well. And so those savings will be flowing in a little, you know, mid-year or so. Got it. And there was no change to the $75 million. No, no, I think we're on track. Got it.

Kurt: And to grow with and utilization of that.

Kurt: It's a multiple multiple functions.

Kurt: It really definitely caught my attention and I know that it's still kind of early stages, but.

Kurt: Maybe you've been doing this a long time.

Kurt: The adoption rate what are you what's your sense on the adoption rate as we go forward. It is the industry.

Onboard with this and do you think theyre going to accelerate it.

Kurt: And then couple that with the with the value proposition as you see it evolving.

Speaker Change: Yes, good question Kurt Kurt.

Appreciate it.

Speaker Change: I think the outlook here is really good. It's early days I will stress all of these are new products being introduced but the attention. They are getting is good.

Speaker Change: In fairness, it's a crowded space Theres a lot of people aiming at stuff like this.

Speaker Change: And.

Speaker Change: And it's sort of.

Speaker Change: Sometimes challenging to sort of rise above the competitive field I think in the products that we've introduced though we've got really good traction because we are demonstrating value.

Clay C. Williams: And then, Clay, you mentioned still expect growth in Saudi Arabia. Just trying to get any context here. Have your internal expectations changed given, Unknown Speaker? And then, then just how do you think about 25 or 26 if we end up having fewer jackups working offshore Saudi Arabia? Yeah, it's a good question.

Speaker Change: Number of these we've developed.

Speaker Change: With.

Speaker Change: Customer engineers oil and gas company engineers that have been succumbed to us for a period of time to sit by our developer and say hey add this attract this this is really what I want so it's a lot of a lot of dialogue with our customers around what do you really want and need and how can we add value and I think thats helped.

Helped us land on products that really do add a lot of value the other the other.

Clay C. Williams: Let me caveat my answer by saying I certainly don't want to speak on behalf of our good customer, Ramco, and I think we'll be saying more about this in the coming weeks. With that caveat, what we think, and I'll be there a week after next, in the kingdom, what we think they are referring to is probably the FID of Safinia, which is a very large offshore field development that they have not yet FID'd. It's north of $20 billion. And so it doesn't really impact 2024.

Speaker Change: Thing to think about here is the fact that a lot of these digital products like for instance, our <unk> operating system, which is now operating on something like a 125 rigs globally, both land and offshore. It really provides kind of a digital foundation for follow on sales in rig is a good example.

Speaker Change: Ample both land and offshore.

Speaker Change: <unk> operating system facilitates our new Adam Rts rig automation package that we're now.

Clay C. Williams: With respect to 2025 and 2026, I think even without Safinia, the kingdom would continue to grow revenues because they continue to press ahead with development drilling to offset declines in conventional oil wells, to add production to existing oil wells, and so on and so forth. And so that all adds up to be, I think, a region that is going to continue to grow for the next few years, probably several years, even in the absence of one or two large offshore fields that are postponed a bit. So we're still very bullish on the outlook for the kingdom. And in fact, just yesterday, we won an award for a non-metallic liner-lined steel tubing business for our Tubisco plant there in the kingdom. And really, across our portfolio, we see continued activity supporting all that other work that's going on there.

Speaker Change: Working.

Speaker Change: On a rig in South America offshore.

Speaker Change: We've got a customer will be spud this quarter onshore we've got another one that's using it at their training facility and.

Speaker Change: Really.

Speaker Change: I think is going to be very transformative a lot of interest in this technology.

Speaker Change: By drilling contractors by the operators, who have seen it who say Wow. This is something thats dramatically better and so this digital family of products that we're introducing arent being launched in isolation, they really sort of tie in to our more traditional product lines I think they facilitate future sales in those areas and so there is a lot of pull through.

Speaker Change: That comes with them as well, but on the whole I'd say very proud of what our team has been able to accomplish very robust computing capabilities on the edge and by the way the edge in the oilfields a lot tougher than a lot of other edges around the industrial space because rigs working really remote areas and spotty communications.

Clay C. Williams: With respect to the jackups, just a level set for everybody, they've dramatically grown their jackup drilling fleet, going from about 50 rigs on up to, I think about, 78 or 80 or so that are turning to the right, and then there's another dozen or so that are under contract to come online. So you add all that up, it's about 91 jackups, up from about 50 not long ago.

Speaker Change: They always had been throughout my career and so we've done a lot to address that and and bring the power of big data analytics.

Speaker Change: Artificial intelligence algorithms to oilfield operations, So I think a lot more to come.

Okay.

Speaker Change: Just a follow up just in the context.

Speaker Change: Without putting on and the expansion of the <unk>.

Clay C. Williams: So, big, big step up in drilling activity. Those are new contracts. Good rigs. We're working efficiently. I don't know precisely what their announcement is about or how it might impact that. But at this point, we're all kind of speculating. But nevertheless, we continue to support all those rigs and continue to remain active on some that are contracted that we're reactivating to put into that. Thank you very

Speaker Change: Thanks.

Speaker Change: What do you think they're more likely do it.

Speaker Change: You think theyre going to pause their Newbuild program do you think they're just going to move forward with the Newbuild program and let some of these other rigs roll off contracts, what's your what's your instinct.

Speaker Change: Well Theres two newbuild programs, one is the land rig program, which should be unaffected by that.

Speaker Change: They are working in the offshore.

Speaker Change: We're continuing to execute those rigs very well.

Douglas Lee Becker: Thanks Doug. Thank you and one moment as we move on to our next question. Our next question is going to come from the line of Kurt Hallead with Benchmark. Your line is open. Please go ahead.

Speaker Change: They're operating really well.

Speaker Change: And the other is offshore.

Speaker Change: And a few years ago, they announced their plans to build a total of 20 jackups for the Kingdom.

Speaker Change: Since then they've been constructing a shipyard in Ras al Khair next door to our facility.

Kurt Kevin Hallead: Hey, good morning, everybody. Good morning, Kurt. Transcribed by https://otter.ai, No doubt. Yeah, so look, I give your commentary around, you know, AI and the growth and utilization of that, you know, across multiple, multiple functions. I really, you know, definitely caught my attention. And I know that, you know, still kind of early stages, but, maybe, you've been doing this a long time, Clay, what is the adoption rate? What's your sense on the adoption rate as we go forward? The industry is on board with this, and you think they're going to accelerate it. And then just couple that with the value proposition as you see it evolving. Yeah, good question, Kurt, Kurt, and I appreciate it.

Speaker Change: And I think the.

Speaker Change: Contracting there has been somewhat gated by the progress on that shipyard to execute future work there.

Speaker Change: But for right now I'd say.

The short answer to your question I don't know.

Speaker Change: We're still optimistic they're going to move forward with their plans.

Speaker Change: But but im going to again, let <unk> speak for Aramco of course, yes got it okay. Thanks I appreciate the insight.

Speaker Change: You bet. Thank you.

Speaker Change: Thank you.

Speaker Change: One moment for our last question.

And our last question is going to come from the line of Stephen <unk> with Stifel. Your line is open. Please go ahead.

Hi, Thanks, good morning, everybody.

Stephen: Hi, Steven.

Stephen: So the re segmentation chart Jose do I need a protractor like is this the scale.

Stephen: You might need a magnifying glass on the table.

Clay C. Williams: There are a lot of people aiming at stuff like this, and it's sometimes challenging to sort of rise above the competitive field. I think in the products that we've introduced, though, we've gotten really good traction because we are demonstrating value. A number of these we've developed with customer engineers, you know, oil and gas company engineers that have been seconded to us for a period of time to sit by our developers and say, hey, add this, subtract this, this is really what I want. So we have a lot of dialogue with our customers around what they really want and need and how we can add value. And I think that's helped us land on products that really do add a lot of value. The other thing to think about here is the fact that a lot of these digital products, like for instance, our Novos operating system, which is now operating on something like 125 rigs globally, both land and offshore, it really provides kind of a digital foundation for follow-on sales. And rig is a good example.

But no. The chart is not is obviously not not not to scale.

Stephen: Just wanted to make it really clear as to which business units went into.

Stephen: Which segment so hopefully that's helpful and then with the tables.

Stephen: I wanted to give you guys plenty of data to tune up your model. So five years of pro forma information on the second page of that if you haven't yet gone through that.

Speaker Change: Great its very helpful.

Speaker Change: When we think about.

Speaker Change: The free cash flow expectations, and then just kind of combine that with sort of return on capital plans.

Speaker Change: Should we think I guess two parts to the question one on working capital should we think about that drifting back towards historical.

Speaker Change: Norms and then how do you think about kind of what's going to drive a decision when it's maybe time to accelerate our return of capital program.

Speaker Change: Yes, so from a from a free cash flow.

Speaker Change: And working capital perspective.

Speaker Change: While we are very pleased to finally turned the corner in Q4 and generate really healthy free cash flow I think thats reflective of the potential that we have in 2024 and beyond historically. This company has been low capital intensity business capitalizing on our high capital intensity industry, which tends to lead.

Clay C. Williams: Both land and offshore, our Novos operating system facilitates our new Adam RTX rig automation package that we're now working on a rig in South America offshore. We've got a customer that will be putting it this quarter onshore. We've got another one that's using it at their training facility.

Speaker Change: Two very strong free cash flow and that's our expectations going forward notwithstanding Q1.

Clay C. Williams: And it really, I think, is going to be very transformative, a lot of interest in this technology, not just by drilling contractors, but by the operators who have seen it and say, wow, this is something that's dramatically better. And so this digital family of products that we're introducing aren't being launched in isolation. They really sort of tie in with our more traditional product lines, and I think they will facilitate future sales in those areas. And so there's a lot of pull through that comes with them as well. But on the whole, I'd say I'm very proud of what our team has been able to accomplish. Very robust computing capabilities on the edge.

Which is as you know is almost always a good.

Speaker Change: Cash consumption quarter due to the seasonality of the payments that really impacts us in Q1, so the trajectory of the cash flow use of cash in Q1, and then steady improvement in terms of free cash flow generation through the remaining.

Speaker Change: Three quarters of the year due in part to the improvement in profitability that we've had to date more of that expected into 'twenty four and beyond and then also continued progression in terms of normalizing or working capital. So we finished the year.

Clay C. Williams: And by the way, the edge in the oil field is a lot tougher than a lot of other edges around the industrial space because rigs work in really remote areas, and spotty communications are kind of the norm. They always have been throughout my career, and so we've done a lot to address that and bring the power of big data analytics and artificial intelligence algorithms to oil field operations. And so I think a lot more to come. Okay, just to follow up, just in the context of, you know, the pause that the Saudis are putting on the expansion of the Safinia and Manipa fields, do you think, what do you think they're more likely to do? Do you think they're going to pause their new bill program? Do you think they're just going to move forward with the new bill program and let some of these other rigs roll off contracts? What's your instinct?

Speaker Change: Year at roughly 29% working capital as a percentage of revenue run rate that will take a step back in the first quarter due to what we just talked about and then we should get back to steady improvement and my expectation is the normalization process will take some time.

Speaker Change: But really sort of as we get.

Speaker Change: Into the.

Speaker Change: So at the end of 2024 I would expect.

Speaker Change: Our working capital as a percentage of revenue run rate to improve called one to 200 basis points versus where we are right now and so.

Speaker Change: Put all that together it presents a pretty good picture for free cash flow in 'twenty four.

Clay C. Williams: Well, there are two new build programs. One is the land rig program, which should be unaffected by that. They're working the off in the offshore. And we're continuing to execute those rigs very well and understand they're operating really well. And the other is offshore.

Speaker Change: And as we talked about in the prepared commentary.

We're optimistic about increasing our return of capital as we get further into 2024. So as we've said before first and foremost we wanted to get the balance sheet metrics, where they where they should be.

Clay C. Williams: And a few years ago, they announced their plans to build a total of 20 jackups for the kingdom. Since then, they've been constructing a shipyard in Razzall Care next door to our facility. And I think the contracting there has been somewhat gated by the progress of that shipyard to execute future work there. But for right now, I'd say the short answer to your question is, I don't know. We're still optimistic they're going to move forward with their plans. But I'm going to again, let Ramco speak for himself, of course.

Speaker Change: Were there.

