HOUSTON--(BUSINESS WIRE)--Feb. 6, 2008--National Oilwell Varco,
Inc. (NYSE:NOV) today 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."
Rig Technology
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.
Petroleum Services & Supplies
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.
Distribution Services
Fourth quarter revenues for the Distribution Services segment were
$365.7 million, up 1 percent from the third quarter of 2007. Fourth
quarter operating profit declined from the third quarter to $20.9
million or 5.7 percent of sales due to lower margins on North America
sales and international expansion costs.
The Company has scheduled a conference call for February 6, 2008,
at 9:00 a.m. Central Time to discuss fourth quarter and 2007 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 303-262-2211
prior to the scheduled start time.
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.
NATIONAL OILWELL VARCO, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
December 31,
2007 2006
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,841.8 $ 957.4
Receivables, net 2,099.8 1,614.6
Inventories, net 2,574.7 1,828.8
Costs in excess of billings 643.5 308.9
Deferred income taxes 131.5 101.6
Prepaid and other current assets 302.5 154.3
------------ ------------
Total current assets 7,593.8 4,965.6
Property, plant and equipment, net 1,197.3 1,022.1
Deferred income taxes 55.6 56.1
Goodwill 2,445.1 2,244.7
Intangibles, net 774.1 705.2
Other assets 49.0 25.6
------------ ------------
$12,114.9 $9,019.3
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 604.0 $ 505.2
Accrued liabilities 1,761.4 1,420.2
Billings in excess of costs 1,396.1 564.4
Current portion of long-term debt and
short-term borrowings 152.8 5.6
Accrued income taxes 112.4 169.8
------------ ------------
Total current liabilities 4,026.7 2,665.2
Long-term debt 737.9 834.7
Deferred income taxes 564.3 389.0
Other liabilities 61.8 71.4
------------ ------------
Total liabilities 5,390.7 3,960.3
------------ ------------
Commitments and contingencies
Minority interest 62.8 35.5
------------ ------------
Stockholders' equity:
Common stock - par value $.01; 356,867,498
and 351,143,326 shares issued and
outstanding at December 31, 2007 and
December 31, 2006 (Note 1) 3.6 3.5
Additional paid-in capital (Note 1) 3,617.2 3,460.0
Accumulated other comprehensive income 195.0 46.1
Retained earnings 2,845.6 1,513.9
------------ ------------
6,661.4 5,023.5
------------ ------------
$12,114.9 $9,019.3
============ ============
Note 1: 2006 restated to reflect a two-for-one stock split effected as
a 100 percent stock dividend in September 2007.
NATIONAL OILWELL VARCO, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In millions, except per share data)
Three Months Ended Years Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenue:
Rig technology $1,593.8 $1,136.5 $5,744.7 $3,584.9
Petroleum services and
supplies 817.6 670.0 3,061.0 2,425.0
Distribution services 365.7 370.5 1,423.7 1,369.6
Eliminations (118.2) (98.3) (440.4) (353.7)
--------- --------- --------- ---------
Total revenue 2,658.9 2,078.7 9,789.0 7,025.8
Gross profit 791.1 567.4 2,830.2 1,760.6
Gross profit % 29.8% 27.3% 28.9% 25.1%
Selling, general, and
administrative 216.4 186.2 785.8 649.5
--------- --------- --------- ---------
Operating profit 574.7 381.2 2,044.4 1,111.1
Interest and financial costs (13.4) (12.1) (50.3) (48.7)
Interest income 20.9 8.4 52.6 18.1
Other income (expense), net (15.9) (8.2) (17.8) (31.3)
--------- --------- --------- ---------
Income before income taxes and
minority interest 566.3 369.3 2,028.9 1,049.2
Provision for income taxes 185.3 127.3 675.8 355.7
--------- --------- --------- ---------
Income before minority
interest 381.0 242.0 1,353.1 693.5
Minority interest in income of
consolidated subsidiaries 4.3 2.8 16.0 9.5
--------- --------- --------- ---------
Net income $ 376.7 $ 239.2 $1,337.1 $ 684.0
========= ========= ========= =========
Net income per share (Note 1):
Basic $ 1.06 $ 0.68 $ 3.77 $ 1.95
========= ========= ========= =========
Diluted $ 1.05 $ 0.68 $ 3.76 $ 1.93
========= ========= ========= =========
Weighted average shares
outstanding (Note 1):
Basic 355.8 351.1 354.4 350.4
========= ========= ========= =========
Diluted 358.8 354.0 355.4 353.6
========= ========= ========= =========
Note 1: All periods reflect a two-for-one stock split effected as a
100 percent dividend in September 2007.
