National Oilwell Varco, Inc. reported that for its second quarter ended June 30, 2012 it earned net income of $605 million, or $1.42 per fully diluted share. Earnings per share increased 26 percent compared to the second quarter of 2011 and were sequentially flat compared to the first quarter of 2012. Excluding transaction charges of $28 million pre-tax, second quarter 2012 net income was $626 million, or $1.46 per fully diluted share.
The Company’s revenues for the second quarter of 2012 were $4.7 billion, which improved 10 percent from the first quarter of 2012 and 35 percent from the second quarter of 2011. Operating profit for the second quarter of 2012 was $907 million or 19.2 percent of sales, excluding transaction charges. Year-over-year second quarter operating profit increased 27 percent and sequentially second quarter operating profit increased three percent.
Backlog for capital equipment orders for the Company’s Rig Technology segment was $11.28 billion at June 30, 2012, up nine percent from the end of the first quarter and up 46 percent from the end of the second quarter of 2011. During the second quarter of 2012 the Company’s Rig Technology segment booked incoming new capital equipment orders of $2.73 billion (through a combination of $2.22 billion in new orders and $0.51 billion in orders through acquisitions completed during the quarter) offset by revenues out of backlog of $1.82 billion.
Pete Miller, Chairman, President and CEO of National Oilwell Varco, remarked, “Our Company achieved strong earnings this quarter, thanks to the hard work of our many dedicated employees. All three segments posted higher sequential and year-over-year revenues and operating profit, and we are pleased at the high level of demand we continue to see for new drilling equipment.
The Company continues to expand organically as well as through acquisitions. We closed six transactions during the quarter for total consideration of $2.0 billion, to strengthen the technology, product and service offerings we provide our oil and gas customers around the globe. Most markets we serve have remained buoyant, despite lower commodity prices, and we therefore expect solid results for the second half of the year.”
Second quarter revenues for the Rig Technology segment were $2.41 billion, an increase of six percent from the first quarter of 2012 and an increase of 27 percent from the second quarter of 2011. Operating profit for this segment was $571 million, or 23.7 percent of revenue. Operating profit flow-through (change in operating profit divided by the change in revenue) was 14 percent sequentially and 11 percent from the second quarter of 2011 to the second quarter of 2012. Excluding results from two acquisitions closed during the quarter, sales increased two percent at 31 percent flow-through, for 24.5 percent operating margin. Revenue out of backlog for the segment increased six percent sequentially and increased 31 percent year-over-year, to $1.82 billion for the second quarter of 2012.
Petroleum Services & Supplies
Revenues for the second quarter of 2012 for the Petroleum Services & Supplies segment were $1.78 billion, up four percent compared to first quarter 2012 results and up 31 percent from the second quarter of 2011. Operating profit was $393 million, or 22.1 percent of revenue, an increase of one percent from the first quarter of 2012 and an increase of 58 percent from the second quarter of 2011. Operating profit flow-through was 35 percent from the second quarter of 2011 to the second quarter of 2012, and seven percent from the first quarter of 2012 to the second quarter of 2012. Higher sequential sales in the U.S. and modest growth in international markets were partly offset by second quarter seasonal declines in Canada.
Distribution & Transmission
The Distribution & Transmission segment generated second quarter revenues of $780 million, which were up 38 percent from the first quarter of 2012 and up 84 percent from the second quarter of 2011, due mostly to one-month’s contribution of Wilson Supply, acquired during the quarter. Second quarter operating profit was$54 million or 6.9 percent of revenue, up 26 percent from the first quarter of 2012 and up 108 percent from the second quarter of 2011. Sequential flow-through was five percent, and year-over-year flow-through was eight percent. Excluding results from the acquisition, revenues grew five percent at 14 percent flow-through, as strong domestic and international sales fully offset the seasonal break-up declines in Canada.
The Company has scheduled a conference call for July 26, 2012, at 8:00 a.m. Central Time to discuss second quarter 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 1-800-447-0521 within North America or 1-847-413-3238 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.