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National Oilwell Varco Announces Third Quarter 2013 Results



  National Oilwell Varco Announces Third Quarter 2013 Results

Business Wire

HOUSTON -- October 25, 2013

National Oilwell Varco, Inc. (NYSE: NOV) today reported that for the third
quarter ended September 30, 2013 it earned net income of $636 million, or
$1.49 per fully diluted share, compared to second quarter ended June 30, 2013
net income of $531 million, or $1.24 per fully diluted share. Excluding $10
million in pre-tax transaction charges and $102 million in pre-tax gains
resulting from the settlement of an outstanding legal claim, third quarter
2013 net income was $573 million, or $1.34 per fully diluted share.

The Company’s revenues for the third quarter of 2013 were $5.69 billion, an
increase of two percent from the second quarter of 2013 and an increase of
seven percent from the third quarter of 2012. Operating profit for the third
quarter of 2013 was $853 million or 15.0 percent of sales, excluding
transaction charges and the settlement of an outstanding legal claim.
Sequentially, third quarter operating profit increased three percent,
resulting in operating profit flow-through (change in operating profit divided
by the change in revenue) of 31 percent, excluding transaction charges and the
settlement of an outstanding legal claim.

Backlog for capital equipment orders for the Company’s Rig Technology segment
was at a record level of $15.15 billion as of September 30, 2013, up nine
percent from the end of the second quarter of 2013 and up 30 percent from the
end of the third quarter of 2012. New orders during the quarter were $3.31
billion, reflecting continued strong demand for oilfield equipment.

Pete Miller, Chairman and CEO of National Oilwell Varco, remarked,
“Outstanding execution enabled the Company to achieve solid results again this
quarter. All three segments posted higher sequential revenues and margins, and
collectively reduced the Company’s working capital requirements, which
ultimately led to a quarterly record of $1 billion in cash flow from
operations. We also added significant new bookings to our capital equipment
backlog for the Rig Technology segment during the third quarter, as the
industry’s demand for our suite of technologies remains strong.

We are excited about our recently announced plans to spin-off the Company’s
distribution business from the remainder of the Company, creating two
stand-alone, publicly traded corporations. We believe that the contemplated
spin-off is very consistent with NOV’s strategy and commitment to continue to
grow the Company and create significant shareholder value. As separate
companies, the distribution business and the remainder of NOV will each be
better positioned and have the enhanced operational flexibility to focus on
their specific products, services and customers.”

Rig Technology

Third quarter revenues for the Rig Technology segment were $2.84 billion, up
slightly sequentially and an increase of 12 percent from the third quarter of
2012. Operating profit for this segment was $606 million, or 21.3 percent of
sales. Revenue out of backlog for the segment was flat sequentially and
increased 10 percent year-over-year, to $2.11 billion for the third quarter of
2013.

Petroleum Services & Supplies

Revenues for the third quarter of 2013 for the Petroleum Services & Supplies
segment were $1.81 billion, up three percent compared to second quarter
results and up five percent from the third quarter of 2012. Operating profit
was $324 million, or 17.9 percent of revenue, up seven percent from the second
quarter of 2013. Operating profit flow-through was 33 percent from the second
quarter of 2013 to the third quarter of 2013.

Distribution & Transmission

The Distribution & Transmission segment generated third quarter revenues of
$1.34 billion, which were up four percent from the second quarter of 2013 and
up two percent from the third quarter of 2012. Third quarter operating profit
was $78 million or 5.8 percent of sales. Operating profit flow-through was 15
percent sequentially.

The Company has scheduled a conference call for October 25, 2013, 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 1-800-447-0521 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)
                                                                   
                                                September 30,     December 31,
                                                2013              2012
                                                (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                       $    2,741        $   3,319
Receivables, net                                     4,801            4,320
Inventories, net                                     6,078            5,891
Costs in excess of billings                          1,640            1,225
Deferred income taxes                                370              349
Prepaid and other current assets                     625              574
Total current assets                                 16,255           15,678
                                                                   
Property, plant and equipment, net                   3,333            2,945
Deferred income taxes                                372              413
Goodwill                                             9,036            7,172
Intangibles, net                                     5,180            4,743
Investment in unconsolidated affiliates              373              393
Other assets                                         124              140
                                                $    34,673       $   31,484
                                                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                   
Current liabilities:
Accounts payable                                $    1,312        $   1,200
Accrued liabilities                                  2,857            2,571
Billings in excess of costs                          1,553            1,189
Current portion of long-term debt and                -                1
short-term borrowings
Accrued income taxes                                 260              355
Deferred income taxes                                335              333
Total current liabilities                            6,317            5,649
                                                                   
Long-term debt                                       3,749            3,148
Deferred income taxes                                2,443            1,997
Other liabilities                                    439              334
Total liabilities                                    12,948           11,128
                                                                   
