National Oilwell Varco Announces Third Quarter 2012 Results

  National Oilwell Varco Announces Third Quarter 2012 Results

Business Wire

HOUSTON -- October 25, 2012

National Oilwell Varco, Inc. (NYSE: NOV) today reported that for the third
quarter ended September 30, 2012 it earned net income of $612 million, or
$1.43 per fully diluted share, compared to second quarter ended June 30, 2012
net income of $605 million, or $1.42 per fully diluted share. Earnings per
share increased 14 percent compared to the third quarter 2011 earnings of
$1.25 per fully diluted share.

Transaction charges for the third quarter of 2012 were $57 million pre-tax.
Net income for the third quarter of 2012 excluding transaction charges was
$650 million, or $1.52 per fully diluted share. This compares to second
quarter of 2012 net income of $626 million, or $1.46 per fully diluted share,
and third quarter 2011 net income of $536 million or $1.26 per fully diluted
share, excluding transaction charges from all periods.

The Company’s revenues for the third quarter of 2012 were $5.3 billion, an
increase of 12 percent from the second quarter of 2012 and an increase of 42
percent from the third quarter of 2011. Operating profit for the third quarter
of 2012 was $946 million or 17.8 percent of sales, excluding transaction
charges. Sequentially, third quarter operating profit increased four percent,
resulting in operating profit flow-through (change in operating profit divided
by the change in revenue) of seven percent, excluding transaction charges.
Year-over-year third quarter operating profit increased 22 percent, resulting
in operating profit flow-through of 11 percent, excluding transaction charges.

During the third quarter of 2012 the Company’s Rig Technology segment booked
$2.29 billion in new orders. Backlog for capital equipment orders for the
Company’s Rig Technology segment at September 30, 2012 was $11.66 billion, up
three percent from the end of the second quarter of 2012.

Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked,
“Outstanding execution enabled the Company to achieve solid earnings again
this quarter. We are pleased by the level of bookings into our capital
equipment backlog for the Rig Technology segment during the third quarter. We
continue to see steady activity around new orders, and expect high demand for
deepwater rigs to drive solid orders again in the fourth quarter. Demand for
other NOV products and services continued to grow in international markets,
but softening demand in North America partly offset this trend during the
third quarter.

Our Company has completed a number of strategic initiatives this year, and I
am pleased to report that these are going very well. Our investments will
further strengthen National Oilwell Varco’s capabilities to service our
customers, as well as provide future opportunities for our employees and
earnings growth for our shareholders.”

Rig Technology

Third quarter revenues for the Rig Technology segment were a record $2.55
billion, an increase of six percent from the second quarter of 2012 and an
increase of 29 percent from the third quarter of 2011. Operating profit for
this segment was $610 million, or 23.9 percent of sales. Operating profit
flow-through was 27 percent sequentially and 14 percent from the third quarter
of 2011 to the third quarter of 2012. Revenue out of backlog for the segment
increased five percent sequentially and increased 36 percent year-over-year,
to $1.91 billion for the third quarter of 2012.

Petroleum Services & Supplies

Revenues for the third quarter of 2012 for the Petroleum Services & Supplies
segment were $1.72 billion, down three percent compared to second quarter 2012
results and up 18 percent from the third quarter of 2011. Operating profit was
$383 million, or 22.3 percent of revenue, up 28 percent from the third quarter
of 2011. Operating profit flow-through was 33 percent from the third quarter
of 2011 to the third quarter of 2012.

Distribution & Transmission

The Distribution & Transmission segment generated third quarter revenues of
$1.32 billion, which were up 69 percent from the second quarter of 2012 and
were up 174 percent from the third quarter of 2011, due mostly to previously
disclosed mergers completed during the second quarter and third quarters of
2012. Third quarter operating profit was $78 million or 5.9 percent of sales.
Operating profit flow-through was four percent sequentially and five percent
from the third quarter of 2011 to the third quarter of 2012.

