National Oilwell Varco Reports Second Quarter 2019 Results
“NOV continues to face challenging cross-currents as it navigates a generational oilfield downturn. International and offshore markets are exhibiting growth, while
“Though we are well-positioned to support growth in the offshore and international markets as customers increase activity after years of curtailed spending, severe capital austerity and lower activity in
“The increased emphasis on capital discipline from our customer base is driving them to do more with less, and it has become clear in the second quarter that this approach is not going away anytime soon. Recognition of this challenging market dynamic, as well as lower equity values and diminished availability of capital for the energy sector led to the Company’s significant impairment charge this quarter. In this environment NOV is focused on cutting our cost structure and managing working capital to improve cash flow and return on capital, while we continue to address our customers’ most challenging needs with the critical technology and equipment that NOV provides.”
Wellbore Technologies
Wellbore Technologies generated revenues of
Completion & Production Solutions
Completion & Production Solutions generated revenues of
New orders booked during the quarter totaled
Rig Technologies
Rig Technologies generated revenues of
New orders booked during the quarter grew 14 percent to
Other Corporate Items
During the second quarter, the Company evaluated the carrying value of its long-lived assets due to several market indicators hitting new decade-lows. Based on the evaluation, the Company recorded a charge of
As of
Significant Achievements
NOV secured a sizeable jacking system order from Jan de Nul, an offshore construction company based in
NOV was awarded a contract for a monoethylene glycol (MEG) regeneration module for the Tortue project. The scope includes engineering, design, and fabrication of proprietary NOV technology for MEG regeneration with a capacity of 12 m³/h. MEG regeneration and reclamation is unique technology critical for the operation of gas and LNG fields, where MEG is chosen for hydrate inhibition. The module will be installed on the Tortue FPSO located in
NOV’s SelectShift™ downhole adjustable motor reached a major milestone, having drilled over 100,000 ft. On a recent run, the SelectShift drilled a 12,985-ft lateral, which was the longest SelectShift run in terms of footage drilled to date. Through 29 field runs, 1,298 drilling and circulating hours, and more than 262 straight/low bend mode shifts downhole, the SelectShift tool has been proven as a viable method of eliminating trips, optimizing drilling parameters, improving hole quality, and increasing ROP throughout all well sections.
NOV was awarded a significant contract for the supply of TK™ glass-reinforced epoxy (GRE) lining products for the Dutch geothermal market. This initial order of Tuboscope’s market-leading corrosion-control system allows the Company to enter into a previously unexplored market, building on NOV’s core competencies while expanding its expertise and footprint into a new sector. The Dutch government is looking to NOV to provide technology that can cost effectively handle the high temperatures and corrosive nature of fluids used in the process associated with geothermal energy production. Commencement of the lining process is anticipated to begin in Q3 of this year with further opportunities in the pipeline.
NOV installed and commissioned five additional NOVOS™ offshore automation packages during the quarter, further expanding the presence and impact of NOV's premier automation technologies in the offshore market. These latest systems are going to work for an array of drilling contractors and their operators with eleven additional systems slated for installation during the second half of 2019. NOV also received orders for ten land systems during the second quarter, as customer demand for process automation that meaningfully benefits operational efficiency and consistency remains high.
NOV was awarded the contract to supply a large submerged turret production (STP™) system for
NOV secured the sale of 22,000 ft of IntelliServ™ wired drill pipe to an independent pipe rental company operating in the offshore
NOV has been awarded a multi-year drilling fluids and solids control service supply contract by a major IOC operating in the Vaca Muerta shale play in
NOV sold two 20,000-psi (20K) blowout preventer (BOP) stacks to
The market acceptance of NOV’s NXT™ upgrade modules for the Tolteq™ measurement-while-drilling (MWD) platform continued in the second quarter. Based on the performance achieved in a harsh application in Oklahoma, a directional driller awarded NOV multiple orders for its top-mount pulser. Additionally, NOV successfully demonstrated the new fast pulsing capability provided by the NXT mud-pulse system. This capability enables directional drillers to receive real-time data at twice the frequency of legacy MWD systems.
