National Oilwell Varco Announces Third Quarter 2012 Results

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National Oilwell Varco Announces Third Quarter 2012 Results

HOUSTON--(BUSINESS WIRE)-- National Oilwell Varco, Inc. (NYS: NOV) today reported that for the third quarter ended September 30, 2012 it earned net income of $612 million, or $1.43 per fully diluted share, compared to second quarter ended June 30, 2012 net income of $605 million, or $1.42 per fully diluted share. Earnings per share increased 14 percent compared to the third quarter 2011 earnings of $1.25 per fully diluted share.

Transaction charges for the third quarter of 2012 were $57 million pre-tax. Net income for the third quarter of 2012 excluding transaction charges was $650 million, or $1.52 per fully diluted share. This compares to second quarter of 2012 net income of $626 million, or $1.46 per fully diluted share, and third quarter 2011 net income of $536 million or $1.26 per fully diluted share, excluding transaction charges from all periods.


The Company's revenues for the third quarter of 2012 were $5.3 billion, an increase of 12 percent from the second quarter of 2012 and an increase of 42 percent from the third quarter of 2011. Operating profit for the third quarter of 2012 was $946 million or 17.8 percent of sales, excluding transaction charges. Sequentially, third quarter operating profit increased four percent, resulting in operating profit flow-through (change in operating profit divided by the change in revenue) of seven percent, excluding transaction charges. Year-over-year third quarter operating profit increased 22 percent, resulting in operating profit flow-through of 11 percent, excluding transaction charges.

During the third quarter of 2012 the Company's Rig Technology segment booked $2.29 billion in new orders. Backlog for capital equipment orders for the Company's Rig Technology segment at September 30, 2012 was $11.66 billion, up three percent from the end of the second quarter of 2012.

Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, "Outstanding execution enabled the Company to achieve solid earnings again this quarter. We are pleased by the level of bookings into our capital equipment backlog for the Rig Technology segment during the third quarter. We continue to see steady activity around new orders, and expect high demand for deepwater rigs to drive solid orders again in the fourth quarter. Demand for other NOV products and services continued to grow in international markets, but softening demand in North America partly offset this trend during the third quarter.

Our Company has completed a number of strategic initiatives this year, and I am pleased to report that these are going very well. Our investments will further strengthen National Oilwell Varco's capabilities to service our customers, as well as provide future opportunities for our employees and earnings growth for our shareholders."

Rig Technology

Third quarter revenues for the Rig Technology segment were a record $2.55 billion, an increase of six percent from the second quarter of 2012 and an increase of 29 percent from the third quarter of 2011. Operating profit for this segment was $610 million, or 23.9 percent of sales. Operating profit flow-through was 27 percent sequentially and 14 percent from the third quarter of 2011 to the third quarter of 2012. Revenue out of backlog for the segment increased five percent sequentially and increased 36 percent year-over-year, to $1.91 billion for the third quarter of 2012.

Petroleum Services & Supplies

Revenues for the third quarter of 2012 for the Petroleum Services & Supplies segment were $1.72 billion, down three percent compared to second quarter 2012 results and up 18 percent from the third quarter of 2011. Operating profit was $383 million, or 22.3 percent of revenue, up 28 percent from the third quarter of 2011. Operating profit flow-through was 33 percent from the third quarter of 2011 to the third quarter of 2012.

Distribution & Transmission

The Distribution & Transmission segment generated third quarter revenues of $1.32 billion, which were up 69 percent from the second quarter of 2012 and were up 174 percent from the third quarter of 2011, due mostly to previously disclosed mergers completed during the second quarter and third quarters of 2012. Third quarter operating profit was $78 million or 5.9 percent of sales. Operating profit flow-through was four percent sequentially and five percent from the third quarter of 2011 to the third quarter of 2012.

The Company has scheduled a conference call for October 25, 2012, 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 1-800-446-1671 within North America or 1-847-413-3362 outside of North America five to ten minutes prior to the scheduled start time, and ask 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,
20122011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$1,702$3,535
Receivables, net4,0333,291
Inventories, net5,9894,030
Costs in excess of billings1,065593
Deferred income taxes286336
Prepaid and other current assets 592 325 
Total current assets13,66712,110
 
Property, plant and equipment, net2,8182,445
Deferred income taxes320267
Goodwill6,9406,151
Intangibles, net4,4314,073
Investment in unconsolidated affiliates370391
Other assets 116 78 
$28,662$25,515 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable$1,365$901
Accrued liabilities2,3632,376
Billings in excess of costs1,037865
Current portion of long-term debt and short-term borrowings354351
Accrued income taxes194709
Deferred income taxes 368 214 
Total current liabilities5,6815,416
 
Long-term debt1,175159
Deferred income taxes1,8021,852
Other liabilities 321 360 
Total liabilities 8,979 7,787 
 
Commitments and contingencies
 
Stockholders' equity:
Common stock - par value $.01; 1 billion shares authorized; 426,879,173 and 423,900,601
shares issued and outstanding at September 30, 2012 and December 31, 201144
Additional paid-in capital8,7188,535
Accumulated other comprehensive income (loss)79(23)
Retained earnings 10,773 9,103 
Total National Oilwell Varco stockholders' equity19,57417,619
Noncontrolling interests 109 109 
Total stockholders' equity 19,683 17,728 
$28,662$25,515 
          

NATIONAL OILWELL VARCO, INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(In millions, except per share data)

 
Three Months EndedNine Months Ended
September 30,June 30,September 30,
20122011201220122011
Revenue:
Rig Technology$2,547$1,970$2,405$7,211$5,472
Petroleum Services & Supplies1,7171,4601,7765,1974,084
Distribution & Transmission1,3154807802,6591,313
Eliminations (260) (170) (227) (711) (470)
Total revenue5,3193,7404,73414,35610,399
Gross profit1,4111,1701,3214,0033,251
Gross profit %26.5%31.3%27.9%27.9%31.3%
Selling, general, and administrative4653924141,2691,133
Other costs 57  6  28  92  29 
Operating profit8897728792,6422,089
Interest and financial costs(10)(8)(9)(27)(31)
Interest income253813
Equity income in unconsolidated affiliates711194334
Other income (expense), net (14) --  (5) (32) (26)
Income before income taxes8747808872,6342,079
Provision for income taxes 265  252  285  819  667 
Net income6095286021,8151,412
 
Net loss attributable to noncontrolling interests (3) (4) (3) (8) (8)
Net income attributable to Company$612 $532 $605 $1,823 $1,420 
 
Net income attributable to Company per share:
 
Basic$1.44 $1.26 $1.42 $4.29 $3.37 
 
Diluted$1.43 $1.25 $1.42 $4.28 $3.35 
 
Weighted average shares outstanding:
 
Basic 425  422  425  425  421 
 
Diluted 427  425  427  426  424 
          

NATIONAL OILWELL VARCO, INC.

OPERATING PROFIT -AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)

(In millions)

 
Three Months EndedNine Months Ended
September 30,June 30,September 30,
20122011201220122011
 
Revenue:
Rig Technology$2,547$ Read Full Story

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