Financial Performance - Total revenues for the three months ended March 31, 2023, increased by $7.7 million, or approximately 9.3%, to $90.9 million compared to $83.1 million for the same period in 2022[111]. - Product revenues accounted for 65.2% of total revenues for the three months ended March 31, 2023, down from 66.9% in the same period of 2022[99]. - Service revenues increased by approximately $2.1 million due to customer-specific increases in technical advisory services and maintenance requests[112]. - Net income for the three months ended March 31, 2023, was approximately $2.3 million, a significant improvement from a net loss of $8.9 million in the same period in 2022[124]. - Adjusted EBITDA for the three months ended March 31, 2023, was $8.8 million, compared to $3.2 million for the same period in 2022[127]. Operational Metrics - The average contracted Mobile Offshore Drilling Units (MODU) increased by 8.8% from 491 rigs in Q1 2022 to 534 rigs in Q1 2023[90]. - As of March 31, 2023, the Company reported 146 floating rigs and 391 jack-up rigs contracted, compared to 135 floating rigs and 357 jack-up rigs in Q1 2022[89]. - Approximately 62.8% of the Company's revenues were derived from foreign sales for the three months ended March 31, 2023, consistent with the previous year[99]. Cost and Expenses - Cost of sales increased by $1.5 million, or approximately 2.4%, to $65.5 million for the three months ended March 31, 2023, while the cost of sales as a percentage of revenue decreased to 72.1% from 77.0%[114]. - Engineering and product development expenses decreased by approximately $0.3 million, or 7.5%, to $3.4 million for the three months ended March 31, 2023[116]. - The Company incurred additional restructuring costs of approximately $1.7 million under the 2021 global strategic plan during the three months ended March 31, 2023[117]. - Capital expenditures for the three months ended March 31, 2023, were $5.4 million, up from $2.1 million in the same period in 2022[133]. Foreign Exchange and Cash Flow - Foreign exchange loss for the three months ended March 31, 2023, was $1.1 million compared to a gain of $1.3 million for the same period in 2022[119]. - The company experienced a foreign currency pre-tax loss of approximately $1.1 million during the three months ended March 31, 2023, compared to a gain of $1.3 million in the same period in 2022[141]. - Cash flows used in operating activities for the three months ended March 31, 2023, were $52.9 million, an increase from $10.9 million in the same period in 2022[131]. - The company has a cash balance of approximately $5.4 million in a cash collateral account as of March 31, 2023[134]. Market and Economic Conditions - Dril-Quip's average Brent Crude oil price per barrel for Q1 2023 was $81.07, down from $100.87 in Q1 2022, with a projected average of $85 per barrel for 2023[85]. - The Company expects continued pressure on crude oil and natural gas prices, which may affect drilling and production activities[82]. - The Company continues to monitor the impact of the COVID-19 pandemic and inflationary pressures on its operations and financial position[81]. - The Company has minimal operational exposure in Russia but is monitoring the potential impacts of sanctions and the ongoing conflict in Ukraine[80]. - The Company is subject to risks associated with international operations, including political instability and changes in foreign regulations[83]. Product and Service Performance - Subsea product operating income increased for the three months ended March 31, 2023, compared to the same period in 2022, due to a favorable product mix and overall price increases[120]. - Subsea services operating income also rose for the three months ended March 31, 2023, primarily due to a gain on the sale of the Houston aftermarket facility and increased utilization[121]. - Well Construction operating income decreased for the three months ended March 31, 2023, mainly due to unfavorable foreign exchange movements and costs related to market entry preparations[122]. Backlog and Future Outlook - The Company's product backlog as of March 31, 2023, was approximately $235.1 million, a decrease from $240.9 million at December 31, 2022, and an increase from $220.9 million at March 31, 2022[95]. - The Inflation Reduction Act of 2022 includes a 15% corporate alternative minimum tax for corporations with average adjusted financial statement income over $1 billion[78]. - The company has authorized a $100.0 million share repurchase plan, but no shares were purchased during the three months ended March 31, 2023[135].

