Press Release
Dril-Quip, Inc. Announces First Quarter 2024 Results
First Quarter Highlights
- Revenue of
$110.3 million decreased 12.7% sequentially and increased 21.4% year-over-year - Net Subsea Product Bookings of
$41.1 million - Net Loss of
$20.0 million decreased$21.8 million sequentially and$22.3 million year-over-year - Adjusted EBITDA of
$10.2 million decreased$6.4 million sequentially and increased$1.3 million year-over-year - Gross Margin of 28.9 % increased 147 basis points sequentially and 99 basis points year-over-year
- Delivered first Great North wellheads internationally to a project in
North Africa - First installation of our SS-15® RLDe Rigid Lockdown Subsea Wellhead System for an offshore project in
Australia - Maintained our MSCI ESG rating of an "A" for the year
- Announced strategic combination with
Innovex Downhole Solutions Inc. ("Innovex") to create a leading industrial energy platform
Operational and Financial Results
Revenue, Cost of Sales and Gross Operating Margin
Consolidated revenue for the first quarter of 2024 was
Cost of sales for the first quarter of 2024 was
Selling, General, Administrative, and Engineering & Other Expenses
Selling, general and administrative ("SG&A") expenses for the first quarter of 2024 were
Engineering and product development expenses were
During the quarter, the Company recognized
Net Income, Adjusted EBITDA and Free Cash Flow
For the first quarter of 2024, the Company reported net loss of
Adjusted EBITDA totaled
Cash used in operations was
Capital expenditures in the first quarter of 2024 were
Outlook
Due to the pending merger with Innovex, the Company has suspended providing earnings guidance updates. Accordingly, investors are cautioned not to rely on historical forward-looking statements as those forward-looking statements were the estimates of management only as of the date provided and were subject to the specific risks and uncertainties that accompanied such forward-looking statements.
Conference Call
Due to the pending merger with Innovex,
About
Investors should note that
Forward-Looking Statements
Statements contained herein relating to future operations and financial results that are forward-looking statements, including those related to market conditions, benefits of the recently completed acquisition of Great North, anticipated project bookings, 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, risks related to the pending merger with Innovex, including uncertainty as to whether the conditions to closing the mergers will be satisfied or whether the mergers will be completed, the risk that a regulatory approval, consent or authorization that may be required for the transaction is not obtained in a timely manner or at all, or is obtained subject to conditions that are not anticipated, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, the impact of actions taken by the
Important Information for Stockholders
In connection with the proposed merger of the Company and Innovex, the Company has filed with the
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
The Company and its directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders in connection with the proposed merger. Information about the Company's directors and executive officers including a description of their interests in the Company is included in the Company's most recent Annual Report on Form 10-K, including any information incorporated therein by reference, as filed with 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 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, stock-based compensation, 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:
Erin_Fazio@dril-quip.com
Comparative Condensed Consolidated Income Statement
(Unaudited)
|
|
Three months ended | |||||||||||
|
|
||||||||||||
|
|
(In thousands, except per share data) | |||||||||||
|
Revenues:
|
||||||||||||
|
Products
|
$ | 64,562 | $ | 78,344 | $ | 59,246 | ||||||
|
Services
|
30,187 | 33,452 | 21,281 | |||||||||
|
Leasing
|
15,548 | 14,548 | 10,338 | |||||||||
|
Total revenues
|
110,297 | 126,344 | 90,865 | |||||||||
|
Costs and expenses:
|
||||||||||||
|
Cost of sales
|
78,419 | 91,687 | 65,502 | |||||||||
|
Selling, general and administrative
|
29,991 | 29,825 | 22,585 | |||||||||
|
Engineering and product development
|
3,738 | 2,987 | 3,399 | |||||||||
|
Restructuring and other charges
|
- | (130 | ) | 1,718 | ||||||||
|
Gain on sale of property, plant and equipment
|
(200 | ) | (342 | ) | (6,647 | ) | ||||||
|
Acquisition costs
|
19,046 | (41 | ) | - | ||||||||
|
Change in fair value of earn-out liability
|
- | (2,282 | ) | - | ||||||||
|
Foreign currency transaction loss (gain)
|
(1,895 | ) | 83 | 1,120 | ||||||||
|
Total costs and expenses
|
129,099 | 121,787 | 87,677 | |||||||||
|
Operating income (loss)
|
