0001564590-19-026145.txt : 20190725 0001564590-19-026145.hdr.sgml : 20190725 20190725163655 ACCESSION NUMBER: 0001564590-19-026145 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 69 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190725 DATE AS OF CHANGE: 20190725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRIL-QUIP INC CENTRAL INDEX KEY: 0001042893 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 742162088 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13439 FILM NUMBER: 19974902 BUSINESS ADDRESS: STREET 1: 6401 N. ELDRIDGE PARKWAY CITY: HOUSTON STATE: TX ZIP: 77041 BUSINESS PHONE: 7139397711 MAIL ADDRESS: STREET 1: 6401 N. ELDRIDGE PARKWAY CITY: HOUSTON STATE: TX ZIP: 77041 10-Q 1 drq-10q_20190630.htm 10-Q drq-10q_20190630.htm
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srt:ConsolidationEliminationsMember 2018-12-31 drq:assessment 0001042893 country:BR 2010-12-01 2011-01-31 0001042893 country:BR 2016-12-31 0001042893 country:BR 2014-12-31

 

 

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, 2019

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.R.S. Employer

Identification No.)

6401 N. ELDRIDGE PARKWAY

HOUSTON, TEXAS

77041

(Address of principal executive offices) (Zip Code)

(713) 939-7711

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value per share

DRQ

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes       No  

As of July 23, 2019, the number of shares outstanding of the registrant’s common stock, par value $0.01 per share, was 36,207,042.

 

 

 


TABLE OF CONTENTS

 

 

 

 


Table of Contents

PART I—FINANCIAL INFORMATION

Item 1.        Financial Statements

DRIL-QUIP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

June 30,

2019

 

 

December 31,

2018

 

 

 

(In thousands, except per share data)

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

423,126

 

 

 

418,100

 

Trade receivables, net

 

 

218,507

 

 

 

202,165

 

Inventories, net

 

 

194,513

 

 

 

191,194

 

Prepaids and other current assets

 

 

31,997

 

 

 

41,522

 

Total current assets

 

 

868,143

 

 

 

852,981

 

Operating lease right of use assets

 

 

4,295

 

 

 

-

 

Property, plant and equipment, net

 

 

265,591

 

 

 

274,123

 

Deferred income taxes

 

 

7,984

 

 

 

7,995

 

Goodwill

 

 

7,633

 

 

 

7,714

 

Intangible assets

 

 

33,811

 

 

 

34,974

 

Other assets

 

 

14,444

 

 

 

14,723

 

Total assets

 

$

1,201,901

 

 

 

1,192,510

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

34,681

 

 

 

26,693

 

Accrued income taxes

 

 

4,441

 

 

 

3,138

 

Customer prepayments

 

 

8,533

 

 

 

9,648

 

Accrued compensation

 

 

11,416

 

 

 

10,537

 

Operating lease liabilities

 

 

1,276

 

 

 

-

 

Other accrued liabilities

 

 

26,750

 

 

 

32,242

 

Total current liabilities

 

 

87,097

 

 

 

82,258

 

Deferred income taxes

 

 

2,623

 

 

 

2,466

 

Income tax payable

 

 

9,817

 

 

 

9,623

 

Operating lease liabilities, long-term

 

 

3,005

 

 

 

-

 

Other long-term liabilities

 

 

2,231

 

 

 

2,001

 

Total liabilities

 

 

104,773

 

 

 

96,348

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock: 10,000,000 shares authorized at $0.01 par value (none issued)

 

 

-

 

 

 

-

 

Common stock:

 

 

 

 

 

 

 

 

100,000,000 shares authorized at $0.01 par value, 36,207,042 and 36,264,001

shares issued and outstanding at June 30, 2019 and December 31, 2018

 

 

376

 

 

 

376

 

Additional paid-in capital

 

 

43,053

 

 

 

34,953

 

Retained earnings

 

 

1,199,502

 

 

 

1,205,946

 

Accumulated other comprehensive losses

 

 

(145,803

)

 

 

(145,113

)

Total stockholders' equity

 

 

1,097,128

 

 

 

1,096,162

 

Total liabilities and stockholders' equity

 

$

1,201,901

 

 

 

1,192,510

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


Table of Contents

DRIL-QUIP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands, except per share data)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

77,233

 

 

$

64,719

 

 

$

142,667

 

 

$

135,764

 

Services

 

 

16,575

 

 

 

17,998

 

 

 

35,051

 

 

 

35,460

 

Leasing

 

 

10,000

 

 

 

12,144

 

 

 

20,407

 

 

 

22,810

 

Total revenues

 

 

103,808

 

 

 

94,861

 

 

 

198,125

 

 

 

194,034

 

Cost and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

 

53,568

 

 

 

57,916

 

 

 

105,110

 

 

 

115,261

 

Services

 

 

10,219

 

 

 

8,268

 

 

 

19,455

 

 

 

17,912

 

Leasing

 

 

10,080

 

 

 

9,353

 

 

 

18,675

 

 

 

15,850

 

Total cost of sales

 

 

73,867

 

 

 

75,537

 

 

 

143,240

 

 

 

149,023

 

Selling, general and administrative

 

 

22,835

 

 

 

22,869

 

 

 

47,378

 

 

 

50,218

 

Engineering and product development

 

 

5,157

 

 

 

5,302

 

 

 

8,777

 

 

 

9,720

 

Restructuring and other charges

 

 

1,019

 

 

 

-

 

 

 

3,415

 

 

 

-

 

Gain on sale of assets

 

 

(1,190

)

 

 

(5,099

)

 

 

(1,203

)

 

 

(5,099

)

