National Oilwell Varco Inc. (NYSE:NOV)

Operating Profit (Loss)

The operating profit demonstrated fluctuations over the reported periods. Starting from a value of 1,685 million US dollars in 2012, it decreased slightly to 1,594 million in 2013. Subsequently, there was a notable increase to 1,996 million in 2014, followed by a significant decline to 1,206 million in 2015. This pattern suggests variability in operational efficiency or market conditions impacting profitability within the segment.

Revenue

Revenue displayed an upward trend from 7,077 million US dollars in 2012 to a peak of 9,848 million in 2014. However, this was followed by a substantial reduction to 6,964 million in 2015. The initial growth phase corresponds with expanding sales or contracts, while the sharp decline in the final year may imply reduced demand or contract completion in the segment.

Segment Profit Margin

The segment profit margin showed a declining trend across the observed years. Starting at 23.81% in 2012, the margin dropped to 18.86% in 2013 and recovered modestly to 20.27% in 2014 before falling again to 17.32% in 2015. This downward trend, despite revenue fluctuations, points toward increasing costs or pressures on pricing within the segment.

Summary

Overall, the segment experienced growth in revenue and profit up to 2014, followed by a contraction in both measures in 2015. The declining profit margins indicate potential challenges in cost management or competitive pressure affecting profitability. The variability in operating profit reflects changing market dynamics or operational factors influencing the segment’s financial performance during the period reviewed.

Revenue Trends

Revenue for the segment exhibited a consistent upward trend from 2012 to 2014, increasing from 2,138 million US dollars to a peak of 3,222 million US dollars in 2014. However, in 2015, revenue declined to 2,515 million US dollars, representing a significant reduction of approximately 22% compared to the previous year.

Operating Profit (Loss) Trends

Operating profit showed a positive trajectory from 2012 through 2014, rising from 594 million US dollars to 882 million US dollars. This increase aligns with the revenue growth during the same period. Conversely, in 2015, operating profit decreased sharply to 605 million US dollars, following the decline in revenue.

Segment Profit Margin Trends

The segment profit margin demonstrated relative stability from 2012 to 2014, maintaining a range between 27.08% and 27.78%. In 2015, the margin declined to 24.06%, reflecting a decrease of roughly 3.3 percentage points from the 2014 margin. This reduction suggests increased cost pressures or less favorable pricing impacting profitability alongside the revenue fall.

Overall Insights

The segment experienced growth in both revenue and operating profit over three consecutive years, indicating strong performance and operational efficiency during that period. The drop in both revenue and operating profit in 2015, as well as the contraction in profit margin, signals a downturn in business activity or market conditions affecting the segment adversely. The decline in profit margin alongside lower revenues highlights potential challenges in maintaining cost efficiency or pricing power in the most recent year.

The financial data for the segment exhibits notable fluctuations across the reported periods. Revenue demonstrated an overall increase from 2012 through 2014, rising from 5,184 million US dollars to 5,722 million US dollars. However, this upward trend reversed sharply in 2015, with revenue decreasing to 3,718 million US dollars.

Operating profit followed a somewhat similar trajectory. It reached 983 million US dollars in 2012, followed by a minor decrease in the subsequent years, registering 915 million and 937 million US dollars in 2013 and 2014, respectively. In 2015, operating profit swung dramatically to a loss of 1,613 million US dollars.

The segment profit margin percentage mirrored the trends seen in both revenue and operating profit. Margins declined gradually from 18.96% in 2012 to 16.38% in 2014, indicating a decrease in profitability relative to revenue. This trend sharply worsened in 2015, with the margin plunging to a negative 43.38%, reflecting substantial operational challenges or cost pressures.

Overall, the data shows a period of stable to slightly declining profitability through 2014, followed by a significant downturn in 2015 affecting revenue, operating profit, and margin. This suggests an adverse shift in market conditions or operational efficiency impacting the segment during the final year reported.

Revenue Trend

Increased steadily from 2012 to 2014, then declined sharply in 2015.

Operating Profit Trend

Moderate decline from 2012 to 2014, followed by a major loss in 2015.

Profit Margin Trend

Gradual decrease through 2014, with a steep negative margin in 2015 indicating operational difficulties.

