DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 24, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | DRIL-QUIP INC | |
Entity Central Index Key | 1,042,893 | |
Trading Symbol | DRQ | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding (in shares) | 35,777,241 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 424,053 | $ 493,180 |
Trade receivables, net | 190,437 | 191,629 |
Inventories, net | 242,123 | 291,087 |
Prepaids and other current assets | 40,837 | 32,653 |
Total current assets | 897,450 | 1,008,549 |
Property, plant and equipment, net | 292,667 | 284,247 |
Deferred income taxes | 5,512 | 5,364 |
Goodwill | 47,120 | 47,624 |
Intangible assets | 35,535 | 38,408 |
Other assets | 14,475 | 15,613 |
Total assets | 1,292,759 | 1,399,805 |
Current liabilities: | ||
Accounts payable | 21,155 | 33,480 |
Accrued income taxes | 4,583 | 24,714 |
Customer prepayments | 7,489 | 4,767 |
Accrued compensation | 11,478 | 11,412 |
Other accrued liabilities | 23,557 | 25,538 |
Total current liabilities | 68,262 | 99,911 |
Deferred income taxes | 3,211 | 3,432 |
Income tax payable | 28,029 | 0 |
Other long-term liabilities | 2,001 | 2,001 |
Total liabilities | 101,503 | 105,344 |
Commitments and contingencies (Note 14) | ||
Stockholders' equity: | ||
Preferred stock: 10,000,000 shares authorized at $0.01 par value (none issued) | 0 | 0 |
Common stock: | ||
100,000,000 shares authorized at $0.01 par value, 36,152,694 and 38,132,693 shares issued and outstanding at September 30, 2018 and December 31, 2017 | 394 | 372 |
Additional paid-in capital | 31,002 | 20,083 |
Treasury shares (at cost) | (71,107) | 0 |
Retained earnings | 1,371,368 | 1,400,296 |
Accumulated other comprehensive losses | (140,401) | (126,290) |
Total stockholders' equity | 1,191,256 | 1,294,461 |
Total liabilities and stockholders' equity | $ 1,292,759 | $ 1,399,805 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued (in shares) | 36,152,694 | 38,132,693 |
Common stock, shares outstanding (in shares) | 36,152,694 | 38,132,693 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 93,257,000 | $ 100,346,000 | $ 287,291,000 | $ 347,498,000 |
Cost and expenses: | ||||
Cost of sales | 65,630,000 | 63,050,000 | 202,824,000 | 233,039,000 |
Selling, general and administrative | 31,566,000 | 27,985,000 | 83,359,000 | 85,060,000 |
Engineering and product development | 10,159,000 | 10,379,000 | 30,133,000 | 32,537,000 |
Impairment and other charges | 0 | 60,968,000 | 0 | 60,968,000 |
Gain on sale of assets | (14,000) | 9,000 | (5,113,000) | (79,000) |
Total costs and expenses | 107,341,000 | 162,391,000 | 311,203,000 | 411,525,000 |
Operating loss | (14,084,000) | (62,045,000) | (23,912,000) | (64,027,000) |
Interest income | 1,893,000 | 957,000 | 5,965,000 | 2,963,000 |
Interest expense | (195,000) | (12,000) | (545,000) | (44,000) |
Loss before income taxes | (12,386,000) | (61,100,000) | (18,492,000) | (61,108,000) |
Income tax provision (benefit) | (2,028,000) | (31,840,000) | 2,291,000 | (31,959,000) |
Net loss | $ (10,358,000) | $ (29,260,000) | $ (20,783,000) | $ (29,149,000) |
Loss per common share: | ||||
Basic (in dollars per share) | $ (0.28) | $ (0.78) | $ (0.56) | $ (0.78) |
Diluted (in dollars per share) | $ (0.28) | $ (0.78) | $ (0.56) | $ (0.78) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 37,119 | 37,528 | 37,349 | 37,527 |
Diluted (in shares) | 37,119 | 37,528 | 37,349 | 37,527 |
Products | ||||
Revenues | $ 63,246,000 | $ 75,885,000 | $ 199,010,000 | $ 269,570,000 |
Cost and expenses: | ||||
Cost of sales | 47,859,000 | 48,761,000 | 151,290,000 | 190,214,000 |
Services | ||||
Revenues | 30,011,000 | 24,461,000 | 88,281,000 | 77,928,000 |
Cost and expenses: | ||||
Cost of sales | $ 17,771,000 | $ 14,289,000 | $ 51,534,000 | $ 42,825,000 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (10,358) | $ (29,260) | $ (20,783) | $ (29,149) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (5,566) | 13,187 | (14,111) | 27,786 |
Total comprehensive loss | $ (15,924) | $ (16,073) | $ (34,894) | $ (1,363) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities | ||
Net loss | $ (20,783,000) | $ (29,149,000) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 25,966,000 | 32,231,000 |
Stock-based compensation expense | 9,950,000 | 10,477,000 |
Impairment and other charges | 0 | 60,968,000 |
Gain on sale of assets | (5,113,000) | (79,000) |
Deferred income taxes | (914,000) | (31,529,000) |
Changes in operating assets and liabilities: | ||
Trade receivables, net | 298,000 | 21,271,000 |
Inventories, net | 32,610,000 | 32,596,000 |
Prepaids and other assets | (9,675,000) | 17,308,000 |
Accounts payable and accrued expenses | (41,000) | (39,359,000) |
Other, net | 309,000 | 0 |
Net cash provided by operating activities | 32,607,000 | 74,735,000 |
Investing activities | ||
Purchase of property, plant and equipment | (26,683,000) | (19,563,000) |
Proceeds from sale of equipment | 11,244,000 | 1,160,000 |
Acquisition of business, net of cash acquired | 0 | (21,289,000) |
Net cash used in investing activities | (15,439,000) | (39,692,000) |
Financing activities | ||
Repurchase of common shares | (80,937,000) | 0 |
ABL Credit Facility issuance costs | (815,000) | 0 |
Proceeds from exercise of stock options | 1,106,000 | 455,000 |
Net cash provided by (used in) financing activities | (80,646,000) | 455,000 |
Effect of exchange rate changes on cash activities | (5,649,000) | 14,050,000 |
Increase (decrease) in cash and cash equivalents | (69,127,000) | 49,548,000 |
Cash and cash equivalents at beginning of period | 493,180,000 | 423,497,000 |
Cash and cash equivalents at end of period | $ 424,053,000 | $ 473,045,000 |
Organization and Principles of
