ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
74-2162088
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
|
ý
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Emerging growth company
|
¨
|
|
|
Page
|
PART I
|
||
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
|
||
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
495,591
|
|
|
$
|
493,180
|
|
Trade receivables, net
|
193,915
|
|
|
191,629
|
|
||
Inventories, net
|
276,005
|
|
|
291,087
|
|
||
Prepaids and other current assets
|
36,620
|
|
|
32,653
|
|
||
Total current assets
|
1,002,131
|
|
|
1,008,549
|
|
||
Property, plant and equipment, net
|
288,466
|
|
|
284,247
|
|
||
Deferred income taxes
|
5,471
|
|
|
5,364
|
|
||
Goodwill
|
47,818
|
|
|
47,624
|
|
||
Intangible assets
|
37,892
|
|
|
38,408
|
|
||
Other assets
|
16,084
|
|
|
15,613
|
|
||
Total assets
|
$
|
1,397,862
|
|
|
$
|
1,399,805
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
25,277
|
|
|
$
|
33,480
|
|
Accrued income taxes
|
27,632
|
|
|
24,714
|
|
||
Customer prepayments
|
5,809
|
|
|
4,767
|
|
||
Accrued compensation
|
11,116
|
|
|
11,412
|
|
||
Other accrued liabilities
|
17,404
|
|
|
25,538
|
|
||
Total current liabilities
|
87,238
|
|
|
99,911
|
|
||
Deferred income taxes
|
3,514
|
|
|
3,432
|
|
||
Other long-term liabilities
|
2,001
|
|
|
2,001
|
|
||
Total liabilities
|
92,753
|
|
|
105,344
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
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, 38,136,258 and 38,132,693 shares issued and outstanding at March 31, 2018 and December 31, 2017
|
381
|
|
|
372
|
|
||
Additional paid-in capital
|
23,964
|
|
|
20,083
|
|
||
Retained earnings
|
1,393,933
|
|
|
1,400,296
|
|
||
Accumulated other comprehensive losses
|
(113,169
|
)
|
|
(126,290
|
)
|
||
Total stockholders’ equity
|
1,305,109
|
|
|
1,294,461
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,397,862
|
|
|
$
|
1,399,805
|
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(In thousands, except per share data)
|
||||||
Revenues:
|
|
|
|
||||
Products
|
$
|
71,045
|
|
|
$
|
91,592
|
|
Services
|
28,128
|
|
|
27,636
|
|
||
Total revenues
|
99,173
|
|
|
119,228
|
|
||
Cost and expenses:
|
|
|
|
||||
Cost of sales:
|
|
|
|
||||
Products
|
52,175
|
|
|
66,462
|
|
||
Services
|
15,575
|
|
|
15,978
|
|
||
Total cost of sales
|
67,750
|
|
|
82,440
|
|
||
Selling, general and administrative
|
28,253
|
|
|
25,808
|
|
||
Engineering and product development
|
9,447
|
|
|
11,850
|
|
||
Total costs and expenses
|
105,450
|
|
|
120,098
|
|
||
Operating loss
|
(6,277
|
)
|
|
(870
|
)
|
||
Interest income
|
1,797
|
|
|
937
|
|
||
Interest expense
|
(2
|
)
|
|
(15
|
)
|
||
Income before income taxes
|
(4,482
|
)
|
|
52
|
|
||
Income tax provision (benefit)
|
2,901
|
|
|
(42
|
)
|
||
Net income (loss)
|
$
|
(7,383
|
)
|
|
$
|
94
|
|
Earnings per common share:
|
|
|
|
||||
Basic
|
$
|
(0.20
|
)
|
|
$
|
—
|
|
Diluted
|
$
|
(0.20
|
)
|
|
$
|
—
|
|
Weighted average common shares outstanding:
|
|
|
|
||||
Basic
|
37,729
|
|
|
37,525
|
|
||
Diluted
|
37,729
|
|
|
37,693
|
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Net income (loss)
|
$
|
(7,383
|
)
|
|
$
|
94
|
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Foreign currency translation adjustments
|
13,121
|
|
|
7,859
|
|
||
Total comprehensive income
