Dril-Quip, Inc. Announces Results For 4th Quarter & Year End 2015

Feb 25, 2016, 06:00 ET from Dril-Quip, Inc.

HOUSTON, Feb. 25, 2016 /PRNewswire/ -- Dril-Quip, Inc. (NYSE: DRQ) today announced net income of $48.4 million, or $1.28 per diluted share, for the three months ended December 31, 2015, versus net income of $59.1 million, or $1.50 per diluted share, for the fourth quarter of 2014.  The fourth quarter 2015 results were favorably impacted by an after-tax foreign exchange gain of $3.1 million, or $0.08 per diluted share, as compared to an after-tax foreign exchange gain of $2.6 million, or $0.07 per diluted share, during the fourth quarter of 2014. Total revenues were $201.6 million during the quarter ended December 31, 2015 compared to $254.8 million for the same period in 2014.

For the year ended December 31, 2015, net income was $192.0 million, or $4.98 per diluted share, compared with net income of $208.7 million, or $5.19 per diluted share, for 2014. The results for the twelve months ended December 31, 2015 were favorably impacted by an after-tax foreign exchange gain of $3.9 million, or $0.10 per diluted share, as compared to an after-tax foreign exchange gain of $3.4 million, or $0.08 per diluted share, during the year ended December 31, 2014. Total revenues for the year ended December 31, 2015 were $844.3 million, compared to $931.0 million for the same period in 2014.

In addition, the Company announced that its backlog at December 31, 2015 was $685 million, compared to its December 31, 2014 backlog of approximately $1.2 billion.

Blake DeBerry, Dril-Quip's President and CEO stated, "Despite challenging industry conditions, we are pleased to announce full-year earnings per share results that exceeded our beginning-of-the-year expectations for 2015.  The fact that both our gross margins and operating margins during 2015 compared favorably with those achieved in 2014 is indicative of the dedication and hard work by Dril-Quip employees around the world.

"Unfortunately, the worldwide reduction in the number of operating floating rigs, both semi-submersibles and drillships, resulted in disappointing bookings throughout the year and a reduced backlog as of December 31, 2015.  We believe that the decrease in order levels was also negatively impacted by both a significant customer property overhang as well as shorter delivery times throughout the industry.

"Without a doubt, 2016 will be a challenging year as oil prices are expected to remain at depressed levels.  Accordingly, we expect that increasing pricing pressures and reduced manufacturing activity will negatively impact our gross margins as the year progresses.  However, we believe that our execution of existing backlog, low capital expenditure requirements and zero debt will result in significant free cash flow during the year. 

"In addition, our continuing conservative management approach has resulted in a strong balance sheet that leaves us well-positioned to capitalize on opportunities for the long term benefit of our stockholders.  During the downturn, the Company intends to continue pursing attractive acquisition candidates as well as our stock buy-back program.  Our research and development efforts will continue – both in Houston and at our recently announced new HPHT R&D facility in Singapore.  We believe that the enhancement of existing products combined with the introduction of new products will place the Company in a strong position when the market rebounds."

Based upon current market conditions and excluding foreign currency gains/losses or any unusual items, the Company expects its earnings per diluted share for the year ending December 31, 2016 to approximate $2.45 to $2.65 per share.  In addition, first quarter 2016 earnings per share are expected to approximate $0.75 to $0.85 per share.

Dril-Quip is a leading manufacturer of highly engineered offshore drilling and production equipment, which is well suited for use in deepwater, harsh environment and severe service applications. 

Statements contained herein relating to future operations and financial results that are forward looking statements, including statements regarding commodity price levels, future financial results, acquisitions and stock repurchases, 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, some of which are 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, uncertainties regarding the effects of new governmental regulations, the Company's ability to convert backlog into revenues on a profitable basis, the possibility of cancellations of orders, the Company's international operations, operating risks, and other factors detailed in the Company's public filings with the Securities and Exchange Commission.  Investors are cautioned that any such statements are not guarantees of future performance and actual outcomes may vary materially from those indicated.

Dril-Quip, Inc

Comparative Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

Three months ended December 31,

Year ended December 31,

2015

2014

2015

2014

Revenues

$   201,630

$   254,819

$   844,310

$   930,957

Cost and expenses:

Cost of sales

108,352

142,497

459,286

513,527

Selling, general and administrative

20,173

22,462

88,044

92,762

Engineering and product development

12,797

11,625

48,145

45,920

141,322

176,584

595,475

652,209

Operating income

60,308

78,235

248,835

278,748

Interest income

389

112

948

667

Interest expense

(2)

(20)

(12)

(35)

Income before income taxes

60,695

78,327

249,771

279,380

Income tax provision

12,341

19,240

57,763

70,668

Net income

$     48,354

$    59,087

$   192,008

$  208,712

Diluted earnings per share

$         1.28

$        1.50

$         4.98

$        5.19

Weighted average shares–diluted

37,845

39,463

38,531

40,190

Depreciation and amortization

$       7,700

$      8,381

$     30,477

$     31,155

Capital expenditures

$     10,333

$    11,385

$     27,079

$     42,549

 

SOURCE Dril-Quip, Inc.



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http://www.dril-quip.com