Dril-Quip, Inc. (NYSE:DRQ) Q4 2022 Earnings Conference Call February 28, 2023 10:00 AM ET Company Participants Erin Fazio - Finance Director Jeff Bird - President and Chief Executive Officer Kyle McClure - VP & CFO Conference Call Participants Eddie Kim - Barclays Operator Good day, and thank you for standing by. Welcome to the Dril-Quip Q4 Full Year 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I'd now like to hand the conference ca ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (MARK ONE) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number 001-13439 DRIL-QUIP, INC. (Exact name of registrant as specified in its charter) | Delaware | 74-2162088 | | --- | -- ...

Financial Data and Key Metrics Changes - The results for Q3 2022 did not meet expectations, with incoming order trends at $75 million, at the high end of the expected range of $60 million to $80 million [6] - The income bookings number was impacted by an uncommon cancellation of $12 million, which is rare for the company [6][24] - The company expects Q4 bookings to exceed Q3 bookings, with a range of $75 million to $100 million anticipated [17][23] Business Line Data and Key Metrics Changes - The company reported that 20% of orders in Q3 were related to Saudi Arabia, indicating a strong market presence [12][15] - The downhole tool business is expected to reach a run rate of $25 million per quarter by late 2023 or early 2024 [33][34] - The combined service and leasing margins saw a decrease in Q3, attributed to the completion of distinct projects [29][30] Market Data and Key Metrics Changes - Leading indicators such as tender volume and average quote value have recovered to pre-pandemic levels, suggesting a constructive offshore market [7][27] - The company is focusing on key markets including Saudi Arabia, Brazil, and Latin America, with significant investments planned [12][14] Company Strategy and Development Direction - The company is looking to capitalize on the offshore market recovery and is optimistic about growth in key regions [7][27] - There is an increased interest in inorganic growth through M&A, with a focus on acquiring companies that align with Dril-Quip's specialized product offerings [42][44] - The company aims to achieve a gross margin target of 35% by 2024, with ongoing investments in manufacturing and operational efficiencies [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about energy security and systematic underinvestment in the industry, which could lead to increased activity [8] - The company is preparing for potential economic downturns by maintaining capital discipline and adjusting to lower oil price expectations [8] - Management noted that customer behavior is shifting towards more resilient investments, with a focus on maintaining inventory levels [10] Other Important Information - The company has received an A rating on its ESG efforts, reflecting improvements in carbon reduction programs [54][55] - The impact of foreign exchange fluctuations was noted, with a $2 million loss in Q3 due to currency movements [22] Q&A Session Summary Question: Broader market outlook and customer sentiment - Management noted that customers are optimistic about energy security and systematic underinvestment, which could lead to increased activity in the coming years [8] Question: Changes in customer behavior - Management observed that customers are becoming more confident and are shifting towards more call-off orders rather than large tenders [10] Question: Update on Petrobras orders - The company has a Master Service Agreement with Petrobras for 87 subsea wellhead systems, with expectations for further tenders in the near future [11] Question: Competitive landscape and M&A interest - Management indicated a focus on both large transformative deals and smaller bolt-on acquisitions, emphasizing the need for scale [42][44] Question: Inflationary pressures and mitigation strategies - Management acknowledged inflation impacts on raw materials and services but noted that they have been able to pass some costs onto customers [18][19] Question: Free cash flow outlook - The company expects to be breakeven on free cash flow for the year, with strategic investments in inventory and machinery impacting current cash flow [36] Question: Seasonal trends in bookings - Management indicated that Q4 typically sees the highest level of bookings as customers exhaust their CapEx plans [39]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-13439 DRIL-QUIP, INC. (Exact name of registrant as specified in its charter) DELAWARE 74-2162088 (State or other jurisdiction of incorporation or organization ...

Dril-Quip, Inc. (NYSE:DRQ) Q2 2022 Earnings Conference Call July 29, 2022 10:00 AM ET Company Participants Erin Fazio - Director, Corporate Development, IR & FP&A Jeff Bird - President and CEO Kyle McClure - Vice President and CFO Conference Call Participants Dave Anderson - Barclays Operator Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Dril-Quip Second Quarter 2022 Fireside Chat. [Operator Instructions] At this time, I would like to turn the call over to Ms. Erin Fazio, Dir ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-13439 DRIL-QUIP, INC. (Exact name of registrant as specified in its charter) DELAWARE 74-2162088 (State or other jurisdiction of incorporation or organization) (I. ...

