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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 | |
---|---|---|---|---|---|---|---|---|
0.06 | 0.32% | 18.60 | 19.105 | 18.3893 | 18.87 | 322,105 | 01:00:00 |
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
|
¨
|
|
|
Emerging growth company
|
¨
|
|
|
Page
|
PART I
|
||
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
|
||
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
436,987
|
|
|
$
|
423,497
|
|
Trade receivables, net
|
221,567
|
|
|
213,513
|
|
||
Inventories, net
|
330,510
|
|
|
355,413
|
|
||
Deferred income taxes
|
—
|
|
|
24,497
|
|
||
Prepaids and other current assets
|
35,831
|
|
|
39,791
|
|
||
Total current assets
|
1,024,895
|
|
|
1,056,711
|
|
||
Property, plant and equipment, net
|
314,610
|
|
|
323,149
|
|
||
Deferred income taxes
|
23,618
|
|
|
1,699
|
|
||
Goodwill
|
47,882
|
|
|
34,371
|
|
||
Intangible assets
|
39,484
|
|
|
29,594
|
|
||
Other assets
|
16,424
|
|
|
15,880
|
|
||
Total assets
|
$
|
1,466,913
|
|
|
$
|
1,461,404
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
24,356
|
|
|
$
|
36,108
|
|
Accrued income taxes
|
21,498
|
|
|
24,543
|
|
||
Customer prepayments
|
5,391
|
|
|
11,884
|
|
||
Accrued compensation
|
17,720
|
|
|
10,829
|
|
||
Other accrued liabilities
|
17,285
|
|
|
18,116
|
|
||
Total current liabilities
|
86,250
|
|
|
101,480
|
|
||
Deferred income taxes
|
2,345
|
|
|
3,500
|
|
||
Total liabilities
|
88,595
|
|
|
104,980
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
||||
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, 37,835,792 and 37,797,317 shares issued and outstanding at June 30, 2017 and December 31, 2016
|
375
|
|
|
375
|
|
||
Additional paid-in capital
|
12,654
|
|
|
5,468
|
|
||
Retained earnings
|
1,501,097
|
|
|
1,500,988
|
|
||
Accumulated other comprehensive losses
|
(135,808
|
)
|
|
(150,407
|
)
|
||
Total stockholders’ equity
|
1,378,318
|
|
|
1,356,424
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,466,913
|
|
|
$
|
1,461,404
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands, except per share data)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
102,092
|
|
|
$
|
116,048
|
|
|
$
|
193,684
|
|
|
$
|
251,242
|
|
Services
|
25,830
|
|
|
26,391
|
|
|
53,466
|
|
|
57,758
|
|
||||
Total revenues
|
127,922
|
|
|
142,439
|
|
|
247,150
|
|
|
309,000
|
|
||||
Cost and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Products
|
74,991
|
|
|
65,407
|
|
|
141,453
|
|
|
142,329
|
|
||||
Services
|
12,558
|
|
|
14,474
|
|
|
28,536
|
|
|
30,648
|
|
||||
Total cost of sales
|
87,549
|
|
|
79,881
|
|
|
169,989
|
|
|
172,977
|
|
||||
Selling, general and administrative
|
31,179
|
|
|
5,762
|
|
|
56,987
|
|
|
18,983
|
|
||||
Engineering and product development
|
10,308
|
|
|
11,579
|
|
|
22,158
|
|
|
22,480
|
|
||||
Total costs and expenses
|
129,036
|
|
|
97,222
|
|
|
249,134
|
|
|
214,440
|
|
||||
Operating income (loss)
|
(1,114
|
)
|
|
45,217
|
|
|
(1,984
|
)
|
|
94,560
|
|
||||
Interest income
