Another quarter, another billion-dollar bump in the backlog. Welcome to the world of National Oilwell Varco
If you're familiar with this company and its ultra-informative conference calls, I'm sure you're curious about management's outlook, so I'll keep my results review brief. Orders hit a record $2.4 billion, including six deepwater packages. In terms of big-ticket orders, this is about on pace with what we saw last quarter. Operating profit, after adjusting for the large Grant Prideco acquisition, was up about 28% compared to last year. All in all, it was another stellar quarter.
As we've seen on the E&P side with companies like Newfield Exploration
Several points were reassuring:
- NOV's top five shipyard customers -- the folks who put the big rigs together -- had well over $6 billion in net cash between them as of their most recent financial statements.
- Large entities, from Petrobras
(NYSE:PBR)to export-import banks, appear prepared to step in to plug financing gaps in their home countries.
- The company's contracts "do not allow for cancellation for lack of financing."
- Payments are structured in a manner that NOV's cash collection is well ahead of its investment outlays. This positive spread is currently in the neighborhood of $3 billion.
A different angle to the whole downturn issue is the consolidation role that NOV will play. This is only natural for a company that's been closing in on the 200 acquisition mark over the past dozen years. Given the depressed share price of -- well, just about every publicly traded company -- NOV has to be pretty excited here. Not that they need my help, but I'll just throw out FMC Technologies