Dril-Quip, Inc. (NYSE:DRQ) Q1 2022 Earnings Conference Call April 29, 2022 11:00 AM ET Company Participants Jeff Bird - CEO Kyle McClure - CFO Conference Call Participants Tom Curran - Seaport Research Partners Operator Good day and thank you for standing by. Welcome to the Dril-Quip First Quarter 2022 Fireside Chat. I would now like to hand the conference over to your speaker today, Mr. Tom Curran from Seaport Research Partners. Sir, please go ahead. Tom Curran Thank you. Greetings, everyone. Welcome to Dr ...

PART I—FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and accompanying notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Balance%20Sheets) Condensed Consolidated Balance Sheets | Metric (in thousands) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | **ASSETS** | | | | Total current assets | $717,376 | $745,549 | | Total assets | $978,110 | $1,010,426 | | **LIABILITIES** | | | | Total current liabilities | $70,321 | $93,663 | | Total liabilities | $90,335 | $113,318 | | **EQUITY** | | | | Total stockholders' equity | $887,775 | $897,108 | [Condensed Consolidated Statements of Income (Loss)](index=4&type=section&id=Statements%20of%20Income%20(Loss)) Condensed Consolidated Statements of Income (Loss) | Metric (in thousands, except per share data) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------------------- | :-------------------------------- | :-------------------------------- | | Total revenues | $83,137 | $81,239 | | Total cost of sales | $63,995 | $56,787 | | Selling, general and administrative | $22,393 | $29,558 | | Engineering and product development | $3,676 | $4,037 | | Restructuring and other charges | $32 | $25,020 | | Operating loss | $(5,591) | $(31,582) | | Loss before income taxes | $(5,442) | $(31,972) | | Income tax provision (benefit) | $3,496 | $2,386 | | Net loss | $(8,938) | $(34,358) | | Basic loss per common share | $(0.26) | $(0.97) | | Diluted loss per common share | $(0.26) | $(0.97) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Statements%20of%20Comprehensive%20Income%20(Loss)) Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) | $(8,938) | $(34,358) | | Foreign currency translation adjustments | $2,886 | $(2,090) | | Total comprehensive income (loss) | $(6,052) | $(36,448) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows | Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :-------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities | $(10,928) | $13,072 | | Net cash provided by (used in) investing activities | $(1,858) | $3,431 | | Net cash used in financing activities | $(5,859) | $(40) | | Effect of exchange rate changes on cash activities | $1,202 | $(205) | | Increase (decrease) in cash and cash equivalents | $(17,443) | $16,258 | | Cash and cash equivalents at end of period | $338,008 | $362,213 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity | Metric (in thousands, except shares) | Balance at January 1, 2022 | Balance at March 31, 2022 | | :----------------------------------- | :------------------------- | :------------------------ | | Common Stock | $352 | $349 | | Additional Paid-In Capital | $80,254 | $82,781 | | Retained Earnings | $973,087 | $958,344 | | Accumulated Other Comprehensive Losses | $(156,585) | $(153,699) | | Total Stockholders' Equity | $897,108 | $887,775 | | Repurchase of common shares | - | $(5,808) | | Stock-based compensation expense | - | $2,527 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Financial%20Statements) [1. Organization and Basis of Presentation](index=8&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) The company designs and manufactures engineered drilling equipment for severe service applications across three geographic segments - Dril-Quip's core business involves highly engineered drilling and production equipment for deepwater, harsh environment, and severe service applications[29](index=29&type=chunk) - Operations are organized into three geographic segments: **Western Hemisphere**, **Eastern Hemisphere**, and **Asia-Pacific**, with manufacturing facilities in each regional headquarters[29](index=29&type=chunk) [2. Significant Accounting Policies](index=8&type=section&id=2.