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National Oilwell Varco (NOV) Q4 Loss Narrower than Expected
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Aggressive cost reduction and improved efficiencies helped energy equipment maker National Oilwell Varco Inc. (NOV - Free Report) report narrower-than-expected fourth-quarter 2016 loss.
Loss per share (excluding one-time items) came in at 15 cents compared with the Zacks Consensus Estimate of a loss of 29 cents.
National Oilwell Varco’s success in implementation and targeted cutting of expenses meant that EBITDA for the quarter was $102 million, reflecting an improvement of $34 million from the third quarter.
However, the bottom line compared unfavorably with the year-ago adjusted profit amid lower customer spending reflecting the severe stress in the oil and gas industry.
Fourth-quarter revenues of $1,692 million decreased from $2,722 million a year ago but were above the Zacks Consensus Estimate of $1,625 million.
Segmental Performance
Rig Systems: Revenues came in at $426 million, down 58% from the year-ago quarter. Moreover, the unit’s operating profit plunged 79% year over year to $40 million. Lower backlog and more projects nearing completion during the quarter dampened the results, which were partly offset by cost cuts.
Rig Aftermarket: The segment generated revenues of $339 million, down 40% from the year-ago period, while operating profit dropped 46% from the fourth quarter of 2015 to $75 million as spare parts' demand remained tepid due to weak market conditions.
Wellbore Technologies: The segment’s revenues fell 30% year over year to $531 million. Worse, the unit’s operating loss deteriorated from a year ago to $75 million amid intense pricing pressure in international markets.
Completion & Production Solutions: Revenues for the segment were recorded at $602 million, down 19% from $746 million in the year-ago quarter. The unit recorded operating profit of $17 million compared with $37 million in the corresponding period last year. The underperformance mainly stemmed from the negative impact of a challenging offshore market.
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise
Adjusted selling, general, and administrative expenses declined $72 million (or 19%) in the quarter from the year-ago period.
Backlog
Capital equipment orders’ backlog for Rig Systems was $2,490 million as of Dec 31, 2016, including $115 million in new orders during the fourth quarter.
Moreover, Completion & Production Solutions segment reported a backlog of $818 million in capital equipment order as at the end of the fourth quarter. The figure decreased 16% from the year-ago quarter but increased 1% sequentially.
Balance Sheet
At the end of 2016, the company had cash and cash equivalents of $1,408 million and long-term debt of $2,708 million. The debt-to-capitalization ratio was approximately 16.2%.
Zacks Rank
National Oilwell Varco – which teamed up last year with General Electric Co. (GE - Free Report) to provide industry-leading standardized interfaces – carries 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 20% as compared with the industry growth rate of just 0.20%.
Houston, TX-based Ultra Petroleum is an independent energy firm engaged in the acquisition, development, exploration and production of oil and gas properties. The company’s operations are focused on the Green River Basin of southwest Wyoming, mainly covering the Pinedale and the Jonah fields. It surpassed estimates in each of the last two quarters.
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National Oilwell Varco (NOV) Q4 Loss Narrower than Expected
Aggressive cost reduction and improved efficiencies helped energy equipment maker National Oilwell Varco Inc. (NOV - Free Report) report narrower-than-expected fourth-quarter 2016 loss.
Loss per share (excluding one-time items) came in at 15 cents compared with the Zacks Consensus Estimate of a loss of 29 cents.
National Oilwell Varco’s success in implementation and targeted cutting of expenses meant that EBITDA for the quarter was $102 million, reflecting an improvement of $34 million from the third quarter.
However, the bottom line compared unfavorably with the year-ago adjusted profit amid lower customer spending reflecting the severe stress in the oil and gas industry.
Fourth-quarter revenues of $1,692 million decreased from $2,722 million a year ago but were above the Zacks Consensus Estimate of $1,625 million.
Segmental Performance
Rig Systems: Revenues came in at $426 million, down 58% from the year-ago quarter. Moreover, the unit’s operating profit plunged 79% year over year to $40 million. Lower backlog and more projects nearing completion during the quarter dampened the results, which were partly offset by cost cuts.
Rig Aftermarket: The segment generated revenues of $339 million, down 40% from the year-ago period, while operating profit dropped 46% from the fourth quarter of 2015 to $75 million as spare parts' demand remained tepid due to weak market conditions.
Wellbore Technologies: The segment’s revenues fell 30% year over year to $531 million. Worse, the unit’s operating loss deteriorated from a year ago to $75 million amid intense pricing pressure in international markets.
Completion & Production Solutions: Revenues for the segment were recorded at $602 million, down 19% from $746 million in the year-ago quarter. The unit recorded operating profit of $17 million compared with $37 million in the corresponding period last year. The underperformance mainly stemmed from the negative impact of a challenging offshore market.
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise
National Oilwell Varco, Inc. Price, Consensus and EPS Surprise | National Oilwell Varco, Inc. Quote
Costs & Expenses
Adjusted selling, general, and administrative expenses declined $72 million (or 19%) in the quarter from the year-ago period.
Backlog
Capital equipment orders’ backlog for Rig Systems was $2,490 million as of Dec 31, 2016, including $115 million in new orders during the fourth quarter.
Moreover, Completion & Production Solutions segment reported a backlog of $818 million in capital equipment order as at the end of the fourth quarter. The figure decreased 16% from the year-ago quarter but increased 1% sequentially.
Balance Sheet
At the end of 2016, the company had cash and cash equivalents of $1,408 million and long-term debt of $2,708 million. The debt-to-capitalization ratio was approximately 16.2%.
Zacks Rank
National Oilwell Varco – which teamed up last year with General Electric Co. (GE - Free Report) to provide industry-leading standardized interfaces – carries a Zacks Rank #3 (Hold).
One can look at better-ranked energy players like McDermott International Inc. and Ultra Petroleum Corp. . Both carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank 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 20% as compared with the industry growth rate of just 0.20%.
Houston, TX-based Ultra Petroleum is an independent energy firm engaged in the acquisition, development, exploration and production of oil and gas properties. The company’s operations are focused on the Green River Basin of southwest Wyoming, mainly covering the Pinedale and the Jonah fields. It surpassed estimates in each of the last two quarters.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>