The Company has scheduled a conference call for October 25, 2012, at 8:00 a.m.
Central Time to discuss third quarter results. The call will be broadcast
through the Investor Relations link on National Oilwell Varco’s web site at
www.nov.com, and a replay will be available on the site for thirty days
following the conference. Participants may also join the conference call by
dialing 1-800-446-1671 within North America or 1-847-413-3362 outside of North
America five to ten minutes prior to the scheduled start time, and ask for the
“National Oilwell Varco Earnings Conference Call.”

National Oilwell Varco is a worldwide leader in the design, manufacture and
sale of equipment and components used in oil and gas drilling and production
operations, the provision of oilfield services, and supply chain integration
services to the upstream oil and gas industry.

Statements made in this press release that are forward-looking in nature are
intended to be "forward-looking statements" within the meaning of Section 21E
of the Securities Exchange Act of 1934 and may involve risks and
uncertainties. These statements may differ materially from actual future
events or results. Readers are referred to documents filed by National Oilwell
Varco with the Securities and Exchange Commission, including the Annual Report
on Form 10-K, which identify significant risk factors which could cause actual
results to differ from those contained in the forward-looking statements.

                                                             
NATIONAL OILWELL VARCO, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)
                                                September 30,     December 31,
                                                2012              2011
                                                (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                       $    1,702        $  3,535
Receivables, net                                     4,033           3,291
Inventories, net                                     5,989           4,030
Costs in excess of billings                          1,065           593
Deferred income taxes                                286             336
Prepaid and other current assets                    592            325     
Total current assets                                 13,667          12,110
                                                                  
Property, plant and equipment, net                   2,818           2,445
Deferred income taxes                                320             267
Goodwill                                             6,940           6,151
Intangibles, net                                     4,431           4,073
Investment in unconsolidated affiliates              370             391
Other assets                                        116            78      
                                                $    28,662       $  25,515  
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                  
Current liabilities:
Accounts payable                                $    1,365        $  901
Accrued liabilities                                  2,363           2,376
Billings in excess of costs                          1,037           865
Current portion of long-term debt and                354             351
short-term borrowings
Accrued income taxes                                 194             709
Deferred income taxes                               368            214     
Total current liabilities                            5,681           5,416
                                                                  
Long-term debt                                       1,175           159
Deferred income taxes                                1,802           1,852
Other liabilities                                   321            360     
Total liabilities                                   8,979          7,787   
                                                                  
Commitments and contingencies
                                                                  
Stockholders’ equity:
Common stock – par value $.01; 1 billion
shares authorized; 426,879,173 and
423,900,601
shares issued and outstanding at September           4               4
30, 2012 and December 31, 2011
Additional paid-in capital                           8,718           8,535
Accumulated other comprehensive income               79              (23     )
(loss)
Retained earnings                                   10,773         9,103   
Total National Oilwell Varco stockholders’           19,574          17,619
equity
Noncontrolling interests                            109            109     
Total stockholders’ equity                          19,683         17,728  
                                                $    28,662       $  25,515  

                                                                 
NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In millions, except per share data)
                                                                            
                   Three Months Ended                        Nine Months Ended
                   September 30,               June 30,      September 30,
                   2012          2011          2012          2012           2011
Revenue:
Rig Technology     $ 2,547       $ 1,970       $ 2,405       $ 7,211        $ 5,472
Petroleum
Services &           1,717         1,460         1,776         5,197          4,084
Supplies
Distribution &       1,315         480           780           2,659          1,313
Transmission
Eliminations        (260  )      (170  )      (227  )      (711   )      (470   )
Total revenue        5,319         3,740         4,734         14,356         10,399
Gross profit         1,411         1,170         1,321         4,003          3,251
Gross profit %       26.5  %       31.3  %       27.9  %       27.9   %       31.3   %
Selling,
general, and         465           392           414           1,269          1,133
administrative
Other costs         57          6           28          92           29     
Operating            889           772           879           2,642          2,089
profit
Interest and
financial            (10   )       (8    )       (9    )       (27    )       (31    )
costs
Interest             2             5             3             8              13
income
Equity income
in                   7             11            19            43             34
unconsolidated
affiliates
Other income        (14   )      --          (5    )      (32    )      (26    )
(expense), net
Income before        874           780           887           2,634          2,079
income taxes
Provision for       265         252         285         819          667    
income taxes
Net income           609           528           602           1,815          1,412
                                                                            