Operating Profit (Loss)

The operating profit for the segment showed an initial increase from 684 million US dollars in 2012 to a peak of 690 million in 2014. However, in 2015, there was a significant decline to 161 million US dollars, indicating a sharp reduction in profitability in that year.

Revenue

Revenue demonstrated a consistent upward trend from 3,994 million US dollars in 2012 to 4,645 million in 2014. Nevertheless, there was a notable decrease to 3,365 million US dollars by the end of 2015, suggesting a reduction in sales or demand in the final year of the period analyzed.

Segment Profit Margin

The segment profit margin percentage followed a decreasing trend overall. It declined from 17.13% in 2012 to 14.23% in 2013, then experienced a slight increase to 14.85% in 2014 before falling sharply to 4.78% in 2015. This indicates a significant reduction in profitability relative to revenue during the last year.

Operating Profit (Loss)

The operating profit for the segment showed a fluctuating trend over the observed period. It increased from 1,685 million USD in 2012 to 1,996 million USD in 2014, representing a peak in profitability during the period. However, in 2015, the operating profit declined significantly to 1,206 million USD, indicating a decrease in operational efficiency or potential market challenges.

Total Assets

The total assets of the segment experienced growth from 6,563 million USD in 2012 to a high point of 8,052 million USD in 2014. This growth suggests investments in asset base or acquisitions. In 2015, total assets decreased markedly to 6,772 million USD, which may imply asset disposals, impairments, or revaluations.

Segment Return on Assets (ROA)

The segment ROA exhibited a variable pattern, starting at 25.67% in 2012, followed by a decline to 20.83% in 2013. It rebounded to 24.79% in 2014, coinciding with the peak in operating profit and total assets. In 2015, ROA dropped to 17.81%, reflecting reduced profitability relative to the asset base and aligning with the decline in operating profit and total assets.

Summary of Trends

Overall, the data indicate that the segment performed strongly between 2012 and 2014, with increasing operating profit, expanding asset base, and relatively high ROA. The year 2015 was marked by a downturn in operating profit, contraction in total assets, and lower ROA, which collectively suggest a decline in segment performance and efficiency. The trends may point to external factors affecting the business environment or internal strategic decisions impacting asset management and profitability.

The annual financial data for the Rig Aftermarket segment reveals several important trends between 2012 and 2015.

Operating Profit (Loss)

Operating profit exhibited a growth trend from 2012 to 2014, increasing from $594 million to $882 million. This upward movement indicates improving profitability during this period. However, in 2015, the operating profit decreased to $605 million, suggesting a downturn in segment performance after three years of growth.

Total Assets

Total assets in the segment rose steadily from 2012 through 2014, starting at $1,930 million and peaking at $2,789 million. This increase points to asset growth, possibly reflecting investments or expansion activities. In 2015, total assets decreased to $2,455 million, indicating a reduction or reallocation of resources within the segment.

Segment Return on Assets (ROA)

The segment ROA was strong throughout the period, staying above 24% in all reported years. It started at 30.78% in 2012, showed a slight decrease to 29.45% in 2013, then rose again to 31.62% in 2014. In 2015, the ROA fell significantly to 24.64%, corresponding with the decline in operating profit and total assets. This decrease suggests less efficient asset utilization or lower profitability relative to assets at the end of the period.

Overall, the segment demonstrated robust profitability and asset growth from 2012 to 2014, followed by a noticeable decline in 2015. The reduction in operating profit alongside a drop in total assets and segment ROA indicates challenges or changing conditions impacting this segment in the latter year.

The analysis of the Wellbore Technologies segment over the reported five-year period reveals several significant trends in profitability, asset base, and return on assets (ROA).

Operating Profit (Loss)

The segment displayed profitability from 2012 through 2014, with operating profits of $983 million in 2012, decreasing to $915 million in 2013, and then increasing slightly to $937 million in 2014. However, in 2015, a marked reversal occurred, with the segment reporting a substantial operating loss of $1,613 million. This indicates a sharp deterioration in operational results in the final year, contrasting significantly with the prior three years of positive earnings.

Total Assets

Total assets showed a modest upward trend from 2012 to 2013, increasing from $11,032 million to $11,862 million. The asset base then slightly decreased to $11,687 million in 2014, followed by a more pronounced decline to $8,766 million in 2015. This reduction in total assets during 2015 coincides with the sharp operating loss experienced in the same year, possibly reflecting asset impairments, divestitures, or other restructuring activities within the segment.

