Good day, ladies and gentlemen, and welcome to the NOV Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen- only mode. Later, we will conduct a question- and-a nswer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Blake McCarthy, Vice President of Corporate Development and Investor Relations. Sir, you may begin. Welcome everyone to NOV's Second Quarter 2022 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. No one should assume these forward-looking statements remain valid later in the quarter or later in the year. For more detailed discussion of the major risk factors affecting our business, please refer to our latest Form 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 second quarter of 2022, NOV reported revenues of $1.73 billion and net income of $69 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 participation. Now, let me turn the call over to Clay. Thank you, Blake. For the second quarter of 2022, NOV's revenues grew 12% sequentially at 26% leverage, driving EBITDA up to $150 million. Despite continuing supply chain disruptions, our teams were able to improve profitability to an EBITDA margin of 8.7%. Orders once again exceeded revenue out of backlog, yielding a book-to-bill of 117%. The company posted earnings of $0.18 per share for the second quarter. We were pleased to see further improvement and expect more to come. Although a potential economic recession has pushed oil and gas prices off recent highs, our outlook remains constructive. The world is facing a significant energy shortfall, and the oil and gas industry needs to increase activity in order to provide greater energy security to the global economy. That urgent activity will need to come at a time when the industry's tools, its rigs, drill pipe, and pumps have been idled, depleted, cannibalized, and worn out through a pandemic shutdown that has produced the most withering downturn the industry has ever seen. NOV is entering the emerging upcycle in a unique position within the oil field ecosystem. Oil and gas production companies or operators live at the top of the food chain in this ecosystem, and they are benefiting in real-time from sharply higher oil and gas prices. Lack of exploration and development investment in the oil field through the pandemic, and the several years preceding it, has reduced the productive capacity of the industry. In fact, some argue that spare capacity may be approaching historic lows. Despite strategic petroleum reserve releases, oil, gas, and product inventories keep drifting lower and are generating commodity price signals back to operators to step up activity and produce more. They are to the extent they can, given their now higher cost of capital, their shareholders' demands for less drill bit CapEx and greater return of capital, and emerging constraints amongst the oilfield service companies that do the actual work, including constrained access to necessary spares and consumables, finding skilled workers and engineers, and moving equipment globally through a broken supply chain. NOV sells to both groups, and our results reflect the fact that broadly speaking, these ecosystem participants are currently at different stages of recovery. NOV's revenues directly to operators were 35% of its mix in the second quarter, and its revenues to oilfield service companies was about 55% of its mix. The balance of 10% were sales to other industrial customers. While the finances of operators have been largely healed by higher oil and gas prices, our oilfield service customers still have a ways to go. Many still labor under low or no- margin contracts signed during the duress of the pandemic lockdown. They continue to execute against rapidly rising costs due to inflation in materials and labor, battling through acute shortages of certain critical items. Many still strain under high debt loads and lack access to external capital. It takes a while for prosperity to trickle down the oilfield food chain, but here's the good news: the trickle-down is underway. Month by month, older low-margin contracts expire and are replaced with better price contracts. For example, leading-edge day rates for super-spec tier one land rigs are squarely north of $30,000 per day now. Fracking prices per stage are improving, and pressure pumper financial statements are starting to reflect it. One major deepwater driller announced a drill ship day rate well north of $400,000 per day this quarter. The overhang of equipment and capacity is diminishing, admittedly at different rates across different categories, but directionally, these are all going the right way. Utilization is rising and facilitating pricing leverage for our oilfield service customers. Idled equipment that has been cannibalized or worn out requires incremental capital to reactivate. With desperation evaporating quickly from oilfield service enterprises, they are now demanding contractually guaranteed payback on these incremental investments in order to bring additional capacity to the marketplace. These are all the first steps that one would expect towards healing the balance sheets and business models of oilfield service companies, and the body of evidence of healing continues to grow. That's why we are so constructive in our outlook. It all points to more future demand for NOV. As you know, NOV is in the business of making these two levels of customers above us in the food chain successful, ultimately to reduce the cost per barrel that both work in concert to produce. NOV outfits our customers with the equipment, technology, and tools used in every part of well construction, and our unique position yields competitive advantage in an upcycle. NOV has always targeted market leadership, and let me explain why. Failure costs in the oil field can be extremely high, tens of millions of dollars or even more. The very expensive setbacks operators experience from time to time tend to make them very, very risk-averse, which means operators value experience and reliability in their oilfield service subcontractors very, very highly. Therefore, for oilfield service companies, scale and market share matter. For an oilfield service company, being the top -of- mind, low- risk, high- value choice of operators is a distinct competitive advantage. As the market leader that has been in this industry for 160 years, NOV has encountered and successfully navigated more real-world obstacles than our smaller competitors. That experience is valuable to oil and gas operators seeking to avoid the expensive headaches that occasionally arise in their operations. Scale also drives additional competitive advantage for NOV through efficiencies we gain as market leader, including purchasing efficiencies and global marketing reach that facilitates our new product launches. Our oilfield service customers sometimes enhance their competitive advantage by standardizing their fleet of oilfield equipment, which simplifies their management of spare parts and consumables and helps in training their workforce. These customers will naturally gravitate to a market leader like NOV, who is well-capitalized and will be around to support a fleet of equipment for decades to come, and one that operates globally to be there for future geographic expansion. Our market leadership over time has yielded the industry's largest installed base of oilfield equipment, which provides another important competitive advantage. NOV's position as the OEM makes us the preferred choice for spares and aftermarket support. Plus, our installed base presents additional