National Oilwell Varco Reports Fourth Quarter and Full Year 2018 Results
Revenues for the full year 2018 were
“During 2018 our team delivered outstanding execution in a volatile operating environment by focusing on our customers’ need for solutions that improve their operating efficiencies,” commented
“The sharp, fourth quarter pull-back in commodity prices heightened uncertainty surrounding 2019 capital budgets and led to an abrupt slowdown in orders, while some of our customers chose to accelerate deliveries prior to year-end. We anticipate that lower orders in December, combined with equipment sales that were pulled forward near year-end, will lead to lower sequential revenue during the first quarter 2019 in all three segments. However, encouraged by the recent uptick in oil prices, some of our customers have recently signaled their intent to increase activity, particularly in certain international and offshore markets. While the near-term outlook remains uncertain, NOV’s portfolio of critical technologies to support the oil and gas industry, together with our track record of adapting quickly to changing market conditions, positions us well for any market environment.”
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion & Production Solutions generated revenues of
New orders booked during the quarter were
Rig Technologies
Rig Technologies generated revenues of
New orders booked during the quarter totaled
Significant Events and Achievements
NOV introduced and completed initial sales of its new TRUE-TAPER™ XR coiled tubing to several customers during the fourth quarter of 2018. The TRUE-TAPER XR design incorporates fewer and shorter tapered sections, which enables better weight and strength distribution, and fewer bias welds. More precise distribution provides the ability to place more weight and strength in vertical sections and less weight in laterals, resulting in better overall performance in extended-reach applications. One customer used TRUE-TAPER XR to reach total depth (TD) on wells that were over four miles in measured depth and had one- to two-mile laterals, success that was not possible with conventional designs.
NOV continued to expand the global footprint of its measurement-while-drilling (MWD) and logging-while-drilling product lines. An independent E&P operator working on a four-well project in
NOV was awarded a 5-year contract for the supply and operation of a state-of-the-art 4,500 m³/day produced water treatment plant for a major multinational operator in the Vaca Muerta shale play. The supply of this first-of-its-kind water treatment plant in
NOV continues to see success with its Vector Series 50 SelectShift™ motor, an industry first that offers downhole adjustment of the motor bend setting. At the close of 2018, the motor has been used in 56,800 ft of drilling and approximately 675 drilling and circulating hours, with more than 148 straight mode shifts downhole. The tool has been proven in the Bakken for the upper and lower vertical/tangent, and it has also effectively drilled the curve in a
NOV’s XL Systems business unit, which provides connectors for conductor strings, surface casing, liners, and caissons, secured a record level of bookings in the fourth quarter and achieved six straight quarters of a book-to-bill ratio greater than 100 percent. Bookings were led by large orders for a major project offshore
NOV successfully delivered an APL submerged swivel with yoke (SSY™) mooring and loading system to Centrais Elétricas de
NOV continued to achieve outstanding performance with ReedHycalog drill bits across several key North American basins. In the Mid Continent, a Tektonic™ bit was used by a major operator to complete an interval in one run in 96.5 hr, while the previous best record with a competitor bit had been 163 hr. In the
NOV’s Rig Technologies segment demonstrated strong execution across its global operations during the fourth quarter by delivering two complete land rigs, eight cranes, the first DSGD-CX425 land rig drawworks, three mobile rig packages, and 10 NOVOS™ kits. These deliveries contributed to a 26 percent sequential increase in revenues during the fourth quarter. The segment also completed its 70th NOVOS installation, including its first on an offshore rig. Results from the initial two offshore wells drilled using NOVOS have shown significant drilling improvements.
NOV shipped an advanced MPowerD™ managed-pressure-drilling (MPD) choke manifold and MPD control system to an NOV extended-reach drilling land rig being built in
On a 16-well project in
NOV was awarded a significant contract for the supply of Tuboscope’s proprietary internal coating systems for a major operator working in
NOV introduced the QuickLatch™ connector to its portfolio of Elmar™ wireline equipment and technologies. The QuickLatch is an integrated wireline pressure control equipment connector designed to minimize delays at the frac site while increasing the safety of site personnel. QuickLatch has a combined quick test/load test feature and an interlock, preventing inadvertent opening when well pressure is present. In addition, the elimination of complex external moving parts and catch points helps make operation and maintenance simpler. The unit also features a failsafe friction lock in case of hydraulic pressure loss.