Organization and Principles of Consolidation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Principles of Consolidation | Organization and Principles of Consolidation Dril-Quip, Inc., a Delaware corporation (the “Company” or “Dril-Quip”), designs, manufactures, sells and services highly engineered drilling and production equipment that is well suited primarily for use in deepwater, harsh environment and severe service applications. The Company’s principal products consist of subsea and surface wellheads, subsea and surface production trees, subsea control systems and manifolds, mudline hanger systems, specialty connectors and associated pipe, drilling and production riser systems, liner hangers, wellhead connectors, diverters and safety valves. Dril-Quip’s products are used by major integrated, large independent and foreign national oil and gas companies and drilling contractors throughout the world. Dril-Quip also provides technical advisory assistance on an as-requested basis during installation of its products, as well as rework and reconditioning services for customer-owned Dril-Quip products. In addition, Dril-Quip’s customers may rent or purchase running tools from the Company for use in the installation and retrieval of the Company’s products. The Company’s operations are organized into three geographic segments— Western Hemisphere (including North and South America; headquartered in Houston, Texas), Eastern Hemisphere (including Europe and Africa; headquartered in Aberdeen, Scotland) and Asia-Pacific (including the Pacific Rim, Southeast Asia, Australia, India and the Middle East; headquartered in Singapore). Each of these segments sells similar products and services, and the Company has major manufacturing facilities in all three of its regional headquarter locations as well as in Macae, Brazil. The Company’s major subsidiaries are Dril-Quip (Europe) Limited, located in Aberdeen with branches in Denmark, Norway and Holland; Dril-Quip Asia-Pacific PTE Ltd., located in Singapore; and Dril-Quip do Brazil LTDA, located in Macae, Brazil. Other operating subsidiaries include TIW Corporation (TIW), located in Houston, Texas; DQ Holdings Pty. Ltd., located in Perth, Australia; Dril-Quip (Ghana) Ltd., located in Takoradi, Ghana; PT DQ Oilfield Services Indonesia, located in Jakarta, Indonesia; Dril-Quip (Nigeria) Ltd., located in Port Harcourt, Nigeria; Dril-Quip Egypt for Petroleum Services S.A.E., located in Alexandria, Egypt; Dril-Quip Oilfield Services (Tianjin) Co. Ltd., located in Tianjin, China, with branches in Shezhen and Beijing, China; and Dril-Quip Qatar LLC, located in Doha, Qatar; TIW de Mexico S.A. de C.V., located in Villahermosa, Mexico; TIW de Venezuela S.A., located in Anaco, Venezuela and with a registered branch located in Shushufindi, Ecuador; TIW (UK) Limited, located in Aberdeen, Scotland; TIW Hungary LLC, located in Szolnok, Hungary; and TIW International, LLC., with a registered branch located in Singapore. On January 6, 2017, the Company acquired The Technologies Alliance Inc. d/b/a OilPatch Technologies (OPT) for approximately $20.0 million , which was integrated into the Company’s existing Western Hemisphere operations. The condensed consolidated financial statements included herein are unaudited. The balance sheet at December 31, 2017 has been derived from the audited consolidated financial statements at that date. In the opinion of management, the unaudited condensed consolidated interim financial statements include all normal recurring adjustments necessary for a fair statement of the financial position as of September 30, 2018 and the results of operations and comprehensive income for the three and nine months ended September 30, 2018 and 2017 and cash flows for the nine -month periods ended September 30, 2018 and 2017 . Certain information and footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Management believes the unaudited interim related disclosures in these condensed consolidated financial statements are adequate. The results of operations, comprehensive income and cash flows for the nine -month period ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year. The condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 . |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of the Company’s more significant estimates are those affected by critical accounting policies for revenue recognition, inventories and contingent liabilities. Revenue Recognition The Company generates revenues through the sale of products, the sale of services and the leasing of installation tools. The Company normally negotiates contracts for products, including those accounted for under the over time method, rental tools and services separately. Modifications to the scope and price of sales contracts may occur in the form of variations and change orders. For all product sales, it is the customer’s decision as to the timing of the product installation as well as whether Dril-Quip running tools will be purchased or rented. Furthermore, the customer is under no obligation to utilize the Company’s technical advisory assistance services. The customer may instead choose to use a third party or its own personnel. Product and Service Revenues Product and service revenues are recognized as the Company satisfies the performance obligation by transferring control of the promised good or service to the customer. Revenues are measured based on consideration specified in a contract with a customer and exclude sales incentives and amounts collected on behalf of third parties. In addition, some customers may impose contractually negotiated penalties for late delivery that are excluded from the transaction price. Management has elected to utilize certain practical expedients allowed under Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606). Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer are excluded from the measurement of the transaction price. Shipping and handling activities that are performed after a customer obtains control of the good are accounted for as activities to fulfill the promise to transfer the good and thus are excluded from the transaction price. Product revenues The Company recognizes product revenues from two methods: • 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. Revenues recognized under the over time method The Company uses the over time method on long-term project contracts that have the following characteristics: • 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. For each project, the Company prepares a detailed analysis of estimated costs, profit margin, completion date and risk factors which include availability of material, production efficiencies and other factors that may impact the project. On a quarterly basis, management reviews the progress of each project, which may result in revisions of previous estimates, including revenue recognition. The Company calculates the percentage complete and applies the percentage to determine the revenues earned and the appropriate portion of total estimated costs to be recognized. Losses, if any, are recorded in full in the period they become known. Historically, the Company’s estimates of total costs and costs to complete have approximated actual costs incurred to complete the project. Under the over time method, billings may not correlate directly to the revenue recognized. Based upon the terms of the specific contract, billings may be in excess of the revenue recognized, in which case the amounts are included in customer prepayments as a liability on the Condensed Consolidated Balance Sheets. Likewise, revenue recognized may exceed customer billings in which case