revenue opportunities, upgrades with new digital products and apps like our NOVOS operating systems and Max Edge computing. Oilfield operations are extraordinarily tough on equipment. When you pump abrasives at super high pressures and rates and jam thousands of horsepower miles into the earth, equipment suffers. The physical consumption of equipment by day-to-day oilfield operations makes oilfield service companies very capital-intensive. However, the rates commanded by most oilfield service sub-sectors over the past several years haven't even come close to paying for the physical capital consumed. Instead, the oilfield service industry has consumed excess equipment, and there's been plenty of it since 2015 when utilization turned south. However, the recent improvements in pricing for many of our customers point to the equipment overhang diminishing rapidly. As oilfield activity rises, so too should demand for oilfield equipment that we provide. We expect our manufacturing flexibility, that is our ability to redirect manufacturing assets as needed, to further enhance our plant utilization as we respond. This flexibility, along with our valued manufacturing vendors, enable us to flex up in times of growing demand, which all serve to reduce NOV's fixed asset intensity. Our historical financials demonstrate low levels of CapEx that go with low fixed asset intensity. Low CapEx needs allow NOV to convert more EBITDA to free cash flow for reinvestment in technology and for shareholder returns. Our results from the past two decades demonstrate that our unique position in the oilfields ecosystem blooms later in the cycle than operators who enjoy prosperity first, followed by service companies who are just starting to see benefit from rising activity now. The past decade shows business models throughout the ecosystem can be highly volatile. Operators are cyclical due to their reliance on oil and gas prices, and they cut activity when prices fall. Oilfield service companies who rely on operators' drilling programs see an outsized down cycle, and they in turn cut their expenditures on equipment, consumables, and aftermarket spare parts, which impacts our revenue as our customers draw down existing inventories and cannibalize idled equipment to support the few units they have left running. Following the extraordinary growth in demand NOV witnessed from 2004 to 2014, our revenues fell sharply in the downturn that followed. However, during the first part of that upcycle, NOV demonstrated that our business model can possess extraordinary optionality and growth. Demand can come rocketing back quickly, as history and recent events have shown. NOV has managed through the downturn since 2015 through one, aggressive, relentless cost-cutting when necessary. Two, maintaining a strong balance sheet. And three, diversification. Diversifying geographically, diversifying between operators and oilfield service companies, diversifying across drilling and completion activities, diversifying across oil and gas, and diversifying across land and offshore. Little goes on in the oilfield where NOV does not in some way participate. All our oil and gas customers are tied more or less to commodity prices, but different parts of the ecosystem respond to changes in different ways, even within oil producers, who respond differently than gas producers. For example, North American independent operators usually react quickly, both up and down, to changes in oil prices, whereas national oil companies move much more deliberately. Our three segments respond differently at different times in the cycle as well. Our year-to-date financial results for 2022 fit the ecosystem model that I've laid out for you. For instance, our Wellbore Technologies segment mostly provides tools to oilfield service companies tied to drilling, but it also provides goods and services like drill bits, solids controls, and downhole tools that are purchased directly or at least specified by operators. It also provides services directly to operators, such as oilfield tubular inspection and coating, and capital equipment to drilling contractors like drill pipe and shale shakers. Overall, its revenues are pretty closely tied to real-time global drilling activity, but its products and services purchased directly by the operator have been the first to recover, while other categories are recovering later. On the other hand, the Completion & Production Solutions segment is tied to capital expenditures by oilfield service providers who perform well -completion activities like fracking. As I noted earlier, prosperity is just now trickling through the oilfield ecosystem to these oilfield service customers, many of whom still face challenged balance sheets and low-priced legacy contracts. Even as balance sheets strengthen, there's a natural lag as new projects are bid to operators and orders placed by the winners. This business blooms later in the cycle, and our expectation is that the next few years will see continued growth and margin expansion as our customers recover. Separately, the C&P segment also provides production modules and conductor and flexible pipe directly to operators, mostly for the offshore market. These capital purchases by offshore operators are also emerging from very low activity levels, so this portion of our business should continue to grow significantly for the next few years as the offshore sector recovers. Notably, the Completion & Production Solutions segment has now posted six quarters in a row of book-to-bill north of one, and its backlog has more than doubled over the past 18 months. Orders point to future growth and continued margin expansion. Finally, our Rig Technologies segment is the global leader in engineering, manufacturing, and supporting drilling rigs of all kinds. Drilling rigs are large investments. Drilling contractors must possess strong balance sheets, access to capital, and high levels of confidence that contracts at high day rates will be available to support these investments. This all combines to make this segment very late cycle in nature. New rigs are never added until the existing fleet is contracted at high day rates, and operators seeking drilling rigs are willing to pay up to gain access to additional rigs. Demand for new rigs evaporated through the downturn, and a resumption in demand for newly constructed drilling rigs is probably a long way off in my view. Nevertheless, NOV's market-leading status as the OEM on a very large part of the global drilling rig fleet means that we get the call for engineering and equipment to reactivate, recertify, and upgrade older, frequently cannibalized rigs coming back to the market. Aftermarket support of these rigs once they go to work, which is increasingly requiring condition-based monitoring technologies that we've developed through the downturn. Recently announced plans to put an incremental three dozen or so jackups to work in the Arabian Gulf, resumption of drilling programs in West Africa, and new rig tenders for Guyana and Brazil all point to higher activity in the offshore and are all driving renewed interest in offshore rig reactivations. Rising offshore activity should also, again, help the C&P segment too. Importantly, through the downturn, Rig Technologies mix has shifted largely to aftermarket support of its installed base for subsistence, which accounted for 53% of its second quarter mix. It has also benefited from its position as the leading provider of offshore wind turbine installation vessel packages, which helped offset