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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Dril Quip Inc | NYSE:DRQ | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.02 | -0.10% | 19.18 | 19.24 | 19.18 | 19.19 | 1,399 | 14:41:48 |
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
74-2162088
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Page
|
PART I
|
||
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
|
||
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
(In thousands)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
423,366
|
|
|
$
|
381,336
|
|
Trade receivables, net
|
328,060
|
|
|
319,780
|
|
||
Inventories, net
|
343,073
|
|
|
344,458
|
|
||
Deferred income taxes
|
24,934
|
|
|
24,613
|
|
||
Prepaids and other current assets
|
45,183
|
|
|
54,111
|
|
||
Total current assets
|
1,164,616
|
|
|
1,124,298
|
|
||
Property, plant and equipment, net
|
294,941
|
|
|
294,251
|
|
||
Other assets
|
10,901
|
|
|
9,701
|
|
||
Total assets
|
$
|
1,470,458
|
|
|
$
|
1,428,250
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
33,509
|
|
|
$
|
30,934
|
|
Accrued income taxes
|
28,143
|
|
|
14,052
|
|
||
Customer prepayments
|
12,540
|
|
|
18,388
|
|
||
Accrued compensation
|
11,391
|
|
|
17,957
|
|
||
Other accrued liabilities
|
19,316
|
|
|
19,484
|
|
||
Total current liabilities
|
104,899
|
|
|
100,815
|
|
||
Deferred income taxes
|
2,264
|
|
|
2,977
|
|
||
Total liabilities
|
107,163
|
|
|
103,792
|
|
||
Commitments and contingencies (Note 7)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, 10,000,000 shares authorized at $0.01 par value (none issued)
|
—
|
|
|
—
|
|
||
Common stock:
|
|
|
|
||||
100,000,000 shares authorized at $0.01 par value, 37,957,052 and 37,951,223 shares issued and outstanding at March 31, 2016 and December 31, 2015
|
378
|
|
|
378
|
|
||
Additional paid-in capital
|
3,334
|
|
|
—
|
|
||
Retained earnings
|
1,462,113
|
|
|
1,425,344
|
|
||
Accumulated other comprehensive losses
|
(102,530
|
)
|
|
(101,264
|
)
|
||
Total stockholders’ equity
|
1,363,295
|
|
|
1,324,458
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,470,458
|
|
|
$
|
1,428,250
|
|
|
Three months ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(In thousands, except per share data)
|
||||||
Revenues:
|
|
|
|
||||
Products
|
$
|
135,194
|
|
|
$
|
187,524
|
|
Services
|
31,367
|
|
|
38,478
|
|
||
Total revenues
|
166,561
|
|
|
226,002
|
|
||
Cost and expenses:
|
|
|
|
||||
Cost of sales:
|
|
|
|
||||
Products
|
76,922
|
|
|
106,007
|
|
||
Services
|
16,174
|
|
|
19,131
|
|
||
Total cost of sales
|
93,096
|
|
|
125,138
|
|
||
Selling, general and administrative
|
13,221
|
|
|
16,958
|
|
||
Engineering and product development
|
10,901
|
|
|
12,213
|
|
||
Total costs and expenses
|
117,218
|
|
|
154,309
|
|
||
Operating income
|
49,343
|
|
|
71,693
|
|
||
Interest income
|
482
|
|
|
49
|
|
||
Interest expense
|
(4
|
)
|
|
(3
|
)
|
||
Income before income taxes
|
49,821
|
|
|
71,739
|
|
||
Income tax provision
|
13,052
|
|
|
18,075
|
|
||
Net income
|
$
|
36,769
|
|
|
$
|
53,664
|
|
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
0.97
|
|
|
$
|
1.38
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
1.38
|
|
Weighted average common shares outstanding:
|
|
|
|
||||
Basic
|
37,752
|
|
|
38,773
|
|
||
Diluted
|
37,847
|
|
|
38,940
|
|
|
Three months ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Net income
|
$
|
36,769
|
|
|
$
|
53,664
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
(1,266
|
)
|
|
(32,534
|
)
|
||
Total comprehensive income
|
$
|
35,503
|
|
|
$
|
21,130
|
|
|
Three months ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
36,769
|
|
|
$
|
53,664
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
7,775
|
|
|
7,455
|
|
||
Stock-based compensation expense
