National Oilwell Varco, Inc. today reported that for the third quarter ended September 30, 2013 it earned net income of $636 million, or $1.49 per fully diluted share, compared to second quarter ended June 30, 2013 net income of $531 million, or $1.24 per fully diluted share. Excluding $10 million in pre-tax transaction charges and $102 million in pre-tax gains resulting from the settlement of an outstanding legal claim, third quarter 2013 net income was $573 million, or $1.34 per fully diluted share.
The Company’s revenues for the third quarter of 2013 were $5.69 billion, an increase of two percent from the second quarter of 2013 and an increase of seven percent from the third quarter of 2012. Operating profit for the third quarter of 2013 was $853 million or 15.0 percent of sales, excluding transaction charges and the settlement of an outstanding legal claim. Sequentially, third quarter operating profit increased three percent, resulting in operating profit flow-through (change in operating profit divided by the change in revenue) of 31 percent, excluding transaction charges and the settlement of an outstanding legal claim.
Backlog for capital equipment orders for the Company’s Rig Technology segment was at a record level of $15.15 billion as of September 30, 2013, up nine percent from the end of the second quarter of 2013 and up 30 percent from the end of the third quarter of 2012. New orders during the quarter were $3.31 billion, reflecting continued strong demand for oilfield equipment.
Pete Miller, Chairman and CEO of National Oilwell Varco, remarked, “Outstanding execution enabled the Company to achieve solid results again this quarter. All three segments posted higher sequential revenues and margins, and collectively reduced the Company’s working capital requirements, which ultimately led to a quarterly record of $1 billion in cash flow from operations. We also added significant new bookings to our capital equipment backlog for the Rig Technology segment during the third quarter, as the industry’s demand for our suite of technologies remains strong.
We are excited about our recently announced plans to spin-off the Company’s distribution business from the remainder of the Company, creating two stand-alone, publicly traded corporations. We believe that the contemplated spin-off is very consistent with NOV’s strategy and commitment to continue to grow the Company and create significant shareholder value. As separate companies, the distribution business and the remainder of NOV will each be better positioned and have the enhanced operational flexibility to focus on their specific products, services and customers.”
Third quarter revenues for the Rig Technology segment were $2.84 billion, up slightly sequentially and an increase of 12 percent from the third quarter of 2012. Operating profit for this segment was $606 million, or 21.3 percent of sales. Revenue out of backlog for the segment was flat sequentially and increased 10 percent year-over-year, to $2.11 billion for the third quarter of 2013.
Petroleum Services & Supplies
Revenues for the third quarter of 2013 for the Petroleum Services & Supplies segment were $1.81 billion, up three percent compared to second quarter results and up five percent from the third quarter of 2012. Operating profit was $324 million, or 17.9 percent of revenue, up seven percent from the second quarter of 2013. Operating profit flow-through was 33 percent from the second quarter of 2013 to the third quarter of 2013.
Distribution & Transmission
The Distribution & Transmission segment generated third quarter revenues of $1.34 billion, which were up four percent from the second quarter of 2013 and up two percent from the third quarter of 2012. Third quarter operating profit was $78 million or 5.8 percent of sales. Operating profit flow-through was 15 percent sequentially.
Press Release, October 25, 2013