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

Zacks Equity Research
·3 min read

Dril-Quip, Inc. DRQ reported second-quarter 2020 adjusted loss per share of 34 cents, wider than the Zacks Consensus Estimate of a loss of 11 cents. In the year-ago comparable period, the company reported earnings of 3 cents per share.

It registered total revenues of $90 million in the quarter, lower than $104 million in the year-ago period. However, the figure beat the Zacks Consensus Estimate of $82 million.

The weak quarterly earnings were due to coronavirus-dented demand for the company’s highly-engineered drilling and production equipment.

DrilQuip, Inc. Price, Consensus and EPS Surprise

 

DrilQuip, Inc. Price, Consensus and EPS Surprise
DrilQuip, Inc. Price, Consensus and EPS Surprise

DrilQuip, Inc. price-consensus-eps-surprise-chart | DrilQuip, Inc. Quote

Second-Quarter Performance

Dril-Quip reported product bookings of $40.5 million in the quarter. The coronavirus pandemic has dented global energy demand and weakened commodity pricing scenario. This led upstream energy players, the company’s customers, to lower capital spending, leading to a substantial year-over-year decline in product booking.    

Notably, the company recorded second-quarter operating loss of $7.5 million against a profit of $2.1 million in the prior-year quarter.

Total Costs and Expenses

On the cost front, cost of sales declined to $66.9 million in the reported quarter from $73.9 million in the year-ago period. Engineering and product development costs, however, rose to $5.4 million in the quarter from the year-ago $5.2 million. Total cost and expenses during the quarter totaled $97.9 million compared with $101.7 million a year ago.

Free Cash Flow

Dril-Quip’s free cash flow in the second quarter was a negative $1.1 million. In the second quarter of 2019, the company’s free cashflow was recorded at $8.7 million.

Backlog

At the end of the second quarter, the company had $238 million in backlog, down from $273 million as of Dec 31, 2019. Of the existing backlog, 80% will likely be converted to revenues this year, while the rest will be converted next year.

Financials

Dril-Quip recorded $4.1 million capital expenditure in the quarter, higher than the year-ago level of $1.1 million.

As of Jun 30, 2020, its cash balance was $345.8. It had total available liquidity of $383.8 million. The company’s balance sheet is free of debt load, which highlights its sound financial position.

Guidance

For 2020, the leading manufacturer of highly engineered drilling and production equipment expects product booking worth $200 million.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #4 (Sell). Meanwhile, a few better-ranked players in the energy space include Concho Resources Inc. CXO, Cimarex Energy Co XEC and EOG Resources, Inc. EOG, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Concho is likely to see earnings growth of 21.6% in 2020.

Cimarex Energy’ 2020 bottom-line estimates have moved up over the past 30 days.

EOG Resources’ 2020 bottom-line estimates have risen more than 200% over the past 30 days.

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EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
Concho Resources Inc. (CXO) : Free Stock Analysis Report
 
DrilQuip, Inc. (DRQ) : Free Stock Analysis Report
 
Cimarex Energy Co (XEC) : Free Stock Analysis Report
 
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