Dril-Quip(US:DRQ)2023-05-08 16:00Financial 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].