National Oilwell Varco Reports Second Quarter 2017 Results
Revenues for the second quarter of 2017 were
“Our team executed exceptionally well during the second quarter, driving
substantial sequential improvements in adjusted EBITDA and free cash
flow, as we continue to navigate a challenging market,” commented
"Scarcity is returning to the oilfield, and, around the world, customers
are steadily exhausting excess stocks of the critical products,
equipment and technologies we supply, laying the groundwork for future
demand. The strong recovery we’ve seen thus far in
Rig Systems
Rig Systems generated revenues of
Backlog for capital equipment orders for Rig Systems at
Rig Aftermarket
Rig Aftermarket generated revenues of
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion and Production Solutions generated revenues of
Backlog for capital equipment orders for Completion & Production
Solutions at
Significant Events and Achievements
NOV signed a 10-year service and support agreement with
NOV introduced the latest version of its MD TotcoTM
autodriller, e-Wildcat™ 2.0. Equipped with a more robust data
acquisition system than previous models, the e-Wildcat 2.0 combines
high-resolution sensors with rig-specific algorithms so conventional
rigs can maintain a constant rate of penetration, allowing customers to
improve drilling times up to 30%.
NOV won a large thru-tubing tools order in
NOV introduced a new, more powerful, higher-torque top drive to enable drilling contractors to drill longer laterals faster and more efficiently. The 1,200-HP high-torque, induction-motor-powered TDS-11HD builds upon the field-proven performance and brand of NOV’s TDS-11SA top drive, offering extra power and 45% more torque for increased drilling requirements. NOV now also offers an upgrade package to provide its large installed base of market-leading TDS-11SA top drives with similar performance characteristics, including retrofitting two new 600-HP induction motors, a 400-HP increase, and upgrading the gear box and other components.
NOV booked meaningful international orders for its tubular coating and
inspection services. In
NOV recently introduced its IQ™ Monitoring System, the industry’s first
wear and vibration monitoring product for underreamers. A unique sensor
arrangement within the Anderreamer™ cutting structure provides detailed
performance data used primarily to eliminate the need for caliper and
cleanout runs. A companion application on any smartphone, tablet, or
laptop is used on the rig for rapid analysis of drilling parameters,
vibration severity, and tool diameter throughout a run. Recently, the
tool was successfully used in high-pressure and high-temperature
applications in the Gulf of
In the
NOV introduced a remote monitoring and analytics platform for its production, process, and fluid transfer technologies. The Company’s new Process and Flow Technologies GoConnect platform collects, stores, and analyzes field-operation data to improve equipment performance and ultimately provide operators conditioned-based maintenance, predictive failure analytics, and process optimization.
NOV successfully trialed its ReedHycalogTM Tektonic™ drill bits Chainsaw design concept, featuring ION™ 3D cutters on primary blades and full round ION cutters on secondary blades. This configuration improves point loading to the formation for much greater drilling efficiency while maintaining durability. The 12¼-in. TK66 Tektonic bit drilled the entire vertical section in a single run, setting a field record for rate of penetration, 8% faster than a competitor’s previous record.