|
3,192
|
|
|
3,363
|
|
||
Loss (gain) on sale of equipment
|
(13
|
)
|
|
(63
|
)
|
||
Deferred income taxes
|
(962
|
)
|
|
(2,755
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables, net
|
(8,942
|
)
|
|
62,837
|
|
||
Inventories, net
|
1,899
|
|
|
(7,010
|
)
|
||
Prepaids and other assets
|
8,050
|
|
|
(1,259
|
)
|
||
Excess tax benefits of stock options and awards
|
(11
|
)
|
|
(24
|
)
|
||
Accounts payable and accrued expenses
|
4,766
|
|
|
(29,139
|
)
|
||
Net cash provided by operating activities
|
52,523
|
|
|
87,069
|
|
||
Investing activities
|
|
|
|
||||
Purchase of property, plant and equipment
|
(7,732
|
)
|
|
(6,156
|
)
|
||
Proceeds from sale of equipment
|
76
|
|
|
121
|
|
||
Net cash used in investing activities
|
(7,656
|
)
|
|
(6,035
|
)
|
||
Financing activities
|
|
|
|
||||
Repurchase of common stock
|
—
|
|
|
—
|
|
||
Proceeds from exercise of stock options
|
155
|
|
|
282
|
|
||
Excess tax benefits of stock options and awards
|
11
|
|
|
24
|
|
||
Net cash used in financing activities
|
166
|
|
|
306
|
|
||
Effect of exchange rate changes on cash activities
|
(3,003
|
)
|
|
(5,914
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
42,030
|
|
|
75,426
|
|
||
Cash and cash equivalents at beginning of period
|
381,336
|
|
|
298,705
|
|
||
Cash and cash equivalents at end of period
|
$
|
423,366
|
|
|
$
|
374,131
|
|
•
|
product revenues recognized under the percentage-of-completion method; and
|
•
|
product revenues from the sale of products that do not qualify for the percentage-of-completion method.
|
•
|
the contracts call for products which are designed to customer specifications;
|
•
|
the structural designs are unique and require significant engineering and manufacturing efforts generally requiring more than one year in duration;
|
•
|
the contracts contain specific terms as to milestones, progress billings and delivery dates; and
|
•
|
product requirements cannot be filled directly from the Company’s standard inventory.
|
•
|
technical advisory assistance;
|
•
|
rental of running tools; and
|
•
|
rework and reconditioning of customer-owned Dril-Quip products.
|
|
Three months ended
March 31, |
||||
|
2016
|
|
2015
|
||
|
(In thousands)
|
||||
Weighted average common shares outstanding—basic
|
37,752
|
|
|
38,773
|
|
Dilutive effect of common stock options and awards
|
95
|
|
|
167
|
|
Weighted average common shares outstanding—diluted
|
37,847
|
|
|
38,940
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
97,107
|
|
|
$
|
101,311
|
|
Work in progress
|
94,474
|
|
|
104,102
|
|
||
Finished goods
|
191,002
|
|
|
178,292
|
|
||
|
382,583
|
|
|
383,705
|
|
||
Less: allowance for obsolete and excess inventory
|
(39,510
|
)
|
|
(39,247
|
)
|
||
Net inventory
|
$
|
343,073
|
|
|
$
|
344,458
|
|
|
Three months ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Revenues:
|
|
|
|
||||
Western Hemisphere
|
|
|
|
||||
Products
|
$
|
78,600
|
|
|
$
|
91,815
|
|
Services
|
16,993
|
|
|
22,309
|
|
||
Intercompany
|
10,711
|
|
|
9,985
|
|
||
Total
|
$
|
106,304
|
|
|
$
|
124,109
|
|
Eastern Hemisphere
|
|
|
|
||||
Products
|
$
|
33,161
|
|
|
$
|
79,421
|
|
Services
|
13,004
|
|
|
11,642
|
|
||
Intercompany
|
185
|
|
|
221
|
|
||
Total
|
$
|
46,350
|
|
|
$
|
91,284
|
|
Asia-Pacific
|
|
|
|
||||
Products
|
$
|
23,433
|
|
|
$
|
16,288
|
|
Services
|
1,370
|
|
|
4,527
|
|
||
Intercompany
|
280
|
|
|
1,181
|
|
||
Total
|
$
|
25,083
|
|
|
$
|
21,996
|
|
Summary
|
|
|
|
||||
Products
|
$
|
135,194
|
|
|
$
|
187,524
|
|
Services
|
31,367
|
|
|
38,478
|
|
||
Intercompany
|
11,176
|
|
|
11,387
|
|
||
Eliminations
|
(11,176
|
)
|
|
(11,387
|
)
|
||
Total
|
$
|
166,561
|
|
|
$
|
226,002
|
|
Income before income taxes:
|
|
|
|
||||
Western Hemisphere
|
$
|
24,956
|
|
|
$
|
32,948
|
|
Eastern Hemisphere