Segment Return on Assets (ROA)

The segment ROA followed a pattern consistent with operating profit trends. In 2012, ROA was 8.91%, which decreased gradually to 7.71% in 2013 and rose slightly to 8.02% in 2014, indicating relatively stable efficiency in generating returns from assets during this period. In 2015, however, ROA plummeted to -18.4%, reflecting the severe negative operating results and reduction in asset base. This dramatic decline marks a significant deterioration in asset profitability.

In summary, the data highlights a stable and profitable segment from 2012 through 2014, followed by a sudden and significant downturn in 2015 characterized by a substantial operating loss, decrease in total assets, and negative ROA. These changes suggest operational and financial challenges that emerged in the final year of the reported period.

Operating Profit (Loss)

The operating profit demonstrates a fluctuating trend over the analyzed period. It increased significantly from 684 million USD in 2012 to 690 million USD in 2014, indicating a period of improved profitability. However, a sharp decline occurred in 2015, with operating profit reducing to 161 million USD, suggesting challenges in maintaining earlier profit levels or possible operational difficulties during that year.

Total Assets

Total assets rose from 6,192 million USD in 2012 to a peak of 7,287 million USD in 2013, indicating an expansion phase. This was followed by a slight decline to 7,072 million USD in 2014 and a more pronounced decrease to 5,916 million USD in 2015. The reduction in total assets toward the end of the period may reflect asset disposals, impairments, or changes in strategic asset management.

Segment Return on Assets (ROA)

The segment ROA, expressing the efficiency in generating profit from assets, shows a declining trend overall. It decreased from 11.05% in 2012 to 8.41% in 2013, then slightly recovered to 9.76% in 2014 before sharply dropping to 2.72% in 2015. This pattern suggests decreasing asset efficiency and profitability, particularly in 2015, paralleling the considerable fall in operating profit and total assets.

Revenue

The revenue exhibits an increasing trend from 2012 to 2014, rising from $7,077 million to $9,848 million. However, in 2015, there is a notable decline to $6,964 million, representing a significant reduction compared to the previous year.

Total assets

Total assets follow a similar pattern as revenue, increasing from $6,563 million in 2012 to $8,052 million in 2014, then decreasing to $6,772 million in 2015. This decline in assets in 2015 corresponds with the decrease observed in revenue during the same period.

Segment asset turnover

The segment asset turnover ratio shows a gradual improvement from 1.08 in 2012 to 1.22 in 2014, indicating increased efficiency in utilizing assets to generate revenue. In 2015, the ratio declines to 1.03, reflecting reduced efficiency possibly linked to the drop in both revenue and total assets that year.

The segment data reveals several notable trends over the period from 2011 to 2015. Revenue displayed a growth trajectory from 2012 through 2014, increasing from 2,138 million USD to a peak of 3,222 million USD. However, in 2015, there was a marked decline in revenue, falling to 2,515 million USD, which represents a significant contraction compared to the prior year.

Total assets followed a generally upward trend from 2012 to 2014, rising from 1,930 million USD to 2,789 million USD. Similar to revenue, total assets declined in 2015, decreasing to 2,455 million USD. This suggests a scaling back of asset allocation or divestiture aligned with reduced operational scale or strategic adjustments.

The segment asset turnover ratio, which measures the efficiency of asset use in generating revenue, remained relatively stable throughout the period, fluctuating slightly around 1.1. It peaked modestly at 1.16 in 2014, indicating optimal asset utilization in that year. The decrease to 1.02 in 2015 aligns with the downturn in revenue, reflecting a reduction in operational efficiency or lower demand impacting asset productivity.

Revenue

Steady growth from 2012 to 2014 followed by a significant decline in 2015.

Total Assets

Increased over three years until 2014, then contracted in 2015.

Segment Asset Turnover

Relatively stable with a slight peak in 2014; declined in 2015 reflecting reduced asset efficiency.

Overall, the data indicates that the segment experienced expansion in the early part of the period, with improving scale and asset utilization, but faced challenges in 2015 that led to decreased revenue, reduced asset base, and a drop in operational efficiency.