NOV installed more than 2.5 miles of Bondstrand™ glass-reinforced
epoxy (GRE) pipework on the HMS Queen Elizabeth, the largest warship
ever built for the UK Royal Navy. The Company supplied more than 2,000
GRE pipe spools, specialist bulkhead penetrations, MARRSTM
OFFSHORE phenolic handrails and structures, and more than 4,311 ft² of
phenolic fiberglass-reinforced polymer grating for the forward and aft
islands and flight deck catwalks. NOV supplied the same solution to the
HMS
Other Corporate Items
As of
Second Quarter Earnings Conference Call
NOV will hold a conference call to discuss its second quarter 2017
results on
About
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, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (In millions, except per share data) |
|||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||
Rig Systems | $ | 346 | $ | 564 | $ | 393 | $ | 739 | $ | 1,490 | |||||||||||||||||
Rig Aftermarket | 341 | 364 | 321 | 662 | 755 | ||||||||||||||||||||||
Wellbore Technologies | 614 | 511 | 555 | 1,169 | 1,142 | ||||||||||||||||||||||
Completion & Production Solutions | 652 | 538 | 648 | 1,300 | 1,096 | ||||||||||||||||||||||
Eliminations | (194 | ) | (253 | ) | (176 | ) | (370 | ) | (570 | ) | |||||||||||||||||
Total revenue | 1,759 | 1,724 | 1,741 | 3,500 | 3,913 | ||||||||||||||||||||||
Gross profit (1) | 231 | 35 | 209 | 440 | 279 | ||||||||||||||||||||||
Gross profit % | 13.1 | % | 2.0 | % | 12.0 | % | 12.6 | % | 7.1 | % | |||||||||||||||||
Selling, general, and administrative | 293 | 305 | 306 | 599 | 738 | ||||||||||||||||||||||
Operating loss | (62 | ) | (270 | ) | (97 | ) | (159 | ) | (459 | ) | |||||||||||||||||
Interest and financial costs | (26 | ) | (30 | ) | (25 | ) | (51 | ) | (55 | ) | |||||||||||||||||
Interest income | 4 | 3 | 4 | 8 | 8 | ||||||||||||||||||||||
Equity loss in unconsolidated affiliates | (2 | ) | (7 | ) | - | (2 | ) | (13 | ) | ||||||||||||||||||
Other income (expense), net | (2 | ) | (34 | ) | (11 | ) | (13 | ) | (55 | ) | |||||||||||||||||
Loss before income taxes | (88 | ) | (338 | ) | (129 | ) | (217 | ) | (574 | ) | |||||||||||||||||
Provision for income taxes | (14 | ) | (121 | ) | (9 | ) | (23 | ) | (239 | ) | |||||||||||||||||
Net loss | (74 | ) | (217 | ) | (120 | ) | (194 | ) | (335 | ) | |||||||||||||||||
Net income attributable to noncontrolling interests | 1 | - | 2 | 3 | 1 | ||||||||||||||||||||||
Net loss attributable to Company | $ | (75 | ) | $ | (217 | ) | $ | (122 | ) | $ | (197 | ) | $ | (336 | ) | ||||||||||||
Per share data: | |||||||||||||||||||||||||||
Basic | $ | (0.20 | ) | $ | (0.58 | ) | $ | (0.32 | ) | $ | (0.52 | ) | $ | (0.90 | ) | ||||||||||||
Diluted | $ | (0.20 | ) | $ | (0.58 | ) | $ | (0.32 | ) | $ | (0.52 | ) | $ | (0.90 | ) | ||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||||||
Basic | 377 | 375 | 376 | 377 | 375 | ||||||||||||||||||||||
Diluted | 377 | 375 | 376 | 377 | 375 | ||||||||||||||||||||||
(1) | Gross profit excluding other items was $261 million and $497 million for the three and six months ended June 30, 2017, respectively. Gross profit excluding other items was $139 million and $439 million for the three and six months ended June 30, 2016, respectively. Gross profit excluding other items was $236 million for the three months ended March 31, 2017. See GAAP to Non-GAAP reconciliation on page 10. | |
NATIONAL OILWELL VARCO, INC. CONSOLIDATED BALANCE SHEETS (In millions) |
||||||||||
June 30, | December 31, | |||||||||
2017 | 2016 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 1,530 | $ | 1,408 | ||||||
