National Oilwell Varco reported that for its first quarter ended March 31, 2011 it earned net income of $407 million, or $0.96 per fully diluted share, compared to fourth quarter ended December 31, 2010 net income of $440 million, or $1.05 per fully diluted share. The first quarter 2011 results included charges related to Libya asset write-downs and the Company's acquisition of APL totaling $19 million pre-tax, or $0.04 per share after-tax. Net income for the first quarter of 2011 excluding the Libya and APL charges was $422 million, or $1.00 per fully diluted share.
Reported revenues for the first quarter of 2011 were $3.15 billion, a decrease of one percent from the fourth quarter of 2010 and an increase of four percent from the first quarter of 2010. Operating profit for the quarter, excluding the Libya and APL charges, was $628 million or 20 percent of sales.
Capital equipment orders for the Company's Rig Technology segment increased significantly, both sequentially and year-over-year, to $2.28 billion during the first quarter, reflecting higher demand for drilling equipment for new build offshore rigs. At March 31, 2011 the segment's backlog was $6.16 billion, up 23 percent from the end of the fourth quarter.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, "Our Company got off to a good start in the first quarter of 2011. Our Petroleum Services & Supplies segment performed exceptionally well, and helped offset expected lower revenues from new rig projects. The high levels of oilfield activity are spurring demand for all our products and services, serving to reload our backlog of Rig Technology capital equipment, and enabling our Distribution Services team to put up very solid revenues and margins once again.
"We are very excited that bookings into our capital equipment backlog were more than double our shipments this quarter. Overall, efficient execution of orders in our backlog, our leading technologies, great service, and, most importantly, the best workforce in the industry, led to solid earnings this quarter.
"Gradually recovering economies, high oil prices, a pressing need for modern, efficient drilling and well stimulation equipment, and rising consumption of drillpipe, downhole tools, and other critical oilfield products provide a great outlook for National Oilwell Varco."
First quarter revenues for the Rig Technology segment were $1.61 billion, a decrease of eight percent from the fourth quarter of 2010 and a decrease of 15 percent from the first quarter of 2010. Operating profit for this segment was $422 million, or 26.2 percent of sales. Revenue out of backlog for the segment declined 25 percent year-over-year, and was down 12 percent from the fourth quarter of 2010, to $1.1 billion for the first quarter of 2011, reflecting the completion of many new offshore rig projects which were won in preceding years.
Petroleum Services & Supplies
Revenues for the first quarter of 2011 for the Petroleum Services & Supplies segment were $1.27 billion, up 11 percent compared to fourth quarter 2010 results and up 37 percent from the first quarter of 2010. Operating profit was $246 million, or 19.4 percent of revenue, an increase of 45 percent from the fourth quarter of 2010. Operating profit flow-through, or the change in operating profit divided by the change in revenue, was 59 percent sequentially and 39 percent from the first quarter of 2010 to the first quarter of 2011.
The Distribution Services segment generated first quarter revenues of $410 million, which were down three percent from the fourth quarter of 2010 and represented a 23 percent increase from the first quarter of 2010. First quarter operating profit was $28 million or 6.8 percent of sales. Operating profit flow-through was 22 percent from the first quarter of 2010 to the first quarter of 2011.
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