HOUSTON, July 28, 2017 /PRNewswire/ -- Dril-Quip,
Inc. (NYSE: DRQ) today reported results for the second quarter of
2017.
|
|
|
Three months
ended
|
|
%
Change
|
|
|
|
June 30,
2017
|
March
31,2017
|
June 30,
2016
|
|
2Q17-1Q17
|
2Q17-2Q16
|
|
in millions,
except per share data
|
|
|
|
Revenues
|
$127.9
|
$119.2
|
$142.4
|
|
7%
|
-10%
|
Gross
Margin
|
$40.4
|
$36.8
|
$62.6
|
|
10%
|
-35%
|
|
Gross Margin
%
|
31.6%
|
30.9%
|
44.0%
|
|
70
bps
|
-1240
bps
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
$0.0
|
$0.1
|
$36.1
|
|
N/M
|
N/M
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$19.3
|
$13.6
|
$42.6
|
|
42%
|
-55%
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
$0.00
|
$0.00
|
$0.96
|
|
N/M
|
N/M
|
|
|
|
|
|
|
|
|
|
Diluted EPS,
excluding charges and
forex
|
$0.09
|
$0.03
|
$0.68
|
|
200%
|
-87%
|
In conjunction with today's release, the Company posted a new
investor presentation entitled "Q2 2017 Supplemental Earnings
Information" to its website, www.dril-quip.com, in the
Presentations section under the Investors tab.
Blake DeBerry, Dril-Quip's
President & CEO, stated, "We were pleased with our ability to
manage our costs and generate strong cash flow in the second
quarter of 2017. Our significant cash position grew,
primarily as a result of Free Cash Flow generation of $19.1 million, to $437
million at June 30,
2017. This increase, coupled with our debt-free balance
sheet, positions us to continue to execute our long-term, forward
focused strategy.
"Eastern Hemisphere revenue improved sequentially by
$9 million, or 45%, as we commenced
work on three new subsea trees in the U.K. While this project
was only awarded in the first quarter, we were able to utilize
existing inventory to accelerate our ramp in our project plan.
"Asia-Pacific also improved
revenue sequentially by $13 million,
or 83%, as we continued to execute on the Kangean project in
Indonesia. This project is broad based across all Dril-Quip
product lines. Additionally, by leveraging existing
inventory, we successfully delivered on a platform wellhead order
that was a call out in the first quarter.
"Western Hemisphere revenue declined sequentially $13 million, or 16%. This decline was
driven by lower fabricated joint revenue in the United States and overall lower
international TIW revenues.
"On a consolidated basis, adjusted EBITDA rose 42% sequentially
on higher revenues and the impact of Q1 headcount and salary
reductions. We continue to progress the integration of TIW,
but have yet to fully realize the benefits of either our
cross-selling efforts or cost synergies. As a result, TIW
experienced negative adjusted EBITDA in the quarter of $1.5 million. We believe that once our
cross-selling efforts and cost synergies are realized, TIW margins
will improve.
"While our revenues increased in Q2 2017, we experienced
disappointing product bookings primarily due to weakening commodity
prices during the quarter. We believe these difficult market
conditions will persist at least throughout the remainder of 2017.
As a result, we currently anticipate our revenues for the second
half of 2017 could be as much as 20% lower than our revenues from
the first half of 2017. However, we continue to believe we will,
barring any further unexpected deterioration in oil prices, be Free
Cash Flow positive for the balance of 2017. We remain confident
that Dril-Quip is well positioned financially and operationally to
navigate our way through this downturn and capitalize on future
opportunities.
"Our balance sheet remains strong with zero debt. The
working capital initiatives kicked off in 2017 continue to gain
momentum and will improve positive Free Cash Flow throughout the
second half of 2017. Our strong cash position will allow us
to continue to execute on our long-term, forward-focused strategy
of pursuing acquisitions, investing in research and development and
opportunistically repurchasing shares."
Dril-Quip is a leading manufacturer of highly engineered
drilling and production equipment for use onshore and offshore, but
which is particularly well suited for use in deepwater, harsh
environment and severe service applications.
Forward-Looking Statements
Statements contained
herein relating to future operations and financial results that are
forward-looking statements, including those related to anticipated
revenues, possible acquisitions, share repurchases and expectations
regarding operating results, are based upon certain assumptions and
analyses made by the management of the Company in light of its
experience and perception of historical trends, current conditions,
expected future developments and other factors. These statements
are subject to risks beyond the Company's control, including, but
not limited to, the volatility of oil and natural gas prices and
cyclicality of the oil and gas industry, project terminations,
suspensions or scope adjustments to contracts, uncertainties
regarding the effects of new governmental regulations, the
Company's international operations, operating risks, and other
factors detailed in the Company's public filings with the
Securities and Exchange Commission. Investors are cautioned
that any such statements are not guarantees of future performance
and actual outcomes may vary materially from those indicated.
Non-GAAP Financial Information
Adjusted net
income, Adjusted diluted EPS, Free Cash Flow, and Adjusted EBITDA
are non-GAAP measures.
Adjusted net income and diluted adjusted net income per common
share are defined as net income (loss) and earnings per share,
respectively, excluding the impact of foreign currency gains or
losses as well as other significant non-cash items and certain
charges and credits.
Free Cash Flow is defined as net cash provided by operating
activities less net cash used in the purchase of property, plant,
and equipment.
