Dril-Quip (DRQ) Disappoints In Q2: Earnings & Revenues Lag

Dril-Quip Inc. (NYSE:DRQ) , the manufacturer of offshore drilling and production equipment, reported second-quarter 2016 adjusted earnings of 64 cents per share, missing the Zacks Consensus Estimate of 68 cents. Also, quarterly earnings decreased from $1.24 reported a year ago.

The reported results were favorably impacted by an after-tax foreign exchange gain of $12.1 million, or 32 cents per diluted share, as compared to an after-tax foreign exchange loss of $8.8 million, or 23 cents per diluted share, during the second quarter of 2015.

The company registered total revenue of $142.4 million in the quarter, down from the year-ago level of $215.3 million. The reported figure also came in below the Zacks Consensus Estimate of $151.0 million.

Operating income of approximately $45.2 million was down from the year-earlier level of almost $52.6 million.

On the cost front, selling, general and administrative expenses fell from the year-earlier level of approximately $33.6 million to approximately $5.8 million. Engineering and product development costs increased 1.6% year over year.

Backlog

As of Jun 30, 2016, the company had a backlog of $460 million compared with its Mar 31, 2016, backlog of approximately $522 million.

Outlook

Dril-Quip plans to continue its strategy of investing counter cyclically through the pursuit of attractive acquisition candidates, the repurchase of stock through the share buyback program and research and development efforts to benefit the company in the long term.

The company expects earnings per diluted share for the third quarter of 2016 in the range of 30 cents to 40 cents. For full-year 2016, the company expects earnings per diluted share in the range of $2.05 to $2.25.

Zacks Rank

Currently, Dril-Quip carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are Vanguard Natural Resources, LLC (NASDAQ:VNR) , QEP Resources, Inc. (NYSE:QEP) and McDermott International Inc. (NYSE:MDR) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).