UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
February 6, 2008
Date of Report (Date of earliest event reported)
Date of Report (Date of earliest event reported)
NATIONAL OILWELL VARCO, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation) |
1-12317 (Commission File Number) |
76-0475815 (IRS Employer Identification No.) |
| 7909 Parkwood Circle Dr. Houston, Texas (Address of principal executive offices) |
77036 (Zip Code) |
Registrant’s telephone number, including area code: 713-346-7500
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
On February 6, 2008, National Oilwell Varco, Inc. issued a press release announcing earnings for
the quarter and full year ended December 31, 2007 and conference call in connection therewith. A
copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
The information contained in this Current Report shall not be deemed to be “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the
liabilities of that section, nor shall it be incorporated by reference into a filing under the
Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits |
(c) Exhibits
| The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K: |
| 99.1 | National Oilwell Varco, Inc. press release dated February 6, 2008 announcing the earnings results for the fourth quarter and full year ended December 31, 2007. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: February 6, 2008 | NATIONAL OILWELL VARCO, INC. |
|||
| /s/ Clay C. Williams | ||||
| Clay C. Williams | ||||
| Sr. Vice President and Chief Financial Officer | ||||
Index to Exhibits
99.1
|
National Oilwell Varco, Inc. press release dated February 6, 2008 announcing the earnings results for the fourth quarter and full year ended December 31, 2007. |
EXHIBIT 99.1
| NEWS | Contact: Clay Williams | |
| (713)346-7606 |
FOR IMMEDIATE RELEASE
NATIONAL OILWELL VARCO ANNOUNCES
FOURTH QUARTER AND 2007 EARNINGS
FOURTH QUARTER AND 2007 EARNINGS
HOUSTON, TX, February 6, 2008 — National Oilwell Varco, Inc. (NYSE: NOV) today reported that for
its fourth quarter ended December 31, 2007 it earned net income of $376.7 million, or $1.05 per
fully diluted share, on revenues of $2,658.9 million. Fourth quarter 2007 earnings per share
increased 3 percent from the third quarter of 2007 and increased 54 percent compared to the fourth
quarter of 2006. Fourth quarter 2007 revenues increased 3 percent from the third quarter of 2007,
and increased 28 percent from the fourth quarter of 2006. Operating profit for the quarter was
$574.7 million, or 21.6 percent of sales, an increase of 5 percent over the third quarter of 2007
and an increase of 51 percent over the fourth quarter of 2006.
Revenues for the full year 2007 were a record $9,789.0 million, up 39 percent from 2006 revenues.
Net income for 2007 was $1,337.1 million, or $3.76 per fully diluted share, up 95 percent from
2006. Operating profit for 2007 was $2,044.4 million, up 84 percent from 2006. Operating profit
flow-through, or the increase in operating profit divided by the increase in revenue, from 2006 to
2007 was 34 percent.
Backlog for capital equipment orders for the Company’s Rig Technology segment at December 31, 2007
increased to a record $9.0 billion, compared to $8.0 billion at September 30, 2007. New orders
during the quarter were a record $2.2 billion. The Company’s backlog for capital equipment
continued to increase as a result of the strong demand for its drilling equipment products,
particularly for international offshore rigs.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, “We enjoyed a very
successful 2007. Each of our three segments reported higher 2007 sales compared to the prior year,
and we enter 2008 with a very healthy backlog of equipment and technology to deliver to our
customers. I am very proud of all the contributions made by our employees in helping us deliver
quality equipment and services. We look forward to continuing to help our customers retool the
world’s rig fleet after years of underinvestment.”
Rig Technology
Fourth quarter revenues for the Rig Technology segment were $1,593.8 million, an increase of 5 percent from the third quarter of 2007 and an increase of 40 percent from the fourth quarter of 2006. Operating profit for this segment was $410.5 million, or 25.8 percent of sales, an increase of 10 percent from the third quarter of 2007. Operating profit flow-through from the third quarter of 2007 to the fourth quarter of 2007 was 51 percent, due to a favorable mix of aftermarket sales and higher margins on rig fabrication projects. Operating profit flow-through from the fourth quarter of 2006 to the fourth quarter of 2007 was 40 percent. Revenue out of backlog for the segment rose 3 percent sequentially and 53 percent year-over-year, to $1,182.7 million for the fourth quarter of 2007, as the segment continued to expand its manufacturing operations.