The segment under review shows a variable yet generally declining trend in revenue over the analyzed period. Starting with a revenue figure of 5184 million USD in 2012, the revenue remains relatively stable in 2013 at 5211 million USD and increases in 2014 to 5722 million USD. However, a significant decline occurs in 2015, with revenue dropping sharply to 3718 million USD. This marks a considerable decrease from the previous year and may indicate market challenges or operational difficulties within the segment.

Total assets exhibit a consistent upward trajectory from 2012 through 2014, increasing from 11032 million USD to a peak of 11862 million USD in 2013, followed by a slight decrease to 11687 million USD in 2014. However, in 2015, total assets decline notably to 8766 million USD, reflecting a substantial reduction in asset base. This sudden drop could be indicative of asset disposals, impairments, or other strategic decisions affecting the asset composition of the segment.

The segment asset turnover ratio displays some fluctuation but generally remains below 0.5 throughout the observed years, pointing to relatively low efficiency in the use of assets to generate revenue. The ratio decreases slightly from 0.47 in 2012 to 0.44 in 2013, then rises to 0.49 in 2014 before falling again to 0.42 in 2015. The downward movement in 2015, coupled with the sharp decline in revenue and assets, suggests a reduced efficiency in asset utilization during this period.

Overall, the data reveal growth and strengthening of the asset base in the earlier years followed by shrinking assets and revenues in the final year. The asset turnover ratio shows limited improvement, indicating persistent challenges in optimizing asset productivity. These trends underscore a period of contraction and reduced operational effectiveness in the latest year reviewed.

Revenue

Stable from 2012 to 2013, increased in 2014, then sharply declined in 2015.

Total Assets

Increased steadily from 2012 to 2013, slightly decreased in 2014, followed by a significant drop in 2015.

Segment Asset Turnover

Fluctuated below 0.5, peaking in 2014 and declining thereafter, indicating declining asset productivity in 2015.

Revenue Trends

Revenue in the segment exhibited a rising trend from 2012 to 2014, increasing from $3,994 million to a peak of $4,645 million. However, in 2015, there was a significant decline to $3,365 million, indicating a notable reduction in sales or demand within the segment during that year.

Total Assets Movements

Total assets associated with the segment showed an initial increase from $6,192 million in 2012 to $7,287 million in 2013, followed by a slight decrease to $7,072 million in 2014. A more pronounced decrease occurred in 2015, dropping to $5,916 million. This pattern suggests some level of asset optimization or divestiture in 2015.

Asset Turnover Ratio Analysis

The segment asset turnover ratio demonstrated some variability across the period, starting at 0.65 in 2012, then declining to 0.59 in 2013, before rebounding to 0.66 in 2014. In 2015, the ratio decreased again to 0.57. This ratio reflects the efficiency with which the assets generate revenue; thus, the fluctuation indicates varying operational efficiency, with 2015 reflecting a reduced capacity to generate sales from assets.

Overall Insights

The examined period reveals growth in both revenue and asset base until 2014, accompanied by moderate fluctuations in asset turnover efficiency. The sharp decline in both revenue and total assets in 2015, along with a decrease in asset turnover ratio, suggests a challenging operational environment or strategic changes impacting the segment's performance and asset utilization efficiency.

Capital Expenditures

The capital expenditures exhibited variability over the five-year period, starting at $81 million in 2012, declining to $61 million in 2013, then substantially increasing to $133 million in 2014 before returning to $81 million in 2015. This pattern suggests fluctuations in investment levels, with a significant peak in 2014.

Depreciation and Amortization

Depreciation and amortization expenses showed a consistent upward trend throughout the years analyzed. Beginning at $64 million in 2012, the expense increased steadily each year to reach $96 million by 2015. This indicates growing capital asset base or changes in asset lives impacting amortization.

Segment Capital Expenditures to Depreciation Ratio

The ratio of capital expenditures to depreciation reflected notable volatility. It decreased from 1.27 in 2012 to 0.74 in 2013, then surged to 1.51 in 2014, followed by a decline to 0.84 in 2015. The fluctuations highlight inconsistent reinvestment relative to asset depreciation, suggesting periods of aggressive investment followed by lower capital spending relative to asset wear.