|
$
|
5,738
|
|
|
$
|
7,953
|
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(7,383
|
)
|
|
$
|
94
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
8,241
|
|
|
9,832
|
|
||
Stock-based compensation expense
|
3,974
|
|
|
3,216
|
|
||
Loss (gain) on sale of equipment
|
(22
|
)
|
|
—
|
|
||
Deferred income taxes
|
(5
|
)
|
|
(1,121
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
—
|
|
|||
Trade receivables, net
|
1,195
|
|
|
7,044
|
|
||
Inventories, net
|
17,244
|
|
|
11,591
|
|
||
Prepaids and other assets
|
(4,076
|
)
|
|
3,051
|
|
||
Accounts payable and accrued expenses
|
(7,403
|
)
|
|
(22,231
|
)
|
||
Other, net
|
(377
|
)
|
|
—
|
|
||
Net cash (used in) provided by operating activities
|
11,388
|
|
|
11,476
|
|
||
Investing activities
|
|
|
|
||||
Purchase of property, plant and equipment
|
(10,571
|
)
|
|
(4,847
|
)
|
||
Proceeds from sale of equipment
|
71
|
|
|
439
|
|
||
Acquisition of business, net of cash acquired
|
—
|
|
|
(19,869
|
)
|
||
Net cash used in investing activities
|
(10,500
|
)
|
|
(24,277
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from exercise of stock options
|
52
|
|
|
403
|
|
||
Net cash provided by financing activities
|
52
|
|
|
403
|
|
||
Effect of exchange rate changes on cash activities
|
1,471
|
|
|
3,091
|
|
||
Increase (decrease) in cash and cash equivalents
|
2,411
|
|
|
(9,307
|
)
|
||
Cash and cash equivalents at beginning of period
|
493,180
|
|
|
423,497
|
|
||
Cash and cash equivalents at end of period
|
$
|
495,591
|
|
|
$
|
414,190
|
|
•
|
product revenues are recognized over time as control is transferred to the customer; and
|
•
|
product revenues from the sale of products that do not qualify for the over time method are recognized as point in time.
|
•
|
the contracts call for products which are designed to customer specifications;
|
•
|
the structural designs are unique and require significant engineering and manufacturing efforts generally requiring more than one year in duration;
|
•
|
the contracts contain specific terms as to milestones, progress billings and delivery dates;
|
•
|
product requirements cannot be filled directly from the Company’s standard inventory; and
|
•
|
The Company has an enforceable right to payment for any work completed to date and the enforceable payment includes a reasonable profit margin.
|
•
|
technical advisory assistance; and
|
•
|
rework and reconditioning of customer-owned Dril-Quip products.
|
|
Three months ended
March 31, |
||||
|
2018
|
|
2017
|
||
|
(In thousands)
|
||||
Weighted average common shares outstanding—basic
|
37,729
|
|
|
37,525
|
|
Dilutive effect of common stock options and awards
|
—
|
|
|
168
|
|
Weighted average common shares outstanding—diluted
|
37,729
|
|
|
37,693
|
|
|
Three months ended
March 31, |
||||
|
2018
|
|
2017
|
||
|
(In thousands)
|
||||
Director stock awards
|
4
|
|
|
—
|
|
Stock options
|
11
|
|
|
—
|
|
Performance share units
|
78
|
|
|
14
|
|
Restricted stock awards
|
77
|
|
|
25
|
|
|
Three months ended
|
||||||||||||||||||
|
March 31, 2018
|
||||||||||||||||||
|
Western Hemisphere
|
|
Eastern Hemisphere
|
|
Asia-Pacific
|
|
Intercompany
|
|
Total
|
||||||||||
|
(In thousands)
|
||||||||||||||||||
Product Revenues
|
$
|
42,436
|
|
|
$
|
19,865
|
|
|
$
|
8,744
|
|
|
$
|
—
|
|
|
$
|
71,045
|
|
