Press Release
Dril-Quip, Inc. Announces Fourth Quarter and Full Year 2020 Results
Key highlights for the fourth quarter of 2020 included:
- Delivered fourth quarter revenue of
$87.2 million and full year 2020 revenue of$365.0 million despite significant disruptions to operations and timing of deliveries from pandemic related impacts; - Recorded a net loss of
$11.3 million , or$0.33 per share, in the fourth quarter of 2020 and a net loss of$30.8 million , or$0.87 per share, for the full year 2020; - Generated adjusted EBITDA of
$9.0 million , or 10.3% of revenue, in the fourth quarter of 2020 and adjusted EBITDA of$31.7 million , or 8.7% of revenue, for the full year 2020; - Reported net cash used by operating activities of
$16.8 million in the fourth quarter of 2020 and$21.1 million for the full year 2020; - Free cash flow was negative
$18.5 million , inclusive of$1.7 million of capital expenditures, for the fourth quarter of 2020 and negative$33.0 million , inclusive of$11.9 million of capital expenditures for the full year 2020; - Completed 2020 planned cost saving initiatives, capturing
$20 million in annualized savings, and expect approximately$10 million in additional annualized cost savings in 2021, of which$5 million is expected to be realized during the year
“Despite the difficult operating environment, we were able to accomplish a number of objectives that helped us navigate the difficult 2020 environment and set us on a path to future growth and profitability for
“During the fourth quarter we saw bookings of
“We remain committed to driving annual productivity improvements through continued deployment of LEAN. We estimate these to contribute
“Building on our leaner cost structure, we are making progress in advancing various growth initiatives as well. This includes exploring further peer-to-peer collaborations to gain access to new markets for our technology and growing our downhole tools product line in underrepresented markets. We also look to expand the utilization of our ‘e Series’ technology offering to current and prospective customers in order to help them lower the costs and carbon footprint of their projects by reducing rig time and materials. A responsibility that we embrace as our customers look to us to assist them with certain aspects of their energy transition.”
“As we move into 2021,
In conjunction with today’s release, the Company posted a new investor presentation entitled “Fourth Quarter and Full Year 2020 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 fourth quarter of 2020 was
Cost of sales for the fourth quarter of 2020 was
Cost of sales for the full year of 2020 was
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses for the fourth quarter of 2020 were
Net Income, Adjusted EBITDA and Free Cash Flow
For the fourth quarter of 2020, the Company reported a net loss of
Adjusted EBITDA totaled
Net cash provided by operating activities was a negative
Cost Saving Initiatives
In the first quarter of 2020, the Company announced its plans to achieve approximately
The Company will continue on its LEAN journey and is targeting additional productivity gains of approximately
Balance Sheet and Liquidity
Dril-Quip’s cash on hand as of
Share Repurchases
For the three-month period ended
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 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 | Twelve months ended | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenues: | |||||||||||||||
Products | $ | 61,692 | $ | 66,451 | $ | 258,834 | $ | 303,279 | |||||||
Services | 18,235 | 17,778 | 75,577 | 72,018 | |||||||||||
Leasing | 7,307 | 7,066 | 30,562 | 39,509 | |||||||||||
Total revenues | 87,234 | 91,295 | 364,973 | 414,806 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of sales | 64,136 | 67,211 | 269,698 | 295,007 | |||||||||||
Selling, general and administrative | 26,235 | 20,843 | 95,057 | 98,412 | |||||||||||
Engineering and product development | 4,038 | 3,983 | 18,920 | 17,329 | |||||||||||
Impairment | - | - | 7,719 | - | |||||||||||
Restructuring and other charges | 478 | 602 | 35,380 | 4,396 | |||||||||||
(Gain) loss on sale of assets | (49 | ) | 14 | (587 | ) | (1,511 | ) | ||||||||
Foreign currency transaction (gains) and losses | 4,024 | 746 | 2,345 | (1,630 | ) | ||||||||||
Total costs and expenses | 98,862 | 93,399 | 428,532 | 412,003 | |||||||||||
Operating income (loss) | (11,628 | ) | (2,104 | ) | (63,559 | ) | 2,803 | ||||||||
Interest income | 83 | 188 | 2,131 | 7,940 | |||||||||||
Interest expense | (83 | ) | (138 | ) | (621 | ) | (314 | ) | |||||||
Income tax provision (benefit) | (374 | ) | (16,380 | ) | (31,281 | ) | 8,709 | ||||||||
Net income (loss) | $ | (11,254 | ) | $ | 14,326 | $ | (30,768 | ) | $ | 1,720 | |||||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | (0.33 | ) | $ | 0.41 | $ | (0.87 | ) | $ | 0.05 | |||||
Diluted | $ | (0.33 | ) | $ | 0.41 | $ | (0.87 | ) | $ | 0.05 | |||||