its lower oil field revenues through the past few years. To recap, NOV segments are responding at different times to the upcycle as expected. Broadly, Wellbore Technologies is the earliest of these, while Completion & Production Solutions and Rig Technologies lag. With the world short of secure energy, the oil field is reassembling itself and getting back to work, which will physically consume the equipment and spare parts NOV makes at an increasing rate. Month by month, it's becoming increasingly evident that the industry faces an uphill battle, having laid off skilled workers, avoided maintenance expenditures during extreme economic duress our customers have been under, having cannibalized a lot of idle oil field assets, and having depleted stocks of consumables that would otherwise be available to support growing operations. I'll acknowledge that many are of the view that we face a global recession in the near term. Recessions can reduce demand, or more accurately, they usually just flatten growth in demand for oil and gas, thereby reducing prices and activity. However, coming out of historically low levels of oil field activity that marked the pandemic shutdown, with nearly all excess OPEC supply back in the marketplace, with the release of the SPR expected to end soon, with the number of viable DUCs in North America drawn down significantly in the past few years, and with oil and gas and product inventories low and falling, man, it's hard for me to imagine anything other than continued growth in this sector for the next several years. Our customers still face constraints in workforce and capital that will continue to moderate their orders with NOV in the near term, but ultimately, the energy shortage must be solved. Candidly, a mild recession would somewhat ease the intense supply chain stresses presently on the oil and gas industry. However it plays out, a key part of the solution will be more orders for NOV. This is a compelling setup for a multi-year upcycle for our company. I'm pleased to report that we are, once again, up to the challenges of growth. In our world, our customers always care about one thing, but the thing changes. In down cycles, the thing is price. In up cycles, the thing is time. We're beginning to see a distinct change in our customer conversations with fewer questions around how much will it cost and many more around when can I get it. This is, to me, the best evidence yet that we are in the very early innings of the part of the cycle where NOV was designed to flourish. To the employees of NOV who are listening today, thank you for all that you do. You are the best. With that, let me turn it over to Jose. Thank you, Clay. To recap the quarter, NOV's consolidated revenue in the second quarter was $1.73 billion, a 12% sequential increase compared to the first quarter and a 22% increase compared to the second quarter of 2021. Adjusted EBITDA for the second quarter totaled $150 million or 8.7% of sales. All three operating segments reported sequential revenue growth and better profitability as we realized continued improvements in oil and gas equipment market fundamentals and execution against ongoing supply chain-related challenges. The improvement in execution comes from working diligently to better forecast demand, plan, and build buffers within our inventory of raw materials and third-party source components that have less certainty in expected lead times. Despite seeing no improvement in the average for on-time deliveries from our vendors in the second quarter, with average lead times continuing to extend, the actions taken by our team increased throughput and deliveries for our customers. Of course, building buffers has a negative impact on our inventories, working capital, and cash flow. Inventory increased $151 million sequentially, which contributed to the $145 million increase in working capital. Despite the increases, our focus on working capital management over the past few years allowed us to better mitigate supply chain risk and fund revenue growth while still delivering an improvement in all primary working capital metrics. The build in working capital, along with a $51 million tax assessment described in our press release, resulted in the use of cash flow from operations of $124 million. CapEx for the quarter was $43 million, resulting in negative free cash flow of $167 million. We ended the second quarter with $1.72 billion in debt and $1.22 billion in cash. Continued top- line growth, supply chain challenges, and the timing of payments on certain percent of completion projects will continue to be a drag on working capital for the remainder of the year. However, at this point, we expect to generate a modest amount of free cash flow in the second half of 2022. Moving on to segment results. Our Wellbore Technologies segment generated $666 million in revenue during the second quarter, an increase of $58 million or 10% compared to the first quarter, and 44% compared to the second quarter of 2021. The segment realized revenue growth in most regions on improving global drilling activity levels, pricing gains, and better execution against ongoing supply chain challenges. EBITDA flow- through was 36%, resulting in a $21 million sequential increase in EBITDA to $122 million or 18.3% of revenue. Our ReedHycalog drill bit business posted mid-single-digit revenue growth with a 16% increase in Eastern Hemisphere revenues, partially offset by the Canadian spring breakup and customer-driven project delays in the Gulf of Mexico. Growth in the Eastern Hemisphere was led by the Middle East and Western Africa, where we are seeing urgency from customers in their requests for extensions on contracts nearing expiration, and they are placing large orders before pricing resets under new agreements. Our ReedHycalog products literally serve as the tip of the drill string and figuratively serve as the tip of the spear of leading indicators for the broader segment, being one of our earliest cycle businesses. The actions our NOC customers are taking today are giving us growing confidence in an upcoming inflection in Eastern Hemisphere activity. Our downhole business reported a high single-digit percentage improvement in revenue during the second quarter. While the unit has seen robust demand for its agitators and motors, manufacturing output has been constrained over the last several quarters due to limited availability of special elastomers and certain grades of steel used in the business' high-spec products. The team has worked hard to mitigate operational disruptions by finding and qualifying alternate sources of materials. Their efforts began to pay off in the second half of Q2, when they were able to significantly increase throughput. Higher output and pricing led to a healthy margin improvement, which we expect will carry into the second half of the year. Our well site services business reported a small sequential decrease in revenue. Healthy growth in our core solids control operation was offset by a decline in revenues from our managed pressure drilling product line, resulting from large capital equipment packages that shipped in the first quarter. Outlook for MPD remains solid, and we anticipate a strong rebound in revenues from the operation in the second half of the year. In our solids control operation, continued efforts to reduce environmental footprint, as well as significantly higher costs for barite and diesel are driving efforts to achieve higher recovery rates from cuttings, which in turn is creating greater demand for