Press Release
Dril-Quip, Inc. Announces First Quarter 2021 Results
Key highlights for the first quarter of 2021 included:
- Delivered revenue of
$81.2 million for the first quarter of 2021; - Reported a net loss of
$34.4 million , or a$0.97 loss per share, driven primarily by$25.0 million of impairments, restructuring and other charges predominantly related to the downhole tools product line; - First quarter net cash provided by operating activities of
$13.1 million and free cash flow of$10.6 million , or 13.0% of revenue, inclusive of$2.5 million of capital expenditures; - Booked
$56.6 million of new product orders during the first quarter of 2021 resulting in quarter end backlog up$1 million fromDecember 31, 2020 to$197 million ; - Generated adjusted EBITDA of
$8.0 million , or 9.9% of revenue; - Recorded highest revenue quarter in downhole tools product line since the acquisition in the fourth quarter of 2016.
“We continue to see the benefits of the strategic growth pillars outlined late last year. Included in our bookings was a contract award for two of our HXT™ tree systems combined with Proserv’s controls for an operator in the
“In addition to these growth pillar milestones, in a recent survey from EnergyPoint research, we ranked second in terms of total customer satisfaction for the Oilfield Product Suppliers category. Being recognized as the preferred supplier for subsea wellheads and trees as well as risers and flexible joints is a testament to the hard work of our employees in meeting the needs of our customers. I want to thank our customers for their continued confidence in
“As we progress through 2021, market conditions are beginning to show signs of a recovery. The impacts from the global pandemic are starting to abate, and as oil and gas demand strengthens, we are encouraged that we could see further improvement in product bookings and service demand during 2021.
In conjunction with today’s release, the Company posted a new investor presentation entitled “First Quarter 2021 Supplemental Earnings Information” to its website, www.dril-quip.com, on the “Events & Presentations” page under the Investors tab. Investors should note that
Operational and Financial Results
Revenue, Cost of Sales and Gross Operating Margin
Consolidated revenue for the first quarter of 2021 was
Cost of sales for the first quarter of 2021 was
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses for the first quarter of 2021 were
Net Loss, Adjusted EBITDA and Free Cash Flow
For the first quarter of 2021, the Company reported a net loss of
Net cash provided by operations was
Cost Saving Initiatives and Liquidity
In the first quarter of 2021, the Company announced its plans to target productivity gains of approximately
Dril-Quip’s cash on hand as of
About
Forward-Looking Statements
Statements contained herein relating to future operations and financial results that are forward-looking statements, including those related to the effects of COVID-19 pandemic, market conditions, anticipated project bookings, expected timing of completing the strategic restructuring, anticipated timing of delivery of new orders, anticipated revenues, costs, cost synergies and savings, possible acquisitions, new product offerings and related revenues, 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 impact of the ongoing COVID-19 pandemic, the effects of actions taken by third parties, including, but not limited to, governmental authorities, customers, contractors and suppliers, in response to the ongoing COVID-19 pandemic, the impact of actions taken by the
Non-GAAP Financial Information
Adjusted Net Income (Loss), Adjusted Diluted EPS, Free Cash Flow and Adjusted EBITDA are non-GAAP measures.
Adjusted Net Income (Loss) and Adjusted Diluted EPS 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 and compare more effectively the results of our 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 (Loss), 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 or net cash provided by operating activities, as measured under
See “Unaudited Non-GAAP Financial Measures” 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 and should be read together with, and is 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.
