Dril-Quip, Inc. Announces Second Quarter 2022 Results
Dril-Quip (NYSE: DRQ) reported second quarter 2022 revenues of $94.0 million, up $10.8 million sequentially, driven by increased subsea equipment and downhole services. The company posted a net loss of $5.6 million or $0.16 per share, an improvement from the prior quarter. Adjusted EBITDA rose to $9.3 million, reflecting a 9.9% margin. New orders totaled $49.6 million, offset by cancellations. Share repurchases reached $3.8 million during the quarter. The company maintains a revenue growth target of 10% for 2022 compared to 2021.
- Revenue increased by $10.8 million sequentially to $94.0 million.
- Adjusted EBITDA rose to $9.3 million, a significant increase from $3.2 million in Q1 2022.
- Gross operating margin improved to 25.9%, up from 23.0% in Q1 2022.
- Share repurchases totaled $3.8 million at an average price of $24.49 per share.
- Net loss of $5.6 million, although improved from the previous quarter.
- Free cash flow was negative at $10.6 million.
HOUSTON, July 28, 2022 (GLOBE NEWSWIRE) -- Dril-Quip, Inc. (NYSE: DRQ), (the “Company” or “Dril-Quip”) today reported operational and financial results for the second quarter of 2022.
Results for the second quarter of 2022 included:
- Revenue of
$94.0 million for the second quarter of 2022, an increase of$10.8 million from the first quarter of 2022 driven by higher subsea equipment and downhole products and services revenue; - A net loss of
$5.6 million , or a$0.16 loss per share, an improvement of$3.4 million , or$0.10 per share compared to the first quarter of 2022, due to improved gross profit and foreign exchange benefits partially offset by higher restructuring charges; - Generated adjusted EBITDA of
$9.3 million , or9.9% of revenue; an increase of$6.2 million from the first quarter of 2022; - Second quarter net cash used by operating activities of
$9.3 million and free cash flow of negative$10.6 million , inclusive of$1.4 million of capital expenditures; - Booked
$49.6 million of new orders during the second quarter of 2022 net of$7.1 million of cancellations and adjustments; - Repurchased
$3.8 million of shares at an average price of$24.49 during the second quarter of 2022. Year-to-date repurchases through the third quarter of 2022 total approximately$21 million ; and - Announced Scope 1 and Scope 2 GHG emissions reduction target of
50% by the year 2030.
Jeff Bird, Dril-Quip’s President and Chief Executive Officer, commented, “Our second quarter results reflect the improving offshore drilling market as well as our commitment to controlling costs and improving margins. Second quarter revenue was up approximately
“We believe the foundation of the strong product-line focused teams that we began forming in early 2022 is bearing fruit by streamlining customer focus, eliminating excess costs and improving efficiency. We also continue to progress on our footprint rationalization plan, including executing a purchase and sale agreement for the forge facilities at our Houston, Texas campus. We expect this transaction to close in the third quarter and anticipate reaching agreements on the two remaining properties by year-end. For all three transactions, we expect the combined net proceeds to be in the
“Additionally, in June we announced our decarbonization targets in alignment with the ambitions of the Paris Agreement. We are targeting the reduction of Scope 1 and Scope 2 GHG emissions by more than
“Looking to the second half of 2022, we believe our previously set financial targets remain achievable. We are focused on year-over-year improvements in our bookings, revenue and profitability and are aligning our activities and structure accordingly. Ongoing success in these areas would enable us the opportunity to generate free cash flow to invest in growth and return cash to shareholders through share repurchases. Our continuous improvement initiatives, clear strategic vision and strong balance sheet will lead to a stronger, nimbler Dril-Quip in the coming quarters and years for the benefit of our shareholders and stakeholders.”
In conjunction with today’s release, the Company posted a new investor presentation entitled “Second Quarter 2022 Supplemental Earnings Information” to its website, www.dril-quip.com, on the “Events & Presentations” page under the Investors tab. Investors should note that Dril-Quip announces material financial information in Securities and Exchange Commission (“SEC”) filings, press releases and public conference calls. Dril-Quip may use the Investors section of its website (www.dril-quip.com) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. Information on Dril-Quip’s website is not part of this release.