various NOV solutions. These range from adding an additional centrifuge, which can modestly improve recovery rates, to the greater adoption of our iNOVaTHERM thermal desorption system, which can dramatically improve recoveries and reduce oil on cuttings to as low as 0.1%. Outlook for our solids control and MPD operations remains strong, with international and offshore-focused markets preparing to increase activity. Improving demand will continue to absorb capacity and allow us to focus on customers that place a premium on our technology differentiation and best-in-class service. Similar to well site services, our M/D Totco business posted relatively flat results with solid growth in its legacy surface data acquisition system operations, offset by a transitory decrease in revenue from our eVolve wired drill pipe optimization services. Despite the pullback in Q2 resulting from a few rigs in the North Sea completing wells and moving on to new locations, we expect eVolve revenue will return to its upward trajectory in the third quarter. More customers are recognizing the improved drilling efficiencies, well productivity, and safety benefits that our eVolve wired drill pipe services provide, which we expect will drive an increase in projects in the North Sea, Middle East, and U.S. during the second half of the year. Our Grant Prideco drill pipe business posted solid sequential revenue growth and achieved its highest order intake since 2014, with the business realizing a sharp inflection in demand for its premium pipe in the U.S. and Middle East. Customer-owned pipe inventory levels are drawing down to uncomfortable levels while drilling activity climbs, creating a renewed sense of urgency among our customers, causing them to secure manufacturing. Our Tuboscope business delivered a sequential revenue increase in the low teens with solid incremental margins. Increased demand in the U.S. And South America, fewer operational disruptions, and higher prices drove the improved results. In addition to solid sequential growth in its inspection operations, the unit realized its third straight quarter of double-digit revenue growth in its coating operations, led by increased demand for line pipe and drill pipe coating in the U.S.. To meet growing demand and prevent lead times from blowing out, we recently reopened a mothballed coating plant in Amelia, Louisiana, that was shut down in July of 2020. Looking ahead to the second half of 2022, we expect a continuation of solid demand in the Western Hemisphere, with accelerating growth in the Eastern Hemisphere. For our Wellbore Technologies segment, we expect North American drilling activity growth rates to moderate while momentum builds in the Eastern Hemisphere, which we expect will help drive revenue growth of 4%-7% in the third quarter. Continued strong execution and pricing improvement should more than offset the impact of ongoing supply chain challenges and inflationary pressures, resulting in EBITDA flow through in the mid-30% range. Our Completion & Production Solutions segment generated revenues of $639 million in the second quarter of 2022, an increase of 21% from the first quarter. The sequential improvement was broad-based, with six of the segment's eight business units reporting double-digit revenue growth. Adjusted EBITDA improved $22 million to $32 million, or 5% of sales. Despite a strong pickup in the shorter cycle components of the segment's operations and improved execution, challenges within shipyard projects continue to pressure margins and limit EBITDA flow-through to 20%. Book-to-bill was 132%, the sixth straight quarter of a book-to-bill greater than one. Quarter-ending backlog increased 6% sequentially to $1.44 billion, achieving its highest level since the first quarter of 2015. While bookings for the quarter were strong, we continue to see large projects pushed to the right. Higher commodity prices have significantly improved project economics, but shipyard suppliers and operators are all struggling with existing logjams in shipyards, uncertain lead times, higher costs, and stretched workforces, leading to nervous customers who are delaying FIDs. However, confidence in the long-term sustainability of improved commodity prices is slowly improving, leaving upside to this segment's future order potential. What we see in our XL Systems conductor pipe connection business contributes to our growing confidence that large project FIDs will rebound. Demand for our XL Systems products has historically served as an early indicator of offshore drilling activity. The business unit realized a meaningful sequential improvement in revenues and a solid level of orders in Q2. More importantly, it saw customer inquiries increase 14% sequentially and 24% year-over-year, with the average value per inquiry up roughly 40%, both sequentially and year-over-year. Our Process and Flow Technologies business unit posted revenue growth in the low teens, with EBITDA flow-through in the upper teens. Ongoing disruptions, delays, and cost overruns in shipyard projects affected our wellstream processing and APL operations and pressured margins for the business unit. Nevertheless, interactions with customers remain upbeat, and our engineering teams are fully consumed working on paid feed studies, which will ensure customers are ready to move projects forward as supply chains normalize. Additionally, the unit's backlog remains strong, equal to 5.5x its revenue out of backlog during the second quarter. Our production and midstream operations began to see some relief from vendor delays, resulting in the operation generating revenue growth in the low teens with outsized incremental margins. Improved supplier deliveries with continued healthy demand, particularly for our production chokes in the Western Hemisphere, resulted in a significant pickup in sales. Our pump and mixer operation revenue was flat with the first quarter, despite the operation's Shanghai manufacturing facility shutting down for the vast majority of the quarter due to COVID-19 lockdowns. While the team's heroic efforts to meet customer demand allowed revenues to remain solid, near zero absorption in Shanghai, higher freight costs and overtime incurred at other plants tasked with making up some of the shortfall pressured margins. Demand for pumps and mixers remains high, and the operation realized its seventh straight quarter with a book-to-bill greater than one. Our subsea flexible pipe business posted a solid rebound in Q2 after suffering from a three-week shutdown in one of our two manufacturing plants in the first quarter, caused by the inability to procure sufficient quantities of polyvinyl fluoride. Additionally, the business unit realized its strongest order intake since 2017, with strong demand for projects in Brazil and in the Asia Pacific region. Our Fiberglass Systems business unit posted a sharp improvement in revenue during the second quarter, capitalizing on six straight quarters with a book-to-bill over one and overcoming many supply chain challenges that have plagued its operations over the last several quarters. While headwinds from inflationary pressures on raw materials, labor, and freight continue, proactive actions taken by the business to better insulate operations from material shortages reduced manufacturing disruptions. Outlook has also improved with all end markets now demonstrating solid recoveries. Demand from North American oil and gas customers finally inflected higher in the second quarter, which allowed us to achieve our highest