Global large-cap energy equipment maker
National Oilwell Varco Inc.
) reported strong second-quarter 2014 earnings, buoyed by growing
demand for oilfield equipment.
Earnings per share (excluding one-time items) came in at $1.61,
surpassing the Zacks Consensus Estimate of $1.45 and improving from
the year-ago adjusted profit of $1.39.
National Oilwell Varco, Inc - Earnings Surprise
Quarterly revenues increased 12.3% year over year from $4,680.0
million to $5,255.0 million but fell short of the Zacks Consensus
Estimate of $5,631.0 million.
Up to the first quarter of 2014, the company operated through three
segments: Rig Technology, Petroleum Services and Supplies, and
Distribution & Transmission. From the quarter under review,
National Oilwell has started to report its operations through four
segments, namely Rig Systems, Rig Aftermarket, Wellbore
Technologies and Completion & Production Solutions.
Revenues came in at $2,372.0 million, up 14.0% from the year-ago
quarter, while revenue from backlog was $2,070.0 million. Moreover,
the unit's operating profit increased significantly (by 27.5% year
over year) to $501.0 million. Operating margin, at 21.1%, also came
ahead of 18.9% in the year-ago period. Oilfield equipment's
significant demand during the quarter aided the results.
The segment generated revenues of $785.0 million, up 17.2% from the
year-ago period, while operating profit improved 14.8% from the
second quarter of 2013 to $217.0 million. However, operating margin
was 27.6%, reflecting a decline from 28.2% in the year-ago quarter.
The segment's revenues climbed 18.3% year over year to $1,446.0
million. Operating profit was $269.0 million, up 38.0% from the
year-earlier quarter. Operating margin for the unit came in at
18.6%, up from 16.0% in second-quarter 2013.
Completion & Production Solutions:
Revenues for the segment were recorded at $1,127.0 million, up 6.6%
from $1,057.0 million in the year ago quarter, owing to higher
demand for completion and production equipment. On the flip side,
the unit's operating profit came in at $158.0 million, down 3.1%
year over year. Moreover, operating margin was 14.0%, lower than
15.4% in the year ago quarter.
Capital equipment orders' backlog for Rig Systems was $15,390
million as of Jun 30, 2014, up 20.0% from the corresponding quarter
Moreover, Completion & Production Solutions segment reported a
backlog of $2,140.0 million in capital equipment order as of Jun
30, 2014. The figure increased 44.0% from the year ago quarter.
At the end of the second quarter, the company had cash on hand of
$3,885.0 million and long-term debt of $3,148.0 million. The
debt-to-capitalization ratio stood at approximately 12.8%.
Zacks Rank & Stock Picks
National Oilwell Varco currently retains a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the same
industry like Cameron International Corporation (
), Weatherford International plc (
) and Dril-Quip Inc. (
). Cameron and Weatherford sport a Zacks Rank #1 (Strong Buy),
while Dril-Quip carries a Zacks Rank #2 (Buy).
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NATL OILWELL VR (NOV): Free Stock Analysis
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