National Oilwell Varco reports Q3 net income of $155 million

National Oilwell Varco Q3 2015 revenues were $3.31 billion, down 15% from Q2 and 41% from Q3 2014

HOUSTON – National Oilwell Varco, Inc. today reported that for its third quarter ended Sept. 30 it earned net income of $155 million or $0.41 per fully diluted share, compared to second quarter ended June 30, 2015 net income of $289 million, or $0.74 per fully diluted share.

Excluding other items and non-recurring charges from all periods, third quarter net income was $232 million, or $0.61 per fully diluted share, compared to $0.77 in the second quarter of 2015 and $1.62 in the third quarter of 2014.

Third quarter 2015 other items were $55 million in pre-tax intangible asset impairment charges and $57 million in pre-tax severance, facility closure, and other charges.

Revenues for the third quarter of 2015 were $3.31 billion, a decrease of 15 percent from the second quarter of 2015 and a decrease of 41 percent from the third quarter of 2014. Operating profit for the quarter, excluding the other items, was $346 million, or 10.5 percent of sales.

EBITDA, excluding other items, was $511 million, or 15.5 percent of sales, down 19 percent sequentially and 58 percent from the prior year. Operating leverage, or the change in operating profit divided by the change in revenue, excluding other items, was 18 percent from the second quarter of 2015 to the third quarter of 2015. SG&A expenses declined 15 percent sequentially and 34 percent from the third quarter of last year.

During the third quarter of 2015, the Company completed its share repurchase program repurchasing and retiring 10.85 million shares of its common stock at an average price of $40.98 per share for a total purchase price of $444 million. Since initiating the share buyback program in September 2014, the Company repurchased 55.6 million shares, or 13 percent of its shares outstanding.

Ending backlog for the third quarter of 2015 was $8.02 billion for the Company’s Rig Systems segment and $1.17 billion for the Company’s Completion & Production Solutions segment.

“The sharp decline in oil prices and activity since late last year has impacted each of our segments, and will drive activity lower in the fourth quarter,” said CEO Clay C. Williams, Chairman.

“We believe our strong financial resources will enable National Oilwell Varco to invest in the extraordinary opportunities that will arise from this downturn, and we expect to emerge with greater capability and efficiency. In the meantime, with limited visibility into the timing of a recovery, we remain focused on managing costs and improving performance, while continuing to develop technologies that help our customers to improve their returns in a lower commodity price world.”

Rig Systems Segment

Rig Systems generated revenues of $1.50 billion in the third quarter of 2015, a decrease of 23 percent from the second quarter of 2015 and a decrease of 44 percent from the third quarter of 2014. Operating profit was $275 million, or 18.4 percent of sales. EBITDA was $300 million, or 20.1 percent of sales. Revenue out of backlog was $1.30 billion.

Backlog for capital equipment orders for Rig Systems at September 30, 2015 was $8.02 billion, down 11 percent from the second quarter of 2015, and down 44 percent from the third quarter of 2014. New orders during the quarter were $367 million.

Rig Aftermarket Segment

Rig Aftermarket generated revenues of $570 million in the third quarter of 2015, a decrease of 13 percent from the second quarter of 2015 and a decrease of 32 percent from the third quarter of 2014. Operating profit was $146 million, or 25.6 percent of sales. EBITDA was $154 million, or 27.0 percent of sales.

Wellbore Technologies Segment

Wellbore Technologies generated revenues of $834 million in the third quarter of 2015, a decrease of 13 percent from the second quarter of 2015 and a decrease of 43 percent from the third quarter of 2014. Operating profit was $22 million, or 2.6 percent of sales. EBITDA was $119 million, or 14.3 percent of sales.

Completion & Production Solutions Segment

Completion & Production Solutions generated revenues of $798 million in the third quarter of 2015, a decrease of nine percent from the second quarter of 2015 and a decrease of 33 percent from the third quarter of 2014. Operating profit was $63 million, or 7.9 percent of sales. EBITDA was $117 million, or 14.7 percent of sales. Revenues out of backlog were $472 million.

Backlog for capital equipment orders for Completion & Production Solutions at September 30, 2015 was $1.17 billion, flat from the second quarter of 2015, and down 44 percent from the third quarter of 2014. New orders during the quarter were $467 million.

The Company has scheduled a conference call for October 28, 2015, 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 1-866-312-4825 within North America or 1-720-634-2948 outside of North America five to ten minutes prior to the scheduled start time and asking for the “National Oilwell Varco Earnings Conference Call.”