National Oilwell Varco, Inc. today reported that for the third quarter ended September 30, 2011 it earned net income of $532 million, or $1.25 per fully diluted share, compared to second quarter ended June 30, 2011 net income of $481 million, or $1.13 per fully diluted share.
Earnings per share increased 30 percent compared to the third quarter of 2010 and increased 11 percent compared to the second quarter of 2011.
Transaction charges for the third quarter of 2011 were $6 million pre-tax. Net income for the third quarter of 2011 excluding transaction charges was $536 million, or $1.26 per fully diluted share. This compares to second quarter of 2011 net income of $484 million, or $1.14 per fully diluted share, and third quarter 2010 net income of $406 million or $0.97 per fully diluted share, excluding transaction charges from all periods.
The Company’s revenues for the third quarter of 2011 were $3.74 billion, an increase of six percent from the second quarter of 2011 and an increase of 24 percent from the third quarter of 2010. Operating profit for the third quarter of 2011 was $778 million or 20.8 percent of sales, excluding transaction charges. Sequentially, third quarter operating profit increased nine percent, resulting in operating profit flow-through (change in operating profit divided by the change in revenue) of 29 percent, excluding transaction and restructuring charges. Year-over-year third quarter operating profit increased 30 percent, resulting in operating profit flow-through of 25 percent, excluding transaction and restructuring charges.
During the third quarter of 2011 the Company’s Rig Technology segment booked a record $3.94 billion in new orders. Third quarter capital equipment orders included the Company’s single largest order ever, a $1.5 billion order for seven drillship packages for Estaleiro Atlantico Sul announced in August. Backlog for capital equipment orders for the Company’s Rig Technology segment at September 30, 2011 was $10.27 billion, up 33 percent from the end of the second quarter of 2011.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, “Strong oil and gas activity and continued outstanding execution enabled the Company to achieve solid earnings again this quarter. All three segments posted higher sequential and year-over-year revenues and operating profit. We are very pleased by the strong sequential margin expansions posted by our Petroleum Services & Supplies and Distribution Services segments, as well as the record level of bookings into our capital equipment backlog for the Rig Technology segment, during the third quarter. We continue to pursue new orders aggressively, and remain well-positioned to execute strategic internal growth and acquisition opportunities.
We recently completed our acquisition of Ameron International Corporation. We are pleased to welcome Ameron’s employees to the National Oilwell Varco family, and are excited about jointly tackling the many new opportunities this combination creates.”
Third quarter revenues for the Rig Technology segment were $1.97 billion, an increase of four percent from the second quarter of 2011 and an increase of 19 percent from the third quarter of 2010. Operating profit for this segment was $528 million, or 26.8 percent of sales. Operating profit flow-through was 14 percent sequentially and 15 percent from the third quarter of 2010 to the third quarter of 2011. Revenue out of backlog for the segment increased one percent sequentially and increased 22 percent year-over-year, to $1.41 billion for the third quarter of 2011. Non backlog revenue improved 12 percent sequentially and 14 percent year-over-year, due to rising demand for aftermarket spare parts and services.
Petroleum Services & Supplies
Revenues for the third quarter of 2011 for the Petroleum Services & Supplies segment were $1.46 billion, up seven percent compared to second quarter 2011 results and up 34 percent from the third quarter of 2010. Operating profit was $299 million, or 20.5 percent of revenue, up 20 percent from the second quarter of 2011. Operating profit flow-through was 50 percent sequentially and 36 percent from the third quarter of 2010 to the third quarter of 2011. Rising levels of rig activity, seasonal recovery in Canada, and improving pricing resulted in higher revenues and margins for the segment.
The Distribution Services segment generated third quarter revenues of $480 million, which were up 13 percent from the second quarter of 2011 and were up 13 percent from the third quarter of 2010. Third quarter operating profit was $37 million or 7.7 percent of sales. Operating profit flow-through was 19 percent sequentially and 23 percent from the third quarter of 2010 to the third quarter of 2011. This segment benefited from sequential seasonal sales improvements in Canada, as well as strong sequential gains in U.S. operations on higher rig counts.
The Company has scheduled a conference call for October 25, 2011, at 8:00 a.m. Central Time to discuss third quarter 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 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.
Source: National Oilwell Varco, October 25, 2011