Speaker Change: And then when you get cash balances and more importantly outlook related to resiliency and consistency in terms of our expectations and free cash flow and so we think putting all that together, it's probably mid year type timeframe.

Speaker Change: We really look at.

Speaker Change: Bridging up that return of capital, but thats been ongoing discussion with our board over the last several quarters and it certainly will be over the next few quarters.

Speaker Change: Okay, Great no that's great color. Thank you Jose that's all for me Thanks, David Alright, Thanks, Steven.

Kurt Kevin Hallead: Yeah, got it. Hey, thanks, Clay. Appreciate it. You bet. Thank you. Thank you. And one moment for our last question. And our last question is going to come from the line of Stephen Gengaro with Stiefel. Your line is open. Please go ahead.

Speaker Change: You and I would now like to turn the conference back to Clay Williams for closing remarks.

Clay C. Williams: Thank you Michelle and thanks to all of you for joining US today, we look forward to reviewing our first quarter results in April and hope everyone has.

Stephen David Gengaro: Thanks. Good morning, everybody. Hi Stephen.

Stephen David Gengaro: So the re-segmentation chart, Jose, do I need a protractor? Like, is this to scale? You might need a magnifying glass for the table.

Speaker Change: Nice day, Thank you bye bye.

Jose A. Bayardo: But no, the chart is obviously not to scale. But I just wanted to make it really clear as to which business units went into which segment. So hopefully that's a little bit helpful. And then with the tables, wanted to give you guys plenty of data to tune up your models. So five years of pro forma information on the second page of that if you haven't yet gone through that. That's great.

This concludes today's conference call. Thank you for participating you may now disconnect.

Jose A. Bayardo: It's very helpful. So when we think about free cash flow expectations and then just kind of combine that with sort of return on capital plans, should we think about, I guess, two parts of the question, one on working capital, should we think about that, drifting kind of back towards historical norms? And then how do you think about kind of what's going to drive the decision when it's maybe time to accelerate the return on capital program? Yeah, so from a free cash flow and working capital perspective, first of all, we're very pleased to finally turn the corner in Q4 and generate really healthy free cash flow. I think that's reflective of, you know, the potential that we have in 2024 and beyond.

Speaker Change: [music].

Jose A. Bayardo: Historically, this company has been a low capital intensity business capitalizing on a high capital intensity industry, which tends to lead to very strong free cash flow. And that's what we expect going forward, notwithstanding Q1, which is, as you know, is almost always a good cash consumption quarter due to the seasonality of the payments that really impacts us in Q1. So the trajectory of the cash flow, the use of cash in Q1, and then steady improvement in terms of free cash flow generation for the remaining three quarters of the year, due in part to, you know, the improvement in profitability that we've had to date, more of that expected into 24 and beyond, and then also continued progression in terms of normalizing or working capital. So, you know, we finished the year at roughly 29% working capital as a percentage of revenue run rate. That will take a step back in the first quarter due to what we just talked about, but then we should get back to steady improvement.

Jose A. Bayardo: And my expectation is the normalization process will take some time. But really, sort of as we get into the end of 2024, I would expect our working capital as a percentage of revenue run rate to improve by 1 to 200 basis points versus where we are right now. And so all that together presents a pretty good picture for free cash flow in 24. And as we talked about in the prepared commentary, we're optimistic about increasing our return of capital as we get further into 2024. So, as we've said before, first and foremost, wanting to get the balance sheet metrics where they should be, we're there. Then we need to get cash balances and, more importantly, an outlook related to resiliency and consistency in terms of our expectations for free cash flow.

Jose A. Bayardo: And so we think putting all that together, it's probably a midyear-type time frame where we really look at leveraging up that return of capital. But that's been an ongoing discussion with our board over the last several quarters, and it certainly will be over the next few quarters. Okay, great. No, that's great color.

Stephen David Gengaro: Thank you, Jose. That's all for me. Thanks, Stephen. All right. Thanks, Stephen. Thank you. And I would now like to turn the conference back to Clay Williams for his closing remarks. Thank you, Michelle.

Clay C. Williams: And thanks to all of you for joining us today. We look forward to reviewing our first quarter results in April and hope everyone has a nice day. Thank you. Bye bye.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. [inaudible] , , , , , , , , , , , , , , , , , , , , , Thomas Curran, Clay Williams, Atidrip Modak, Scott Gruber, Luke Lemoine, James Rollyson, Unknown Executive, Arun Jayaram, Blake McCarthy, National Oilwell Varco Inc https://www.youtube.com.uk ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, ladies and gentlemen, and welcome to the NOV fourth quarter and full year 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Amy D'Ambrosio: Later, we will conduct the question and answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Ms. Amy D'Ambrosio, Director of Investor Relations. Madam, please begin.

Amy D'Ambrosio: For a more detailed discussion of the major risk factors affecting our business, please refer to our latest Forms 10-K and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-gap measures. Reconciliations to the nearest corresponding gap measures are in our earnings release available on our. On a US GAAP basis for the fourth quarter of 2023, NOV reported revenues of $2.34 billion and a net income of $598 million, or $1.51 per fully diluted share. For the full year of 2023, revenues were $8.58 billion, and net income was $993 million. Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings. Later in the call, we will host a question and answer session. Please limit yourself to one question and one follow-up to permit more participants. Now, let me turn the call over to you. Thanks Amy.

Speaker Change: [music].

Clay C. Williams: Completing a year in which the company generated $8.6 billion, four-year revenues increased 19% from 2023 versus 2022. Driven by strong offshore and international demand, continued supply chain improvement, and increasing uptake in the new technologies NOV has been introducing. Fourth quarter EBITDA increased to $294 million, or 12.5% of... 30 basis points from the prior quarter and up 140 basis points. For more information, visit www.

Clay C. Williams: FEMA.gov, Despite higher-than-expected sales for the fourth quarter, EBITDA leverage was lighter than expected at 17%, falling short of our forecasts due in part to continuing activity declines in North America and in part to some unexpected charges. Revenues for North American land declined 5% sequentially, hitting our wellbore technology services businesses disproportionately.

Clay C. Williams: Additionally, we had an approximately $20 million impact on EBITDA in the quarter due to the 55% devaluation of the Argentine peso in December, higher US medical costs, and workman compensation. Fourth quarter offshore revenue grew 7% sequentially on large increases in managed pressure drilling, equipment sales, flexible pipe, conductor pipe, and aftermarket spares for offshore. NOB's international land revenues grew by more than 20% on Stronger Shipments of Drill Pipe, Composite Pipe, Stimulation Equipment, and Drilling Equipment for the Middle East. The company's offshore and international revenue strength more than offset North America, leading to consolidated sequential sales growth at $7. Recoverable cash flow improved significantly during the fourth quarter to $301 million. The inflection in free cash flow signaled relief from the supply chain challenges of the first half of 2020, as additional inventory enabled higher flush year-end shipments, including strong double-digit sequential growth for the rig technology segment and spare parts and drilling. 2022 was characterized by a recovery of activity in North America.

Speaker Change: Ladies and gentlemen, and welcome to the N O V fourth quarter and full year 2023 earnings conference call.

Speaker Change: At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this conference is being recorded I would now like to introduce your host for today's conference Ms. Amy Dambrosio director of Investor Relations Ma'am. Please begin.

Clay C. Williams: 2023 saw continuing momentum in offshore and international markets that is underpinning a steady upcycle we believe will continue to unfold over the next several years, Aramco Safanaya plans notwithstanding. Despite postponement of plans to grow production capacity to 13 million barrels per day, we still expect the kingdom to remain quite busy as it drills to stem declines in conventional oil wells and it drills to develop unconventional oil. We expect our revenues in 2024 to continue to rise. Broadly speaking, rising activity and critical global offshore and international markets are leading to purchase. Tools and Kit

Speaker Change: Okay.

Speaker Change: Before we begin I would like to remind you that some of today's comments are forward looking statements within the meaning of the federal securities laws. They involve risks and uncertainty and actual results may differ materially.

Clay C. Williams: Needed for our oilfield customers to execute, develop, and We remain constructive in our global outlook for the next several years because there are so many areas that look so strong. 2023 saw the re-entry of IOC customers into the deep water market after a decade-long hiatus, with several basins seeing renewed energy and focused on exploration like Namibia and Suriname, as well as brownfield developments like Norway, West Africa, and the Gulf of Mexico, and Greenfield developments like Brazil, Guyana, and Australia. Although we view U.S. permitting constraints on further LNG export growth as unwise from an energy security standpoint.

Speaker Change: No one should assume these forward looking statements remain valid later in the quarter or later in the year.

For a more detailed discussion of the major risk factors affecting our business. Please refer to our latest forms 10-K, and 10-Q filed with the Securities and Exchange Commission. Our comments also include non-GAAP measures reconciliations to the nearest corresponding GAAP measures are in our earnings release available on our website.

Speaker Change: On a U S GAAP basis for the fourth quarter of 2023 and of your reported revenues of 2.34 billion and a net income of $598 million or $1.51 per fully diluted share for the full year of 2023 revenues were $8 five $8 billion in net income was 993 million.

Clay C. Williams: Such a move would drive additional calls for LNG production from offshore Australia and Qatar. Increasing offshore activity is tightening the market for floating rigs, leading to a doubling of day rates, with high-spec floaters utilizing sophisticated NOV technologies benefiting the most. Likewise, growing offshore drilling in the Arabian Gulf has materially improved utilization and day rates for. Despite some white space and specific rig contracts popping up in 2024, arising from the completion of older, shorter, well-to-well, our customers are using this idle time to accomplish maintenance and SPS. They also report rising operator interest in longer three to five-year terms. Transcribed by https://otter.ai, given greater visibility in their future. However, we are more subdued in our 2024 outlook for North America.

Our use of the term EBITDA throughout this morning's call corresponds with the term adjusted EBITDA as defined in our earnings release later.

Speaker Change: Later in the call we will host a question and answer session. Please limit yourself to one question and one follow up to permit more participation.

Speaker Change: Now, let me turn the call over to clay.

Clay C. Williams: Thanks, Amy and it'll be continued its strong sales growth through the fourth quarter of 2023 with revenues of $2 $3 billion up 7% sequentially completing a year in which the company generated $8 $6 billion in sales for.

Clay C. Williams: Full year revenues increased 19% from 2023 versus 2022, driven by strong offshore and international demand continued supply chain improvement and increasing uptake in the new technologies and it will be has been introducing to its customers.

Clay C. Williams: Fourth quarter, EBITDA increased to $294 million or 12, 5% of revenue up 30 basis points from the prior quarter and up 140 basis points from the fourth quarter of last year.

Clay C. Williams: The euphoria of 2022 has matured into a phase of consolidation and strict capital discipline in 2023, exacerbated by continued volatility in oil prices. Given the suppressed domestic natural gas, I believe E&P CapEx will likely decline slightly year over year. Nevertheless, North American production will remain vital to global supply and energy security.

Proportionately hard. Additionally, we had an approximately $20 million impact on EBITDA in the quarter due to the 55% devaluation of the Argentine peso in December higher U S medical costs, and Workman compensation insurance accruals.

Clay C. Williams: The expected commissioning of incremental U.S. LNG export capacity in 2025 could spark additional North American gas drilling activity later in the year. Against this market backdrop of growing offshore international markets offset by declining North American, NOV is posting much improved results, driven by projects aimed at reactivating and upgrading offshore rigs and significant uptake of our new advanced technology to meet operators' demands for more efficient operations. There remains room for improvement in our profitability and return profile. We are focused on improving our margins by executing our cost reduction plan and continuing our commitment to improve pricing. NOV's investments in technologies over the past several years have focused squarely on providing solutions that drive improved economics for our customers, utilizing new robotics and digital advancements to expand and enhance our traditional product portfolio. We have very intentionally repositioned ourselves to support future energy investments.

Fourth quarter offshore revenue.

Clay C. Williams: Grew 7% sequentially and large increases in managed pressure drilling equipment sales flexible pipe conductor pipe in aftermarket spares for offshore rigs and obese International land revenues grew by more than 20% sequentially on stronger shipments of drill pipe composite pipe stimulation equipment and drilling equipment for the middle East the companies.

