) reported third-quarter 2013 adjusted earnings of $1.12 per
share, beating the Zacks Consensus Estimate of $1.06. The
quarterly earnings also increased from the year-ago profit level
of 78 cents. The outperformance was mainly backed by growth in
product and service revenues as well as the increased demand for
The company registered total revenue of $224.7 million in the
quarter, up nearly 18% from the year-ago level of $190.9 million.
The reported figure was below the Zacks Consensus Estimate of
Operating income grew 36% to $52.0 million from the
year-earlier level of $38.7 million. On the cost front, selling,
general and administrative expenses rose 43.7% to $29.8 million
from the year-earlier level of $20.8 million, while engineering
and product development costs increased 12.8%.
As of Sep 30, 2013, the company had a backlog of $1.15 billion
compared with $747 million as of Sep 30, 2012.
For the fourth quarter of 2013, the offshore drilling
equipment maker expects earnings between $1.04 and $1.14 per
diluted share, excluding any unusual or special charges.
Additionally, based on improving market conditions, Dril-Quip
raised its full-year adjusted earnings per share expectation to
$4.10-$4.20 from $3.85-$4.05 guided previously.
Going forward, we expect large orders from the Gulf of Mexico
(GoM) and Brazil, with a rising demand and activity level in
these regions. This gives it the financial flexibility to take
advantage of new growth opportunities while returning capital to
Dril-Quip registered an impressive gross margin increment both
for its products and services divisions. Installation and
maintenance work on subsea projects drove margins for the
quarter. Capacity addition helped the company accomplish its
target for the year. Again, Dril-Quip boasts an impressive
balance sheet with effectively no debt and ample free cash flow
to fund capital spending.
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 through the
usual fluctuations in commodity prices.
Dril-Quip currently holds a Zacks Rank #3 (Hold). Other
stocks in the oil and gas sector such as
TransAtlantic Petroleum Ltd
Matador Resources Company
Northern Oil and Gas, Inc.
) with a Zacks Rank #1 (Strong Buy) are expected to
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