|
1,070
|
|
|
541
|
|
|
2,007
|
|
|
1,023
|
|
||||
Interest expense
|
(18
|
)
|
|
(10
|
)
|
|
(33
|
)
|
|
(14
|
)
|
||||
Income before income taxes
|
(62
|
)
|
|
45,748
|
|
|
(10
|
)
|
|
95,569
|
|
||||
Income tax provision (benefit)
|
(77
|
)
|
|
9,611
|
|
|
(120
|
)
|
|
22,663
|
|
||||
Net income
|
$
|
15
|
|
|
$
|
36,137
|
|
|
$
|
110
|
|
|
$
|
72,906
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
—
|
|
|
$
|
0.96
|
|
|
$
|
—
|
|
|
$
|
1.94
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.96
|
|
|
$
|
—
|
|
|
$
|
1.93
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
37,528
|
|
|
37,564
|
|
|
37,526
|
|
|
37,658
|
|
||||
Diluted
|
37,718
|
|
|
37,713
|
|
|
37,706
|
|
|
37,779
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Net income
|
$
|
15
|
|
|
$
|
36,137
|
|
|
$
|
110
|
|
|
$
|
72,906
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
6,740
|
|
|
(20,087
|
)
|
|
14,599
|
|
|
(21,352
|
)
|
||||
Total comprehensive income
|
$
|
6,755
|
|
|
$
|
16,050
|
|
|
$
|
14,709
|
|
|
$
|
51,554
|
|
|
Six months ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
110
|
|
|
$
|
72,906
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
22,713
|
|
|
15,500
|
|
||
Stock-based compensation expense
|
6,783
|
|
|
6,254
|
|
||
Loss (gain) on sale of equipment
|
(88
|
)
|
|
(29
|
)
|
||
Deferred income taxes
|
(1,486
|
)
|
|
(3,828
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Trade receivables, net
|
(4,823
|
)
|
|
64,200
|
|
||
Inventories
|
29,246
|
|
|
763
|
|
||
Prepaids and other assets
|
4,471
|
|
|
20,658
|
|
||
Excess tax benefits of stock options and awards
|
—
|
|
|
(26
|
)
|
||
Accounts payable and accrued expenses
|
(18,226
|
)
|
|
(13,537
|
)
|
||
Net cash provided by operating activities
|
38,700
|
|
|
162,861
|
|
||
Investing activities
|
|
|
|
||||
Purchase of property, plant and equipment
|
(12,936
|
)
|
|
(15,276
|
)
|
||
Proceeds from sale of equipment
|
610
|
|
|
139
|
|
||
Acquisition of business, net of cash acquired
|
(21,289
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(33,615
|
)
|
|
(15,137
|
)
|
||
Financing activities
|
|
|
|
||||
Repurchase of common stock
|
—
|
|
|
(24,238
|
)
|
||
Proceeds from exercise of stock options
|
403
|
|
|
508
|
|
||
Excess tax benefits of stock options and awards
|
—
|
|
|
26
|
|
||
Net cash used in financing activities
|
403
|
|
|
(23,704
|
)
|
||
Effect of exchange rate changes on cash activities
|
8,002
|
|
|
(13,627
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
13,490
|
|
|
110,393
|
|
||
Cash and cash equivalents at beginning of period
|
423,497
|
|
|
381,336
|
|
||
Cash and cash equivalents at end of period
|
$
|
436,987
|
|
|
$
|
491,729
|
|
•
|
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
June 30, |
|
Six months ended
June 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||||||
Weighted average common shares outstanding—basic
|
37,528
|
|
|
37,564
|
|
|
37,526
|
|
|
37,658
|
|
Dilutive effect of common stock options and awards
|
190
|
|
