) has reported first-quarter 2012 earnings of 71 cents per share,
comfortably beating the Zacks Consensus Estimate of 67 cents and
increasing more than 31% from the year-ago profit level of 54
The company registered total revenue of $177.1 million in the
quarter, up 28.7% from the year-ago level of $137.7 million. The
increase in revenue was mainly backed by the growth in product and
service revenues. The reported figure also surpassed the Zacks
Consensus Estimate of $165 million.
Operating income expanded 31% to $40.0 million from the
year-earlier level of $30.6 million. The company faced a
considerable rise in costs. On an annualized basis, selling,
general and administrative expenses rose 12% to $20.4 million from
the year-earlier level of $18.3 million, while its engineering and
product development costs rose 10.5%.
As of March 31, 2012, the company had a backlog of $701 million,
compared with $655 million in the prior-year quarter.
Capital expenditures in the quarter were $13.9 million, compared
with $19.8 million in the year-earlier quarter.
For the second quarter of 2012, earnings are projected between 62
cents and 72 cents per diluted share, excluding any unusual or
special charges. Dril-Quip expects its 2012 earnings to range
between $2.60 and $2.80 per share.
We are maintaining our long-term Underperform recommendation on
Dril-Quip, supported by a Zacks #4 Rank (short-term Sell rating) -
reflecting its exposure to the highly volatile oil and gas sector
We remain concerned about company-specific risks, which include
new product growth challenges, manufacturing difficulties and
potential backlog losses. Additionally, delays in deepwater
infrastructure contracts may also hinder the growth prospect of
Dril-Quip. Dril-Quip has also exhibited restricted growth in the
past few quarters and we remain cautious going forward. Further,
Cameron International Corporation
) is also a concern.
Partially offsetting these negatives are increased deepwater
activity over the near term, recent capacity additions in Brazil
and Singapore, as well as ongoing capacity expansions, all of which
could prove beneficial over time.
CAMERON INTL (CAM): Free Stock Analysis Report
DRIL-QUIP INC (DRQ): Free Stock Analysis Report
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