Fourth quarter revenues for the Rig Technology segment were $1,593.8 million, an increase of 5 percent from the third quarter of 2007 and an increase of 40 percent from the fourth quarter of 2006. Operating profit for this segment was $410.5 million, or 25.8 percent of sales, an increase of 10 percent from the third quarter of 2007. Operating profit flow-through from the third quarter of 2007 to the fourth quarter of 2007 was 51 percent, due to a favorable mix of aftermarket sales and higher margins on rig fabrication projects. Operating profit flow-through from the fourth quarter of 2006 to the fourth quarter of 2007 was 40 percent. Revenue out of backlog for the segment rose 3 percent sequentially and 53 percent year-over-year, to $1,182.7 million for the fourth quarter of 2007, as the segment continued to expand its manufacturing operations.
Petroleum Services & Supplies
Revenues for the fourth quarter of 2007 for the Petroleum Services & Supplies segment were $817.6 million, up 2 percent compared to third quarter 2007 results and up 22 percent compared to fourth quarter 2006 results. Operating profit was $189.2 million, or 23.1 percent of revenue, a decrease of 2 percent from the third quarter of 2007 and an increase of 16 percent from the fourth quarter of 2006. Operating profit flow-through from the fourth quarter of 2006 to the fourth quarter of 2007 was 17 percent. Operating margins declined slightly both sequentially and year-over-year, due to a variety of factors including international expansion costs. International sales increased 6 percent from the third quarter of 2007 to the fourth quarter of 2007, while North America sales were essentially flat.
Revenues for the fourth quarter of 2007 for the Petroleum Services & Supplies segment were $817.6 million, up 2 percent compared to third quarter 2007 results and up 22 percent compared to fourth quarter 2006 results. Operating profit was $189.2 million, or 23.1 percent of revenue, a decrease of 2 percent from the third quarter of 2007 and an increase of 16 percent from the fourth quarter of 2006. Operating profit flow-through from the fourth quarter of 2006 to the fourth quarter of 2007 was 17 percent. Operating margins declined slightly both sequentially and year-over-year, due to a variety of factors including international expansion costs. International sales increased 6 percent from the third quarter of 2007 to the fourth quarter of 2007, while North America sales were essentially flat.
Distribution Services
Fourth quarter revenues for the Distribution Services segment were $365.7 million, up 1 percent from the third quarter of 2007. Fourth quarter operating profit declined from the third quarter to $20.9 million or 5.7 percent of sales due to lower margins on North America sales and international expansion costs.
Fourth quarter revenues for the Distribution Services segment were $365.7 million, up 1 percent from the third quarter of 2007. Fourth quarter operating profit declined from the third quarter to $20.9 million or 5.7 percent of sales due to lower margins on North America sales and international expansion costs.
The Company has scheduled a conference call for February 6, 2008, at 9:00 a.m. Central Time to
discuss fourth quarter and 2007 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 303-262-2211 prior to the scheduled start time.
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.
