Dril-Quip Q1 Profit Rises, But Revenues Miss View; Lowers 2014 Outlook

(RTTNews) - Offshore drilling and production equipment maker Dril-Quip, Inc. (DRQ) on Friday reported a 7 percent increase in profit for the first quarter from last year, as higher revenues more than offset a foreign exchange loss. However, revenues for the quarter missed analysts' expectations.

Looking ahead, the company forecast earnings for the second quarter below Street estimates and also lowered its earnings outlook for fiscal 2014.

Houston, Texas-based Dril-Quip's net income for the first quarter was $42.62 million or $1.04 per share, up from $39.84 million or $0.98 per share in the year-ago period.

On average, 14 analysts polled by Thomson-Reuters expected the company to report earnings of $1.20 per share for the quarter. Analysts' estimates typically exclude one-time items.

The latest quarter's results include an after-tax foreign exchange loss of $0.66 million or $0.02 per share, compared to an after-tax foreign exchange gain of $4.1 million or $0.10 per share in the year-ago period.

Revenues for the quarter grew 6 percent to $204.07 million from $193.16 million in the prior-year quarter. Analysts had a consensus revenue estimate of $241.71 million for the quarter.

In the latest quarter, Dril-Quip was unable to recognize around $10 million in revenue related to items of equipment that were completed, but not accepted for delivery by a major customer due to disagreement over certain contractual requirements. The company said it is engaged in talks with the customer to resolve the disagreement.

Dril-Quip's backlog at the end of the first quarter was about $1.35 billion, up from backlog of about $1.02 billion in the same period last year.

Looking ahead to the second quarter, Dril-Quip forecast earnings per share in a range of about $1.05 to $1.15, excluding any unusual or special charges. Street expects the company to earn $1.31 per share for the quarter.

For fiscal 2014, Dril-Quip lowered its adjusted earnings outlook to a range of $4.70 to $4.90 per share from the prior range of $5.00 to $5.20 per share, citing the customer acceptance issues. Analysts expect the company to report earnings of $5.38 per share for the year.

DRQ is trading at $100.98, down $10.81 or 9.67 percent on a volume of 519,272 shares.