Offshore and international revenue strength more than offset North America, leading to consolidated sequential sales growth of 7%.

Clay C. Williams: Free cash flow improved significantly during the fourth quarter to $301 million.

Clay C. Williams: Collection and free cash flow signaled relief from the supply chain challenges of the first half of 2023 as additional inventory enabled higher flush yearend shipments, including strong double digit sequential growth for the rig technology segment and spare parts and drilling equipment.

Clay C. Williams: While 2022 was characterized by the recovery of activity in North America, 2023 saw continuing momentum in offshore and international markets that is underpinning.

Clay C. Williams: With continued traction in North America and the Middle East, our edge compute, edge to cloud, and cloud-based solutions are equipping drilling intervention and completions with more information to make better decisions. The fourth quarter saw two independents adopt our new artificial intelligence edge compute technology to identify critical downhole events. Transcription by https://otter.ai, from a dozen drilling contractors to enable its big data scientists and algorithms to identify and act on opportunities to improve performance. Our completions customers are also seeing the benefits of real-time interaction with aggregated field data. We ended the year with more than 3,500 active users of our remote monitoring tools for completion operations, up 70% compared to the first half of 2020, and we are introducing new frac monitoring capabilities through our MaxEdge platform this year.

Clay C. Williams: The steady upcycle, we believe will continue to unfold over the next several years Aramco Sophonias plans notwithstanding despite postponement of plans to grow production capacity to 13 million barrels per day, we still expect the kingdom to remain quite busy as it drills to stem declines in conventional oil wells and it drills to develop unconventional gas we expect our.

Clay C. Williams: Revenues in 2024, there to continue to grow.

Clay C. Williams: <unk> speaking rising activity in critical global offshore and international markets is leading to purchases of the tools and kit needed for our oilfield customers to execute development plans, we remain constructive in our global outlook over the next several years because there's so many areas that look so strong 2023 saw the reentry of IOC customer.

Clay C. Williams: For us into the deepwater market after a decade long hiatus with several basins seeing renewed energy and focus on exploration like Namibia and Suriname.

<unk> field developments like Norway, West Africa, and the Gulf of Mexico, and Greenfield developments like Brazil, Guyana in Australia, Although we view U S permitting constraints on further LNG export growth as unwise from an energy security standpoint.

Clay C. Williams: Overall fourth quarter max edge product revenue more than tripled versus the fourth quarter of 2020. NOB's proprietary wire drill pipe high speed data delivery system has seen widespread adoption in the North Sea over the past few years, and now a major NOC in the Middle East is reporting 30% improvement in well placement on its pilot wells drilled last year, significantly improving well economics.

Clay C. Williams: Such a move would drive additional calls on LNG production from offshore Australia, and Qatar in our view.

Clay C. Williams: Creasing offshore activity is tightening the market for floating rigs leading to a doubling of day rates with high spec floaters utilizing sophisticated Adobe technology is benefiting the most.

Likewise growing offshore drilling in the Arabian Gulf has materially improved utilization and day rates for Jackups. Despite some white space and specific rig contracts popping up in 2024 arising from the completion of older shorter well to well contracts. Our customers are using this idle time to accomplish maintenance and Sps surveys. They also report rising operator.

Clay C. Williams: <unk> and longer three to five year term contracts. This bodes well for future <unk> rig technology demand as customers can achieve payback on incremental capex upgrades on their rigs given the greater visibility in their future utilization.

Clay C. Williams: We are more subdued in our 2020 for outlook for North America.

Clay C. Williams: For year 2022 has matured into a phase of consolidation and strict capital discipline in 2023 exacerbated by continued volatility in oil prices and depressed domestic natural gas prices I believe E&P capex will likely decline slightly year over year. Nevertheless, North America production will remain vital to global supply and energy security.

Clay C. Williams: Better drilling performance enabled by NOV's cutters drove significant market share gains in drill in several regions throughout 2020, and revenue from new downhold tools grew 27% sequentially. Our new Positrack Torsional Vibration Mitigation Tool completed its 100th run during the quarter, enabling a doubling of the rate of penetration for a customer in Indonesia, where our new Agitator ZP Friction Reduction Tools are enabling operators to move to three-mile laterals in the Permian.

Clay C. Williams: The expected commissioning of incremental U S. LNG export capacity in 2025 could spark additional north American gas drilling activity later in the year to prove me wrong.

Clay C. Williams: Against this market backdrop of growing offshore international markets offset by declining North American activity.

Clay C. Williams: Bits, motors, and NWD failures are the leading causes of expensive, unplanned trips for horizontal drilling, which has led many E&P operators to rent this equipment directly from NOV because of our exceptional reliability and performance, rather than delegate the supply of this to their directional drillers as they have traditionally done. NOV is very, very well positioned for performance drilling. Similarly, in high-temperature basins like Hainesville and Eagle Ford, we are receiving repeat orders for our Tubiscope TK340TC coating, which insulates drill pipe, and our Tundra Maxx mudchiller to help reduce downhole temperatures that can damage downhole electronics.

Clay C. Williams: Posting much improved results driven by projects aimed at reactivating and upgrading offshore rigs and significant uptake of our new advanced technology to meet operators demands for more efficient operations. There remains room for improvement in our profitability and return profile. We are focused on improving our margins by executing our cost reduction plan and continuing our commitment to improved pricing.

Clay C. Williams: Where we can and <unk> investments in technologies over the past several years have focused squarely on providing solutions that drive improved economics for our customers utilizing new robotics and digital advancements to expand and enhance our traditional product portfolio. We.

We have very intentionally reposition ourselves to support future energy investments of all kinds with continued traction in North America, and the middle East our edge compute edge to cloud and cloud based solutions are equipping drilling intervention in completions operators on the front lines with more information to make better decisions. The fourth quarter saw two independence adopt our new <unk>.

Clay C. Williams: Again, operators are buying directly from NOV and are reporting fewer equipment failures and improved cost savings. Leveraging our existing expertise in harsh environment drilling, we are addressing the high-temperature hard rock challenges faced in the growing geothermal industry. NWD Tools, Composite Pipe, Liner Hangers, and Corrosion Resistant Pipeliners combat the tough challenges faced in geothermal wells. And we've seen strong demand, particularly in years past. Oil and gas producers are committed to reducing the environmental impact of their operations. NOV's proprietary InnovaTherm cuttings treatment technology is seeing strong demand, particularly in areas like Angola and the Arabian Gulf, which are tightening drill cuttings discharge requirements. Treating drill cuttings on the rig reduces the high CO2 footprint associated with shipping them to shore. Operators are also demanding drilling contractors cut CO2 emissions, driving interest in NOV's new PowerBlade and Maestro engine management technology.

Clay C. Williams: Artificial intelligence edge compute technology to identify critical downhole events like washouts hours earlier than traditional methods. We're also seeing gains in our one click cloud data delivery and our new high frequency data services in December <unk> celebrated by major NOC for providing high speed data streaming from over 100 rigs.

Clay C. Williams: From a dozen drilling contractors to enable its big data scientists and algorithms to identify and act on opportunities to drive better efficiency.

Clay C. Williams: Our completions customers are also seeing the benefits of real time interaction with aggregated field data. We ended the year with more than 3500 active users of our remote monitoring tools for completion operations up 70% compared to the first half of 2023, and we are introducing new frac monitoring capabilities for IMAX edge platform. This year overall fourth quarter <unk>.

Clay C. Williams: Committing to a cleaner future, operators are applying their expertise to carbon capture and storage and using NOV's deep experience in this area. We secured the dehydration package for a large carbon capture and storage project in Louisiana aimed at reducing emissions from industrial processes, and we are pursuing several additional CCUS opportunities. Sustained investments in new products and technologies help drive our strong top line results. This fourth quarter 2023 revenues have increased nearly 90% from the first quarter of 2021 low, which compares to the big three average of about 60% over the same time period, equating to approximately 26% compound annual growth rate for NOV versus 19% for the big three. And we believe we have room to run as more EMPs try wire drill pipe, max-edge compute solutions, AI-powered optimization software, and more sophisticated drilling tools and robotics.

Clay C. Williams: <unk> product revenue more than tripled versus the fourth quarter of 2022.

Clay C. Williams: <unk> proprietary wire drill pipe high speed data delivery system has seen widespread adoption in the north sea over the past few years and now a major NOC and the middle East is reporting 30% improvement in well placement on its pilot drilled last year significantly improving well economics strong results arising from better data prompted another Arabian Gulf operator to spud with the technology.

Clay C. Williams: A few days ago with several others planning to adopt the technology in a region. Later this year. We believe we are pioneering a new and better way to drill wired drill pipe technology combined with Nov's, new managed pressure drilling offering will provide unprecedented control and performance and I believe this technology will become standard in the offshore arena in coming decades.

Clay C. Williams: Better drilling performance enabled by Nov's cutters drove significant market share gains in drill bits in several regions throughout 2023 and revenue from new downhole tools grew 27% sequentially, our new positive track torsional vibration mitigation tool completed its 100th run during the quarter, enabling a doubling of rate of penetration for <unk>.

Clay C. Williams: We expect our adaptation to the reality of the industry and the strong results these technologies provide will continue to drive an improving top line. As part of NOV's repositioning of its product portfolio, we also continue to review and optimize our shareholders' capital employed across the portfolio. We expect to divest one or possibly two businesses in the coming year and redeploy capital into higher-performing opportunities like electrical submersibles, which we added this week through an acquisition. Additionally, we expect that improved cash flows in 2024 following supply chain normalization will enable us to increase our return of capital to shareholders. NOV is well-positioned to capitalize on the world's need to invest in energy. We have a lot of work ahead of us, and I'm grateful for NOV's team and their extraordinary professionalism, their intense focus on the critical needs of our customers, the creativity and innovation they apply to technology to meet those needs, and, above all, their ability and willingness to get the job done. Many thanks to all of you. With that, I will turn it over to you. Thank you, Clay.

Clay C. Williams: And Indonesia, where our new agitators EEP friction reduction tools are enabling operators to move to three mile laterals in the Permian bits Motors, and then WD failures of the leading causes of expensive unplanned trips for horizontal drillers, which has led many many E&P operators to rent this equipment directly from <unk> because of our exceptional reliability and performed.

Clay C. Williams: It's rather than delegate the supply of these to their directional drillers as they have traditionally done very.

Clay C. Williams: Very well position and performance drilling sector for future share gains.

Clay C. Williams: Similarly in high temperature basins like the Haynesville and Eagle Ford, we are receiving repeat orders for our <unk> Teekay $3, 40, Tc coding, which insulates drill pipe and our tundra Max mud chiller to help reduce downhole temperatures that can damage downhole electronics again operators are buying directly from <unk> and our reporting fewer equipment failures and improve.

Clay C. Williams: <unk> cost savings as a result.

Clay C. Williams: Leveraging our existing expertise in harsh environment drilling we are addressing the high temperature hard rock challenges faced in the growing geothermal market.

Clay C. Williams: Portfolio of drill bits and WD tools composite pipe liner hangers, and corrosion resistant pipeline or as combat the tough challenges faced in geothermal wells and we've seen strong demand, particularly in Europe.

Jose A. Bayardo: NOB's consolidated revenues for the fourth quarter totaled $2.34 billion, and revenues for the full year 2023 totaled $8.58, an increase of 19% or 1.35 billion from 2020. EBITDA increased 10% sequentially to $294 million, or 12.5%. Clay mentioned flow-through was limited in part due to larger-than-anticipated year-end adjustments to our medical and workers' comp accruals and the devaluation of the Argentine pay-as-you-go system. For the full year, EBITDA increased 47% to $1 billion, or 11.7%. During the fourth quarter, we recorded $55 million in other items, primarily related to a voluntary early retirement.

Clay C. Williams: Oil and gas producers are committed to reducing the environmental impact of their operations Nov's proprietary <unk> cuttings treatment technology is seeing strong demand, particularly in areas like Angola, and the Arabian Gulf, which are tightening drill cuttings discharge requirements treating drill cuttings on the rig reduces the high cotwo footprint associated with shipping these to shore.

Operators are also demanding drilling contractors cut cotwo shins.

Clay C. Williams: Driving interest in <unk>, new power blade and Maestro engine management technologies.

