National Oilwell Varco Announces First Quarter 2014 Earnings and Backlog

  National Oilwell Varco Announces First Quarter 2014 Earnings and Backlog

Business Wire

HOUSTON -- April 28, 2014

National Oilwell Varco, Inc. (NYSE: NOV) today reported that for its first
quarter ended March 31, 2014, it earned net income of $589 million, or $1.37
per fully diluted share, compared to fourth quarter ended December 31, 2013
net income of $658 million, or $1.53 per fully diluted share. Excluding
pre-tax transaction charges of $19 million, earnings were $602 million, or
$1.40 per fully diluted share.

Revenues for the first quarter of 2014 were $5.78 billion, a decrease of six
percent from the fourth quarter of 2013 and an increase of nine percent from
the first quarter of 2013. Operating profit for the quarter, excluding the
transaction charges, was $880 million, or 15.2 percent of sales. Sequentially,
first quarter operating profit decreased 10 percent, while year-over-year
first quarter operating profit increased eight percent.

Backlog for capital equipment orders for the Company’s Rig Technology segment
at March 31, 2014 was an all-time record of $16.35 billion, up one percent
from the fourth quarter of 2013, and up 27 percent from the first quarter of
2013. New orders during the quarter were $2.33 billion, reflecting continued
healthy demand for oilfield equipment.

Clay Williams, President and CEO of National Oilwell Varco, stated, “We are
pleased with our solid start to the new year, as the Company’s investments in
new technologies, manufacturing capacity and strategic acquisitions drove
year-over-year revenue and earnings growth. Our $2.33 billion in new capital
orders and record backlog demonstrate that demand for oilfield equipment
remained high in the first quarter, as our customers continued to recognize
National Oilwell Varco for our industry leading technology, our proven track
record of project execution, and our leading aftermarket service.

We are encouraged to see domestic land drilling and well service firms
increasing activity, which is leading to increased demand for drilling and
stimulation equipment to develop unconventional shales. Outside of the U.S.,
our investments in Latin America, Africa, the Middle East and Asia have laid a
great foundation for continued growth.” Williams added, “We are also pleased
to be entering into the final stages of the previously announced spinoff of
our distribution business to our shareholders, which we expect to complete
during the second quarter. I want to thank all of the employees, of what will
soon be two separately traded companies, for all of their hard work to make
this Company successful.”

Rig Technology

First quarter revenues for the Rig Technology segment were $3.01 billion, a
decrease of nine percent from the fourth quarter of 2013 and an increase of 14
percent from the first quarter of 2013. Operating profit for this segment was
$635 million, or 21.1 percent of sales. Year-over-year operating profit
flow-through (change in operating profit divided by the change in revenue) was
20 percent. Revenue out of backlog for the segment was at $2.22 billion.

Petroleum Services & Supplies

Revenues for the first quarter of 2014 for the Petroleum Services & Supplies
segment were $1.79 billion, down seven percent compared to fourth quarter 2013
results and up five percent from the first quarter of 2013. Operating profit
was $326 million, or 18.2 percent of revenue. Year-over-year operating profit
flow-through was 17 percent.

Distribution & Transmission

The Distribution & Transmission segment generated first quarter revenues of
$1.28 billion, up two percent from the fourth quarter of 2013 and up four
percent from the first quarter of 2013. First quarter operating profit was $68
million, or 5.3 percent of sales. Year-over-year operating profit flow-through
was six percent.

The Company has scheduled a conference call for April 28, 2014, at 8:00 a.m.
Central Time to discuss first 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)

                                            March 31,      December 31,
                                                2014              2013
                                                (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents                       $  3,688          $  3,436
Receivables, net                                   5,310             4,896
Inventories, net                                   5,659             5,603
Costs in excess of billings                        1,520             1,539
Deferred income taxes                              325               373
Prepaid and other current assets                  709             576     
Total current assets                               17,211            16,423
                                                                  
Property, plant and equipment, net                 3,437             3,408
Deferred income taxes                              479               372
Goodwill                                           8,875             9,049
Intangibles, net                                   4,953             5,055
Investment in unconsolidated affiliate             402               390
Other assets                                      123             115     
                                                $  35,480        $  34,812  
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                  
Current liabilities:
Accounts payable                                $  1,391          $  1,275
Accrued liabilities                                2,717             2,763
Billings in excess of costs                        2,079             1,771
Current portion of long-term debt and              -                 1
short-term borrowings
Accrued income taxes                               484               556
Deferred income taxes                             427             312     
Total current liabilities                          7,098             6,678
                                                                  
