National Oilwell Varco, Inc. today reported that for its first quarter ended March 31, 2014, it earned net income of $589 million, or $1.37 per fully diluted share, compared to fourth quarter ended December 31, 2013 net income of $658 million, or $1.53 per fully diluted share. Excluding pre-tax transaction charges of $19 million, earnings were $602 million, or $1.40 per fully diluted share.
Revenues for the first quarter of 2014 were $5.78 billion, a decrease of six percent from the fourth quarter of 2013 and an increase of nine percent from the first quarter of 2013. Operating profit for the quarter, excluding the transaction charges, was $880 million, or 15.2 percent of sales. Sequentially, first quarter operating profit decreased 10 percent, while year-over-year first quarter operating profit increased eight percent.
Backlog for capital equipment orders for the Company’s Rig Technology segment at March 31, 2014 was an all-time record of $16.35 billion, up one percent from the fourth quarter of 2013, and up 27 percent from the first quarter of 2013. New orders during the quarter were $2.33 billion, reflecting continued healthy demand for oilfield equipment.
Clay Williams, President and CEO of National Oilwell Varco, stated, “We are pleased with our solid start to the new year, as the Company’s investments in new technologies, manufacturing capacity and strategic acquisitions drove year-over-year revenue and earnings growth. Our $2.33 billion in new capital orders and record backlog demonstrate that demand for oilfield equipment remained high in the first quarter, as our customers continued to recognize National Oilwell Varco for our industry leading technology, our proven track record of project execution, and our leading aftermarket service.”
“We are encouraged to see domestic land drilling and well service firms increasing activity, which is leading to increased demand for drilling and stimulation equipment to develop unconventional shales. Outside of the U.S., our investments in Latin America, Africa, the Middle East and Asia have laid a great foundation for continued growth.” Williams added, “We are also pleased to be entering into the final stages of the previously announced spinoff of our distribution business to our shareholders, which we expect to complete during the second quarter. I want to thank all of the employees, of what will soon be two separately traded companies, for all of their hard work to make this Company successful.”
First quarter revenues for the Rig Technology segment were $3.01 billion, a decrease of nine percent from the fourth quarter of 2013 and an increase of 14 percent from the first quarter of 2013. Operating profit for this segment was $635 million, or 21.1 percent of sales. Year-over-year operating profit flow-through (change in operating profit divided by the change in revenue) was 20 percent. Revenue out of backlog for the segment was at $2.22 billion.
Petroleum Services & Supplies
Revenues for the first quarter of 2014 for the Petroleum Services & Supplies segment were $1.79 billion, down seven percent compared to fourth quarter 2013 results and up five percent from the first quarter of 2013. Operating profit was $326 million, or 18.2 percent of revenue. Year-over-year operating profit flow-through was 17 percent.
Distribution & Transmission
The Distribution & Transmission segment generated first quarter revenues of $1.28 billion, up two percent from the fourth quarter of 2013 and up four percent from the first quarter of 2013. First quarter operating profit was $68 million, or 5.3 percent of sales. Year-over-year operating profit flow-through was six percent.
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.