Operational and Financial Results
Revenue, Cost of Sales and Gross Operating Margin
Consolidated revenue for the second quarter of 2022 was
Cost of sales for the second quarter of 2022 was
Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses for the second quarter of 2022 were
Net Loss, Adjusted EBITDA and Free Cash Flow
For the second quarter of 2022, the Company reported a net loss of
Net cash used by operations was
Share Repurchases
For the three-month period ended June 30, 2022, the Company purchased 157,101 shares under its share repurchase plan at an average price of
About Dril-Quip
Dril-Quip is a developer, manufacturer and provider of highly engineered equipment, service and innovative technologies for use in the energy industry.
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 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 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 Organization of Petroleum Exporting Countries (OPEC) and non-OPEC nations to adjust their production levels, the general volatility of oil and natural gas prices and cyclicality of the oil and gas industry, declines in investor and lender sentiment with respect to, and new capital investments in, 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, the impact of our customers and the global energy sector shifting some of their asset allocation from fossil-fuel production to renewable energy resources, and other factors detailed in the Company’s public filings with the SEC. Investors are cautioned that any such statements are not guarantees of future performance and actual outcomes may vary materially from those indicated.
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 U.S. generally accepted accounting principles (“GAAP”).
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, Director of Corporate Development, Investor Relations & FP&A
(713) 939-7711
Erin_Fazio@dril-quip.com
| Dril-Quip, Inc. | ||||||||||||
| Comparative Condensed Consolidated Income Statement | ||||||||||||
| (Unaudited) | ||||||||||||
| Three months ended | ||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||
| (In thousands, except per share data) | ||||||||||||
| Revenues: | ||||||||||||
| Products | $ | 61,979 | $ | 55,642 | $ | 55,860 | ||||||
| Services | 19,596 | 17,499 | 17,536 | |||||||||
| Leasing | 12,403 | 9,996 | 7,401 | |||||||||
| Total revenues | 93,978 | 83,137 | 80,797 | |||||||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 69,663 | 63,995 | 61,539 | |||||||||
| Selling, general and administrative | 22,498 | 22,393 | 29,593 | |||||||||
| Engineering and product development | 2,720 | 3,676 | 3,722 | |||||||||
| Restructuring and other charges | 5,765 | 32 | 1,000 | |||||||||
| (Gain) loss on sale of property, plant and equipment | (380 | ) | (114 | ) | 82 | |||||||
| Foreign currency transaction gains | (2,419 | ) | (1,254 | ) | (475 | ) | ||||||
| Total costs and expenses | 97,847 | 88,728 | 95,461 | |||||||||
| Operating loss | (3,869 | ) | (5,591 | ) | (14,664 | ) | ||||||
| Interest income | 573 | 203 | 63 | |||||||||
| Interest expense | (99 | ) | (54 | ) | (59 | ) | ||||||
| Income tax provision | 2,175 | 3,496 | 4,407 | |||||||||
| Net loss | $ | (5,570 | ) | $ | (8,938 | ) | $ | (19,067 | ) | |||
| Loss per share | ||||||||||||
| Basic | $ | (0.16 | ) | $ | (0.26 | ) | $ | (0.54 | ) | |||
| Diluted | $ | (0.16 | ) | $ | (0.26 | ) | $ | (0.54 | ) | |||
| Depreciation and amortization | $ | 7,670 | $ | 7,559 | $ | 7,343 | ||||||
| Capital expenditures | $ | 1,363 | $ | 2,066 | $ | 3,524 | ||||||
