Press Release
Dril-Quip, Inc. Announces Third Quarter 2018 Results
- Generated
$93.3 million of revenue, above the high end of guidance range of$80 - $90 million - Reported a net loss of $10.4 million, or $0.28 loss per diluted share, including restructuring costs of
$3.7 million - Incurred an adjusted net loss of $7.4 million excluding restructuring costs, or $0.20 loss per diluted share
- Generated net cash provided by operating activities of
$9.1 million - Reported cash on hand of
$424.1 million as ofSeptember 30, 2018 - Completed
$100 million share repurchase program in October 2018 - Maintained clean balance sheet with no debt as of
September 30, 2018 - Progressed Sea Lion Phase 1 to frame agreement
- Achieved
$13.5 million of targeted$40 - $50 million of annualized cost reductions
“As we look to the future, we will leverage our technologically innovative products, first-class service and strong balance sheet to provide the equipment and support for major projects around the world. We are seeing international drilling activity continuing to increase as well as our quote activity, and we are closely monitoring several significant opportunities.
“Looking to the fourth quarter of 2018, our expectation is that the Company’s revenue will be between
“Last quarter we announced a target of
In conjunction with today’s release, the Company posted a new investor presentation entitled “3rd Quarter 2018 Supplemental Earnings Information” to its website, www.dril-quip.com, in the Events & Presentations section under the Investors link.
Third Quarter Segment Review and Financial Discussion
Consolidated revenue was down
Western Hemisphere revenue decreased sequentially by
Eastern Hemisphere revenue increased sequentially by
Net loss was
Adjusted EBITDA decreased sequentially by
Balance Sheet
Dril-Quip’s cash on hand as of
Share Repurchases
On
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, anticipated project bookings, expected timing of commencing new project work, anticipated revenues, costs, cost synergies and savings, possible acquisitions, new product offerings, 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 volatility of oil and natural gas prices and cyclicality of the oil and gas industry, project terminations, suspensions or scope adjustments to contracts, uncertainties regarding the effects of new governmental regulations, the Company’s international operations, operating risks, and other factors detailed in the Company’s public filings with the
Non-GAAP Financial Information
Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, and Adjusted EBITDA are non-GAAP measures.
Adjusted Net Income 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 items that can be considered non-recurring.
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, 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 U.S. generally accepted accounting principles.
See tables 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 should be read together with, and are 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.
SOURCE:
Dril-Quip, Inc. | |||||||||||
Comparative Condensed Consolidated Income Statement | |||||||||||
(Unaudited) | |||||||||||
Three months ended | |||||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||||
(In thousands, except per share data) | |||||||||||
Revenues: | |||||||||||
Products | $ | 63,246 | $ | 64,719 | $ | 75,885 | |||||
Services | 30,011 | 30,142 | 24,461 | ||||||||
Total revenues | 93,257 | 94,861 | 100,346 | ||||||||
Costs and expenses: | |||||||||||
Cost of sales | 65,630 | 69,443 | 63,050 | ||||||||
Selling, general and administrative | 31,566 | 23,739 | 27,985 | ||||||||
Engineering and product development | 10,159 | 10,526 | 10,379 | ||||||||
Impairment and other charges | — | — | 60,968 | ||||||||