(18,802 | ) | 4,557 | 3,188 | ||||||||
|
Interest income, net
|
(2,196 | ) | (1,150 | ) | (2,747 | ) | ||||||
|
Income tax provision (benefit)
|
3,378 | 3,863 | 3,624 | |||||||||
|
Net income (loss)
|
$ | (19,984 | ) | $ | 1,844 | $ | 2,311 | |||||
|
Net income (loss) per share
|
||||||||||||
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Basic
|
$ | (0.58 | ) | $ | 0.05 | $ | 0.07 | |||||
|
Diluted
|
$ | (0.58 | ) | $ | 0.05 | $ | 0.07 | |||||
|
Depreciation and amortization
|
$ | 8,432 | $ | 8,487 | $ | 6,889 | ||||||
|
Capital expenditures
|
$ | 4,757 | $ | 11,585 | $ | 5,424 | ||||||
|
Weighted Average Shares Outstanding
|
||||||||||||
|
Basic
|
34,417 | 34,306 | 34,128 | |||||||||
|
Diluted
|
34,417 | 34,539 | 34,489 | |||||||||
Comparative Condensed Consolidated Balance Sheets
(Unaudited)
|
|
||||||||
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(In thousands) | |||||||
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Assets:
|
||||||||
|
Cash, cash equivalents, and restricted cash
|
$ | 202,300 | $ | 191,400 | ||||
|
Short-term investments
|
4,016 | 25,908 | ||||||
|
Other current assets
|
508,829 | 502,409 | ||||||
|
PP&E, net
|
215,264 | 217,631 | ||||||
|
Other assets
|
90,618 | 90,833 | ||||||
|
Total assets
|
$ | 1,021,027 | $ | 1,028,181 | ||||
|
Liabilities and Equity:
|
||||||||
|
Current liabilities
|
$ | 133,556 | $ | 117,703 | ||||
|
Deferred income taxes
|
10,330 | 10,564 | ||||||
|
Other long-term liabilities
|
19,778 | 18,654 | ||||||
|
Total liabilities
|
163,664 | 146,921 | ||||||
|
Total stockholders equity
|
857,363 | 881,260 | ||||||
|
Total liabilities and equity
|
$ | 1,021,027 | $ | 1,028,181 | ||||
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share to Adjusted Diluted Earnings (Loss) per Share
|
Adjusted Net Income (Loss) and Diluted EPS:
|
Three months ended | |||||||||||||||||||||||
|
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||||||||||||||||||||||||
|
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Effect on net income (loss) (after-tax) |
Impact on diluted earnings (loss) per share |
Effect on net income (loss) (after-tax) |
Impact on diluted earnings (loss) per share |
Effect on net income (loss) (after-tax) |
Impact on diluted earnings (loss) per share |
||||||||||||||||||
|
|
(In thousands, except per share amounts) | |||||||||||||||||||||||
|
Net income (loss)
|
$ | (19,984 | ) | $ | (0.58 | ) | $ | 1,844 | $ | 0.05 | $ | 2,311 | $ | 0.07 | ||||||||||
|
Adjustments (after tax):
|
||||||||||||||||||||||||
|
Foreign currency transaction loss
|
(1,497 | ) | (0.04 | ) | 66 | - | 885 | 0.03 | ||||||||||||||||
|
Restructuring and other charges
|
- | - | (103 | ) | - | 1,357 | 0.04 | |||||||||||||||||
|
Gain on sale of property, plant and equipment
|
(158 | ) | - | (270 | ) | (0.01 | ) | (5,251 | ) | (0.15 | ) | |||||||||||||
|
Adjusted net income (loss)
|
$ | (21,639 | ) | $ | (0.62 | ) | $ | 1,537 | $ | 0.04 | $ | (698 | ) | $ | (0.01 | ) | ||||||||
| ^ | ^ | ^ | ^ | ^ | ||||||||||||||||||||
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Weighted Average Shares Outstanding
|
34,417 | 34,539 | 34,489 | |||||||||||||||||||||
|
Tax Rate
|
21 | % | 21 | % | 21 | % | ||||||||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA
|
Adjusted EBITDA:
|
Three months ended | |||||||||||
| (In thousands) | ||||||||||||
|
Net income (loss)
|
$ | (19,984 | ) | $ | 1,844 | 2,311 | ||||||
|
Add:
|
||||||||||||
|
Interest income, net
|
(2,196 | ) | (1,150 | ) | (2,747 | ) | ||||||
|
Income tax provision (benefit)
|
3,379 | 3,863 | 3,624 | |||||||||
|
Depreciation and amortization expense
|
8,432 | 8,487 | 6,889 | |||||||||
|
Restructuring and other charges
|
- | (130 | ) | 1,718 | ||||||||
|
Acquisition costs
|
19,046 | (41 | ) | - | ||||||||
|
Change in fair value of earn-out liability
|
- | (2,282 | ) | - | ||||||||
|
Gain on sale of property, plant and equipment
|
(200 | ) | (342 | ) | (6,647 | ) | ||||||
|
Foreign currency transaction loss
|
(1,895 | ) | 83 | 1,120 | ||||||||
|
Stock compensation expense
|
2,788 | 3,173 | 2,577 | |||||||||
|
Other
|
805 | 3,041 | - | |||||||||
|
Adjusted EBITDA
|
$ | 10,175 | $ | 16,546 | $ | 8,845 | ||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
|
Free Cash Flow:
|
Three months ended | |||||||||||
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|
||||||||||||
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(In thousands) | |||||||||||
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Net cash provided by (used in) operating
activities |
$ | (4,104 | ) | $ | 26,131 | $ | (52,920 | ) | ||||
|
Less:
|
||||||||||||
|
Purchase of property, plant and equipment
|
(4,757 | ) | (11,585 | ) | (5,424 | ) | ||||||
|
Free cash flow
|
$ | (8,861 | ) | $ | 14,546 | $ | (58,344 | ) | ||||
SOURCE:
press releaseaccesswire.com