This article was first published by Seeking Alpha on
February 11, 2015.
By Sarfaraz A. Khan
National Oilwell Varco (NYSE:NOV), which designs,
manufactures and sells equipments and components used by exploration and
production companies in oil and gas drilling, has recently released its
quarterly results that came in better than market's expectations.
National Oilwell Varco's revenues climbed 7.7% from the same
quarter last year to $5.7 billion while gross margins expanded by 60 bps to
27.1%. Adjusted EBITDA increased by 8.6% to $1.2 billion while adjusted EPS
increased by 13% to $1.69 a share, higher than analysts' estimate of $1.60 a
share, as per data compiled by Thomson Reuters.
The Rig Systems segment, under which NOV manufactures and
sells equipment used in drilling rigs, has been the largest contributor to the
company's revenues. This is followed by Wellbore Technologies, under which NOV
provides products to improve the drilling process and Completion and Production
solutions segment, in which - as the name implies -- the company provides
equipment for well completion and hydrocarbon production.
On an average, over the last four fiscal years, NOV has
generated nearly 40% of its revenues from rig systems, 27% from Wellbore
Technologies and 20% from completion and production solutions. The remaining
revenues have come from sale of rig aftermarket products.
During the quarter, NOV witnessed around 7% revenue growth
in the rig systems business and double-digit growth in other segments. In terms
of operating profits, NOV reported double-digit growth in all segments.
Furthermore, the company also reported improvements in operating margins in
every segment.