Service Revenues
|
9,082
|
|
|
5,973
|
|
|
2,406
|
|
|
—
|
|
|
17,461
|
|
|||||
Total
|
$
|
51,518
|
|
|
$
|
25,838
|
|
|
$
|
11,150
|
|
|
$
|
—
|
|
|
$
|
88,506
|
|
Contract Assets at December 31, 2017
|
$
|
41,825
|
|
Additions
|
48,676
|
|
|
Transfer to Accounts Receivable
|
(34,169
|
)
|
|
Contract Assets at March 31, 2018
|
$
|
56,332
|
|
Contract Liabilities at December 31, 2017
|
$
|
4,767
|
|
Additions
|
4,969
|
|
|
Revenue Recognized
|
(3,986
|
)
|
|
Contract Liabilities at March 31, 2018
|
$
|
5,750
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(In thousands)
|
||||||
Raw materials and supplies
|
$
|
65,540
|
|
|
$
|
70,188
|
|
Work in progress
|
66,686
|
|
|
65,382
|
|
||
Finished goods
|
227,429
|
|
|
239,083
|
|
||
|
359,655
|
|
|
374,653
|
|
||
Less: allowance for obsolete and excess inventory
|
(83,650
|
)
|
|
(83,566
|
)
|
||
Net inventory
|
$
|
276,005
|
|
|
$
|
291,087
|
|
|
Carrying Value
|
|
|
Carrying Value
|
||||||||
|
January 1, 2018
|
Acquisitions
|
Foreign Currency Translation
|
March 31, 2018
|
||||||||
|
(In thousands)
|
|||||||||||
Western Hemisphere
|
$
|
39,158
|
|
$
|
—
|
|
$
|
16
|
|
$
|
39,174
|
|
Eastern Hemisphere
|
8,466
|
|
—
|
|
178
|
|
8,644
|
|
||||
Asia Pacific
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Total
|
$
|
47,624
|
|
$
|
—
|
|
$
|
194
|
|
$
|
47,818
|
|
|
Estimated Useful Lives
|
March 31, 2018
|
|||||||||||
|
Gross Book Value
|
Accumulated Amortization
|
Foreign Currency Translation
|
Net Book Value
|
|||||||||
|
|
(In thousands)
|
|||||||||||
Trademarks
|
indefinite
|
$
|
8,416
|
|
$
|
—
|
|
$
|
62
|
|
$
|
8,478
|
|
Patents
|
15 - 30 years
|
5,946
|
|
(1,049
|
)
|
11
|
|
4,908
|
|
||||
Customer relationships
|
5 - 15 years
|
26,503
|
|
(2,465
|
)
|
368
|
|
24,406
|
|
||||
Non-compete agreements
|
3 years
|
171
|
|
(71
|
)
|
—
|
|
100
|
|
||||
|
$
|
41,036
|
|
$
|
(3,585
|
)
|
$
|
441
|
|
$
|
37,892
|
|
|
Estimated Useful Lives
|
December 31, 2017
|
|||||||||||
|
Gross Book Value
|
Accumulated Amortization
|
Foreign Currency Translation
|
Net Book Value
|
|||||||||
|
|
(In thousands)
|
|||||||||||
Trademarks
|
indefinite
|
$
|
8,416
|
|
$
|
—
|
|
$
|
56
|
|
$
|
8,472
|
|
Patents
|
15 - 30 years
|
5,946
|
|
(968
|
)
|
80
|
|
5,058
|
|
||||
Customer relationships
|
5 - 15 years
|
26,503
|
|
(1,675
|
)
|
(64
|
)
|
24,764
|
|
||||
Non-compete agreements
|
3 years
|
171
|
|
(57
|
)
|
—
|
|
114
|
|
||||
|
$
|
41,036
|
|
$
|
(2,700
|
)
|
$
|
72
|
|
$
|
38,408
|
|
|
Western Hemisphere
|
|
Eastern Hemisphere
|
|
Asia Pacific
|
|
DQ Corporate
|
|
Total
|
|||||||||||||||||||||||||
|
Three months ended March 31,
|
|||||||||||||||||||||||||||||||||
|
2018
|
2017
|
|
2018
|
2017
|
|
2018
|
2017
|
|
2018
|
2017
|
|
2018
|
2017
|
||||||||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Products
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Standard Products
|
$
|
35,952
|
|
$
|
65,012
|
|
|
$
|
17,461
|
|
$
|
7,041
|
|
|
$
|
6,505
|
|
$
|
4,946
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
59,918
|
|
$
|
76,999
|
|
Over Time Contracts
|
6,484
|
|
275
|
|
|
2,404
|
|
6,886
|
|
|
2,239
|
|
7,432
|
|
|
—
|
|
—
|
|
|
11,127
|
|
14,593
|
|
||||||||||
Total Products
|
42,436
|
|
65,287
|
|
|
19,865
|
|
13,927
|
|
|
8,744
|
|
12,378
|
|
|
—
|
|
—
|
|
|
71,045
|
|
91,592
|
|
||||||||||
