NOV: HISTORIC Q2 2014
National Oilwell Varco, Inc. (NYSE: NOV) reported that for its second quarter ended June 30, 2014, it earned net income of $619 million, or $1.44 per fully diluted share, compared to first quarter ended March 31, 2014 net income of $589 million, or $1.37 per fully diluted share.
The second quarter 2014 fully diluted earnings per share includes: $0.02 per share for income from discontinued operations, ($0.05) per share for nonrecurring items and ($0.14) per share for the amortization of intangible assets. The first quarter of 2014 fully diluted earnings per share includes: $0.09 per share for income from discontinued operations, ($0.01) per share for nonrecurring items and ($0.14) per share for the amortization of intangible assets. Excluding these items, operating (non-GAAP) earnings per fully diluted share for the second quarter of 2014 were $1.61 per share, compared to $1.43 per share in the first quarter of 2014, an increase of 13 percent.
As previously announced, on May 30, 2014, the Company completed the spin-off to its stockholders of its distribution business as an independent public company, NOW Inc. These results are presented as discontinued operations. This also marks the first quarter in which the Company has issued financial results based on its four new reporting segments.
Revenues for the second quarter of 2014 were $5.26 billion, an increase of seven percent from the first quarter of 2014 and an increase of 12 percent from the second quarter of 2013. Operating profit for the quarter, excluding non-recurring items, was $945 million, or 18.0 percent of sales. EBITDA for the quarter, excluding non-recurring items, was $1.14 billion, or 21.7 percent of sales, up 12 percent from the prior quarter.
Ending backlog for the second quarter of 2014 was $15.39 billion for the Company's Rig Systems segment and $2.14 billion for the Company's Completion & Production Solutions segment.
Clay Williams, Chairman, President and CEO of National Oilwell Varco, stated, "The second quarter of 2014 was a historic quarter for NOV. In addition to posting strong operating results, and securing $3.4 billion in new capital equipment orders, we are very pleased to have created additional shareholder value by both successfully completing the spin-off of our distribution business, and increasing our regular dividend by over 75 percent. As we move through the second half of 2014, we look forward to continued demand for our drilling, completion and production equipment, and continued strong results from our four new segments."
NATIONAL OILWELL VARCO, INC. | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(In millions, except share data) | ||||||||||||
June 30, | December 31, | |||||||||||
2014 | 2013 | |||||||||||
(Unaudited) | ||||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 3,885 | $ | 3,436 | ||||||||
Receivables, net | 4,427 | 4,896 | ||||||||||
Inventories, net | 5,198 | 5,603 | ||||||||||
Costs in excess of billings | 1,567 | 1,539 | ||||||||||
Deferred income taxes | 331 | 373 | ||||||||||
Prepaid and other current assets | 595 | 576 | ||||||||||
Total current assets | 16,003 | 16,423 | ||||||||||
Property, plant and equipment, net | 3,440 | 3,408 | ||||||||||
Deferred income taxes | 472 | 372 | ||||||||||
Goodwill | 8,640 | 9,049 | ||||||||||
Intangibles, net | 4,808 | 5,055 | ||||||||||
Investment in unconsolidated affiliates | 351 | 390 | ||||||||||
Other assets | 113 | 115 | ||||||||||
$ | 33,827 | $ | 34,812 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 1,178 | $ | 1,275 | ||||||||
Accrued liabilities | 2,857 | 2,763 | ||||||||||
Billings in excess of costs | 2,176 | 1,771 | ||||||||||
Current portion of long-term debt and short-term borrowings | - | 1 | ||||||||||
