Manufacturer of offshore drilling and production equipment,
) reported first-quarter 2014 adjusted earnings of $1.04 per share,
missing the Zacks Consensus Estimate of $1.21. Quarterly
performance was overshadowed by the exclusion of approximately $10
million of revenue related to equipment completed but not accepted
for delivery by one of its major customers. Quarterly earnings,
however, increased from 98 cents reported a year ago.
The company registered total revenue of $204.1 million in the
quarter, up from the year-ago level of $193.2 million. The reported
figure was below the Zacks Consensus Estimate of $242.0 million.
Operating income grew nearly 12.2% to $58.6 million from the
year-earlier level of $52.2 million. On the cost front, selling,
general and administrative expenses rose 53.1% to $23.9 million
from the year-earlier level of $15.6 million, while engineering and
product development costs increased 19.5%.
As of Mar 31, 2014, the company had a backlog of $1.4 billion
compared with approximately $1.0 billion as of Mar 31, 2013.
For the second quarter of 2014, the offshore drilling equipment
maker expects earnings between $1.05 and $1.15 per diluted share,
excluding any unusual or special charges. Additionally, based on
current market conditions, Dril-Quip lowered its full-year adjusted
earnings per share projection from $5.00-$5.20 to $4.70-$4.90.
Dril-Quip's results are heavily levered with continued strength in
global deepwater drilling markets, especially in South America and
the Asia-Pacific region. Given the operators' long-term outlook on
these projects, deepwater drilling and other related services will
likely remain relatively stable amid the usual fluctuations in
Dril-Quip currently holds a Zacks Rank #3 (Hold). However,
better-ranked stocks in the oil and gas sector such as
Boardwalk Pipeline Partners, LP
Magellan Midstream Partners LP
Targa Resources Partners LP
) with a Zacks Rank #1 (Strong Buy) are expected to outperform.
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