National Oilwell Varco Announces Fourth Quarter and Full Year 2011 Earnings

Friday, Feb 03, 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 Americafive 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.

Source: Business Wire

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