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
National Oilwell Varco Announces First Quarter 2014 Earnings and Backlog
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