Jose Bayardo
Senior Vice President and Chief Financial Officer at NOV
As Clay mentioned, NOV had a solid 2024. During a year when drilling activity was down 9% in North-America and flat in international markets, our full-year revenue improved 3% with 38% EBITDA flow-through. We also generated $953 million of free-cash flow and achieved a book-to-bill of 122%. For the 4th-quarter, NOV's consolidated revenue decreased 1% year-over-year, but EBITDA increased 3% to $302 million with margins increasing 60 basis-points to 13.1% of sales.
Steadily improving quality of our capital equipment backlog, market-share gains from new higher-margin technologies and services and operational efficiencies more than offset the effect of lower activity levels. Cash-flow from operations was robust and totaled $591 million in the 4th-quarter due to higher levels of profitability and improved working capital efficiencies. Capital expenditures totaled $118 million, resulting in $473 million of free-cash flow. For full-year 2024, NOV generated $1.3 billion in cash-flow from operations and invested $351 million in capital expenditures, resulting in the $953 million of free-cash flow. We expect capital expenditures in 2025 to be in-line with 2024.
We achieved an 86% conversion rate of EBITDA to free-cash flow-in 2024. While we do not expect the exceptional improvement in working capital to repeat this year, we still expect a healthy EBITDA to free-cash flow conversion rate of more than 50% in 2025. During the 4th-quarter, we repurchased 7.5 million shares for $112 million and paid a $29 million dividend, returning $141 million to our shareholders. Our repurchases were heavily weighted towards the end-of-the quarter, so we exited the year with 384 million fully-diluted shares outstanding, 6 million shares lower than the weighted-average number of shares outstanding during the quarter.
For the full-year, we returned a total of $337 million to our shareholders or 41% of our excess free-cash flow. We remain committed to returning at least 50% of our excess free-cash flow to our shareholders on an annual basis and therefore, expect to true-up to that threshold through a supplemental dividend in the first-half of 2025. Our exceptionally strong cash-flow also allowed us to improve our cash balance by $414 million during 2024. With a robust balance sheet, we now expect to return well over 50% of our excess free-cash flow-in 2025, excluding the supplemental dividend related to our 2024 return target. Moving on to segment results.
During the 4th-quarter of 2024, our Energy Products and Services segment generated revenue of $1.06 billion, a modest decrease compared to the 4th-quarter of 2023. EBITDA decreased $20 million to $173 million or 16.3% of sales. The decrease in revenue and profitability was due to lower global drilling activity and the effect of heightened geopolitical and macroeconomic uncertainty, which had a disproportionate effect on-demand for the segment's shorter-cycle capital equipment offerings.
For the 4th-quarter, the sales mix for energy products and services was 49% services and rentals, 19% product sales and 32% shorter lived capital equipment. Sales of capital equipment decreased 15% year-over-year due to strong deliveries of drill pipe, managed-pressure drilling equipment and conductor casing connections in the 4th-quarter of 2023, which did not repeat. While demand for these offerings decreased year-over-year, each product-line has seen solid orders as of late. Partially offsetting the overall decline in capital equipment sales was a strong increase in revenue from the segment's composite pipes, fittings and structures.
We continue to experience robust demand for fiberglass pipes and tanks in support of production infrastructure for international developments and recently, shipyards seem to have found a new sense of urgency in taking deliveries of composite piping, ducts and ballast tanks for floating production storage and offloading vessels. Segment's revenues from services and rentals improved 4% year-over-year due primarily to contributions from our artificial lift and setting tool acquisitions. Excluding the acquisitions, service and rental revenue was up slightly year-over-year as market-share gains offset lower drilling activity levels.
Despite steady declines in drilling activity, revenue from rentals of our drill bits in the US has increased four straight quarters, a result of our industry-leading cutter technologies and close engineering coordination with operators to provide the optimal bit for the specific whole application. Demand for our solid control services remained robust with year-over-year revenue up in the low double-digit percent range, led by demand for our latest generation of technologies.
