UNITED STATES
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
February 2, 2012
Date of Report (Date of earliest event reported)
NATIONAL OILWELL VARCO, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-12317 | 76-0475815 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
| 7909 Parkwood Circle Dr. Houston, Texas |
77036 | |||
| (Address of principal executive offices) | (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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 2, 2012, National Oilwell Varco, Inc. issued a press release announcing earnings for the quarter and full year ended December 31, 2011 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 |
(d) 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 2, 2012 announcing the earnings results for the fourth quarter and full year ended December 31, 2011. | |
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 2, 2012 | NATIONAL OILWELL VARCO, INC. | |||
| /s/ Raymond W. Chang | ||||
| Raymond W. Chang Vice President | ||||
Index to Exhibits
| 99.1 | National Oilwell Varco, Inc. press release dated February 2, 2012 announcing the earnings results for the fourth quarter and full year ended December 31, 2011. | |
EXHIBIT 99.1
| NEWS |
Contact: Clay Williams | |
| (713) 346-7606 |
FOR IMMEDIATE RELEASE
NATIONAL OILWELL VARCO ANNOUNCES
FOURTH QUARTER AND FULL YEAR 2011 EARNINGS
HOUSTON, TX, February 2, 2012 — National Oilwell Varco, Inc. (NYSE: NOV) today reported that for the fourth quarter ended December 31, 2011 it earned net income of $574 million, or $1.35 per fully diluted share. Earnings improved eight percent compared to third quarter of 2011, and improved 30 percent compared to the fourth quarter of 2010. Excluding $12 million in pre-tax transaction charges in the fourth quarter of 2011, net income was $583 million, or $1.37 per fully diluted share, up nine percent from the third quarter of 2011, and up 30 percent from the fourth quarter of 2010, excluding transaction charges from all periods.
Revenues reported for the full year 2011 were $14.66 billion, and net income was $1.99 billion, or $4.70 per fully diluted share. Operating profit for the full year 2011 was $2.94 billion. Excluding $41 million in pre-tax transaction charges in 2011, net income was $2.02 billion, or $4.77 per fully diluted share, and operating profit was $2.98 billion or 20.3 percent of sales, for the full year 2011.
Revenues for the fourth quarter increased 14 percent sequentially to $4.26 billion. Operating profit for the fourth quarter, excluding transaction charges, was $860 million or 20.2 percent of sales, up 11 percent from the third quarter of 2011. Operating profit flow-through, or the change in operating profit divided by the change in revenue, was 16 percent from the third quarter of 2011 to the fourth quarter of 2011, and was 22 percent from the fourth quarter of 2010 to the fourth quarter of 2011, excluding transaction charges from all periods. The Company’s acquisition of Ameron was completed on October 5, 2011 and contributed to its sequential growth in revenues.
Backlog for capital equipment orders for the Company’s Rig Technology segment at December 31, 2011 was $10.16 billion, down one percent from the third quarter of 2011, but double year-earlier levels. New orders during the quarter were $1.67 billion, reflecting continued good demand for oilfield equipment.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, “We achieved solid results in 2011. The Company posted record revenues, net income, and orders for capital equipment, which at $10.8 billion for the year handily beat our previous high of $7.3 billion. We used the year to focus on efficiency and technology, while continuing to invest for future growth, to position National Oilwell Varco to capitalize on extraordinary opportunities emerging in the oil and gas industry.
We enter 2012 with strong financial resources, $3.5 billion in cash, a solid backlog, and an experienced team capable of delivering great service and products to our customers. We believe that the oil and gas industry will continue to need to upgrade the world’s rig fleet, and we look forward to continuing to help our customers retool their rigs to improve safety, reduce environmental impact, and drive higher efficiency. I thank all of our dedicated employees for their hard work and outstanding execution this year.”
Rig Technology
Fourth quarter revenues for the Rig Technology segment were $2.32 billion, an increase of 18 percent from the third quarter of 2011 and an increase of 32 percent from the fourth quarter of 2010. Operating profit for this segment was $603 million, or 26.0 percent of sales, an increase of 14 percent from the third quarter of 2011 and an increase of 20 percent from the fourth quarter of 2010. Sequential operating profit flow-through was 22 percent. Year-over-year operating profit flow-through was 18 percent. Revenue out of backlog for the segment increased 26 percent sequentially and increased 40 percent year-over-year, to $1.78 billion for the fourth quarter of 2011.
Petroleum Services & Supplies
Revenues for the fourth quarter of 2011 for the Petroleum Services & Supplies segment were $1.57 billion, up eight percent compared to third quarter 2011 results and up 38 percent compared to fourth quarter 2010 results. Operating profit was $301 million, or 19.2 percent of sales, essentially flat from the third quarter of 2011 and an increase of 77 percent from the fourth quarter of 2010. Operating profit flow-through was two percent from the prior quarter, and 30 percent from the fourth quarter of 2010 to the fourth quarter of 2011. Reported fourth quarter results for Petroleum Services & Supplies include the Fiberglass Composite Pipe segment of Ameron from the acquisition date, which contributed $71 million in revenue to the segment in the quarter.