Depreciation and amortization | $ | 7,668 | $ | 7,908 | $ | 32,389 | $ | 34,020 | |||||||
Capital expenditures | $ | 1,700 | $ | 1,925 | $ | 11,943 | $ | 11,501 | |||||||
Weighted Average Shares Outstanding: | |||||||||||||||
Basic | 35,276 | 35,049 | 35,260 | 35,839 | |||||||||||
Diluted | 35,276 | 35,249 | 35,260 | 36,152 | |||||||||||
Comparative Condensed Consolidated Balance Sheets | |||||||||||
(Unaudited) | |||||||||||
(In thousands) | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 345,955 | $ | 359,171 | $ | 398,946 | |||||
Other current assets | 517,238 | 503,831 | 481,543 | ||||||||
PP&E, net | 234,823 | 239,591 | 258,497 | ||||||||
Other assets | 53,156 | 56,946 | 67,579 | ||||||||
Total assets | $ | 1,151,172 | $ | 1,159,539 | $ | 1,206,565 | |||||
Liabilities and Equity: | |||||||||||
Current liabilities | $ | 85,512 | $ | 100,982 | $ | 96,940 | |||||
Deferred Income taxes | 6,779 | 3,657 | 4,150 | ||||||||
Other long-term liabilities | 17,353 | 17,338 | 14,774 | ||||||||
Total liabilities | 109,644 | 121,977 | 115,864 | ||||||||
Total stockholders equity | 1,041,528 | 1,037,562 | 1,090,701 | ||||||||
Total liabilities and equity | $ | 1,151,172 | $ | 1,159,539 | $ | 1,206,565 | |||||
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 income (loss) | $ | (11,254 | ) | $ | (0.33 | ) | $ | 14,326 | $ | 0.41 | $ | 7,400 | $ | 0.21 | |||||||||
Adjustments (after tax): | |||||||||||||||||||||||
Reverse the effect of foreign currency | 3,179 | 0.09 | 589 | 0.02 | 355 | 0.01 | |||||||||||||||||
Restructuring costs, including severance | 4,407 | 0.12 | 476 | 0.01 | 344 | 0.01 | |||||||||||||||||
(Gain) loss on sale of assets | (39 | ) | - | 11 | - | (22 | ) | - | |||||||||||||||
Adjusted net income (loss) | $ | (3,707 | ) | $ | (0.12 | ) | $ | 15,402 | $ | 0.44 | $ | 8,077 | $ | 0.23 | |||||||||
Adjusted Net Income and EPS: | Twelve months ended |
||||||||||||||||||||||
2020 |
2019 |
2018 |
|||||||||||||||||||||
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 income (loss) | $ | (30,768 | ) | $ | (0.87 | ) | $ | 1,720 | $ | 0.05 | $ | (95,695 | ) | $ | (2.58 | ) | |||||||
Adjustments (after tax): | |||||||||||||||||||||||
Reverse the effect of foreign currency | 1,853 | 0.05 | (1,287 | ) | (0.04 | ) | (796 | ) | (0.02 | ) | |||||||||||||
Add back impairment | 6,098 | 0.17 | - | - | 67,569 | 1.82 | |||||||||||||||||
Restructuring costs, including severance | 31,979 | 0.91 | 3,473 | 0.10 | 10,326 | 0.28 | |||||||||||||||||
Gain on sale of assets | (464 | ) | (0.01 | ) | (1,194 | ) | (0.03 | ) | (4,896 | ) | (0.13 | ) | |||||||||||
Adjusted net income (loss) | $ | 8,698 | $ | 0.25 | $ | 2,712 | $ | 0.08 | $ | (23,491 | ) | $ | (0.63 | ) | |||||||||
Adjusted EBITDA: | Three months ended | ||||||||||
(In thousands) | |||||||||||
Net income (loss) | $ | (11,254 | ) | $ | 14,326 | $ | 7,400 | ||||
Add: | |||||||||||
Interest income, (net) | (1 | ) | (50 | ) | (1,181 | ) | |||||
Income tax benefit | (373 | ) | (16,380 | ) | (155 | ) | |||||
Depreciation and amortization expense | 7,668 | 7,908 | 8,865 | ||||||||
Restructuring costs, including severance | 5,578 | 602 | 435 | ||||||||
(Gain) loss on sale of assets | (49 | ) | 14 | (28 | ) | ||||||
Foreign currency loss | 4,024 | 746 | 449 | ||||||||
Stock compensation expense | 3,453 | 3,003 | (25 | ) | |||||||
Adjusted EBITDA | $ | 9,046 | $ | 10,169 | $ | 15,760 | |||||
Adjusted EBITDA: | Year ended | ||||||||||
(In thousands) | |||||||||||
Net income (loss) | $ | (30,768 | ) | $ | 1,720 | $ | (95,695 | ) | |||
Add: | |||||||||||
Interest income, (net) | (1,510 | ) | (7,626 | ) | (7,749 | ) | |||||
Income tax expense (benefit) | (31,281 | ) | 8,709 | (19,294 | ) | ||||||
Depreciation and amortization expense | 32,389 | 34,020 | 35,312 | ||||||||
Impairment | 7,719 | 4,396 | 13,071 | ||||||||
Restructuring costs, including severance | 40,480 | - | 85,531 | ||||||||
Gain on sale of assets | (587 | ) | (1,511 | ) | (6,198 | ) | |||||
Foreign currency loss (gain) | 2,345 | (1,630 | ) | (1,007 | ) | ||||||
Stock compensation expense | 12,914 | 15,721 | 13,459 | ||||||||
Adjusted EBITDA | $ | 31,701 | $ | 53,799 | $ | 17,430 | |||||
Free Cash Flow: | Three months ended | ||||||||||
(In thousands) | |||||||||||
Net cash provided by (used in) operating activities | $ | (16,786 | ) | $ | 13,889 | $ | 8,054 | ||||
Less: | |||||||||||
Purchase of property, plant and equipment | (1,700 | ) | (1,925 | ) | (2,881 | ) | |||||
Free cash flow | $ | (18,486 | ) | $ | 11,964 | $ | 5,173 | ||||
Free Cash Flow: | Year ended |
||||||||||
2020 | 2019 | 2018 | |||||||||
(In thousands) | |||||||||||
Net cash provided by (used in) operating activities | $ | (21,088 | ) | $ | 14,678 | $ | 45,503 | ||||
Less: | |||||||||||
Purchase of property, plant and equipment | (11,943 | ) | (11,501 | ) | (32,061 | ) | |||||
Free cash flow | $ | (33,031 | ) | $ | 3,177 | $ | 13,442 | ||||
Source: Dril-Quip, Inc.