Press Release
Dril-Quip, Inc. Announces Second Quarter 2023 Results
Second quarter bookings increase 47% over prior year
Announces acquisition of Great North to expand the Company's
Second Quarter Highlights
- Revenue of
$89.6 million decreased 1% sequentially and 5% year-over-year - Net Bookings of
$72.7 million increased 36% sequentially and 47% year-over-year, representing a book-to-bill ratio of 1.2x - Net Income of
$3.5 million increased$1.2 million sequentially and increased$9.1 million year-over-year - Adjusted EBITDA of
$8.8 million is sequentially flat and decreased$0.6 million year-over-year - Gross Margin of 26.7% decreased 125 basis points sequentially and increased 79 basis points year-over-year
- Installed BigBore™ lle Wellhead System for Petrobras Exploratory project in the
Santos Basin - Successfully installed HorizontalBore™ Subsea Trees at Woodside Shenzi North
- Remain on track to complete footprint optimization initiatives by year end 2023
- Subsequent to quarter end, received approximately
$16.8 million from theU.S. Internal Revenue Service related to prior year audit adjustments - Subsequent to quarter end, announced acquisition of Great North to expand the Company's
Well Construction portfolio (the "Acquisition")
"We delivered another quarter of strong operational performance as we continue to benefit from the improving offshore drilling market, while we control costs and drive sustained margin improvement," said
"As we look toward the second half of the year, the integration of Great North will be a priority to capture the potential high value this transaction creates. The continuation of our organic operational efficiency initiatives and the closing on the sale of a third property in
Great North Wellhead Acquisition
The Company also announced today, in a separate press release, that it has acquired Great North Wellhead and its subsidiaries (collectively "Great North") for approximately
Updated Financial Outlook
Dril-Quip is raising its full year 2023 revenue target to 20% growth over 2022 to account for the 2023 impact of the acquisition of Great North, indicating second half 2023 revenue in the range of$240 million to$250 million - Bookings year-over-year growth of 10% to 20%
- Second half 2023 adjusted EBITDA margins of 14% - 16%
- Capital expenditures of
$30 million for the full year 2023
In conjunction with today's release, the Company posted a new investor presentation entitled "Q2 2023 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 second quarter of 2023 was
Cost of sales for the second quarter of 2023 was
Selling, General, Administrative, and Engineering Expenses
Selling, general and administrative ("SG&A") expenses for the second quarter of 2023 were
Net Income, Adjusted EBITDA and Free Cash Flow
For the second quarter of 2023, the Company reported net income of
Adjusted EBITDA totaled
Cash provided by operations was
Share Repurchases
During the second quarter of 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: |
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888-506-0062 |
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International Dial-In: |
973-528-0011 |
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Conference ID: |
605971 |
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, 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.
Investor Relations Contact
Erin_Fazio@dril-quip.com
Comparative Condensed Consolidated Income Statement
(Unaudited)
| Three months ended | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
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Revenues:
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||||||||||||
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Products
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$ | 55,828 | $ | 59,246 | $ | 61,979 | ||||||
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Services
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23,733 | 21,281 | 19,596 | |||||||||
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Leasing
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10,046 | 10,338 | 12,403 | |||||||||
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Total revenues
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89,607 | 90,865 | 93,978 | |||||||||
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Costs and expenses:
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Cost of sales
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65,711 | 65,502 | 69,663 | |||||||||
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Selling, general and administrative
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23,248 | 22,585 | 22,498 | |||||||||
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Engineering and product development
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3,202 | 3,399 | 2,720 | |||||||||
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Restructuring and other charges
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(610 | ) | 1,718 | 5,765 | ||||||||
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Gain on sale of property, plant and equipment
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(738 | ) | (6,647 | ) | (380 | ) | ||||||
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Foreign currency transaction (gain) loss
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(4,812 | ) | 1,120 | (2,419 | ) | |||||||
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Total costs and expenses
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86,001 | 87,677 | 97,847 | |||||||||
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Operating income (loss)
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3,606 | 3,188 | (3,869 | ) | ||||||||
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Interest income
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1,998 | 2,827 | 573 | |||||||||
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Interest expense
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(19 | ) | (80 | ) | (99 | ) | ||||||
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Income tax provision
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2,102 | 3,624 | 2,175 | |||||||||
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Net income (loss)
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$ | 3,483 | $ | 2,311 | $ | (5,570 | ) | |||||
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Income (Loss) per share
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Basic
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$ | 0.10 | $ | 0.07 | $ | (0.16 | ) | |||||
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Diluted
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$ | 0.10 | $ | 0.07 | $ | (0.16 | ) | |||||
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Depreciation and amortization