Over the past year, we've realized rapid market adoption of our Alpha shakers, which can process 20% to 30% more cuttings than other shakers on the market and our Therm thermal dissorption systems, which efficiently removes oil-based waste from cuttings, eliminating or significantly decreasing transport costs associated with waste disposal.
Our digital services operation, which includes our legacy MD Totco business, our MAX digital service offerings and our wired drill pipe-enabled downhole broadband solutions declined in the upper-single digit percent range range due to lower drilling activity levels impacting demand for electronic drilling data recorders and spud dates for DBS projects in the Middle-East sliding to the right, both of which more than offset contributions from the continued growth in the user base of our Max digital Solutions platform.
Revenue from our tubular coating and inspection services were flat year-over-year with steady demand for coating services in North-America, offsetting declines in higher-margin coating services in the Eastern Hemisphere and Latin-America. Revenue from Inspection services was down slightly due to lower activity in North-America, mostly offset by higher demand from Latin-America. We're realizing strong growth in downhole tool rentals from international markets by capitalizing on opportunities to expand the use of our leading-edge extended lateral tools into unconventional fields in international markets, including Saudi Arabia, the UAE and Argentina.
In the Middle-East, we began executing on a contract to provide complete bottom hole assemblies, including our advanced drill bits, motors and measurement wall drilling tools for a large service provider drilling extended lateral wells in an unconventional field. We've already helped the customer set a rate of penetration record for the 16-inch section in the field.
We're also seeing accelerated adoption of our friction reduction and torsional vibration mitigation tools in the Middle-East and pushing those products along with our advanced drilling motors and power sections into the Vaca Morta field in Argentina. The strong demand for our downhold tools in international markets and market-share gains in the US are mostly offsetting the decline in drilling activity and an increase in-direct sales of our products to operators, more of whom are starting to build-out their own fleet of high-spec drilling tools. Revenues from product sales increased in the low-double-digits compared to the 4th-quarter of 2023.
Our artificial lift franchise continues to see healthy demand in the Permian while pursuing growth in additional regions. Excluding the acquisition of our artificial lift business, revenue from consumable products was down in the low-to mid-teen percent range. Strong shipments of downhole drilling and fishing tools to customers in India, Indonesia and China were more than offset by lower shipments of tubular liners and sleeves, MPD consumables and a fall-off of drill bit sales in Saudi Arabia during the last couple of months of the year.
For the first-quarter of 2025, we expect our Energy Products and Services segment to realize a seasonal decline that is in-line with what the segment experienced last year, translating into revenue that is flat-to-down 2% year-over-year with EBITDA between $145 million and $165 million. Moving to our Energy Equipment segment. Revenue for the 4th-quarter of 2024 was $1.29 billion, down 1% from the 4th-quarter of 2023. EBITDA increased $38 million to $185 million, resulting in a 310 basis-point increase in margin to 14.4% of sales. The 4th-quarter of 2024 marks the 10th straight quarter of year-over-year margin growth for this segment, resulting from the continued improvement in the quality of our backlog and improvements in operational efficiencies.
During the 4th-quarter, sales of capital equipment accounted for approximately 57% of the segment's revenues, unchanged from the 4th-quarter of 2023, but up 3 percentage points from the 3rd-quarter of 2024 due to the typical seasonal pickup in year-end capital equipment deliveries. Aftermarket sales and services accounted for the remaining 43% of revenue in the 4th-quarter of 2024, which declined 3% year-over-year due primarily to a mid-single-digit percentage decrease in aftermarket support for intervention and stimulation equipment and a 1% decrease in our drilling equipment aftermarket operations.
Revenue from aftermarket parts and services for intervention and stimulation equipment in the US decreased in the mid-teen percent range year-over-year with a steady decline of completions activity causing customers to idle and stack frac spreads and other equipment. Partially offsetting the lower revenue from North-America was a mid-teen percent increase in-demand for aftermarket services in the Middle-East, where growing activity in unconventional resources is requiring more aftermarket support for a growing base of service equipment.