level of bookings from this market in the last four years. We also began to see a recovery in the marine and offshore sector, driven by the increasing spread between low and high -sulfur fuels, rekindling demand for scrubbers despite our customers' appropriate reluctance to bring vessels to port while shipping rates remain elevated. The marine sector is also benefiting from growing demand in the wind power installation space, with our operation receiving an order to provide its Bondstrand glass-reinforced epoxy piping for use in a new wind turbine installation vessel. Our intervention and stimulation equipment business posted revenue growth in the mid-teens, with solid improvements in each of the business's product lines. The unit also achieved its fourth straight quarter of improved bookings and its third straight quarter with a book-to-bill above 100%. Demand for pressure pumping equipment, parts, and service continues to evolve as service market fundamentals improve. Beginning in the fourth quarter of 2020, customers began reactivating stacked fleets with the average level of difficulty increasing through 2021 as they dug deeper into their stacks of parked equipment. We saw a shift towards fleet overhauls and rebuilds and are now seeing demand for new build equipment and booked orders of 62,500 horsepower of pressure pumping equipment during the second quarter. Despite the strong orders, we expect to see a dip in pressure pumping revenues in the third quarter, resulting from the completion of large aftermarket reactivation projects in the second quarter and ongoing supply chain constraints that are extending lead times for new build deliveries. The business unit's coiled tubing and wireline operations are also realizing growing demand from higher service activity in North America and from a growing number of international markets where customers are preparing for higher activity in the coming quarters. We expect our Completion & Production Solutions segment's growing backlog to drive revenue growth between 1%-5%. While the segment will continue to face supply chain disruptions and inflationary pressures through the remainder of the year, the combination of growing demand and improved execution should drive EBITDA incremental margins into the mid-30% range in the third quarter. Our Rig Technologies segment generated revenue. Our Rig Technologies segment generated revenues of $462 million in the second quarter, an increase of $21 million or 5% sequentially. Topline growth was led by continued strength in the segment's aftermarket operations. Adjusted EBITDA improved $5 million to $41 million or 8.9% of sales. New orders totaled $141 million, representing a book-to-bill of 80%. Total backlog for the segment at quarter end was $2.84 billion. Orders included the design and jacking system for another next-generation wind power installation vessel. The rest of the order book consisted of top drives, handling equipment, pumps, BOP controls and components, and other miscellaneous equipment for replacements and upgrades. While this type of order book reflects a market that is still healing, there are many signs that indicate this process is accelerating. As Clay touched on, recent public contracting data points have been very encouraging, with key offshore customers securing contracts at day rates more than 2x the average rate seen in 2020. In the U.S. land market, average day rates in the Permian increased 33% in the last three months, with a blended average day rate still more than 25% below leading- edge rates. This means we can expect our customers' cash flows to continue improving rapidly, which is critical since access to capital remains a challenge for the industry. Until the broader financial markets once again reward high- return investments in oil and gas equipment, customers will need to self-fund their equipment needs. Fortunately, as I just mentioned, cash flow from our customer base is improving at a rapid pace. Near term, we expect the bulk of our Rig Technologies segment's capital equipment orders to come from replacement and upgrades for their existing fleets. While rig capital equipment orders remain modest, quickly improving day rates are driving a much- improved environment for our aftermarket operations. We're seeing steadily increasing demand for reactivation, recertification, overhaul, and upgrade projects in all major regions. We've also seen orders for spare parts improve over the past six quarters, with Q2 orders achieving pre-pandemic levels. Supply chain constraints are still limiting our manufacturing output, resulting in backlog growth that continues to outpace our ability to get parts to our customers. While throughput and revenue from spare parts improved in the second quarter, bookings increased 9% and our backlog also increased. Growing demand and our focus on continuing to improve our abilities to secure materials and ramp manufacturing throughput is making us increasingly optimistic about the prospects for the segment to generate improved financial results in the second half of this year and gather momentum for an improved 2023. For the third quarter, we expect revenue for our Rig Technologies segment to grow between 5%-10% sequentially, with EBITDA flow through in the mid-teens. While we're pleased with the recovery and profitability in the second quarter, there remains substantial room for improvement with the upturn in our business in the very early innings of what we believe will be a multi-year recovery. What we see in each of our operating segments is in line with what we expect. Short- cycle businesses realizing rapidly improving results, initially driven by activity in North America and now shifting to the Eastern Hemisphere. Shorter cycle capital equipment businesses seeing increased demand and aftermarket operations of long cycle capital equipment businesses ramping up. Every cycle is a little different, and this recent down cycle has been more severe than most, if not all, prior downturns. We're still facing headwinds from global supply chain challenges and investor pressure on our customers to avoid investments in their operations. We believe these issues are creating more pent-up demand for assets that are needed to address the growing global energy supply and security challenges and will prove transitory. While we do not expect these constraints to alleviate in 2022, we do anticipate a significant improvement in our results and expect to see demand for more of our products and technologies inflect, which should allow NOV to deliver second- half 2022 EBITDA that is 45%-55% greater than what we achieved in the first half. With that, we'll now open the call up to questions. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your touchtone phone. One moment while we compile our Q&A roster. Our first question comes from Stephen Gengaro with Stifel. Your line is open. Thanks. Good morning, gentlemen. Morning. Morning. Jose, you mentioned this at the end. I was curious if you could dig in a little more. I mean, when you think about, you know, what pressure pumpers are going through as far as what the E&Ps are saying and their willingness or lack of willingness to invest and/or upgrade equipment, can you just talk about sort of the conversations that you're having with customers and how they're sort of thinking about that, given what seemed to be, you know, somewhat long lead times for these items? Yeah. I think we're at the point where, you know, we're seeing such a rapid improvement in the pricing that is being received by our customers, that they're really sort of struggling with the two opposing forces, right? Those being, you know, pressures to be very conservative from a capital standpoint, and the other sort of beginning to salivate over the type of per unit economics that are coming back into the fray related to assets. You know, the longer that people postpone making those types of investment decisions, the worse the supply-demand imbalance becomes, right? Everyone's trying to figure out when the right point is to sort of step into it. They're still struggling with it, and I think they'll continue to struggle at least through the end of this year to be determined how that plays out next year. You know, I think our primary point here is that, it's just creating more pent-up demand. Quite frankly, we may be a little bit biased on this, but, you know, those who pull the trigger sooner rather than later are the ones that are gonna be able to recognize the most benefit from having those assets deployed in the field. It's inevitable that more assets need to come back into the field to meet the global supply and energy security needs. Great. Thank you. The follow-up was really on the wellbore side. Maybe talk a little bit about what you're seeing on sort of the price versus cost inflation side. Can we talk specifically about incrementals in the third quarter and how you think that impacts the margin progression as you get into 2023? Yeah. Look, you know, I think if you look back over the last several quarters, we have been very focused on improving our execution and also recapturing pricing that had eroded through the course of the down cycle in order to, you know, not only return pricing and normal margins to more acceptable levels, but also to offset the costs associated with those operational disruptions which were taking place due to all the supply chain related challenges. With the actions that our teams around the world are taking to better mitigate those supply chain disruptions, we're starting to see an improvement in those incremental margins, and that will continue to be in sort of fits and spurts. Going forward, we hope to be able to deliver at least sort of a normalized, incremental margin over an extended period of time. As you recall, you know, for our Wellbore Technologies segment, that's sort of in the mid-30%+ range, which is kind of where we were this quarter. Stephen, I would add, too, we've invested in new technologies in Wellbore Technologies around things like bit cutters and downhole tools and drilling motors that I think have enabled NOV to gain share out there. The performance differences that we highlight in each of our press releases each quarter really are translating to more demand for tools that I think we're putting more distance between us and our competitors on. We're differentiating in terms of performance, and our customers are paying up for that. That's contributing to these strong financial results from Wellbore Technologies too. Great. Thank you, Clay and Jose. You bet. Yeah. One moment, please. One moment before our next question. Our next question comes from David Anderson with Barclays. Your line is open. Hey, good afternoon, Clay. Your results and your commentary are another clear indication of both Middle East and offshore inflecting, and we'll see substantial activity especially in the next 12-18 months. First time we've seen this obviously in quite some time. You guys have taken a ton of costs out of your operations and some of the internal changes you've made. I'm wondering if there are certain product lines or businesses in offshore Middle East where you think you'll see the greatest operating leverage as things start to really turn up. Yeah. Right now, this kind of fits with Jose's prepared remarks. As expected, you see the first pickup in consumables in the things like drill pipe where that are required to go back to work for these rigs. I think that's where we've seen the greatest sort of increase in demand and big pickup in spares orders and rig, for instance, which isn't part of the backlog or the orders that we report, separately. Mm-hmm. It was a really nice lift sequentially to support those rigs going back to work. Our drill pipe business saw orders nearly double from offshore from Q1 to Q2, again, to support those rigs going back to work. Our expectation is with the number of rigs and shipyards going through reactivation, recertification processes to go to work in the offshore in places like Saudi Arabia and elsewhere, our engineers are engaged with those customers, looking at their needs for equipment so forth. I think that'll be a little bit later. That's sort of the progression of demand that we foresee in offshore drilling. Hey, Dave also as you just observed, you know, we've spent the last several years really primarily contracting the organization, but it was really. Mm-hmm ... not just a right- sizing effort, but it was also positioning the organization for the future. You know, while we've certainly contracted the footprint to a large degree, we have actually enhanced and grown our footprint in certain markets, including the Middle East. Mm-hmm. That's a great point. Feel like we're really well positioned for the way that the market will evolve. We're well- positioned for that. Yep. Yeah. It feels like Middle East kind of touches all your segments. You know, I guess the other thing I'm kind of curious about is you talked about reactivations and tenders out there. We're hearing, you know, a lot of the checkup on the deepwater side. I would think that the amount of potential aftermarket revenue per rig increases substantially the further we go down the stack. A lot of these rigs have been. I would imagine they're in pretty bad shape after sitting idle for a few years. Can you talk about how, what that looks like over the next 12 months? I mean, how. Like, in terms of what you're seeing, then what can the market really do, and how does that change your revenue potential? I'm sure it expands quite a bit. Yeah. Yeah As you get down to some of these rigs that have been stacked two years or so. After about two years, the costs go way up. There's sort of almost a step change function in the offshore for rigs that are cold stacked for that period of time. It's really gonna vary a lot by rig. That's why it's so important that our engineering teams engage with these customers and really, you know, get on the deck and see what they're working with, and that's underway. The other kind of constraint, I guess, that we're facing here in the near term, and again, something else that Jose touched on, is that the offshore drillers really are, you know, many are emerging from restructuring. They face constrained access to capital. They're very careful about their expenditures on these rigs and I think that's sort of gating some of the investments. At the end of the day, more rigs have to go back to work. We have a supply and demand shortfall that has to be addressed. We foresee rising levels of activity that's gonna support more rigs being reactivated, and that process will go from the easy, cheap and easy, easiest rigs at the beginning of the cycle to the more expensive, more challenged rigs as we progress deeper into the stack. That's kind of how we see things playing out. Great. Thank you. Thanks, Dave. One moment for our next question. Our next question comes from David Smith with Pickering Energy Partners. Hey, good morning. Your line is open. Thank you. Good morning. Good morning. Thank you for taking my