| Weighted Average Shares Outstanding | ||||||||||||
| Basic | 34,476 | 34,494 | 35,387 | |||||||||
| Diluted | 34,476 | 34,494 | 35,387 | |||||||||
| Dril-Quip, Inc. | ||||||
| Comparative Condensed Consolidated Balance Sheets | ||||||
| (Unaudited) | ||||||
| June 30, 2022 | December 31, 2021 | |||||
| (In thousands) | ||||||
| Assets: | ||||||
| Cash and cash equivalents | $ | 320,784 | $ | 355,451 | ||
| Other current assets | 427,079 | 390,098 | ||||
| PP&E, net | 179,938 | 216,200 | ||||
| Other assets | 45,765 | 48,677 | ||||
| Total assets | $ | 973,566 | $ | 1,010,426 | ||
| Liabilities and Equity: | ||||||
| Current liabilities | $ | 84,856 | $ | 93,663 | ||
| Deferred Income taxes | 4,234 | 3,925 | ||||
| Other long-term liabilities | 15,787 | 15,730 | ||||
| Total liabilities | 104,877 | 113,318 | ||||
| Total stockholders equity | 868,689 | 897,108 | ||||
| Total liabilities and equity | $ | 973,566 | $ | 1,010,426 | ||
| Dril-Quip, Inc. | ||||||||||||||||||||||||
| 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: | Three months ended | |||||||||||||||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||||||||||||||
| 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 loss | $ | (5,570 | ) | $ | (0.16 | ) | $ | (8,938 | ) | $ | (0.26 | ) | $ | (19,067 | ) | $ | (0.54 | ) | ||||||
| Adjustments (after tax): | ||||||||||||||||||||||||
| Reverse the effect of foreign currency transaction gains | (1,911 | ) | (0.06 | ) | (991 | ) | (0.03 | ) | (375 | ) | (0.01 | ) | ||||||||||||
| Restructuring and other costs, including severance | 4,554 | 0.13 | 25 | - | 790 | 0.02 | ||||||||||||||||||
| (Gain) loss on sale of property, plant and equipment | (300 | ) | (0.01 | ) | (90 | ) | - | 65 | - | |||||||||||||||
| Adjusted net loss | $ | (3,227 | ) | $ | (0.10 | ) | $ | (9,994 | ) | $ | (0.29 | ) | $ | (18,587 | ) | $ | (0.53 | ) | ||||||
| Dril-Quip, Inc. | ||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | ||||||||||||
| Adjusted EBITDA: | Three months ended | |||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||
| (In thousands) | ||||||||||||
| Net loss | $ | (5,570 | ) | $ | (8,938 | ) | $ | (19,067 | ) | |||
| Add: | ||||||||||||
| Interest (income) expense, net | (474 | ) | (149 | ) | (4 | ) | ||||||
| Income tax provision | 2,175 | 3,496 | 4,407 | |||||||||
| Depreciation and amortization expense | 7,670 | 7,559 | 7,343 | |||||||||
| Restructuring and other costs, including severance | 5,765 | 32 | 7,250 | |||||||||
| (Gain) loss on sale of property, plant and equipment | (380 | ) | (114 | ) | 82 | |||||||
| Foreign currency transaction gains | (2,419 | ) | (1,254 | ) | (475 | ) | ||||||
| Stock compensation expense | 2,573 | 2,527 | 3,079 | |||||||||
| Adjusted EBITDA | $ | 9,340 | $ | 3,159 | $ | 2,615 | ||||||
| Dril-Quip, Inc. | ||||||||||||
| Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||
| Free Cash Flow: | Three months ended | |||||||||||
| June 30, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||
| (In thousands) | ||||||||||||
| Net cash provided (used) by operating activities | $ | (9,281 | ) | $ | (10,928 | ) | $ | 11,343 | ||||
| Less: | ||||||||||||
| Purchase of property, plant and equipment | (1,363 | ) | (2,066 | ) | (3,112 | ) | ||||||
| Free cash flow | $ | (10,644 | ) | $ | (12,994 | ) | $ | 8,231 | ||||
FAQ
What were Dril-Quip's revenues for Q2 2022?
How did Dril-Quip's adjusted EBITDA perform in Q2 2022?
What was the net loss reported by Dril-Quip for Q2 2022?
How much did Dril-Quip spend on share repurchases in Q2 2022?
What is Dril-Quip's revenue growth target for 2022?
