UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 25, 2016
DRIL-QUIP, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-13439 | 74-2162088 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
6401 N. Eldridge Parkway Houston, Texas |
77041 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (713) 939-7711
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On February 25, 2016, Dril-Quip, Inc. (Dril-Quip) reported full year 2015 and fourth quarter 2015 earnings. For additional information regarding Dril-Quips full year 2015 and fourth quarter 2015 earnings, please refer to Dril-Quips press release attached to this report as Exhibit 99.1 (the Press Release), which Press Release is incorporated by reference herein.
The information in the Press Release is being furnished, not filed, pursuant to Item 2.02. Accordingly, the information in the Press Release will not be incorporated by reference into any registration statement filed by Dril-Quip under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
The exhibit listed below is being furnished pursuant to Item 2.02 of this Form 8-K:
Exhibit No. |
Description | |
99.1 | Press Release issued February 25, 2016. |
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DRIL-QUIP, INC. | ||
By: | /s/ Jerry M. Brooks | |
Jerry M. Brooks | ||
Vice PresidentFinance and Chief Financial Officer |
Date: February 25, 2016
3
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | Press Release issued February 25, 2016. |
4
Exhibit 99.1
Contact: Jerry M. Brooks, Chief Financial Officer, (713) 939-7711
DRIL-QUIP, INC. ANNOUNCES RESULTS FOR 4th QUARTER & YEAR END 2015
HOUSTON, February 25, 2016 Dril-Quip, Inc. (NYSE: DRQ) today announced net income of $48.4 million, or $1.28 per diluted share, for the three months ended December 31, 2015, versus net income of $59.1 million, or $1.50 per diluted share, for the fourth quarter of 2014. The fourth quarter 2015 results were favorably impacted by an after-tax foreign exchange gain of $3.1 million, or $0.08 per diluted share, as compared to an after-tax foreign exchange gain of $2.6 million, or $0.07 per diluted share, during the fourth quarter of 2014. Total revenues were $201.6 million during the quarter ended December 31, 2015 compared to $254.8 million for the same period in 2014.
For the year ended December 31, 2015, net income was $192.0 million, or $4.98 per diluted share, compared with net income of $208.7 million, or $5.19 per diluted share, for 2014. The results for the twelve months ended December 31, 2015 were favorably impacted by an after-tax foreign exchange gain of $3.9 million, or $0.10 per diluted share, as compared to an after-tax foreign exchange gain of $3.4 million, or $0.08 per diluted share, during the year ended December 31, 2014. Total revenues for the year ended December 31, 2015 were $844.3 million, compared to $931.0 million for the same period in 2014.
In addition, the Company announced that its backlog at December 31, 2015 was $685 million, compared to its December 31, 2014 backlog of approximately $1.2 billion.
Blake DeBerry, Dril-Quips President and CEO stated, Despite challenging industry conditions, we are pleased to announce full-year earnings per share results that exceeded our beginning-of-the-year expectations for 2015. The fact that both our gross margins and operating margins during 2015 compared favorably with those achieved in 2014 is indicative of the dedication and hard work by Dril-Quip employees around the world.
Unfortunately, the worldwide reduction in the number of operating floating rigs, both semi-submersibles and drillships, resulted in disappointing bookings throughout the year and a reduced backlog as of December 31, 2015. We believe that the decrease in order levels was also negatively impacted by both a significant customer property overhang as well as shorter delivery times throughout the industry.
Without a doubt, 2016 will be a challenging year as oil prices are expected to remain at depressed levels. Accordingly, we expect that increasing pricing pressures and reduced manufacturing activity will negatively impact our gross margins as the year progresses. However, we believe that our execution of existing backlog, low capital expenditure requirements and zero debt will result in significant free cash flow during the year.
In addition, our continuing conservative management approach has resulted in a strong balance sheet that leaves us well-positioned to capitalize on opportunities for the long term benefit of our stockholders. During the downturn, the Company intends to continue pursing attractive acquisition candidates as well as our stock buy-back program. Our research and development efforts will continue both in Houston and at our recently announced new HPHT R&D facility in Singapore. We believe that the enhancement of existing products combined with the introduction of new products will place the Company in a strong position when the market rebounds.
Based upon current market conditions and excluding foreign currency gains/losses or any unusual items, the Company expects its earnings per diluted share for the year ending December 31, 2016 to approximate $2.45 to $2.65 per share. In addition, first quarter 2016 earnings per share are expected to approximate $0.75 to $0.85 per share.
Dril-Quip is a leading manufacturer of highly engineered offshore drilling and production equipment, which is well suited for use in deepwater, harsh environment and severe service applications.
Statements contained herein relating to future operations and financial results that are forward looking statements, including statements regarding commodity price levels, future financial results, acquisitions and stock repurchases, are based upon certain assumptions and analyses made by the management of the Company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors. These statements are subject to risks, some of which are beyond the Companys control, including, but not limited to, the volatility of oil and natural gas prices and cyclicality of the oil and gas industry, uncertainties regarding the effects of new governmental regulations, the Companys ability to convert backlog into revenues on a profitable basis, the possibility of cancellations of orders, the Companys international operations, operating risks, and other factors detailed in the Companys public filings with the Securities and Exchange Commission. Investors are cautioned that any such statements are not guarantees of future performance and actual outcomes may vary materially from those indicated.
Dril-Quip, Inc.
Comparative Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Revenues |
$ | 201,630 | $ | 254,819 | $ | 844,310 | $ | 930,957 | ||||||||
Cost and expenses: |
||||||||||||||||
Cost of sales |
108,352 | 142,497 | 459,286 | 513,527 | ||||||||||||
Selling, general and administrative |
20,173 | 22,462 | 88,044 | 92,762 | ||||||||||||
Engineering and product development |
12,797 | 11,625 | 48,145 | 45,920 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
141,322 | 176,584 | 595,475 | 652,209 | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
60,308 | 78,235 | 248,835 | 278,748 | ||||||||||||
Interest income |
389 | 112 | 948 | 667 | ||||||||||||
Interest expense |
(2 | ) | (20 | ) | (12 | ) | (35 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
60,695 | 78,327 | 249,771 | 279,380 | ||||||||||||
Income tax provision |
12,341 | 19,240 | 57,763 | 70,668 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 48,354 | $ | 59,087 | $ | 192,008 | $ | 208,712 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share |
$ | 1.28 | $ | 1.50 | $ | 4.98 | $ | 5.19 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average sharesdiluted |
37,845 | 39,463 | 38,531 | 40,190 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Depreciation and amortization |
$ | 7,700 | $ | 8,381 | $ | 30,477 | $ | 31,155 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Capital expenditures |
$ | 10,333 | $ | 11,385 | $ | 27,079 | $ | 42,549 | ||||||||
|
|
|
|
|
|
|
|