|
149
|
|
|
180
|
|
|
121
|
|
Weighted average common shares outstanding—diluted
|
37,718
|
|
|
37,713
|
|
|
37,706
|
|
|
37,779
|
|
|
Valuation at November 10, 2016
|
||
|
(In thousands)
|
||
Cash
|
$
|
1,829
|
|
Trade receivables
|
9,794
|
|
|
Inventories
|
29,896
|
|
|
Prepaid and other current assets
|
3,572
|
|
|
Deferred income taxes
|
205
|
|
|
Property, plant and equipment
|
38,058
|
|
|
Intangible assets
(1)
|
29,808
|
|
|
Total assets acquired
|
$
|
113,162
|
|
|
|
||
Accounts payable
|
5,599
|
|
|
Customer prepayments
|
2,757
|
|
|
Other accrued liabilities
|
2,644
|
|
|
Deferred tax liabilities, non-current
|
2,261
|
|
|
Total liabilities assumed
|
$
|
13,261
|
|
|
|
||
Net identifiable assets acquired
|
$
|
99,901
|
|
Goodwill
|
34,371
|
|
|
Net assets acquired
|
$
|
134,272
|
|
|
Three months ended June 30, 2016
|
Six Months Ended
June 30, 2016 |
||||
|
(In thousands, except per share data)
|
|||||
|
(unaudited)
|
|||||
Revenues
|
$
|
163,919
|
|
$
|
351,979
|
|
Net income
|
$
|
37,916
|
|
$
|
74,653
|
|
Basic earnings per share
|
$
|
1.01
|
|
$
|
1.98
|
|
Diluted earnings per share
|
$
|
1.01
|
|
$
|
1.98
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Raw materials
|
$
|
79,164
|
|
|
$
|
85,684
|
|
Work in progress
|
72,569
|
|
|
81,645
|
|
||
Finished goods
|
228,610
|
|
|
233,732
|
|
||
|
380,343
|
|
|
401,061
|
|
||
Less: allowance for obsolete and excess inventory
|
(49,833
|
)
|
|
(45,648
|
)
|
||
Net inventory
|
$
|
330,510
|
|
|
$
|
355,413
|
|
|
Carrying Value
|
|
|
Carrying Value
|
||||||||
|
December 31, 2016
|
Acquisitions
(1)
|
Foreign Currency Translation Adjustment
|
June 30, 2017
|
||||||||
|
(In thousands)
|
|||||||||||
Western Hemisphere
|
$
|
26,632
|
|
$
|
12,788
|
|
$
|
312
|
|
$
|
39,732
|
|
Eastern Hemisphere
|
7,739
|
|
—
|
|
411
|
|
8,150
|
|
||||
Asia-Pacific
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Total
|
$
|
34,371
|
|
$
|
12,788
|
|
$
|
723
|
|
$
|
47,882
|
|
|
Estimated
Useful Lives
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||||||
|
Gross Book Value
|
Accumulated Amortization
|
Net Book Value
|
|
Gross Book Value
|
Accumulated Amortization
|
Net Book Value
|
||||||||||||||
|
|
|
(In thousands)
|
||||||||||||||||||
Trademarks
|
indefinite
|
|
$
|
8,434
|
|
$
|
—
|
|
$
|
8,434
|
|
|
$
|
8,416
|
|
$
|
—
|
|
$
|
8,416
|
|
Patents
|
15 - 30 years
|
|
5,950
|
|
592
|
|
5,358
|
|
|
3,583
|
|
294
|
|
3,289
|
|
||||||
Customer relationships
|
5 - 15 years
|
|
26,611
|
|
1,062
|
|
25,549
|
|
|
18,057
|
|
168
|
|
17,889
|
|
||||||
Noncompete Agreements
|
3 years
|
|
171
|
|
28
|
|
143
|
|
|
—
|
|
—
|
|
—
|
|
||||||
|
|
|
$
|
41,166
|
|
$
|
1,682
|
|
$
|
39,484
|
|
|
$
|
30,056
|
|
$
|
462
|
|
$
|
29,594
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Western Hemisphere
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
54,299
|
|
|
$
|
62,786
|
|
|
$
|
119,587
|
|
|
$
|
141,386
|
|
Services
|
16,430
|
|
|
16,783
|
|
|
34,892
|
|
|
33,776
|
|
||||
Intercompany
|
4,227
|
|
|
10,505
|
|
|
