Dril-Quip(DRQ)2024-02-27 17:50Financial Data and Key Metrics Changes - Total revenue for Q4 2023 was $126.3 million, representing a 31% year-over-year increase and an 8% sequential increase, driven by activity increases in subsea services and the full quarter contribution from Great North [30] - For the full year 2023, revenue was $424.1 million, an increase of 17% year-over-year, with Great North contributing $35.2 million [30] - Adjusted EBITDA for Q4 2023 was $16.5 million, an increase of $4.2 million sequentially and $6.3 million year-over-year, while full year adjusted EBITDA was $46.5 million, a 56% increase year-over-year [32] - Free cash flow for Q4 2023 was $14.5 million, an improvement of $37.3 million year-over-year, while free cash flow for the full year was negative $24.9 million [33] Business Line Data and Key Metrics Changes - Subsea Products revenue increased by 2% year-over-year, while Subsea Services revenue grew by 7% [12] - The Well Construction segment revenue grew 70% year-over-year, reflecting increased activity in Latin America and Saudi Arabia, with a $100 million annual run rate for the legacy TIW business [13] Market Data and Key Metrics Changes - The Canadian onshore market is expected to grow due to increased production from operators and market share expansion, particularly in the Grand Prairie region [9] - International growth is anticipated in key areas such as the Middle East, Latin America, and the U.S., with investments in new facilities and technologies [10][11] Company Strategy and Development Direction - The company is reorganizing its business into product lines, optimizing its footprint, and investing in manufacturing capabilities to drive growth [8] - Strategic investments are being made in key growth markets globally, including Saudi Arabia and Mexico, to support anticipated demand [10][11] - The company plans to discontinue the inclusion of well construction bookings in future disclosures, focusing solely on subsea product bookings [24] Management's Comments on Operating Environment and Future Outlook - The macroeconomic outlook for 2024 and beyond is positive, with expectations for increased offshore project FIDs [27] - Management expressed confidence in accelerating contract awards in 2024 as rig capacity constraints are resolved [9] - The company expects revenue to increase by 15% to 20% in 2024, with Q1 revenue projected between $105 million and $110 million [15] Other Important Information - The company completed the sale of its Houston administration building, generating approximately $23 million, which funded investments in subsea wellhead manufacturing equipment [25] - The investment in upgrading subsea wellhead manufacturing equipment is on schedule and expected to go live in Q2 2024 [26] Q&A Session Summary Question: Can you provide the subsea product bookings for full year 2022 and 2023? - The subsea product bookings for both 2022 and 2023 were approximately $215 million to $217 million, with the 2024 guidance being $200 million to $225 million [18] Question: Will the 24 wells announced for the Woodside Trion development offshore Mexico be included in subsea bookings for Q1? - The MSA for the 24 wells was signed in Q4 and will be called off over the next 1 to 2 years, thus not contributing to immediate bookings [19] Question: Can you clarify the margin guidance for this year? - The difference in margin guidance is attributed to timing on productivity initiatives, which may have been pushed out a quarter [37]