National Oilwell Varco Announces Fourth Quarter and Full Year 2012 Earnings

  National Oilwell Varco Announces Fourth Quarter and Full Year 2012 Earnings

Business Wire

HOUSTON -- February 1, 2013

National Oilwell Varco, Inc. (NYSE: NOV) today reported that for the fourth
quarter ended December 31, 2012 it earned net income of $668 million, or $1.56
per fully diluted share. Earnings improved nine percent compared to the third
quarter of 2012, and improved 16 percent compared to the fourth quarter of
2011. Excluding $51 million in pre-tax transaction charges and a net $69
million tax benefit related to certain U.S. foreign tax credits in the fourth
quarter of 2012, net income was $638 million, or $1.49 per fully diluted
share, down two percent from the third quarter of 2012, and up nine percent
from the fourth quarter of 2011, excluding transaction charges from all
periods. The net $69 million tax benefit resulted from a strategic
reorganization of certain foreign operations to more fully integrate recently
acquired business groups.

Revenues reported for the full year 2012 were $20.04 billion, and net income
was $2.49 billion, or $5.83 per fully diluted share. Operating profit for the
full year 2012 was $3.55 billion. Excluding $143 million in pre-tax
transaction charges and a net $69 million tax benefit related to certain U.S.
foreign tax credits in 2012, net income was $2.52 billion, or $5.91 per fully
diluted share, and operating profit was $3.69 billion or 18.4 percent of
sales, for the full year 2012. Earnings per share increased 24 percent from
2011, excluding transaction charges and unusual tax benefits from both
periods.

Revenues for the fourth quarter increased seven percent sequentially to $5.69
billion. Operating profit for the fourth quarter, excluding transaction
charges, was $954 million or 16.8 percent of sales, up one percent from the
third quarter of 2012. Operating profit flow-through, or the change in
operating profit divided by the change in revenue, was two percent from the
third quarter of 2012 to the fourth quarter of 2012, and was seven percent
from the fourth quarter of 2011 to the fourth quarter of 2012, excluding
transaction charges from all periods.

Backlog for capital equipment orders for the Company’s Rig Technology segment
at December 31, 2012 was a record at $11.86 billion, up two percent from the
third quarter of 2012. New orders during the quarter were $2.42 billion,
reflecting continued good demand for oilfield equipment.

Pete Miller, Chairman and CEO of National Oilwell Varco, remarked, “The fourth
quarter marked a strong finish to a record-breaking year. For the year, the
Company’s continued investments in technology, product and service line
extensions, facilities and machines, and our people, enabled us to better
support our customers and establish new benchmarks in revenues, net income and
ending backlog. I would like to thank all of our dedicated employees for their
hard work and outstanding execution this year.

As we enter 2013, we recognize that there are some near-term headwinds facing
us in the North American land market. However, we are excited to be entering
the year with strong financial resources, a solid backlog, a well-constructed
and balanced business, and an experienced and capable group at NOV that
remains committed to delivering the highest quality of products and services
to our customers. We also enter the year with the firm belief that the oil and
gas industry will continue to upgrade the world’s aging rig fleet, while
simultaneously building out both a deepwater and a worldwide shale
infrastructure that are still in the early stages of development, and we look
forward to playing a leadership role in those efforts.”

Rig Technology

Fourth quarter revenues for the Rig Technology segment were $2.90 billion, an
increase of 14 percent from the third quarter of 2012 and an increase of 25
percent from the fourth quarter of 2011. Operating profit for this segment was
$648 million, or 22.4 percent of sales, an increase of six percent from the
third quarter of 2012 and an increase of seven percent from the fourth quarter
of 2011. Sequential operating profit flow-through was 11 percent.
Year-over-year operating profit flow-through was eight percent. Revenue out of
backlog for the segment increased 16 percent sequentially and increased 25
percent year-over-year, to $2.21 billion for the fourth quarter of 2012.

