National Oilwell Varco Announces Fourth Quarter and 2009 Earnings
HOUSTON--National Oilwell Varco, Inc. today reported that for its fourth quarter ended December 31, 2009 it earned net income of $394 million, or $0.94 per fully diluted share, compared to third quarter ended September 30, 2009 net income of $385 million, or $0.92 per fully diluted share. Transaction and restructuring charges for the fourth quarter of 2009 were $14 million pre-tax or $0.02 per share after-tax. Net income for the fourth quarter of 2009 excluding transaction and restructuring charges was $404 million, or $0.96 per fully diluted share.
Revenues reported for the full year 2009 were $12,712 million, and net income was $1,469 million, or $3.52 per fully diluted share. Operating profit for the full year 2009 was $2,315 million. Excluding all reported transaction, restructuring, voluntary retirement and intangible asset impairment charges in 2009, net income was $1,624 million, or $3.89 per fully diluted share, and operating profit was $2,549 million, for the full year 2009.
Revenues for the fourth quarter increased 2 percent sequentially to $3,134 million. Operating profit for the fourth quarter, excluding transaction and restructuring charges, was $622 million, up slightly from the third quarter of 2009.
During the fourth quarter of 2009, the Company added $624 million of orders to its capital equipment backlog, and removed $46 million of discontinued orders on cancelled projects. Backlog for capital equipment orders for the Company’s Rig Technology segment was $6.4 billion at December 31, 2009 compared to $7.3 billion at September 30, 2009.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, “We achieved solid results in 2009, despite the challenging market we faced throughout the year. We were able to use this time to make our businesses more efficient, while continuing to invest for future growth and better position ourselves for the inevitable recovery in drilling activity. We ended the year with $2.6 billion in cash, and cash flow remains a strength of our Company. I would like to thank all of our dedicated employees for their continued hard work.
While market conditions remain challenging, we enter 2010 with a solid backlog of equipment and technology to deliver to our customers, strong financial resources and positive cash flow. We believe that the oil and gas industry will continue to need to upgrade the world’s rig fleet, and we look forward to continuing to help our customers retool their rigs to improve safety, reduce environmental impact, and drive higher efficiency.”
Rig Technology
Fourth quarter revenues for the Rig Technology segment were $1,977 million, a decrease of 1 percent from the third quarter of 2009 and a decrease of 5 percent from the fourth quarter of 2008. Operating profit for this segment was $566 million, or 28.6 percent of sales, a decrease of 2 percent from the third quarter of 2009. Revenue out of backlog for the segment declined 5 percent sequentially and increased 3 percent year-over-year, to $1,512 million for the fourth quarter of 2009.
Petroleum Services & Supplies
Revenues for the fourth quarter of 2009 for the Petroleum Services & Supplies segment were $936 million, up 6 percent compared to third quarter 2009 results and down 33 percent compared to fourth quarter 2008 results. Operating profit was $107 million, or 11.4 percent of revenue, an increase of 24 percent from the third quarter of 2009.
Distribution Services
Fourth quarter revenues for the Distribution Services segment were $331 million, up 8 percent from the third quarter of 2009. Fourth quarter operating profit was $8 million or 2.4 percent of sales.
The Company has scheduled a conference call for February 3, 2010, at 9:00 a.m. Central Time to discuss fourth quarter and 2009 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 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.
