UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
October 25, 2012
Date of Report (Date of earliest event reported)
NATIONAL OILWELL VARCO, INC.
(Exact name of registrant as specified in its charter)
Delaware | 1-12317 | 76-0475815 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
7909 Parkwood Circle Dr. Houston, Texas |
77036 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: 713-346-7500
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On October 25, 2012, National Oilwell Varco, Inc. issued a press release announcing earnings for the third quarter ended September 30, 2012 and conference call in connection therewith. A copy of the release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
The information contained in this Current Report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibit is provided as part of the information furnished under Item 2.02 of this Current Report on Form 8-K:
99.1 | National Oilwell Varco, Inc. press release dated October 25, 2012 announcing the earnings results for the third quarter ended September 30, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 25, 2012 | NATIONAL OILWELL VARCO, INC. | |||||
/s/ Raymond W. Chang | ||||||
Raymond W. Chang | ||||||
Vice President |
Index to Exhibits
99.1 | National Oilwell Varco, Inc. press release dated October 25, 2012 announcing the earnings results for the third quarter ended September 30, 2012. |
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EXHIBIT 99.1
NEWS |
Contact: Clay Williams | |
(713) 346-7606 |
FOR IMMEDIATE RELEASE
NATIONAL OILWELL VARCO ANNOUNCES THIRD QUARTER 2012 RESULTS
HOUSTON, TX, October 25, 2012 National Oilwell Varco, Inc. (NYSE: NOV) today reported that for the third quarter ended September 30, 2012 it earned net income of $612 million, or $1.43 per fully diluted share, compared to second quarter ended June 30, 2012 net income of $605 million, or $1.42 per fully diluted share. Earnings per share increased 14 percent compared to the third quarter 2011 earnings of $1.25 per fully diluted share.
Transaction charges for the third quarter of 2012 were $57 million pre-tax. Net income for the third quarter of 2012 excluding transaction charges was $650 million, or $1.52 per fully diluted share. This compares to second quarter of 2012 net income of $626 million, or $1.46 per fully diluted share, and third quarter 2011 net income of $536 million or $1.26 per fully diluted share, excluding transaction charges from all periods.
The Companys revenues for the third quarter of 2012 were $5.3 billion, an increase of 12 percent from the second quarter of 2012 and an increase of 42 percent from the third quarter of 2011. Operating profit for the third quarter of 2012 was $946 million or 17.8 percent of sales, excluding transaction charges. Sequentially, third quarter operating profit increased four percent, resulting in operating profit flow-through (change in operating profit divided by the change in revenue) of seven percent, excluding transaction charges. Year-over-year third quarter operating profit increased 22 percent, resulting in operating profit flow-through of 11 percent, excluding transaction charges.
During the third quarter of 2012 the Companys Rig Technology segment booked $2.29 billion in new orders. Backlog for capital equipment orders for the Companys Rig Technology segment at September 30, 2012 was $11.66 billion, up three percent from the end of the second quarter of 2012.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, Outstanding execution enabled the Company to achieve solid earnings again this quarter. We are pleased by the level of bookings into our capital equipment backlog for the Rig Technology segment during the third quarter. We continue to see steady activity around new orders, and expect high demand for deepwater rigs to drive solid orders again in the fourth quarter. Demand for other NOV products and services continued to grow in international markets, but softening demand in North America partly offset this trend during the third quarter.
Our Company has completed a number of strategic initiatives this year, and I am pleased to report that these are going very well. Our investments will further strengthen National Oilwell Varcos capabilities to service our customers, as well as provide future opportunities for our employees and earnings growth for our shareholders.
Rig Technology
Third quarter revenues for the Rig Technology segment were a record $2.55 billion, an increase of six percent from the second quarter of 2012 and an increase of 29 percent from the third quarter of 2011. Operating profit for this segment was $610 million, or 23.9 percent of sales. Operating profit flow-through was 27 percent sequentially and 14 percent from the third quarter of 2011 to the third quarter of 2012. Revenue out of backlog for the segment increased five percent sequentially and increased 36 percent year-over-year, to $1.91 billion for the third quarter of 2012.
Petroleum Services & Supplies
Revenues for the third quarter of 2012 for the Petroleum Services & Supplies segment were $1.72 billion, down three percent compared to second quarter 2012 results and up 18 percent from the third quarter of 2011. Operating profit was $383 million, or 22.3 percent of revenue, up 28 percent from the third quarter of 2011. Operating profit flow-through was 33 percent from the third quarter of 2011 to the third quarter of 2012.
Distribution & Transmission
The Distribution & Transmission segment generated third quarter revenues of $1.32 billion, which were up 69 percent from the second quarter of 2012 and were up 174 percent from the third quarter of 2011, due mostly to previously disclosed mergers completed during the second quarter and third quarters of 2012. Third quarter operating profit was $78 million or 5.9 percent of sales. Operating profit flow-through was four percent sequentially and five percent from the third quarter of 2011 to the third quarter of 2012.