Receivables, net | 2,086 | 2,083 | ||||||||
Inventories, net | 3,207 | 3,325 | ||||||||
Costs in excess of billings | 599 | 665 | ||||||||
Other current assets | 319 | 395 | ||||||||
Total current assets | 7,741 | 7,876 | ||||||||
Property, plant and equipment, net | 3,052 | 3,150 | ||||||||
Goodwill and intangibles, net | 9,567 | 9,597 | ||||||||
Other assets | 527 | 517 | ||||||||
Total assets | $ | 20,887 | $ | 21,140 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 448 | $ | 414 | ||||||
Accrued liabilities | 1,489 | 1,568 | ||||||||
Billings in excess of costs | 337 | 440 | ||||||||
Current portion of long-term debt and short-term borrowings | 506 | 506 | ||||||||
Accrued income taxes | 71 | 119 | ||||||||
Total current liabilities | 2,851 | 3,047 | ||||||||
Long-term debt | 2,708 | 2,708 | ||||||||
Other liabilities | 1,306 | 1,382 | ||||||||
Total liabilities | 6,865 | 7,137 | ||||||||
Total stockholders’ equity | 14,022 | 14,003 | ||||||||
Total liabilities and stockholders’ equity | $ | 20,887 | $ | 21,140 | ||||||
NATIONAL OILWELL VARCO, INC. OPERATING PROFIT (LOSS) – GAAP to Non-GAAP RECONCILIATION (Unaudited) (In millions) |
||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
June 30, | March 31, | June 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | ||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||
Rig Systems | $ | 346 | $ | 564 | $ | 393 | $ | 739 | $ | 1,490 | ||||||||||||||||||
Rig Aftermarket | 341 | 364 | 321 | 662 | 755 | |||||||||||||||||||||||
Wellbore Technologies | 614 | 511 | 555 | 1,169 | 1,142 | |||||||||||||||||||||||
Completion & Production Solutions | 652 | 538 | 648 | 1,300 | 1,096 | |||||||||||||||||||||||
Eliminations | (194 | ) | (253 | ) | (176 | ) | (370 | ) | (570 | ) | ||||||||||||||||||
Total revenue | $ | 1,759 | $ | 1,724 | $ | 1,741 | $ | 3,500 | $ | 3,913 | ||||||||||||||||||
Operating profit (loss): | ||||||||||||||||||||||||||||
Rig Systems | $ | (7 | ) | $ | 7 | $ | 9 | $ | 2 | $ | 74 | |||||||||||||||||
Rig Aftermarket | 76 | 62 | 61 | 137 | 131 | |||||||||||||||||||||||
Wellbore Technologies | (24 | ) | (146 | ) | (57 | ) | (81 | ) | (237 | ) | ||||||||||||||||||
Completion & Production Solutions | 27 | (33 | ) | 8 | 35 | (71 | ) | |||||||||||||||||||||
Eliminations and corporate costs | (134 | ) | (160 | ) | (118 | ) | (252 | ) | (356 | ) | ||||||||||||||||||
Total operating profit (loss) | $ | (62 | ) | $ | (270 | ) | $ | (97 | ) | $ | (159 | ) | $ | (459 | ) | |||||||||||||
Other items: | ||||||||||||||||||||||||||||
Rig Systems | $ | 16 | $ | 23 | $ | 7 | $ | 23 | $ | 75 | ||||||||||||||||||
Rig Aftermarket | 1 | 5 | 5 | 6 | 13 | |||||||||||||||||||||||
Wellbore Technologies | (4 | ) | 50 | - | (4 | ) | 88 | |||||||||||||||||||||
Completion & Production Solutions | 17 | 38 | 15 | 32 | 72 | |||||||||||||||||||||||
Eliminations and corporate costs | - | 1 | - | - | 10 | |||||||||||||||||||||||
Total other items | $ | 30 | $ | 117 | $ | 27 | $ | 57 | $ | 258 | ||||||||||||||||||
Operating profit (loss) excluding other items: | ||||||||||||||||||||||||||||
Rig Systems | $ | 9 | $ | 30 | $ | 16 | $ | 25 | $ | 149 | ||||||||||||||||||
Rig Aftermarket | 77 | 67 | 66 | 143 | 144 | |||||||||||||||||||||||
Wellbore Technologies | (28 | ) | (96 | ) | (57 | ) | (85 | ) | (149 | ) | ||||||||||||||||||
Completion & Production Solutions | 44 | 5 | 23 | 67 | 1 | |||||||||||||||||||||||
Eliminations and corporate costs | (134 | ) | (159 | ) | (118 | ) | (252 | ) | (346 | ) | ||||||||||||||||||
Total operating profit (loss) excluding other items | $ | (32 | ) | $ | (153 | ) | $ | (70 | ) | $ | (102 | ) | $ | (201 | ) | |||||||||||||