NOV was awarded two separate multi-year contracts with long-standing IOCs operating offshore
Second Quarter Earnings Conference Call
NOV will hold a conference call to discuss its second 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) |
||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
||||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
||||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
850 |
|
|
$ |
793 |
|
|
$ |
807 |
|
|
$ |
1,657 |
|
|
$ |
1,504 |
|
Completion & Production Solutions |
|
|
663 |
|
|
|
738 |
|
|
|
581 |
|
|
|
1,244 |
|
|
|
1,408 |
|
Rig Technologies |
|
|
671 |
|
|
|
651 |
|
|
|
603 |
|
|
|
1,274 |
|
|
|
1,134 |
|
Eliminations |
|
|
(52 |
) |
|
|
(76 |
) |
|
|
(51 |
) |
|
|
(103 |
) |
|
|
(145 |
) |
Total revenue |
|
|
2,132 |
|
|
|
2,106 |
|
|
|
1,940 |
|
|
|
4,072 |
|
|
|
3,901 |
|
Gross profit |
|
|
62 |
|
|
|
355 |
|
|
|
256 |
|
|
|
318 |
|
|
|
642 |
|
Gross profit % |
|
|
2.9 |
% |
|
|
16.9 |
% |
|
|
13.2 |
% |
|
|
7.8 |
% |
|
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Selling, general, and administrative |
|
|
417 |
|
|
|
303 |
|
|
|
304 |
|
|
|
721 |
|
|
|
591 |
|
Long-lived asset impairment |
|
|
5,373 |
|
|
|
— |
|
|
— |
|
|
5,373 |
|
|
|
— |
|||
Operating profit (loss) |
|
|
(5,728 |
) |
|
|
52 |
|
|
|
(48 |
) |
|
|
(5,776 |
) |
|
|
51 |
|
Interest and financial costs |
|
|
(25 |
) |
|
|
(23 |
) |
|
|
(25 |
) |
|
|
(50 |
) |
|
|
(47 |
) |
Interest income |
|
|
6 |
|
|
|
5 |
|
|
|
6 |
|
|
|
12 |
|
|
|
12 |
|
Equity income (loss) in unconsolidated affiliates |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
— |
|
|
(2 |
) |
|
|
1 |
|
|
Other income (expense), net |
|
|
(8 |
) |
|
|
(3 |
) |
|
|
(18 |
) |
|
|
(26 |
) |
|
|
(50 |
) |
Income (loss) before income taxes |
|
|
(5,757 |
) |
|
|
30 |
|
|
|
(85 |
) |
|
|
(5,842 |
) |
|
|
(33 |
) |
Provision (benefit) for income taxes |
|
|
(373 |
) |
|
|
5 |
|
|
|
(10 |
) |
|
|
(383 |
) |
|
|
8 |
|
Net income (loss) |
|
|
(5,384 |
) |
|
|
25 |
|
|
|
(75 |
) |
|
|
(5,459 |
) |
|
|
(41 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
5 |
|
|
|
1 |
|
|
|
2 |
|
|
|
7 |
|
|
|
3 |
|
Net income (loss) attributable to Company |
|
$ |
(5,389 |
) |
|
$ |
24 |
|
|
$ |
(77 |
) |
|
$ |
(5,466 |
) |
|
$ |
(44 |
) |
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
$ |
(14.11 |
) |
|
$ |
0.06 |
|
|
$ |
(0.20 |
) |
|
$ |
(14.35 |
) |
|
$ |
(0.12 |
) |
Diluted |
|
$ |
(14.11 |
) |
|
$ |
0.06 |
|
|
$ |
(0.20 |
) |
|
$ |
(14.35 |
) |
|
$ |
(0.12 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
|
382 |
|
|
|
378 |
|
|
|
380 |
|
|
|
381 |
|
|
|
377 |
|
Diluted |
|
|
382 |
|
|
|
381 |
|
|
|
380 |
|
|
|
381 |
|
|
|
377 |
|
NATIONAL OILWELL VARCO, INC. |
||||||||
CONSOLIDATED BALANCE SHEETS (Unaudited) |
||||||||
(In millions) |
||||||||
|
|
June 30, |
|
December 31, |
||||
|
|
2019 |
|
2018 |
||||
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,121 |
|
|
$ |
1,427 |
|
Receivables, net |
|
|
1,973 |
|
|
|
2,101 |
|
Inventories, net |
|
|
2,858 |
|
|
|
2,986 |
|
Contract assets |
|
|
585 |
|
|
|
565 |
|
Other current assets |
|
|
229 |
|
|
|
200 |
