National Oilwell Varco, Inc. (NYSE: NOV) has reported a third quarter 2016 net loss of US$1.36 billion, or US$3.62 per share. Excluding other items, net loss for the quarter was US$128 million, or US$0.34 per share. Other items totaled US$1.09 billion, pretax, consisting of a US$972 million goodwill impairment and US$116 million of other charges primarily associated with severance, facility closures and write-offs of certain assets. Other items, net of tax, totaled US$1.23 billion and included a US$213 million valuation allowance against foreign tax credits.
Revenues for the third quarter of 2016 were US$1.65 billion, a decrease of 5% compared to the second quarter of 2016 and a decrease of 50% from the third quarter of 2015. Operating loss for the third quarter was US$1.19 billion, or 72.1% of sales. Excluding other items, operating loss was US$108 million, or 6.6% of sales. Adjusted EBITDA (operating profit excluding other items before depreciation and amortisation) for the third quarter was US$68 million, or 4.1% of sales, an increase of US$43 million from the second quarter of 2016.
“Our ability to post a higher Adjusted EBITDA on a five percent sequential decline in revenue was the result of our team’s continued progress in improving our efficiencies and lowering our costs,” commented Clay Williams, Chairman, President and CEO. “While consolidated revenues continued to contract in the third quarter, two of our four reporting segments posted sequential revenue growth, and three of our four segments posted higher margins.”
“We are encouraged by the early signs of a recovery in the North American marketplace. Our short cycle businesses within our Wellbore Technologies Segment account for over 80% of total segment revenue. Within North America these posted sequential revenue growth of approximately 15%. Even though international, offshore and capital equipment markets remain challenging, we believe declining global production and improving commodity prices are setting the stage for a broader recovery in 2017. In the meantime, we continue to aggressively reduce costs, improve efficiencies, and invest in our comprehensive technology portfolio. So far in 2016 we have added significant new technologies in completion tools, directional drilling tools, condition-based monitoring services and drilling optimisation services. All are winning significant customer interest, and all better position NOV for the inevitable recovery.”
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