NATIONAL OILWELL VARCO, INC. AS ADJUSTED BEFORE DEPRECIATION & AMORTIZATION SUPPLEMENTAL SCHEDULE (Unaudited) (In millions) |
|||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||||
Operating profit (loss) excluding other items: | |||||||||||||||||||||||||||
Rig Systems | $ | 9 | $ | 30 | $ | 16 | $ | 25 | $ | 149 | |||||||||||||||||
Rig Aftermarket | 77 | 67 | 66 | 143 | 144 | ||||||||||||||||||||||
Wellbore Technologies | (28 | ) | (96 | ) | (57 | ) | (85 | ) | (149 | ) | |||||||||||||||||
Completion & Production Solutions | 44 | 5 | 23 | 67 | 1 | ||||||||||||||||||||||
Eliminations and corporate costs | (134 | ) | (159 | ) | (118 | ) | (252 | ) | (346 | ) | |||||||||||||||||
Total operating profit (loss) excluding other items | $ | (32 | ) | $ | (153 | ) | $ | (70 | ) | $ | (102 | ) | $ | (201 | ) | ||||||||||||
Depreciation & amortization: | |||||||||||||||||||||||||||
Rig Systems | $ | 17 | $ | 19 | $ | 17 | $ | 34 | $ | 37 | |||||||||||||||||
Rig Aftermarket | 6 | 6 | 5 | 11 | 11 | ||||||||||||||||||||||
Wellbore Technologies | 94 | 97 | 95 | 189 | 193 | ||||||||||||||||||||||
Completion & Production Solutions | 54 | 52 | 54 | 108 | 104 | ||||||||||||||||||||||
Eliminations and corporate costs | 3 | 4 | 4 | 7 | 8 | ||||||||||||||||||||||
Total depreciation & amortization | $ | 174 | $ | 178 | $ | 175 | $ | 349 | $ | 353 | |||||||||||||||||
Adjusted EBITDA (Operating profit excluding other | |||||||||||||||||||||||||||
items before depreciation & amortization) (Note 1): | |||||||||||||||||||||||||||
Rig Systems | $ | 26 | $ | 49 | $ | 33 | $ | 59 | $ | 186 | |||||||||||||||||
Rig Aftermarket | 83 | 73 | 71 | 154 | 155 | ||||||||||||||||||||||
Wellbore Technologies | 66 | 1 | 38 | 104 | 44 | ||||||||||||||||||||||
Completion & Production Solutions | 98 | 57 | 77 | 175 | 105 | ||||||||||||||||||||||
Eliminations and corporate costs | (131 | ) | (155 | ) | (114 | ) | (245 | ) | (338 | ) | |||||||||||||||||
Total Adjusted EBITDA | $ | 142 | $ | 25 | $ | 105 | $ | 247 | $ | 152 | |||||||||||||||||
Adjusted EBITDA % (Note 1): | |||||||||||||||||||||||||||
Rig Systems | 7.5 | % | 8.7 | % | 8.4 | % | 8.0 | % | 12.5 | % | |||||||||||||||||
Rig Aftermarket | 24.3 | % | 20.1 | % | 22.1 | % | 23.3 | % | 20.5 | % | |||||||||||||||||
Wellbore Technologies | 10.7 | % | 0.2 | % | 6.8 | % | 8.9 | % | 3.9 | % | |||||||||||||||||
Completion & Production Solutions | 15.0 | % | 10.6 | % | 11.9 | % | 13.5 | % | 9.6 | % | |||||||||||||||||
Total Adjusted EBITDA % | 8.1 | % | 1.5 | % | 6.0 | % | 7.1 | % | 3.9 | % | |||||||||||||||||
Reconciliation of Adjusted EBITDA (Note 1): | |||||||||||||||||||||||||||
GAAP net income (loss) attributable to Company | $ | (75 | ) | $ | (217 | ) | $ | (122 | ) | $ | (197 | ) | $ | (336 | ) | ||||||||||||
Net income attributable to noncontrolling interest | 1 | - | 2 | 3 | 1 | ||||||||||||||||||||||
Provision for income taxes | (14 | ) | (121 | ) | (9 | ) | (23 | ) | (239 | ) | |||||||||||||||||
Interest expense | 26 | 30 | 25 | 51 | 55 | ||||||||||||||||||||||
Interest income | (4 | ) | (3 | ) | (4 | ) | (8 | ) | (8 | ) | |||||||||||||||||
Equity income (loss) in unconsolidated affiliates | 2 | 7 | - | 2 | 13 | ||||||||||||||||||||||
Other income (expense), net | 2 | 34 | 11 | 13 | 55 | ||||||||||||||||||||||
Depreciation & amortization | 174 | 178 | 175 | 349 | 353 | ||||||||||||||||||||||
Other items in operating profit | 30 | 117 | 27 | 57 | 258 | ||||||||||||||||||||||
Total Adjusted EBITDA: | $ | 142 | $ | 25 | $ | 105 | $ | 247 | $ | 152 | |||||||||||||||||
