National Oilwell Varco, Inc. (NYSE: NOV) today reported a first
quarter 2017 net loss of $122 million, or $0.32 per share.
Excluding other items, net loss for the quarter was $63 million, or
$0.17 per share. Other items totaled $37 million, pretax, and
primarily consisted of charges related to severance and facility
closures.
Revenues for the first quarter of 2017 were $1.74 billion, an
increase of three percent compared to the fourth quarter of 2016
and a decrease of 20 percent from the first quarter of 2016.
Operating loss for the first quarter was $97 million, or 5.6
percent of sales. Excluding other items, operating loss was $70
million, or 4.0 percent of sales. Adjusted EBITDA (operating profit
excluding other items before depreciation and amortization) for the
first quarter was $105 million, or 6.0 percent of sales, an
increase of $3 million from the fourth quarter of 2016. Cash flow
from operations for the first quarter was $111 million.
“The Company posted its second consecutive quarter of rising
revenues and its third consecutive quarter of rising Adjusted
EBITDA,” commented Clay Williams, Chairman, President and CEO. “Our
businesses that serve the improving North American land market
generated solid sequential improvements in profitability and are
growing quickly. This lifted NOV’s consolidated mix of land
revenues to 57 percent during the first quarter of 2017.”
“We continue to drive cost reductions and efficiencies and pivot
toward the products and technologies we believe will benefit
disproportionately through the upcycle. In a global market that is
slowly grinding higher, our improving financial results demonstrate
the extraordinary effort and execution from our team.”
Rig Systems
Rig Systems generated revenues of $393 million, a decrease of
eight percent from the fourth quarter of 2016 and a decrease of 58
percent from the first quarter of 2016. Operating profit was $9
million, or 2.3 percent of sales. Adjusted EBITDA was $33 million,
or 8.4 percent of sales, a decrease of 42 percent sequentially and
a decrease of 76 percent from the prior year.
Backlog for capital equipment orders for Rig Systems at March
31, 2017 was $2.32 billion. New orders during the quarter were $118
million, representing a book-to-bill of 41 percent when compared to
the $285 million of orders shipped from backlog.
Rig Aftermarket
Rig Aftermarket generated revenues of $321 million, a decrease
of five percent from the fourth quarter of 2016 and a decrease of
18 percent from the first quarter of 2016. Operating profit was $61
million, or 19.0 percent of sales. Adjusted EBITDA was $71 million,
or 22.1 percent of sales, a decrease of 11 percent sequentially and
a decrease of 13 percent from the prior year.
Wellbore Technologies
Wellbore Technologies generated revenues of $555 million, an
increase of five percent from the fourth quarter of 2016 and a
decrease of 12 percent from the first quarter of 2016. Operating
loss was $57 million, or 10.3 percent of sales. Adjusted EBITDA was
$38 million, or 6.8 percent of sales, an increase of 90 percent
sequentially and a decrease of 12 percent from the prior year.
Completion & Production Solutions
Completion and Production Solutions generated revenues of $648
million, an increase of eight percent from the fourth quarter of
2016 and an increase of 16 percent from the first quarter of 2016.
Operating profit was $8 million, or 1.2 percent of sales. Adjusted
EBITDA was $77 million, or 11.9 percent of sales, an increase of 12
percent sequentially and an increase of 60 percent from the prior
year.
Backlog for capital equipment orders for Completion &
Production Solutions at March 31, 2017 was $751 million. New orders
during the quarter were $323 million, representing a book-to-bill
of 90 percent when compared to the $359 million of orders shipped
from backlog.
Significant Events and Achievements
NOV recently introduced the highest strength coiled tubing
string commercially available today, the QT-1400™. QT-1400 coiled
tubing has a specified minimum yield strength of 140,000 psi and
greater resistance to low-cycle fatigue cracking at high pressure.
The new coiled tubing improves customers’ operational efficiencies
in completing and refracturing long laterals onshore and offshore
with a 54% further reach capability, 28% stronger internal yield
pressure, and 23% higher yield load capability, as compared to
QT‐1100™ with a 2-in. OD.
NOV introduced two real-time condition-based monitoring (CBM)
systems for intervention and stimulation equipment. The CTES™ CBM
system maximizes uptime and reduces maintenance costs associated
with personnel and inventory requirements through early
identification of potential failures. This is accomplished by
monitoring pump performance, filters, and engine health in addition
to hydraulic systems, lubrication systems, and specific bearings on
rotating machinery. The Texas Oil Tools™ Stack Monitor
increases customer confidence of coiled tubing blowout preventer
(BOP) performance by providing real-time data of the entire stack.
Mounted in the control cabin, the Stack Monitor allows the customer
to determine if the BOP rams are fully opened or closed from a safe
distance from the operation.
