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Dril-Quip (DRQ) Q2 Earnings Miss Estimates, Revenues In Line

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Dril-Quip Inc. (DRQ - Free Report) reported second-quarter adjusted loss of 24 cents per share, wider than the Zacks Consensus Estimate of a loss of 8 cents. The figure was also wider than earnings of 9 cents in the year-ago quarter.
 

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Total revenues amounted to $95 million in the second quarter, in line with the Zacks Consensus Estimate. However, the figure deteriorated from the year-ago quarter’s level of $128 million.
    
Second-quarter results were affected by decline in revenues from the Asia-Pacific as well as lower product bookings, partially offset by higher activities in Western Hemisphere.

Costs

On the cost front, selling, general and administrative expenses declined from the year-earlier quarter’s level of approximately $31.3 million to about $23.7 million. Engineering and product development costs totaled $10.5 million, up 2.1% year over year from $10.3 million in the year-ago quarter. Total cost and expense during the quarter was $98.6 million compared with $129 million in the year-ago quarter.

The company incurred operating loss of approximately $3.7 million compared with operating loss of $1.1 million in the year-earlier quarter.

Cash Flow

The company’s cash position in the second quarter was strong, courtesy of free cash flow generation of $3 million and a debt-free balance sheet compared with $19.1 million free cash flow in second-quarter 2017. This will help the company execute long-term strategies of acquiring potential assets and repurchasing existing shares in the market. The company also intends to invest in research and development in the future.

Backlog

As of Jun 30, 2018, the company had backlog of $260.9 million compared with a backlog of $266.7 million as of Mar 31, 2017.

Guidance

Dril-Quip projects revenues for 2018 in the range of $350-$370 million. Moreover, the company targets annualized cost reductions of $40-$50 million by the fourth quarter of 2019.

Q2 Price Performance

In the quarter under review, Dril-Quip’s shares gained 14.8% compared with the 18.4% rise of the industry it belongs to.



 

Zacks Rank & Stocks to Consider

Dril-Quip currently has a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Canadian Natural Resources Limited (CNQ - Free Report) , China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, and Sunrun Inc (RUN - Free Report) . All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Canadian Natural Resources, based in Calgary, Alberta, is an exploration and production (E&P) company. It pulled off an average positive earnings surprise of 4.7% in the last four quarters.

Sinopec is one of the largest petroleum and petrochemical companies in Asia. The company delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

Sunrun is engaged in offering solar services through various channels. The company delivered an average positive earnings surprise of 16.3% in the last four quarters.

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