Clay C. Williams: Committing to a cleaner future operators are applying their expertise to carbon capture and storage in using nov's deep experience in this area as well.

Clay C. Williams: We secured the dehydration package for a large carbon capture and storage project in Louisiana aimed at reducing emissions from industrial processes and we are pursuing several additional <unk> opportunities our sustained investments in new products and technologies helped drive our strong top line results as fourth quarter 2023 revenues have increased nearly 90% from the first quarter.

Jose A. Bayardo: Additionally, NOV's effective tax rate was favorably impacted by the release of $485 million in valuation alone. Resulting from the company's assessment of the carrying value of its deferred tax assets and future projections of taxable income, we estimate that our tax rate for 2024 will be approximately 26%. Cash flow from operations totaled a healthy $377 million in the fourth quarter, supported by a reduction in working capital, but partially offset by $42 million in cash severance charges associated with the Voluntary Early Retirement Program and other restructuring-related programs. Capital expenditures totaled $76 million in the fourth quarter and when netted against cash flow from operations, resulted in $301 million in free cash. During 2024, we expect to generate free cash flow in excess of 50% of EBITDA with a seasonal use of cash in the first quarter and steadily improving cash flow to the remainder. The Capital Allocation Hierarchy remains the same as ever.

Clay C. Williams: <unk> of 2021, low which compares to the big three average of about 60% over the same time period equating to approximately 26% compound annual growth rate for <unk> versus 19% for the big three.

Clay C. Williams: And we believe we have room to run as more e&ps try wire drill pipe Max edge compute solutions AI powered optimization software and more sophisticated drilling tools and robotics, we expect our adaptation to the reality of the industry and the strong results. These technologies provide we will continue to drive improving top line results.

As part of <unk> repositioning of its product portfolio. We also continue to review and optimize our shareholders' capital employed across the portfolio, we expect to divest one or possibly two businesses in the coming year and redeploy capital into higher performing opportunities like electrical submersible pumps, which we added this week through an acquisition.

Clay C. Williams: Additionally, we expect that improved cash flows in 2024 following supply chain normalization will enable us to increase our return of capital to shareholders in the coming year and some <unk> is well positioned to capitalize on the world's need to invest in energy of all forms.

Jose A. Bayardo: First and foremost, we prioritize compelling organic investment, which historically provides us with the greatest risk weighted return. Clay discussed the new products that we've recently introduced are gaining rapid adoption in the market, and we plan to accelerate our build out of these. As a result, we expect to increase our capital expenditures in 2024 to approximately $330 million. We continue to take a portfolio management approach to capital allocation, and we'll invest in businesses at compelling valuations where we can leverage our core competencies, manufacturing capabilities, global distribution infrastructure, digital platforms, and world-class R&D. An example of this is the very recent acquisition of X-TRACT, a leading provider of artificial lift technologies in the service industry.

Clay C. Williams: A lot of work ahead of us and I'm grateful for Nov's team and they are extraordinary professionalism their intense focus on the critical needs of our customers the creativity and innovation they apply to technology to meet those needs and above all their ability and willingness to get the job done. Many thanks to all of you who are listening.

Clay C. Williams: With that I will turn it over to Jose Thank you clay Nov's consolidated.

Jose A. Bayardo: Elevated revenues for the fourth quarter totaled $2 $3 4 billion and revenues for the full year 2023 totaled 858 billion, an increase of 19% or 135 billion from 2022.

Jose A. Bayardo: EBITDA increased 10% sequentially to $294 million or 12, 5% of sales as clay mentioned.

Jose A. Bayardo: <unk> flow through was limited in part due to larger than anticipated year end adjustments to our medical and workers comp accruals and the devaluation of the Argentine peso.

Jose A. Bayardo: We'll also look to divest businesses where we are not the best owner and, as Clay mentioned, plan to do so for one to two businesses in 2019. With the cash flow guidance I provided, it's also worthwhile to reiterate Clay's previous comments that we remain committed to returning excess capital to our shareholders and that we anticipate being able to increase the return of capital later this year. Next, I'll walk through our historical segment results and provider outlook based on our new segment structure: Energy Products and Services, and Energy Equipment.

Jose A. Bayardo: Cash flow from operations totaled a healthy $377 million in the fourth quarter supported by a reduction in working capital, but partially offset by $42 million in cash severance charges associated with the voluntary early retirement program and other restructuring related actions cap.

Jose A. Bayardo: To help investors understand the change and update their models, we've provided a diagram illustrating the changes in our reporting segments and five years of pro forma financial data on our investor relations website and in an 8K we filed this morning. Moving on to segment, Our wellbore technology segment generated $824 million in revenue during the fourth an increase of 25 million or 3% compared to the third quarter and 8% compared to the fourth quarter of 2022. Exceptionally strong year-end shipments of drill pipe and managed pressure drilling equipment, along with healthy drilling activity levels in international and offshore markets, more than offset a softening North American market. EBITDA was $160 million, or 19.4% of... Soft flow through due to a less favorable mix and operations that were disproportionately affected by the increase in employee benefit costs and the devaluation of the Argentine, Our downhole tools business reported a modest increase in revenue and even, Strong year-end drilling motor and fishing tool packages sales into Asia and Sub-Saharan Africa, along with higher rental activity and service equipment sales in the Middle East, drove a solid increase in Eastern Hemisphere revenues, while sales in North America decreased 1 percent against a 4 percent decline in drilling. Our MD Totco business posted a high single digit revenue increase to achieve another quarterly record high revenue. The sequential increase was primarily due to growth from its core drilling surface data system sales and rentals, driven by strong activity in the Middle East and Foreign. Surface data system runnels remain stable in North America, despite the lower.

Jose A. Bayardo: Capital expenditures totaled $76 million in the fourth quarter and when netted against cash flow from operations resulted in $301 million in free cash flow. During 2024, we expect to generate free cash flow in excess of 50% of EBITDA with a seasonal use of cash in the first quarter and steadily improving cash flow through the remainder of the year.

Jose A. Bayardo: As a result, we expect to increase our capital expenditures in 2024 to approximately $330 million.

Jose A. Bayardo: Official lift technologies and services will also look to divest businesses, where we're not the best owner and as Clay mentioned plan to do so for one or two businesses in 2024.

Jose A. Bayardo: First I'll walk through our historical segment results and provide our outlook based on our new segment structure energy products and services and energy equipment.

Jose A. Bayardo: Revenues from our EVOLV wired drill pipe drilling optimization services decreased slightly due to the early completion of two North Sea projects, which we expect will resume in early 2020. Further expansion of e-valve wired drill pipe services and the accelerating rate of adoption of our max products further underscores NOV's continued success in developing industry-leading digital solutions that Clay. Our Reid Heikkilaug drill bit business posted a mid-single-digit percent sequential decrease in revenues during the fourth quarter, largely due to softening drilling activity in North America. After three quarters of growing U.S. revenues through market share gains, the 20% year-on-year decline in drilling activity finally prevented the unit's revenues from growing. Despite the challenges in North America, the business partially offset these declines with solid gains in several Middle Eastern countries, including Turkey, Qatar, and Kuwait. Additionally, the business expects to return to its growth trajectory in the first quarter with a rebound in Canadian drilling activity and continued strength in the Middle East and North Africa. Our Cubiscope Pipe Inspection and Coding Business realized a low single-digit sequential decrease in revenue during the four.

Jose A. Bayardo: Exceptionally strong year end shipments of drill pipe and managed pressure drilling equipment, along with healthy drilling activity levels in the international and offshore markets more than offset a softening north American market.

EBITDA was $160 million or 19, 4% of revenue with soft flow through due to a less favorable mix and operations that were disproportionately affected by the increase in employee benefit costs and the devaluation of the Argentine peso.

Jose A. Bayardo: Cent decline in drilling activity.

Our <unk> business posted a high single digit revenue increase to achieve another quarterly record high revenue level. The sequential increase was primarily due to growth from its core drilling surface data system sales and rentals driven by strong activity in the middle East and far east surface data system rentals remained stable in North America. Despite.

Jose A. Bayardo: The lower rig count.

Jose A. Bayardo: Transcription sponsored by Transcription Outsourcing, LLC. Revenue from the unit's coating operation declined due to lower sleeve shipments and lower pipe coating volumes in the Eastern Hemisphere, partially offset by improved activity in the Middle East and Mexico. Despite lower drilling activity, U.S. coating revenues and volumes were flat, and backlog remained strong. Our GrantPrideCo jewel pipe business realized strong top-line growth with flush shipments following supply chain normalization, permitting the unit to achieve its highest revenue level since the first quarter of 2015. A more favorable offshore and international sales mix that drove average pricing higher also contributed to the sequential. New orders increased sharply from low levels in the third quarter and were weighted toward offshore and western hemisphere customers.

After three quarters of growing U S revenues through market share gains the 20% year on year decline in drilling activity finally prevented the units revenues from grinding higher.

Despite the challenges in North America, the business, partially offset these declines with solid gains in several middle eastern countries, including Turkey, Qatar and Kuwait.

Additionally, the business expects to return to its growth trajectory in the first quarter with a rebound in Canadian drilling activity and continued strength in the middle East and North Africa.

Jose A. Bayardo: Unfortunately, the strong bookings take a few quarters to convert into revenue, and we expect lower volumes and a less favorable sales mix to result in a sharp revenue decline in the first quarter for Grant Pride. Our well site services business delivered strong sequential growth and revenue during the fourth quarter, driven by sizable year-end shipments of managed pressure drilling equipment and strong demand for our solids control. Revenue gains were partially offset by currency devaluation and reduced solids control activity in Latin America.

Jose A. Bayardo: Our tube ESCO pipe inspection and coating business realized a low single digit sequential decrease in revenue during the fourth quarter.

Jose A. Bayardo: Inspection revenues were impacted by the continued rig activity declines in North America, the currency devaluation in Argentina, and a decrease in product sales in the far east partially offset by improved activity in Mexico, Europe Middle East revenue from the unit's coating operation declined on lower sleeve shipments and lower pipe coating volumes in the eastern.

Jose A. Bayardo: Hemisphere, partially offset by improved activity in the middle East and Mexico.

Jose A. Bayardo: Despite lower drilling activity U S coating revenues and volumes were flat and backlog remains strong.

Jose A. Bayardo: While the strong capital equipment deliveries are not expected to repeat in the first quarter, we expect strong sales for both our solids control and MPD offerings to return later in the year in key offshore markets, including Brazil, Mexico, and Guyana, as well as in strategic international land markets such as Mexico. Our completion of production solution segment generated revenue of $803 million in the fourth quarter of 2020. 6% sequential increase and a 9% improvement compared to the fourth quarter of 2022. EBITDA was 86 million, or 10.7% of sales, representing a healthy flow through a 44% compared to the third. We continue to see strong demand from international and offshore markets pushing orders up 28% sequentially to $676 million, representing a book-to-bill of 132% and the highest level of orders since 2014. Backlog at year-end was 1.82 billion, up 12% sequentially and 14% year-over-year.

Jose A. Bayardo: A more favorable offshore and international sales mix that drove average pricing higher also contributed to the sequential growth.

Jose A. Bayardo: New orders increased sharply from low levels in the third quarter and were weighted towards the offshore in western hemisphere customers. Unfortunately, the strong bookings take a few quarters to convert into revenue and we expect lower volumes and a less favorable sales mix to result in a sharp revenue decline in the first quarter for our grant <unk> business.

Jose A. Bayardo: Our intervention and stimulation equipment business posted an upper single-digit sequential increase in revenue with solid EBITDA flow. The unit benefited from flush year-end deliveries in all major product lines following supply chain normals. Pressure Pumping Revenues Improved on Higher Pump and Blender Delivery. Coiled tubing sales increased with the delivery of a new unit, several support trailers, and nitrous, and Wireline improved with strong deliveries into Latin America and the Middle East. The business also posted strong bookings, which improved 71% sequentially, resulting in a 154% increase in bookings.

Jose A. Bayardo: EBITDA was $86 million or 10, 7% of sales representing a healthy flow through of 44% compared to the third quarter.

Jose A. Bayardo: We continue to see strong demand from international and offshore markets, pushing orders up 28% sequentially to $676 million representing.