%20Significant%20Accounting%20Policies) This note outlines key accounting policies, including revenue recognition, and details a new share repurchase plan - The Board of Directors authorized an incremental **$100 million** share repurchase plan on February 22, 2022, bringing the cumulative authorized amount to approximately **$118 million**[36](index=36&type=chunk) - For the three months ended March 31, 2022, the Company repurchased **273,629 shares** at an average price of approximately **$21.20 per share**, totaling approximately **$5.8 million**[36](index=36&type=chunk) - Revenues are generated from the sale of products, services, and the leasing of running tools, with recognition based on contract terms[32](index=32&type=chunk)[33](index=33&type=chunk) [3. Revenue Recognition](index=10&type=section&id=3.%20Revenue%20Recognition) This section details revenue by segment and type, contract balances, and remaining performance obligations Revenue by Geographic Segment and Type (Q1 2022) | Revenue Type (in thousands) | Western Hemisphere 2022 | Eastern Hemisphere 2022 | Asia-Pacific 2022 | Total 2022 | | :-------------------------- | :---------------------- | :---------------------- | :---------------- | :--------- | | Product Revenues | $36,661 | $11,783 | $7,198 | $55,642 | | Service Revenues | $11,585 | $3,262 | $2,652 | $17,499 | | Total | $48,246 | $15,045 | $9,850 | $73,141 | Contract Balances | Contract Balances (in thousands) | December 31, 2021 | March 31, 2022 | | :------------------------------- | :---------------- | :------------- | | Contract Assets | $97,716 | $104,101 | | Contract Liabilities | $9,222 | $5,028 | - The aggregate amount of the transaction price allocated to remaining performance obligations from over-time product lines was **$86.5 million** as of March 31, 2022, with approximately **93.4%** expected to be recognized over the next 12 months[44](index=44&type=chunk) [4. Stock-Based Compensation and Stock Awards](index=11&type=section&id=4.%20Stock-Based%20Compensation%20and%20Stock%20Awards) This note reports the stock-based compensation expense for the first quarters of 2022 and 2021 Stock-Based Compensation Expense | Metric (in millions) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Stock-based compensation expense | $2.5 | $3.2 | [5. Inventories, net](index=11&type=section&id=5.%20Inventories,%20net) This note provides a detailed breakdown of the company's inventory components and related allowances Inventory Components | Inventory Component (in thousands) | March 31, 2022 | December 31, 2021 | | :--------------------------------- | :------------- | :---------------- | | Raw materials and supplies | $28,609 | $27,398 | | Work in progress | $27,096 | $28,361 | | Finished goods | $211,226 | $218,946 | | Total inventory (gross) | $266,931 | $274,705 | | Less: allowance for slow moving and excess inventory | $(125,642) | $(128,981) | | Total inventory (net) | $141,289 | $145,724 | [6. Impairment, Restructuring and Other Charges](index=12&type=section&id=6.%20Impairment,%20Restructuring%20and%20Other%20Charges) This note details a significant reduction in restructuring charges in Q1 2022 compared to Q1 2021 - No significant restructuring costs were incurred under the 2021 global strategic plan during the three months ended March 31, 2022[48](index=48&type=chunk) Restructuring and Other Charges | Charge Type (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------- | :-------------------------------- | :-------------------------------- | | Inventory write-down | $- | $19,300 | | Severance | $32 | $2,700 | | Other | $- | $3,000 | | Total | $32 | $25,000 | [7. Intangible Assets](index=12&type=section&id=7.%20Intangible%20Assets) This note provides a breakdown of intangible assets, including trademarks, patents, and customer relationships Net Book Value of Intangible Assets | Intangible Asset (in thousands) | Net Book Value (March 31, 2022) | Net Book Value (December 31, 2021) | | :------------------------------ | :------------------------------ | :--------------------------------- | | Trademarks | $6,512 | $6,655 | | Patents | $2,669 | $2,772 | | Customer relationships | $16,414 | $16,912 | | Organizational costs | $89 | $107 | | Total | $25,684 | $26,446 | [8. Asset Backed Loan (ABL) Credit Facility](index=13&type=section&id=8.