NOV Reports Strong Fourth Quarter 2009 Results

National Oilwell Varco, Inc. reported that for its fourth quarter ended December 31, 2008 it earned net income of $585.0 million, or $1.40 per fully diluted share, compared to third quarter ended September 30, 2008 net income of $547.7 million, or $1.31 per fully diluted share.

The results include $20.1 million of pre-tax charges ($0.04 per share after tax) related to its April 2008 merger with Grant Prideco, Inc. Excluding the transaction charges, earnings were $1.44 per fully diluted share.
 
Revenues reported for the full year 2008 were $13,431.4 million, and net income was $1,952.0 million, or $4.90 per fully diluted share. Including results for Grant Prideco prior to the April 21, 2008 merger, 2008 revenues were $14,035.1 million, up 20 percent from 2007 revenues of $11,697.6 million. On a combined basis, 2008 operating profit was $3,139.5 million, up 29 percent from 2007 operating profit, including full year Grant Prideco results and excluding transaction charges in both periods. Operating profit flow-through, or the increase in operating profit divided by the increase in revenue, from 2007 to 2008 was 30 percent, on a combined basis.
 
Revenues for the fourth quarter increased 5 percent sequentially to $3,810.2 million, and operating profit (excluding the $20.1 million transaction charge) was $876.5 million, an increase of 7 percent over the third quarter.
 
New capital equipment orders during the quarter were $724.2 million, resulting in a backlog for capital equipment orders for the Company's Rig Technology segment of $11.1 billion at December 31, 2008, compared to $11.8 billion at September 30, 2008.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, "We enjoyed a very successful 2008, in which each of our three segments reported higher sales and operating profit compared to the prior year. I am very proud of all the contributions made by our employees in helping us deliver quality equipment and services to our customers, and solid profitability for our shareholders.
 
While near term economic conditions are challenging, we enter 2009 with a healthy backlog of equipment and technology to deliver to our customers, and a balance sheet with considerably more cash than debt. We believe that the oil and gas industry's challenge to replace depleting reserves will require upgrading the world's rig fleet, and we look forward to continuing to help our customers retool their rigs after years of underinvestment."
 
Rig Technology
 
Fourth quarter revenues for the Rig Technology segment were $2,087.7 million, an increase of 8 percent from the third quarter of 2008 and an increase of 31 percent from the fourth quarter of 2007. Operating profit for this segment was $556.6 million, or 26.7 percent of sales, an increase of 11 percent from the third quarter of 2008. Operating profit flow-through from the third quarter of 2008 to the fourth quarter of 2008 was 35 percent. Operating profit flow-through from the fourth quarter of 2007 to the fourth quarter of 2008 was 30 percent. Revenue out of backlog for the segment rose 8 percent sequentially and 27 percent year-over-year, to $1,466.1 million for the fourth quarter of 2008.
 
Petroleum Services & Supplies
 
Revenues for the fourth quarter of 2008 for the Petroleum Services & Supplies segment were $1,387.3 million, up 6 percent compared to third quarter 2008 results and up 5 percent compared to fourth quarter 2007 results, on an adjusted combined basis for the merger for both periods. Operating profit was $341.0 million, or 24.6 percent of revenue, an increase of 3 percent from the third quarter of 2008 and an increase of 12 percent from the fourth quarter of 2007, on a combined basis. Operating profit flow-through from the third quarter of 2008 to the fourth quarter of 2008 was 15 percent, on a combined basis. Operating profit flow-through from the fourth quarter of 2007 to the fourth quarter of 2008 was 58 percent, on a combined basis.
 
Distribution Services
 
Fourth quarter revenues for the Distribution Services segment were $483.0 million, down 3 percent from the third quarter of 2008. Fourth quarter operating profit was $42.4 million or 8.8 percent of sales. Operating profit flow-through from the fourth quarter of 2007 to the fourth quarter of 2008 was 18 percent.

 

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