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NATIONAL OILWELL VARCO, INC. CONSOLIDATED BALANCE SHEETS (In millions, except share data) |
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| December 31, | December 31, | ||||||
| 2009 | 2008 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 2,622 | $ | 1,543 | |||
| Receivables, net | 2,187 | 3,136 | |||||
| Inventories, net | 3,490 | 3,806 | |||||
| Costs in excess of billings | 740 | 618 | |||||
| Deferred income taxes | 290 | 271 | |||||
| Prepaid and other current assets | 269 | 283 | |||||
| Total current assets | 9,598 | 9,657 | |||||
| Property, plant and equipment, net | 1,836 | 1,677 | |||||
| Deferred income taxes | 92 | 126 | |||||
| Goodwill | 5,489 | 5,225 | |||||
| Intangibles, net | 4,052 | 4,300 | |||||
| Investment in unconsolidated affiliate | 393 | 421 | |||||
| Other assets | 72 | 73 | |||||
| $ | 21,532 | $ | 21,479 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 584 | $ | 852 | |||
| Accrued liabilities | 2,267 | 2,376 | |||||
| Billings in excess of costs | 1,090 | 2,161 | |||||
| Current portion of long-term debt and short-term borrowings | 7 | 4 | |||||
| Accrued income taxes | 226 | 230 | |||||
| Total current liabilities | 4,174 | 5,623 | |||||
| Long-term debt | 876 | 870 | |||||
| Deferred income taxes | 2,091 | 2,134 | |||||
| Other liabilities | 163 | 128 | |||||
| Total liabilities | 7,304 | 8,755 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Common stock – par value $.01; 418,451,731 and 417,350,924 shares | |||||||
| issued and outstanding at December 31, 2009 and December 31, 2008 | 4 | 4 | |||||
| Additional paid-in capital | 8,214 | 7,989 | |||||
| Accumulated other comprehensive income (loss) | 90 | (161 | ) | ||||
| Retained earnings | 5,805 | 4,796 | |||||
| Total National Oilwell Varco stockholders’ equity | 14,113 | 12,628 | |||||
| Noncontrolling interests | 115 | 96 | |||||
| Total stockholders’ equity | 14,228 | 12,724 | |||||
| $ | 21,532 | $ | 21,479 | ||||
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NATIONAL OILWELL VARCO, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In millions, except per share data) |
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| Three Months Ended | Years Ended | ||||||||||||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||||||||||||
| 2009 | 2008 | 2009 | 2009 | 2008 | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||
| Rig technology | $ | 1,977 | $ | 2,088 | $ | 2,000 | $ | 8,093 | $ | 7,528 | |||||||||||||||
| Petroleum services and supplies | 936 | 1,387 | 882 | 3,745 | 4,651 | ||||||||||||||||||||
| Distribution services | 331 | 483 | 306 | 1,350 | 1,772 | ||||||||||||||||||||
| Eliminations | (110 | ) | (148 | ) | (101 | ) | (476 | ) | (520 | ) | |||||||||||||||
| Total revenue | 3,134 | 3,810 |
3,087 |
12,712 | 13,431 | ||||||||||||||||||||
| Gross profit | 980 | 1,209 |
897 |
3,793 | 4,161 | ||||||||||||||||||||
| Gross profit % | 31.3 | % | 31.7 | % |
29.1 |
% |
29.8 | % | 31.0 | % | |||||||||||||||
| Selling, general, and administrative | 358 | 332 |
279 |
1,244 | 1,143 | ||||||||||||||||||||
| Intangible asset impairment | -- | -- | -- | 147 | -- | ||||||||||||||||||||
| Transaction and restructuring costs | 14 | 20 | 17 | 87 | 111 | ||||||||||||||||||||
| Operating profit | 608 | 857 |
601 |
2,315 | 2,907 | ||||||||||||||||||||
| Interest and financial costs | (13 | ) | (14 | ) | (14 | ) | (53 | ) | (67 | ) | |||||||||||||||
| Interest income | 1 | 8 | 4 | 9 | 45 | ||||||||||||||||||||
| Equity income in unconsolidated affiliate | 2 | 16 | 1 | 47 | 53 | ||||||||||||||||||||
| Other income (expense), net | (23 | ) | 9 | (13 | ) | (110 | ) | 23 | |||||||||||||||||
| Income before income taxes | 575 | 876 | 579 | 2,208 | 2,961 | ||||||||||||||||||||
| Provision for income taxes | 184 | 286 |
192 |
735 | 993 | ||||||||||||||||||||
| Net income | 391 | 590 |
387 |
1,473 | 1,968 | ||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | (3 | ) | 5 |
2 |
4 | 16 | |||||||||||||||||||
| Net income attributable to Company | $ | 394 | $ | 585 |
$ |
385 |
$ | 1,469 | $ | 1,952 | |||||||||||||||
| Net income attributable to Company per share: | |||||||||||||||||||||||||
| Basic | $ | 0.95 | $ | 1.41 | $ | 0.93 | $ | 3.53 | $ | 4.91 | |||||||||||||||