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Technical Advisory
|
6,241
|
|
7,320
|
|
|
5,101
|
|
2,934
|
|
|
1,365
|
|
1,977
|
|
|
—
|
|
—
|
|
|
12,707
|
|
12,231
|
|
||||||||||
Reconditioning
|
2,841
|
|
1,919
|
|
|
872
|
|
341
|
|
|
1,041
|
|
44
|
|
|
—
|
|
—
|
|
|
4,754
|
|
2,304
|
|
||||||||||
Total Services (excluding rental tools)
|
9,082
|
|
9,239
|
|
|
5,973
|
|
3,275
|
|
|
2,406
|
|
2,021
|
|
|
—
|
|
—
|
|
|
17,461
|
|
14,535
|
|
||||||||||
Rental Tools
|
5,535
|
|
9,223
|
|
|
4,205
|
|
3,000
|
|
|
927
|
|
878
|
|
|
—
|
|
—
|
|
|
10,667
|
|
13,101
|
|
||||||||||
Total Services (including rental tools)
|
14,617
|
|
18,462
|
|
|
10,178
|
|
6,275
|
|
|
3,333
|
|
2,899
|
|
|
—
|
|
—
|
|
|
28,128
|
|
27,636
|
|
||||||||||
Intercompany
|
3,073
|
|
5,903
|
|
|
186
|
|
31
|
|
|
165
|
|
66
|
|
|
—
|
|
—
|
|
|
3,424
|
|
6,000
|
|
||||||||||
Eliminations
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(3,424
|
)
|
(6,000
|
)
|
|
(3,424
|
)
|
(6,000
|
)
|
||||||||||
Total Revenues
|
$
|
60,126
|
|
$
|
89,652
|
|
|
$
|
30,229
|
|
$
|
20,233
|
|
|
$
|
12,242
|
|
$
|
15,343
|
|
|
$
|
(3,424
|
)
|
$
|
(6,000
|
)
|
|
$
|
99,173
|
|
$
|
119,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Depreciation
|
$
|
5,492
|
|
$
|
7,137
|
|
|
$
|
1,211
|
|
$
|
1,080
|
|
|
$
|
975
|
|
$
|
1,017
|
|
|
$
|
563
|
|
$
|
599
|
|
|
$
|
8,241
|
|
$
|
9,833
|
|
Income before income taxes
|
$
|
721
|
|
$
|
7,472
|
|
|
$
|
5,659
|
|
$
|
3,491
|
|
|
$
|
256
|
|
$
|
1,844
|
|
|
$
|
(11,118
|
)
|
$
|
(12,755
|
)
|
|
$
|
(4,482
|
)
|
$
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
March 31, 2018
|
December 31, 2017
|
|
March 31, 2018
|
December 31, 2017
|
|
March 31, 2018
|
December 31, 2017
|
|
March 31, 2018
|
December 31, 2017
|
|
March 31, 2018
|
December 31, 2017
|
||||||||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||||||||||
Long-Lived Assets
|
$
|
480,882
|
|
$
|
482,636
|
|
|
$
|
135,436
|
|
$
|
264,828
|
|
|
$
|
62,655
|
|
$
|
58,606
|
|
|
$
|
(283,242
|
)
|
$
|
(414,814
|
)
|
|
$
|
395,731
|
|
$
|
391,256
|
|
Total Assets
|
$
|
856,227
|
|
$
|
877,779
|
|
|
$
|
635,387
|
|
$
|
752,967
|
|
|
$
|
188,610
|
|
$
|
185,229
|
|
|
$
|
(282,362
|
)
|
$
|
(416,170
|
)
|
|
$
|
1,397,862
|
|
$
|
1,399,805
|
|
|
Three months ended March 31,
|
||||||||||
|
2018
|
|
2017
|
||||||||
|
Floating Rigs
|
|
Jack-up Rigs
|
|
Floating Rigs
|
|
Jack-up Rigs
|
||||
Western Hemisphere
|
59
|
|
|
39
|
|
|
65
|
|
|
39
|
|
Eastern Hemisphere
|
55
|
|
|
59
|
|
|
54
|
|
|
57
|
|
Asia-Pacific
|
33
|
|
|
223
|
|
|
31
|
|
|
212
|
|
Total
|
147
|
|
|
321
|
|
|
150
|
|
|
308
|
|
|
Floating
|
|
Jack-Up
|
|
|
|||
|
Rigs
|
|
Rigs
|
|
Total
|
|||
2018
|
17
|
|
|
57
|
|
|
74
|
|
2019
|
13
|
|
|
26
|
|
|
39
|
|
2020
|
11
|
|
|
7
|
|
|
18
|
|
2021
|
1
|
|
|
—
|
|
|
1
|
|
2022
|
—
|
|
|
—
|
|
|
—
|
|
After 2022 or unspecified delivery date
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
42
|
|
|
90
|
|
|
132
|
|
|
Three months ended
|
|||||||||
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
|||||
|
(In thousands)
|
|||||||||
Beginning Backlog
|
$
|
207,305
|
|
|
$
|
216,495
|
|
|
317,579
|
|
Bookings:
|
|
|
|
|
|
|||||
Product
|
132,538
|
|
|
74,513
|
|
|
71,054
|
|
||
Service
|
28,128
|
|
|
26,409
|
|
|
27,636
|
|
||
Cancellation/Revision adjustments
|
(2,508
|
)
|
|
(1,260
|
)
|
|
(3,500
