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DrilQuip Inc. Reports Operating Results (10-Q)

August 06, 2012 | About:
10qk

10qk

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DrilQuip Inc. (DRQ) filed Quarterly Report for the period ended 2012-06-30.

Dril-quip, Inc. has a market cap of $2.89 billion; its shares were traded at around $72.06 with a P/E ratio of 27.59 and P/S ratio of 4.81. Dril-quip, Inc. had an annual average earning growth of 23.3% over the past 10 years. GuruFocus rated Dril-quip, Inc. the business predictability rank of 2-star.

Highlight of Business Operations:

Revenues. Dril-Quips revenues are generated from two sources: products and services. Product revenues are derived from the sale of offshore drilling and production equipment. Service revenues are earned when the Company provides technical advisory assistance for installation of the Companys products, reconditioning services and rental of running tools for installation and retrieval of the Companys products. For the six months ended June 30, 2012 and 2011, the Company derived 84% and 85%, respectively, of its revenues from the sale of its products and 16% and 15%, respectively, of its revenues from services. Service revenues generally correlate to revenues from product sales because increased product sales typically generate increased demand for technical advisory services during installation and rental of running tools. The Company has substantial international operations, with approximately 75% and 78% of its revenues derived from foreign sales for the three months ended June 30, 2012 and 2011, respectively, and 71% and 70% for the six months ended June 30, 2012 and 2011, respectively. Substantially all of the Companys domestic revenue relates to operations in the U. S. Gulf of Mexico. Domestic revenue approximated 25% and 22%, respectively, of the Companys total revenues for the three months ended June 30, 2012 and 2011 and 29% and 30% for the six months ended June 30, 2012 and 2011, respectively.

Revenues. Revenues increased by $39.6 million, or approximately 28.9%, to $176.6 million in the three months ended June 30, 2012 from $137.0 million in the three months ended June 30, 2011. Product revenues increased by approximately $32.2 million for the three months ended June 30, 2012 compared to the same period in 2011 as a result of increased revenues of $18.7 million in subsea equipment, $6.3 million in surface equipment and $7.2 million in offshore rig equipment. The majority of the increase in subsea equipment occurred in the Western Hemisphere and Asia-Pacific. The change in offshore rig equipment revenues in the second quarter of 2012 compared to the second quarter of 2011 resulted primarily from an increase of revenues from projects accounted for under the percentage-of-completion method. In any given time period, the revenue allocation

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $1.4 million, or approximately 8.7%, to $17.4 million for the three months ended June 30, 2012 from $16.0 million for the same period in 2011. Increased personnel and related expenses totaled $1.1 million. This increase was partially offset by an increase in foreign currency transaction gains to $450,000 for the three months ended June 30, 2012 from $405,000 for the three months ended June 30, 2011. Stock option expense for the second quarter of 2012 and 2011 both totaled $1.2 million. Selling, general and administrative expenses as a percentage of revenues decreased to 9.8% in 2012 from 11.7% in 2011.

Revenues. Revenues increased by $79.0 million, or approximately 28.8%, to $353.7 million in the six months ended June 30, 2012 from $274.7 million in the six months ended June 30, 2011. Product revenues increased by approximately $61.7 million for the six months ended June 30, 2012 compared to the same period in 2011 as a result of increased revenues of $61.4 million in subsea equipment and $11.0 million in surface equipment, partially offset by a decrease in offshore rig equipment revenues related to percentage-of-completion projects of $10.7 million. Product revenues increased in the Western Hemisphere by $11.7 million, $23.6 million

Selling, General and Administrative Expenses. For the six months ended June 30, 2012, selling, general and administrative expenses increased by approximately $3.5 million, or 10.2%, to $37.8 million from $34.3 million for the same period in 2011. Approximately $2.2 million was primarily related to increases in personnel and related expenses. Legal and professional fees were $600,000 higher in the second quarter of 2012 as compared to the same period in 2011. The Company experienced approximately $1.9 million in foreign currency transaction losses in the first six months of 2012 and 2011. Stock option expense for the first six months of 2012 was $2.6 million compared to $2.4 million for the same period in 2011. Selling, general and administrative expenses as a percentage of revenues decreased to 10.7% in 2012 from 12.5% in 2011.

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10qk
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