%20Asset%20Backed%20Loan%20(ABL)%20Credit%20Facility) The company terminated its ABL Credit Facility and established a new restricted cash collateral account - The ABL Credit Facility was terminated effective February 22, 2022[52](index=52&type=chunk) - A new cash collateral account was established with JPMorgan Chase Bank, N.A., with approximately **$7.1 million** transferred to cover existing letters of credit, which is now considered restricted cash[52](index=52&type=chunk) [9. Geographic Areas](index=13&type=section&id=9.%20Geographic%20Areas) This note provides a breakdown of financial performance by the company's three geographic segments Financial Performance by Geographic Segment (Q1 2022) | Metric (in thousands) | Western Hemisphere 2022 | Eastern Hemisphere 2022 | Asia-Pacific 2022 | Total 2022 | | :-------------------- | :---------------------- | :---------------------- | :---------------- | :--------- | | Total Revenues | $57,356 | $17,562 | $14,151 | $83,137 | | Income (loss) before income taxes | $8,553 | $75 | $340 | $(5,442) | Total Assets | Asset Category (in thousands) | March 31, 2022 | December 31, 2021 | | :---------------------------- | :------------- | :---------------- | | Total long-lived assets | $260,734 | $264,877 | | Total assets | $978,110 | $1,010,426 | - During Q1 2022, there were no asset write-downs, unlike Q1 2021 which saw **$19.3 million** in non-cash inventory write-downs due to a shift to vendor outsourcing[56](index=56&type=chunk) [10. Income Tax](index=14&type=section&id=10.%20Income%20Tax) This note discusses the significant change in the effective tax rate and the company's foreign earnings reinvestment policy Effective Tax Rate | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--------------- | :-------------------------------- | :-------------------------------- | | Effective tax rate | **(64.2)%** | **(7.5)%** | - The change in effective tax rate was primarily due to changes in income in foreign jurisdictions, valuation allowances in the U.S., foreign inclusions, and nondeductible compensation[57](index=57&type=chunk) - The company reversed its indefinite reinvestment assertion for foreign earnings, resulting in a deferred foreign tax liability of **$3.3 million** as of March 31, 2022[57](index=57&type=chunk) [11. Contingencies](index=14&type=section&id=11.%20Contingencies) This note addresses the status of the FMC Technologies, Inc. lawsuit regarding trade secret misappropriation - In the FMC Technologies, Inc. lawsuit, the jury returned a verdict in favor of Dril-Quip on April 29, 2021; FMC filed an appeal which the company intends to vigorously defend[58](index=58&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, cash flows, and key business trends [Forward-Looking Statements](index=15&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding future results, expenditures, market conditions, and the impact of external factors like COVID-19 and the energy transition[62](index=62&type=chunk) - These statements are based on assumptions and involve substantial risks, with actual future results potentially differing materially from expectations[62](index=62&type=chunk) [Overview](index=16&type=section&id=Overview) - Dril-Quip designs, manufactures, and services highly engineered drilling and production equipment for severe service applications, serving major oil and gas companies globally[65](index=65&type=chunk) [Business Environment](index=16&type=section&id=Business%20Environment) - Dril-Quip entered a collaboration agreement with Aker Solutions ASA in Q1 2022 to offer subsea injection systems for carbon capture, utilization, and storage (CCUS) projects[66](index=66&type=chunk) - The Russia-Ukraine invasion in February 2022 led to sanctions and increased uncertainty, potentially affecting the global supply chain despite Dril-Quip's minimal operational exposure in Russia[66](index=66&type=chunk)[68](index=68&type=chunk) - Crude oil prices rebounded sharply in Q1 2022, but recovery in the subsea market generally lags[66](index=66&type=chunk)[68](index=68&type=chunk) [Oil and Gas Prices](index=17&type=section&id=Oil%20and%20Gas%20Prices) - The company's business is substantially dependent on the condition of the oil and gas industry and capital expenditures by oil and gas companies[68](index=68&type=chunk) Brent Crude Oil Price per Barrel | Brent Crude Oil Price per Barrel | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Low | $78.25 | $50.37 | | High | $133.18 | $69.95 | | Average | $100.87 | $61.04 | | Closing | $107.29 | $63.52 | [Offshore Rig