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National Oilwell Varco (NOV) Q3 Loss Wider than Expected
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Energy equipment maker National Oilwell Varco Inc. (NOV - Free Report) could not overcome the sharp drop in oil prices and reported wider-than-expected third-quarter 2016 loss. However, successful cost reduction efforts and efficiency gains provided some respite.
Loss per share (excluding one-time items) came in at 34 cents, 6 cents worse than the Zacks Consensus Estimate for a loss of 28 cents.
However, the bottom line compared unfavorably with the year-ago adjusted profit amid deteriorating market conditions.
Third quarter revenues of $1,646 million decreased from $3,306 million a year ago and was also below the Zacks Consensus Estimate of $1,688.5 million.
Rig Systems: Revenues came in at $470 million, down 69% from the year-ago quarter. Moreover, the unit’s operating profit plunged 89% year over year to $32 million. Lower backlog and more projects nearing completion during the quarter dampened the results.
Rig Aftermarket: The segment generated revenues of $322 million, down 44% from the year-ago period, while operating profit dropped 53% from the third quarter of 2015 to $75 million as spare parts demand continue to remain weak due to deteriorating market conditions.
Wellbore Technologies: The segment’s revenues fell 37% year over year to $526 million. Worse, the unit swung to an operating loss of $70 million from a profit of $27 million a year ago amid intense pricing pressures.
Completion & Production Solutions: Revenues for the segment were recorded at $543 million, down 32% from $798 million in the year-ago quarter. The unit recorded operating loss of $10 million, as against income of $70 million in the corresponding period last year. The underperformance mainly stemmed from the negative impact of challenging offshore market.
Costs & Expenses
Adjusted selling, general, and administrative expenses declined $61 million (or 17%) in the quarter from the year-ago period.
Backlog
Capital equipment orders’ backlog for Rig Systems was $2,760 million as of Sep 30, 2016, including $185 million in new orders during the third quarter.
Moreover, Completion & Production Solutions segment reported a backlog of $812 million in capital equipment order as at the end of the third quarter. The figure decreased 31% from the year-ago quarter.
Balance Sheet
At the end of the third quarter, the company had cash and cash equivalents of $1,510 million and long-term debt of $3,210 million. The debt-to-capitalization ratio stood at approximately 17.7%.
Zacks Rank
National Oilwell Varco – which in Jul teamed up with General Electric Co. (GE - Free Report) to provide industry-leading standardized interfaces – holds a Zacks Rank #3 (Hold).
Incorporated in 1959, Houston, TX-based McDermott International is an engineering and construction company, solely focused on the offshore oil and gas business. The company’s expected EPS growth rate for 3 to 5 years is currently 15.50% –– in contrast to the industry growth rate of -1.80%.
Headquartered in Calgary, Alberta, Precision Drilling supplies its customers in the oil and gas industry with drilling, completion and production services. It surpassed estimates in each of the last four quarters at an average rate of 41.51%.
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National Oilwell Varco (NOV) Q3 Loss Wider than Expected
Energy equipment maker National Oilwell Varco Inc. (NOV - Free Report) could not overcome the sharp drop in oil prices and reported wider-than-expected third-quarter 2016 loss. However, successful cost reduction efforts and efficiency gains provided some respite.
Loss per share (excluding one-time items) came in at 34 cents, 6 cents worse than the Zacks Consensus Estimate for a loss of 28 cents.
However, the bottom line compared unfavorably with the year-ago adjusted profit amid deteriorating market conditions.
Third quarter revenues of $1,646 million decreased from $3,306 million a year ago and was also below the Zacks Consensus Estimate of $1,688.5 million.
NATL OILWELL VR Price, Consensus and EPS Surprise
NATL OILWELL VR Price, Consensus and EPS Surprise | NATL OILWELL VR Quote
Segmental Performance
Rig Systems: Revenues came in at $470 million, down 69% from the year-ago quarter. Moreover, the unit’s operating profit plunged 89% year over year to $32 million. Lower backlog and more projects nearing completion during the quarter dampened the results.
Rig Aftermarket: The segment generated revenues of $322 million, down 44% from the year-ago period, while operating profit dropped 53% from the third quarter of 2015 to $75 million as spare parts demand continue to remain weak due to deteriorating market conditions.
Wellbore Technologies: The segment’s revenues fell 37% year over year to $526 million. Worse, the unit swung to an operating loss of $70 million from a profit of $27 million a year ago amid intense pricing pressures.
Completion & Production Solutions: Revenues for the segment were recorded at $543 million, down 32% from $798 million in the year-ago quarter. The unit recorded operating loss of $10 million, as against income of $70 million in the corresponding period last year. The underperformance mainly stemmed from the negative impact of challenging offshore market.
Costs & Expenses
Adjusted selling, general, and administrative expenses declined $61 million (or 17%) in the quarter from the year-ago period.
Backlog
Capital equipment orders’ backlog for Rig Systems was $2,760 million as of Sep 30, 2016, including $185 million in new orders during the third quarter.
Moreover, Completion & Production Solutions segment reported a backlog of $812 million in capital equipment order as at the end of the third quarter. The figure decreased 31% from the year-ago quarter.
Balance Sheet
At the end of the third quarter, the company had cash and cash equivalents of $1,510 million and long-term debt of $3,210 million. The debt-to-capitalization ratio stood at approximately 17.7%.
Zacks Rank
National Oilwell Varco – which in Jul teamed up with General Electric Co. (GE - Free Report) to provide industry-leading standardized interfaces – holds a Zacks Rank #3 (Hold).
Meanwhile, one can look at better-ranked energy players like McDermott International Inc. and Precision Drilling Corp. (PDS - Free Report) . Both carry Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Incorporated in 1959, Houston, TX-based McDermott International is an engineering and construction company, solely focused on the offshore oil and gas business. The company’s expected EPS growth rate for 3 to 5 years is currently 15.50% –– in contrast to the industry growth rate of -1.80%.
Headquartered in Calgary, Alberta, Precision Drilling supplies its customers in the oil and gas industry with drilling, completion and production services. It surpassed estimates in each of the last four quarters at an average rate of 41.51%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>