National Oilwell Varco Reports First Quarter 2019 Results
“Two big challenges negatively impacted our quarter—oilfield service customers cut expenditures due to low year-end oil prices and sliding producer activity outlook, and offshore sales declined following the accelerated equipment deliveries we saw in the fourth quarter,” commented
“While we expect modestly improving activity in international and offshore markets, along with growing market penetration for NOV’s proprietary technologies and services, capital austerity in the North American land market leaves our near-term outlook uncertain. Consequently, we are renewing our focus on controlling what we can, namely our cost structure, as we streamline our operations to improve our organization’s profitability, regardless of the market environment.”
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion & Production Solutions generated revenues of
Orders improved in March and totaled
Rig Technologies
Rig Technologies generated revenues of
New orders booked during the quarter totaled
Other Corporate Items
Lower compensation and third-party service expenses and a decrease in intersegment sales resulted in a
During the first quarter of 2019, the Company adopted ASC 842, Leases, effective
Significant Events and Achievements
NOV booked an order from BP and the
NOV opened its new, state-of-the-art Fiber Glass Systems manufacturing facility in
NOV expanded the international reach of its measurement-while-drilling (MWD) and steerable technologies portfolio during the first quarter of 2019. NOV secured its first long-term rental contract to deploy Vector™ rotary steerable system (RSS) tools in the MENA region based on the successful use of the tool to maintain verticality in a hard, interbedded, and highly dipping formation. NOV also deployed its iSeries™ MWD tools in
NOV signed an agreement with a major operator in
NOV secured a 93-pump order from a major mid-stream company for a major pipeline infrastructure buildout from the
NOV Completion Tools successfully introduced its BPS™ Maxx and i-Opener™ TD (Time Delay) systems. The BPS Maxx offers a significant increase in flow area compared to earlier generations of BPS products, allowing for flowrates greater than 100 barrels per minute, significantly improving productivity from the toe sections of extended-reach horizontal wellbores. The Company has already deployed BPS Maxx in the
NOV introduced BW Shield™, a proprietary coating technology that reduces corrosion-related damage to bias welds on coiled tubing strings. Operations in shale plays present coiled tubing service companies with persistent corrosion challenges, including pitting corrosion due to microbes, leftover acid, chloride-rich solutions, and other harsh conditions found in downhole environments. These issues can cause premature failures of bias welds, leading to early coiled tubing string retirements and costly downtime. BW Shield prevents localized bias weld corrosion, helping customers improve string life, increase reliability, and avoid service interruptions.
NOV was made the primary fixed-cutter drill bit supplier for a major operator in
NOV received the 2019 OTC Spotlight on New Technology Award, the second award in as many years, for its subsea automated pig launcher (SAPL). The SAPL allows pig launching from the subsea to topside and enables a wide range of pigging operations that help avoid pipeline blockages and production shutdowns while improving system integrity. The system also eliminates the need for a second flowline solely for pigging and wax handling and reduces the number of days required for vessel mobilization compared to conventional systems.
NOV booked its first international order for a Genesis™ coiled tubing unit from a large independent service company operating in the
NOV’s TerraPULSE™ CT Agitator™ tool achieved success for an operator on a two-well project in
NOV’s MPowerD™ managed-pressure-drilling (MPD) product line continues to gain international traction. The Company introduced the first MPD system integrated with an MPD application on the NOVOS™ platform to a pilot project in
NOV signed a 3-year, 10-rig contract for its solids control and waste management equipment services in the Permian for a major integrated oil company. This award comes from a successful field trial showcasing NOV’s Advanced Fluid Recovery System (AFRS), which transfers whole wellbore cuttings directly from the shale shakers to a processing centrifuge. This patent-pending process produces a dryer waste stream and yields a cleaner recoverable drilling fluid, which reduces overall disposal numbers and provides savings to the operator on base fluid usage. The award will mobilize five AFRS packages and five centrifuge packages along with various other surface rental pieces.
First Quarter Earnings Conference Call
NOV will hold a conference call to discuss its first quarter 2019 results on
About NOV
Visit www.nov.com for more information.
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
Certain prior period amounts have been reclassified in this press release to be consistent with current period presentation.