the amounts are reported in trade receivables. Unbilled revenues are expected to be billed and collected within one year. At September 30, 2018 and December 31, 2017 , receivables included $47.3 million and $41.0 million of unbilled receivables, respectively. For the three months ended September 30, 2018 , there were eight projects representing approximately 15.7% of the Company's total revenues and approximately 23.1% of its product revenues that were accounted for using the over time method, compared to seven projects for the three months ended September 30, 2017 , which represented approximately 15.0% of the Company's total revenues and approximately 20.0% of its product revenues. For the nine months ended September 30, 2018 , there were 14 projects representing approximately 14.0% of the Company’s total revenues and approximately 20.3% of its product revenues that were accounted for using over time accounting, compared to eight projects for the nine months ended September 30, 2017 , which represented approximately 15.0% of the Company’s total revenues and approximately 19.0% of its product revenues. Revenues recognized under the point in time method Revenues from the sale of standard inventory products, not accounted for under the over time method, are recorded at the point in time that the customer obtains control of the promised asset and the Company satisfies its performance obligation. This point in time recognition aligns with the time of shipment, which is when the Company typically has a present right to payment, title transfers to the customer, the customer or its carrier has physical possession and the customer has significant risks and rewards of ownership. The Company may provide product storage to some customers. Revenues for these products are recognized at the point in time that control of the product transfers to the customer, the reason for storage is requested by the customer, the product is separately identified, the product is ready for physical transfer to the customer and the Company does not have the ability to use or direct the use of the product. This point in time typically occurs when the products are moved to storage. We receive payment after control of the products has transferred to the customer. Service revenues The Company recognizes service revenues from two sources: • technical advisory assistance; and • rework and reconditioning of customer-owned Dril-Quip products. The Company generally does not install products for its customers, but it does provide technical advisory assistance. The Company normally negotiates contracts for products, including those accounted for under the over time method, and services separately. For all product sales, it is the customer’s decision as to the timing of the product installation as well as whether Dril-Quip running tools will be purchased or rented. Furthermore, the customer is under no obligation to utilize the Company’s technical advisory assistance services. The customer may use a third party or their own personnel. The contracts for these services are typically considered day-to-day. Rework and reconditioning service revenues are recorded using the over time method based on the remaining steps that need to be completed as the refurbishment process is performed. The measurement of progress considers, among other things, the time necessary for completion of each step in the reconditioning plan, the materials to be purchased, labor and ordering procedures. We receive payment after the services have been performed by billing customers periodically (typically monthly). Lease revenues The Company earns lease revenues from the rental of running tools. Rental revenues are recognized within service revenues on a dayrate basis over the lease term. Practical Expedients We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, receivables and payables. The carrying values of these financial instruments approximate their respective fair values as they are short-term in nature. Restructuring and Other Charges In the third quarter of 2018, we initiated a global strategic analysis to better align our operations with current market conditions. As a result of this plan, during the three and nine months ended September 30, 2018, we incurred restructuring and other charges of approximately $3.7 million primarily related to employee termination benefits and consulting fees, which are included in "Selling, general and administrative" in our accompanying condensed consolidated statement of income (loss). Treasury Shares On July 26, 2016, the Board of Directors authorized a share repurchase plan under which the Company can repurchase up to $100 million of its common stock. The repurchase plan has no set expiration date and any repurchased shares are expected to be cancelled. For the three-month period ended September 30, 2018, the Company purchased 1,395,521 shares under the share repurchase plan at an average price of approximately $50.95 per share totaling approximately $71.1 million , which is reflected in "Treasury shares (at cost)", in our accompanying condensed consolidated balance sheet. In May 2018, the Company purchased 219,102 shares under the share repurchase plan at an average price of approximately $ 44.87 per share totaling approximately $9.8 million and retired such shares, which is reflected within our retained earnings for the period ended September 30, 2018. Earnings Per Share Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed considering the dilutive effect of stock options and awards using the treasury stock method. In each relevant period, the net income used in the basic and dilutive earnings per share calculations is the same. The following table reconciles the weighted average basic number of common shares outstanding and the weighted average diluted number of common shares outstanding for the purpose of calculating basic and diluted earnings per share: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 (In thousands) Weighted average common shares outstanding - basic 37,119 37,528 37,349 37,527 Dilutive effect of common stock options and awards — — — — Weighted average common shares outstanding - diluted 37,119 37,528 37,349 37,527 For the three and nine months ended September 30, 2018 , the Company has excluded the following common stock options and awards because their impact on the loss per share is anti-dilutive (in thousands on a weighted average basis): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 (In thousands) Director stock awards 11 15 9 13 Stock options 181 328 196 333 Performance share units 126 212 90 207 Restricted stock awards 172 315 125 293 |
New Accounting Standards