NOV booked another 75,000 HHP hydraulic fracturing equipment
order during the first quarter, bringing the Company’s total to
150,000 HHP for 2017. The most recent order includes 30 frac units,
two blenders, one chemical unit, one hydration unit, and a data
van.
NOV booked orders for 30 high-spec well servicing rigs for the
US market. These rigs incorporate purpose-built
components that optimize the rigs’ ability to be utilized in a
variety of applications, including extended lateral
completions.
NOV booked orders for 16 NOVOS™ rig operating systems, a key
element of the Company’s automation initiative. NOVOS automates
drilling activities and incorporates the ability to utilize
applications and algorithms which leverage real-time drilling data
to optimize drilling performance.
NOV introduced its new Vector™ Series 50 motor, a short
bit-to-bend downhole drilling motor with an ERT™ power section
that delivers extended operational hours, less aggressive rotation,
and tighter curve sections. Using the new motor, an independent
operator in the Permian drilled back-to-back record runs, including
their fastest lateral section. The tool delivered 32% and 58% ROP
improvement over Reagan County’s top five-performing wells.
Following similar successes around North America, NOV is adding
additional Series 50 motors to its rental fleet.
Grant Prideco’s newest connection, Delta™, completed its first
commercial run. An independent E&P company in the Permian basin
used 5½-in. S-135 Delta 544 Grant Prideco™ drill pipe to drill one
of their longest and fastest lateral wells in the area. The
operator drilled a clean hole, eliminating casing run concerns and
reducing the open hole friction factor from 0.34 to 0.24, a 30%
reduction in torque and tension loads, to make it easier to reach
total depth. The operator plans to continue using Grant Prideco
5½-in. drill pipe with Delta connections. With such strong initial
performance, the Company anticipates broader adoption of 5½-in.
drill pipe with Delta connections for horizontal land drilling.
An NOV customer set a record for the longest lateral drilled in
the 8¾-in. section in Howard County, Texas using
a ReedHycalog™ DS616M-T1 drill bit with Permian Series cutters
and an Agitator™ system. The bit drilled 10,927 ft in 138
hr for an average rate of penetration of 79 ft/hr. The bit drilled
53% farther and 7% faster than the county’s top ten bit runs,
motivating the customer to continue using this drill bit for their
Midland Basin laterals.
NOV Tuboscope’s tubular inspections now feature the latest
ultrasonic phased array technology. Tuboscope can now identify any
transverse, longitudinal, and oblique flaws within the pipe body of
oil country tubular goods simultaneously. With this new technology,
Tuboscope can provide higher-resolution inspections at faster
speeds with improved operational flexibility.
NOV opened a new plant in Abu Dhabi to provide Tuboscope™ TK™
Liner products to the Middle Eastern market. TK Liner products are
glass-reinforced epoxy (GRE) liners designed to protect new and
used oil country tubular goods and flow lines in corrosive
environments. In its first quarter of operation, the plant
delivered 350,000 ft of liner.
NOV received a multi-year integrated service contract to provide
drilling fluids, solids control, and waste management for
Mittelplate Island. Mittelplate is an artificial island for
drilling and production in the middle of the Schleswig-Holstein
Wadden Sea National Park in Northern Germany, making proper
drilling waste treatment and disposal operation-critical.
Other Corporate Items
As of March 31, 2017, the Company had $1.48 billion in cash and
cash equivalents and total debt of $3.21 billion. NOV had $4.5
billion available on its revolving credit facility as of March 31,
2017. The unsecured facility matures in September of 2018 and is
subject to one primary covenant, a maximum debt-to-capitalization
ratio of 60 percent. As of March 31, 2017, NOV had a
debt-to-capitalization ratio of 18.7 percent.
First Quarter Earnings Conference Call
NOV will hold a conference call to discuss its first quarter
2017 results on April 27, 2017 at 8:00 AM Central Time (9:00 AM
Eastern Time). Interested parties are invited to participate on the
call by dialing +1 (844) 464-3148 or, if calling internationally,
+1 (574) 990-9849 approximately ten minutes prior to the scheduled
start time and asking for the “NOV Earnings Call.” The call will be
broadcast simultaneously at www.nov.com/investors on a listen-only
basis. A replay will be available on the website for 30 days.
About National Oilwell Varco
National Oilwell Varco (NYSE: NOV) is a leading provider of
technology, equipment, and services to the global oil and gas
industry. NOV has been pioneering innovations that improve the
cost-effectiveness, efficiency, safety, and environmental impact of
oil and gas operations since 1862. The depth and breadth of NOV’s
offerings support customers’ full-field, drilling, completion, and
production needs. NOV powers the industry that powers the
world.
