Press Release
Dril-Quip, Inc. Announces Fourth Quarter and Full Year 2023 Results
Annual revenue increases double digits year-over-year
Full year cash provided by operations increases
Company provides fiscal 2024 financial outlook
Fourth Quarter Highlights
- Revenue of
$126.3 million increased 8% sequentially and 31% year-over-year - Net Bookings of
$122.7 million increased$76.2 million sequentially and$24.4 million year-over-year - Net Income of
$1.8 million increased$8.9 million sequentially and$2.1 million year-over-year - Adjusted EBITDA of
$16.5 million increased 34% sequentially and 61% year-over-year - Gross Margin of 27.4% improved 44 basis points sequentially and decreased 381 basis points year-over-year
- Cash Provided by Operations of
$26.1 million increased$2.9 million sequentially and$43.7 million year-over-year - Free cash flow of
$14.5 million decreased$3.3 million sequentially and increased$37.3 million year-over-year - Closed on the sale of a third
Houston property generating net proceeds of$9 million - Secured major subsea production system in
Australia for approximately$40 million - Awarded 3-year deepwater subsea wellhead contract by CNOOC
- Won a multi-well, multi-year contract to supply Subsea Wellhead Systems in
Mexico - Awarded Hibernia / Exxon Canada Diverter Systems which provides a special application for pressure balanced drilling
- Deployed equipment for the completion of three Canadian carbon storage appraisal wells
Full Year Highlights
- Revenue of
$424.1 million increased 17% year-over-year - Net Bookings of
$295.4 million increased 9% year-over-year - Signed 11 new master service agreements (MSAs) in 2023
- Net Income of
$0.6 million increased$2.2 million year-over-year - Adjusted EBITDA of
$46.5 million reflecting 27% incremental margins - Closed on the sale of two
Houston properties completing the current footprint optimization initiative, resulting in net proceeds of$23 million in 2023 - Completed the acquisition of Great North which contributed
$35.2 million to 2023 revenue - Installed BigBore™ lle subsea wellhead systems for Petrobras Exploratory project in the
Santos Basin - Successfully installed HorizontalBore™ subsea trees at Woodside Shenzi North
- Awarded tender with Petrobras for 43 subsea wellhead systems supporting their pre-salt well development project
- First delivery of XPak De TM liner hangers for exploration projects in
Africa - Participation in a geothermal project in
New Zealand through our connector product line
"Strong performance in the fourth-quarter was great way to close out 2023 for
"With improved reporting lines, leaner operations, and quicker delivery times for our customers, we are well positioned to capitalize on the ongoing offshore upcycle and drive future margins meaningfully higher. Our strong balance sheet and financial flexibility allow us to continue to evaluate both organic and inorganic growth opportunities with the expectation to capture incremental market share and ultimately drive sustained, profitable growth for our shareholders."
2024 Financial Outlook
- Revenue growth of 15%-20%
- Adjusted EBITDA of
$65 million to$75 million - Subsea Product Bookings of
$200 million to$225 million - Capital Expenditures 3-5% of revenue
In conjunction with today's release, the Company posted a new investor presentation entitled "2024 Investor Presentation" 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 2023 was
For the full year 2023, revenue was
Cost of sales for the fourth quarter of 2023 was
Cost of sales for the full year of 2023 was
Selling, General, Administrative, and Engineering Expenses
Selling, general and administrative ("SG&A") expenses for the fourth quarter of 2023 were
Engineering and product development expenses were
Net Income, Adjusted EBITDA and Free Cash Flow
For the fourth quarter of 2023, the Company reported net income of
Adjusted EBITDA totaled
Cash provided by operations was
Cash provided by operations was
Net proceeds from sale of property, plant and equipment was
Share Repurchases
During 2023, the Company did not make any share repurchases. The Company has approximately
Conference Call and Webcast
Management will host a conference call and a webcast to discuss the financial results on
To access the call, please dial in approximately ten minutes before the start of the call.
Conference Call and Webcast Details
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Date / Time: |
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Webcast: |
https://www.webcaster4.com/Webcast/Page/2968/49907 |
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877-545-0523 |
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International Dial-In: |
973-528-0016 |
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Participant Access Code: |
699212 |
For those unable to participate in the live call, an audio replay will be available following the call through midnight
About
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, expected timing of completing 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 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 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.