Representing a book to bill of 132% and the highest level of orders since 2014 backlog at year end was $1 eight 2 billion up 12% sequentially and 14% year over year.

Jose A. Bayardo: The business also posted strong bookings, which improved 71% sequentially, resulting in a 154% book to bill despite.

Jose A. Bayardo: While much of the demand is coming from the Middle East Latin America, and Asia Pacific regions service intensity is only increasing in North America, and the wear and tear continues to drive attrition and the need to replace equipment.

Jose A. Bayardo: The Subsea Flexible Pipe Business posted a strong finish to the year with solid revenue growth, healthy EBITDA flow-through, and strong... Throughout 2023, the business unit continued to work through some lower-margin projects but produced its highest footage of pipe in its history, and our discipline to hold out for better pricing is being rewarded with strong bookings at highly accretive margins. The business unit posted a book to bill of 147%, and we also expect strong bookings in the first.

Jose A. Bayardo: Despite strong orders and backlog, we expect Q1 revenues to decline following flush year end shipments.

<unk> accretive margins the business unit posted a book to Bill of 147% and we also expect strong bookings in the first quarter, although we still have lower margin projects in our backlog and anticipate a sequentially less favorable mix with lower volumes in the first quarter, we expect the business unit's margins to steadily improve throughout the course of 2024.

Jose A. Bayardo: <unk>.

Jose A. Bayardo: Despite the decline in revenues, margins improved slightly with higher margin backlog continuing to displace less favorable projects. Bookings increased 29% sequentially and included orders for a monoethylene glycol module and a sulfate removal unit for projects in the North. Additionally, we were awarded a contract to provide a CO2 dehydration package for a supermajors carbon capture and storage project on the Gulf Coast, which will capture 800,000 tons of CO2 and demonstrate NOV's continued leadership in gas and liquid processing technology and capability. Our fiberglass business unit posted flat sequential revenue with improved demand from oil and gas, chemical industrial, and marine sectors, offsetting declines in revenue from the wastewater sector and in fuel handling products EBITDOM proved due to a more favorable sales. Demand remains strong for our fiberglass business, and we continue to realize solid growth for multiple countries in the Middle East, where we're increasing our capacity to better serve the region. In North America, we received an order from an operator for 11,000 feet of 8-inch composite spoolable Duraflex pipe, which is the largest order we have ever received for this product.

Jose A. Bayardo: Module and a sulfate removal unit four projects in the North Sea. Additionally.

Additionally, we were awarded a contract to provide a cotwo hydration package for a super majors carbon capture and storage project on the Gulf Coast, which will capture 800000 tons of Cotwo annually.

Jose A. Bayardo: These project awards demonstrate <unk> continued leadership in gas and liquid processing technology and capabilities.

Jose A. Bayardo: Our fiberglass business unit posted flat sequential revenue with improved demand from oil and gas chemical and industrial and marine sectors offsetting declines in revenue from the wastewater sector and in fuel handling product sales EBITDA improved due to a more favorable sales mix demand remains strong for our fiberglass business and we continue to <unk>.

Jose A. Bayardo: Realized solid growth from multiple countries in the middle East, where we're increasing our capacity to better serve the region.

North America, we received an order from an operator for 11000 foot of eight inch composite spool of bolt or flex pipe, which is the largest order we have ever received for this product. We continue to make inroads into the semiconductor market and received an order to supply a large tank farm for a major new semiconductor fabrication facility. Additionally.

Jose A. Bayardo: We continue to make inroads into the semiconductor market and received an order to supply a large tank farm for a major new semiconductor fabrication. Additionally, we are realizing more opportunities to provide our lightweight, corrosion-resistant bond strand solutions for ballast systems and FPSOs, leaving the business well-positioned to capitalize on growing offshore assets. Our rig technology segment generated revenues of $766 million in the fourth quarter, an increase of $80 million, or 12% compared to the third quarter, and 24% compared to the fourth quarter of 2022. Strong growth was primarily the result of large capital equipment deliveries at year end, a higher rate of progress on projects, and a typical seasonal fourth quarter increase in aftermarket. Just EBITDA improved $9 million sequentially and $21 million year-over-year to $109 million, or 14.2% of the total. EBITDA flow through was limited by a less favorable sales mix and higher medical workers comp related costs.

Jose A. Bayardo: We are realizing more opportunities provide our lightweight corrosion resistant bond strand solutions for ballast systems, and Fpss, leaving the business well positioned to capitalize on growing offshore activity.

Jose A. Bayardo: Our rig technology segment generated revenues of $766 million in the fourth quarter, an increase of $80 million or 12% compared to the third quarter and 24% compared to the fourth quarter of 2022.

Jose A. Bayardo: The strong growth was primarily the result of large capital equipment deliveries at year end.

Jose A. Bayardo: Higher rate of progress on projects and typical seasonal fourth quarter increase in aftermarket activities adjust.

Jose A. Bayardo: Adjusted EBITDA improved $9 million sequentially, and $21 million year over year to $109 million or 14, 2% of sales.

Jose A. Bayardo: EBITDA flow through was limited by a less favorable sales mix and higher medical workers' comp related costs.

Jose A. Bayardo: New capital equipment orders increased $36 million, or 20% sequentially, totaling $214 million. Total backlog for the segment at year-end was $2.87 billion, an increase of $75 million over the prior year. Solid Offshore and International Industry Fundamentals continue to support the segment's aftermarket operators, which have doubled their revenues since the fourth quarter of 2021. The outlook remains positive, with customers continuing to push forward reactivation, upgrade, and recertification projects. The total value of projects rose another $71 million, with the average size per project increasing 10%.

Jose A. Bayardo: New capital equipment orders increased $36 million or 20% sequentially totaling $214 million.

Jose A. Bayardo: Total backlog for the segment at year end was $2 87 billion, an increase of $75 million over the prior year.

Jose A. Bayardo: Solid offshore and international industry fundamentals continue to support the segments aftermarket operations, which has doubled its revenue since the fourth quarter of 2021.

Jose A. Bayardo: As customers dig deeper into their stacks for reactivation and as the broader rig fleet continues to age the size and scope of projects continue to increase.

Continued improvement in on time deliveries from our vendors has enabled better execution from our manufacturing facilities, allowing us to continue to chip away at the backlog of orders in both our spare parts and capital equipment operations and better manage our inventory levels.

<unk> improvement in casting deliveries from our vendors helped increase our ability and manufacturer key product components contributing to a sizeable increase in shipments of top drives and iron roughnecks for our customers.

We're seeing a growing number of opportunities to upgrade rigs in the middle East and North Africa with operators pushing for contractors to update DC rigs to AC power systems and improve mechanization.

While we expect demand from North America to remain soft until excess equipment capacity in our customers' yard is absorbed.

Jose A. Bayardo: Capitalizing on opportunities to support upcoming drilling projects in Alaska and continued to gain traction in the lower 48 land markets with automation upgrades.

Jose A. Bayardo: We and our customers still see a sizable shortfall in vessel capacity needed for projects that have been sanctioned, and we're continuing to have promising conversations with multiple contractors. While new WTIB orders have been delayed, we expect a couple projects will move forward later this year, and we continue to capitalize on other investments required to build out key infrastructure for offshore wind power development. During the fourth quarter, we received an order for a large interconnector cable lay system and crane from a key European provider of power transmission cables.

Jose A. Bayardo: <unk> orders have been delayed we expect a couple of projects will move forward later this year and we continue to capitalize on other investments required to build out key infrastructure for offshore wind power development during.

During the fourth quarter, we received an order for a large interconnector cable lay system and crane from a key European provider of power transmission cables.

Jose A. Bayardo: The order marks our second order for a large power transmission cable lay vessel, further solidifying our position as a leader in providing the key enabling technology and equipment needed for large-scale related infrastructure projects. In addition to our prospects for additional WTIV and large transmission cable lay vessel orders, we also see opportunities to build smaller interarray vessels which will lay cables between wind turbines and feed into larger transmission lines. Looking forward to the first quarter, the flush shipments we delivered in the fourth quarter following supply chain normalization in all three segments, combined with an incrementally more cautious outlook for North America, will result in a larger-than-average seasonal drop in the first. We anticipate our legacy completion and production solutions and rig technology segments will see seasonal declines that are in line with their average over the last seven years. However, our legacy wellbore technology segment will see a greater-than-average decline, primarily due to extraordinarily strong shipments of high-spec drill pipe and MPD capital equipment that will not repeat in the first quarter.

Order bookings marks our second order for a large power transmission cable lay vessel further solidifying our position as a leader in providing the key enabling technology and equipment needed for large scale related infrastructure projects.

Jose A. Bayardo: In addition to our prospects for additional WT IV in large transmission cable lay vessel orders. We also see opportunities to build smaller inter array vessels, which will lay cables between wind turbines and feed into larger transmission lines.

Looking forward to the first quarter of the flush shipments we delivered in the fourth quarter following supply chain normalization in all three segments combined with an incrementally more cautious outlook for North America will result in a larger than average seasonal drop in the first quarter.

We anticipate our legacy completion and production solutions and rig technology segments will see seasonal declines that are in line with our average over the last seven years. However, our legacy Wellbore technologies segment will see a greater than average decline primarily due to extraordinarily strong shipments of high spec drill pipe and MPD capital equipment.

Jose A. Bayardo: All of which points to a year-over-year increase in consolidated first quarter revenues of between 5 to 10%. For the new energy products and services segment, we expect Q1 revenues to improve in the mid-single-digit percent range year-over-year, with EBITDA flow-through in the 30% range. For our new energy equipment segment, we expect revenues to improve between 8 to 10 percent year over year with EBITDA flow through in the mid-20 percent range. We also expect first quarter eliminations and corporate costs to be in line with the first quarter of 2023.

Jose A. Bayardo: That will not repeat in the first quarter, all of which points to our year over year increase in consolidated first quarter revenues of between 5% to 10%.

Jose A. Bayardo: <unk>, new energy products and services segment, we expect Q1 revenues to improve in the mid single digit percent range year over year with EBITDA flow through in the 30% range.

Jose A. Bayardo: For our new energy equipment segment, we expect revenues to improve between 8% to 10% year over year with EBITDA flow through in the mid 20% range. We also expect first quarter eliminations and corporate costs to be in line with the first quarter of 2023.

Jose A. Bayardo: For the year, we expect our consolidated company revenues from North America to decrease in the low to mid single-digit percent range and our revenues from international markets to grow in the low double digits, resulting in 2024 full year revenue to improve four to 8% year over year. We also expect continued margin improvement through a combination of the improving quality of our backlog and our cost out program to result in full year EBITDA flow through in the mid-30s. With that, we'll now open the call to questions. Thank you. To ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

We also expect continued margin improvement through a combination of improving quality of our backlog and our cost out program to result in full year EBIT dollars flow through in the mid 30% range with that we will now open the call to questions.

Operator: We ask that you please limit yourself to one question and one follow-up. One moment while we compile our Q&A. And our first question comes from the line of Arun Jayaram with JP Morgan Securities. Your line is open. Please go ahead.

Speaker Change: And our first question comes from the line of Arun Jairam with J P. Morgan Securities. Your line is open. Please go ahead.

Arun Jayaram: Yeah, good morning, gentlemen. I wanted to get your thoughts on, you know, you gave us some Outlook comments on on one cue. But Clay, as you mentioned, revenue growth for NOV has been, you know, really, really strong relative to the big three, yet margin gains have lagged. And so I want to see if you could give us your thoughts on how margins could trend, you know, in 2024, just given how, you know, the revenue uptick has been quite strong, and perhaps you could give us a sense of what type of margins you see in your back Yeah, it's a good question, Arun, and I appreciate it.

Arun Jairam: Yes, good morning, gentlemen, I wanted to get your thoughts on you gave us some outlook comments on on one Q.

But clay you mentioned revenue growth for Adobe has been really really strong relative to the big three yes.

Margin gains have lagged and.

Arun Jairam: And so I wanted to see if you can give us or thoughts on how.

Margins could trend.

Arun Jairam: In 2020 forward just given how the revenue uptake has been quite strong and perhaps you can give us a sense of what type of margins do you see in your backlog versus.

