National Oilwell Varco Announces All-Time Record Backlog and Second Quarter 2013 Earnings

  National Oilwell Varco Announces All-Time Record Backlog and Second Quarter
  2013 Earnings

Business Wire

HOUSTON -- July 30, 2013

National Oilwell Varco, Inc. (NYSE: NOV) today reported that for its second
quarter ended June 30, 2013 it earned net income of $531 million, or $1.24 per
fully diluted share, compared to first quarter ended March 31, 2013 net income
of $502 million, or $1.17 per fully diluted share. Excluding transaction
charges of $57 million pre-tax, second quarter 2013 net income was $568
million, or $1.33 per fully diluted share.

The Company’s revenues for the second quarter of 2013 were $5.60 billion,
which improved six percent from the first quarter of 2013 and 18 percent from
the second quarter of 2012. Operating profit for the second quarter of 2013
was $826 million, or 14.7 percent of sales, excluding transaction charges.

Backlog for capital equipment orders for the Company’s Rig Technology segment
was at a historic record level of $13.95 billion as of June 30, 2013, up eight
percent from the end of the first quarter of 2013 and up 24 percent from the
end of the second quarter of 2012. New orders during the quarter were $3.15
billion, reflecting continued strong demand for oilfield equipment.

Pete Miller, Chairman and CEO of National Oilwell Varco, remarked, “The second
quarter of 2013 marked another solid quarter for NOV. Despite seasonal
slowdowns in Canada and a challenging US market, the Company produced
sequential gains in revenues and earnings, which were largely driven by strong
revenues out of backlog and significant international growth within our
Petroleum Services & Supplies and Distribution & Transmission segments. The
Company also ended the quarter with an all-time record backlog of capital
equipment, as orders for new floaters and jackups continued at a strong pace,
and orders for our floating production equipment more than doubled from the
first quarter.” Miller continued, “In addition to our solid operating results,
we are also proud to have doubled our regular dividend in the second quarter,
further demonstrating our commitment to return more cash to our shareholders.
As we move through the second half of 2013, we look forward to continued
demand for our offshore drilling and floating production equipment, a gradual
rebound in Canada, and continued growth from our other international
operations.”

Rig Technology

Second quarter revenues for the Rig Technology segment were $2.83 billion, an
increase of eight percent from the first quarter of 2013 and an increase of 18
percent from the second quarter of 2012. Operating profit for this segment was
$587 million, or 20.7 percent of revenue. Operating profit flow-through
(change in operating profit divided by the change in revenue) was 15 percent
sequentially and four percent from the second quarter of 2012 to the second
quarter of 2013. Revenue out of backlog for the segment increased seven
percent sequentially and increased 17 percent year-over-year to $2.12 billion
for the second quarter of 2013.

Petroleum Services & Supplies

Revenues for the second quarter of 2013 for the Petroleum Services & Supplies
segment were $1.75 billion, up three percent compared to first quarter 2013
results and down two percent from the second quarter of 2012. Operating profit
was $304 million, or 17.4 percent of revenue, a decrease of two percent from
the first quarter of 2013. Double-digit percentage growth in international
markets, combined with a full quarter contribution from Robbins & Myers, was
partly offset by second quarter seasonal declines in Canada.

Distribution & Transmission

The Distribution & Transmission segment generated second quarter revenues of
$1.30 billion, which were up six percent from the first quarter of 2013 and up
66 percent from the second quarter of 2012 (due mostly to previously disclosed
mergers completed in 2012). Second quarter operating profit was $71 million,
or 5.5 percent of revenue, up nine percent from the first quarter of 2013 and
up 31 percent from the second quarter of 2012. Sequential flow-through was
nine percent, and year-over-year flow-through was three percent. Strong
international sales and a full quarter contribution from Robbins & Myers fully
offset the seasonal break-up declines in Canada.

The Company has scheduled a conference call for July 30, 2013, at 8:00 a.m.
Central Time to discuss second 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 1-800-447-0521 within North America or 1-847-413-3238 outside of North
America five to ten minutes prior to the scheduled start time and asking 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)
                                                                  
                                                June 30,          December 31,
                                                2013              2012
                                                (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                       $  2,327          $   3,319
Receivables, net                                   4,424              4,320
Inventories, net                                   6,083              5,891
Costs in excess of billings                        1,448              1,225
Deferred income taxes                              360                349
Prepaid and other current assets                  579              574
Total current assets                               15,221             15,678
                                                                  
Property, plant and equipment, net                 3,210              2,945
Deferred income taxes                              395                413
Goodwill                                           8,997              7,172
Intangibles, net                                   5,305              4,743
Investment in unconsolidated affiliates            357                393
Other assets                                      108              140
                                                $  33,593        $   31,484
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                  
Current liabilities:
Accounts payable                                $  1,232          $   1,200
Accrued liabilities                                2,681              2,571
Billings in excess of costs                        1,159              1,189
Current portion of long-term debt and              -                  1
short-term borrowings
Accrued income taxes                               248                355
Deferred income taxes                             299              333
Total current liabilities                          5,619              5,649
                                                                  
Long-term debt                                     4,120              3,148
Deferred income taxes                              2,458              1,997
Other liabilities                                 445              334
Total liabilities                                 12,642           11,128
                                                                  