The capital expenditures in the Rig Aftermarket segment exhibited fluctuations over the five-year period. Beginning with an unreported value for 2011, capital expenditures increased to 13 million US dollars in 2012, then further rose to 24 million US dollars in 2013. Subsequently, there was a decline, with capital expenditures reducing to 12 million US dollars in 2014 and 10 million US dollars in 2015, indicating a downward trend in investment activity after 2013.

Depreciation and amortization expenses showed a consistent upward trajectory. Starting at 18 million US dollars in 2012, these expenses increased yearly to reach 26 million US dollars in 2013, 27 million US dollars in 2014, and peaked at 30 million US dollars in 2015. This steady increase suggests a growing allocation of expense related to the consumption of capital assets in the segment.

The ratio of segment capital expenditures to depreciation revealed a noticeable decline over the observed years. From 0.72 in 2012, the ratio rose modestly to 0.92 in 2013, indicating capital spending nearly matched the depreciation expense for that year. However, from 2013 onward, the ratio dropped significantly to 0.44 in 2014 and further to 0.33 in 2015. This declining ratio signifies that capital expenditures were increasingly insufficient relative to the depreciation recorded, implying a reduction in asset replenishment or acquisition compared to asset consumption.

Summary of Trends

Capital expenditures peaked in 2013 and then declined, while depreciation steadily increased throughout the period.

The decreasing ratio of capital expenditures to depreciation after 2013 suggests that the segment may be underinvesting in capital assets relative to the consumption and aging of existing assets.

This pattern could point to potential challenges in maintaining or expanding the asset base in the Rig Aftermarket segment.

The analysis of the Wellbore Technologies segment financial data over the period from 2011 to 2015 reveals several important trends and patterns.

Capital Expenditures

Capital expenditures were absent or not reported at the end of 2011. From 2012, capital expenditures began at $247 million, decreasing slightly to $226 million in 2013, followed by an increase to $262 million in 2014. However, a notable decline occurred in 2015, with expenditures falling to $180 million. Overall, capital expenditures showed variability but exhibited a downward trend by the end of the period.

Depreciation and Amortization

Depreciation and amortization expenses were also unreported for 2011. From 2012 onwards, these expenses increased steadily, beginning at $389 million in 2012, rising to $420 million in 2013, and then $439 million in 2014, before a decrease to $400 million in 2015. Despite the slight decline in 2015, the general trend over the period reflects a gradual increase in depreciation and amortization.

Segment Capital Expenditures to Depreciation Ratio

This ratio, which serves as an indicator of investment relative to asset depreciation, was not reported in 2011. In 2012, the ratio stood at 0.63, reflecting a higher investment level compared to asset depreciation. The ratio then declined to 0.54 in 2013, rose slightly to 0.60 in 2014, and decreased again to 0.45 in 2015. The overall trend demonstrates a general decrease in capital investments relative to depreciation expenses, suggesting diminishing reinvestment rates in the segment’s assets by the end of the observed period.

Capital Expenditures

The capital expenditures exhibited variability over the observed period, increasing from 169 million USD in 2012 to a peak of 212 million USD in 2013. Following this peak, there was a decline to 184 million USD in 2014 and a more significant decrease to 87 million USD in 2015, indicating a reduction in investment activities within the segment during this time frame.

Depreciation and Amortization

Depreciation and amortization expenses showed a rising trend from 145 million USD in 2012 to 224 million USD in 2014, followed by a slight decrease to 221 million USD in 2015. This pattern suggests increasing allocation of costs related to asset usage up to 2014, with a marginal reduction thereafter.

Segment Capital Expenditures to Depreciation Ratio

The ratio of capital expenditures to depreciation declined steadily over the period. Starting at 1.17 in 2012, the ratio decreased to 1.01 in 2013, then further to 0.82 in 2014, and reached a low of 0.39 in 2015. This trend indicates that capital investments have been decreasing at a faster rate relative to the depreciation charges, which may reflect a lowering of asset replacement or expansion efforts relative to the wear and tear accounted for in depreciation.

Overall Interpretation

The data reflects a segment experiencing a reduction in investment expenditures from its peak in 2013, while maintaining relatively high levels of depreciation and amortization. The declining capital expenditures to depreciation ratio points to a potential shift toward reduced asset growth or renewal, accompanied by ongoing asset depreciation costs, which may impact the segment's operational capacity and long-term asset base.