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Dril-Quip (DRQ) Down 5.2% Since Q4 Earnings Miss: Here's Why

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Dril-Quip, Inc.’s (DRQ - Free Report) shares declined 5.2% since the announcement of weak fourth-quarter results on Feb 25. Market uncertainty owing to the coronavirus pandemic continues to hurt the company’s product bookings and bottom line.

Q4 Results

The company reported fourth-quarter 2020 adjusted loss per share of 12 cents, wider than the Zacks Consensus Estimate of a loss of a penny. In the year-ago period, the company reported a profit of 23 cents per share.

It registered total revenues of $87 million for the quarter, lower than $108 million in the year-ago period. Moreover, the figure missed the Zacks Consensus Estimate of $89 million.

DrilQuip, Inc. Price, Consensus and EPS Surprise

 

DrilQuip, Inc. Price, Consensus and EPS Surprise

DrilQuip, Inc. price-consensus-eps-surprise-chart | DrilQuip, Inc. Quote

Fourth-Quarter Performance

Dril-Quip reported product bookings of $36 million for the quarter. The company added that the uncertain business scenario owing to the coronavirus pandemic has hurt its product bookings.  Notably, the company recorded fourth-quarter operating loss of $11.6 million, wider than a loss of $2.1 million in the prior-year quarter.

Total Costs and Expenses

On the cost front, cost of sales declined to $64.1 million for the reported quarter from $67.2 million in the year-ago period. Engineering and product development costs, however, rose marginally to $4 million for the quarter from the year-ago figure of $3.9 million. Total cost and expenses for the quarter totaled $98.9 million compared with $93.4 million a year ago.

Free Cash Flow

Dril-Quip’s free cash outflow for the fourth quarter was $18.5 million. For fourth-quarter 2019, the company’s free cash flow was recorded at $5.2 million.

Backlog

At fourth quarter-end, it had $196 million in backlog, down from $273 million as of Dec 31, 2019.

Financials

Dril-Quip recorded $1.7 million capital expenditure for the quarter versus the year-ago level of $1.9 million.

As of Dec 31, 2020, its cash balance was $346 million. It had total available liquidity of $386.2 million. The company’s balance sheet is free of debt load, which highlights a sound financial position.

Guidance

For 2021, the leading manufacturer of highly engineered drilling and production equipment expects product bookings worth $40 million to $60 million per quarter. In the back half of this year, the company expects to see modest improvement since economies are reopening.

Zacks Rank & Key Picks

Dril-Quip currently carries a Zacks Rank #4 (Sell). Meanwhile, a few better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Antero Resources Corporation (AR - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) . While Antero Resources carries a Zacks Rank #2 (Buy),Diamondback and Matador sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Matador is likely to see earnings growth of 201.3% in 2021.

Antero Resources has seen upward estimate revisions for 2021 earnings in the past 30 days.

Diamondback is likely to see earnings growth of 55% in 2021.

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