New Accounting Standards | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Standards | New Accounting Standards In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, “Intangibles - Goodwill and Other (Topic 350).” The standard simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should be applied on a prospective basis. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has adopted this standard as of October 1, 2017. In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a Business (Topic 805).” This update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company has adopted this standard as of December 31, 2017. In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842).” The new standard requires lessees to recognize lease assets (right of use) and lease obligations (lease liability) for leases previously classified as operating leases under generally accepted accounting principles on the balance sheet for leases with terms in excess of 12 months. The standard is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The Company has engaged a third-party expert to assist in the analysis of its lease arrangements to ensure the appropriate steps are taken in its assessment of the standard. The ultimate effect on our condensed consolidated financial statements will be based on an evaluation of the contract-specific facts and circumstances. With respect to leases in which we are the lessee, we expect to recognize a lease liability and a corresponding right of use asset. We plan to utilize the FASB package of three practical expedients under ASC 842-10-65-1(f). We are currently evaluating what other effect, if any, ASC 842 will have on our condensed consolidated financial statements and related disclosures. Adoption of ASC Topic 606, “Revenue from Contracts with Customers” In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers (Topic 606).” On January 1, 2018, we adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (the "new revenue standard”) for contracts that are not completed at the date of initial application using the modified retrospective method. We recognized the cumulative effect of the initial application of the new revenue standard as an increase to the opening balance of retained earnings at January 1, 2018 for $1.8 million . Therefore, the comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. A majority of the Company's revenues are not subject to the new revenue standard. The adoption of ASC 606 resulted in an increase of approximately $0.1 million and $2.4 million in our results from operations for the three and nine months ended September 30, 2018 , respectively, and did not have a material impact on the Company's consolidated financial position, results of operations, equity or cash flows. A majority of our product revenues continues to be recognized when products are shipped from our facilities. |
Revenue Recognition (Adoption o
Revenue Recognition (Adoption of ASC 606) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition (Adoption of ASC 606) | Revenue Recognition (Adoption of ASC 606) Revenues from contracts with customers consisted of the following: Three months ended September 30, 2018 Western Hemisphere Eastern Hemisphere Asia-Pacific Intercompany Total (In thousands) Product Revenues $ 43,825 $ 17,834 $ 1,587 $ — $ 63,246 Service Revenues 10,169 4,364 3,008 — 17,541 Total $ 53,994 $ 22,198 $ 4,595 $ — $ 80,787 Nine months ended September 30, 2018 Western Hemisphere Eastern Hemisphere Asia-Pacific Intercompany Total (In thousands) Product Revenues $ 130,259 $ 52,238 $ 16,513 $ — $ 199,010 Service Revenues 29,173 15,485 8,345 — 53,003 Total $ 159,432 $ 67,723 $ 24,858 $ — $ 252,013 Contract Balances Balances related to contracts with customers consisted of the following: Contract Assets (amounts shown in thousands) Contract Assets at December 31, 2017 $ 41,825 Additions 44,110 Transfers to Accounts Receivable 10,180 Contract Assets at September 30, 2018 $ 75,755 Contract Liabilities (amounts shown in thousands) Contract Liabilities at December 31, 2017 $ 4,767 Additions 25,039 Revenue Recognized 23,018 Contract Liabilities at September 30, 2018 $ 6,788 Receivables, which are included in trade receivables, net, were $98.3 million and $136.5 million for the nine months ended September 30, 2018 and December 31, 2017 , respectively. The amount of revenues from performance obligations satisfied (or partially satisfied) in previous periods was $3.9 million and $15.7 million for the three and nine months ended September 30, 2018 , respectively. The contract liabilities primarily relate to advance payments from customers and are included in "Customer prepayments" in our accompanying condensed consolidated balance sheets. The contract assets primarily relate to unbilled amounts typically resulting from sales under contracts when the over time method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer and is included in "Trade receivables, net" in our accompanying condensed consolidated balance sheets. Contract assets are transferred to the receivables when the rights become unconditional. Obligations for returns and refunds were considered immaterial as of September 30, 2018 . Remaining Performance Obligations The aggregate amount of the transaction price allocated to remaining performance obligations from our reconditioning services and over time product lines was $33.8 million as of September 30, 2018 . The Company expects to recognize revenue on approximately 85% and 15% of the remaining performance obligations over the next 12 and 24 months, respectively, with the remainder recognized thereafter. The Company applies the practical expedient available under the new revenue standard and does not disclose information about remaining performance obligations that have original expected durations of one year or less. |
Stock-Based Compensation and St
Stock-Based Compensation and Stock Awards | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation and Stock Awards | Stock-Based Compensation and Stock Awards During the three and nine months ended September 30, 2018 , the Company recognized approximately $2.4 million and $10.0 million , respectively, of stock-based compensation expense, which is included in "Selling, general and administrative" in our accompanying condensed consolidated statements of income (loss) and "Additional paid-in capital" in our accompanying condensed consolidated balance sheets, compared to $3.7 million and $10.5 million recognized for the three and nine months ended September 30, 2017 , respectively. No stock-based compensation expense was capitalized during the three and nine months ended September 30, 2018 or 2017 . |
Inventories, net