Distribution & Transmission
Fourth quarter revenues for the Distribution & Transmission segment were $560 million, up 17 percent from the third quarter of 2011 and up 32 percent from the fourth quarter of 2010. Fourth quarter operating profit was $45 million or 8.0 percent of sales. Operating profit flow-through was 10 percent sequentially, and 11 percent from the fourth quarter of 2010 to the fourth quarter of 2011. Reported fourth quarter results for Distribution & Transmission include the Water Transmission and Infrastructure Products segments of Ameron from the acquisition date, which contributed $70 million in revenue in the quarter.
The Company has scheduled a conference call for February 2, 2012, at 8:00 a.m. Central Time to discuss fourth quarter and 2011 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 1-800-447-0521 within North America or 1-847-413-3238 outside of North America outside of North America five to ten minutes prior to the scheduled start time, and ask for the “National Oilwell Varco Earnings Conference Call.”
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.
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NATIONAL OILWELL VARCO, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
| December 31, 2011 |
December 31, 2010 |
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| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 3,535 | $ | 3,333 | ||||
| Receivables, net |
3,291 | 2,425 | ||||||
| Inventories, net |
4,030 | 3,388 | ||||||
| Costs in excess of billings |
593 | 815 | ||||||
| Deferred income taxes |
336 | 316 | ||||||
| Prepaid and other current assets |
325 | 258 | ||||||
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| Total current assets |
12,110 | 10,535 | ||||||
| Property, plant and equipment, net |
2,445 | 1,840 | ||||||
| Deferred income taxes |
267 | 341 | ||||||
| Goodwill |
6,151 | 5,790 | ||||||
| Intangibles, net |
4,073 | 4,103 | ||||||
| Investment in unconsolidated affiliates |
391 | 386 | ||||||
| Other assets |
78 | 55 | ||||||
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| $ | 25,515 | $ | 23,050 | |||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable |
$ | 901 | $ | 628 | ||||
| Accrued liabilities |
2,376 | 2,105 | ||||||
| Billings in excess of costs |
865 | 511 | ||||||
| Current portion of long-term debt and short-term borrowings |
351 | 373 | ||||||
| Accrued income taxes |
709 | 468 | ||||||
| Deferred income taxes |
214 | 451 | ||||||
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| Total current liabilities |
5,416 | 4,536 | ||||||
| Long-term debt |
159 | 514 | ||||||
| Deferred income taxes |
1,852 | 1,885 | ||||||
| Other liabilities |
360 | 253 | ||||||
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| Total liabilities |
7,787 | 7,188 | ||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| Common stock – par value $.01; 423,900,601 and 421,141,751 shares issued and outstanding at December 31, 2011 and December 31, 2010 |
4 | 4 | ||||||
| Additional paid-in capital |
8,535 | 8,353 | ||||||
| Accumulated other comprehensive (loss) income |
(23 | ) | 91 | |||||
| Retained earnings |
9,103 | 7,300 | ||||||
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| Total National Oilwell Varco stockholders’ equity |
17,619 | 15,748 | ||||||
| Noncontrolling interests |
109 | 114 | ||||||
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| Total stockholders’ equity |
17,728 | 15,862 | ||||||
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| $ | 25,515 | $ | 23,050 | |||||
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NATIONAL OILWELL VARCO, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)
| Three Months Ended | Years Ended December 31, |
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| December 31, | September 30, 2011 |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Revenue: |
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| Rig Technology |
$ | 2,316 | $ | 1,757 | $ | 1,970 | $ | 7,788 | $ | 6,965 | ||||||||||
| Petroleum Services & Supplies |
1,570 | 1,137 | 1,460 | 5,654 | 4,182 | |||||||||||||||
| Distribution & Transmission |
560 | 423 | 480 | 1,873 | 1,546 | |||||||||||||||
| Eliminations |
(187 | ) | (145 | ) | (170 | ) | (657 | ) | (537 | ) | ||||||||||
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| Total revenue |
4,259 | 3,172 | 3,740 | 14,658 | 12,156 | |||||||||||||||
| Gross profit |
1,287 | 998 | 1,170 | 4,538 | 3,850 | |||||||||||||||
| Gross profit % |
30.2 | % | 31.5 | % | 31.3 | % | 31.0 | % | 31.7 | % | ||||||||||
| Selling, general, and administrative |
427 | 373 | 392 | 1,560 | 1,385 | |||||||||||||||
| Other costs |
12 | 1 | 6 | 41 | 45 | |||||||||||||||
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| Operating profit |
848 | 624 | 772 | 2,937 | 2,420 | |||||||||||||||
| Interest and financial costs |
(9 | ) | (12 | ) | (8 | ) | (40 | ) | (50 | ) | ||||||||||
| Interest income |
5 | 4 | 5 | 18 | 13 | |||||||||||||||
| Equity income in unconsolidated affiliates |
12 | 14 | 11 | 46 | 36 | |||||||||||||||
| Other income (expense), net |
(13 | ) | (7 | ) | — | (39 | ) | (22 | ) | |||||||||||
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| Income before income taxes |
843 | 623 | 780 | 2,922 | 2,397 | |||||||||||||||
| Provision for income taxes |
270 | 186 | 252 | 937 | 738 | |||||||||||||||
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| Net income |
573 | 437 | 528 | 1,985 | 1,659 | |||||||||||||||
| Net loss attributable to noncontrolling interests |
(1 | ) | (3 | ) | (4 | ) | (9 | ) | (8 | ) | ||||||||||
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| Net income attributable to Company |
$ | 574 | $ | 440 | $ | 532 | $ | 1,994 | $ | 1,667 | ||||||||||
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| Net income attributable to Company per share: |
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| Basic |
$ | 1.36 | $ | 1.05 | $ | 1.26 | $ | 4.73 | $ | 3.99 | ||||||||||
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| Diluted |
$ | 1.35 | $ | 1.05 | $ | 1.25 | $ | 4.70 | $ | 3.98 | ||||||||||
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| Weighted average shares outstanding: |
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| Basic |
422 | 418 | 422 | 422 | 417 | |||||||||||||||
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| Diluted |
425 | 421 | 425 | 424 | 419 | |||||||||||||||
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NATIONAL OILWELL VARCO, INC.
OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
| Three Months Ended | Years Ended December 31, |
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| December 31, | September 30, 2011 |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Revenue: |
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| Rig Technology |
$ | 2,316 | $ | 1,757 | $ | 1,970 | $ | 7,788 | $ | 6,965 | ||||||||||
| Petroleum Services & Supplies |
1,570 | 1,137 | 1,460 | 5,654 | 4,182 | |||||||||||||||
| Distribution & Transmission |
560 | 423 | 480 | 1,873 | 1,546 | |||||||||||||||
| Eliminations |
(187 | ) | (145 | ) | (170 | ) | (657 | ) | (537 | ) | ||||||||||
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| Total revenue |
$ | 4,259 | $ | 3,172 | $ | 3,740 | $ | 14,658 | $ | 12,156 | ||||||||||
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| Operating profit: |
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| Rig Technology |
$ | 603 | $ | 501 | $ | 528 | $ | 2,070 | $ | 2,071 | ||||||||||
| Petroleum Services & Supplies |
301 | 170 | 299 | 1,095 | 585 | |||||||||||||||
| Distribution & Transmission |
45 | 30 | 37 | 136 | 78 | |||||||||||||||
| Unallocated expenses and eliminations |
(89 | ) | (76 | ) | (86 | ) | (323 | ) | (269 | ) | ||||||||||
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| Total operating profit (before other costs) |
$ | 860 | $ | 625 | $ | 778 | $ | 2,978 | $ | 2,465 | ||||||||||
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| Operating profit %: |
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| Rig Technology |
26.0 | % | 28.5 | % | 26.8 | % | 26.6 | % | 29.7 | % | ||||||||||
| Petroleum Services & Supplies |
19.2 | % | 15.0 | % | 20.5 | % | 19.4 | % | 14.0 | % | ||||||||||
| Distribution & Transmission |
8.0 | % | 7.1 | % | 7.7 | % | 7.3 | % | 5.0 | % | ||||||||||
| Other unallocated |
— | — | — | — | — | |||||||||||||||
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| Total operating profit % (before other costs) |
20.2 | % | 19.7 | % | 20.8 | % | 20.3 | % | 20.3 | % | ||||||||||
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NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING OTHER COSTS
(Unaudited)
(In millions)
| Three Months Ended | Years Ended December 31, |
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| December 31, | September 30, 2011 |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Reconciliation of EBITDA excluding other costs (Note 1): |
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| GAAP net income attributable to Company |
$ | 574 | $ | 440 | $ | 532 | $ | 1,994 | $ | 1,667 | ||||||||||
| Provision for income taxes |
270 | 186 | 252 | 937 | 738 | |||||||||||||||
| Interest expense |
9 | 12 | 8 | 40 | 50 | |||||||||||||||
| Depreciation and amortization |
142 | 129 | 140 | 555 | 507 | |||||||||||||||
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| EBITDA |
995 | 767 | 932 | 3,526 | 2,962 | |||||||||||||||
| Other costs: |
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| Transaction costs |
12 | 1 | 6 | 24 | 7 | |||||||||||||||
| Libya asset write-down |
— | — | — | 17 | — | |||||||||||||||
| Devaluation costs |
— | — | — | — | 38 | |||||||||||||||
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| EBITDA excluding other costs (Note 1) |
$ | 1,007 | $ | 768 | $ | 938 | $ | 3,567 | $ | 3,007 | ||||||||||
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Note 1: EBITDA excluding other costs means earnings before interest, taxes, depreciation, amortization, and other costs, and is a non-GAAP financial measurement. Management uses EBITDA excluding other costs 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 |