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National Oilwell (NOV) Posts Narrower-Than-Expected Q2 Loss

National Oilwell Varco, Inc. NOV reported adjusted loss of 7 cents per share for second-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of 11 cents. Particularly, better-than-expected revenues from the Completion & Production Solutions segment led to this outperformance. However, the bottom line came wider than the year-ago loss of 4 cents due to weakness in the Rig Technologies and the Wellbore Technologies unit.

Total revenues of $1.50 billion underperformed the Zacks Consensus Estimate of $1.54 billion and also dipped 29.8% from the year-ago number of $2.13 billion.

The oil & gas industry is suffering heavy economic damages triggered by the COVID-19 pandemic that drastically affected drilling activity. Against this backdrop, National Oilwell is aggressively curbing expenses and driving cash flow through more prudent strategies and a disciplined working capital deployment.

Segmental Performance

Rig Technologies: Revenues summed $476 million, which missed the Zacks Consensus Estimate of $498 million and also compared unfavorably with the year-ago quarter’s $671 million, thanks to a drop in the global rig activity and a decline in aftermarket revenues, resulting from coronavirus-induced logistics troubles. The unit’s adjusted EBITDA of $14 million decreased from the year-earlier quarter’s $74 million.

Wellbore Technologies: Segmental revenues of $442 million lagged the Zacks Consensus Estimate of $494 million and also fell 48% year over year as a result of reduced drilling operations in North America and Latin America. Meanwhile, the unit’s adjusted EBITDA of $42 million deteriorated from the prior-year’s $134 million.

Completion & Production Solutions: Revenues of $611 million outperformed the Zacks Consensus Estimate of $600 million but dropped 7.84% from $663 million in the year-earlier quarter. This could be attributable to dwindling situations in the global completions market and logistical troubles from COVID-19-related restrictions, which were partially offset by a strong execution of existing backlog. The unit recorded adjusted EBITDA of $68 million, up 30.8% from the year-ago figure of $52 million.

National Oilwell Varco, Inc. Price, Consensus and EPS Surprise

National Oilwell Varco, Inc. Price, Consensus and EPS Surprise

National Oilwell Varco, Inc. price-consensus-eps-surprise-chart | National Oilwell Varco, Inc. Quote

Backlog

Capital equipment order backlog for Rig Technologies was $2.79 billion as of Jun 30, 2020 including $74 million worth of new orders.

Meanwhile, the Completion & Production Solutions’ backlog for capital equipment orders totalled $1 billion at the end of the second quarter. The figure included $196 million worth of new orders.

Balance Sheet

As of Jun 30, 2020, the company had cash and cash equivalents of $1.45 billion and long-term debt of $2.03 billion. The total debt-to-total capitalization was 26.8%.

Zacks Rank & Key Picks

National Oilwell carries a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energyspace are Royal Dutch Shell PLC RDS.A, TC PipeLines LP TCP and NextDecade Corporation NEXT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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