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Why Is DrilQuip (DRQ) Down 2.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Dril-Quip (DRQ - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is DrilQuip due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Dril-Quip’s Q4 Earnings Miss Estimates on Higher Costs

Dril-Quip reported fourth-quarter 2023 adjusted earnings of 4 cents per share, which missed the Zacks Consensus Estimate of 11 cents. The bottom line also declined from the year-ago quarter’s 6 cents.

The company’s total quarterly revenues of $126 million increased from the year-ago quarter’s figure of $97 million. The figure, however, missed the Zacks Consensus Estimate of $136 million.

Significant rise in total costs and expenses led to weak quarterly earnings.

Q4 Performance

Dril-Quip reported net bookings of $122.7 million for the quarter, up 25% year over year. At the end of the reported quarter, the company had $264 million in its backlog.

DRQ reported a fourth-quarter operating income of $4.6 million, indicating a turnaround from the prior-year period’s reported loss of $2.4 million.

Total Costs and Expenses

The cost of sales increased to $121.8 million from $99.2 million in the year-ago period. Engineering and product development costs also increased to almost $3 million from $2.7 million.

Total costs and expenses were $121.8 million compared with $99.2 million registered in the corresponding period of 2022.

Free Cash Flow

In the fourth quarter, Dril-Quip generated a free cash flow of $14.5 million against a negative free cash flow of $22.8 million a year ago.

Financials

Dril-Quip recorded $11.6 million in capital expenditure for the quarter.

As of Dec 31, 2023, the company’s cash balance was $191.4 million. Its balance sheet is free of debt load, highlighting a sound financial position.

Guidance

DRQ expects revenues this year to grow 15% to 20% year over year. The company anticipates Subsea product bookings in 2024 in the band of $200-$225 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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