Commitments and contingencies
                                                                   
Stockholders’ equity:
Common stock – par value $.01; 1 billion
shares authorized; 427,719,063 and
426,928,322
shares issued and outstanding at September           4                4
30, 2013 and December 31, 2012
Additional paid-in capital                           8,846            8,743
Accumulated other comprehensive income               1                107
Retained earnings                                    12,776           11,385
Total Company stockholders’ equity                   21,627           20,239
Noncontrolling interests                             98               117
Total stockholders’ equity                           21,725           20,356
                                                $    34,673       $   31,484

                                                                           
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,
                   2013          2012          2013          2013           2012
Revenue:
Rig Technology     $ 2,843       $ 2,547       $ 2,833       $ 8,304        $ 7,211
Petroleum
Services &           1,809         1,717         1,749         5,259          5,197
Supplies
Distribution &       1,342         1,315         1,295         3,864          2,659
Transmission
Eliminations         (307  )       (260  )       (276  )       (832   )       (711   )
Total revenue        5,687         5,319         5,601         16,595         14,356
Gross profit         1,355         1,411         1,320         3,962          4,003
Gross profit %       23.8  %       26.5  %       23.6  %       23.9   %       27.9   %
Selling,
general, and         502           465           494           1,467          1,269
administrative
Other costs          (92   )       57            57            38             92      
Operating            945           889           769           2,457          2,642
profit
Interest and
financial            (26   )       (10   )       (30   )       (84    )       (27    )
costs
Interest             2             2             3             8              8
income
Equity income
in                   13            7             15            47             43
unconsolidated
affiliates
Other income         (15   )       (14   )       13            (15    )       (32    )
(expense), net
Income before        919           874           770           2,413          2,634
income taxes
Provision for        283           265           239           746            819     
income taxes
Net income           636           609           531           1,667          1,815
                                                                             
                                                                             
Net income
(loss)
attributable         -             (3    )       -             (2     )       (8     )
to
noncontrolling
interests
Net income
attributable       $ 636         $ 612         $ 531         $ 1,669        $ 1,823   
to Company
                                                                             
Net income
attributable
to Company per
share:
                                                                             
Basic              $ 1.49        $ 1.44        $ 1.25        $ 3.92         $ 4.29    
                                                                             
Diluted            $ 1.49        $ 1.43        $ 1.24        $ 3.90         $ 4.28    
                                                                             
Weighted
average shares
outstanding:
                                                                             
Basic                426           425           426           426            425     
                                                                             
Diluted              428           427           428           428            426     

                                                                         
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,
                 2013          2012          2013          2013           2012
                                                                           
Revenue:
Rig              $ 2,843       $ 2,547       $ 2,833       $ 8,304        $ 7,211
Technology
Petroleum
Services &         1,809         1,717         1,749         5,259          5,197
Supplies
Distribution
&                  1,342         1,315         1,295         3,864          2,659
Transmission
Eliminations       (307  )       (260  )       (276  )       (832   )       (711   )
Total            $ 5,687       $ 5,319       $ 5,601       $ 16,595       $ 14,356  
revenue
                                                                           
Operating
profit:
Rig              $ 606         $ 610         $ 587         $ 1,750        $ 1,732
Technology
Petroleum
Services &         324           383           304           939            1,164
Supplies
Distribution
&                  78            78            71            214            175
Transmission
Unallocated
expenses and       (155  )       (125  )       (136  )       (408   )       (337   )
eliminations
Total
operating
profit           $ 853         $ 946         $ 826         $ 2,495        $ 2,734   
(before
other costs)
Operating
profit %:
Rig                21.3  %       23.9  %       20.7  %       21.1   %       24.0   %
Technology
Petroleum
Services &         17.9  %       22.3  %       17.4  %       17.9   %       22.4   %
Supplies
Distribution
&                  5.8   %       5.9   %       5.5   %       5.5    %       6.6    %
Transmission
Other              -             -             -             -              -       
unallocated
                                                                           
Total
operating
profit %           15.0  %       17.8  %       14.7  %       15.0   %       19.0   %
(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,
                   2013          2012        2013        2013          2012
                                                                        
Reconciliation
of EBITDA
excluding
other costs
(Note 1):
GAAP net
income             $ 636         $ 612       $ 531       $ 1,669       $ 1,823
attributable
to Company
Provision for        283           265         239         746           819
income taxes
Interest             26            10          30          84            27
expense
Depreciation
and                  191           157         190         555           462
amortization
EBITDA               1,136         1,044       990         3,054         3,131
Other costs:
Transaction          10            57          57          132           92
costs
Litigation           (102  )       -           -           (102  )       -
gain
Devaluation          -             -           -           8             -
costs
EBITDA
excluding          $ 1,044       $ 1,101     $ 1,047     $ 3,092       $ 3,223
other costs
(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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