Analyst Note
| Preston Caldwell |NOV’s second-quarter results evinced solid improvement in the company's prospects, though not to the degree the headline numbers suggest. While revenue was up 13% sequentially, and adjusted operating margins jumped to 2% from negative 6% in the prior quarter, this was boosted by a temporary windfall from a settlement on a rig cancellation (which affected the rig technologies segment). Excluding the settlement contribution, revenue was up 8% sequentially, and adjusted operating margins improved to negative 2%. North America revenue surged 22% on the back of industrywide activity improvement, and international revenue was about flat. Our fair value estimate and no-moat rating are unchanged following the results.