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$ | 7,049 | $ | 6,889 | $ | 7,670 | ||||||
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Capital expenditures
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$ | 10,187 | $ | 5,424 | $ | 1,363 | ||||||
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Weighted Average Shares Outstanding
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Basic
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34,130 | 34,128 | 34,476 | |||||||||
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Diluted
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34,490 | 34,489 | 34,476 | |||||||||
Comparative Condensed Consolidated Balance Sheets
(Unaudited)
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Assets:
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Cash and cash equivalents
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$ | 236,490 | $ | 264,804 | ||||
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Short-term investments
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18,795 | 32,232 | ||||||
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Other current assets
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499,871 | 452,988 | ||||||
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PP&E, net
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185,894 | 181,270 | ||||||
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Other assets
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38,616 | 38,657 | ||||||
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Total assets
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$ | 979,666 | $ | 969,951 | ||||
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Liabilities and Equity:
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Current liabilities
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$ | 88,124 | $ | 87,555 | ||||
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Deferred Income taxes
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4,512 | 3,756 | ||||||
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Other long-term liabilities
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7,621 | 6,288 | ||||||
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Total liabilities
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100,257 | 97,599 | ||||||
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Total stockholders equity
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879,409 | 872,352 | ||||||
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Total liabilities and equity
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$ | 979,666 | $ | 969,951 | ||||
The
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss)
per Share and Adjusted Diluted Earnings (Loss) per Share
Adjusted Net Income (Loss) and 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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$ | 3,483 | $ | 0.10 | $ | 2,311 | $ | 0.07 | $ | (5,570 | ) | $ | (0.16 | ) | ||||||||||
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Adjustments (after tax):
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Reverse the effect of foreign currency transaction (gain) loss
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(3,801 | ) | (0.11 | ) | 885 | 0.03 | (1,911 | ) | (0.06 | ) | ||||||||||||||
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Restructuring and other charges, including severance
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(14 | ) | - | 1,357 | 0.04 | 4,554 | 0.13 | |||||||||||||||||
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Gain on sale of property, plant and equipment
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(583 | ) | (0.02 | ) | (5,251 | ) | (0.15 | ) | (300 | ) | (0.01 | ) | ||||||||||||
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Adjusted net loss
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$ | (915 | ) | $ | (0.03 | ) | $ | (698 | ) | $ | (0.01 | ) | $ | (3,227 | ) | $ | (0.10 | ) | ||||||
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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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$ | 3,483 | $ | 2,311 | $ | (5,570 | ) | |||||
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Add:
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Interest (income) expense, net
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(1,979 | ) | (2,747 | ) | (474 | ) | ||||||
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Income tax provision
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2,102 | 3,624 | 2,175 | |||||||||
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Depreciation and amortization expense
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7,049 | 6,889 | 7,670 | |||||||||
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Restructuring and other charges
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(610 | ) | 1,718 | 5,765 | ||||||||
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Acquisition costs
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1,134 | - | - | |||||||||
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Gain on sale of property, plant and equipment
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(738 | ) | (6,647 | ) | (380 | ) | ||||||
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Foreign currency transaction (gain) loss
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(4,812 | ) | 1,120 | (2,419 | ) | |||||||
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Stock compensation expense
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2,566 | 2,577 | 2,573 | |||||||||
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Other
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592 | - | - | |||||||||
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Adjusted EBITDA
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$ | 8,787 | $ | 8,845 | $ | 9,340 | ||||||
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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Net cash provided by (used in) operating activities
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$ | 11,282 | $ | (52,920 | ) | $ | (9,281 | ) | ||||
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Less:
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Purchase of property, plant and equipment
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(10,187 | ) | (5,424 | ) | (1,363 | ) | ||||||
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Free cash flow
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$ | 1,095 | $ | (58,344 | ) | $ | (10,644 | ) | ||||
SOURCE:
accesswire.com
https://www.accesswire.com/771243/Dril-Quip-Inc-Announces-Second-Quarter-2023-Results