|
16,684
|
|
|
31,708
|
|
||
Asia-Pacific
|
6,113
|
|
|
3,425
|
|
||
Eliminations
|
2,068
|
|
|
3,658
|
|
||
Total
|
$
|
49,821
|
|
|
$
|
71,739
|
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
(In thousands)
|
||||||
Total Long-Lived Assets:
|
|
|
|
||||
Western Hemisphere
|
$
|
212,069
|
|
|
$
|
208,408
|
|
Eastern Hemisphere
|
42,332
|
|
|
43,449
|
|
||
Asia-Pacific
|
54,367
|
|
|
55,021
|
|
||
Eliminations
|
(2,926
|
)
|
|
(2,926
|
)
|
||
Total
|
$
|
305,842
|
|
|
$
|
303,952
|
|
Total Assets:
|
|
|
|
||||
Western Hemisphere
|
$
|
710,691
|
|
|
$
|
677,460
|
|
Eastern Hemisphere
|
398,324
|
|
|
391,672
|
|
||
Asia-Pacific
|
380,114
|
|
|
372,823
|
|
||
Eliminations
|
(18,671
|
)
|
|
(13,705
|
)
|
||
Total
|
$
|
1,470,458
|
|
|
$
|
1,428,250
|
|
|
Three months ended March 31,
|
||||||||||
|
2016
|
|
2015
|
||||||||
|
Floating Rigs
|
|
Jack-up Rigs
|
|
Floating Rigs
|
|
Jack-up Rigs
|
||||
Western Hemisphere
|
97
|
|
|
48
|
|
|
123
|
|
|
75
|
|
Eastern Hemisphere
|
71
|
|
|
73
|
|
|
94
|
|
|
92
|
|
Asia-Pacific
|
30
|
|
|
226
|
|
|
48
|
|
|
256
|
|
TOTAL
|
198
|
|
|
347
|
|
|
265
|
|
|
423
|
|
|
Floating
|
|
Jack-Up
|
|
|
|||
|
Rigs
|
|
Rigs
|
|
Total
|
|||
2016
|
22
|
|
|
76
|
|
|
98
|
|
2017
|
22
|
|
|
32
|
|
|
54
|
|
2018
|
11
|
|
|
7
|
|
|
18
|
|
2019
|
12
|
|
|
2
|
|
|
14
|
|
After 2019 or unspecified delivery date
|
2
|
|
|
5
|
|
|
7
|
|
|
69
|
|
|
122
|
|
|
191
|
|
|
Three months ended
March 31, |
||||
|
2016
|
|
2015
|
||
Revenues:
|
|
|
|
||
Products
|
81.2
|
%
|
|
83.0
|
%
|
Services
|
18.8
|
|
|
17.0
|
|
Total revenues:
|
100.0
|
|
|
100.0
|
|
Cost of sales:
|
|
|
|
||
Products
|
46.2
|
|
|
46.9
|
|
Services
|
9.7
|
|
|
8.5
|
|
Total cost of sales:
|
55.9
|
|
|
55.4
|
|
Selling, general and administrative expenses
|
8.0
|
|
|
7.5
|
|
Engineering and product development expenses
|
6.5
|
|
|
5.4
|
|
Operating income
|
29.6
|
|
|
31.7
|
|
Interest income
|
0.3
|
|
|
—
|
|
Income before income taxes
|
29.9
|
|
|
31.7
|
|
Income tax provision
|
7.8
|
|
|
8.0
|
|
Net income
|
22.1
|
%
|
|
23.7
|
%
|
|
Three months ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(In millions)
|
||||||
Revenues:
|
|
|
|
||||
Products
|
|
|
|
||||
Subsea equipment
|
$
|
121.1
|
|
|
$
|
168.0
|
|
Surface equipment
|
4.1
|
|
|
5.5
|
|
||
Offshore rig equipment
|
10.0
|
|
|
14.0
|
|
||
Total products
|
135.2
|
|
|
187.5
|
|
||
Services
|
31.4
|
|
|
38.5
|
|
||
Total revenues
|
$
|
166.6
|
|
|
$
|
226.0
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Operating activities
|
$
|
52,523
|
|
|
$
|
87,069
|
|
Investing activities
|
(7,656
|
)
|
|
(6,035
|
)
|
||
Financing activities
|
166
|
|
|
306
|
|
||
|
45,033
|
|
|
81,340
|
|
||
Effect of exchange rate changes on cash activities
|
(3,003
|
)
|
|
(5,914
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
$
|
42,030
|
|
|
$
|
75,426
|
|
•
|
future operating results and cash flow;
|
•
|
scheduled, budgeted and other future capital expenditures;
|
•
|
working capital requirements;
|
•
|
the need for and the availability of expected sources of liquidity;
|
•
|
the introduction into the market of the Company’s future products;
|
•
|
the market for the Company’s existing and future products;
|
•
|
the Company’s ability to develop new applications for its technologies;
|
•
|
the exploration, development and production activities of the Company’s customers;
|
•
|
compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings;
|
•
|
effects of pending legal proceedings;
|
•
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changes in customers’ future product and service requirements that may not be cost effective or within the Company’s capabilities; and
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•
|
future operations, financial results, business plans and cash needs.
