Energy equipment maker National Oilwell Varco Inc. (NOV - Analyst Report) overcame a sharp drop in oil prices and reported narrower-than-expected second-quarter 2016 loss, buoyed by cost reduction efforts and efficiency gains.

Loss per share (excluding one-time items) came in at 30 cents, narrower than the Zacks Consensus Estimate for a loss of 33 cents.

However, the bottom line compared unfavorably with the year-ago adjusted profit of 77 cents amid deteriorating market conditions.

Second quarter revenues of $1,724 million decreased from $3,909 million a year ago and was also below the Zacks Consensus Estimate of $1,798.2 million.

Segmental Performance

Rig Systems: Revenues came in at $564 million, down 71% from the year-ago quarter. Moreover, the unit’s operating profit plunged 93% year over year to $30 million. Fall in spare part sales and slowdown in cost reduction efforts during the quarter dampened the results.

Rig Aftermarket: The segment generated revenues of $364 million, down 45% from the year-ago period, while operating profit dropped 57% from the second quarter of 2015 to $67 million as spare parts demand eroded due to deteriorating market conditions.

Wellbore Technologies: The segment’s revenues fell 47% year over year to $511 million. Worse, the unit swung to an operating loss of $96 million from a profit of $57 million a year ago amid intense pricing pressures.

Completion & Production Solutions: Revenues for the segment were recorded at $538 million, down 38% from $873 million in the year-ago quarter. The unit recorded operating profit of just $5 million, as against income of $88 million in the corresponding period last year. The underperformance mainly stemmed from the negative impact of lower sales from the offshore business.

NATL OILWELL VR Price, Consensus and EPS Surprise

NATL OILWELL VR Price, Consensus and EPS Surprise | NATL OILWELL VR Quote

Costs & Expenses

Selling, general and administrative expenses declined $125 million (or 30%) in the quarter from the year-ago period.

Backlog

Capital equipment orders’ backlog for Rig Systems was $2,940 million as of Jun 30, 2016, including $66 million in new orders during the second quarter.

Moreover, Completion & Production Solutions segment reported a backlog of $947 million in capital equipment order as at the end of the second quarter. The figure decreased 20% from the year-ago quarter.

Balance Sheet

At the end of the second quarter, the company had cash and cash equivalents of $1,661 million and long-term debt of $3,268 million. The debt-to-capitalization ratio stood at approximately 17.0%.

Zacks Rank

National Oilwell Varco currently carries a Zacks Rank #3 (Hold). Meanwhile, one can look at better-ranked energy players like Anadarko Petroleum Corp. (APC - Analyst Report) , Apache Corp. (APA - Analyst Report) and Chesapeake Energy Corp. (CHK - Analyst Report) . All carry Zacks Rank #2 (Buy).