Investor Relations Contact
(713) 939-7711
Blake_Holcomb@dril-quip.com
Comparative Condensed Consolidated Income Statement | |||||||||||
(Unaudited) | |||||||||||
Three months ended | |||||||||||
(In thousands, except per share data) | |||||||||||
Revenues: | |||||||||||
Products | $ | 55,583 | $ | 61,692 | $ | 67,558 | |||||
Services | 17,667 | 18,235 | 18,814 | ||||||||
Leasing | 7,989 | 7,307 | 9,626 | ||||||||
Total revenues | 81,239 | 87,234 | 95,998 | ||||||||
Costs and expenses: | |||||||||||
Cost of sales | 56,787 | 64,136 | 71,414 | ||||||||
Selling, general and administrative | 29,558 | 26,235 | 24,658 | ||||||||
Engineering and product development | 4,037 | 4,038 | 5,525 | ||||||||
Impairment | - | - | 7,719 | ||||||||
Restructuring and other charges | 25,020 | 478 | 32,713 | ||||||||
Gain on sale of assets | (3,955 | ) | (49 | ) | (467 | ) | |||||
Foreign currency transaction (gains) and losses | 1,374 | 4,024 | (3,242 | ) | |||||||
Total costs and expenses | 112,821 | 98,862 | 138,320 | ||||||||
Operating loss | (31,582 | ) | (11,628 | ) | (42,322 | ) | |||||
Interest income | 49 | 83 | 1,206 | ||||||||
Interest expense | (439 | ) | (83 | ) | (191 | ) | |||||
Income tax provision (benefit) | 2,386 | (374 | ) | (21,609 | ) | ||||||
Net loss | $ | (34,358 | ) | $ | (11,254 | ) | $ | (19,698 | ) | ||
Loss per share | |||||||||||
Basic | $ | (0.97 | ) | $ | (0.33 | ) | $ | (0.55 | ) | ||
Diluted | $ | (0.97 | ) | $ | (0.33 | ) | $ | (0.55 | ) | ||
Depreciation and amortization | $ | 7,416 | $ | 7,668 | $ | 8,873 | |||||
Capital expenditures | $ | (2,513 | ) | $ | 1,700 | $ | 4,187 | ||||
Weighted Average Shares Outstanding | |||||||||||
Basic | 35,385 | 35,276 | 35,695 | ||||||||
Diluted | 35,385 | 35,276 | 35,695 | ||||||||
Comparative Condensed Consolidated Balance Sheets | |||||
(Unaudited) | |||||
(In thousands) | |||||
Assets: | |||||
Cash and cash equivalents | $ | 362,213 | $ | 345,955 | |
Other current assets | 482,508 | 517,238 | |||
PP&E, net | 231,385 | 234,823 | |||
Other assets | 50,725 | 53,156 | |||
Total assets | $ | 1,126,831 | $ | 1,151,172 | |
Liabilities and Equity: | |||||
Current liabilities | $ | 95,307 | $ | 85,512 | |
Deferred Income taxes | 6,934 | 6,779 | |||
Other long-term liabilities | 16,324 | 17,353 | |||
Total liabilities | 118,565 | 109,644 | |||
Total stockholders equity | 1,008,266 | 1,041,528 | |||
Total liabilities and equity | $ | 1,126,831 | $ | 1,151,172 | |
Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Diluted Earnings per Share | |||||||||||||||||||||||
and Adjusted Diluted Earnings per Share | |||||||||||||||||||||||
Adjusted Net Income and EPS: | Three months ended | ||||||||||||||||||||||
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 | ||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||||
Net loss | $ | (34,358 | ) | $ | (0.97 | ) | $ | (11,254 | ) | $ | (0.33 | ) | $ | (19,698 | ) | $ | (0.55 | ) | |||||
Adjustments (after tax): | |||||||||||||||||||||||
Reverse the effect of foreign currency | 1,085 | 0.03 | 3,179 | 0.09 | (2,561 | ) | (0.07 | ) | |||||||||||||||
Add back impairment and other charges | - | - | - | - | 6,098 | 0.17 | |||||||||||||||||
Restructuring costs, including severance | 19,766 | 0.56 | 4,407 | 0.12 | 25,843 | 0.72 | |||||||||||||||||
Gain on sale of assets | (3,124 | ) | (0.09 | ) | (39 | ) | - | (369 | ) | (0.01 | ) | ||||||||||||
Adjusted net income (loss) | $ | (16,631 | ) | $ | (0.47 | ) | $ | (3,707 | ) | $ | (0.12 | ) | $ | 9,313 | $ | 0.26 | |||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA | |||||||||||
Adjusted EBITDA: | Three months ended | ||||||||||
(In thousands) | |||||||||||
Net loss | $ | (34,358 | ) | $ | (11,254 | ) | $ | (19,698 | ) | ||
Add: | |||||||||||
Interest (income) expense, net | 390 | - | (1,015 | ) | |||||||
Income tax provision (benefit) | 2,386 | (374 | ) | (21,609 | ) | ||||||
Depreciation and amortization expense | 7,416 | 7,668 | 8,873 | ||||||||
Impairments | - | - | 7,719 | ||||||||
Restructuring costs, including severance | 29,820 | 5,578 | 32,713 | ||||||||
Gain on sale of assets | (3,955 | ) | (49 | ) | (467 | ) | |||||
Foreign currency transaction (gains) and losses | 1,374 | 4,024 | (3,242 | ) | |||||||
Stock compensation expense | 3,186 | 3,453 | 3,176 | ||||||||
Brazilian amnesty settlement | 1,787 | - | - | ||||||||
Adjusted EBITDA | $ | 8,046 | $ | 9,046 | $ | 6,450 | |||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | |||||||||||
Free Cash Flow: | Three months ended | ||||||||||
(In thousands) | |||||||||||
Net cash provided (used in) by operating activities | $ | 13,072 | $ | (16,786 | ) | $ | (21,237 | ) | |||
Less: | |||||||||||
Purchase of property, plant and equipment | (2,513 | ) | (1,700 | ) | (4,187 | ) | |||||
Free cash flow | $ | 10,559 | $ | (18,486 | ) | $ | (25,424 | ) | |||
Source: Dril-Quip, Inc.