Arun Jairam: What you printed.

Arun Jairam: In 2023, which I think you did a 12, 5% EBITDA margin consolidated in <unk>, just under 12% for the full year.

Clay C. Williams: Obviously, we've been very focused on margins and leverage here for quite some time, taking a lot of costs out since 2019 and more planned for 2020 as we get into 2024. But we faced a lot of headwinds with respect to supply chain disruptions more so than I think anybody else in oilfield services, along with inflation. And so a lot of kind of headwinds against our battle to push margins up. Nevertheless, we've made good progress, made good progress again in 2023, when margins in the first quarter were touched below 10% and finishing up, as you point out, at 12.5% EBITDA margins in Q4. Looking forward to 2024, we expect that to continue. The normalization of the supply chain is going to help a lot. Inflation appears to be calming down a bit, at least here in the United States.

Speaker Change: Yes, it's a good question and I appreciate it obviously we've.

Speaker Change: <unk> been very focused on margins and leverage here for quite some time.

Speaker Change: Taken a lot of costs out since 2019 and more planned for 2020 as we get into 2024.

Speaker Change: But we faced a lot of headwinds with respect to <unk>.

Speaker Change: Apply chain disruptions more so than I think anybody else in oilfield services.

Speaker Change: Along with with inflation and so a lot of kind of headwinds against our battle to push margins up. Nevertheless, we have made good progress made good progress again in 2023 when margins.

Speaker Change: The first quarter were touch below 10% and finishing up as you pointed out at 12, 5% EBITDA margins in Q4 looking forward to 2024, we expect that to continue.

Speaker Change: The normalization of supply chain is going to help a lot.

Speaker Change: Inflation appears to be coming down a bit.

Clay C. Williams: And I think that's going to help a lot. We've been adding accretive work to our backlogs; we ended up with some large frame agreements and things that were signed at the depths of the pandemic that inflation took a much bigger toll on, and so we're, you know, quarter by quarter working through that stuff. And so I think that all points to improving margin performance as we kind of work our way through 2024. The other part of my answer would be around some of the new products and technologies and things that we have going on.

Speaker Change: At least here in the United States and I think that's going to help a lot.

Speaker Change: We've been adding accretive work to our backlogs we.

Speaker Change: We ended up with some large frame agreements and things that were signed at the depths of the pandemic.

Speaker Change: Inflation took a much bigger pull in and so quarter.

Speaker Change: Quarter by quarter, working through that stuff and so.

Speaker Change: I think that all points to improving margin performance as we kind of work our way through through 2024. The other part of my answer would be around some of the new products and technologies and things that we have going on here.

Clay C. Williams: You're, I know, very familiar with what we're doing in renewables, for instance, with these new products and technologies. So there's a lot of, and it's, you know, not terribly material overall, but it does add up a lot of sort of startup costs around things that we're doing and carrying. And, you know, for instance, our Keystone tower systems business. We are very excited about that. It could be hugely transformational in the wind tower space.

Speaker Change: No very familiar with what we're doing in renewables for instance, with these new products and technologies. So theres a lot of and its not terribly material overall, but it does add up a lot of sort of startup costs around things that we're doing and carrying it.

Speaker Change: For instance, our Keystone tower systems business very excited about that.

Speaker Change: Could be hugely transformational in the wind tower space, but there are quarter by quarter.

Speaker Change: Start up cost that we carry with that so.

Speaker Change: Nevertheless, it's not lost on US we can do better on leveraging margins very focused on that and.

Clay C. Williams: And now we're focused on translating that really strong top-line growth that we have been putting into better profitability for our shareholders. My follow-up, Clay, you mentioned that you may be shedding one to two businesses, and you also announced an acquisition of Xtract, I think, after the quarter closed. Maybe some thoughts on the portfolio repositioning, and how do these moves impact your thoughts on return of capital later this year, increasing that? Yeah, again, with our stronger outlook for cash flow in 2024 and a much higher conversion rate of EBITDA to free cash flow, I think we're going to have more options available to do both, return capital to shareholders, as well as act on some interesting opportunities we see developing out there.

Speaker Change: I'll start with the top line and now we're focused on translating that really strong top line growth that we have been putting up into into better profitability for our shareholders.

Speaker Change: Okay.

Speaker Change: Great My follow up Clay you mentioned that you may be shedding one to two businesses.

Speaker Change: Also announced an acquisition of extract I guess after the quarter close maybe just some thoughts on the portfolio repositioning and ahead of this.

Speaker Change: How do these moves impact your thoughts on return of capital later this year increasing that.

Speaker Change: Yes, again with stronger are stronger outlook for cash flow in 2024, and much higher conversion rate of EBITDA to free cash flow I think we're going to have more options available to do both.

Speaker Change: Returning capital to shareholders as well as act on some interesting opportunities, we see developing out there.

Clay C. Williams: We continually review our portfolio. We continually remain engaged in looking at acquisition opportunities, but we've actually been pretty quiet on that front. I don't think we closed anything in 2023, despite looking at almost three dozen different opportunities. Only one of those, or actually two of those, translated into acquisitions here, Xtract being one, and we expect to close another here in a couple of days.

We continually review our portfolio, we continually remained engaged in looking at acquisition opportunities.

Speaker Change: But we've actually been pretty quiet on that front I don't think we closed anything in 2023, despite looking at almost three dozen different opportunities.

Speaker Change: Only one of those are actually two of those translated into into acquisitions here extract being one and we expect to close another here a couple of days and what we see there are businesses that fit very very well with us strategically that we can get a good value that are.

Clay C. Williams: And what we see there are businesses that fit very, very well with us strategically, that we can get good values on, that are immediately accretive to EBITDA in terms of cash flow and earnings for our shareholders. And then, on the other hand, we also have businesses that have been in our portfolio that are terrific businesses but, frankly, might be worth more to someone else than what they're capitalized at, given NOV's multiple, if that makes sense. And so we're looking at the value of the individual components in our portfolio, and we've got one process underway that we're pretty excited about. And we think net-net, buying low and selling high, is good for our shareholders. Great Thanks a lot.

Speaker Change: Immediately accretive to EBITDA and cash flow and earnings for our shareholders and then on the other hand, we also have businesses that have been in our portfolio. They are terrific businesses, but frankly might be worth more to someone else than what they are capitalized at given these multiple that makes sense and so so we're looking at the value.

Speaker Change: The individual components in our portfolio.

We've got one process underway that we're pretty excited about and.

Speaker Change: And we think net net buying low and selling high is good for our shareholders.

Clay C. Williams: You bet. Thanks, Arun. Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Jim Rollyson with Raymond James. Your line is open. Please go ahead.

Speaker Change: Great. Thanks, a lot.

Speaker Change: You bet Thanks, Brian.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of Jim Rollyson with Raymond James Your line is open. Please go ahead.

James Michael Rollyson: Hey, good morning, guys. I generally, if I did my math right from what Jose said on revenue growth and incremental margins, kind of implies your range of EBITDA margins for 24 full years, and we're in the mid 12% range to almost the mid 13, curious. You know, in the recent past, you guys have talked about getting a 15% EBITDA margin number, possibly sometime in 24. Is that pared back, maybe because of the kind of what's happening in North America, not being quite as strong as maybe everyone was thinking here, three to six months ago? Just kind of curious how you think of margins stepping up between higher margin backlog and obviously the cost of the movie that you're making as we progress through this year and into next. Yeah, you said 15.

Jim Rollyson: Hey, good morning, guys.

Jim Rollyson: Hi, gentlemen, Jamie if I did if I did my math right from what Jose said on revenue growth and incremental margins.

Kind of implies a range of EBITDA margins for 2000 and for full year somewhere in the mid 12% range to almost the mid 13% range.

Jim Rollyson: Curious.

In the recent past you guys have talked about hitting a 15% EBITDA margin number possibly sometime in 'twenty four is that paired back maybe because of the kind of what's happening in North America, not being quite as strong as maybe everyone was thinking here three months to six months ago, just kind of curious how you think of.

Jim Rollyson: Margins stepping up between higher margin backlog and obviously the cost moves that you're making as we progress through this year and into next actually.

Jim Rollyson: Yes, you said 15, I think more accurately we said mid teens, but it.

Mentally since that call.

Jim Rollyson: As we were I think pretty clear in our comments. This morning, we're incrementally.

Jim Rollyson: Just a little more cautious on North America now calling for.

Sure.

Jim Rollyson: Expenditure E&P capex to be down in 2020.

Jim Rollyson: 2024 versus 2023.

And so thats certainly shading, our view again I'll stress I hope were wrong I hope natural gas fuel some additional drilling here later in the year.

Jim Rollyson: But that's that's certainly.

Jim Rollyson: Influencing our exit margins at this point, but.

Speaker Change: The thing is Jim we've got a long way to go before we get to the end of the year.

Speaker Change: In.

Speaker Change: To continue to work to maximize margins whatever the market gives us and so that's really our focus.

Jim Rollyson: Yes, no I'm just trying to make sure that I was understanding the components there.

James Michael Rollyson: And then just as a follow-up, you spent a bit of time talking about kind of your edge products on the AI side. And it sounds like that's actually gaining quite a bit of traction. Any sense of magnitude of how meaningful that is to NOV as a whole and how you're thinking about that from a growth rate perspective? It's a great question.

And then just as a follow up you spent a bit of time talking about kind of your edge products on the AI side and it sounds like that's actually gaining quite a bit of traction.

Jim Rollyson: Any sense of magnitude of how meaningful is that <unk> as a whole and how youre thinking about that from a growth rate perspective, given that yet.

Clay C. Williams: Yeah, it's a great question, Jim. And I'm very excited about I'm going to steer clear of quantifying just yet. These are all new products we've been producing some just this past quarter. But the approach that we've had for the past few years here has been to develop our Max Edge platform as a corporate resource and enable our business units to develop products off of that. So we're not reinventing that wheel.

Speaker Change: Great question, because the second half.

Speaker Change: But the approach that we've had for the past few years here has been to develop our Max edge platform as a corporate resource enable our business units to develop products. So off of that so we're not reinventing the wheel and what we have come up with is a very robust platform that sort of facilitates the internet of things.

Clay C. Williams: And what we have come up with is a very robust platform that sort of facilitates the Internet of Things and edge computing. Obviously, there is a lot of interest in that across the producer space, and a lot of application of that platform to products that we offer through several different business units at NOV, and there's a lot more to come. And so, you know, within our, within the drilling world, we were pleased to be celebrated by one of the major Middle Eastern national oil companies, as I mentioned, for streamlining data from 100 rigs at a much higher rate than their previous service provider. In the completion space, our max completion is gaining a lot of interest amongst pressure pumpers and their customers and enabling more optimization of frack jobs.

Speaker Change: Edged computing, obviously a lot of interest.

In that.

Cross the producer space and a lot of application of that platform to products that we offer through several different business units.

Speaker Change: And there is a lot more to come and so.

Speaker Change: Within our <unk>.

Speaker Change: Willing world I'm pleased to be celebrated by.

Speaker Change: One of the major middle Eastern National oil companies as I mentioned for streaming data from 100 rigs.

Speaker Change: At a much higher rate than their previous service provider and.

Speaker Change: In the completions space, our Maxx completion is gaining a lot of interest amongst pressure pumper and their customers and enabling more optimization.

Clay C. Williams: We're also continuing to improve that product. And so, you know, 3500, more than 3500 users now, and it's growing pretty dramatically. And then there are several other areas where we're using that in conjunction with artificial intelligence to drive better results.

Speaker Change: Of Frac jobs were also.

Speaker Change: <unk> to improve that product and so.

3500, more than 3500 users now and it's growing pretty dramatically and then there are several other areas, where we're we're using that in conjunction with artificial intelligence to.

Speaker Change: Drive better results, so our kaizen drilling optimization program, our new drilling beliefs, and analytics, which has been as I think I mentioned above.

Speaker Change: Prepared remarks was adopted by a couple of large independents. Shortly after our introduction just a couple of months ago, and so really really pleased with how all of this is going.

Atidrip Modak: Thanks, Jim. Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Ati Modak with Goldman Sachs. Your line is open. Please go ahead.

Speaker Change: Yes understood sounds exciting.

