National Oilwell Varco Q1 Results Miss Estimates

(RTTNews) - Oilfield services company National Oilwell Varco, Inc. (NOV) reported Monday a profit for the first quarter that increased from last year, despite lower margins, reflecting revenue growth across its three operating segments. However, both adjusted earnings per share and quarterly revenues missed analysts' expectations by a whisker.

"We are pleased with our solid start to the new year, as the Company's investments in new technologies, manufacturing capacity and strategic acquisitions drove year-over-year revenue and earnings growth," President and CEO Clay Williams said in a statement.

The Houston, Texas-based company reported net income of $589 million or $1.37 per share for the first quarter, higher than $502 million or $1.17 per share in the prior-year quarter.

On average, 28 analysts polled by Thomson Reuters expected the company to post earnings of $1.38 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter grew 9 percent to $5.78 billion from $5.31 billion in the same quarter last year, but missed twenty-three Wall Street analysts' consensus estimate of $5.80 billion.

During the most recent quarter, National Oilwells' rig technology segment booked $2.33 billion in new orders, reflecting continued healthy demand for oilfield equipment.

As of the end of the first quarter, backlog for capital equipment orders for rig technology segment was an all-time record of $16.35 billion, up 27 percent for the end of the year-ago first quarter.

"Our $2.33 billion in new capital orders and record backlog demonstrate that demand for oilfield equipment remained high in the first quarter, as our customers continued to recognize National Oilwell Varco for our industry leading technology, our proven track record of project execution, and our leading aftermarket service," Williams added.

The company's rig technology revenues increased 14 percent to $3.01 billion from a year ago, and petroleum services and supplies revenues advanced 5 percent to $1.79 billion from last year. Revenues from distribution services grew 4 percent to $1.28 billion from the first quarter of 2013.

Operating profit margin for the quarter contracted 20 basis points to 15.2 percent from last year's 25.4 percent as gross profit margin declined 10 basis points.

The company noted that it is seeing increased demand for drilling and stimulation equipment due to the increasing activity by domestic land drilling and well service firms to develop unconventional shales. Meanwhile, the company's investments in Latin America, Africa, the Middle East and Asia have laid a great foundation for continued growth outside of the U.S.

The company added that it is entering into the final stages of the previously announced spinoff of the distribution business to its shareholders, which is expected to be completed during the second quarter.

NOV closed Friday's regular trading session at $83.47, up $0.73 on a volume of 4.85 million shares. In the past 52-week period, the stock has been trading in a range of $63.25 to $84.71.