National Oilwell Varco (NYSE:NOV) will report its fourth-quarter and full-year results early next week. The oil-field equipment company has already provided a glimpse of what to expect by providing guidance on its third-quarter conference call and announcing in the middle of January that the quarter should "be at or above prior expectations." As a result, we have a pretty good idea of what to expect from each of its business segments this quarter.

Rig technologies: New name, better results

In mid-January, National Oilwell Varco announced that it would combine its rig systems and rig aftermarket segments into one reporting entity called rig technologies. Along with that announcement, the company noted that the newly combined businesses would "exceed prior guidance." That's a step forward, since both segments missed expectations last quarter.

An offshore oil platform with the sun rising in the background.

Image source: Getty Images.

One reason the former rig systems segment fell short last quarter was because $40 million to $50 million in sales got pushed into the fourth quarter. Given the company's guidance, we can expect to see that those items shipped, implying that revenue from the legacy rig systems segment should be up a bit from the $330 million it pulled in last quarter. Meanwhile, "recent improvements in spare part bookings give us some confidence that fourth-quarter rig aftermarket results should be in line with third quarter" (when revenue was $311 million), according to CFO Jose Bayardo on last quarter's conference call. These factors all seem to suggest that the combined segment's revenue rose to around $650 million during the quarter.  

Wellbore technologies: Red-hot and right on target

National Oilwell Varco's wellbore technologies segment was the star in the third quarter after revenue rose 13% to $693 million thanks to strong sales in North America resulting from an uptick in shale drilling. That improvement was the main reason companywide revenue rose last quarter. That said, as good as those results were, National Oilwell Varco expected even more in the fourth quarter.

Several factors fueled those expectations, including the belief that the industry needs to replenish its equipment supply after three years of underinvestment. As a result, Bayardo thought that revenue from the segment would increase by "300 to 500 basis points" while margins would expand even more than they did in the third quarter. The company seems to have hit those targets, as it noted in last month's update that this segment's results would be "in-line with expectations."

Completion and production systems: Falling a bit short

The other positive last quarter was the company's completion and production systems segment, where revenue rose 5% to $682 million due to strong well completion activity in North America and the Middle East, which drove demand for its related equipment. That led Bayardo to predict on last quarter's call that, "after several quarters in a row of strong bookings, this segment is well positioned to realize mid-single-digit percent revenue growth in the fourth quarter."

Unfortunately, it appears as if National Oilwell Varco will miss that mark, with the company noting earlier in the year that this segment would "fall short of guidance." Driving that shortfall were some engineering challenges and delivery delays associated with a new product, as well as lower-than-expected orders in its process and flow technologies business.

Continuing the upward climb

With the expectation for better performance from two of its three business segments, National Oilwell Varco should report another quarter of improving financial results. That would continue a trend that began in the fourth quarter of 2016. That said, it seems like the company is just about to hit its stride, since oil prices have recovered sharply in recent months, which should provide oil companies with the cash to buy more equipment. That suggests National Oilwell Varco's recovery could shift into higher gear this year. 

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