question. I guess one quick follow-up on that last topic, circling back to offshore rig demand growth. With what Phil is talking about, you know, 12-month lead times on the deepwater reactivation. I suspect you're involved in those conversations before- Yeah. You know, will we ever see a contract announced. You know, I wanted to ask, also, you know, on those reactivation candidates, especially on the deepwater side, are you seeing interest in equipment upgrades as part of the reactivation and any color you might provide on what that opportunity can look like? Yes, we are. A lot of interest around achieving BSEE required BOP recertifications globally. That's sort of becoming a new standard. A lot of interest in MPD. Many markets are requiring managed pressure drilling capabilities on deepwater rigs as we go forward and put those rigs back to work. Yeah, we're definitely involved in those conversations and you know, expect that that's gonna lead to orders for additional equipment in the future for NOV. Great. Appreciate it. Then just circling back to the push-pull and you know an undersupplied U.S. you know lower 48 market at least you know undersupplied for you know future demand growth. Was hoping you could share any color on what you're seeing you know on you know potential for a pickup and private capital maybe evaluating some growth opportunities to you know kind of get in front of public companies that you know need improving balance sheets and you know long-term contracts to support growth. David, this is pressure pumping you're asking about or more broadly? Pressure pumping, you know, broadly works, too. Yeah. Yeah. I think, you know, look, all public companies have a lot of pressure to be very, very careful on capital expenditures. You've seen that play out in the E&P space, where most of the incremental rigs put back to work are private operators that are picking up rigs, whereas the public companies have been way more measured in their growth in activity. Candidly, I you know, we'll see how it plays out in the oilfield services sector. I don't know if this is going to be the case or not, but it wouldn't surprise me if there are some smart private capital that looks at opportunities that are emerging. We're just now kind of moving through this pricing inflection point in lots of categories of equipment. You've had just the past couple of days, strong performance and announcements by some pressure pumpers as well as North American land drillers that point to you know, sharply rising sort of margins per unit per day and those sorts of things that make those investments more attractive. We'll see how it plays out. Ultimately, I think what we're seeing in commodity prices translating through to oilfield service pricing is a strong price signal coming back that look, we've got a couple of million barrel per day shortfall that has to be addressed, and capital ultimately will find its way into the space to address that, in our view. David, I think it's a really interesting question, not just as it pertains to the North American market, but if you think about the global market. You know, things are emerging quickly, but what does appear is that the investors in the space this cycle are gonna be a little bit different than what we saw in the prior cycle. There's certainly some new and emerging potential investors that are kicking around within the U.S. markets and overseas. That's the same case as well, but also probably gonna be more driven by NOCs helping to support more- Yeah. Of the activity going forward, as well as sort of affiliated sovereign wealth funds that are getting much more engaged in the space outside of their home territory. Things are gonna look a little bit differently this time, but at the end of the day, when the sector delivers good returns, which we are entering that phase, that will draw investors and providers of capital. That's a great point. More specifically around that, you go back to the jack-up space in the offshore. There's been a number of jack-up rig transactions in the last quarter or two that you're seeing some players emerge that are backed by sovereign wealth capital that is much more bullish and willing to put new capital into offshore drilling assets, more specifically. Yeah, that's a great point. Really appreciate the color, and I'd be remiss if I didn't say congrats on the quarter and the great second half outlook. Thank you. Thanks, David. One moment for our next question. Our next question comes from Marc Bianchi with Cowen. Your line is open. Hey, thanks. Yeah, I guess on the second half outlook there, you know, this is the first time I can remember you guys going beyond a quarter out in terms of giving some guidance. What's the thought process there, if there's anything in particular that caused that this quarter? I don't think there's anything in particular, Marc. Look, you know, we obviously significantly outpaced the guidance that we provided this quarter. Things are shaping up a little bit better in terms of our confidence related to our ability to execute against supply chain challenges that will continue to exist through year-end. Blake and I know we're gonna get a tremendous number of questions related to outlook a little bit further out. We provided a very wide range, but wanted to provide you at least a fair way of alternatives for how we're sort of seeing the second half. That's it in a nutshell. Okay, super. Maybe back to you know, the customer spending and refurbishing their fleets and so forth. How much below sustaining CapEx do you think customers are generally? You know, is it 20%, 30%, 50% below where they need to be spending at current activity levels? Is there a big distinction as you look in North America versus rest of world? Yeah, it's really. It's a great question. It's really hard to answer. What I would say is, this is very anecdotal, admittedly. I think it's easier for land drillers with idled rigs to cannibalize than it is for the offshore. In terms of, you know, for a given number of rigs working, they can underspend more dramatically than in the offshore because they just send a crew out to, you know, take a draw works off of a stacked rig and replace the capital as it's needed to sustain the ongoing land rigs that are working. Whereas in the offshore, that's more expensive, far more challenging to do, putting a rig in a shipyard. I'm not sure that answers your question, but it's sort of, hopefully, some anecdotal insight into what's possible out there. What I would tell you, though, is all of our customers are great at not spending dollars they don't have to spend in a downturn. That's a skill set that they've honed over prior downturns and that they've employed enthusiastically through this downturn. What that gives rise to is that kind of coiled spring that Jose was talking about earlier, where, you know, I think we are moving to a period where we're gonna see some catch up expenditures here, around these rig reactivations, around putting more rigs to work globally that are going to benefit NOV. Yep. Thanks for that, Clay. I'll turn it back. Thank you. Thanks. One moment for our next question. Our next question comes from Connor Lynagh with Morgan Stanley. Your line is open. Yeah, thanks. I wanted to talk about C&Ps a bit. The order intake there has actually been quite strong, but you highlighted in your comments that you're still seeing deferral of projects and things like that. I'm wondering if you can just sort of square the two things, and basically, you know, is there a