|
)
|
||
Translation adjustments
|
385
|
|
|
(879
|
)
|
|
1,993
|
|
||
Total Bookings
|
158,543
|
|
|
98,783
|
|
|
97,183
|
|
||
Revenues:
|
|
|
|
|
|
|||||
Product
|
71,045
|
|
|
81,564
|
|
|
91,592
|
|
||
Service
|
28,128
|
|
|
26,409
|
|
|
27,636
|
|
||
Total Revenue
|
99,173
|
|
|
107,973
|
|
|
119,228
|
|
||
Ending Backlog (1)
|
$
|
266,675
|
|
|
$
|
207,305
|
|
|
295,534
|
|
|
Three months ended
March 31, |
||||
|
2018
|
|
2017
|
||
Revenues:
|
|
|
|
||
Products
|
71.6
|
%
|
|
76.8
|
%
|
Services
|
28.4
|
|
|
23.2
|
|
Total revenues:
|
100.0
|
|
|
100.0
|
|
Cost of sales:
|
|
|
|
||
Products
|
52.6
|
|
|
55.7
|
|
Services
|
15.7
|
|
|
13.4
|
|
Total cost of sales:
|
68.3
|
|
|
69.1
|
|
Selling, general and administrative expenses
|
28.5
|
|
|
21.7
|
|
Engineering and product development expenses
|
9.5
|
|
|
9.9
|
|
Operating income
|
(6.3
|
)
|
|
(0.7
|
)
|
Interest income
|
1.8
|
|
|
0.8
|
|
Income before income taxes
|
(4.5
|
)
|
|
0.1
|
|
Income tax provision
|
2.9
|
|
|
—
|
|
Net income
|
(7.4
|
)%
|
|
0.1
|
%
|
|
Three months ended
March 31, |
||||||
|
2018
|
|
2017
|
||||
|
(In millions)
|
||||||
Revenues:
|
|
|
|
||||
Products:
|
|
|
|
||||
Subsea equipment
|
$
|
54.9
|
|
|
$
|
74.3
|
|
Downhole tools
|
9.9
|
|
|
11.3
|
|
||
Surface equipment
|
5.1
|
|
|
0.9
|
|
||
Offshore rig equipment
|
1.2
|
|
|
5.1
|
|
||
Total products
|
71.1
|
|
|
91.6
|
|
||
Services
|
28.1
|
|
|
27.6
|
|
||
Total revenues
|
$
|
99.2
|
|
|
$
|
119.2
|
|
Adjusted EBITDA:
|
Three months ended March 31,
|
||||||
|
|
2018
|
2017
|
||||
|
|
(In thousands)
|
|||||
Net Income (Loss)
|
$
|
(7,383
|
)
|
$
|
94
|
|
|
Add:
|
|
|
|
||||
|
Interest (income) expense
|
(1,795
|
)
|
(922
|
)
|
||
|
Income tax expense (benefit)
|
2,901
|
|
(42
|
)
|
||
|
Depreciation and amortization expense
|
8,241
|
|
9,832
|
|
||
|
Restructuring costs
|
600
|
|
—
|
|
||
|
Foreign currency loss (gain)
|
1,304
|
|
(104
|
)
|
||
|
Severance costs
|
—
|
|
1,572
|
|
||
|
Stock compensation expense
|
3,974
|
|
3,216
|
|
||
Adjusted EBITDA
|
$
|
7,842
|
|
$
|
13,646
|
|
|
Three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Operating activities
|
$
|
11,388
|
|
|
$
|
11,476
|
|
Investing activities
|
(10,500
|
)
|
|
(24,277
|
)
|
||
Financing activities
|
52
|
|
|
403
|
|
||
|
940
|
|
|
(12,398
|
)
|
||
Effect of exchange rate changes on cash activities
|
1,471
|
|
|
3,091
|
|
||
Increase (decrease) in cash and cash equivalents
|
$
|
2,411
|
|
|
$
|
(9,307
|
)
|
•
|
future operating results and cash flow;
|
•
|
scheduled, budgeted and other future capital expenditures;
|
•
|
working capital requirements;
|
•
|
the need for and the availability of expected sources of liquidity;
|
•
|
the introduction into the market of the Company’s future products;
|
•
|
the market for the Company’s existing and future products;
|
•
|
the Company’s ability to develop new applications for its technologies;
|
•
|
the exploration, development and production activities of the Company’s customers;
|
•
|
compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings;
|
•
|
effects of pending legal proceedings;
|
•
|
changes in customers’ future product and service requirements that may not be cost effective or within the Company’s capabilities; and
|
•
|
future operations, financial results, business plans and cash needs.
