NOV Inc.

Good day and welcome to the Q1 2025 NOV Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Ms. Amy D'Ambrosio, Director of Investor Relations.

Please go ahead. Welcome, everyone, to NOV's first quarter 2025 earnings conference call. With me today are Clay Williams, our Chairman and Chief Executive Officer, Jose Bayardo, our President and Chief Operating Officer, and Rodney Reed, our Senior Vice President and Chief Financial Officer. 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. 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. On a U.S. GAAP basis for the first quarter of 2025, NOV reported revenues of $2.1 billion and a net income of $73 million or 19 cents per fully diluted share. 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 participation. Now, let me turn the call over to Clay.

Thank you, Amy. For the first quarter of 2025, NOV reported net income of $73 million, or 19 cents per fully diluted share. Revenue was $2.1 billion, and EBITDA was $252 million, or 12% of sales, a margin increase of 80 basis points year-on-year. Strong demand for deepwater production equipment and cost reductions enabled our energy equipment segment to achieve significant improvement, increasing margins by 430 basis points compared to the first quarter of 2024. Revenues for our shorter cycle segment, energy products and services, outperformed the 5% reduction in global drilling activity year-on-year as NOV's high-performance technologies continued to gain share, but these were offset by lower sales of drilling-related capital equipment, which drove segment margins lower. Both segments continue to take costs out, and their efforts are accelerating in view of the macroeconomic headwinds that are emerging. Right now, our second quarter looks solid, with sequential revenues and EBITDA expected to grow modestly. But we expect things to get tougher after that, perhaps much tougher. The emerging trade war, its effect on the broad economy, and OPEC's decision to add barrels to a balanced market will almost certainly lead to lower oil field activity. LNG demand and natural gas help notwithstanding. Accordingly, we continue to focus on operational efficiencies and careful cost management. Lower commodity prices have North American EMPs running more downside scenarios, and we believe activity here is most at risk, along with a few other markets like Mexico and Saudi Arabia conventional activity. On the other hand, so far we see most international and offshore customers pressing ahead with their strategic plans. These are typically long-duration, requiring a longer view, and projects continue to move forward in places like the Arabian Gulf and Brazil, and in unconventional places like Saudi Arabia's Jafura gas field in Argentina's Vaca Merida region, areas where NOV technologies play a critical role. InnoV is well positioned to weather this latest storm. Our teams have streamlined operations and improved working capital efficiency. We have a solid balance sheet and our cash flow has been strong. We have introduced dozens of new products that demonstrably improve the efficiency, safety, and environmental impact of our customers' operations. These products have gained significant share. Our backlog of capital equipment and projects has grown steadily over the preceding four years with margins that have moved up meaningfully. Despite near-term macro challenges, InnoV is well positioned for where the market is going longer term. U.S. shales have been the most extraordinary phenomenon ever witnessed in this industry. It accounted for almost all incremental global production through the past decade, adding about 7 million barrels of oil per day and crowding out offshore investments along the way. If North American shale activity slows meaningfully in the second half of the year, it would exhibit high decline rates, just like it did during COVID. Either way, U.S. production will peak sooner or later, and in the coming decade, we believe incremental production growth will come from a combination of deepwater and international shales. Both will need technologies and picks and shovels that NOV is uniquely positioned to supply. I know many of you have questions about the impact of tariffs on our operations. Frankly, we do too, as the tariff regimes and trade negotiations evolve and shift daily. In a moment, Jose will provide you more color, but the upshot is that we believe that this will be manageable for NOV, and our teams will be able to significantly reduce, 80% or more, but probably not fully eliminate the full effect of known tariffs. About half of NOB's manufacturing capacity is in the United States, with the remainder spread out in various countries around the world, and we have a lot of options to adjust our supply chains. We are working closely with vendors and customers to mitigate the effects. More importantly, we have terrific supply chain managers who successfully navigated disruption from tariffs in 2017 and again during COVID. They are steely veterans of this kind of thing. Before Rodney takes you through our first quarter results, let me say thank you to our employees. You did a great job during the first quarter, and I appreciate the way you take care of our customers and each other. We expect business to be more challenging as the year progresses, but we will weather this storm. You are part of a strong and critical team that the world's energy infrastructure counts on. Rodney?