Cautionary Statement for the Purpose of the “Safe Harbor”
Provisions of the Private Securities Litigation Reform Act of
1995
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 the 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 STATEMENTS OF INCOME
(LOSS) (Unaudited)
(In millions, except per share
data)
Three Months Ended March 31,
December 31, 2017 2016 2016
Revenue: Rig Systems $ 393 $ 926 $ 426 Rig Aftermarket 321 391 339
Wellbore Technologies 555 631 531 Completion & Production
Solutions 648 558 602 Eliminations (176 ) (317 )
(206 ) Total revenue 1,741 2,189 1,692 Gross profit (loss)
(1) 209 244 (459 ) Gross profit (loss) % 12.0 % 11.1 % (27.1 %)
Selling, general, and administrative 306
433 307 Operating loss (97 ) (189 )
(766 ) Interest and financial costs (25 ) (25 ) (25 ) Interest
income 4 5 4 Equity income (loss) in unconsolidated affiliates - (6
) (2 ) Other income (expense), net (11 ) (21 )
(16 ) Loss before income taxes (129 ) (236 ) (805 ) Provision for
income taxes (9 ) (118 ) (88 ) Net loss (120 )
(118 ) (717 ) Net income (loss) attributable to noncontrolling
interests 2 1 (3 ) Net loss
attributable to Company $ (122 ) $ (119 ) $ (714 ) Per share
data: Basic $ (0.32 ) $ (0.32 ) $ (1.90 ) Diluted $ (0.32 ) $ (0.32
) $ (1.90 ) Weighted average shares outstanding: Basic 376
375 376 Diluted 376
375 376 (1)
Gross profit excluding other items was $236 million and $300
million for the three months ended March 31, 2017 and 2016,
respectively. Gross profit excluding other items was $235 million
for the three months ended December 31, 2016. See GAAP to Non-GAAP
reconciliation on page 9.
NATIONAL OILWELL VARCO, INC.
CONSOLIDATED BALANCE SHEETS
(In millions)
March 31, December
31, 2017 2016 (Unaudited) ASSETS Current assets: Cash and cash
equivalents $ 1,479 $ 1,408 Receivables, net 1,978 2,083
Inventories, net 3,254 3,325 Costs in excess of billings 653 665
Other current assets 380 395 Total current assets
7,744 7,876 Property, plant and equipment, net 3,108 3,150
Goodwill and intangibles, net 9,532 9,597 Other assets 520
517 Total assets $ 20,904 $ 21,140 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $
388 $ 414 Accrued liabilities 1,512 1,568 Billings in excess of
costs 363 440 Current portion of long-term debt and short-term
borrowings 506 506 Accrued income taxes 83 119 Total
current liabilities 2,852 3,047 Long-term debt 2,707 2,708
Other liabilities 1,360 1,382 Total liabilities 6,919
7,137 Total stockholders’ equity 13,985 14,003
Total liabilities and stockholders’ equity $ 20,904 $ 21,140
NATIONAL OILWELL VARCO, INC.
OPERATING PROFIT (LOSS) – GAAP to
Non-GAAP RECONCILIATION (Unaudited)
(In millions)
Three Months Ended March 31,
December 31, 2017 2016 2016 Revenue:
Rig Systems $ 393 $ 926 $ 426 Rig Aftermarket 321 391 339 Wellbore
Technologies 555 631 531 Completion & Production Solutions 648
558 602 Eliminations (176 ) (317 ) (206 )
Total revenue $ 1,741 $ 2,189 $ 1,692
Operating profit (loss): Rig Systems $ 9 $ 67 $ (81 ) Rig
Aftermarket 61 69 26 Wellbore Technologies (57 ) (91 ) (439 )
Completion & Production Solutions 8 (38 ) (134 ) Eliminations
and corporate costs (118 ) (196 ) (138 ) Total
operating profit (loss) $ (97 ) $ (189 ) $ (766 ) Other
items: Rig Systems $ 7 $ 52 $ 121 Rig Aftermarket 5 8 49 Wellbore
Technologies - 38 364 Completion & Production Solutions 15 34
151 Eliminations and corporate costs - 9
9 Total other items $ 27 $ 141 $
694 Operating profit (loss) excluding other items:
Rig Systems $ 16 $ 119 $ 40 Rig Aftermarket 66 77 75 Wellbore
Technologies (57 ) (53 ) (75 ) Completion & Production
Solutions 23 (4 ) 17 Eliminations and corporate costs (118 )
(187 ) (129 ) Total operating profit (loss) excluding
other items $ (70 ) $ (48 ) $ (72 )
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED BEFORE DEPRECIATION &
AMORTIZATION SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
Three Months Ended March 31,
December 31, 2017 2016 2016 Operating
profit (loss) excluding other items: Rig Systems $ 16 $ 119 $ 40
Rig Aftermarket 66 77 75 Wellbore Technologies (57 ) (53 ) (75 )
Completion & Production Solutions 23 (4 ) 17 Eliminations and
corporate costs (118 ) (187 ) (129 ) Total