NATIONAL OILWELL VARCO, INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (In millions, except per share data) |
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Three Months Ended | ||||||||||||||||
March 31, | December 31, | |||||||||||||||
2019 | 2018 | 2018 | ||||||||||||||
Revenue: | ||||||||||||||||
Wellbore Technologies | $ | 807 | $ | 711 | $ | 884 | ||||||||||
Completion & Production Solutions | 581 | 670 | 788 | |||||||||||||
Rig Technologies | 603 | 483 | 804 | |||||||||||||
Eliminations | (51 | ) | (69 | ) | (78 | ) | ||||||||||
Total revenue | 1,940 | 1,795 | 2,398 | |||||||||||||
Gross profit | 256 | 287 | 409 | |||||||||||||
Gross profit % | 13.2 | % | 16.0 | % | 17.1 | % | ||||||||||
Selling, general, and administrative | 304 | 288 | 322 | |||||||||||||
Operating profit (loss) | (48 | ) | (1 | ) | 87 | |||||||||||
Interest and financial costs | (25 | ) | (24 | ) | (22 | ) | ||||||||||
Interest income | 6 | 7 | 7 | |||||||||||||
Equity income (loss) in unconsolidated affiliates | — | 2 | (2 | ) | ||||||||||||
Other income (expense), net | (18 | ) | (47 | ) | (29 | ) | ||||||||||
Income (loss) before income taxes | (85 | ) | (63 | ) | 41 | |||||||||||
Provision (benefit) for income taxes | (10 | ) | 3 | 26 | ||||||||||||
Net income (loss) | (75 | ) | (66 | ) | 15 | |||||||||||
Net (income) loss attributable to noncontrolling interests | 2 | 2 | 3 | |||||||||||||
Net income (loss) attributable to Company | $ | (77 | ) | $ | (68 | ) | $ | 12 | ||||||||
Per share data: | ||||||||||||||||
Basic | $ | (0.20 | ) | $ | (0.18 | ) | $ | 0.03 | ||||||||
Diluted | $ | (0.20 | ) | $ | (0.18 | ) | $ | 0.03 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 380 | 377 | 379 | |||||||||||||
Diluted | 380 | 377 | 383 |
NATIONAL OILWELL VARCO, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions) |
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March 31, | December 31, | |||||||||
2019 | 2018 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 1,270 | $ | 1,427 | ||||||
Receivables, net | 1,793 | 2,101 | ||||||||
Inventories, net | 3,131 | 2,986 | ||||||||
Contract assets | 539 | 565 | ||||||||
Other current assets | 205 | 200 | ||||||||
Total current assets | 6,938 | 7,279 | ||||||||
Property, plant and equipment, net | 2,605 | 2,797 | ||||||||
Lease right-of-use assets | 789 | — | ||||||||
Goodwill and intangibles, net | 9,234 | 9,284 | ||||||||
Other assets | 436 | 436 | ||||||||
Total assets | $ | 20,002 | $ | 19,796 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 679 | $ | 722 | ||||||
Accrued liabilities | 876 | 1,088 | ||||||||
Contract liabilities | 412 | 458 | ||||||||
Current portion of lease liabilities | 115 | 7 | ||||||||
Accrued income taxes | 21 | 66 | ||||||||
Total current liabilities | 2,103 | 2,341 | ||||||||
Lease liabilities | 728 | 222 | ||||||||
Long-term debt | 2,483 | 2,482 | ||||||||
Other liabilities | 848 | 862 | ||||||||
Total liabilities | 6,162 | 5,907 | ||||||||
Total stockholders’ equity | 13,840 | 13,889 | ||||||||
Total liabilities and stockholders’ equity | $ | 20,002 | $ | 19,796 | ||||||
The Company adopted ASC 842, Leases, effective
NATIONAL OILWELL VARCO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
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Three Months Ended | ||||||||||||
March 31, | ||||||||||||
2019 | 2018 | |||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (75 | ) | $ | (66 | ) | ||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 177 | 173 | ||||||||||
Working capital and other operating items, net | (140 | ) | (236 | ) | ||||||||
Net cash used by operating activities | (38 | ) | (129 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property, plant and equipment | (43 | ) | (39 | ) | ||||||||