NATIONAL OILWELL VARCO, INC. GAAP to Non-GAAP (Adjusted) RECONCILIATION (Unaudited) (In millions, except per share data) |
|||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||||||||
GAAP net income (loss) attributable to Company | $ | (75 | ) | $ | (217 | ) | $ | (122 | ) | $ | (197 | ) | $ | (336 | ) | ||||||||||||||||
Other Items: | |||||||||||||||||||||||||||||||
Severance, inventory charges, facility closures and other | 30 | 117 | 27 | 57 | 258 | ||||||||||||||||||||||||||
Fixed asset write-down | - | 26 | 10 | 10 | 32 | ||||||||||||||||||||||||||
GAAP net income (loss) less pre-tax other items | (45 | ) | (74 | ) | (85 | ) | (130 | ) | (46 | ) | |||||||||||||||||||||
Tax impact on other items | (9 | ) | (40 | ) | (12 | ) | (21 | ) | (89 | ) | |||||||||||||||||||||
Tax items (Note 2) | - | - | 34 | 34 | - | ||||||||||||||||||||||||||
Adjusted net income (loss) attributable to Company (Note 1) | (54 | ) | (114 | ) | (63 | ) | (117 | ) | (135 | ) | |||||||||||||||||||||
Noncontrolling interest | 1 | - | 2 | 3 | 1 | ||||||||||||||||||||||||||
Adjusted net income (loss) (Note 1) | $ | (53 | ) | $ | (114 | ) | $ | (61 | ) | $ | (114 | ) | $ | (134 | ) | ||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||||||||
GAAP net income (loss) attributable to Company per share | $ | (0.20 | ) | $ | (0.58 | ) | $ | (0.32 | ) | $ | (0.52 | ) | $ | (0.90 | ) | ||||||||||||||||
Other items: | |||||||||||||||||||||||||||||||
Severance, inventory charges, facility closures and other | 0.06 | 0.23 | 0.04 | 0.10 | 0.48 | ||||||||||||||||||||||||||
Fixed asset write-down | - | 0.05 | 0.02 | 0.02 | 0.06 | ||||||||||||||||||||||||||
Tax items | - | - | 0.09 | 0.09 | - | ||||||||||||||||||||||||||
Adjusted earnings (loss) per share (Note 1) | $ | (0.14 | ) | $ | (0.30 | ) | $ | (0.17 | ) | $ | (0.31 | ) | $ | (0.36 | ) | ||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2017 | 2016 | |||||||||||||||||||||||||||
GAAP gross profit | $ | 231 | $ | 35 | $ | 209 | $ | 440 | $ | 279 | |||||||||||||||||||||
Other items included in gross profit | 30 | 104 | 27 | 57 | 160 | ||||||||||||||||||||||||||
Adjusted gross profit (Note 1) | $ | 261 | $ | 139 | $ | 236 | $ | 497 | $ | 439 | |||||||||||||||||||||
GAAP selling, general, and administrative | $ | 293 | $ | 305 | $ | 306 | $ | 599 | $ | 738 | |||||||||||||||||||||
Other items included in selling, general, and administrative | - | (13 | ) | - | - | (98 | ) | ||||||||||||||||||||||||
Adjusted selling, general, and administrative (Note 1) | $ | 293 | $ | 292 | $ | 306 | $ | 599 | $ | 640 | |||||||||||||||||||||
Note 1: The Company discloses various non-GAAP financial measures in its periodic earnings press releases and other public disclosures to provide investors additional information about the results of ongoing operations. The Company uses these same non-GAAP measures internally to evaluate and manage the business. Each of these non-GAAP financial measures excludes the impact of certain other items and therefore has not been calculated in accordance with GAAP. A reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measure is included herein. The non-GAAP financial measures are not intended to replace GAAP financial measures.
Note 2: The excluded Tax Item in Q1 2017 was foreign tax credit valuation allowances (VAs) booked because the Company is in a three-year cumulative tax loss position. In Q2 2017, similar VAs were largely offset by other realized tax credits.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170727006686/en/
Source:
National Oilwell Varco, Inc.
Loren Singletary, 713-346-7807
Loren.Singletary@nov.com