National Oilwell Varco Announces Fourth Quarter and Full Year 2013 Earnings

  National Oilwell Varco Announces Fourth Quarter and Full Year 2013 Earnings

Business Wire

HOUSTON -- January 31, 2014

National Oilwell Varco, Inc. (NYSE: NOV) today reported that for the fourth
quarter ended December 31, 2013 it earned net income of $658 million, or $1.53
per fully diluted share. Earnings improved three percent compared to the third
quarter of 2013, and were down two percent compared to the fourth quarter of
2012. Excluding $16 million in pre-tax transaction charges, net income was
$670 million, or $1.56 per fully diluted share, up 16 percent from the third
quarter of 2013, and up five percent from the fourth quarter of 2012,
excluding transaction charges from all periods.

Revenues reported for the full year 2013 were $22.77 billion, and net income
was $2.33 billion, or $5.44 per fully diluted share. Operating profit for the
full year 2013 was $3.41 billion. Excluding $156 million in pre-tax
transaction charges and $102 million in pre-tax gains resulting from the
settlement of an outstanding legal claim, net income was $2.36 billion, or
$5.52 per fully diluted share, and operating profit was $3.47 billion or 15.2
percent of sales, for the full year 2013.

Revenues for the fourth quarter increased nine percent sequentially to $6.17
billion. Operating profit for the fourth quarter, excluding transaction
charges, was $973 million or 15.8 percent of sales, up 14 percent from the
third quarter of 2013. Operating profit flow-through, or the change in
operating profit divided by the change in revenue, was 25 percent from the
third quarter of 2013 to the fourth quarter of 2013, and was four percent from
the fourth quarter of 2012 to the fourth quarter of 2013, excluding
transaction charges from all periods. The Company’s fourth quarter 2013
results included a record $1.5 billion in cash flow from operations, 50
percent greater than the previous record set in the third quarter of 2013.

Backlog for capital equipment orders for the Company’s Rig Technology segment
at December 31, 2013 was a record at $16.24 billion, up seven percent from the
third quarter of 2013 and up 37 percent from the end of the fourth quarter of
2012. New orders during the quarter were $3.61 billion, reflecting continued
strong demand for oilfield equipment.

Pete Miller, Chairman and CEO of National Oilwell Varco, remarked, “The fourth
quarter marked a strong finish to a challenging, but solid year. For the year,
the Company’s continued investments in technology, products, facilities, and
our people, enabled us to better support our customers, and ultimately led to
a year in which we set new annual records for revenues, capital equipment
orders and backlog, and cash flow from operations. I would like to thank our
customers for their continued trust in us, and all of our dedicated employees
for their hard work and outstanding execution this year.

As we enter 2014, we recognize that there remain headwinds facing us in the
North American land market. However, we are excited to be entering the year
with strong financial resources, a very solid backlog, and an experienced
group of employees at NOV that remains committed to delivering the highest
quality of products and services to our customers. We are also excited about
the upcoming spin-off of NOV’s distribution business from the remainder of the
Company in 2014, which we believe will enable the distribution business and
the remainder of NOV to have the enhanced operational flexibility to focus on
their specific products, services and customers.”

Rig Technology

Fourth quarter revenues for the Rig Technology segment were $3.31 billion, an
increase of 16 percent from the third quarter of 2013 and an increase of 14
percent from the fourth quarter of 2012. Operating profit for this segment was
$697 million, or 21.1 percent of sales, an increase of 15 percent from the
third quarter of 2013 and an increase of eight percent from the fourth quarter
of 2012. Sequential operating profit flow-through was 19 percent.
Year-over-year operating profit flow-through was 12 percent. Revenue out of
backlog for the segment increased 20 percent sequentially and increased 14
percent year-over-year, to $2.52 billion for the fourth quarter of 2013.

Petroleum Services & Supplies

Revenues for the fourth quarter of 2013 for the Petroleum Services & Supplies
segment were $1.93 billion, up six percent compared to third quarter 2013
results and up 9 percent compared to fourth quarter 2012 results. Operating
profit was $366 million, or 19.0 percent of sales, up 13 percent from the
third quarter of 2013 and an increase of three percent from the fourth quarter
of 2012. Sequential operating profit flow-through was 36 percent. Operating
profit flow-through was seven percent from the fourth quarter of 2012 to the
fourth quarter of 2013.

Distribution & Transmission

Fourth quarter revenues for the Distribution & Transmission segment were $1.25
billion, down seven percent from the third quarter of 2013, and down one
percent from the fourth quarter of 2012. Fourth quarter operating profit was
$60 million or 4.8 percent of sales.

The Company has scheduled a conference call for January 31, 2014, at 8:00 a.m.
Central Time to discuss fourth quarter and 2013 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)

                                        December 31,     December 31,
                                             2013                 2012
                                             (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                    $  3,436             $   3,319
Receivables, net                                4,896                 4,320
Inventories, net                                5,603                 5,891
Costs in excess of billings                     1,539                 1,225
Deferred income taxes                           373                   349
Prepaid and other current assets               576                 574
Total current assets                            16,423                15,678
                                                                  
Property, plant and equipment, net              3,408                 2,945
Deferred income taxes                           372                   413
Goodwill                                        9,049                 7,172
Intangibles, net                                5,055                 4,743
Investment in unconsolidated                    390                   393
affiliates
Other assets                                   115                 140
                                             $  34,812           $   31,484
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                  
Current liabilities:
Accounts payable                             $  1,275             $   1,200
Accrued liabilities                             2,763                 2,571
Billings in excess of costs                     1,771                 1,189
Current portion of long-term debt               1                     1
and short-term borrowings
Accrued income taxes                            556                   355
Deferred income taxes                          312                 333
Total current liabilities                       6,678                 5,649
                                                                  