|
Total current assets |
|
|
6,766 |
|
|
|
7,279 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
2,356 |
|
|
|
2,797 |
|
Lease right-of-use assets |
|
|
698 |
|
|
|
— |
|
Goodwill and intangibles, net |
|
|
4,106 |
|
|
|
9,284 |
|
Other assets |
|
|
423 |
|
|
|
436 |
|
Total assets |
|
$ |
14,349 |
|
|
$ |
19,796 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
695 |
|
|
$ |
722 |
|
Accrued liabilities |
|
|
955 |
|
|
|
1,088 |
|
Contract liabilities |
|
|
455 |
|
|
|
458 |
|
Current portion of lease liabilities |
|
|
116 |
|
|
|
7 |
|
Accrued income taxes |
|
|
— |
|
|
|
66 |
|
Total current liabilities |
|
|
2,221 |
|
|
|
2,341 |
|
|
|
|
|
|
|
|
|
|
Lease liabilities |
|
|
696 |
|
|
|
222 |
|
Long-term debt |
|
|
2,483 |
|
|
|
2,482 |
|
Other liabilities |
|
|
462 |
|
|
|
862 |
|
Total liabilities |
|
|
5,862 |
|
|
|
5,907 |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
8,487 |
|
|
|
13,889 |
|
Total liabilities and stockholders’ equity |
|
$ |
14,349 |
|
|
$ |
19,796 |
|
The Company adopted ASC 842, Leases, effective
NATIONAL OILWELL VARCO, INC. |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
||||||||
(In millions) |
||||||||
|
|
Six Months Ended |
||||||
|
|
June 30, |
||||||
|
|
2019 |
|
2018 |
||||
Cash flows from operating activities: |
|
|
||||||
Net loss |
|
$ |
(5,459 |
) |
|
$ |
(41 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
331 |
|
|
|
347 |
|
Long-lived asset impairment |
|
|
5,373 |
|
|
|
— |
|
Working capital and other operating items, net |
|
|
(356 |
) |
|
|
(196 |
) |
Net cash provided (used) by operating activities |
|
|
(111 |
) |
|
|
110 |
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property, plant and equipment |
|
|
(97 |
) |
|
|
(102 |
) |
Business acquisitions, net of cash acquired |
|
|
(65 |
) |
|
|
(280 |
) |
Other |
|
|
6 |
|
|
|
22 |
|
Net cash used in investing activities |
|
|
(156 |
) |
|
|
(360 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Cash dividends paid |
|
|
(38 |
) |
|
|
(38 |
) |
Other |
|
|
(1 |
) |
|
|
18 |
|
Net cash used in financing activities |
|
|
(39 |
) |
|
|
(20 |
) |
Effect of exchange rates on cash |
|
|
— |
|
|
(30 |
) |
|
Decrease in cash and cash equivalents |
|
|
(306 |
) |
|
|
(300 |
) |
Cash and cash equivalents, beginning of period |
|
|
1,427 |
|
|
|
1,437 |
|
Cash and cash equivalents, end of period |
|
$ |
1,121 |
|
|
$ |
1,137 |
|
NATIONAL OILWELL VARCO, INC. |
||||||||||||||||||||
RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) (Unaudited) |
||||||||||||||||||||
(In millions) |
||||||||||||||||||||
The Company discloses Adjusted EBITDA (defined as Operating Profit excluding Depreciation, Amortization and, when applicable, |
||||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
||||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2019 |
|
2018 |
||||||||||
Operating profit (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
(3,295 |
) |
|
$ |
38 |
|
|
$ |
19 |
|
|
$ |
(3,276 |
) |
|
$ |
50 |
|
Completion & Production Solutions |
|
|
(1,932 |
) |
|
|
40 |
|
|
|
(35 |
) |
|
|
(1,967 |
) |
|
|
56 |
|
Rig Technologies |
