(Adds analyst comment, executive comment, updated share price,
other information, in the second through fifth and seventh through
10th paragraphs.)
--National Oilwell Varco's adjusted earnings beat analyst
estimates by 4 cents per share
--Margins in the company's largest segment were compressed
--Company executives said pricing is still challenged
By Ben Fox Rubin and Alison Sider
National Oilwell Varco Inc.'s (NOV) fourth-quarter profit rose a
better-than-expected 16% as the maker of equipment for energy
producers saw all three of its major segments post strong growth,
led by distribution and transmission.
The drilling- and rig-equipment manufacturer consistently has
posted double-digit percentage earnings increases for more than a
year as oil and gas producers boosted their capital expenditures,
often spending heavily on complex equipment that can extract
hard-to-reach reserves through unconventional means such as
hydraulic fracturing and horizontal drilling.
National Oilwell posted a profit of $668 million, or $1.56 a
share, up from $574 million, or $1.35 a share, a year earlier.
Excluding transaction charges and a tax benefit, per-share earnings
were $1.49 in the latest period.
Revenue was up 33% to $5.69 billion.
Analysts surveyed by Thomson Reuters had projected a per-share
profit of $1.44 on revenue of $5.3 billion.
Revenue in the rig-technology segment jumped 25%, while the
petroleum services-and-supplies unit saw revenue increase 13%.
Revenue from the distribution-and-transmission segment more than
doubled, due mostly to recent mergers, the company said.
But margins in the company's rig-technology segment, its
largest, gave analysts pause.
"Weaker operating margins in the Rig Tech segment eliminated
some of the revenue strength," Raymond James analysts wrote in a
research note Friday morning.
Clay Williams, National Oilwell Varco's chief operating officer,
said during a conference call following the earnings release that
competitive forces have kept prices for new drilling-equipment
packages "stubbornly" 8% to 10% below prices in 2007 and 2008.
Shares of National Oilwell Varco were recently down 4.75% at
$70.66.
National Oilwell Varco has sought to continue its strong growth
with its $2.55 billion acquisition plans for peer Robbins &
Myers Inc. (RBN), but U.S. and Canadian antitrust reviews of the
deal were extended in December, pushing back the proposed closing
date.
The deal, first disclosed in August, was seen as expanding
National Oilwell Varco's offerings of tools, pumps and valves used
in oil production and came amid an acquisition spree that has made
National Oilwell Varco the sector's dominant equipment maker.
Backlog at the rig-technology business reached $11.86 billion as
of Dec. 31, up from $11.66 billion in the previous quarter. New
orders in the segment were $2.42 billion.
Write to Ben Fox Rubin at ben.rubin@dowjones.com.
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