National Oilwell Varco: Historic Backlog for Rig Technology Segment in 2Q

National Oilwell Varco, Inc.  today reported that for its second quarter ended June 30, 2013 it earned net income of $531 million, or $1.24 per fully diluted share, compared to first quarter ended March 31, 2013 net income of $502 million, or $1.17 per fully diluted share. Excluding transaction charges of $57 million pre-tax, second quarter 2013 net income was $568 million, or $1.33 per fully diluted share.

The Company’s revenues for the second quarter of 2013 were $5.60 billion, which improved six percent from the first quarter of 2013 and 18 percent from the second quarter of 2012. Operating profit for the second quarter of 2013 was $826 million, or 14.7 percent of sales, excluding transaction charges.

Backlog for capital equipment orders for the Company’s Rig Technology segment was at a historic record level of $13.95 billion as of June 30, 2013, up eight percent from the end of the first quarter of 2013 and up 24 percent from the end of the second quarter of 2012. New orders during the quarter were $3.15 billion, reflecting continued strong demand for oilfield equipment.

Pete Miller, Chairman and CEO of National Oilwell Varco, remarked, “The second quarter of 2013 marked another solid quarter for NOV. Despite seasonal slowdowns in Canada and a challenging US market, the Company produced sequential gains in revenues and earnings, which were largely driven by strong revenues out of backlog and significant international growth within our Petroleum Services & Supplies and Distribution & Transmission segments. The Company also ended the quarter with an all-time record backlog of capital equipment, as orders for new floaters and jackups continued at a strong pace, and orders for our floating production equipment more than doubled from the first quarter.” Miller continued, “In addition to our solid operating results, we are also proud to have doubled our regular dividend in the second quarter, further demonstrating our commitment to return more cash to our shareholders. As we move through the second half of 2013, we look forward to continued demand for our offshore drilling and floating production equipment, a gradual rebound in Canada, and continued growth from our other international operations.”

 Rig Technology

Second quarter revenues for the Rig Technology segment were $2.83 billion, an increase of eight percent from the first quarter of 2013 and an increase of 18 percent from the second quarter of 2012. Operating profit for this segment was $587 million, or 20.7 percent of revenue. Operating profit flow-through (change in operating profit divided by the change in revenue) was 15 percent sequentially and four percent from the second quarter of 2012 to the second quarter of 2013. Revenue out of backlog for the segment increased seven percent sequentially and increased 17 percent year-over-year to $2.12 billion for the second quarter of 2013.

Petroleum Services & Supplies

Revenues for the second quarter of 2013 for the Petroleum Services & Supplies segment were $1.75 billion, up three percent compared to first quarter 2013 results and down two percent from the second quarter of 2012. Operating profit was $304 million, or 17.4 percent of revenue, a decrease of two percent from the first quarter of 2013. Double-digit percentage growth in international markets, combined with a full quarter contribution from Robbins & Myers, was partly offset by second quarter seasonal declines in Canada.

Distribution & Transmission

The Distribution & Transmission segment generated second quarter revenues of $1.30 billion, which were up six percent from the first quarter of 2013 and up 66 percent from the second quarter of 2012 (due mostly to previously disclosed mergers completed in 2012). Second quarter operating profit was $71 million, or 5.5 percent of revenue, up nine percent from the first quarter of 2013 and up 31 percent from the second quarter of 2012. Sequential flow-through was nine percent, and year-over-year flow-through was three percent. Strong international sales and a full quarter contribution from Robbins & Myers fully offset the seasonal break-up declines in Canada.

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.