Adjusted EBITDA is defined as net income excluding income taxes,
interest income and expense, depreciation and amortization expense,
non-cash gains or losses from foreign currency exchange rate
changes as well as other significant non-cash items and other
adjustments for certain charges and credits.
The Company believes that these non-GAAP measures enable it to
evaluate more effectively the operations period over period and
identify operating trends by removing the effect of its capital
structure from its operating structure. In addition, the
Company believes that these measures are supplemental measurement
tools used by analysts and investors to help evaluate overall
operating performance, ability to pursue and service possible debt
opportunities and make future capital expenditures. Adjusted
Net Income, Adjusted EBITDA, and Free Cash Flow do not represent
funds available for our discretionary use and are not intended to
represent or to be used as a substitute for net income and net cash
provided by operating activities, as measured under U.S. generally
accepted accounting principles.
See tables below for additional information concerning non-GAAP
financial information, including a reconciliation of the non-GAAP
financial information presented in this press release to the most
directly comparable financial information presented in accordance
with GAAP. Non-GAAP financial information supplements should be
read together with, and are not an alternative or substitute for,
the Company's financial results reported in accordance with GAAP.
Because non-GAAP financial information is not standardized, it may
not be possible to compare these financial measures with other
companies' non-GAAP financial measures.
Dril-Quip,
Inc.
|
Comparative
Condensed Consolidated Statements of Income
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
Three months
ended
|
|
June
30,2017
|
|
March 31,
2017
|
|
June 30,
2016
|
Revenues
|
$ 127,922
|
|
$ 119,228
|
|
$ 142,439
|
Cost and
expenses:
|
|
|
|
|
|
Cost of
sales
|
87,549
|
|
82,440
|
|
79,881
|
Selling, general and
administrative
|
31,179
|
|
25,808
|
|
5,762
|
Engineering and
product development
|
10,308
|
|
11,850
|
|
11,579
|
|
129,036
|
|
120,098
|
|
97,222
|
Operating
income
|
(1,114)
|
|
(870)
|
|
45,217
|
Interest
income
|
1,070
|
|
937
|
|
541
|
Interest
expense
|
(18)
|
|
(15)
|
|
(10)
|
Income before income
taxes
|
(62)
|
|
52
|
|
45,748
|
Income tax
provision
|
(77)
|
|
(42)
|
|
9,611
|
Net income
|
$
15
|
|
$
94
|
|
$
36,137
|
Diluted earnings per
share
|
$
0.00
|
|
$
0.00
|
|
$
0.96
|
Weighted average
shares–diluted
|
37,718
|
|
37,693
|
|
37,713
|
Depreciation and
amortization
|
$
12,881
|
|
$
9,832
|
|
$
7,725
|
Capital
expenditures
|
$
8,089
|
|
$
4,847
|
|
$
7,544
|
Dril-Quip,
Inc.
|
Unaudited Non-GAAP
Financial Measures
|
(In thousands,
except per share amounts)
|
|
Adjusted Net
Income and EPS:
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
|
|
Effect on net
income (after-
tax)
|
Impact on
diluted
earnings per
share
|
Effect on net
income (after-
tax)
|
Impact on
diluted
earnings per
share
|
Effect on net
income (after-
tax)
|
Impact on
diluted
earnings per
share
|
|
|
|
|
|
|
|
|
Net Income
|
$15
|
$0.00
|
$94
|
$0.00
|
$36,137
|
$0.96
|
|
|
|
|
|
|
|
|
Adjustments (after
tax)
|
|
|
|
|
|
|
|
Reverse the effect of
foreign currency
|
2,988
|
0.08
|
(84)
|
0.00
|
(12,141)
|
(0.32)
|
|
Add back severance
payments
|
247
|
0.01
|
1,266
|
0.03
|
1,556
|
0.04
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$3,250
|
$0.09
|
$1,276
|
$0.03
|
$25,552
|
$0.68
|
Adjusted
EBITDA
|
|
|
Three months
ended
|
|
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
|
|
|
|
|
Net Income
|
$ 15
|
$ 94
|
$ 36,137
|
Add:
|
|
|
|
|
Interest (income)
expense
|
(1,052)
|
(922)
|
(531)
|
|
Income tax expense
(benefit)
|
(77)
|
(42)
|
9,611
|
|
Depreciation and
amortization
|
12,881
|
9,832
|
7,725
|
|
Foreign currency loss
(gain)
|
3,689
|
(104)
|
(15,369)
|
|
Severance
costs
|
305
|
1,572
|
1,970
|
|
Stock compensation
expense
|
3,567
|
3,216
|
3,062
|
Adjusted
EBITDA
|
$ 19,328
|
$ 13,646
|
$ 42,605
|
Free Cash
Flow
|
|
|
Three months
ended
|
|
|
June 30,
2017
|
March 31,
2017
|
June 30,
2016
|
|
|
|
|
|
Net Cash Provided by
Operating Activities
|
$ 27,224
|
$ 11,476
|
$ 110,338
|
Less:
|
|
|
|
|
Purchase of Property,
Plant, and Equipment
|
(8,089)
|
(4,847)
|
(7,544)
|
Free Cash
Flow
|
$ 19,135
|
$ 6,629
|
$ 102,794
|
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content:http://www.prnewswire.com/news-releases/dril-quip-inc-announces-results-for-second-quarter-2017-300495870.html
SOURCE Dril-Quip, Inc.