10,130
|
|
|
21,216
|
|
||||
Total
|
$
|
74,956
|
|
|
$
|
90,074
|
|
|
$
|
164,609
|
|
|
$
|
196,378
|
|
Eastern Hemisphere
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
22,441
|
|
|
$
|
29,913
|
|
|
$
|
36,367
|
|
|
$
|
63,074
|
|
Services
|
6,853
|
|
|
8,007
|
|
|
13,128
|
|
|
21,011
|
|
||||
Intercompany
|
256
|
|
|
22
|
|
|
287
|
|
|
207
|
|
||||
Total
|
$
|
29,550
|
|
|
$
|
37,942
|
|
|
$
|
49,782
|
|
|
$
|
84,292
|
|
Asia-Pacific
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
25,352
|
|
|
$
|
23,349
|
|
|
$
|
37,730
|
|
|
$
|
46,782
|
|
Services
|
2,548
|
|
|
1,601
|
|
|
5,447
|
|
|
2,971
|
|
||||
Intercompany
|
51
|
|
|
236
|
|
|
117
|
|
|
516
|
|
||||
Total
|
$
|
27,951
|
|
|
$
|
25,186
|
|
|
$
|
43,294
|
|
|
$
|
50,269
|
|
Summary
|
|
|
|
|
|
|
|
||||||||
Products
|
$
|
102,092
|
|
|
$
|
116,048
|
|
|
$
|
193,684
|
|
|
$
|
251,242
|
|
Services
|
25,830
|
|
|
26,391
|
|
|
$
|
53,466
|
|
|
$
|
57,758
|
|
||
Intercompany
|
4,534
|
|
|
10,763
|
|
|
$
|
10,534
|
|
|
$
|
21,939
|
|
||
Eliminations
|
(4,534
|
)
|
|
(10,763
|
)
|
|
(10,534
|
)
|
|
(21,939
|
)
|
||||
Total
|
$
|
127,922
|
|
|
$
|
142,439
|
|
|
$
|
247,150
|
|
|
$
|
309,000
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
||||||||
Western Hemisphere
|
$
|
10,190
|
|
|
$
|
5,084
|
|
|
$
|
17,327
|
|
|
10,105
|
|
|
Eastern Hemisphere
|
1,075
|
|
|
1,362
|
|
|
$
|
2,155
|
|
|
2,686
|
|
|||
Asia-Pacific
|
1,014
|
|
|
1,045
|
|
|
$
|
2,031
|
|
|
2,249
|
|
|||
Corporate
|
602
|
|
|
234
|
|
|
1,200
|
|
|
460
|
|
||||
Total
|
$
|
12,881
|
|
|
$
|
7,725
|
|
|
$
|
22,713
|
|
|
$
|
15,500
|
|
Income before income taxes:
|
|
|
|
|
|
|
|
||||||||
Western Hemisphere
|
$
|
4,442
|
|
|
$
|
26,530
|
|
|
$
|
11,914
|
|
|
$
|
64,843
|
|
Eastern Hemisphere
|
2,792
|
|
|
25,050
|
|
|
6,283
|
|
|
41,734
|
|
||||
Asia-Pacific
|
5,796
|
|
|
5,111
|
|
|
7,640
|
|
|
11,224
|
|
||||
Corporate
|
(11,750
|
)
|
|
(12,098
|
)
|
|
(24,595
|
)
|
|
(24,921
|
)
|
||||
Eliminations
|
(1,342
|
)
|
|
1,155
|
|
|
(1,252
|
)
|
|
2,689
|
|
||||
Total
|
$
|
(62
|
)
|
|
$
|
45,748
|
|
|
$
|
(10
|
)
|
|
$
|
95,569
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Total Long-Lived Assets:
|
|
|
|
||||
Western Hemisphere
|
$
|
374,661
|
|
|
$
|
317,875
|
|
Eastern Hemisphere
|
33,813
|
|
|
33,338
|
|
||
Asia-Pacific
|
54,415
|
|
|
53,960
|
|
||
Eliminations
|
(20,871
|
)
|
|
(480
|
)
|
||
Total
|
$
|
442,018
|
|
|
$
|
404,693
|
|
Total Assets:
|
|
|
|
||||
Western Hemisphere
|
$
|
777,995
|
|
|
$
|
775,358
|
|
Eastern Hemisphere
|
338,703
|
|
|
318,529
|
|
||
Asia-Pacific
|
376,323
|
|
|
370,043
|
|
||
Eliminations
|
(26,108
|
)
|
|
(2,526
|
)
|
||
Total
|
$
|
1,466,913
|
|
|
$
|
1,461,404
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||
Brent Crude Oil Price per Barrel
|
2017
|
2016
|
|
2017
|
2016
|
||||||||
Low
|
$
|
43.98
|
|
$
|
35.88
|
|
|
$
|
43.98
|
|
$
|
26.01
|
|
High
|
55.05
|
50.73
|
|
56.34
|
50.73
|
||||||||
Average
|
49.55
|
45.57
|
|
51.57
|
39.80
|
||||||||
Closing
|
47.08
|
48.05
|
|