| Diluted | $ | 0.94 | $ | 1.40 | $ | 0.92 | $ | 3.52 | $ | 4.90 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||
| Basic | 416 | 416 |
416 |
416 | 397 | ||||||||||||||||||||
| Diluted | 419 | 417 |
418 |
417 | 399 | ||||||||||||||||||||
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NATIONAL OILWELL VARCO, INC. OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited) (In millions) |
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| Three Months Ended | Years Ended | ||||||||||||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||||||||||||
| 2009 | 2008 | 2009 | 2009 | 2008 | |||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||
| Rig technology | $ | 1,977 | $ | 2,088 | $ | 2,000 | $ | 8,093 | $ | 7,528 | |||||||||||||||
| Petroleum services and supplies | 936 | 1,387 | 882 | 3,745 | 5,255 | ||||||||||||||||||||
| Distribution services | 331 | 483 | 306 | 1,350 | 1,772 | ||||||||||||||||||||
| Eliminations | (110 | ) | (148 | ) | (101 | ) | (476 | ) | (520 | ) | |||||||||||||||
| Total revenue | $ | 3,134 | $ | 3,810 | $ | 3,087 | $ | 12,712 | $ | 14,035 | |||||||||||||||
| Operating profit: | |||||||||||||||||||||||||
| Rig technology | $ | 566 | $ | 557 | $ | 579 | $ | 2,287 | $ | 1,970 | |||||||||||||||
| Petroleum services and supplies | 107 | 341 | 86 | 453 | 1,281 | ||||||||||||||||||||
| Distribution services | 8 | 43 | 7 | 50 | 130 | ||||||||||||||||||||
| Unallocated expenses and eliminations | (59 | ) | (64 | ) | (54 | ) | (241 | ) | (241 | ) | |||||||||||||||
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Total operating profit (before intangible asset impairment and transaction and restructuring costs) |
$ | 622 | $ | 877 | $ | 618 | $ | 2,549 | $ | 3,140 | |||||||||||||||
| Operating profit %: | |||||||||||||||||||||||||
| Rig technology | 28.6 | % | 26.7 | % | 29.0 | % | 28.3 | % | 26.2 | % | |||||||||||||||
| Petroleum services and supplies | 11.4 | % | 24.6 | % | 9.8 | % | 12.1 | % | 24.4 | % | |||||||||||||||
| Distribution services | 2.4 | % | 8.9 | % | 2.3 | % | 3.7 | % | 7.3 | % | |||||||||||||||
| Other unallocated | -- | -- | -- | -- | -- | ||||||||||||||||||||
| Total operating profit (before intangible asset impairment and transaction and restructuring costs) | 19.8 | % | 23.0 | % | 20.0 | % | 20.1 | % | 22.4 | % | |||||||||||||||
Note (1): The unaudited as adjusted results for 2008 represent the combined estimated financial results for National Oilwell Varco, Inc. and Grant Prideco, Inc. as if the acquisition occurred at the beginning of the period. The results include the estimated effect of purchase accounting adjustments, but do not include any effect from costs savings that may result from the acquisition. The unaudited as adjusted financial statements are presented for informational purposes only and are not necessarily indicative of results of operations or financial position that would have occurred had the transaction been consummated at the beginning of the period presented, nor are they necessarily indicative of future results.
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NATIONAL OILWELL VARCO, INC. AS ADJUSTED EBITDA RECONCILIATION EXCLUDING TRANSACTION AND RESTRUCTURING COSTS (Unaudited) (In millions) |
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| Three Months Ended | Years Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||||||
| 2009 | 2008 |
2009 |
2009 | 2008 | |||||||||||||||
| Reconciliation of EBITDA (Note 1): | |||||||||||||||||||
| GAAP net income attributable to Company | $ | 394 | $ | 585 | $ | 385 | $ | 1,469 | $ | 1,952 | |||||||||
| Provision for income taxes | 184 | 286 | 192 | 735 | 993 | ||||||||||||||
| Interest expense | 13 | 14 | 14 | 53 | 67 | ||||||||||||||
| Depreciation and amortization | 126 | 118 | 126 | 490 | 402 | ||||||||||||||
| Intangible asset impairment | -- | -- | -- | 147 | -- | ||||||||||||||
| Transaction and restructuring costs | 14 | 20 | 17 | 87 | 111 | ||||||||||||||
| EBITDA (Note 1) | $ | 731 | $ | 1,023 | $ | 734 | $ | 2,981 | $ | 3,525 | |||||||||
Note 1: EBITDA means earnings before interest, taxes, depreciation, amortization, intangible asset impairment, transaction and restructuring 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.