Dril-Quip Inc. (DRQ) reported first-quarter 2013 adjusted earnings of 85 cents per share, beating the Zacks Consensus Estimate of 80 cents. The quarterly earnings also increased 13.3% from the year-ago profit level of 75 cents. The outperformance was mainly backed by growth in product and service revenues as demand for offshore equipment increased.
The company registered total revenue of $193.2 million in the quarter, up 9.1% from the year-ago level of $177.1 million. The reported figure, however, missed the Zacks Consensus Estimate of $195.0 million.
Operating income expanded 30.3% to $52.2 million from the year-earlier level of $40.0 million. On the cost front, on an annualized basis, selling, general and administrative expenses dropped 23.5% to $15.6 million from the year-earlier level of $20.4 million, while its engineering and product development costs decreased 6.1%. Notably, depreciation and amortization expenses increased 15.6% to $7.0 million.
As of Mar 31, 2013, the company had a backlog of $1,022.0 million, compared with $701 million in the prior-year period.
For the second quarter of 2013, the offshore drilling equipment maker expects earnings between 80 cents and 90 cents per diluted share, excluding any unusual or special charges. Additionally, based on improving market conditions, Dril-Quip maintained its full-year 2013 adjusted earnings per share expectation at $3.40–$3.60.
The company remains upbeat on the four-year contract with Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras (PBR) regarding the supply of subsea wellhead systems as well as tools for drilling deepwater wells offshore Brazil. The company is well positioned to take advantage of the project. Thus, the company through 2013 and beyond is geared for general secular growth backed by Petrobras' planned newbuild program.
Dril-Quip holds a Zacks Rank #3, which is equivalent to a Hold rating for a period of 1 to 3 months. However, there are other stocks in the oil and gas sector – InterOil Corporation (IOC) and CNOOC Ltd. (CEO)– which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.
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