47.08
|
48.05
|
|
Six months ended June 30,
|
||||||||||
|
2017
|
|
2016
|
||||||||
|
Floating Rigs
|
|
Jack-up Rigs
|
|
Floating Rigs
|
|
Jack-up Rigs
|
||||
Western Hemisphere
|
62
|
|
|
42
|
|
|
93
|
|
|
47
|
|
Eastern Hemisphere
|
59
|
|
|
59
|
|
|
67
|
|
|
70
|
|
Asia-Pacific
|
34
|
|
|
219
|
|
|
30
|
|
|
223
|
|
TOTAL
|
155
|
|
|
320
|
|
|
190
|
|
|
340
|
|
|
Floating
|
|
Jack-Up
|
|
|
|||
|
Rigs
|
|
Rigs
|
|
Total
|
|||
2017
|
16
|
|
|
28
|
|
|
44
|
|
2018
|
16
|
|
|
54
|
|
|
70
|
|
2019
|
10
|
|
|
15
|
|
|
25
|
|
2020
|
4
|
|
|
3
|
|
|
7
|
|
After 2020 or unspecified delivery date
|
1
|
|
|
—
|
|
|
1
|
|
|
47
|
|
|
100
|
|
|
147
|
|
|
Three months ended
|
|||||||
|
June 30, 2017
|
|
March 31, 2017
|
|
December 31, 2016
|
|||
|
(in thousands)
|
|||||||
Beginning Backlog
|
$295,534
|
|
$317,579
|
|
$378,447
|
|||
Bookings:
|
|
|
|
|
|
|||
Product
|
45,804
|
|
|
71,054
|
|
|
62,743
|
|
Service
|
25,831
|
|
|
27,636
|
|
|
25,598
|
|
Cancellation/Revision
|
(2,758
|
)
|
|
(3,500
|
)
|
|
(36,784
|
)
|
Translation
|
(1,630
|
)
|
|
1,993
|
|
|
(6,334
|
)
|
Total Bookings
|
67,247
|
|
|
97,183
|
|
|
45,223
|
|
Revenues:
|
|
|
|
|
|
|||
Product
|
102,092
|
|
|
91,592
|
|
|
80,493
|
|
Service
|
25,830
|
|
|
27,636
|
|
|
25,598
|
|
Total Revenue
|
127,922
|
|
|
119,228
|
|
|
106,091
|
|
Ending Backlog
|
$234,859
|
|
$295,534
|
|
$317,579
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
|
|
|
||||
Revenues:
|
|
|
|
|
|
|
|
||||
Products
|
79.8
|
%
|
|
81.5
|
%
|
|
78.4
|
%
|
|
81.3
|
%
|
Services
|
20.2
|
|
|
18.5
|
|
|
21.6
|
|
|
18.7
|
|
Total revenues
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales:
|
|
|
|
|
|
|
|
||||
Products
|
58.6
|
|
|
45.9
|
|
|
57.2
|
|
|
46.1
|
|
Services
|
9.8
|
|
|
10.2
|
|
|
11.6
|
|
|
9.9
|
|
Total cost of sales
|
68.4
|
|
|
56.1
|
|
|
68.8
|
|
|
56.0
|
|
Selling, general and administrative
|
24.4
|
|
|
4.1
|
|
|
23.0
|
|
|
6.1
|
|
Engineering and product development
|
8.1
|
|
|
8.1
|
|
|
9.0
|
|
|
7.3
|
|
Operating income
|
(0.9
|
)
|
|
31.7
|
|
|
(0.8
|
)
|
|
30.6
|
|
Interest income
|
0.8
|
|
|
0.4
|
|
|
0.8
|
|
|
0.3
|
|
Income before income taxes
|
(0.1
|
)
|
|
32.1
|
|
|
—
|
|
|
30.9
|
|
Income tax provision
|
(0.1
|
)
|
|
6.7
|
|
|
—
|
|
|
7.3
|
|
Net income
|
—
|
%
|
|
25.4
|
%
|
|
—
|
%
|
|
23.6
|
%
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In millions)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Products
|
|
|
|
|
|
|
|
||||||||
Subsea equipment
|
$
|
85.7
|
|
|
$
|
98.9
|
|
|
$
|
160.0
|
|
|
$
|
219.5
|
|
Downhole tools
|
6.1
|
|
|
1.9
|
|
|
17.5
|
|
|
2.4
|
|
||||
Offshore rig equipment
|
2.7
|
|
|
9.4
|
|
|
7.8
|
|
|
19.4
|
|
||||
Surface equipment
|
7.6
|
|
|
5.8
|
|
|
8.4
|
|
|
9.9
|
|
||||
Total products
|
102.1
|
|
|
116.0
|
|
|
193.7
|
|
|
251.2
|
|
||||
Services
|
25.8
|
|
|
26.4
|
|
|
53.5
|
|
|
57.8
|
|
||||
Total revenues
|
$
|
127.9
|
|
|
$
|
142.4
|
|
|
$
|
247.2
|
|
|
$
|
309.0
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(In thousands)
|
||||||||||||||
Net Income