Petroleum Services & Supplies

Revenues for the fourth quarter of 2012 for the Petroleum Services & Supplies
segment were $1.77 billion, up three percent compared to third quarter 2012
results and up 13 percent compared to fourth quarter 2011 results. Operating
profit was $355 million, or 20.1 percent of sales, down seven percent from the
third quarter of 2012 and an increase of 18 percent from the fourth quarter of
2011. Operating profit flow-through was 27 percent from the fourth quarter of
2011 to the fourth quarter of 2012.

Distribution & Transmission

Fourth quarter revenues for the Distribution & Transmission segment were $1.27
billion, down four percent from the third quarter of 2012, and up 126 percent
from the fourth quarter of 2011 (due mostly to previously disclosed mergers
completed in 2012). Fourth quarter operating profit was $78 million or 6.2
percent of sales. Operating profit flow-through was flat sequentially, and was
five percent from the fourth quarter of 2011 to the fourth quarter of 2012.

The Company has scheduled a conference call for February 1, 2013, at 8:00 a.m.
Central Time to discuss fourth quarter and 2012 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)
                                                          
                                               December 31,       December 31,
                                               2012               2011
                                               (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                      $   3,319          $  3,535
Receivables, net                                   4,320             3,291
Inventories, net                                   5,891             4,030
Costs in excess of billings                        1,225             593
Deferred income taxes                              349               336
Prepaid and other current assets                  574              325     
Total current assets                               15,678            12,110
                                                                  
Property, plant and equipment, net                 2,945             2,445
Deferred income taxes                              413               267
Goodwill                                           7,172             6,151
Intangibles, net                                   4,743             4,073
Investment in unconsolidated                       393               391
affiliates
Other assets                                      140              78      
                                               $   31,484         $  25,515  
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                  
Current liabilities:
Accounts payable                               $   1,200          $  901
Accrued liabilities                                2,571             2,376
Billings in excess of costs                        1,189             865
Current portion of long-term debt and              1                 351
short-term borrowings
Accrued income taxes                               355               709
Deferred income taxes                             333              214     
Total current liabilities                          5,649             5,416
                                                                  
Long-term debt                                     3,148             159
Deferred income taxes                              1,997             1,852
Other liabilities                                 334              360     
Total liabilities                                 11,128           7,787   
                                                                  
Commitments and contingencies
                                                                  
Stockholders’ equity:
Common stock – par value $.01; 1
billion shares authorized; 426,928,322
and 423,900,601
shares issued and outstanding at
December 31, 2012 and December 31,                 4                 4
2011
Additional paid-in capital                         8,743             8,535
Accumulated other comprehensive income             107               (23     )
(loss)
Retained earnings                                 11,385           9,103   
Total National Oilwell Varco                       20,239            17,619
stockholders’ equity
Noncontrolling interests                          117              109     
Total stockholders’ equity                        20,356           17,728  
                                               $   31,484         $  25,515  
                                                                             

                                                                       
NATIONAL OILWELL VARCO, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)

                       Three Months Ended                              Years Ended
                       December 31,                    September       December 31,
                                                       30,
                       2012            2011            2012            2012             2011
Revenue:
Rig Technology         $ 2,896         $ 2,316         $ 2,547         $ 10,107         $ 7,788
Petroleum
Services &               1,770           1,570           1,717           6,967            5,654
Supplies
Distribution &           1,268           560             1,315           3,927            1,873
Transmission
Eliminations            (249  )        (187  )        (260  )        (960   )        (657   )
Total revenue            5,685           4,259           5,319           20,041           14,658
Gross profit             1,410           1,287           1,411           5,413            4,538
Gross profit %           24.8  %         30.2  %         26.5  %         27.0   %         31.0   %
Selling,
general, and             456             427             465             1,725            1,560
administrative
Other costs             51            12            57            143            41     
Operating                903             848             889             3,545            2,937
profit
Interest and
financial                (21   )         (9    )         (10   )         (48    )         (40    )
costs
Interest                 2               5               2               10               18
income
Equity income
in                       15              12              7               58               46
unconsolidated
affiliates
Other income            (28   )        (13   )        (14   )        (60    )        (39    )
(expense), net
Income before            871             843             874             3,505            2,922
income taxes
Provision for           203           270           265           1,022          937    
income taxes
Net income               668             573             609             2,483            1,985
                                                                                        