Accrued income taxes | 260 | 556 | ||||||||||
Deferred income taxes | 444 | 312 | ||||||||||
Total current liabilities | 6,915 | 6,678 | ||||||||||
Long-term debt | 3,148 | 3,149 | ||||||||||
Deferred income taxes | 2,002 | 2,292 | ||||||||||
Other liabilities | 344 | 363 | ||||||||||
Total liabilities | 12,409 | 12,482 | ||||||||||
Commitments and contingencies | ||||||||||||
Stockholders’ equity: | ||||||||||||
Common stock – par value $.01; 1 billion shares authorized; 429,458,043 and 428,433,703 | ||||||||||||
shares issued and outstanding at June 30, 2014 and December 31, 2013 | 4 | 4 | ||||||||||
Additional paid-in capital | 8,999 | 8,907 | ||||||||||
Accumulated other comprehensive income (loss) | 48 | (4 | ) | |||||||||
Retained earnings | 12,281 | 13,323 | ||||||||||
Total Company stockholders’ equity | 21,332 | 22,230 | ||||||||||
Noncontrolling interests | 86 | 100 | ||||||||||
Total stockholders’ equity | 21,418 | 22,330 | ||||||||||
$ | 33,827 | $ | 34,812 | |||||||||
NATIONAL OILWELL VARCO, INC. | |||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||||||||||||||||
(In millions, except per share data) | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||
Rig Systems | $ | 2,372 | $ | 2,081 | $ | 2,256 | $ | 4,628 | $ | 3,992 | |||||||||||||||||||||
Rig Aftermarket | 785 | 670 | 750 | 1,535 | 1,221 | ||||||||||||||||||||||||||
Wellbore Technologies | 1,446 | 1,222 | 1,278 | 2,724 | 2,445 | ||||||||||||||||||||||||||
Completion & Production Solutions | 1,127 | 1,057 | 1,002 | 2,129 | 2,059 | ||||||||||||||||||||||||||
Eliminations | (475 | ) | (350 | ) | (397 | ) | (872 | ) | (661 | ) | |||||||||||||||||||||
Total revenue | 5,255 | 4,680 | 4,889 | 10,144 | 9,056 | ||||||||||||||||||||||||||
Gross profit | 1,456 | 1,227 | 1,290 | 2,746 | 2,416 | ||||||||||||||||||||||||||
Gross profit % | 27.7 | % | 26.2 | % | 26.4 | % | 27.1 | % | 26.7 | % | |||||||||||||||||||||
Selling, general, and administrative | 511 | 457 | 473 | 984 | 889 | ||||||||||||||||||||||||||
Nonrecurring items | 32 | 57 | 18 | 50 | 130 | ||||||||||||||||||||||||||
Operating profit | 913 | 713 | 799 | 1,712 | 1,397 | ||||||||||||||||||||||||||
Interest and financial costs | (27 | ) | (30 | ) | (26 | ) | (53 | ) | (58 | ) | |||||||||||||||||||||
Interest income | 5 | 3 | 4 | 9 | 6 | ||||||||||||||||||||||||||
Equity income in unconsolidated affiliates | 23 | 15 | 10 | 33 | 34 | ||||||||||||||||||||||||||
Other income (expense), net | (21 | ) | 11 | - | (21 | ) | (3 | ) | |||||||||||||||||||||||
Income before income taxes | 893 | 712 | 787 | 1,680 | 1,376 | ||||||||||||||||||||||||||
Provision for income taxes | 284 | 218 | 239 | 523 | 423 | ||||||||||||||||||||||||||
Income from continuing operations | 609 | 494 | 548 | 1,157 | 953 | ||||||||||||||||||||||||||
Income from discontinued operations | 11 | 37 | 41 | 52 | 78 | ||||||||||||||||||||||||||
Net income | 620 | 531 | 589 | 1,209 | 1,031 | ||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 1 | - | - | 1 | (2 | ) | |||||||||||||||||||||||||
Net income attributable to Company | $ | 619 | $ | 531 | $ | 589 | $ | 1,208 | $ | 1,033 | |||||||||||||||||||||
Per share data: | |||||||||||||||||||||||||||||||
Basic | |||||||||||||||||||||||||||||||
Income from continuing operations | $ | 1.42 | $ | 1.16 | $ | 1.28 | $ | 2.70 | $ | 2.24 | |||||||||||||||||||||
Income from discontinued operations | $ | 0.03 | $ | 0.09 | $ | 0.10 | $ | 0.12 | $ | 0.18 | |||||||||||||||||||||
Net income attributable to Company | $ | 1.45 | $ | 1.25 | $ | 1.38 | $ | 2.82 | $ | 2.42 | |||||||||||||||||||||
Diluted | |||||||||||||||||||||||||||||||
Income from continuing operations | $ | 1.42 | $ | 1.15 | $ | 1.28 | $ | 2.69 | $ | 2.23 | |||||||||||||||||||||
Income from discontinued operations | $ | 0.02 | $ | 0.09 | $ | 0.09 | $ | 0.12 | $ | 0.18 | |||||||||||||||||||||
