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NOV Sees Drop in Revenues Across All Segments
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National Oilwell Varco, Inc. reported that for its first quarter ended March 31, 2015, it earned net income of $310 million, or $0.76 per fully diluted share, compared to fourth quarter ended December 31, 2014 net income of $595 million, or $1.39 per fully diluted share. Excluding other items of $122 million in pre-tax charges related to an early retirement program, $9 million of Venezuela asset write-down, and $69 million of non-recurring foreign tax exposure, net income was $466 million, or $1.14 per fully diluted share, down 33 percent from the fourth quarter of 2014, and down 12 percent from the first quarter of 2014, excluding other items from all periods.
Revenues for the first quarter of 2015 were $4.82 billion, a decrease of 15.6 percent from the fourth quarter of 2014 and a decrease of one percent from the first quarter of 2014. Operating profit for the quarter, excluding the other items, was $692 million, or 14.4 percent of sales. EBITDA for the first quarter, excluding other items, was $837 million, or 17.4 percent of sales, down 18.1 percent from the prior year.
During the first quarter of 2015, the Company repurchased and retired 24.5 million shares of its common stock at an average price of $54.35 per share for a total purchase price of $1.3 billion. Since initiating a share buyback program in September 2014, the Company has repurchased 43.3 million shares or 10 percent of its shares outstanding, at an average price of $57.38 per share.
Ending backlog for the first quarter of 2015 was $10.43 billion for the Company’s Rig Systems segment and $1.46 billion for the Company’s Completion & Production Solutions segment.
Clay C. Williams, Chairman, President and CEO of National Oilwell Varco, stated, “National Oilwell Varco executed well during the first quarter of 2015, despite the significant downturn in oil price and oilfield activity we faced. Our strong financial resources, $11.9 billion backlog, and outstanding workforce position us well to weather the current challenging market, and we plan to emerge stronger and better. In the short run we will continue with cost reduction initiatives implemented through the past few months to drive better efficiency and mitigate the impact of declining revenues, which we expect to continue through at least the next few quarters.”
Williams noted that the Company will continue to execute its long-term plans to increase shareholder value. “We have the financial resources to invest in acquisitions, as well as the transformative new technologies we have a long history of pioneering. Cyclical downturns provide extraordinary opportunities to deploy capital to better position our enterprise for a recovery. While we don’t know the duration of this downturn, we know that we will be better when the recovery comes.”
Rig Systems
The Rig Systems segment generated revenues of $2.52 billion in the first quarter of 2015, a decrease of one percent from the fourth quarter of 2014 and an increase of 12 percent from the first quarter of 2014. Operating profit for this segment was $488 million, or 19.3 percent of sales. EBITDA for this segment was $511 million, or 20.3 percent of sales. Revenue out of backlog for the segment was $2.25 billion.
Backlog for capital equipment orders for the Company’s Rig Systems segment at March 31, 2015 was $10.43 billion, down 17 percent from the fourth quarter of 2014, and down 31 percent from the end of the first quarter of 2014. New orders during the quarter were $236 million, which were partly offset by $99 million in foreign currency exchange adjustments in the quarter.
Rig Aftermarket
The Rig Aftermarket segment generated revenues of $719 million in the first quarter of 2015, a decrease of 15 percent from the fourth quarter of 2014 and a decrease of four percent from the first quarter of 2014. Operating profit for this segment was $199 million, or 27.7 percent of sales. EBITDA for this segment was $206 million, or 28.7 percent of sales. Sequential operating leverage, or the change in operating profit divided by the change in revenues from the fourth quarter of 2014 to the first quarter of 2015 was 35 percent.
Wellbore Technologies
The Wellbore Technologies segment generated revenues of $1.17 billion in the first quarter of 2015, a decrease of 23 percent from the fourth quarter of 2014 and a decrease of eight percent from the first quarter of 2014. Operating profit for this segment was $124 million, or 10.6 percent of sales. EBITDA for this segment was $229 million, or 19.6 percent of sales. Sequential operating leverage was 42 percent.
Completion & Production Solutions
The Completion & Production Solutions generated revenues of $948 million in the first quarter of 2015, a decrease of 28 percent from the fourth quarter of 2014 and a decrease of five percent from the first quarter of 2014. Revenues out of backlog were $563 million. Operating profit for this segment was $108 million, or 11.4 percent of sales. EBITDA for this segment was $163 million, or 17.2 percent of sales. Sequential operating leverage was 28 percent.
Backlog for capital equipment orders for the Company’s Completion & Production Solutions segment at March 31, 2015 was $1.46 billion, down 18 percent from the fourth quarter of 2014, and down ten percent from the end of the first quarter of 2014. New orders during the quarter were $327 million, which were partly offset by $81 million in foreign currency exchange adjustments.