Thanks, Jim.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of <unk> with Goldman Sachs. Your line is open. Please go ahead.

<unk>: Hi, good morning, guys.

Goldman Sachs: Mentioning some divestiture plans.

Goldman Sachs: Can we can we get some more color on what the size of those proceeds could look like and how should we think about the nature of those assets.

Speaker Change: We prefer not to disclose anything more other than we think this is prudent.

<unk>.

Speaker Change: This is prudent.

Speaker Change: Stewardship of our capital and see an opportunity to kind of reposition.

Speaker Change: Adding a product line and then capitalizing on the fact that others value another product line more highly than us and so I'm kind of just going to leave it at that.

Clay C. Williams: And then you provided a range for your revenue growth for the full year. Can you help us understand the drivers of the low and high ends there and the subsequent impact on EBITDA? How should we think about the drivers? Yeah, hey, Ati. It's Jose.

Speaker Change: Okay got it.

Speaker Change: And then you provided a range for your revenue growth for the full year can you help us understand the drivers of the low and high end there and the subsequent impact on EBITDA should we think about the drivers.

Jose A. Bayardo: Yeah, really, the way that we're looking at it, you know, provide the guidance by sort of major region, North America versus international. And just to repeat it, because I know it's hard to catch everything during the course of the call, we said a low to mid single-digit percent range for North America and for international markets, low double digits. And so those are percentages that I would apply generally across the segments to sort of get to a notional range of where we think revenues will be for each of the three segments. And, basically, those ranges are a little bit more optimistic than what we expect will occur in the marketplace from an E&P CapEx standpoint. So what we're generally saying is that we think we will continue to outpace the rate of global spend due to all the things that Clay highlighted related to the technological innovation that's continuing to gain more and more traction out there and the positioning that we have, frankly, in the higher growth regions of the world.

Yes.

It's Jose.

Jose A. Bayardo: Yes really.

Jose A. Bayardo: The way that we're looking at it yes, I provide the guidance by sort of major region, North America versus international and just to repeat it because I know, it's hard to catch everything during the course of the call. We said low to mid single digit percent range for North America, and international markets low double digits.

Jose A. Bayardo: So those percentages that I would apply generally across the segments to sort of get to notional range of where we think the revenues will be for each of the three segments and.

Jose A. Bayardo: Basically those ranges are a little bit more optimistic than what we expect will occur in the marketplace from an E&P capex standpoint, so what we're generally saying is that we think we will continue to outpace the rate of global spend due to all the things that.

Jose A. Bayardo: Clay highlighted related to the technology innovation, that's continuing to gain more and more traction out there and the positioning that we have frankly in the higher growth regions of the world.

Jose A. Bayardo: Also said that the EBITDA flow through, we expect to be in the mid 30% range. So a step up from kind of where we have been as we continue to get a better quality of mix in our backlog, better pricing, and also some of the effects of cost savings that we've been working diligently to push through the system. So that's sort of it in a nutshell.

Jose A. Bayardo: <unk> also said that the EBITDA flow through.

Jose A. Bayardo: We expect to be in the mid 30% range. So a step up from kind of where we are we have been at.

Jose A. Bayardo: As.

Jose A. Bayardo: We continue to get a better quality of mix in our backlog better pricing and also some of the cost saves and the effects of cost savings.

Jose A. Bayardo: We've been working diligently to.

Stephen David Gengaro: Thank you. Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Doug Becker with Capital One. Your line is open. Please go ahead.

Pushed through the system, so that's sort of it in a nutshell.

Speaker Change: Thank you I'll turn it over.

Speaker Change: Thank you. Thanks Ali Thank you and one moment as we move on to our next question.

Speaker Change: And our next question is going to come from the line of Doug Becker with capital. One your line is open. Please go ahead.

Speaker Change: Thanks.

Doug Becker: Any update on the cost out program to $75 million.

Doug Becker: Any update on how that played into the fourth quarter and expectations as we go through this year.

Jose A. Bayardo: Yeah, you know, as you heard in the commentary, and I think in the press release as well, the major initial catalyst for a cost savings program is really the, you know, we start with a voluntary early retirement program and also the restructuring of the segment structure, so going from the three segments down to the two segments. So all of that really just happened and just got underway. So, very minimal impact from our cost savings efforts through Q4. Expect a little bit in Q1, but really expect to see that gain steam during the remainder of 2024. Yeah, another piece of that, too, is the closure of facilities. So we have just closed a couple of facilities in South America and Europe as well. And so those savings will be flowing in a little, you know, mid year or so. Got it. And there was no change to the $75 million.

Yes, Doug.

Doug Becker: Yes.

Speaker Change: <unk> heard in the commentary.

Speaker Change: In the press release as well.

Speaker Change: The major.

Speaker Change: Initial catalyst.

Speaker Change: For our cost savings program.

Speaker Change: Really.

Speaker Change: We start with the voluntary early retirement program and also the restructuring.

Speaker Change: Of the segment.

Speaker Change: Structure, so going from the three segments down to the two segments. So all of that really just happened and just got underway, so very minimal impact from our cost savings efforts.

Speaker Change: Through Q4.

Expect a little bit in Q1, but really expect to see that gains steam.

Speaker Change: During the remainder of 2020 for another piece of that too is the closure of facility. So we are.

Speaker Change: Just closed a couple of facilities in South America, and Europe, as well and so those savings will be flowing in.

Speaker Change: Mid year or so.

Clay C. Williams: No, no, I think we're on track. Got it. And then, Clay, you mentioned that you still expect growth in Saudi Arabia. Just trying to get any context here.

Speaker Change: Got it and no change to the 75 billion.

Speaker Change: Yes, I think we are on track for that.

Speaker Change: Yes.

Got it and then.

Speaker Change: You mentioned still expect growth in Saudi Arabia.

Clay C. Williams: Have your internal expectations changed given, Unknown Speaker? And then, just how do you think about 25 or 26 if we end up having fewer jackups working offshore Saudi Arabia? Yeah, it's a good question. Let me caveat my answer by saying I certainly don't want to speak on behalf of our good customer Ramco, and I think we'll be saying more about this in the coming weeks. With that caveat, what we think, and I'll be there a week after next, in the kingdom, what we think they are referring to is really around the FID of Safania, which is a very large offshore field development that they have not yet F It's north of $20 billion, and so it doesn't really impact 2024.

Speaker Change: Just trying to get any context here have your internal expectations changed.

Speaker Change: Given the.

Speaker Change: The renewed.

And then then just how do you think about 25 or 26%.

Speaker Change: Having fewer jackups working offshore Saudi Arabia.

Speaker Change: Yes, it's a good question, let me caveat my answer by saying I don't certainly don't want to speak on behalf of our good customer <unk>.

We'll be saying more about this in coming weeks.

Speaker Change: That caveat.

Speaker Change: And I'll be there a week after next.

Speaker Change: In the Kingdom.

Speaker Change: What we think they are referring to is really around probably the idea of SaaS.

Speaker Change: Which is a very large offshore field development that they have not yet need it's north of $20 billion.

Speaker Change: <unk>.

Speaker Change: And so it doesn't really impact 2024.

Clay C. Williams: With respect to 2025 and 2026, I think even without Safania, the kingdom would continue to grow revenues because it continues to press ahead with development drilling to offset declines in conventional oil wells, to add production to existing offshore fields that it's already FID'd, to add gas production, which is a critical strategic priority for the kingdom, to support domestic gas production and move forward with its unconventional Jafura development.

With respect to 2025, and 2026, I think even without <unk>.

Speaker Change: The Kingdom would continue to grow revenues because they continue to press ahead with <unk>.

Development drilling to offset declines of conventional oil wells too.

Speaker Change: Yeah.

Speaker Change: Add production to existing offshore fields that they've already.

Speaker Change: To add gas production, which is a critical strategic priority for the kingdom to support domestic gas production and move forward with their unconditional for development and so that all adds up to be I think.

Clay C. Williams: And so that all adds up to be, I think, a region that is going to continue to grow for the next few years, probably several years, even in the absence of, you know, one or two large offshore fields that get postponed a bit. So we're still very bullish on the outlook for the kingdom. And in fact, you know, we just won an award for a non-metallic liner-lined steel tubing business for our Tubescope plant there in the kingdom.

Speaker Change: Region that is going to continue to grow for the next.

Speaker Change: A few years, probably several years, even in the absence of <unk>.

Speaker Change: One or two large offshore fields that get postponed a bit. So we're still very bullish on the outlook for the kingdom and in fact.

Speaker Change: Just yesterday, we won an award for a non metallic liner.

Speaker Change: Sure.

Speaker Change: Lined steel tubing business for our tubes scope plant there in the kingdom.

Clay C. Williams: And really across our portfolio, we're seeing continued activity supporting all that other work that's going on there. With respect to the jackups, just to level the playing field for everybody, they've dramatically grown their jackup drilling fleet going from about 50 rigs on up to, I think, about 78 or 80 or so are turning to the right. And then there's another dozen or so that are under contract to come online. So you add all that up, it's about 91 jackups, up from about 50 not long ago.

And really across our portfolio.

Speaker Change: See continued activity supporting all of that other work that's going on there with respect to the Jackups just to level set for everybody they've dramatically grown their jackup drilling fleet going from about 50 rigs on up to think about.

Speaker Change: <unk>.

Speaker Change: 78, or 80, or so are turning to the right and then there is another dozen or so.

Douglas Lee Becker: So, big, big step up in drilling activity. Those are new contracts. Good rigs. We're working efficiently. I don't know precisely what their announcement is about or how it might impact that. But at this point, we're all kind of speculating.

Speaker Change: Good rigs were working efficiently I don't know precisely what the announcement.

Clay C. Williams: But nevertheless, we continue to support all those rigs and continue to remain active on some that are contracted that we're reactivating to put into that. Thank you very much. Thanks Doug. Thank you and one moment as we move on to our next question. Our next question is going to come from the line of Kurt Hallead with Benchmark. Your line is open. Please go ahead. Hey, good morning, everybody. Good morning, Kurt. Transcribed by https://otter.ai. No doubt.

Speaker Change: It might impact that but at this point, we're all kind of speculating, but nevertheless, we continue to support all those rigs and continue to remain active on.

Speaker Change: Some that are contracted that we're reactivating to put put into that market.

Speaker Change: Thank you very much.

Speaker Change: Okay. Thanks, Thanks, Doug. Thank you one moment as we move on to our next question.

Speaker Change: Our next question is going to come from the line of Kurt <unk> with benchmark. Your line is open. Please go ahead.

Kurt: Hey, good morning, everybody.

Kurt: Good morning, Kurt interesting times as always right.

Kurt Kevin Hallead: Yeah, so look, I know your commentary around, you know, AI and the growth and utilization of that, you know, across multiple, multiple functions. I really, you know, definitely caught my attention. And I know that, you know, still kind of early stages, but, maybe, you've been doing this a long time, Clay, what is the adoption rate? What's your sense on the adoption rate as we go forward? The industry is on board with this, and you think they're going to accelerate it. And then just couple that with the value proposition as you see it evolve. Yeah, good question, Kurt, Kurt, and I appreciate it.

Kurt: No doubt.

Kurt: Yeah.

Kurt: Yes, so look I.

Kurt: Your commentary around.

Kurt: And the growth and utilization of that.

Kurt: Across a multiple multiple functions.

Kurt: Definitely caught my attention and I know that it's still kind of early stages, but.

Kurt: Maybe you've been doing this a long time play.

Kurt: Yes.

Speaker Change: The adoption rate what are you what's your sense on the adoption rate as we go forward. It is the industry.

Speaker Change: Onboard with this and you think theyre going to accelerate it.

Speaker Change: And then couple that with the with the value proposition as you see it evolving.

Clay C. Williams: I think the outlook here is really good. It's early days, and I'll stress a lot of these are new products being introduced, but the attention they're getting is good. In fairness, it's a crowded space. There are a lot of people aiming at stuff like this, and it's sort of sometimes challenging to sort of rise above the competitive field.

Speaker Change: Yes, good question Kurt Kurt.

I appreciate it.

Speaker Change: Thank the outlook here is really good it's early days I'll stress all of these are new products being introduced but the attention. They are getting is good.