Inventories, net | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Inventories, net Inventories consist of the following: September 30, December 31, 2018 2017 (In thousands) Raw materials and supplies $ 59,505 $ 70,188 Work in progress 53,546 65,382 Finished goods 206,543 239,083 319,594 374,653 Less: allowance for obsolete and excess inventory (77,471 ) (83,566 ) Total inventory $ 242,123 $ 291,087 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill by reporting unit during the nine months ended September 30, 2018 were as follows: Carrying Value Carrying Value December 31, 2017 Foreign Currency Translation September 30, 2018 (In thousands) Western Hemisphere $ 39,158 $ (93 ) $ 39,065 Eastern Hemisphere 8,466 (411 ) 8,055 Asia-Pacific — — — Total $ 47,624 $ (504 ) $ 47,120 The Company performs its annual impairment tests of goodwill as of October 1 or when there is an indication an impairment may have occurred. As of September 30, 2018, there were no indications an impairment may have occurred. The fair values used in the goodwill impairment assessment were determined using the net present value of the expected future cash flows for the reporting unit. During the Company’s goodwill impairment analysis, the Company determines the fair value of the reporting unit, as a whole, using a discounted cash flow analysis, which requires significant assumptions and estimates about future operations. The assumptions about future cash flows and growth rates are based on our current budget for the remainder of the current year, 2019 and for future periods, as well as our strategic plans and management’s beliefs about future exploration and development in the industry. Changes in management's forecast commodity price assumptions may cause us to reassess our goodwill for impairment and could result in non-cash impairment charges in the future. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Intangible assets, substantially all of which were acquired in the acquisition of TIW and OPT, consist of the following: Estimated Useful Lives September 30, 2018 Gross Book Value Accumulated Amortization Foreign Currency Translation Net Book Value (In thousands) Trademarks indefinite $ 8,275 $ — $ (73 ) $ 8,202 Patents 15 - 30 years 5,950 (1,309 ) (32 ) 4,609 Customer relationships 5 - 15 years 25,889 (3,101 ) (136 ) 22,652 Non-compete agreements 3 years 171 (99 ) — 72 $ 40,285 $ (4,509 ) $ (241 ) $ 35,535 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 Amortization expense for each of the three and nine months ended September 30, 2018 was $0.6 million and $1.7 million , respectively, compared to the three and nine months ended September 30, 2017 of $0.6 million and $1.8 million , respectively. |
Gain on Sale of Assets
Gain on Sale of Assets | 9 Months Ended |
Sep. 30, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Gain on Sale of Assets | Gain on Sale of Assets During the second quarter of 2018, we sold certain property, plant and equipment for a net gain of approximately $5.1 million as part of our reorganization and consolidation of operations at our headquarters location in Houston, Texas. A gain on property, plant and equipment or intangible assets is calculated as the difference between the cost of the asset disposed of, net of depreciation, and the sales proceeds received. The net gain is reflected in "Gain on sale of assets" in our accompanying condensed consolidated statements of income (loss). There were no significant sales of assets during the three months ended September 30, 2018. |
Impairments and Other Charges
Impairments and Other Charges | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairments and Other Charges | Impairments and Other Charges We carry a variety of long-lived assets on our balance sheet, including property, plant and equipment, goodwill and other intangibles. We conduct impairment tests on long-lived assets if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We review the recoverability of the carrying value of our assets based upon estimated future cash flows while taking into consideration assumptions and estimates, including the future use of the asset, remaining useful life of the asset and service potential of the asset. Additionally, inventories are valued at the lower of cost or market. In connection with our preparation and review of financial statements for the quarter ended September 30, 2017, after considering current Brent Crude consensus forecasts and expected rig counts for the foreseeable future, we determined that the carrying amount of certain of our long-lived assets in the Western Hemisphere exceeded their respective fair values due to projected declines in asset utilization and that the cost of some of our worldwide inventory exceeded its market value. As a result, we recorded corresponding impairments and other charges. Primarily as a result of the factors described above, we recorded charges of approximately $33.6 million related to inventory and $27.4 million related to fixed assets during the three and nine months ended September 30, 2017. There were no impairments during the three and nine months ended September 30, 2018. |
Asset Backed Loan (ABL) Credit
Asset Backed Loan (ABL) Credit Facility | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Asset Backed Loan (ABL) Credit Facility | Asset Backed Loan (ABL) Credit Facility On February 23, 2018, the Company, as borrower, and the Company’s subsidiaries TIW and Honing, Inc., as guarantors, entered into a five -year senior secured revolving credit facility (the “ABL Credit Facility”) with JPMorgan Chase Bank, N.A., as administrative agent, and other financial institutions as lenders with total commitments of $100.0 million , including up to $10.0 million available for letters of credit. The maximum amount that the Company may borrow under the ABL Credit Facility is subject to the borrowing base, which is based on a percentage of eligible accounts receivable and eligible inventory, subject to reserves and other adjustments. All obligations under the ABL Credit Facility are fully and unconditionally guaranteed jointly and severally by the Company, TIW, Honing, Inc., and future significant domestic subsidiaries, subject to customary exceptions. Borrowings under the ABL Credit Facility are secured by liens on substantially all of the Company’s personal property, and bear interest at the Company’s option at either (i) the CB Floating Rate (as defined therein), calculated as the rate of interest publicly announced by JPMorgan Chase Bank, N.A., as its “prime rate,” subject to each increase or decrease in such prime rate effective as of the date such change occurs, with such CB Floating Rate not being less than