Net income attributable to Company | $ | 1.44 | $ | 1.24 | $ | 1.37 | $ | 2.81 | $ | 2.41 | |||||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||||||||||
Basic | 428 | 426 | 428 | 428 | 426 | ||||||||||||||||||||||||||
Diluted | 430 | 428 | 429 | 430 | 428 | ||||||||||||||||||||||||||
NATIONAL OILWELL VARCO, INC. | |||||||||||||||||||||||||||||||
OPERATING PROFIT – AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited) | |||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||
Rig Systems | $ | 2,372 | $ | 2,081 | $ | 2,256 | $ | 4,628 | $ | 3,992 | |||||||||||||||||||||
Rig Aftermarket | 785 | 670 | 750 | 1,535 | 1,221 | ||||||||||||||||||||||||||
Wellbore Technologies | 1,446 | 1,222 | 1,278 | 2,724 | 2,445 | ||||||||||||||||||||||||||
Completion & Production Solutions | 1,127 | 1,057 | 1,002 | 2,129 | 2,059 | ||||||||||||||||||||||||||
Eliminations | (475 | ) | (350 | ) | (397 | ) | (872 | ) | (661 | ) | |||||||||||||||||||||
Total revenue | 5,255 | 4,680 | 4,889 | 10,144 | 9,056 | ||||||||||||||||||||||||||
Operating profit: | |||||||||||||||||||||||||||||||
Rig Systems | $ | 501 | $ | 393 | $ | 451 | $ | 952 | $ | 765 | |||||||||||||||||||||
Rig Aftermarket | 217 | 189 | 191 | 408 | 331 | ||||||||||||||||||||||||||
Wellbore Technologies | 269 | 195 | 224 | 493 | 403 | ||||||||||||||||||||||||||
Completion & Production Solutions | 158 | 163 | 143 | 301 | 335 | ||||||||||||||||||||||||||
Eliminations | (200 | ) | (170 | ) | (192 | ) | (392 | ) | (307 | ) | |||||||||||||||||||||
Total operating profit (before nonrecurring items) | $ | 945 | $ | 770 | $ | 817 | $ | 1,762 | $ | 1,527 | |||||||||||||||||||||
Operating profit %: | |||||||||||||||||||||||||||||||
Rig Systems | 21.1 | % | 18.9 | % | 20.0 | % | 20.6 | % | 19.2 | % | |||||||||||||||||||||
Rig Aftermarket | 27.6 | % | 28.2 | % | 25.5 | % | 26.6 | % | 27.1 | % | |||||||||||||||||||||
Wellbore Technologies | 18.6 | % | 16.0 | % | 17.5 | % | 18.1 | % | 16.5 | % | |||||||||||||||||||||
Completion & Production Solutions | 14.0 | % | 15.4 | % | 14.3 | % | 14.1 | % | 16.3 | % | |||||||||||||||||||||
Total operating profit % (before nonrecurring items) | 18.0 | % | 16.5 | % | 16.7 | % | 17.4 | % | 16.9 | % | |||||||||||||||||||||
NATIONAL OILWELL VARCO, INC. | |||||||||||||||||||||||||||||||
AS ADJUSTED BEFORE DEPRECIATION & AMORTIZATION SUPPLEMENTAL SCHEDULE (Unaudited) | |||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||||||||||||
Operating profit excluding nonrecurring items (Note 1): | |||||||||||||||||||||||||||||||
Rig Systems | $ | 501 | $ | 393 | $ | 451 | $ | 952 | $ | 765 | |||||||||||||||||||||
Rig Aftermarket | 217 | 189 | 191 | 408 | 331 | ||||||||||||||||||||||||||
Wellbore Technologies | 269 | 195 | 224 | 493 | 403 | ||||||||||||||||||||||||||
Completion & Production Solutions | 158 | 163 | 143 | 301 | 335 | ||||||||||||||||||||||||||
Eliminations | (200 | ) | (170 | ) | (192 | ) | (392 | ) | (307 | ) | |||||||||||||||||||||
Total operating profit excluding nonrecurring items | $ | 945 | $ | 770 | $ | 817 | $ | 1,762 | $ | 1,527 | |||||||||||||||||||||
Depreciation & amortization: | |||||||||||||||||||||||||||||||
Rig Systems | $ | 22 | $ | 22 | $ | 22 | $ | 44 | $ | 38 | |||||||||||||||||||||
Rig Aftermarket | 7 | 6 | 6 | 13 | 12 | ||||||||||||||||||||||||||
Wellbore Technologies | 108 | 101 | 108 | 216 | 202 | ||||||||||||||||||||||||||
Completion & Production Solutions | 53 | 57 | 55 | 108 | 104 | ||||||||||||||||||||||||||
Eliminations | - | - | - | - | - | ||||||||||||||||||||||||||
Total depreciation & amortization | $ | 190 | $ | 186 | $ | 191 | $ | 381 | $ | 356 | |||||||||||||||||||||
Segment EBITDA excluding nonrecurring items | |||||||||||||||||||||||||||||||
