Oilfield services company
National Oilwell Varco
(
NOV
) reported stellar fourth quarter and full year 2011 results,
helped by robust activity levels across all business segments and
benefits from the Ameron acquisition.
Earnings per share (excluding transaction charges) came in at
$1.37, comfortably above the Zacks Consensus Estimate of $1.30 and
the year-ago profit of $1.05.
For full-year 2011, the company earned $4.77 per share, up 16.6%
from $4.09 in the prior year. The reported results also surpassed
our earnings projection of $4.69.
Quarterly revenue rose 34.3% year over year - from $3,172.0
million to $4,259.0 million - and was 6.4% above our
projection.
National Oilwell generated revenues of $14,658 million in fiscal
2011, compared with $12,156 million in 2010. The fiscal result also
breezed past the Zacks Consensus Estimate of $14,400 million.
Segmental Performance
Rig Technology:
Revenue in the Rig Technology segment increased 31.8% year over
year to $2,316.0 million in the quarter, while revenue out of
backlog was up 40% from the corresponding period last year.
The segment's quarterly operating profit was up 20.4% year over
year at $603 million. Rig Technology's profitability during the
quarter was helped by higher demand for aftermarket parts, services
and capital spares. Operating margin, at 26.0%, however, dipped
from 28.5% in the year-ago period.
Petroleum Services & Supplies:
The company's Petroleum Services & Supplies segment achieved
revenues of $1,570.0 million, up 38.1% from the year-ago period,
while operating profit rose 77.1% from the fourth quarter of 2010
to $301 million.
Operating margin was 19.2% versus 15.0% in the year-ago quarter.
The positive comparisons were due to strong contributions from the
Fiberglass Composite Pipe segment of Ameron (acquired during the
quarter).
Distribution Services:
Distribution Service revenues were up 32.4% year over year at $560
million in fourth quarter. Operating profit was $45 million,
compared to $30 million in the year-earlier quarter. Operating
margin was 8.0%, up from 7.1% in the fourth quarter of 2010. The
segment results were helped by strong performance in the Water
Transmission and Infrastructure Products segments of Ameron.
Backlog
During the quarter, National Oilwell Varco added a record
$1,670.0 million worth of orders to its capital equipment
backlog.
Backlog for capital equipment orders for the company's Rig
Technology segment was $10,160.0 million at December 31, 2011,
almost double the prior-year quarter level.
Balance Sheet
As of December 31, 2011, the company had cash on hand of
$3,535.0 million and long-term debt of $510 million. The
debt-to-capitalization ratio stood at approximately 2.8%.
Our Recommendation
National Oilwell Varco, which ranks ahead of
Cameron International Corp.
(
CAM
) as the biggest U.S. maker of oilfield equipment, currently
retains a Zacks #2 Rank, which translates into a short-term Buy
rating.
We have an optimistic outlook on National Oilwell's performance
for 2012, based on its sound financial profile, solid backlog and
an efficient management team. The company's large installed base of
rigs worldwide provides for a steady recurring revenue stream
through demand for maintenance, parts and other expendable
products.
CAMERON INTL (
CAM
): Free Stock Analysis Report
NATL OILWELL VR (
NOV
): Free Stock Analysis Report
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