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Dril-Quip (DRQ) Q3 Loss Narrower Than Expected, Revenues Beat

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Dril-Quip Inc. (DRQ - Free Report) reported third-quarter adjusted loss of 20 cents per share, narrower than the Zacks Consensus Estimate of a loss of 23 cents. The company reported earnings of 5 cents in the year-ago quarter.

In the quarter under review, total revenues amounted to $93 million, which beat the Zacks Consensus Estimate of $86 million. However, the figure deteriorated from the year-ago quarter’s level of $100 million.

The quarterly results were affected by decline in revenues from the Asia-Pacific and Western Hemisphere, partially offset by higher activities in Eastern Hemisphere.
 

Dril-Quip, Inc. Price, Consensus and EPS Surprise

 

Dril-Quip, Inc. Price, Consensus and EPS Surprise | Dril-Quip, Inc. Quote

 

Costs

On the cost front, selling, general and administrative expenses declined to about $31.6 million from the year-earlier quarter’s level of approximately $28 million. Engineering and product development costs totaled $10.2 million, down 2.1% year over year from $10.4 million in the year-ago quarter. Total cost and expenses were $107.3 million compared with $129 million in the year-ago quarter.

The company incurred operating loss of approximately $14.1 million compared with operating loss of $62 million in the year-earlier quarter.

Cash Flow

The company’s cash position in the third quarter was strong, courtesy of free cash flow generation of $2.1 million and a debt-free balance sheet compared with $29.4 million free cash flow in third-quarter 2017. This will help the company execute long-term strategies of acquiring potential assets and repurchasing existing shares in the market. The company intends to allocate funds in research and development in the future.

Backlog

As of Sep 30, 2018, the company had backlog of $249 million compared with a backlog of $260.9 million as of Jun 30, 2018.

Guidance

Dril-Quip projects revenues for fourth quarterin the range of $80-$90 million. Moreover, the company targets annualized cost reductions of $40-$50 million by the fourth quarter of 2019.Of this, the first phase is expected to deliver $13.5 million of annualized savings. This is likely to have a positive impact of $3.4 million in the fourth quarter.

Zacks Rank & Stocks to Consider

Dril-Quip currently has a Zacks Rank #4 (Sell).

A few better-ranked players in the same sector are Murphy Oil Corporation (MUR - Free Report) , Enbridge Inc (ENB - Free Report) and Eni SpA (E - 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.

El Dorado, AR-based Murphy Oil is a global oil and gas exploration as well as production company. It pulled off an average positive earnings surprise of 96.5% in the last four quarters.

Headquartered in Calgary, Alberta, Enbridge is a leading energy infrastructure company. The company delivered an average positive earnings surprise of 35.3% in the trailing four quarters.

Based in Rome, Italy, Eni is among the leading integrated energy players in the world. The partnership reported a negative earnings surprise of 0.3% in the last four quarters.

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