Gain on sale of assets | (14 | ) | (5,099 | ) | 9 | ||||||
Total costs and expenses | 107,341 | 98,609 | 162,391 | ||||||||
Operating income (loss) | (14,084 | ) | (3,748 | ) | (62,045 | ) | |||||
Interest income | 1,893 | 2,275 | 957 | ||||||||
Interest expense | (195 | ) | (151 | ) | (12 | ) | |||||
Income tax provision (benefit) | (2,028 | ) | 1,418 | (31,840 | ) | ||||||
Net income (loss) | $ | (10,358 | ) | $ | (3,042 | ) | $ | (29,260 | ) | ||
Earnings (loss) per share | $ | (0.28 | ) | $ | (0.08 | ) | $ | (0.78 | ) | ||
Depreciation and amortization | $ | 8,724 | $ | 9,001 | $ | 9,518 | |||||
Capital expenditures | $ | 7,078 | $ | 9,034 | $ | 6,627 | |||||
Dril-Quip, Inc. | |||||||
Comparative Condensed Consolidated Balance Sheets | |||||||
(Unaudited) | |||||||
September 30, 2018 | December 31, 2017 | ||||||
(In thousands) | |||||||
Assets: | |||||||
Cash and cash equivalents | $ | 424,053 | $ | 493,180 | |||
Other current assets | 473,397 | 515,369 | |||||
PP&E,net | 292,667 | 284,247 | |||||
Other assets | 102,642 | 107,009 | |||||
Total assets | $ | 1,292,759 | $ | 1,399,805 | |||
Liabilities and Stockholders' Equity: | |||||||
Current liabilities | $ | 68,262 | $ | 99,911 | |||
Long-term debt | — | — | |||||
Deferred taxes | 3,211 | 3,432 | |||||
Income Taxes | 28,029 | — | |||||
Other long-term liabilities | 2,001 | 2,001 | |||||
Total liabilities | 101,503 | 105,344 | |||||
Stockholders' equity | 1,191,256 | 1,294,461 | |||||
Total liabilities and stockholders' equity | $ | 1,292,759 | $ | 1,399,805 | |||
Dril-Quip, Inc. | ||||||||||||||||||||
Unaudited Non-GAAP Financial Measures | ||||||||||||||||||||
Adjusted Net Income and EPS: | Three months ended | |||||||||||||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | ||||||||||||||||||
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 data) | ||||||||||||||||||||
Net income (loss) | $ | (10,358 | ) | $ | (0.28 | ) | $ | (3,042 | ) | $ | (0.08 | ) | $ | (29,260 | ) | $ | (0.78 | ) | ||
Adjustments (after tax): | ||||||||||||||||||||
Reverse the effect of foreign currency | 32 | — | (1,703 | ) | (0.05 | ) | 308 | 0.01 | ||||||||||||
Add back restructuring costs | 2,959 | 0.08 | — | — | 35,876 | 0.96 | ||||||||||||||
Less gain on sale of assets | (11 | ) | — | (4,028 | ) | (0.11 | ) | — | — | |||||||||||
Less one-time tax adjustments | — | — | — | — | (6,075 | ) | (0.16 | ) | ||||||||||||
Add back severance payments | — | — | — | — | 942 | 0.03 | ||||||||||||||
Adjusted net income (loss) | $ | (7,378 | ) | $ | (0.20 | ) | $ | (8,773 | ) | $ | (0.24 | ) | $ | 1,791 | $ | 0.06 | ||||
Three months ended | |||||||||
Adjusted EBITDA: | September 30, 2018 | June 30, 2018 | September 30, 2017 | ||||||
(In thousands) | |||||||||
Net Income (Loss) | $ | (10,358 | ) | $ | (3,042 | ) | $ | (29,260 | ) |
Add: | |||||||||
Interest (income) expense | (1,698 | ) | (2,124 | ) | (945 | ) | |||
Income tax expense (benefit) | (2,028 | ) | 1,418 | (31,840 | ) | ||||
Depreciation and amortization expense | 8,724 | 9,001 | 9,518 | ||||||
Restructuring costs | 3,745 | — | — | ||||||
Impairment and other charges | — | — | 60,968 | ||||||
Gain on sale of assets | (14 | ) | (5,099 | ) | — | ||||
Foreign currency loss (gain) | 41 | (2,155 | ) | 380 | |||||
Severance costs | — | — | 1,163 | ||||||
Stock compensation expense | 2,366 | 3,611 | 3,694 | ||||||
Adjusted EBITDA | $ | 778 | $ | 1,610 | $ | 13,678 | |||
Free Cash Flow: | Three months ended | ||||||||
September 30, 2018 | June 30, 2018 | September 30, 2017 | |||||||
(In thousands) | |||||||||
Net cash provided by operating activities | $ | 9,141 | $ | 12,078 | $ | 36,035 | |||
Less: | |||||||||
Purchase of property, plant and equipment | (7,078 | ) | (9,034 | ) | (6,627 | ) | |||
Free Cash Flow | $ | 2,063 | $ | 3,044 | $ | 29,408 | |||