certain portion of the business that's been disproportionately contributing to the orders over the past few quarters and a portion that you expect to catch up going forward? Obviously, within our C&Ps segment, we've strung together a number of quarters in a row here of really solid bookings. This last quarter, even though, you know, it's 132% book-to-bill, but maybe even more importantly, it's up 56% quarter-on-quarter. Everything's heading the right direction. I think the distinction that we're trying to make in that commentary that you're referring to is that the businesses that are conducting business in Asian shipyards that have had a host of challenges and are still sort of working through debottlenecking processes are resulting in some cautiousness on the customer's part in terms of pulling the trigger on FIDs. Our sense is, you know, that the number and size of opportunities that we've been pursuing over the last several quarters, if not several years, certainly, isn't getting any smaller. Just, the time horizon when they pull those triggers is getting kicked out a little bit, I think, pending resolution on those bottlenecks, getting arms around the new cost environment that they're in, all those sorts of issues. Really, it's just almost more of a sense of optimism that there's more orders to come, particularly for those large project-intensive businesses. Yeah, that makes sense. So just sort of thinking through that, you guys have also highlighted, you know, ongoing cost to your business from delays in shipyards. I missed if you had quantified the amount, but if you have any sort of quantification of that. You know, I think some of the thinking around margins through the next few quarters was that those would be rolling off. Just any updated expectations on how to think about margins beyond, obviously, the third quarter or those costs, however you wanna frame it. Yeah. I think probably can't give you any more specific guidance, but progressive improvement on the margin front. Look, you know, the last two quarters, we called out specific charges that we took on projects, and those were POC-type projects. That pressures future margins associated with those projects. This quarter, we didn't have anything of that magnitude, and we saw some improvement. Obviously, look at the guidance, where we're citing mid-30% incremental margins going into Q3. Things are improving and obviously that's on a segment that normally does not deliver incremental margins that's quite that high. Hopefully we're soon to get back to a time period where we're consistently delivering the types of incremental margins that segment normally delivers, which is sort of upper 20s%-lower 30% type range. We got a little bit of a catch-up coming, I think. Okay. Sorry, just finalizing this thought here. In order to get back to the sort of low- to mid-teen-type margins that this business was doing in say 2017 and 2018, is it shorter-cycle consumable items with higher margin coming back into the mix? Is it some of these big projects starting to execute faster? You know, what do you see as the biggest swing factors to getting back to those profitability levels? Yeah. Go ahead. I think that's a good question, Connor. It's obviously both, right? We've got to have better execution on those larger projects. We need more of those short- cycle capital equipment businesses to come to life. Hopefully you picked up on that aspect in our prepared comments a little bit, that we're starting to see a lot more of those signs of life, particularly within our Fiberglass business and our intervention and stimulation equipment business, right? Yeah, I think we touched on before that basically the segment consists of about two-thirds longer cycle big project- oriented businesses and about a third shorter cycle. That longer cycle provides that base load that we've sort of been surviving off of over the last several quarters. Those shorter cycle components really provide the juice and more of the upside as it relates to better incrementals. Importantly, both types of business have suffered under a lot of supply chain disruption, both, you know, in the short-cycle Fiberglass, you've heard us talk about our restrictions, our glass supply allocations, et cetera. Longer cycle projects are more exposed to Asian shipyard disruptions and the like. I think supply chain issues hopefully will ease over the next few quarters. I think that'll go a long way towards helping us out here. Makes sense. Thanks very much. Thanks, Connor. Thank you. One moment for our next question. Our next question comes from Arun Jayaram with JP Morgan. Your line is open. Good morning. Clay, Jose, I was wondering if you could give us a sense on the capital equipment side of the business. I was wondering if you can maybe characterize trends you're seeing from E&Ps versus your oil service customers. Also maybe within oil services, give us a bit more color around call order trends between offshore and onshore. 'Cause Clay, as you mentioned earlier, we are starting to see some of the onshore North American service companies start to raise CapEx in frac and in terms of adding incremental capacity. Yeah. Yeah. Well, Arun, I know you're aware of this, but for everyone else's benefit, oilfield service companies don't necessarily want to add features that aren't directed by operators, right? A lot that happens in our world are dictated by operators. Things like lower emission eFrac fleets and the like is really a trend that we see in the pressure pumping side that I think will continue to be influential the frac fleets that we provide on the drilling side. The E&Ps on land are dictating more setback capacity. They want to move to 5.5-inch drill pipe for better hydraulics on longer high laterals and more mud pump capacity at 7,500 PSI high- pressure systems, that sort of thing. In the offshore, I mentioned earlier, managed pressure drilling is a big push as well as BSEE sort of BOP requirements. Those are some of the directional trends that we're seeing from the E&P world that are influencing what they're requiring of our customers, the oilfield service companies out there. Great. Okay. Just my follow-up, Clay, you guys obviously are a global manufacturer. I was wondering if you could give us a sense of how much, you know, manufacturing capacity does, you know, NOV have in Western Europe and any risk mitigation you're doing given what could be an energy crunch, unfortunately this upcoming winter? Yeah, we do have some manufacturing in Europe, but far less than we have in the United States and North America or in the Middle East or Asia. It's small with respect to our own footprint of manufacturing. We do, however, rely on suppliers out of Western Europe that we're watching closely and in close communication with. These are suppliers of castings and forgings and a few other polymers and things that we buy. Very concerned about kind of their ability to continue to supply us as we move into the winter months. If they're constrained from a natural gas standpoint, we need to know that and prepare for that. Watching the situation there very closely. Great. Thanks, Clay. Thanks, Arun. I'm not showing any further questions at this time. I'd like to turn the call back over to Clay for any closing remarks. Good. Thank you, Kevin. I know this has been a busy day, so really, news day, and I appreciate you joining us this morning. I hope you have a great day. Thank you. Ladies and gentlemen, this concludes today's presentation. Just gonna have a wonderful day.