The Company has scheduled a conference call for October 25, 2012, 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 Varcos 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 1-800-446-1671 within North America or 1-847-413-3362 outside of North America five to ten minutes prior to the scheduled start time, and ask for the National Oilwell Varco Earnings Conference Call.
National Oilwell Varco is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production operations, the provision of oilfield services, and supply chain integration services to the upstream oil and gas industry.
Statements made in this press release that are forward-looking in nature are intended to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and may involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to documents filed by National Oilwell Varco with the Securities and Exchange Commission, including the Annual Report on Form 10-K, which identify significant risk factors which could cause actual results to differ from those contained in the forward-looking statements.
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NATIONAL OILWELL VARCO, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
September 30, | December 31, | |||||||
2012 | 2011 | |||||||
(Unaudited) | ||||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 1,702 | $ | 3,535 | ||||
Receivables, net |
4,033 | 3,291 | ||||||
Inventories, net |
5,989 | 4,030 | ||||||
Costs in excess of billings |
1,065 | 593 | ||||||
Deferred income taxes |
286 | 336 | ||||||
Prepaid and other current assets |
592 | 325 | ||||||
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Total current assets |
13,667 | 12,110 | ||||||
Property, plant and equipment, net |
2,818 | 2,445 | ||||||
Deferred income taxes |
320 | 267 | ||||||
Goodwill |
6,940 | 6,151 | ||||||
Intangibles, net |
4,431 | 4,073 | ||||||
Investment in unconsolidated affiliates |
370 | 391 | ||||||
Other assets |
116 | 78 | ||||||
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$ | 28,662 | $ | 25,515 | |||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 1,365 | $ | 901 | ||||
Accrued liabilities |
2,363 | 2,376 | ||||||
Billings in excess of costs |
1,037 | 865 | ||||||
Current portion of long-term debt and short-term borrowings |
354 | 351 | ||||||
Accrued income taxes |
194 | 709 | ||||||
Deferred income taxes |
368 | 214 | ||||||
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Total current liabilities |
5,681 | 5,416 | ||||||
Long-term debt |
1,175 | 159 | ||||||
Deferred income taxes |
1,802 | 1,852 | ||||||
Other liabilities |
321 | 360 | ||||||
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Total liabilities |
8,979 | 7,787 | ||||||
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Commitments and contingencies |
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Stockholders equity: |
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Common stock par value $.01; 1 billion shares authorized; 426,879,173 and 423,900,601 shares issued and outstanding at September 30, 2012 and December 31, 2011 |
4 | 4 | ||||||
Additional paid-in capital |
8,718 | 8,535 | ||||||
Accumulated other comprehensive income (loss) |
79 | (23 | ) | |||||
Retained earnings |
10,773 | 9,103 | ||||||
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Total National Oilwell Varco stockholders equity |
19,574 | 17,619 | ||||||
Noncontrolling interests |
109 | 109 | ||||||
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Total stockholders equity |
19,683 | 17,728 | ||||||
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$ | 28,662 | $ | 25,515 | |||||
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NATIONAL OILWELL VARCO, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | ||||||||||||||||||
2012 | 2011 | 2012 | 2012 | 2011 | ||||||||||||||||
Revenue: |
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Rig Technology |
$ | 2,547 | $ | 1,970 | $ | 2,405 | $ | 7,211 | $ | 5,472 | ||||||||||
Petroleum Services & Supplies |
1,717 | 1,460 | 1,776 | 5,197 | 4,084 | |||||||||||||||
Distribution & Transmission |
1,315 | 480 | 780 | 2,659 | 1,313 | |||||||||||||||
Eliminations |
(260 | ) | (170 | ) | (227 | ) | (711 | ) | (470 | ) | ||||||||||
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Total revenue |
5,319 | 3,740 | 4,734 | 14,356 | 10,399 | |||||||||||||||
Gross profit |
1,411 | 1,170 | 1,321 | 4,003 | 3,251 | |||||||||||||||
Gross profit % |
26.5 | % | 31.3 | % | 27.9 | % | 27.9 | % | 31.3 | % | ||||||||||
Selling, general, and administrative |
465 | 392 | 414 | 1,269 | 1,133 | |||||||||||||||
Other costs |
57 | 6 | 28 | 92 | 29 | |||||||||||||||
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Operating profit |
889 | 772 | 879 | 2,642 | 2,089 | |||||||||||||||
Interest and financial costs |
(10 | ) | (8 | ) | (9 | ) | (27 | ) | (31 | ) | ||||||||||
Interest income |
2 | 5 | 3 | 8 | 13 | |||||||||||||||
Equity income in unconsolidated affiliates |
7 | 11 | 19 | 43 | 34 | |||||||||||||||
Other income (expense), net |
(14 | ) | | (5 | ) | (32 | ) | (26 | ) | |||||||||||
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Income before income taxes |
874 | 780 | 887 | 2,634 | 2,079 | |||||||||||||||
Provision for income taxes |
265 | 252 | 285 | 819 | 667 | |||||||||||||||
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Net income |
609 | 528 | 602 | 1,815 | 1,412 | |||||||||||||||
Net loss attributable to noncontrolling interests |
(3 | ) | (4 | ) | (3 | ) | (8 | ) | (8 | ) | ||||||||||
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Net income attributable to Company |
$ | 612 | $ | 532 | $ | 605 | $ | 1,823 | $ | 1,420 | ||||||||||
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Net income attributable to Company per share: |
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Basic |
$ | 1.44 | $ | 1.26 | $ | 1.42 | $ | 4.29 | $ | 3.37 | ||||||||||
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Diluted |
$ | 1.43 | $ | 1.25 | $ | 1.42 | $ | 4.28 | $ | 3.35 | ||||||||||
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Weighted average shares outstanding: |
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Basic |
425 | 422 | 425 | 425 | 421 | |||||||||||||||
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Diluted |
427 | 425 | 427 | 426 | 424 | |||||||||||||||
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NATIONAL OILWELL VARCO, INC.