Adjusted One Month LIBOR (as defined therein) or (ii) the Adjusted LIBOR (as defined therein), plus, in each case, an applicable margin. The applicable margin ranges from 1.00% to 1.50% per annum for CBFR loans and 2.00% to 2.50% per annum for Eurodollar loans and, in each case, is based on the Company’s leverage ratio. The unused portion of the ABL Credit Facility is subject to a commitment fee that varies from 0.250% to 0.375% per annum, according to average unused commitments under the ABL Credit Facility. Interest on Eurodollar loans is payable at the end of the selected interest period, but no less frequently than quarterly. Interest on CB Floating Rate loans is payable monthly in arrears. The ABL Credit Facility contains various covenants and restrictive provisions that limit the Company’s ability to, among other things, (1) enter into asset sales; (2) incur additional indebtedness; (3) make investments or loans and create liens; (4) pay certain dividends or make other distributions and (5) engage in transactions with affiliates. The ABL Credit Facility also requires the Company to maintain a fixed charge coverage ratio of 1.0 to 1.0, based on the ratio of EBITDA (as defined therein) to Fixed Charges (as defined therein) during certain periods, including when availability under the ABL Credit Facility is under certain levels. If the Company fails to perform its obligations under the agreement that results in an event of default, the commitments under the ABL Credit Facility could be terminated and any outstanding borrowings under the ABL Credit Facility may be declared immediately due and payable. The ABL Credit Facility also contains cross default provisions that apply to the Company’s other indebtedness. The Company is in compliance with the related covenants as of September 30, 2018 . As of September 30, 2018 , the availability under the ABL Credit Facility was $ 56.0 million , after taking into account the outstanding letters of credit of approximately $0.3 million issued under the facility. |
Geographic Areas
Geographic Areas | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Geographic Areas | Geographic Areas Three months ended September 30, Western Hemisphere Eastern Hemisphere Asia-Pacific DQ Corporate Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 (In thousands) Revenues Products Standard Products $ 34,101 $ 43,344 $ 12,918 $ 9,246 $ 1,587 $ 7,940 $ — $ — $ 48,606 $ 60,530 Percentage of Completion 9,724 — 4,916 7,954 — 7,401 — — 14,640 15,355 Total Products 43,825 43,344 17,834 17,200 1,587 15,341 — — 63,246 75,885 Services — Technical Advisory 7,305 6,732 3,612 3,931 2,889 1,701 — — 13,806 12,364 Reconditioning 2,864 2,008 752 844 119 19 — — 3,735 2,871 Total Services (excluding rental tools) 10,169 8,740 4,364 4,775 3,008 1,720 — — 17,541 15,235 Leasing 5,899 5,666 3,115 2,782 3,456 778 — — 12,470 9,226 Total Services (including rental tools) 16,068 14,406 7,479 7,557 6,464 2,498 — — 30,011 24,461 Intercompany 2,564 12,569 1,302 267 573 416 — — 4,439 13,252 Eliminations — — — — — — (4,439 ) (13,252 ) (4,439 ) (13,252 ) Total Revenues $ 62,457 $ 70,319 $ 26,615 $ 25,024 $ 8,624 $ 18,255 $ (4,439 ) $ (13,252 ) $ 93,257 $ 100,346 Depreciation and amortization $ 5,607 $ 6,827 $ 1,057 $ 1,073 $ 1,390 $ 1,015 $ 670 $ 603 $ 8,724 $ 9,518 Income (loss) before income taxes $ 13,902 $ (40,472 ) $ 8,133 $ (2,882 ) $ (301 ) $ (4,525 ) $ (34,120 ) $ (13,221 ) $ (12,386 ) $ (61,100 ) Nine months ended September 30, Western Hemisphere Eastern Hemisphere Asia-Pacific DQ Corporate Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 (In thousands) Revenues Products Standard Products $ 110,074 $ 162,656 $ 35,556 $ 29,919 $ 13,031 $ 26,298 $ — $ — $ 158,661 $ 218,873 Percentage of Completion 20,185 275 16,682 23,648 3,482 26,774 — — 40,349 50,697 Total Products 130,259 162,931 52,238 53,567 16,513 53,072 — — 199,010 269,570 Services Technical Advisory 20,835 21,709 12,785 11,135 7,021 5,340 — — 40,641 38,184 Reconditioning 8,338 5,985 2,700 1,392 1,324 204 — — 12,362 7,581 Total Services (excluding rental tools) 29,173 27,694 15,485 12,527 8,345 5,544 — — 53,003 45,765 Leasing 18,162 21,604 10,837 8,158 6,279 2,401 — — 35,278 32,163 Total Services (including rental tools) 47,335 49,298 26,322 20,685 14,624 7,945 — — 88,281 77,928 Intercompany 9,685 22,700 1,835 554 1,300 533 — — 12,820 23,787 Eliminations — — — — — — (12,820 ) (23,787 ) (12,820 ) (23,787 ) Total $ 187,279 $ 234,929 $ 80,395 $ 74,806 $ 32,437 $ 61,550 $ (12,820 ) $ (23,787 ) $ 287,291 $ 347,498 Depreciation and amortization $ 17,091 $ 24,153 $ 3,402 $ 3,228 $ 3,521 $ 3,046 $ 1,952 $ 1,804 $ 25,966 $ 32,231 Income (loss) before income taxes $ 12,999 $ (28,558 ) $ 13,792 $ 3,401 $ (45 ) $ 3,115 $ (45,238 ) $ (39,066 ) $ (18,492 ) $ (61,108 ) Western Hemisphere Eastern Hemisphere Asia-Pacific DQ Corporate Total September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 (In thousands) Long-Lived Assets $ 466,703 $ 482,636 $ 256,779 $ 264,828 $ 66,466 $ 58,606 $ (394,640 ) $ (414,814 ) $ 395,309 $ 391,256 Total Assets $ 800,936 $ 877,779 $ 777,868 $ 752,967 $ 161,662 $ 185,229 $ (447,707 ) $ (416,170 ) $ 1,292,759 $ 1,399,805 The Company’s operations are organized into three geographic segments - Western Hemisphere (including North and South America; headquartered in Houston, Texas), Eastern Hemisphere (including Europe and Africa; headquartered in Aberdeen, Scotland) and Asia-Pacific (including the Pacific Rim, Southeast Asia, Australia, India and the Middle East; headquartered in Singapore). Each of these segments sells similar products and services and the Company has major manufacturing facilities in all three of its regional headquarter locations as well as in Macae, Brazil. Eliminations of operating profits are related to intercompany inventory transfers that are deferred until shipment is made to third party customers. |
Income Tax