(Note 1): | |||||||||||||||||||||||||||||||
Rig Systems | $ | 523 | $ | 415 | $ | 473 | $ | 996 | $ | 803 | |||||||||||||||||||||
Rig Aftermarket | 224 | 195 | 197 | 421 | 343 | ||||||||||||||||||||||||||
Wellbore Technologies | 377 | 296 | 332 | 709 | 605 | ||||||||||||||||||||||||||
Completion & Production Solutions | 211 | 220 | 198 | 409 | 439 | ||||||||||||||||||||||||||
Eliminations | (200 | ) | (170 | ) | (192 | ) | (392 | ) | (307 | ) | |||||||||||||||||||||
Total segment EBITDA excluding nonrecurring items | $ | 1,135 | $ | 956 | $ | 1,008 | $ | 2,143 | $ | 1,883 | |||||||||||||||||||||
Segment EBITDA % excluding nonrecurring items | |||||||||||||||||||||||||||||||
(Note 1): | |||||||||||||||||||||||||||||||
Rig Systems | 22.0 | % | 19.9 | % | 21.0 | % | 21.5 | % | 20.1 | % | |||||||||||||||||||||
Rig Aftermarket | 28.5 | % | 29.1 | % | 26.3 | % | 27.4 | % | 28.1 | % | |||||||||||||||||||||
Wellbore Technologies | 26.1 | % | 24.2 | % | 26.0 | % | 26.0 | % | 24.7 | % | |||||||||||||||||||||
Completion & Production Solutions | 18.7 | % | 20.8 | % | 19.8 | % | 19.2 | % | 21.3 | % | |||||||||||||||||||||
Total segment EBITDA % excluding nonrecurring items | 21.6 | % | 20.4 | % | 20.6 | % | 21.1 | % | 20.8 | % | |||||||||||||||||||||
Total segment EBITDA excluding nonrecurring items | $ | 1,135 | $ | 956 | $ | 1,008 | $ | 2,143 | $ | 1,883 | |||||||||||||||||||||
Nonrecurring items | (32 | ) | (57 | ) | (18 | ) | (50 | ) | (130 | ) | |||||||||||||||||||||
Interest income | 5 | 3 | 4 | 9 | 6 | ||||||||||||||||||||||||||
Equity income in unconsolidated affiliates | 23 | 15 | 10 | 33 | 34 | ||||||||||||||||||||||||||
Other income (expense), net | (21 | ) | 11 | - | (21 | ) | (3 | ) | |||||||||||||||||||||||
Net income (loss) attributable to noncontrolling | |||||||||||||||||||||||||||||||
interest | (1 | ) | - | - | (1 | ) | 2 | ||||||||||||||||||||||||
EBITDA (Note 1) | $ | 1,109 | $ | 928 | $ | 1,004 | $ | 2,113 | $ | 1,792 | |||||||||||||||||||||
Reconciliation of EBITDA (Note 1): | |||||||||||||||||||||||||||||||
GAAP net income attributable to Company | $ | 619 | $ | 531 | $ | 589 | $ | 1,208 | $ | 1,033 | |||||||||||||||||||||
Income from discontinued operations | (11 | ) | (37 | ) | (41 | ) | (52 | ) | (78 | ) | |||||||||||||||||||||
Provision for income taxes | 284 | 218 | 239 | 523 | 423 | ||||||||||||||||||||||||||
Interest expense | 27 | 30 | 26 | 53 | 58 | ||||||||||||||||||||||||||
Depreciation and amortization | 190 | 186 | 191 | 381 | 356 | ||||||||||||||||||||||||||
EBITDA | 1,109 | 928 | 1,004 | 2,113 | 1,792 | ||||||||||||||||||||||||||
Nonrecurring items | 32 | 57 | 18 | 50 | 130 | ||||||||||||||||||||||||||
EBITDA excluding nonrecurring items (Note 1) | $ | 1,141 | $ | 985 | $ | 1,022 | $ | 2,163 | $ | 1,922 | |||||||||||||||||||||
NATIONAL OILWELL VARCO, INC. | |||||||||||||||||||||||||||||||
OPERATING (NON-GAAP) DILUTED EARNINGS PER SHARE RECONCILIATION (Unaudited) | |||||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | March 31, | June 30, | |||||||||||||||||||||||||||||
2014 | 2013 | 2014 | 2014 | 2013 | |||||||||||||||||||||||||||
Net income attributable to Company | $ | 1.44 | $ | 1.24 | $ | 1.37 | $ | 2.81 | $ | 2.41 | |||||||||||||||||||||
Income from discontinued operations | (0.02 | ) | (0.09 | ) | (0.09 | ) | (0.12 | ) | (0.18 | ) | |||||||||||||||||||||
Income from continuing operations | 1.42 | 1.15 | 1.28 | 2.69 | 2.23 | ||||||||||||||||||||||||||
Nonrecurring items | 0.05 | 0.09 | 0.01 | 0.07 | 0.21 | ||||||||||||||||||||||||||
Amortization of intangible assets | 0.14 | 0.15 | 0.14 | 0.29 | 0.27 | ||||||||||||||||||||||||||
Operating (non-GAAP) earnings | $ | 1.61 | $ | 1.39 | $ | 1.43 | $ | 3.05 | $ | 2.71 | |||||||||||||||||||||
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