operating profit (loss) excluding other items $ (70 ) $ (48 ) $ (72
) Depreciation & amortization: Rig Systems $ 17 $ 18 $
17 Rig Aftermarket 5 5 5 Wellbore Technologies 95 96 95 Completion
& Production Solutions 54 52 52 Eliminations and corporate
costs 4 4 5 Total
depreciation & amortization $ 175 $ 175 $ 174
Adjusted EBITDA (Operating profit excluding other
items before depreciation & amortization) (Note 1): Rig Systems
$ 33 $ 137 $ 57 Rig Aftermarket 71 82 80 Wellbore Technologies 38
43 20 Completion & Production Solutions 77 48 69 Eliminations
and corporate costs (114 ) (183 ) (124 ) Total
Adjusted EBITDA $ 105 $ 127 $ 102
Adjusted EBITDA % (Note 1): Rig Systems 8.4 % 14.8 % 13.4 % Rig
Aftermarket 22.1 % 21.0 % 23.6 % Wellbore Technologies 6.8 % 6.8 %
3.8 % Completion & Production Solutions 11.9 % 8.6 % 11.5 %
Total Adjusted EBITDA % 6.0 % 5.8 % 6.0 % Total Adjusted
EBITDA: $ 105 $ 127 $ 102 Other items in operating profit (27 )
(141 ) (694 ) Interest income 4 5 4 Equity income (loss) in
unconsolidated affiliates - (6 ) (2 ) Other income (expense), net
(11 ) (21 ) (16 ) Net (income) loss attributable to noncontrolling
interest (2 ) (1 ) 3 EBITDA (Note 1) $
69 $ (37 ) $ (603 ) Reconciliation of EBITDA (Note
1): GAAP net income (loss) attributable to Company $ (122 ) $ (119
) $ (714 ) Provision for income taxes (9 ) (118 ) (88 ) Interest
expense 25 25 25 Depreciation & amortization 175
175 174 EBITDA 69 (37 ) (603 ) Other
items in operating profit 27 141 694 Other items in other income
(expense), net 10 6 12
EBITDA excluding other items (Note 1) $ 106 $ 110 $
103
NATIONAL OILWELL VARCO, INC.
GAAP to Non-GAAP (Adjusted)
RECONCILIATION (Unaudited)
(In millions, except per share
data)
Three Months Ended March 31,
December 31, 2017 2016
2016 GAAP net income (loss) attributable to Company $ (122 ) $ (119
) $ (714 ) Other Items: Severance, inventory charges, facility
closures and other 27 141 694 Fixed asset write-down 10
6 12 GAAP net income (loss) less
pre-tax other items (85 ) 28 (8 ) Tax impact on other items (12 )
(49 ) (224 ) Tax items (Note 2) 34 -
175 Adjusted net income (loss) attributable to
Company (Note 1) (63 ) (21 ) (57 ) Noncontrolling interest 2
1 (3 ) Adjusted net income (loss) (Note
1) $ (61 ) $ (20 ) $ (60 ) Three Months Ended March 31,
December 31, 2017 2016 2016 GAAP net income (loss) attributable to
Company per share $ (0.32 ) $ (0.32 ) $ (1.90 ) Other items:
Severance, inventory charges, facility closures and other 0.04 0.25
1.26 Fixed asset write-down 0.02 0.01 0.02 Tax items 0.09
- 0.47 Adjusted earnings (loss)
per share (Note 1) $ (0.17 ) $ (0.06 ) $ (0.15 ) Three
Months Ended March 31, December 31, 2017 2016 2017 GAAP gross
profit $ 209 $ 244 $ (459 ) Other items included in gross profit
27 56 694 Adjusted gross
profit (Note 1) $ 236 $ 300 $ 235 GAAP
selling, general, and administrative $ 306 $ 433 $ 307 Other items
included in selling, general, and administrative -
(85 ) - Adjusted selling, general, and
administrative (Note 1) $ 306 $ 348 $ 307
Note 1: In an effort to provide investors with additional
information regarding our results as determined by GAAP, we
disclose various non-GAAP financial measures in our quarterly
earnings press releases and other public disclosures. Each of these
financial measures excludes the impact of certain other items and
therefore has not been calculated in accordance with GAAP. A
reconciliation of each of these non-GAAP financial measures to its
most comparable GAAP financial measure is included here within, and
these non-GAAP financial measures are not intended to replace GAAP
financial measures. We use these non-GAAP financial measures
internally to evaluate and manage the Company’s operations because
we believe it provides useful supplemental information regarding
the Company’s on-going economic performance. We have 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.
Note 2: The excluded Tax Items are primarily valuation
allowances booked on foreign tax credits because the Company is in
a three-year cumulative tax loss position.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426006863/en/
National Oilwell Varco, Inc.Loren Singletary,
713-346-7807Loren.Singletary@nov.com
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