Long-term debt                                  3,149                 3,148
Deferred income taxes                           2,292                 1,997
Other liabilities                              363                 334
Total liabilities                              12,482              11,128
                                                                  
Commitments and contingencies
                                                                  
Stockholders’ equity:
Common stock – par value $.01; 1
billion shares authorized;
428,433,703 and 426,928,322
shares issued and outstanding at
December 31, 2013 and December 31,              4                     4
2012
Additional paid-in capital                      8,907                 8,743
Accumulated other comprehensive                 (4      )             107
income (loss)
Retained earnings                              13,323              11,385
Total Company stockholders’ equity              22,230                20,239
Noncontrolling interests                       100                 117
Total stockholders’ equity                     22,330              20,356
                                             $  34,812           $   31,484
                                                                      


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,
                       2013              2012              2013              2013               2012
Revenue:
Rig Technology         $ 3,310           $ 2,896           $ 2,843           $ 11,614           $ 10,107
Petroleum
Services &               1,925             1,770             1,809             7,184              6,967
Supplies
Distribution &           1,253             1,268             1,342             5,117              3,927
Transmission
Eliminations            (316  )          (249  )          (307  )          (1,148 )          (960   )
Total revenue            6,172             5,685             5,687             22,767             20,041
Gross profit             1,500             1,410             1,355             5,462              5,413
Gross profit %           24.3  %           24.8  %           23.8  %           24.0   %           27.0   %
Selling,
general, and             527               456               502               1,994              1,725
administrative
Other costs             16              51              (92   )          54               143    
Operating                957               903               945               3,414              3,545
profit
Interest and
financial                (27   )           (21   )           (26   )           (111   )           (48    )
costs
Interest                 4                 2                 2                 12                 10
income
Equity income
in                       16                15                13                63                 58
unconsolidated
affiliates
Other income            (17   )          (28   )          (15   )          (32    )          (60    )
(expense), net
Income before            933               871               919               3,346              3,505
income taxes
Provision for           272             203             283             1,018            1,022  
income taxes
Net income               661               668               636               2,328              2,483
                                                                                                
                                                                                                
Net income
(loss)
attributable            3               -               -               1                (8     )
to
noncontrolling
interests
Net income
attributable           $ 658            $ 668            $ 636            $ 2,327           $ 2,491  
to Company
                                                                                                
Net income
attributable
to Company per
share:
                                                                                                
Basic                  $ 1.54           $ 1.57           $ 1.49           $ 5.46            $ 5.86   
                                                                                                
Diluted                $ 1.53           $ 1.56           $ 1.49           $ 5.44            $ 5.83   
                                                                                                
Weighted
average shares
outstanding:
                                                                                                
Basic                   427             426             426             426              425    
                                                                                                
Diluted                 429             428             428             428              427    
                                                                                                         

                                                              
NATIONAL OILWELL VARCO, INC.

OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)

(In millions)
                                                                    
                Three Months Ended                     Years Ended
                December 31,            September      December 31,
                                        30,
                2013        2012        2013           2013         2012
                                                                    
Revenue:
Rig             $ 3,310     $ 2,896     $  2,843       $ 11,614     $ 10,107
Technology
Petroleum
Services &        1,925       1,770        1,809         7,184        6,967
Supplies
Distribution
&                 1,253       1,268        1,342         5,117        3,927
Transmission
Eliminations     (316  )    (249  )     (307   )     (1,148 )    (960   )
Total revenue   $ 6,172    $ 5,685    $  5,687      $ 22,767    $ 20,041 
                                                                    
Operating
profit:
Rig             $ 697       $ 648       $  606         $ 2,447      $ 2,380
Technology
Petroleum
Services &        366         355          324           1,305        1,519
Supplies
Distribution
&                 60          78           78            274          253
Transmission
Unallocated
expenses and     (150  )    (127  )     (155   )     (558   )    (464   )
eliminations
Total
operating
profit          $ 973      $ 954      $  853        $ 3,468     $ 3,688  
(before other
costs)
Operating
profit %:
Rig               21.1  %     22.4  %      21.3   %      21.1   %     23.5   %
Technology
Petroleum
Services &        19.0  %     20.1  %      17.9   %      18.2   %     21.8   %
Supplies
Distribution
&                 4.8   %     6.2   %      5.8    %      5.4    %     6.4    %
Transmission
Other            -         -          -           -          -      
unallocated
                                                                    
Total
operating
profit %         15.8  %    16.8  %     15.0   %     15.2   %    18.4   %
(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,
                   2013         2012         2013          2013        2012
                                                                       
Reconciliation
of EBITDA
excluding other
costs (Note 1):
GAAP net income
attributable to    $  658       $  668       $  636        $ 2,327     $ 2,491
Company
Provision for         272          203          283          1,018       1,022
income taxes
Interest              27           21           26           111         48
expense
Depreciation
and                  200         166         191        755       628
amortization
EBITDA                1,157        1,058        1,136        4,211       4,189
Other costs:
Transaction           16           51           10           148         143
costs
Litigation gain       -            -            (102   )     (102  )     -
Devaluation          -           -           -          8         -
costs
EBITDA
excluding other    $  1,173     $  1,109     $  1,044     $ 4,265    $ 4,332
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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