Comparative Condensed Consolidated Income Statement
(Unaudited)
| Three months ended | Twelve months ended | |||||||||||||||
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Revenues:
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||||||||||||||||
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Products
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$ | 78,344 | $ | 77,603 | $ | 271,021 | $ | 240,762 | ||||||||
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Services
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33,452 | 27,214 | 105,680 | 79,129 | ||||||||||||
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Leasing
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14,548 | 12,427 | 47,359 | 42,033 | ||||||||||||
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Total revenues
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126,344 | 117,244 | 424,060 | 361,924 | ||||||||||||
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Costs and expenses:
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Cost of sales
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91,687 | 85,603 | 308,503 | 265,935 | ||||||||||||
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Selling, general and administrative
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29,825 | 26,993 | 101,517 | 94,206 | ||||||||||||
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Engineering and product development
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2,987 | 3,061 | 12,649 | 11,740 | ||||||||||||
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Restructuring and other charges
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(130 | ) | 2,267 | 3,245 | 13,364 | |||||||||||
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Gain on sale of property, plant and equipment
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(342 | ) | (1,027 | ) | (8,754 | ) | (20,019 | ) | ||||||||
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Acquisition costs
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(41 | ) | 5,358 | 6,451 | - | |||||||||||
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Change in fair value of earn-out liability
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(2,282 | ) | - | (2,282 | ) | - | ||||||||||
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Foreign currency transaction loss (gain)
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83 | 1,060 | (2,549 | ) | (3,756 | ) | ||||||||||
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Total costs and expenses
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121,787 | 123,315 | 418,780 | 361,470 | ||||||||||||
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Operating income (loss)
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4,557 | (6,071 | ) | 5,280 | 454 | |||||||||||
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Interest income, net
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(1,150 | ) | (2,312 | ) | (8,188 | ) | (4,249 | ) | ||||||||
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Income tax provision (benefit)
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3,863 | 3,275 | 12,864 | 6,327 | ||||||||||||
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Net income (loss)
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$ | 1,844 | $ | (7,034 | ) | $ | 604 | $ | (1,624 | ) | ||||||
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Net income (loss) per share
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Basic
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$ | 0.05 | $ | (0.21 | ) | $ | 0.02 | $ | (0.05 | ) | ||||||
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Diluted
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$ | 0.05 | $ | (0.21 | ) | $ | 0.02 | $ | (0.05 | ) | ||||||
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Depreciation and amortization
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$ | 8,487 | $ | 7,899 | $ | 30,324 | $ | 29,421 | ||||||||
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Capital expenditures
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$ | 11,585 | $ | 5,430 | $ | 32,626 | $ | 18,866 | ||||||||
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Weighted Average Shares Outstanding
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Basic
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34,306 | 34,132 | 34,174 | 34,237 | ||||||||||||
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Diluted
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34,539 | 34,132 | 34,473 | 34,237 | ||||||||||||
Comparative Condensed Consolidated Balance Sheets
(Unaudited)
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Assets:
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Cash, cash equivalents, and restricted cash
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$ | 191,400 | $ | 181,072 | $ | 264,804 | ||||||
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Short-term investments
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25,908 | 8,911 | 32,232 | |||||||||
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Other current assets
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502,409 | 519,057 | 452,988 | |||||||||
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PP&E, net
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217,631 | 211,806 | 181,270 | |||||||||
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Other assets
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90,833 | 86,722 | 38,657 | |||||||||
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Total assets
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$ | 1,028,181 | $ | 1,007,568 | $ | 969,951 | ||||||
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Liabilities and Equity:
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Current liabilities
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$ | 117,703 | $ | 106,735 | $ | 87,555 | ||||||
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Deferred income taxes
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10,564 | 12,114 | 3,756 | |||||||||
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Other long-term liabilities
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18,654 | 18,257 | 6,288 | |||||||||
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Total liabilities
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146,921 | 137,106 | 97,599 | |||||||||
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Total stockholders equity
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881,260 | 870,462 | 872,352 | |||||||||
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Total liabilities and equity
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$ | 1,028,181 | $ | 1,007,568 | $ | 969,951 | ||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
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Free Cash Flow:
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Three months ended | |||||||||||
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(In thousands) | |||||||||||
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Net cash provided by (used in) operating activities
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$ | 26,131 | $ | 23,234 | $ | (17,604 | ) | |||||
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Less:
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Purchase of property, plant and equipment
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(11,585 | ) | (5,430 | ) | (5,154 | ) | ||||||
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Free cash flow
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$ | 14,546 | $ | 17,804 | $ | (22,758 | ) | |||||
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Free Cash Flow:
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Twelve months ended |
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2023 | 2022 | 2021 | |||||||||
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Net cash provided by (used in) operating activities
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$ | 7,727 | $ | (36,771 | ) | $ | 38,428 | |||||
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Less:
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Purchase of property, plant and equipment
