Dril-Quip(US:DRQ)2022-07-27 16:00Oil Market and Demand - Dril-Quip reported an average Brent Crude oil price of $113.84 per barrel for the three months ended June 30, 2022, compared to $68.98 per barrel for the same period in 2021, reflecting a significant increase in oil prices [71]. - The company anticipates global oil demand to grow to 99.2 million barrels per day in 2022, up from 97.5 million barrels per day in 2021, driven by a recovering global economy [71]. - Brent Crude oil prices are projected to average approximately $104.05 per barrel in 2022 and $93.75 per barrel in 2023, compared to an average of $70.89 per barrel in 2021, indicating a volatile market outlook [71]. Operational Performance - The average contracted offshore rig count increased by 6.5% to 510 rigs as of June 30, 2022, from 479 rigs as of June 30, 2021, indicating a recovery in drilling activity [75]. - The average contracted offshore rig count for the Western Hemisphere was 58 floating rigs and 42 jack-up rigs for the six months ended June 30, 2022, compared to 55 floating rigs and 46 jack-up rigs in 2021 [73]. - The Company accounted for 50 projects using over-time accounting for the three months ended June 30, 2022, representing approximately 36.7% of total revenues, compared to 39 projects for the same period in 2021 [81]. Financial Results - Total revenue for the three months ended June 30, 2022, was $93.98 million, an increase from $83.14 million for the three months ended March 31, 2022, and $77.91 million for the three months ended December 31, 2021 [79]. - Revenues increased by $13.2 million, or approximately 16.3%, to $94.0 million for the three months ended June 30, 2022, compared to $80.8 million for the same period in 2021 [84]. - Total bookings for the three months ended June 30, 2022, were $81.6 million, down from $93.9 million for the three months ended March 31, 2022, and $109.0 million for the three months ended December 31, 2021 [79]. - Net loss was approximately $5.6 million for the three months ended June 30, 2022, compared to a net loss of $19.1 million for the same period in 2021 [85]. - Revenues increased by $15.1 million, or approximately 9.3%, to $177.1 million for the six months ended June 30, 2022, compared to $162.0 million for the same period in 2021 [85]. Cost and Expenses - Cost of sales increased by $8.1 million, or approximately 13.2%, to $69.7 million for the three months ended June 30, 2022, with cost of sales as a percentage of revenue decreasing to 74.1% from 76.2% [85]. - Selling, general and administrative expenses decreased by $7.1 million, or 24.0%, to $22.5 million for the three months ended June 30, 2022 [85]. - Engineering and product development expenses decreased by approximately $1.0 million, or 26.9%, to $2.7 million for the three months ended June 30, 2022 [85]. International Operations - Approximately 62.4% of the Company's revenues for the six months ended June 30, 2022, were derived from foreign sales, down from 67.2% for the same period in 2021 [79]. - The Company has substantial international operations, with domestic revenue approximating 37.6% of total revenues for the six months ended June 30, 2022 [79]. Strategic Initiatives - The company entered a collaboration agreement with Aker Solutions to provide subsea injection systems for carbon capture, utilization, and storage (CCUS) projects, enhancing its technological offerings [68]. - Dril-Quip's collaboration and supply agreement with a peer provider of subsea equipment aims to bundle products and services into an integrated offering, potentially increasing market access [68]. - The Company authorized a $100.0 million share repurchase plan on February 22, 2022, with no set expiration date [96]. Cash Flow and Capital Expenditures - Net cash used in operating activities for the six months ended June 30, 2022 was $20.2 million, a decrease from net cash provided of $24.4 million for the same period in 2021 [93]. - Capital expenditures for the six months ended June 30, 2022 were $3.4 million, down from $5.6 million for the same period in 2021 [93]. Market Risks - The Company is exposed to market risks related to interest rate changes on short-term investments and fluctuations in foreign exchange rates [100]. - The Company does not engage in material hedging transactions or forward contracts to mitigate market risks [100]. - The Company has no derivative instruments or off-balance sheet hedging arrangements [97].