|
$
|
15
|
|
|
$
|
36,137
|
|
|
$
|
110
|
|
|
$
|
72,906
|
|
|
Add:
|
|
|
|
|
|
|
||||||||||
|
Interest (income) expense
|
(1,052
|
)
|
|
(531
|
)
|
|
(1,974
|
)
|
|
(1,009
|
)
|
||||
|
Income tax expense (benefit)
|
(77
|
)
|
|
9,611
|
|
|
(120
|
)
|
|
22,663
|
|
||||
|
Depreciation and amortization expense
|
12,881
|
|
|
7,725
|
|
|
22,713
|
|
|
15,500
|
|
||||
|
Foreign currency loss (gain)
|
3,689
|
|
|
(15,369
|
)
|
|
3,585
|
|
|
(22,663
|
)
|
||||
|
Severance costs
|
305
|
|
|
1,970
|
|
|
1,877
|
|
|
1,991
|
|
||||
|
Stock compensation expense
|
3,567
|
|
|
3,062
|
|
|
6,783
|
|
|
6,254
|
|
||||
Adjusted EBITDA
(1)
|
$
|
19,328
|
|
|
$
|
42,605
|
|
|
$
|
32,974
|
|
|
$
|
95,642
|
|
|
Six months ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Operating activities
|
$
|
38,700
|
|
|
$
|
162,861
|
|
Investing activities
|
(33,615
|
)
|
|
(15,137
|
)
|
||
Financing activities
|
403
|
|
|
(23,704
|
)
|
||
|
5,488
|
|
|
124,020
|
|
||
Effect of exchange rate changes on cash activities
|
8,002
|
|
|
(13,627
|
)
|
||
Increase (decrease) in cash and cash equivalents
|
$
|
13,490
|
|
|
$
|
110,393
|
|
•
|
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;
|
•
|
changes in customers’ future product and service requirements that may not be cost effective or within the Company’s capabilities; and
|
•
|
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, South America, 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, including those attributable to the Brexit;
|
•
|
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
|
•
|
changes to, and differing interpretations of, tax laws with respect to our operations and subsidiaries.
|
Exhibit No.
|
|
Description
|
—
|
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).
|
|
|
|
|
—
|
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).
|
|
|
|
|
—
|
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).
|
|
|
|
|
—
|
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).
|
|
|
|
|
—
|
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 Jeffrey J. Bird.
|
|
|
|
32.1
|
—
|
Section 1350 Certification of Blake T. DeBerry.
|
|
|
|
32.2
|
—
|
Section 1350 Certification of Jeffrey J. Bird.
|
|
|
|
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
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DRIL-QUIP, INC.
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Date: July 28, 2017
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BY:
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/s/ Jeffrey J. Bird
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Jeffrey J. Bird,
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Vice President and Chief Financial Officer
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(Principal Accounting Officer and
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Duly Authorized Signatory)
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1 Year Dril Quip Chart |
1 Month Dril Quip Chart |
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