Long-term debt                                     3,149             3,149
Deferred income taxes                              2,088             2,292
Other liabilities                                 353             363     
Total liabilities                                 12,688          12,482  
                                                                  
Commitments and contingencies
                                                                  
Stockholders’ equity:
Common stock – par value $.01; 1
billion shares authorized; 428,852,227
and
428,433,703 shares issued and
outstanding at March 31, 2014 and                  4                 4
December 31, 2013
Additional paid-in capital                         8,933             8,907
Accumulated other comprehensive loss               (41    )          (4      )
Retained earnings                                 13,801          13,323  
Total Company stockholders’ equity                 22,697            22,230
Noncontrolling interests                          95              100     
Total stockholders’ equity                        22,792          22,330  
                                                $  35,480        $  34,812  
                                                                             


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

                              Three Months Ended
                                  March 31,                    December 31,
                                  2014         2013            2013
Revenue:
Rig Technology                    $ 3,009         $ 2,628         $  3,310
Petroleum Services &                1,789           1,701            1,925
Supplies
Distribution &                      1,281           1,227            1,253
Transmission
Eliminations                       (302  )        (249  )         (316   )
Total revenue                       5,777           5,307            6,172
Gross profit                        1,400           1,287            1,500
Gross profit %                      24.2  %         24.3  %          24.3   %
Selling, general, and               520             471              527
administrative
Transaction and                    19            73             16     
devaluation costs
Operating profit                    861             743              957
                                                                  
Interest and financial              (26   )         (28   )          (27    )
costs
Interest income                     4               3                4
Equity income in                    10              19               16
unconsolidated affiliate
Other income (expense),            -             (13   )         (17    )
net
                                                                  
Income before income                849             724              933
taxes
                                                                  
Provision for income               260           224            272    
taxes
Net income                          589             500              661
                                                                  
Net income (loss)
attributable to                    -             (2    )         3      
noncontrolling interests
Net income attributable           $ 589          $ 502          $  658    
to Company
                                                                  
Net income attributable
to Company per share:
                                                                  
Basic                             $ 1.38         $ 1.18         $  1.54   
                                                                  
Diluted                           $ 1.37         $ 1.17         $  1.53   
                                                                  
Weighted average shares
outstanding:
                                                                  
Basic                              428           426            427    
                                                                  
Diluted                            429           428            429    
                                                                            


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

                              Three Months Ended
                                  March 31,                    December 31,
                                  2014         2013            2013
                                                                  
Revenue:
Rig Technology                    $ 3,009         $ 2,628         $  3,310
Petroleum Services &                1,789           1,701            1,925
Supplies
Distribution &                      1,281           1,227            1,253
Transmission
Eliminations                       (302  )        (249  )         (316   )
Total Revenue                     $ 5,777        $ 5,307        $  6,172  
                                                                  
Operating profit:
Rig Technology                    $ 635           $ 557           $  697
Petroleum Services &                326             311              366
Supplies
Distribution &                      68              65               60
Transmission
Unallocated expenses and           (149  )        (117  )         (150   )
eliminations
Total operating profit            $ 880          $ 816          $  973    
(before other costs)
                                                                  
Operating profit %:
Rig Technology                      21.1  %         21.2  %          21.1   %
Petroleum Services &                18.2  %         18.3  %          19.0   %
Supplies
Distribution &                      5.3   %         5.3   %          4.8    %
Transmission
Other unallocated                  -             -              -      
                                                                  
Total operating profit %           15.2  %        15.4  %         15.8   %
(before other costs)
                                                                            


NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING TRANSACTION AND DEVALUATION COSTS
(Unaudited)
(In millions)

                                   Three Months Ended
                                      March 31,                December 31,
                                      2014       2013          2013
                                                                  
Reconciliation of EBITDA
excluding other costs (Note 1):
GAAP net income attributable to       $ 589         $ 502         $    658
Company
Provision for income taxes              260           224              272
Interest expense                        26            28               27
Depreciation and amortization          195          174             200
EBITDA                                  1,070         928              1,157
                                                                  
Other costs:
Transaction costs                       19            65               16
Devaluation costs                      -            8               -
EBITDA excluding other costs          $ 1,089       $ 1,001       $    1,173
(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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