- more
NATIONAL OILWELL VARCO, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
| December 31, | ||||||||
| 2007 | 2006 | |||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,841.8 | $ | 957.4 | ||||
Receivables, net |
2,099.8 | 1,614.6 | ||||||
Inventories, net |
2,574.7 | 1,828.8 | ||||||
Costs in excess of billings |
643.5 | 308.9 | ||||||
Deferred income taxes |
131.5 | 101.6 | ||||||
Prepaid and other current assets |
302.5 | 154.3 | ||||||
Total current assets |
7,593.8 | 4,965.6 | ||||||
Property, plant and equipment, net |
1,197.3 | 1,022.1 | ||||||
Deferred income taxes |
55.6 | 56.1 | ||||||
Goodwill |
2,445.1 | 2,244.7 | ||||||
Intangibles, net |
774.1 | 705.2 | ||||||
Other assets |
49.0 | 25.6 | ||||||
| $ | 12,114.9 | $ | 9,019.3 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 604.0 | $ | 505.2 | ||||
Accrued liabilities |
1,761.4 | 1,420.2 | ||||||
Billings in excess of costs |
1,396.1 | 564.4 | ||||||
Current portion of long-term debt and short-term borrowings |
152.8 | 5.6 | ||||||
Accrued income taxes |
112.4 | 169.8 | ||||||
Total current liabilities |
4,026.7 | 2,665.2 | ||||||
Long-term debt |
737.9 | 834.7 | ||||||
Deferred income taxes |
564.3 | 389.0 | ||||||
Other liabilities |
61.8 | 71.4 | ||||||
Total liabilities |
5,390.7 | 3,960.3 | ||||||
Commitments and contingencies |
||||||||
Minority interest |
62.8 | 35.5 | ||||||
Stockholders’ equity: |
||||||||
Common stock — par value $.01; 356,867,498 and 351,143,326 shares
issued and outstanding at December 31, 2007 and December 31, 2006 (Note 1) |
3.6 | 3.5 | ||||||
Additional paid-in capital (Note 1) |
3,617.2 | 3,460.0 | ||||||
Accumulated other comprehensive income |
195.0 | 46.1 | ||||||
Retained earnings |
2,845.6 | 1,513.9 | ||||||
| 6,661.4 | 5,023.5 | |||||||
| $ | 12,114.9 | $ | 9,019.3 | |||||
| Note 1: 2006 restated to reflect a two-for-one stock split effected as a 100 percent stock dividend in September 2007. |
NATIONAL OILWELL VARCO, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Revenue: |
||||||||||||||||
Rig technology |
$ | 1,593.8 | $ | 1,136.5 | $ | 5,744.7 | $ | 3,584.9 | ||||||||
Petroleum services and supplies |
817.6 | 670.0 | 3,061.0 | 2,425.0 | ||||||||||||
Distribution services |
365.7 | 370.5 | 1,423.7 | 1,369.6 | ||||||||||||
Eliminations |
(118.2 | ) | (98.3 | ) | (440.4 | ) | (353.7 | ) | ||||||||
Total revenue |
2,658.9 | 2,078.7 | 9,789.0 | 7,025.8 | ||||||||||||
Gross profit |
791.1 | 567.4 | 2,830.2 | 1,760.6 | ||||||||||||
Gross profit % |
29.8 | % | 27.3 | % | 28.9 | % | 25.1 | % | ||||||||
Selling, general, and administrative |
216.4 | 186.2 | 785.8 | 649.5 | ||||||||||||
Operating profit |
574.7 | 381.2 | 2,044.4 | 1,111.1 | ||||||||||||
Interest and financial costs |
(13.4 | ) | (12.1 | ) | (50.3 | ) | (48.7 | ) | ||||||||
Interest income |
20.9 | 8.4 | 52.6 | 18.1 | ||||||||||||
Other income (expense), net |
(15.9 | ) | (8.2 | ) | (17.8 | ) | (31.3 | ) | ||||||||
Income before income taxes and minority interest |
566.3 | 369.3 | 2,028.9 | 1,049.2 | ||||||||||||
Provision for income taxes |
185.3 | 127.3 | 675.8 | 355.7 | ||||||||||||
Income before minority interest |
381.0 | 242.0 | 1,353.1 | 693.5 | ||||||||||||
Minority interest in income of consolidated
subsidiaries |
4.3 | 2.8 | 16.0 | 9.5 | ||||||||||||
Net income |
$ | 376.7 | $ | 239.2 | $ | 1,337.1 | $ | 684.0 | ||||||||
Net income per share (Note 1): |
||||||||||||||||
Basic |
$ | 1.06 | $ | 0.68 | $ | 3.77 | $ | 1.95 | ||||||||
Diluted |
$ | 1.05 | $ | 0.68 | $ | 3.76 | $ | 1.93 | ||||||||
Weighted average shares outstanding (Note 1): |
||||||||||||||||
Basic |
355.8 | 351.1 | 354.4 | 350.4 | ||||||||||||
Diluted |
358.8 | 354.0 | 355.4 | 353.6 | ||||||||||||
| Note 1: All periods reflect a two-for-one stock split effected as a 100 percent dividend in September 2007. |
NATIONAL OILWELL VARCO, INC.