|
|
(422 |
) |
|
|
62 |
|
|
|
31 |
|
|
|
(391 |
) |
|
|
80 |
|
Eliminations and corporate costs |
|
|
(79 |
) |
|
|
(88 |
) |
|
|
(63 |
) |
|
|
(142 |
) |
|
|
(135 |
) |
Total operating profit (loss) |
|
$ |
(5,728 |
) |
|
$ |
52 |
|
|
$ |
(48 |
) |
|
$ |
(5,776 |
) |
|
$ |
51 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
3,345 |
|
|
$ |
— |
|
|
$ |
(2 |
) |
|
$ |
3,343 |
|
|
$ |
(3 |
) |
Completion & Production Solutions |
|
|
1,939 |
|
|
|
— |
|
|
|
11 |
|
|
|
1,950 |
|
|
|
3 |
|
Rig Technologies |
|
|
474 |
|
|
|
— |
|
|
|
2 |
|
|
|
476 |
|
|
|
6 |
|
Corporate |
|
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
(18 |
) |
Total other items |
|
$ |
5,769 |
|
|
$ |
— |
|
|
$ |
11 |
|
|
$ |
5,780 |
|
|
$ |
(12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation & amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
84 |
|
|
$ |
95 |
|
|
$ |
100 |
|
|
$ |
184 |
|
|
$ |
189 |
|
Completion & Production Solutions |
|
|
45 |
|
|
|
54 |
|
|
|
52 |
|
|
|
97 |
|
|
|
108 |
|
Rig Technologies |
|
|
22 |
|
|
|
22 |
|
|
|
23 |
|
|
|
45 |
|
|
|
43 |
|
Corporate |
|
|
3 |
|
|
|
3 |
|
|
|
2 |
|
|
|
5 |
|
|
|
7 |
|
Total depreciation & amortization |
|
$ |
154 |
|
|
$ |
174 |
|
|
$ |
177 |
|
|
$ |
331 |
|
|
$ |
347 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Wellbore Technologies |
|
$ |
134 |
|
|
$ |
133 |
|
|
$ |
117 |
|
|
$ |
251 |
|
|
$ |
236 |
|
Completion & Production Solutions |
|
|
52 |
|
|
|
94 |
|
|
|
28 |
|
|
|
80 |
|
|
|
167 |
|
Rig Technologies |
|
|
74 |
|
|
|
84 |
|
|
|
56 |
|
|
|
130 |
|
|
|
129 |
|
Eliminations and corporate costs |
|
|
(65 |
) |
|
|
(85 |
) |
|
|
(61 |
) |
|
|
(126 |
) |
|
|
(146 |
) |
Total Adjusted EBITDA |
|
$ |
195 |
|
|
$ |
226 |
|
|
$ |
140 |
|
|
$ |
335 |
|
|
$ |
386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Reconciliation of Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
GAAP net income (loss) attributable to Company |
|
$ |
(5,389 |
) |
|
$ |
24 |
|
|
$ |
(77 |
) |
|
$ |
(5,466 |
) |
|
$ |
(44 |
) |
Noncontrolling interests |
|
|
5 |
|
|
|
1 |
|
|
|
2 |
|
|
|
7 |
|
|
|
3 |
|
Provision (benefit) for income taxes |
|
|
(373 |
) |
|
|
5 |
|
|
|
(10 |
) |
|
|
(383 |
) |
|
|
8 |
|
Interest expense |
|
|
25 |
|
|
|
23 |
|
|
|
25 |
|
|
|
50 |
|
|
|
47 |
|
Interest income |
|
|
(6 |
) |
|
|
(5 |
) |
|
|
(6 |
) |
|
|
(12 |
) |
|
|
(12 |
) |
Equity (income) loss in unconsolidated affiliate |
|
|
2 |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
(1 |
) |
Other (income) expense, net |
|
|
8 |
|
|
|
3 |
|
|
|
18 |
|
|
|
26 |
|
|
|
50 |
|
Depreciation and amortization |
|
|
154 |
|
|
|
174 |
|
|
|
177 |
|
|
|
331 |
|
|
|
347 |
|
Other items |
|
|
5,769 |
|
|
|
— |
|
|
|
11 |
|
|
|
5,780 |
|
|
|
(12 |
) |
Total Adjusted EBITDA |
|
$ |
195 |
|
|
$ |
226 |
|
|
$ |
140 |
|
|
$ |
335 |
|
|
$ |
386 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190729005773/en/
Source:
Loren Singletary
Chief Investor and Industry Relations Officer
(713) 346-7807
Loren.Singletary@nov.com
Blake McCarthy
Vice President, Corporate Development and Investor Relations
(713) 815-3535
Blake.McCarthy@nov.com