|
•
|
the volatility of oil and natural gas prices;
|
•
|
the cyclical nature of the oil and gas industry;
|
•
|
uncertainties associated with the United States and worldwide economies;
|
•
|
uncertainties regarding political tensions in the Middle East, South America, Africa and elsewhere;
|
•
|
current and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries;
|
•
|
uncertainties regarding future oil and gas exploration and production activities, including new regulations, customs requirements and product testing requirements;
|
•
|
operating interruptions (including explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);
|
•
|
project terminations, suspensions or scope adjustments to contracts reflected in the Company’s backlog;
|
•
|
the Company’s reliance on product development;
|
•
|
technological developments;
|
•
|
the Company’s reliance on third-party technologies;
|
•
|
acquisition and merger activities involving the Company or its competitors;
|
•
|
the Company’s dependence on key employees and skilled machinists, fabricators and technical personnel;
|
•
|
the Company’s reliance on sources of raw materials, including any increase in steel costs or decreases in steel supply as a result of the President's March 2018 proclamation imposing a 25% global tariff on certain imported steel mill products;
|
•
|
impact of environmental matters, including future environmental regulations;
|
•
|
competitive products and pricing pressures;
|
•
|
fluctuations in foreign currency, including those attributable to the Brexit;
|
•
|
the ability of the Organization of Petroleum Exporting Countries to set and maintain production levels and pricing;
|
•
|
the Company’s reliance on significant customers;
|
•
|
creditworthiness of the Company’s customers;
|
•
|
fixed-price contracts;
|
•
|
changes in general economic, market or business conditions;
|
•
|
access to capital markets;
|
•
|
negative outcome of litigation, threatened litigation or government proceedings;
|
•
|
terrorist threats or acts, war and civil disturbances; and
|
•
|
changes to, and differing interpretations of, tax laws with respect to our operations and subsidiaries.
|
Exhibit No.
|
|
Description
|
*3.1
|
—
|
|
|
|
|
*3.2
|
—
|
|
|
|
|
4.1
|
—
|
|
|
|
|
*4.2
|
—
|
|
|
|
|
*10.1
|
—
|
|
|
|
|
*10.2
|
—
|
|
|
|
|
31.1
|
—
|
|
|
|
|
31.2
|
—
|
|
|
|
|
32.1
|
—
|
|
|
|
|
32.2
|
—
|
|
|
|
|
101.INS
|
—
|
XBRL Instance Document
|
|
|
|
101.SCH
|
—
|
XBRL Schema Document
|
|
|
|
101.CAL
|
—
|
XBRL Calculation Document
|
|
|
|
101.DEF
|
—
|
XBRL Definition Linkbase Document
|
|
|
|
101.LAB
|
—
|
XBRL Label Linkbase Document
|
|
|
|
101.PRE
|
—
|
XBRL Presentation Linkbase Document
|
|
|
|
|
DRIL-QUIP, INC.
|
|
|
|
|
Date: April 26, 2018
|
BY:
|
/s/ Jeffrey J. Bird
|
|
|
Jeffrey J. Bird,
|
|
|
Vice President and Chief Financial Officer
|
|
|
(Principal Accounting Officer and
|
|
|
Duly Authorized Signatory)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Dril-Quip, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 26, 2018
|
|
|
/s/ Blake T. DeBerry
|
|
Blake T. DeBerry
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Dril-Quip, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: April 26, 2018
|
|
|
/s/ Jeffrey J. Bird
|
|
Jeffrey J. Bird
|
|
Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 26, 2018
|
|
|
/s/ Blake T. DeBerry
|
|
Blake T. DeBerry
|
|
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 26, 2018
|
|
|
/s/ Jeffrey J. Bird
|
|
Jeffrey J. Bird
|
|
Vice President and Chief Financial Officer
|