OPERATING PROFIT — SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
OPERATING PROFIT — SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||||||
| 2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Revenue: |
||||||||||||||||||||
Rig technology |
$ | 1,593.8 | $ | 1,136.5 | $ | 1,521.9 | $ | 5,744.7 | $ | 3,584.9 | ||||||||||
Petroleum services and supplies |
817.6 | 670.0 | 805.5 | 3,061.0 | 2,425.0 | |||||||||||||||
Distribution services |
365.7 | 370.5 | 361.3 | 1,423.7 | 1,369.6 | |||||||||||||||
Eliminations |
(118.2 | ) | (98.3 | ) | (109.2 | ) | (440.4 | ) | (353.7 | ) | ||||||||||
Total revenue |
$ | 2,658.9 | $ | 2,078.7 | $ | 2,579.5 | $ | 9,789.0 | $ | 7,025.8 | ||||||||||
Operating profit: |
||||||||||||||||||||
Rig technology |
$ | 410.5 | $ | 225.5 | $ | 373.5 | $ | 1,393.6 | $ | 608.5 | ||||||||||
Petroleum services and supplies |
189.2 | 163.6 | 193.6 | 731.6 | 545.6 | |||||||||||||||
Distribution services |
20.9 | 28.4 | 25.1 | 94.0 | 94.0 | |||||||||||||||
Unallocated expenses and eliminations |
(45.9 | ) | (36.3 | ) | (46.8 | ) | (174.8 | ) | (137.0 | ) | ||||||||||
Total operating profit |
$ | 574.7 | $ | 381.2 | $ | 545.4 | $ | 2,044.4 | $ | 1,111.1 | ||||||||||
Operating profit %: |
||||||||||||||||||||
Rig technology |
25.8 | % | 19.8 | % | 24.5 | % | 24.3 | % | 17.0 | % | ||||||||||
Petroleum services and supplies |
23.1 | % | 24.4 | % | 24.0 | % | 23.9 | % | 22.5 | % | ||||||||||
Distribution services |
5.7 | % | 7.7 | % | 6.9 | % | 6.6 | % | 6.9 | % | ||||||||||
Other unallocated |
— | — | — | — | — | |||||||||||||||
Total operating profit % |
21.6 | % | 18.3 | % | 21.1 | % | 20.9 | % | 15.8 | % | ||||||||||
| Note: | Stock-based compensation expense and integration costs have been allocated to the respective business segments and unallocated expenses for all periods presented. |
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING INTEGRATION COSTS
(Unaudited)
(In millions)
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING INTEGRATION COSTS
(Unaudited)
(In millions)
| Three Months Ended | Years Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||||||
| 2007 | 2006 | 2007 | 2007 | 2006 | ||||||||||||||||
Reconciliation of EBITDA
(Note 1): |
||||||||||||||||||||
GAAP net income |
$ | 376.7 | $ | 239.2 | $ | 366.0 | $ | 1,337.1 | $ | 684.0 | ||||||||||
Provision for income taxes |
185.3 | 127.3 | 177.8 | 675.8 | 355.7 | |||||||||||||||
Interest expense |
13.4 | 12.1 | 11.5 | 50.3 | 48.7 | |||||||||||||||
Depreciation and amortization |
58.5 | 41.9 | 56.4 | 214.1 | 160.6 | |||||||||||||||
Integration costs |
— | — | — | — | 7.9 | |||||||||||||||
EBITDA (Note 1) |
$ | 633.9 | $ | 420.5 | $ | 611.7 | $ | 2,277.3 | $ | 1,256.9 | ||||||||||
| Note 1: EBITDA means earnings before interest, taxes, depreciation, amortization, and integration 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. |
CONTACT:
|
National Oilwell Varco, Inc. | |
| Clay Williams, (713) 346-7606 | ||
| Clay.Williams@nov.com |