Count](index=17&type=section&id=Offshore%20Rig%20Count) - As of March 31, 2022, the total contracted offshore rig count for the company's geographic regions was **491**, an increase of **3.4%** from 475 rigs as of March 31, 2021[71](index=71&type=chunk) Contracted Offshore Rig Count | Rig Type / Region | 2022 Floating Rigs | 2022 Jack-up Rigs | 2021 Floating Rigs | 2021 Jack-up Rigs | | :---------------- | :----------------- | :---------------- | :----------------- | :---------------- | | Western Hemisphere | 56 | 41 | 55 | 43 | | Eastern Hemisphere | 50 | 61 | 41 | 52 | | Asia-Pacific | 29 | 255 | 33 | 249 | | Total | 135 | 357 | 129 | 344 | [Regulation](index=18&type=section&id=Regulation) - Demand for the company's products is affected by industry regulations, including tariffs on steel imports and the implications of Brexit[72](index=72&type=chunk) - The imposition of additional tariffs or trade restrictions could increase raw material costs or affect product markets, with the ultimate impact remaining uncertain[72](index=72&type=chunk) [Backlog and Revenues](index=19&type=section&id=Backlog%20and%20Revenues) - Product backlog increased to **$220.9 million** at March 31, 2022, from **$210.1 million** at December 31, 2021[74](index=74&type=chunk) - For Q1 2022, **66.9%** of revenues came from products, **21.0%** from services, and **12.0%** from leasing, with international sales accounting for approximately **62.8%** of total revenues[75](index=75&type=chunk) Backlog and Bookings | Metric (in thousands) | March 31, 2022 | December 31, 2021 | March 30, 2021 | | :-------------------- | :------------- | :---------------- | :------------- | | Beginning Backlog | $210,119 | $179,012 | $195,650 | | Total Bookings | $93,952 | $109,019 | $82,250 | | Total Revenue | $83,137 | $77,912 | $81,239 | | Ending Backlog | $220,934 | $210,119 | $196,661 | [Results of Operations](index=21&type=section&id=Results%20of%20Operations) - Total revenues increased by **$1.9 million (2.3%)** to **$83.1 million** in Q1 2022, driven by increased subsea equipment and leasing revenues[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Cost of sales increased by **$7.2 million (12.7%)** to **$64.0 million** in Q1 2022, primarily due to unfavorable product mix and increased transportation costs[82](index=82&type=chunk) - Selling, general and administrative expenses decreased by **$7.2 million (24.2%)** to **$22.4 million** in Q1 2022, mainly due to lower legal and consulting fees[82](index=82&type=chunk) - Net loss significantly reduced to **$8.9 million** in Q1 2022 from **$34.4 million** in Q1 2021, primarily due to lower restructuring charges and SG&A expenses[82](index=82&type=chunk) Key Metrics as a Percentage of Revenues | Metric (as % of revenues) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------ | :-------------------------------- | :-------------------------------- | | Products | 66.9% | 68.4% | | Services | 21.1% | 21.8% | | Leasing | 12.0% | 9.8% | | Total cost of sales | 77.0% | 69.9% | | Selling, general and administrative | 26.9% | 36.4% | | Engineering and product development | 4.4% | 5.0% | | Restructuring and other charges | 0.0% | 30.8% | | Operating loss | (6.7)% | (38.9)% | | Net income (loss) | (10.8)% | 42.2% | [Non-GAAP Financial Measures - Adjusted EBITDA](index=23&type=section&id=Non-GAAP%20Financial%20Measures) - Adjusted EBITDA is used to evaluate and compare operating results by removing the effect of capital structure and certain non-cash items[84](index=84&type=chunk)[85](index=85&type=chunk) Adjusted EBITDA Reconciliation | Metric (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(8,938) | $(34,358) | | Adjusted EBITDA | $3,159 | $8,046 | [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - Net cash used in operating activities was **$10.9 million** in Q1 2022, a **$24.0 million** decrease from Q1 2021, primarily due to changes in operating assets and liabilities[88](index=88&type=chunk) - Capital expenditures were **$2.1 million** in Q1 2022, mainly for rental tools and machinery[88](index=88&type=chunk) - The ABL Credit Facility was terminated, and a new cash collateral account was opened holding approximately **$7.1 million** as restricted cash[89](index=89&type=chunk) - The Board authorized an incremental **$100 million** share repurchase plan, and the company repurchased **273,629 