Income Tax | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax | Income Tax The effective tax rates for the three and nine months ended September 30, 2018 were 16.4% and (12.4)% , respectively, compared to 52.0% and 52.2% for the same periods in 2017. The Company established valuation allowances on deferred tax assets for losses and tax credits generated in each period, which, when applied to losses for the three and nine months ended September 30, 2018, resulted in lower effective tax rates than the U.S. statutory rate. The negative tax rate for the nine months ended September 30, 2018 is the result of net tax expense recorded against a pre-tax loss for the period. The change in effective tax rate from 2017 to 2018 was also impacted by the decrease in the U.S. federal corporate tax rate from 35% in 2017 to 21% in 2018. On December 22, 2017, the President of the United States signed into law P.L. 115-97, informally known as the Tax Cuts and Jobs Act of 2017 ("Tax Reform"). Tax Reform amends the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions for individuals and businesses. For businesses, Tax Reform reduced the corporate federal tax rate from a maximum of 35% to 21% and transitions from a worldwide tax system to a modified territorial tax system. Tax Reform also adds many new provisions including changes to bonus depreciation, the deduction for executive compensation and interest expense, a tax on global intangible low-taxed income, the base erosion anti-abusive tax and a deduction for foreign-derived intangible income. Given the amount and complexity of the changes to tax law, we continue to finalize our accounting for the income tax effects stemming from Tax Reform. At December 31, 2017, certain provisional amounts were taken as estimates to account for the impact of Tax Reform. The actual impact of Tax Reform may differ from the estimates used due to, among other things, further refinement of our calculations, changes in interpretations and assumptions we have made, guidance that may be issued and actions we may take as a result of the tax legislation. Any adjustments to these provisional estimates will be reported as a component of income tax expense in the reporting period in which any such adjustments are identified, which will be no later than the fourth quarter of 2018. For the three and nine months ended September 30, 2018, the Company reclassified $28.0 million from current income taxes payable to non-current income taxes payable due to tax return elections, recent guidance and regulations occurring in the quarter. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Brazilian Tax Issue From 2002 to 2007, the Company’s Brazilian subsidiary imported goods through the State of Espirito Santo in Brazil and subsequently transferred them to its facility in the State of Rio de Janeiro. During that period, the Company’s Brazilian subsidiary paid taxes to the State of Espirito Santo on its imports. Upon the final sale of these goods, the Company’s Brazilian subsidiary collected taxes from customers and remitted them to the State of Rio de Janeiro net of the taxes paid on importation of those goods to the State of Espirito Santo in accordance with the Company’s understanding of Brazilian tax laws. In December 2010 and January 2011, the Company’s Brazilian subsidiary was served with two assessments totaling approximately $13.0 million from the State of Rio de Janeiro to cancel the credits associated with the tax payments to the State of Espirito Santo (Santo Credits) on the importation of goods from July 2005 to October 2007. The Company has objected to these assessments on the grounds that they would represent double taxation on the importation of the same goods and that the Company is entitled to the credits under applicable Brazilian law. The Company’s Brazilian subsidiary filed appeals with a State of Rio de Janeiro judicial court to annul both of these tax assessments following rulings against the Company by the tax administration’s highest council. In connection with those appeals, the Company deposited with the court a total amount of approximately $8.8 million in December 2014 and December 2016 as the full amount of the assessments with penalties and interest. The Company believes that these credits are valid and that success in the judicial court process is probable. Based upon this analysis, the Company has not accrued any liability in conjunction with this matter. Since 2007, the Company’s Brazilian subsidiary has paid taxes on the importation of goods directly to the State of Rio de Janeiro and the Company does not expect any similar issues to exist for periods subsequent to 2007. General The Company operates its business and markets its products and services in most of the significant oil and gas producing areas in the world and is, therefore, subject to the risks customarily attendant to international operations and dependency on the condition of the oil and gas industry. Additionally, products of the Company are used in potentially hazardous drilling, completion, and production applications that can cause personal injury, property damage and environmental claims. Although exposure to such risk has not resulted in any significant problems in the past, there can be no assurance that ongoing and future developments will not adversely impact the Company. The Company is also involved in a number of legal actions arising in the ordinary course of business. Although no assurance can be given with respect to the ultimate outcome of such legal action, in the opinion of management, the ultimate liability with respect thereto will not have a material adverse effect on the Company’s results of operations, financial position or cash flows. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 18, 2018, we announced that Dril-Quip (Europe) Limited, our wholly owned subsidiary, has entered into a Front End Engineering and Design (FEED) Contract and Frame Agreement with Premier Oil Exploration and Production Limited (Premier) to provide the subsea production systems for the Sea Lion Phase 1 Development located offshore the Falkland Islands. The Frame Agreement replaces the previously announced letter of intent. The current estimated value of the equipment portion of the scope of work is $207 million , which includes plans for up to 30 subsea production systems, including wellheads, horizontal trees, tubing hangers, control systems, associated production and injection manifolds and subsea umbilicals. Under the Frame Agreement, it is envisaged that Dril-Quip will provide vendor financing for up to 30% of the equipment portion of the contract. Formal contract award will be subject to agreement of a definitive contract and Premier taking a final investment decision. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of the Company’s more significant estimates are those affected by critical accounting policies for revenue recognition, inventories and contingent liabilities. |