Speaker Change: In fairness, it's a crowded space Theres a lot of people aiming at stuff like this and.

Speaker Change: It's sort of.

Clay C. Williams: I think with the products that we've introduced, though, we've gotten really good traction because we are demonstrating value. A number of these we've developed with customer engineers, you know, oil and gas company engineers that have been seconded to us for a period of time to sit by our developers and say, hey, add this, subtract this, this is really what I want. So it's a lot of dialogue with our customers around what do you really want and need and how can we add value. And I think that's helped us land on products that really do add a lot of value. The other thing to think about here is the fact that a lot of these digital products, like for instance, our Novos operating system, which is now operating on something like 125 rigs globally, both land and offshore, really provide kind of a digital foundation for follow-on sales. And rig is a good example, both land and offshore; our Novos operating system facilitates our new Atom RTX rig automation package that we're now working on a rig in South America offshore.

Speaker Change: Sometimes challenging to sort of rise above the competitive field.

Speaker Change: I think in the products that we've introduced though we've got really good traction because we are demonstrating value a number of these we've developed with customer.

Speaker Change: Customer engineers, you know oil and gas company engineers that have been succumbed to us for a period of time to sit by our developer and say hey add this attract this this is really what I want so it's a lot of <unk>.

Speaker Change: A lot of dialogue with our customers around what are you really want need and how can we add value and I think thats helped.

Speaker Change: It helped us land on products that really do add a lot of value the other the other.

Speaker Change: Thing to think about here is the fact that a lot of these digital products like for instance, our <unk> operating system, which is now operating on something like 125 rigs globally, both land and offshore. It really provides kind of a digital foundation for follow on sales and rig is a good <unk>.

Speaker Change: Example, both land and offshore.

Speaker Change: No votes operating system facilitates our new Adam RPX rig automation package that we're now.

Speaker Change: Working.

Clay C. Williams: We've got a customer that will be spudding this quarter onshore. We've got another one that's using it at their training facility. And it really, I think this is going to be very transformative, a lot of interest in this technology, not just by drilling contractors, but by the operators who have seen it and say, wow, this is something that's dramatically better. And so this digital family of products that we're introducing aren't being launched in isolation. They really sort of tie in with our more traditional product lines, and I think they will facilitate future sales in those areas. And so there's a lot of pull through that comes with them as well.

Speaker Change: On a rig in South America offshore.

Speaker Change: We've got a customer will be spud this quarter onshore we've got another one that's using it at their training facility and and it really.

Speaker Change: <unk>.

Speaker Change: <unk> is going to be very transformative a lot of interest in this technology.

Speaker Change: Not just by drilling contractors by the operators, who have seen it who say Wow. This is something thats dramatically better and so this digital family of products that we're introducing arent being launched in isolation, they really sort of tie in to our more traditional product lines and I think they facilitate future sales in those areas and so there is a lot of pull.

Clay C. Williams: But on the whole, I'd say very proud of what our team has been able to accomplish, very robust computing capabilities on the edge. And by the way, the edge in the oil field is a lot tougher than a lot of other edges around the industrial space because rigs work in really remote areas, and spotty communications are kind of an alarm. They always have been throughout my career.

Speaker Change: Through that comes with them as well, but on the whole I'd say very proud of what our team has been able to accomplish very robust computing capabilities on the edge and by the way the edge in the oilfields a lot tougher than a lot of other edges around the industrial space because rigs working really remote areas and spotty communications.

Clay C. Williams: And so we've done a lot to address that and bring the power of big data analytics and artificial intelligence algorithms to oil field operations. And so I think there is a lot more to come. Okay, just to follow up, just in the context of, you know, the pause that the Saudis are putting on the expansion of the Safinia and Manipa fields, do you think, what do you think they're more likely to do? Do you think they're going to pause their new bill program? Do you think they're just going to move forward with the new bill program and let some of these other rigs go off contract? What does your instinct tell you?

Speaker Change: We're kind of anymore. They always had been throughout my career and so we've done a lot to address that Ed.

Speaker Change: And bringing the power of big data analytics.

Speaker Change: Artificial intelligence algorithms to oilfield operations, and so I think a lot more to come.

Okay.

Speaker Change: A follow up just in the context.

Speaker Change: The Saudis are putting on the expansion of the staffing and the NIPA fields.

Speaker Change: Thanks.

What do you think is there more likely do it.

Speaker Change: Do you think theyre going to pause their Newbuild program do you think they're just going to move forward with the Newbuild program and let some of these other rigs roll off contracts, what's your what's your instinct.

Speaker Change: Well Theres two newbuild programs, one is the land rig program, which is should be unaffected by that.

Speaker Change: They are working in the offshore.

Speaker Change: We're continuing to execute those rigs very well understood.

Clay C. Williams: And a few years ago, they announced their plans to build a total of 20 jackups for the kingdom. Since then, they've been constructing a shipyard in Razzle Care next door to our facility. And I think the contracting there has been somewhat gated by the progress of that shipyard to execute future work there. But for right now, I'd say the short answer to your question is, I don't know. We're still optimistic they're going to move forward with their plans. But I'm going to again, let Ramco speak for himself, of course. Yeah, I got it.

Understand they're operating really well.

Speaker Change: And the other is offshore.

Speaker Change: And a few years ago, they announced their plans to build a total of 20 jackups for the Kingdom.

Speaker Change: Since then they've been constructing a shipyard in Ras al Khair next door to our facility.

Speaker Change: And I think the.

Contracting there has been somewhat gated by the progress on that shipyard to execute future work there.

Speaker Change: But for right now I'd say.

Speaker Change: The short answer your question I don't know.

Speaker Change: We're still optimistic they're going to move forward with their plans.

But I'm going to again, let <unk> speak for Aramco.

Clay C. Williams: Hey, thanks, Clay. I appreciate you. You bet.

Kurt Kevin Hallead: Thank you. Thank you. And one moment for our last question, and our last question is going to come from the line of Stephen Gengaro with Stiefel. Your line is open. Please go ahead.

Yes got it okay. Thanks, I appreciate the insight.

Speaker Change: You bet. Thank you.

Speaker Change: Thank you.

Speaker Change: One moment for our last question.

Speaker Change: And our last question is going to come from the line of Stephen <unk> with Stifel. Your line is open. Please go ahead.

Stephen David Gengaro: Thanks. Good morning, everybody. Hi, Stephen. So the re-segmentation chart, Jose, do I need a protractor? Like, is this to scale? You might need a magnifying glass for the table.

Stephen: Hi, Thanks, good morning, everybody.

Stephen: Hi, Steven.

Stephen: So the re segmentation chart Jose do I need a protractor like is this the scale.

Stephen: You might need a magnifying glass on the table.

But no. The chart is not is obviously not not not to scale.

Stephen: But just wanted to make it really clear as to which business units went into which segment. So hopefully that's.

That's helpful and then with the tables.

I wanted to give you guys plenty of data to tune up your model. So five years of pro forma information on the second page of that if you haven't yet gone through that.

Jose A. Bayardo: That's great! It's very helpful. So when we think about free cash flow expectations and then just kind of combine that with sort of return on capital plans, should we think about, I guess, two parts of the question, one on working capital, should we think about that, drifting kind of back towards historical norms? And then how do you think about kind of what's going to drive the decision when it's maybe time to accelerate a return on capital program? Yeah, so from a free cash flow and working capital perspective, first of all, we're very pleased to finally turn the corner in Q4 and generate really healthy free cash flow. I think that's reflective of, you know, the potential that we have in 2024 and beyond. Historically, this company has been a low capital intensity business capitalizing on a high capital intensity industry, which tends to lead to very strong free cash flow.

Speaker Change: No that's great it's very helpful.

Speaker Change: When we think about.

Speaker Change: <unk>.

Speaker Change: The free cash flow expectations, and then just kind of combine that with sort of return on capital plans.

Speaker Change: Should we think I guess two parts to the question one on working capital should we think about that.

Speaker Change: And kind of back towards historical norms, and then how do you think about kind of what's going to drive a decision when it's maybe time to celebrate.

Speaker Change: <unk> capital program.

Speaker Change: Yes, so from a from a free cash flow.

Speaker Change: And working capital perspective first.

Speaker Change: First of all we're very pleased to finally turned the corner in Q4 and generate really healthy free cash flow I think thats reflective of the potential that we have in 2024.

Speaker Change: Beyond historically this company has been low capital intensity business capitalizing on our high capital intensity industry, which tends to lead to very strong free cash flow and that's our expectations going forward notwithstanding Q1.

Jose A. Bayardo: And that's our expectation going forward, notwithstanding Q1, which is, as you know, is almost always a good cash consumption quarter due to the seasonality of the payments that really impact us in Q1. So the trajectory of the cash flow, the use of cash in Q1, and then steady improvement in terms of free cash flow generation through the remaining remaining three quarters of the year, due in part to, you know, the improvement in profitability that we've had to date, more of that expected into 24 and beyond, and then also continued progression in terms of normalizing our working capital. So, you know, we finished the year at roughly 29% working capital as a percentage of revenue run rate. That will take a step back in the first quarter due to what we just talked about, and then we should get back to steady improvement.

Speaker Change: Which is as you know is almost always a good.

Speaker Change: Due in part to the <unk>.

Speaker Change: <unk> profitability that we've had to date.

That expected into 'twenty, four and beyond and then also continued progression in terms of normalizing or working capital. So we finished the year at roughly 29% working capital as a percentage of revenue run rate that will take a step back in the first quarter due to what.

Jose A. Bayardo: And my expectation is the normalization process will take some time, but really, as we get into the end of 2024, I would expect our working capital as a percentage of revenue run rate to improve by 1 to 200 basis points versus where we are right now. And so, all that together presents a pretty good picture for free cash flow in 24.

Speaker Change: We just talked about and then we should get back to steady improvement and my expectation is the normalization process will take some time, but.

Speaker Change: But really sort of as we get in.

Speaker Change: Into the.

Speaker Change: So at the end of 2024 I would expect.

Speaker Change: Working capital as a percentage of revenue run rate to improve call. It one to 200 basis points versus where we are right now and so.

Speaker Change: Put all that together it presents a pretty good picture for free cash flow in 'twenty four.

Jose A. Bayardo: And as we talked about in the prepared commentary, we're optimistic about increasing our return on capital as we get further into 2024. So as we've said before, first and foremost, wanting to get the balance sheet metrics where they should be, we are there. Then we need to get cash balances and, more importantly, an outlook related to resiliency and consistency in terms of our expectations for free cash flow. And so we think putting all that together, it's probably a midyear-type timeframe where we really look at leveraging up that return of capital.

Speaker Change: And as we talked about in the prepared commentary.

Speaker Change: We're optimistic about increasing our return of capital as we get further into 2024. So again as we've said before first and foremost we wanted to get the balance sheet metrics, where they where they should be.

Speaker Change: Are there.

Speaker Change: Then when you get cash balances and more importantly outlook related to resiliency and consistency in terms of our expectations and free cash flow and so we think putting all that together, it's probably mid year type timeframe.

Jose A. Bayardo: But that's been an ongoing discussion with our board over the last several quarters, and it certainly will be over the next few quarters. Okay, great. No, that's a great color.

Speaker Change: We really look at.

Speaker Change: Emerging up that return of capital, but thats been ongoing discussion with our board over the last several quarters and it certainly will be over the next few quarters.

Stephen David Gengaro: Thank you, Jose. That's all from me. Thanks, Stephen. Great. Thanks, Stephen. Thank you. And I would now like to turn the conference back to Clay Williams for his closing remarks. Thank you, Michelle. And thanks to all of you for joining us today. We look forward to reviewing our first quarter results in April and hope everyone has a nice day. Thank you. Bye bye. This concludes today's conference call. Thank you for participating. You may now disconnect.

Okay, Great. That's great color. Thank you Jose that's all for me. Thanks, David Alright. Thanks, Steven Thank you and I would now like to turn the conference back to Clay Williams for closing remarks.

Clay C. Williams: Thank you Michelle and thanks to all of you for joining US today, we look forward to reviewing our first quarter results in April and hope everyone has.

Speaker Change: Nice day, Thank you bye bye.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

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