|
•
|
the volatility of oil and natural gas prices;
|
•
|
the cyclical nature of the oil and gas industry;
|
•
|
uncertainties associated with the United States and worldwide economies;
|
•
|
uncertainties regarding political tensions in the Middle East, Africa and elsewhere;
|
•
|
current and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries;
|
•
|
uncertainties regarding future oil and gas exploration and production activities, including new regulations, customs requirements and product testing requirements;
|
•
|
operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);
|
•
|
project terminations, suspensions or scope adjustments to contracts reflected in the Company’s backlog;
|
•
|
the Company’s reliance on product development;
|
•
|
technological developments;
|
•
|
the Company’s reliance on third-party technologies;
|
•
|
acquisition and merger activities involving the Company or its competitors;
|
•
|
the Company’s dependence on key employees and skilled machinists, fabricators and technical personnel;
|
•
|
the Company’s reliance on sources of raw materials;
|
•
|
impact of environmental matters, including future environmental regulations;
|
•
|
competitive products and pricing pressures;
|
•
|
fluctuations in foreign currency;
|
•
|
the ability of the Organization of Petroleum Exporting Countries (OPEC) to set and maintain production levels and pricing;
|
•
|
the Company’s reliance on significant customers;
|
•
|
creditworthiness of the Company’s customers;
|
•
|
fixed-price contracts;
|
•
|
changes in general economic, market or business conditions;
|
•
|
access to capital markets;
|
•
|
negative outcome of litigation, threatened litigation or government proceedings;
|
•
|
terrorist threats or acts, war and civil disturbances; and
|
•
|
the interpretation of foreign tax laws with respect to our foreign subsidiaries.
|
Exhibit No.
|
|
Description
|
*3.1
|
—
|
Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 20, 2014).
|
|
|
|
*3.2
|
—
|
Certificate of Designations of Series A Junior Participating Preferred Stock of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 25, 2008).
|
|
|
|
*3.3
|
—
|
Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 20, 2014).
|
|
|
|
*4.1
|
—
|
Form of certificate representing Common Stock (incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-33447).
|
|
|
|
*4.2
|
—
|
Rights Agreement dated as of November 24, 2008 between Dril-Quip, Inc. and Mellon Investor Services LLC, as Rights Agent (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 25, 2008).
|
|
|
|
31.1
|
—
|
Rule 13a-14(a)/15d-14(a) Certification of Blake T. DeBerry.
|
|
|
|
31.2
|
—
|
Rule 13a-14(a)/15d-14(a) Certification of Jerry M. Brooks.
|
|
|
|
32.1
|
—
|
Section 1350 Certification of Blake T. DeBerry.
|
|
|
|
32.2
|
—
|
Section 1350 Certification of Jerry M. Brooks.
|
|
|
|
101.INS
|
—
|
XBRL Instance Document
|
|
|
|
101.SCH
|
—
|
XBRL Schema Document
|
|
|
|
101.CAL
|
—
|
XBRL Calculation Document
|
|
|
|
101.DEF
|
—
|
XBRL Definition Linkbase Document
|
|
|
|
101.LAB
|
—
|
XBRL Label Linkbase Document
|
|
|
|
101.PRE
|
—
|
XBRL Presentation Linkbase Document
|
|
|
|
|
DRIL-QUIP, INC.
|
|
|
|
|
Date: April 26, 2016
|
BY:
|
/s/ Jerry M. Brooks
|
|
|
Jerry M. Brooks,
|
|
|
Vice President—Finance and
|
|
|
Chief Financial Officer
|
|
|
(Principal Accounting Officer and
|
|
|
Duly Authorized Signatory)
|
1 Year Dril Quip Chart |
1 Month Dril Quip Chart |
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