Commitments and contingencies
                                                                  
Stockholders’ equity:
Common stock – par value $.01; 1 billion
shares authorized; 427,402,817 and
426,928,322 shares issued and outstanding          4                  4
at June 30, 2013 and December 31, 2012
Additional paid-in capital                         8,805              8,743
Accumulated other comprehensive income             (201   )           107
(loss)
Retained earnings                                 12,251           11,385
Total Company stockholders’ equity                 20,859             20,239
Noncontrolling interests                          92               117
Total stockholders’ equity                        20,951           20,356
                                                $  33,593        $   31,484

                                                                  
NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In millions, except per share data)
                                                                              
                     Three Months Ended                        Six Months Ended
                     June 30,                    March 31,     June 30,
                     2013          2012          2013          2013           2012
Revenue:
Rig Technology       $ 2,833       $ 2,405       $ 2,628       $ 5,461        $ 4,664
Petroleum
Services &             1,749         1,776         1,701         3,450          3,480
Supplies
Distribution &         1,295         780           1,227         2,522          1,344
Transmission
Eliminations          (276  )      (227  )      (249  )      (525   )      (451  )
                                                                                      
Total revenue          5,601         4,734         5,307         10,908         9,037
                                                                                      
Gross profit           1,320         1,321         1,287         2,607          2,592
                                                                                      
Gross profit %         23.6  %       27.9  %       24.3  %       23.9   %       28.7  %
                                                                                      
Selling,
general, and           494           414           471           965            804
administrative
                                                                                      
Other costs           57          28          73          130          35    
                                                                                      
Operating              769           879           743           1,512          1,753
profit
                                                                                      
Interest and
financial              (30   )       (9    )       (28   )       (58    )       (17   )
costs
Interest               3             3             3             6              6
income
Equity income
in                     15            19            19            34             36
unconsolidated
affiliates
Other income          13          (5    )      (13   )      -            (18   )
(expense), net
                                                                                      
Income before          770           887           724           1,494          1,760
income taxes
                                                                                      
Provision for         239         285         224         463          554   
income taxes
                                                                                      
Net income             531           602           500           1,031          1,206
                                                                              
Net income
(loss)
attributable          -           (3    )      (2    )      (2     )      (5    )
to
noncontrolling
interests
Net income
attributable         $ 531        $ 605        $ 502        $ 1,033       $ 1,211 
to Company
                                                                              
Net income
attributable
to Company per
share:
                                                                              
Basic                $ 1.25       $ 1.42       $ 1.18       $ 2.42        $ 2.85  
                                                                              
Diluted              $ 1.24       $ 1.42       $ 1.17       $ 2.41        $ 2.84  
                                                                              
Weighted
average shares
outstanding:
                                                                              
Basic                 426         425         426         426          424   
                                                                              
Diluted               428         427         428         428          426   

                                                               
NATIONAL OILWELL VARCO, INC.

OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)

(In millions)
                                                                          
                 Three Months Ended                        Six Months Ended
                 June 30,                    March 31,     June 30,
                 2013          2012          2013          2013           2012
                                                                          
Revenue:
Rig              $ 2,833       $ 2,405       $ 2,628       $ 5,461        $ 4,664
Technology
Petroleum
Services &         1,749         1,776         1,701         3,450          3,480
Supplies
Distribution
&                  1,295         780           1,227         2,522          1,344
Transmission
Eliminations      (276  )      (227  )      (249  )      (525   )      (451  )
Total            $ 5,601      $ 4,734      $ 5,307      $ 10,908      $ 9,037 
revenue
                                                                          
Operating
profit:
Rig              $ 587         $ 571         $ 557         $ 1,144        $ 1,122
Technology
Petroleum
Services &         304           393           311           615            781
Supplies
Distribution
&                  71            54            65            136            97
Transmission
Unallocated
expenses and      (136  )      (111  )      (117  )      (253   )      (212  )
eliminations
Total
operating
profit           $ 826        $ 907        $ 816        $ 1,642       $ 1,788 
(before
other costs)
                                                                          
Operating
profit %:
Rig                20.7  %       23.7  %       21.2  %       20.9   %       24.1  %
Technology
Petroleum
Services &         17.4  %       22.1  %       18.3  %       17.8   %       22.4  %
Supplies
Distribution
&                  5.5   %       6.9   %       5.3   %       5.4    %       7.2   %
Transmission
Other             -           -           -           -            -     
unallocated
Total
operating
profit %          14.7  %      19.2  %      15.4  %      15.1   %      19.8  %
(before
other costs)

                                                            
NATIONAL OILWELL VARCO, INC.

AS ADJUSTED EBITDA RECONCILIATION EXCLUDING OTHER COSTS (Unaudited)

(In millions)
                                                                       
                     Three Months Ended                    Six Months Ended
                     June 30,                March 31,     June 30,
                     2013        2012        2013          2013        2012
                                                                       
Reconciliation
of EBITDA
excluding other
costs (Note 1):
GAAP net income
attributable to      $ 531       $ 605       $  502        $ 1,033     $ 1,211
Company
Provision for          239         285          224          463         554
income taxes
Interest expense       30          9            28           58          17
Depreciation and      190        157         174         364        305
amortization
EBITDA                 990         1,056        928          1,918       2,087
Other costs:
Transaction            57          28           65           122         35
costs
Devaluation           -          -           8           8          -
costs
EBITDA excluding
other costs          $ 1,047     $ 1,084     $  1,001      $ 2,048     $ 2,122
(Note 1)
                                                                         

Note 1: EBITDA means earnings before taxes, interest, depreciation,
amortization, and other costs, and is a non-GAAP measurement. Management uses
EBITDA 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
 
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