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(32,626 | ) | (18,866 | ) | (9,990 | ) | ||||||
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Free cash flow
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$ | (24,899 | ) | $ | (55,637 | ) | $ | 28,438 | ||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA
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Adjusted EBITDA:
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Three months ended | |||||||||||
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Net income (loss)
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$ | 1,844 | $ | (7,034 | ) | (405 | ) | |||||
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Add:
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Interest income, net
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(1,150 | ) | (2,312 | ) | (3,378 | ) | ||||||
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Income tax provision (benefit)
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3,863 | 3,275 | 1,266 | |||||||||
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Depreciation and amortization expense
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8,487 | 7,899 | 7,069 | |||||||||
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Restructuring and other charges
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(130 | ) | 2,267 | 3,466 | ||||||||
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Acquisition costs
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(41 | ) | 5,358 | - | ||||||||
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Change in fair value of earn-out liability
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(2,282 | ) | - | - | ||||||||
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Gain on sale of property, plant and equipment
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(342 | ) | (1,027 | ) | (2,249 | ) | ||||||
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Foreign currency transaction loss
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83 | 1,060 | 1,818 | |||||||||
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Stock compensation expense
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3,173 | 2,576 | 2,694 | |||||||||
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Other
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3,041 | 309 | - | |||||||||
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Adjusted EBITDA
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$ | 16,546 | $ | 12,371 | $ | 10,281 | ||||||
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Adjusted EBITDA:
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Year ended | |||||||||||
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Net income (loss)
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$ | 604 | $ | (1,624 | ) | $ | (128,493 | ) | ||||
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Add:
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Interest expense (income), net
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(8,188 | ) | (4,249 | ) | 212 | |||||||
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Income tax provision
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12,864 | 6,327 | 2,946 | |||||||||
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Depreciation and amortization expense
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30,324 | 29,421 | 30,381 | |||||||||
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Restructuring and other charges
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3,245 | 13,364 | 96,650 | |||||||||
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Acquisition costs
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6,451 | - | - | |||||||||
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Change in fair value of earn-out liability
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(2,282 | ) | - | - | ||||||||
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Gain on sale of property, plant and equipment
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(8,754 | ) | (20,019 | ) | (4,482 | ) | ||||||
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Foreign currency transaction loss (gain)
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(2,549 | ) | (3,756 | ) | 836 | |||||||
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Stock compensation expense
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10,892 | 10,363 | 14,895 | |||||||||
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Other
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3,935 | - | 1,787 | |||||||||
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Adjusted EBITDA
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$ | 46,542 | $ | 29,827 | $ | 14,732 | ||||||
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share
to Adjusted Diluted Earnings (Loss) per Share
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Adjusted Net Income (Loss) and Diluted EPS:
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Three months ended | |||||||||||||||||||||||
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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 |
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(In thousands, except per share amounts) | |||||||||||||||||||||||
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Net income (loss)
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$ | 1,844 | $ | 0.05 | $ | (7,034 | ) | $ | (0.21 | ) | $ | (405 | ) | $ | (0.01 | ) | ||||||||
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Adjustments (after tax):
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Foreign currency transaction loss
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66 | - | 837 | 0.02 | 1,436 | 0.04 | ||||||||||||||||||
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Restructuring and other charges
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(103 | ) | - | 1,791 | 0.05 | 2,738 | 0.08 | |||||||||||||||||
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Gain on sale of property, plant and equipment
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(270 | ) | (0.01 | ) | (811 | ) | (0.02 | ) | (1,777 | ) | (0.05 | ) | ||||||||||||
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Adjusted net income (loss)
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$ | 1,537 | $ | 0.04 | $ | (5,217 | ) | $ | (0.16 | ) | $ | 1,993 | $ | 0.06 | ||||||||||
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Adjusted Net Income (Loss) and Diluted EPS:
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Twelve months ended |
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2023 | 2022 | 2021 | |||||||||||||||||||||
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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 |
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(In thousands, except per share amounts) | |||||||||||||||||||||||
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Net income (loss)
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$ | 604 | $ | 0.02 | $ | (1,624 | ) | $ | (0.05 | ) | $ | (128,493 | ) | $ | (3.63 | ) | ||||||||
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Adjustments (after tax):
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Foreign currency transaction loss (gain)
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(2,014 | ) | (0.06 | ) | (2,967 | ) | (0.09 | ) | 660 | 0.02 | ||||||||||||||
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Restructuring and other charges
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2,564 | 0.07 | 10,558 | 0.31 | 76,354 | 2.16 | ||||||||||||||||||
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Gain on sale of property, plant and equipment
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(6,916 | ) | (0.20 | ) | (15,815 | ) | (0.46 | ) | (3,541 | ) | (0.10 | ) | ||||||||||||
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Adjusted net loss
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$ | (5,762 | ) | $ | (0.17 | ) | $ | (9,849 | ) | $ | (0.29 | ) | $ | (55,020 | ) | $ | (1.55 | ) | ||||||
Investor Relations Contact
Erin_Fazio@dril-quip.com
SOURCE:
press releaseaccesswire.com