OPERATING PROFIT AS ADJUSTED SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | ||||||||||||||||||
2012 | 2011 | 2012 | 2012 | 2011 | ||||||||||||||||
Revenue: |
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Rig Technology |
$ | 2,547 | $ | 1,970 | $ | 2,405 | $ | 7,211 | $ | 5,472 | ||||||||||
Petroleum Services & Supplies |
1,717 | 1,460 | 1,776 | 5,197 | 4,084 | |||||||||||||||
Distribution & Transmission |
1,315 | 480 | 780 | 2,659 | 1,313 | |||||||||||||||
Eliminations |
(260 | ) | (170 | ) | (227 | ) | (711 | ) | (470 | ) | ||||||||||
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Total revenue |
$ | 5,319 | $ | 3,740 | $ | 4,734 | $ | 14,356 | $ | 10,399 | ||||||||||
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Operating profit: |
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Rig Technology |
$ | 610 | $ | 528 | $ | 571 | $ | 1,732 | $ | 1,467 | ||||||||||
Petroleum Services & Supplies |
383 | 299 | 393 | 1,164 | 794 | |||||||||||||||
Distribution & Transmission |
78 | 37 | 54 | 175 | 91 | |||||||||||||||
Unallocated expenses and eliminations |
(125 | ) | (86 | ) | (111 | ) | (337 | ) | (234 | ) | ||||||||||
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Total operating profit (before other costs) |
$ | 946 | $ | 778 | $ | 907 | $ | 2,734 | $ | 2,118 | ||||||||||
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Operating profit %: |
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Rig Technology |
23.9 | % | 26.8 | % | 23.7 | % | 24.0 | % | 26.8 | % | ||||||||||
Petroleum Services & Supplies |
22.3 | % | 20.5 | % | 22.1 | % | 22.4 | % | 19.4 | % | ||||||||||
Distribution & Transmission |
5.9 | % | 7.7 | % | 6.9 | % | 6.6 | % | 6.9 | % | ||||||||||
Other unallocated |
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Total operating profit % (before other costs) |
17.8 | % | 20.8 | % | 19.2 | % | 19.0 | % | 20.4 | % | ||||||||||
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NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING OTHER COSTS
(Unaudited)
(In millions)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | June 30, | September 30, | ||||||||||||||||||
2012 | 2011 | 2012 | 2012 | 2011 | ||||||||||||||||
Reconciliation of EBITDA excluding other costs (Note 1): |
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GAAP net income attributable to Company |
$ | 612 | $ | 532 | $ | 605 | $ | 1,823 | $ | 1,420 | ||||||||||
Provision for income taxes |
265 | 252 | 285 | 819 | 667 | |||||||||||||||
Interest expense |
10 | 8 | 9 | 27 | 31 | |||||||||||||||
Depreciation and amortization |
157 | 140 | 157 | 462 | 413 | |||||||||||||||
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EBITDA |
1,044 | 932 | 1,056 | 3,131 | 2,531 | |||||||||||||||
Other costs: |
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Transaction costs |
57 | 6 | 28 | 92 | 12 | |||||||||||||||
Libya asset write-down |
| | | | 17 | |||||||||||||||
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EBITDA excluding other costs (Note 1) |
$ | 1,101 | $ | 938 | $ | 1,084 | $ | 3,223 | $ | 2,560 | ||||||||||
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Note 1: EBITDA excluding other costs means earnings before interest, taxes, depreciation, amortization, and other costs, and is a non-GAAP financial measurement. Management uses EBITDA excluding other costs because it believes it provides useful supplemental information regarding the Companys on-going economic performance and, therefore, uses this financial measure internally to evaluate and manage the Companys operations. The Company has chosen to provide this information to investors to enable them to perform more meaningful comparisons of operating results and as a means to emphasize the results of on-going operations.
CONTACT: | National Oilwell Varco, Inc. |
Clay Williams, (713) 346-7606
Clay.Williams@nov.com
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