Business acquisitions, net of cash acquired | (65 | ) | (36 | ) | ||||||||
Other | 1 | 14 | ||||||||||
Net cash used in investing activities | (107 | ) | (61 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Cash dividends paid | (19 | ) | (19 | ) | ||||||||
Other | (1 | ) | 1 | |||||||||
Net cash used in financing activities | (20 | ) | (18 | ) | ||||||||
Effect of exchange rates on cash | 8 | 7 | ||||||||||
Decrease in cash and cash equivalents | (157 | ) | (201 | ) | ||||||||
Cash and cash equivalents, beginning of period | 1,427 | 1,437 | ||||||||||
Cash and cash equivalents, end of period | $ | 1,270 | $ | 1,236 |
NATIONAL OILWELL VARCO, INC. RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) (Unaudited) (In millions) |
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The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization | ||||||||||||||||
and, when applicable, Other Items) in its periodic earnings press releases and other public disclosures | ||||||||||||||||
to provide investors additional information about the results of ongoing operations. The Company uses | ||||||||||||||||
Adjusted EBITDA internally to evaluate and manage the business. Adjusted EBITDA is not intended to | ||||||||||||||||
replace GAAP financial measures, such as Net Income. Other items include restructure costs for facility | ||||||||||||||||
closures, inventory write downs, severance payments and adjustments of certain reserves. | ||||||||||||||||
Three Months Ended | ||||||||||||||||
March 31, | December 31, | |||||||||||||||
2019 | 2018 | 2018 | ||||||||||||||
Operating profit (loss): | ||||||||||||||||
Wellbore Technologies | $ | 19 | $ | 12 | $ | 41 | ||||||||||
Completion & Production Solutions | (35 | ) | 16 | 64 | ||||||||||||
Rig Technologies | 31 | 18 | 75 | |||||||||||||
Eliminations and corporate costs | (63 | ) | (47 | ) | (93 | ) | ||||||||||
Total operating profit (loss) | $ | (48 | ) | $ | (1 | ) | $ | 87 | ||||||||
Other items: | ||||||||||||||||
Wellbore Technologies | $ | (2 | ) | $ | (3 | ) | $ | 24 | ||||||||
Completion & Production Solutions | 11 | 3 | (3 | ) | ||||||||||||
Rig Technologies | 2 | 6 | — | |||||||||||||
Corporate | — | (18 | ) | — | ||||||||||||
Total other items | $ | 11 | $ | (12 | ) | $ | 21 | |||||||||
Depreciation & amortization: | ||||||||||||||||
Wellbore Technologies | $ | 100 | $ | 94 | $ | 90 | ||||||||||
Completion & Production Solutions | 52 | 54 | 51 | |||||||||||||
Rig Technologies | 23 | 21 | 27 | |||||||||||||
Corporate | 2 | 4 | 3 | |||||||||||||
Total depreciation & amortization | $ | 177 | $ | 173 | $ | 171 | ||||||||||
Adjusted EBITDA: | ||||||||||||||||
Wellbore Technologies | $ | 117 | $ | 103 | $ | 155 | ||||||||||
Completion & Production Solutions | 28 | 73 | 112 | |||||||||||||
Rig Technologies | 56 | 45 | 102 | |||||||||||||
Eliminations and corporate costs | (61 | ) | (61 | ) | (90 | ) | ||||||||||
Total Adjusted EBITDA | $ | 140 | $ | 160 | $ | 279 | ||||||||||
Reconciliation of Adjusted EBITDA: | ||||||||||||||||
GAAP net income (loss) attributable to Company | $ | (77 | ) | $ | (68 | ) | $ | 12 | ||||||||
Noncontrolling interests | 2 | 2 | 3 | |||||||||||||
Provision (benefit) for income taxes | (10 | ) | 3 | 26 | ||||||||||||
Interest expense | 25 | 24 | 22 | |||||||||||||
Interest income | (6 | ) | (7 | ) | (7 | ) | ||||||||||
Equity (income) loss in unconsolidated affiliate | — | (2 | ) | 2 | ||||||||||||
Other (income) expense, net | 18 | 47 | 29 | |||||||||||||
Depreciation and amortization | 177 | 173 | 171 | |||||||||||||
Other items | 11 | (12 | ) | 21 | ||||||||||||
Total Adjusted EBITDA | $ | 140 | $ | 160 | $ | 279 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190425006035/en/
Source:
National Oilwell Varco, Inc.
Loren Singletary (713) 346-7807
Loren.Singletary@nov.com