Net loss
attributable
to                  (3    )      (4    )      (3    )      (8     )      (8     )
noncontrolling
interests
Net income
attributable       $ 612        $ 532        $ 605        $ 1,823       $ 1,420  
to Company
                                                                            
Net income
attributable
to Company per
share:
                                                                            
Basic              $ 1.44       $ 1.26       $ 1.42       $ 4.29        $ 3.37   
                                                                            
Diluted            $ 1.43       $ 1.25       $ 1.42       $ 4.28        $ 3.35   
                                                                            
Weighted
average shares
outstanding:
                                                                            
Basic               425         422         425         425          421    
                                                                            
Diluted             427         425         427         426          424    

                                                               
NATIONAL OILWELL VARCO, INC.

OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)

(In millions)

                 Three Months Ended                        Nine Months Ended
                 September 30,               June 30,      September 30,
                 2012          2011          2012          2012           2011
                                                                          
Revenue:
Rig              $ 2,547       $ 1,970       $ 2,405       $ 7,211        $ 5,472
Technology
Petroleum
Services &         1,717         1,460         1,776         5,197          4,084
Supplies
Distribution
&                  1,315         480           780           2,659          1,313
Transmission
Eliminations      (260  )      (170  )      (227  )      (711   )      (470   )
Total            $ 5,319      $ 3,740      $ 4,734      $ 14,356      $ 10,399 
revenue
                                                                          
Operating
profit:
Rig              $ 610         $ 528         $ 571         $ 1,732        $ 1,467
Technology
Petroleum
Services &         383           299           393           1,164          794
Supplies
Distribution
&                  78            37            54            175            91
Transmission
Unallocated
expenses and      (125  )      (86   )      (111  )      (337   )      (234   )
eliminations
Total
operating
profit           $ 946        $ 778        $ 907        $ 2,734       $ 2,118  
(before
other costs)
Operating
profit %:
Rig                23.9  %       26.8  %       23.7  %       24.0   %       26.8   %
Technology
Petroleum
Services &         22.3  %       20.5  %       22.1  %       22.4   %       19.4   %
Supplies
Distribution
&                  5.9   %       7.7   %       6.9   %       6.6    %       6.9    %
Transmission
Other             --          --          --          --           --     
unallocated
                                                                          
Total
operating
profit %          17.8  %      20.8  %      19.2  %      19.0   %      20.4   %
(before
other costs)


NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING OTHER COSTS
(Unaudited)
(In millions)
                                                                 
                         Three Months Ended                            Nine Months Ended
                         September 30,                 June            September 30,
                                                       30,
                         2012            2011          2012            2012            2011
                                                                                       
Reconciliation
of EBITDA
excluding
other costs
(Note 1):
GAAP net
income                   $ 612           $ 532         $ 605           $ 1,823         $ 1,420
attributable
to Company
Provision for              265             252           285             819             667
income taxes
Interest                   10              8             9               27              31
expense
Depreciation
and                       157            140          157            462            413
amortization
EBITDA                     1,044           932           1,056           3,131           2,531
Other costs:
Transaction                57              6             28              92              12
costs
Libya asset               --             --           --             --             17
write-down
EBITDA
excluding                $ 1,101         $ 938         $ 1,084         $ 3,223         $ 2,560
other costs
(Note 1)
                                                                                         

Note 1: EBITDA excluding other costs means earnings before interest, taxes,
depreciation, amortization, and other costs, and is a non-GAAP financial
measurement. Management uses EBITDA excluding other costs because it believes
it provides useful supplemental information regarding the Company’s on-going
economic performance and, therefore, uses this financial measure internally to
evaluate and manage the Company’s operations. The Company has chosen to
provide this information to investors to enable them to perform more
meaningful comparisons of operating results and as a means to emphasize the
results of on-going operations.

Contact:

National Oilwell Varco, Inc.
Clay Williams, (713) 346-7606
Clay.Williams@nov.com
 
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