In our drilling equipment business, lower demand for spare parts was mostly offset by higher revenues from service and repair work. As Clay mentioned, we've started to experience softening demand for aftermarket parts and services as our offshore drilling contractor customers prepare to navigate through white space in 2025. We anticipate and are beginning to see a larger effect on-demand for spare parts versus service and repair with many customers taking advantage of the activity to complete upgrades and recertifications. Despite a lower number of recertifications expected in 2025, the offshore rig fleet is getting older and we expect our average recertification project will have a larger scope than what we saw in 2024.
Our expectation is that we will have fewer drill ship reactivations and recertifications, but we should see a meaningful number of upgrades and a larger scope per recertification project, resulting in aftermarket revenue that will decline in the mid to-upper single-digit percent range for the full-year. With the expectation for significantly higher offshore activity in 2026, we expect aftermarket orders to bottom in the second-quarter and revenues to trough in the 3rd-quarter before results improve in the 4th-quarter of 2025.
Turning to the capital equipment portion of the Energy Equipment segment, higher sales of drilling production and completion equipment more than offset lower year-over-year revenue from wind turbine installation vessels. 4th-quarter bookings remained strong with the segment posting a book-to-bill of 121%. Backlog ended 2024 at $4.43 billion, up 7% from year-end 2023 despite the negative impact strengthening US dollar had on our heavily international market-weighted backlog.
Revenue in our offshore production-oriented businesses improved slightly year-over-year with higher progress on process system projects, partially offset by a decline in our subsea flexible pipe operation after an extraordinarily strong Q4 of 2023. Outlook for our offshore production offerings remains very strong. We secured new orders for equipment packages associated with three newbuild FPSOs that will operate in Brazil and West Africa. The scope includes advanced natural gas dehydration, CO2 handling and produced water treatment systems.
Our Subsea flexible pipe business had another strong bookings quarter and backlog is at a record-high, up 62% from the end of last year. Importantly, the backlog consists of projects with much-improved pricing, which should drive meaningfully higher margins for the operation in 2025. Sales of intervention stimulation capital equipment improved high-single-digits over the 4th-quarter of 2023, with strong sales of coiled tubing and wireline equipment in the Middle-East more than offsetting a sharp decrease in-demand for pressure pumping equipment in North-America.
As activity declines and operators are doing more with less, we expect to see more attrition of the service equipment base over the next couple of quarters before our customers will need to resume replacing worn-out assets with our latest generation of equipment, which offers greater operational efficiencies and a lower total cost of ownership. While rig curtailments in conventional Saudi fields are causing some cautiousness, we expect the Middle-East region will continue to be a solid source of demand for completion equipment that is needed to feed the development of the service-intensive unconventional plays that is now underway.
Revenue from drilling capital equipment grew mid-single digits year-over-year due to increased progress on offshore projects, including a 20,000 PSI BOP upgrade we announced in 2024, and we continue to execute well on our sizable backlog of newbuild rigs in Saudi where we recently delivered our 10th rig. Our operations remain busy building equipment for offshore upgrades and we recently booked a drilling equipment package for a new jackup rig, but the outlook for rig equipment looks modest in 2025.
As Clay mentioned, we expect revenues to decrease in the low-single digit percent range in 2025 due to the offshore white space and macroeconomic uncertainties. Longer-term, we see building pent-up demand for high-spec rigs in emerging international unconventional basins and more opportunities to upgrade offshore rigs with the latest capabilities. Our marine and construction business experienced a steady decline in revenues through 2024 as higher revenue from pipe and cable lay vessels could not offset the completion of WTIV projects that occurred through the course of the year.
While orders for WTIVs have been somewhat sparse over the last two years, our customers in Western Europe continue to project a shortage of vessels by 2028 and are beginning to initiate tenders with shipyards, giving us optimism that we could realize a couple of orders during 2025. We also see the potential for additional pipelay vessels and expect demand for cranes and deck machinery to remain solid. With increasing macroeconomic and geopolitical uncertainty, we expect the Energy Equipment segment to realize a slightly larger than usual seasonal decline resulting in revenue that will be down 3% to 5% year-over-year with margins improving between 150 to 250 basis-points to yield EBITDA in the range of $135 million to $150 million.
With that, we'll now open the call to questions.