Net loss
attributable
to                      -             (1    )        (3    )        (8     )        (9     )
noncontrolling
interests
Net income
attributable           $ 668          $ 574          $ 612          $ 2,491         $ 1,994  
to Company
                                                                                        
Net income
attributable
to Company per
share:
                                                                                        
Basic                  $ 1.57         $ 1.36         $ 1.44         $ 5.86          $ 4.73   
                                                                                        
Diluted                $ 1.56         $ 1.35         $ 1.43         $ 5.83          $ 4.70   
                                                                                        
Weighted
average shares
outstanding:
                                                                                        
Basic                   426           422           425           425            422    
                                                                                        
Diluted                 428           425           427           427            424    
                                                                                                 


NATIONAL OILWELL VARCO, INC.
OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)

                 Three Months Ended                           Years Ended
                     December 31,                 September       December 31,
                                                     30,
                     2012         2011            2012            2012          2011
                                                                                      
Revenue:
Rig                  $ 2,896         $ 2,316         $ 2,547         $ 10,107         $ 7,788
Technology
Petroleum
Services &             1,770           1,570           1,717           6,967            5,654
Supplies
Distribution
&                      1,268           560             1,315           3,927            1,873
Transmission
Eliminations          (249  )        (187  )        (260  )        (960   )        (657   )
Total                $ 5,685        $ 4,259        $ 5,319        $ 20,041        $ 14,658 
revenue
                                                                                      
Operating
profit:
Rig                  $ 648           $ 603           $ 610           $ 2,380          $ 2,070
Technology
Petroleum
Services &             355             301             383             1,519            1,095
Supplies
Distribution
&                      78              45              78              253              136
Transmission
Unallocated
expenses and          (127  )        (89   )        (125  )        (464   )        (323   )
eliminations
Total
operating
profit               $ 954          $ 860          $ 946          $ 3,688         $ 2,978  
(before
other costs)
Operating
profit %:
Rig                    22.4  %         26.0  %         23.9  %         23.5   %         26.6   %
Technology
Petroleum
Services &             20.1  %         19.2  %         22.3  %         21.8   %         19.4   %
Supplies
Distribution
&                      6.2   %         8.0   %         5.9   %         6.4    %         7.3    %
Transmission
Other                 -             -             -             -              -      
unallocated
                                                                                      
Total
operating
profit %              16.8  %        20.2  %        17.8  %        18.4   %        20.3   %
(before
other costs)
                                                                                               


NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING OTHER COSTS
(Unaudited)
(In millions)
                                                                
                       Three Months Ended                          Years Ended
                       December 31,                September       December 31,
                                                   30,
                       2012          2011          2012            2012          2011
                                                                                 
Reconciliation
of EBITDA
excluding
other costs
(Note 1):
GAAP net
income                 $ 668         $ 574         $  612          $ 2,491       $ 1,994
attributable
to Company
Provision for            203           270            265            1,022         937
income taxes
Interest                 21            9              10             48            40
expense
Depreciation
and                     166          142           157           628          555
amortization
EBITDA                   1,058         995            1,044          4,189         3,526
Other costs:
Transaction              51            12             57             143           24
costs
Libya asset             -            -             -             -            17
write-down
EBITDA
excluding              $ 1,109       $ 1,007       $  1,101        $ 4,332       $ 3,567
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.
Jeremy Thigpen, (713) 346-7301
Jeremy.Thigpen@nov.com
 
Press spacebar to pause and continue. Press esc to stop.