NATIONAL OILWELL VARCO, INC.
OPERATING PROFIT - SUPPLEMENTAL SCHEDULE (Unaudited)
(In millions)
Three Months Ended Years Ended
--------------------------------- -------------------
December 31, September 30, December 31,
------------------- ------------- -------------------
2007 2006 2007 2007 2006
--------- --------- ------------- --------- ---------
Revenue:
Rig technology $1,593.8 $1,136.5 $1,521.9 $5,744.7 $3,584.9
Petroleum
services and
supplies 817.6 670.0 805.5 3,061.0 2,425.0
Distribution
services 365.7 370.5 361.3 1,423.7 1,369.6
Eliminations (118.2) (98.3) (109.2) (440.4) (353.7)
--------- --------- ------------- --------- ---------
Total
revenue $2,658.9 $2,078.7 $2,579.5 $9,789.0 $7,025.8
========= ========= ============= ========= =========
Operating
profit:
Rig technology $ 410.5 $ 225.5 $ 373.5 $1,393.6 $ 608.5
Petroleum
services and
supplies 189.2 163.6 193.6 731.6 545.6
Distribution
services 20.9 28.4 25.1 94.0 94.0
Unallocated
expenses and
eliminations (45.9) (36.3) (46.8) (174.8) (137.0)
--------- --------- ------------- --------- ---------
Total
operating
profit $ 574.7 $ 381.2 $ 545.4 $2,044.4 $1,111.1
========= ========= ============= ========= =========
Operating profit
%:
Rig technology 25.8% 19.8% 24.5% 24.3% 17.0%
Petroleum
services and
supplies 23.1% 24.4% 24.0% 23.9% 22.5%
Distribution
services 5.7% 7.7% 6.9% 6.6% 6.9%
Other
unallocated -- -- -- -- --
--------- --------- ------------- --------- ---------
Total
operating
profit % 21.6% 18.3% 21.1% 20.9% 15.8%
========= ========= ============= ========= =========
Note: Stock-based compensation expense and integration costs have been
allocated to the respective business segments and unallocated
expenses for all periods presented.
NATIONAL OILWELL VARCO, INC.
AS ADJUSTED EBITDA RECONCILIATION EXCLUDING INTEGRATION COSTS
(Unaudited)
(In millions)
Three Months Ended Years Ended
------------------------------ -----------------
December 31, September 30, December 31,
---------------- ------------- -----------------
2007 2006 2007 2007 2006
-------- ------- ------------- -------- --------
Reconciliation of
EBITDA (Note 1):
GAAP net income $376.7 $239.2 $366.0 $1,337.1 $ 684.0
Provision for income
taxes 185.3 127.3 177.8 675.8 355.7
Interest expense 13.4 12.1 11.5 50.3 48.7
Depreciation and
amortization 58.5 41.9 56.4 214.1 160.6
Integration costs -- -- -- -- 7.9
-------- ------- ------------- -------- --------
EBITDA (Note 1) $633.9 $420.5 $611.7 $2,277.3 $1,256.9
======== ======= ============= ======== ========
Note 1: EBITDA means earnings before interest, taxes,
depreciation, amortization, and integration costs, and is a non-
GAAP measurement. Management uses EBITDA because it believes it
provides useful supplemental information regarding the Company's
on-going economic performance and, therefore, uses this
financial measure internally to evaluate and manage the
Company's 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
SOURCE: National Oilwell Varco, Inc.