NOV’s Delta™ drill pipe connection continued to expand its market penetration in Q4, with more than 25 percent of Grant Prideco revenue being generated through Delta products. During the quarter, a large operator in
Fourth Quarter and Full Year Earnings Conference Call
NOV will hold a conference call to discuss its fourth quarter and full year 2018 results on
About NOV
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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 | Years Ended | |||||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | ||||||||||||||||||
Revenue: | ||||||||||||||||||||||
Wellbore Technologies | $ | 884 | $ | 715 | $ | 847 | $ | 3,235 | $ | 2,577 | ||||||||||||
Completion & Production Solutions | 788 | 690 | 735 | 2,931 | 2,672 | |||||||||||||||||
Rig Technologies | 804 | 614 | 637 | 2,575 | 2,252 | |||||||||||||||||
Eliminations | (78 | ) | (50 | ) | (65 | ) | (288 | ) | (197 | ) | ||||||||||||
Total revenue | 2,398 | 1,969 | 2,154 | 8,453 | 7,304 | |||||||||||||||||
Gross profit | 409 | 167 | 393 | 1,444 | 892 | |||||||||||||||||
Gross profit % | 17.1 | % | 8.5 | % | 18.2 | % | 17.1 | % | 12.2 | % | ||||||||||||
Selling, general, and administrative | 322 | 278 | 320 | 1,233 | 1,169 | |||||||||||||||||
Operating profit (loss) | 87 | (111 | ) | 73 | 211 | (277 | ) | |||||||||||||||
Interest and financial costs | (22 | ) | (25 | ) | (24 | ) | (93 | ) | (102 | ) | ||||||||||||
Interest income | 7 | 6 | 6 | 25 | 25 | |||||||||||||||||
Equity loss in unconsolidated affiliates | (2 | ) | (1 | ) | (2 | ) | (3 | ) | (5 | ) | ||||||||||||
Other income (expense), net | (29 | ) | (7 | ) | (20 | ) | (99 | ) | (43 | ) | ||||||||||||
Income (loss) before income taxes | 41 | (138 | ) | 33 | 41 | (402 | ) | |||||||||||||||
Provision (benefit) for income taxes | 26 | (123 | ) | 29 | 63 | (166 | ) | |||||||||||||||
Net income (loss) | 15 | (15 | ) | 4 | (22 | ) | (236 | ) | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | 3 | (1 | ) | 3 | 9 | 1 | ||||||||||||||||
Net income (loss) attributable to Company | $ | 12 | $ | (14 | ) | $ | 1 | $ | (31 | ) | $ | (237 | ) | |||||||||
Per share data: | ||||||||||||||||||||||
Basic | $ | 0.03 | $ | (0.04 | ) | $ | 0.00 | $ | (0.08 | ) | $ | (0.63 | ) | |||||||||
Diluted | $ | 0.03 | $ | (0.04 | ) | $ | 0.00 | $ | (0.08 | ) | $ | (0.63 | ) | |||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||
Basic | 379 | 377 | 379 | 378 | 377 | |||||||||||||||||
Diluted | 383 | 377 | 383 | 378 | 377 |
NATIONAL OILWELL VARCO, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions) |
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December 31, | |||||||||
2018 | 2017 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 1,427 | $ | 1,437 | |||||
Receivables, net | 2,101 | 2,015 | |||||||
Inventories, net | 2,986 | 3,003 | |||||||
Contract assets | 565 | 495 | |||||||
Other current assets | 200 | 267 | |||||||
Total current assets | 7,279 | 7,217 | |||||||
Property, plant and equipment, net | 2,797 | 3,002 | |||||||
Goodwill and intangibles, net | 9,284 | 9,528 | |||||||
Other assets | 436 | 459 | |||||||
Total assets | $ | 19,796 | $ | 20,206 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 722 | $ | 510 | |||||
Accrued liabilities | 1,088 | 1,238 | |||||||
Contract liabilities | 458 | 519 | |||||||
Current portion of long-term debt and short-term borrowings | 7 | 6 | |||||||
Accrued income taxes | 66 | 81 | |||||||
Total current liabilities | 2,341 | 2,354 | |||||||
Long-term debt | 2,704 | 2,706 | |||||||
Other liabilities | 862 | 986 | |||||||
Total liabilities | 5,907 | 6,046 | |||||||
Total stockholders’ equity | 13,889 | 14,160 | |||||||
Total liabilities and stockholders’ equity | $ | 19,796 | $ | 20,206 |
NATIONAL OILWELL VARCO, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) |
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Years Ended | ||||||||||
December 31, | ||||||||||
2018 | 2017 | |||||||||
Cash flows from operating activities: | ||||||||||
Net loss | $ | (22 | ) | $ | (236 | ) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 690 | 698 | ||||||||
Working capital and other operating items, net | (147 | ) | 370 | |||||||
Net cash provided by operating activities | 521 | 832 | ||||||||
