National Oilwell Varco Announces Fourth Quarter and Full Year 2015 Earnings
National Oilwell Varco, Inc. (NYSE:NOV) today reported fourth quarter 2015 net income of $85 million, or $0.23 per fully diluted share, excluding other items, down from $0.61 in the third quarter of 2015 on a comparable basis. Other items included pre-tax charges of $1,634 million for goodwill and other intangible asset write-downs, $139 million for restructuring and other charges (which included inventory write-downs, severance and facility closure costs, and other costs), and $7 millionin FX losses due to a currency devaluation in Argentina. GAAP net loss for the quarter was $1,523 million, or $4.06 per fully diluted share.
Revenues for the fourth quarter of 2015 were $2.72 billion, a decrease of 18 percent from the third quarter of 2015 and a decrease of 52 percent from the fourth quarter of 2014. Operating profit for the quarter, excluding other items, was $141 million, or 5.2 percent of revenue. EBITDA for the quarter, excluding other items, was $308 million, or 11.3 percent of revenue, down 40 percent sequentially and 75 percent from the prior year. Operating leverage, or the change in operating profit divided by the change in revenue, excluding other items, was 35 percent from the third quarter of 2015 to the fourth quarter of 2015.
Revenues reported for the full year 2015 were $14.76 billion, and net loss was $769 million, or $1.99 per fully diluted share. Excluding other items, net income was $1,083 million for the full year 2015, or $2.80 per fully diluted share. Operating profit for the full year, excluding other items, was $1.63 billion, or 11.1 percent of revenue. Year-over-year operating leverage was 32 percent, excluding other items from both periods. EBITDA for the full year, excluding other items, was $2.28 billion, or 15.5 percent of revenue.
Clay C. Williams, Chairman, President and CEO of National Oilwell Varco, stated, “Our team executed well in 2015 in a very tough market. Tumbling oil prices brought capital austerity and sharply lower oilfield activity, which is intensifying as we enter 2016. Nevertheless, our consolidated revenue outperformed the decline in global rig count, and our cost reductions and operational efficiencies enabled solid cash generation. Together with our strong balance sheet, this allowed us to invest in our business for future growth, as well as return significant capital to our shareholders. We are well positioned to take advantage of the opportunities we expect to emerge during 2016.
This ‘lower-for-longer’ market decline will provide the foundation for an eventual recovery, as oil depletion marches onward and demand continues to grow. We nevertheless recognize that the timing of the recovery remains uncertain and that we face additional headwinds in the year ahead. I am grateful for the hard work and dedication of our NOV employees and am confident in their ability to navigate the tough road ahead. We remain resolute in our focus on reducing costs, improving execution, doing more with less and, ultimately, emerging from the depths of this cycle well positioned for the upturn.”
Segment results (excluding other items):
Rig Systems Segment
Rig Systems generated revenues of $1 billion, a decrease of 32 percent from the third quarter of 2015 and a decrease of 60 percent from the fourth quarter of 2014. Operating profit was $160 million, or 15.8 percent of sales. Sequential quarterly operating leverage was 24 percent. EBITDA was $184 million, or 18.1 percent of sales. Revenue out of backlog was $843 million.
Backlog for capital equipment orders for Rig Systems at December 31, 2015 was $6.08 billion, down 24 percent from the third quarter of 2015, and down 52 percent from the end of the fourth quarter of 2014. New orders during the quarter were $89 million.
Rig Aftermarket Segment
Rig Aftermarket generated revenues of $569 million, flat from the third quarter of 2015 and a decrease of 33 percent from the fourth quarter of 2014. Operating profit was $127 million, or 22.3 percent of sales. EBITDA was $135 million, or 23.7 percent of sales.
Wellbore Technologies Segment
Wellbore Technologies generated revenues of $757 million, a decrease of 9 percent from the third quarter of 2015 and a decrease of 50 percent from the fourth quarter of 2014. Operating loss was $31 million, or negative 4.1 percent of sales. Sequential quarterly operating leverage was 69 percent. EBITDA was $68 million, or 9.0 percent of sales.
Completion & Production Solutions Segment
Completion & Production Solutions generated revenues of $746 million, a decrease of 7 percent from the third quarter of 2015 and a decrease of 44 percent from the fourth quarter of 2014. Operating profit was $34 million, or 4.6 percent of sales. Sequential quarterly operating leverage was 56 percent. EBITDA was $86 million, or 11.5 percent of sales.
Backlog for capital equipment orders for Completion & Production Solutions at December 31, 2015 was $969 million, down 17 percent from the third quarter of 2015, and down 46 percent from the fourth quarter of 2014. New orders during the quarter were $272 million.
The Company has scheduled a conference call for February 3, 2016, at 8:00 a.m. Central Time to discuss fourth 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 1-866-312-4825 within North Americaor 1-720-634-2948 outside of North America five to ten minutes prior to the scheduled start time and asking 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, and the provision of oilfield 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.