shares** for **$5.8 million** in Q1 2022[90](index=90&type=chunk) Summary of Cash Flow Activities | Cash Flow Activity (in thousands) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(10,928) | $13,072 | | Investing activities | $(1,858) | $3,431 | | Financing activities | $(5,859) | $(40) | | Increase (decrease) in cash | $(17,443) | $16,258 | [Other Matters](index=25&type=section&id=Other%20Matters) - The company may engage in discussions for acquisitions or joint ventures, with timing and funding being unpredictable[93](index=93&type=chunk) [Critical Accounting Judgments](index=25&type=section&id=Critical%20Accounting%20Judgments) - There were no material changes in critical accounting judgments and assumptions during the three months ended March 31, 2022[94](index=94&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily from interest rate and foreign exchange rate fluctuations [Foreign Exchange Rate Risk](index=25&type=section&id=Foreign%20Exchange%20Rate%20Risk) - The company is exposed to foreign exchange rate risk due to international operations and does not engage in material hedging transactions[96](index=96&type=chunk) Foreign Currency Pre-tax (Gain)/Loss | Metric (in millions) | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :------------------------------- | :-------------------------------- | :-------------------------------- | | Foreign currency pre-tax (gain)/loss | $1.3 (gain) | $(1.4) (loss) | [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and reports no material changes in internal control - The company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2022[97](index=97&type=chunk) - There were no material changes in the company's internal control over financial reporting during the three months ended March 31, 2022[97](index=97&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 (Contingencies) for a description of the company's legal proceedings - For a description of the company's legal proceedings, refer to Note 12, 'Contingencies,' in the Notes to Condensed Consolidated Financial Statements[100](index=100&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors disclosed in the Annual Report, specifically addressing risks from the Russia-Ukraine conflict [Risks Related to Business, Operations and Industry](index=26&type=section&id=Risks%20Related%20to%20Business,%20Operations%20and%20Industry) - The Russia-Ukraine invasion has led to sanctions which could adversely affect oil and gas customers and the global supply chain, increasing market instability[102](index=102&type=chunk) - The company does not intend to commit further capital towards projects in Russia, and the full impact of the conflict remains unknown[102](index=102&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the repurchase of common stock during the first quarter of 2022 Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price paid per Share | Maximum Dollar Value of Shares that May Yet be Purchased (in millions) | | :-------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------- | | January 1 - 31, 2022 | 273,629 | $21.20 | $18.5 | | February 1 - 28, 2022 | - | - | $118.5 | | March 1 - 31, 2022 | - | - | $118.5 | | Total | 273,629 | $21.20 | $118.5 | [Item 6. Index to Exhibits](index=28&type=section&id=Item%206.%20Index%20to%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL interactive data files - The report includes exhibits such as the Restated Certificate of Incorporation, Bylaws, Certifications, and various Inline XBRL documents[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Signatures](index=29&type=section&id=Signatures) This section contains the authorized signature for the Form 10-Q report - The report was signed by Kyle F. McClure, Vice President – Chief Financial Officer, on April 28, 2022, as the duly authorized signatory[120](index=120&type=chunk)

Dril-Quip, Inc. (NYSE:DRQ) Q4 2021 Earnings Conference Call February 24, 2022 10:00 AM ET Company Participants Blake Holcomb - Director, Investor Relations and Corporate Planning Jeff Bird - President and Chief Executive Officer Kyle McClure - Vice President and Chief Financial Officer Conference Call Participants Taylor Zurcher - Tudor, Pickering, Holt Operator Welcome to the Dril-Quip Q4 and Full Year 2021 Earnings Call. My name is Daryl and I will be your operator for today’s call. [Operator Instructions ...