Total costs and expenses

 

 

101,688

 

 

 

98,609

 

 

 

201,607

 

 

 

203,862

 

Operating income (loss)

 

 

2,120

 

 

 

(3,748

)

 

 

(3,482

)

 

 

(9,828

)

Interest income

 

 

2,680

 

 

 

2,275

 

 

 

4,686

 

 

 

4,075

 

Interest expense

 

 

-

 

 

 

(151

)

 

 

(121

)

 

 

(350

)

Income (loss) before income taxes

 

 

4,800

 

 

 

(1,624

)

 

 

1,083

 

 

 

(6,103

)

Income tax provision

 

 

3,119

 

 

 

1,418

 

 

 

5,452

 

 

 

4,318

 

Net income (loss)

 

 

1,681

 

 

 

(3,042

)

 

 

(4,369

)

 

 

(10,421

)

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

(0.08

)

 

$

(0.12

)

 

$

(0.28

)

Diluted

 

$

0.05

 

 

$

(0.08

)

 

$

(0.12

)

 

$

(0.28

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,967

 

 

 

37,615

 

 

 

35,764

 

 

 

37,672

 

Diluted

 

 

36,210

 

 

 

37,615

 

 

 

35,764

 

 

 

37,672

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


Table of Contents

DRIL-QUIP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Net income (loss)

 

$

1,681

 

 

$

(3,042

)

 

$

(4,369

)

 

$

(10,421

)

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(2,317

)

 

 

(21,666

)

 

 

(690

)

 

 

(8,545

)

Total comprehensive loss

 

 

(636

)

 

 

(24,708

)

 

 

(5,059

)

 

 

(18,966

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


Table of Contents

DRIL-QUIP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Six months ended

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(4,369

)

 

$

(10,421

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

16,851

 

 

 

17,242

 

Stock-based compensation expense

 

 

8,083

 

 

 

7,585

 

Restructuring and other charges

 

 

314

 

 

 

-

 

Gain on sale of assets

 

 

(1,203

)

 

 

(5,099

)

Deferred income taxes

 

 

164

 

 

 

578

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables, net

 

 

(16,716

)

 

 

7,007

 

Inventories, net

 

 

(1,002

)

 

 

22,731

 

Prepaids and other assets

 

 

5,860

 

 

 

(3,117

)

Accounts payable and accrued expenses

 

 

2,731

 

 

 

(13,374

)

Other, net

 

 

(63

)

 

 

334

 

Net cash provided by operating activities

 

 

10,650

 

 

 

23,466

 

Investing activities

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(4,598

)

 

 

(19,605

)

Proceeds from sale of equipment

 

 

1,565

 

 

 

10,517

 

Net cash used in investing activities

 

 

(3,033

)

 

 

(9,088

)

Financing activities

 

 

 

 

 

 

 

 

Repurchase of common shares

 

 

(1,996

)

 

 

(9,830

)

ABL Credit Facility issuance costs

 

 

-

 

 

 

(815

)

Proceeds from exercise of stock options

 

 

-

 

 

 

642

 

Net cash used in financing activities

 

 

(1,996

)

 

 

(10,003

)

Effect of exchange rate changes on cash activities

 

 

(595

)

 

 

(4,133

)

Increase in cash and cash equivalents

 

 

5,026

 

 

 

242

 

Cash and cash equivalents at beginning of period

 

 

418,100

 

 

 

493,180

 

Cash and cash equivalents at end of period

 

$

423,126

 

 

$

493,422

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

 

 

 

 

6


Table of Contents

DRIL-QUIP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

 

 

 

Common Stock

 

 

Additional Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Losses

 

 

Total

 

 

 

 

 

 

 

(In thousands, except shares)

 

 

 

 

 

Balance at April 1, 2019

 

$

376

 

 

$

39,815

 

 

$

1,198,700

 

 

$

(143,486

)

 

$

1,095,405

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,317

)

 

 

(2,317

)

Net income

 

 

-

 

 

 

-

 

 

 

1,681

 

 

 

-

 

 

 

1,681

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(636

)

Repurchase of common stock (22,073 shares)

 

 

-

 

 

 

-

 

 

 

(880

)

 

 

-

 

 

 

(880

)

Stock option expense

 

 

-

 

 

 

3,221

 

 

 

-

 

 

 

-

 

 

 

3,221

 

Other

 

 

-

 

 

 

17

 

 

 

1

 

 

 

-

 

 

 

18

 

Balance at June 30, 2019

 

$

376

 

 

$

43,053

 

 

$

1,199,502

 

 

$

(145,803

)

 

$

1,097,128

 

 

 

Balance at January 1, 2019

 

$

376

 

 

$

34,953

 

 

$

1,205,946

 

 

$

(145,113

)

 

$

1,096,162

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(690

)

 

 

(690

)

Net loss

 

 

-

 

 

 

-

 

 

 

(4,369

)

 

 

-

 

 

 

(4,369

)

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,059

)

Repurchase of common stock (50,151 shares)

 

 

-

 

 

 

-

 

 

 

(1,996

)

 

 

-

 

 

 

(1,996

)

Stock option expense

 

 

-

 

 

 

8,083

 

 

 

-

 

 

 

-

 

 

 

8,083

 

Other

 

 

-

 

 

17

 

 

 

(79

)

 

 

-

 

 

 

(62

)

Balance at June 30, 2019

 

$

376

 

 

$

43,053

 

 

$

1,199,502

 

 

$

(145,803

)

 

$

1,097,128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional Paid-In Capital

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Losses

 

 

Total

 

 

 

 

 

 

 

(In thousands, except shares)