Cash flows from investing activities: | ||||||||||
Purchases of property, plant and equipment | (244 | ) | (192 | ) | ||||||
Business acquisitions, net of cash acquired | (280 | ) | (86 | ) | ||||||
Other | 67 | 33 | ||||||||
Net cash used in investing activities | (457 | ) | (245 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Payments against lines of credit and other debt | (8 | ) | (506 | ) | ||||||
Cash dividends paid | (76 | ) | (76 | ) | ||||||
Other | 54 | (13 | ) | |||||||
Net cash used in financing activities | (30 | ) | (595 | ) | ||||||
Effect of exchange rates on cash | (44 | ) | 37 | |||||||
Increase (decrease) in cash and cash equivalents | (10 | ) | 29 | |||||||
Cash and cash equivalents, beginning of period | 1,437 | 1,408 | ||||||||
Cash and cash equivalents, end of period | $ | 1,427 | $ | 1,437 |
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 in the three and twelve | ||||||||||||||||||||||
months ended December 31, 2018 were $21 million and $9 million, pre-tax, respectively, primarily from the adjustment of certain | ||||||||||||||||||||||
accruals, restructure charges, and severance payments. Other items in 2017 consisted primarily of restructure charges for | ||||||||||||||||||||||
inventory write-downs, facility closures and severance payments. | ||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||||||
2018 | 2017 | 2018 | 2018 | 2017 | ||||||||||||||||||
Operating profit (loss): | ||||||||||||||||||||||
Wellbore Technologies | $ | 41 | $ | (21 | ) | $ | 40 | $ | 131 | $ | (102 | ) | ||||||||||
Completion & Production Solutions | 64 | 19 | 46 | 166 | 98 | |||||||||||||||||
Rig Technologies | 75 | (51 | ) | 58 | 213 | (14 | ) | |||||||||||||||
Eliminations and corporate costs | (93 | ) | (58 | ) | (71 | ) | (299 | ) | (259 | ) | ||||||||||||
Total operating profit (loss) | $ | 87 | $ | (111 | ) | $ | 73 | $ | 211 | $ | (277 | ) | ||||||||||
Other items: | ||||||||||||||||||||||
Wellbore Technologies | $ | 24 | $ | 32 | $ | — | $ | 21 | $ | 28 | ||||||||||||
Completion & Production Solutions | (3 | ) | 1 | — | — | 33 | ||||||||||||||||
Rig Technologies | — | 100 | — | 6 | 129 | |||||||||||||||||
Corporate | — | — | — | (18 | ) | — | ||||||||||||||||
Total other items | $ | 21 | $ | 133 | $ | — | $ | 9 | $ | 190 | ||||||||||||
Depreciation & amortization: | ||||||||||||||||||||||
Wellbore Technologies | $ | 90 | $ | 96 | $ | 95 | $ | 374 | $ | 379 | ||||||||||||
Completion & Production Solutions | 51 | 54 | 53 | 212 | 215 | |||||||||||||||||
Rig Technologies | 27 | 21 | 20 | 90 | 88 | |||||||||||||||||
Corporate | 3 | 4 | 4 | 14 | 16 | |||||||||||||||||
Total depreciation & amortization | $ | 171 | $ | 175 | $ | 172 | $ | 690 | $ | 698 | ||||||||||||
Adjusted EBITDA: | ||||||||||||||||||||||
Wellbore Technologies | $ | 155 | $ | 107 | $ | 135 | $ | 526 | $ | 305 | ||||||||||||
Completion & Production Solutions | 112 | 74 | 99 | 378 | 346 | |||||||||||||||||
Rig Technologies | 102 | 70 | 78 | 309 | 203 | |||||||||||||||||
Eliminations and corporate costs | (90 | ) | (54 | ) | (67 | ) | (303 | ) | (243 | ) | ||||||||||||
Total adjusted EBITDA | $ | 279 | $ | 197 | $ | 245 | $ | 910 | $ | 611 | ||||||||||||
Reconciliation of Adjusted EBITDA: | ||||||||||||||||||||||
GAAP net income (loss) attributable to Company | $ | 12 | $ | (14 | ) | $ | 1 | $ | (31 | ) | $ | (237 | ) | |||||||||
Noncontrolling interests | 3 | (1 | ) | 3 | 9 | 1 | ||||||||||||||||
Provision (benefit) for income taxes | 26 | (123 | ) | 29 | 63 | (166 | ) | |||||||||||||||
Interest expense | 22 | 25 | 24 | 93 | 102 | |||||||||||||||||
Interest income | (7 | ) | (6 | ) | (6 | ) | (25 | ) | (25 | ) | ||||||||||||
Equity (income) loss in unconsolidated affiliate | 2 | 1 | 2 | 3 | 5 | |||||||||||||||||
Other (income) expense, net | 29 | 7 | 20 | 99 | 43 | |||||||||||||||||
Depreciation and amortization | 171 | 175 | 172 | 690 | 698 | |||||||||||||||||
Other items | 21 | 133 | - | 9 | 190 | |||||||||||||||||
Total Adjusted EBITDA | $ | 279 | $ | 197 | $ | 245 | $ | 910 | $ | 611 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190206005746/en/
Source:
National Oilwell Varco, Inc.
Loren Singletary (713) 346-7807
Loren.Singletary@nov.com