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Actionable news in NOV: NATIONAL OILWELL VARCO Inc,

National Oilwell Varco Reports Second Quarter 2017 Results

HOUSTON--(BUSINESS WIRE)--National Oilwell Varco, Inc. (NYSE: NOV) today reported a second quarter 2017 net loss of $75 million, or $0.20 per share. Excluding other items, net loss for the quarter was $54 million, or $0.14 per share. Other items totaled $30 million, pretax, and primarily consisted of charges related to severance and facility closures.

Revenues for the second quarter of 2017 were $1.76 billion, an increase of one percent compared to the first quarter of 2017 and an increase of two percent from the second quarter of 2016. Operating loss for the second quarter was $62 million, or 3.5 percent of sales. Excluding other items, operating loss was $32 million, or 1.8 percent of sales. Adjusted EBITDA (operating profit excluding other items before depreciation and amortization) for the second quarter was $142 million, or 8.1 percent of sales, an increase of $37 million from the first quarter of 2017. Cash flow from operations for the second quarter was $168 million.

“Our team executed exceptionally well during the second quarter, driving substantial sequential improvements in adjusted EBITDA and free cash flow, as we continue to navigate a challenging market,” commented Clay Williams, Chairman, President, and CEO. “Efficiency gains from our investments in operations through the last two years and rising demand support our drive to return the company to acceptable levels of financial performance. The second quarter results reflect our steady progress.”

"Scarcity is returning to the oilfield, and, around the world, customers are steadily exhausting excess stocks of the critical products, equipment and technologies we supply, laying the groundwork for future demand. The strong recovery we’ve seen thus far in North America, combined with many international markets stabilizing and offshore markets nearing bottom, makes us optimistic in our outlook.”

Rig Systems

Rig Systems generated revenues of $346 million, a decrease of 12 percent from the first quarter of 2017 and a decrease of 39 percent from the second quarter of 2016. Operating loss was $7 million, or 2.0 percent of sales. Adjusted EBITDA was $26 million, or 7.5 percent of sales, a decrease of 21 percent sequentially and a decrease of 47 percent from the prior year. Revenue from backlog declined to $224 million as backlog waned and certain capital equipment deliveries were deferred to the third quarter. Rig Systems held adjusted EBITDA decrementals (the change in adjusted EBITDA divided by the change in revenue) to 15% through strong execution of cost control and efficiency improvement initiatives.

Backlog for capital equipment orders for Rig Systems at June 30, 2017 was $2.22 billion. New orders during the quarter were $124 million, representing a book-to-bill of 55 percent. Land-related orders represented 60% of the order book and included one 1,500-HP AC Ideal Rig and a complete land rig equipment package that included the Company’s NOVOSTM process automation platform.

Rig Aftermarket

Rig Aftermarket generated revenues of $341 million, an increase of six percent from the first quarter of 2017 and a decrease of six percent from the second quarter of 2016. Operating profit was $76 million, or 22.3 percent of sales. Adjusted EBITDA was $83 million, or 24.3 percent of sales, an increase of 17 percent sequentially and an increase of 14 percent from the prior year. Rising demand for spare parts, service, and repair supported revenue growth. Favorable mix and improved absorption drove 60% adjusted EBITDA incrementals.

Wellbore Technologies

Wellbore Technologies generated revenues of $614 million, an increase of 11 percent from the first quarter of 2017 and an increase of 20 percent from the second quarter of 2016. Operating loss was $24 million, or 3.9 percent of sales. Adjusted EBITDA was $66 million, or 10.7 percent of sales, an increase of 74 percent sequentially and an increase of $65 million from the prior year. Robust U.S. activity growth and modest improvements in many international markets, partially offset by Canadian spring break-up, increased customer demand for the segment’s products and services. Higher volumes improved absorption across many of the segment’s North American manufacturing and service facilities, resulting in 47% adjusted EBITDA incrementals.

Completion & Production Solutions

Completion and Production Solutions generated revenues of $652 million, an increase of one percent from the first quarter of 2017 and an increase of 21 percent from the second quarter of 2016. Operating profit was $27 million, or 4.1 percent of sales. Adjusted EBITDA was $98 million, or 15.0 percent of sales, an increase of 27 percent sequentially and an increase of 72 percent from the prior year. Revenue improvements in the segment’s land-oriented operations were offset by declines in offshore businesses. Strong execution on offshore projects, FX benefits, and cost savings initiatives resulted in a 310 basis point improvement to adjusted EBITDA margins.

Backlog for capital equipment orders for Completion & Production Solutions at June 30, 2017 was $881 million. New orders during the quarter were $501 million, representing a book-to-bill of 127 percent when compared to the $393 million of orders shipped from backlog. Nearly all of the segment’s business units secured orders well in excess of 100% book-to-bill. Included in the order book was a total of 107,500HP of pressure pumping equipment, orders for seven new coiled tubing units, and a subsea soft yoke system for a floating storage regassification unit.

Significant Events and Achievements

NOV signed a 10-year service and support agreement with Transocean to maximize uptime and reduce total cost of ownership for the drill-floor equipment on 15 Transocean drilling rigs. The collaborative arrangement will leverage the operational expertise of both organizations and incorporate NOV’s leading drilling technologies, global aftermarket service and repair capabilities, and data-driven solutions, including the Company’s RigsentryTM condition-monitoring system. Rigsentry merges the power of Big Data analytics with design insight only available as the original equipment manufacturer to enable customers to operate and maintain rig equipment more effectively.

NOV introduced the latest version of its MD TotcoTM autodriller, e-Wildcat™ 2.0. Equipped with a more robust data acquisition system than previous models, the e-Wildcat 2.0 combines high-resolution sensors with rig-specific algorithms so conventional rigs can maintain a constant rate of penetration, allowing customers to improve drilling times up to 30%. Across North America, multiple customers have switched from competitor systems to the e-Wildcat 2.0, citing the system’s increased control and visibility as well as the additional ability to drill surface-hole sections more effectively.

NOV won a large thru-tubing tools order in North America from an independent service company, booking 60 TerraMax™ milling systems, totaling over 260 tools. The TerraMax milling system is a complete bottomhole assembly (BHA) for coiled tubing mill-out that includes thru-tubing connectors, twin flapper check valves, a dual circulation sub, a Bowen™ TerraForce™ coiled tubing jar, Bowen hydraulic disconnect, a PowerPlus™ coiled tubing motor, and a ShredR™ bit. NOV delivered the first 20 BHAs, and the customer is now using them in the Eagle Ford and Permian basins for extended-reach operations.

NOV introduced a new, more powerful, higher-torque top drive to enable drilling contractors to drill longer laterals faster and more efficiently. The 1,200-HP high-torque, induction-motor-powered...


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