National Oilwell Varco Q4 2007 Earnings Increase 54%
National Oilwell Varco, Inc. reported that for its fourth quarter ended December 31, 2007 it earned net income of $376.7 million, or $1.05 per fully diluted share, on revenues of $2,658.9 million. Fourth quarter 2007 earnings per share increased 3 percent from the third quarter of 2007 and increased 54 percent compared to the fourth quarter of 2006. Fourth quarter 2007 revenues increased 3 percent from the third quarter of 2007, and increased 28 percent from the fourth quarter of 2006. Operating profit for the quarter was $574.7 million, or 21.6 percent of sales, an increase of 5 percent over the third quarter of 2007 and an increase of 51 percent over the fourth quarter of 2006.
Revenues for the full year 2007 were a record $9,789.0 million, up 39 percent from 2006 revenues. Net income for 2007 was $1,337.1 million, or $3.76 per fully diluted share, up 95 percent from 2006. Operating profit for 2007 was $2,044.4 million, up 84 percent from 2006. Operating profit flow-through, or the increase in operating profit divided by the increase in revenue, from 2006 to 2007 was 34 percent.
Backlog for capital equipment orders for the Company's Rig Technology segment at December 31, 2007 increased to a record $9.0 billion, compared to $8.0 billion at September 30, 2007. New orders during the quarter were a record $2.2 billion. The Company's backlog for capital equipment continued to increase as a result of the strong demand for its drilling equipment products, particularly for international offshore rigs.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, "We enjoyed a very successful 2007. Each of our three segments reported higher 2007 sales compared to the prior year, and we enter 2008 with a very healthy backlog of equipment and technology to deliver to our customers. I am very proud of all the contributions made by our employees in helping us deliver quality equipment and services. We look forward to continuing to help our customers retool the world's rig fleet after years of underinvestment."
Fourth quarter revenues for the Rig Technology segment were $1,593.8 million, an increase of 5 percent from the third quarter of 2007 and an increase of 40 percent from the fourth quarter of 2006. Operating profit for this segment was $410.5 million, or 25.8 percent of sales, an increase of 10 percent from the third quarter of 2007. Operating profit flow-through from the third quarter of 2007 to the fourth quarter of 2007 was 51 percent, due to a favorable mix of aftermarket sales and higher margins on rig fabrication projects. Operating profit flow-through from the fourth quarter of 2006 to the fourth quarter of 2007 was 40 percent. Revenue out of backlog for the segment rose 3 percent sequentially and 53 percent year-over-year, to $1,182.7 million for the fourth quarter of 2007, as the segment continued to expand its manufacturing operations.
Revenues for the fourth quarter of 2007 for the Petroleum Services & Supplies segment were $817.6 million, up 2 percent compared to third quarter 2007 results and up 22 percent compared to fourth quarter 2006 results. Operating profit was $189.2 million, or 23.1 percent of revenue, a decrease of 2 percent from the third quarter of 2007 and an increase of 16 percent from the fourth quarter of 2006. Operating profit flow-through from the fourth quarter of 2006 to the fourth quarter of 2007 was 17 percent. Operating margins declined slightly both sequentially and year- over-year, due to a variety of factors including international expansion costs. International sales increased 6 percent from the third quarter of 2007 to the fourth quarter of 2007, while North America sales were essentially flat.
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