Revenue Recognition | Revenues recognized under the over time method The Company uses the over time method on long-term project contracts that have the following characteristics: • 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. For each project, the Company prepares a detailed analysis of estimated costs, profit margin, completion date and risk factors which include availability of material, production efficiencies and other factors that may impact the project. On a quarterly basis, management reviews the progress of each project, which may result in revisions of previous estimates, including revenue recognition. The Company calculates the percentage complete and applies the percentage to determine the revenues earned and the appropriate portion of total estimated costs to be recognized. Losses, if any, are recorded in full in the period they become known. Historically, the Company’s estimates of total costs and costs to complete have approximated actual costs incurred to complete the project. Under the over time method, billings may not correlate directly to the revenue recognized. Based upon the terms of the specific contract, billings may be in excess of the revenue recognized, in which case the amounts are included in customer prepayments as a liability on the Condensed Consolidated Balance Sheets. Likewise, revenue recognized may exceed customer billings in which case the amounts are reported in trade receivables. Unbilled revenues are expected to be billed and collected within one year. Revenue Recognition The Company generates revenues through the sale of products, the sale of services and the leasing of installation tools. The Company normally negotiates contracts for products, including those accounted for under the over time method, rental tools and services separately. Modifications to the scope and price of sales contracts may occur in the form of variations and change orders. For all product sales, it is the customer’s decision as to the timing of the product installation as well as whether Dril-Quip running tools will be purchased or rented. Furthermore, the customer is under no obligation to utilize the Company’s technical advisory assistance services. The customer may instead choose to use a third party or its own personnel. Revenues recognized under the point in time method Revenues from the sale of standard inventory products, not accounted for under the over time method, are recorded at the point in time that the customer obtains control of the promised asset and the Company satisfies its performance obligation. This point in time recognition aligns with the time of shipment, which is when the Company typically has a present right to payment, title transfers to the customer, the customer or its carrier has physical possession and the customer has significant risks and rewards of ownership. The Company may provide product storage to some customers. Revenues for these products are recognized at the point in time that control of the product transfers to the customer, the reason for storage is requested by the customer, the product is separately identified, the product is ready for physical transfer to the customer and the Company does not have the ability to use or direct the use of the product. This point in time typically occurs when the products are moved to storage. We receive payment after control of the products has transferred to the customer. Service revenues The Company recognizes service revenues from two sources: • technical advisory assistance; and • rework and reconditioning of customer-owned Dril-Quip products. The Company generally does not install products for its customers, but it does provide technical advisory assistance. The Company normally negotiates contracts for products, including those accounted for under the over time method, and services separately. For all product sales, it is the customer’s decision as to the timing of the product installation as well as whether Dril-Quip running tools will be purchased or rented. Furthermore, the customer is under no obligation to utilize the Company’s technical advisory assistance services. The customer may use a third party or their own personnel. The contracts for these services are typically considered day-to-day. Rework and reconditioning service revenues are recorded using the over time method based on the remaining steps that need to be completed as the refurbishment process is performed. The measurement of progress considers, among other things, the time necessary for completion of each step in the reconditioning plan, the materials to be purchased, labor and ordering procedures. We receive payment after the services have been performed by billing customers periodically (typically monthly). |
Lease revenues | Lease revenues The Company earns lease revenues from the rental of running tools. Rental revenues are recognized within service revenues on a dayrate basis over the lease term. |
Practical Expedients | Practical Expedients We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist primarily of cash and cash equivalents, receivables and payables. The carrying values of these financial instruments approximate their respective fair values as they are short-term in nature. |
Restructuring and Other Charges | Restructuring and Other Charges In the third quarter of 2018, we initiated a global strategic analysis to better align our operations with current market conditions. As a result of this plan, during the three and nine months ended September 30, 2018, we incurred restructuring and other charges of approximately $3.7 million primarily related to employee termination benefits and consulting fees, which are included in "Selling, general and administrative" in our accompanying condensed consolidated statement of income (loss). |
Treasury Shares | Treasury Shares On July 26, 2016, the Board of Directors authorized a share repurchase plan under which the Company can repurchase up to $100 million of its common stock. The repurchase plan has no set expiration date and any repurchased shares are expected to be cancelled. For the three-month period ended September 30, 2018, the Company purchased 1,395,521 shares under the share repurchase plan at an average price of approximately $50.95 per share totaling approximately $71.1 million , which is reflected in "Treasury shares (at cost)", in our accompanying condensed consolidated balance sheet. In May 2018, the Company purchased 219,102 shares under the share repurchase plan at an average price of approximately $ 44.87 per share totaling approximately $9.8 million and retired such shares, which is reflected within our retained earnings for the period ended September 30, 2018. |
Earnings Per Share | Earnings Per Share Basic earnings per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed considering the dilutive effect of stock options and awards using the treasury stock method. In each relevant period, the net income used in the basic and dilutive earnings per share calculations is the same. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share | The following table reconciles the weighted average basic number of common shares outstanding and the weighted average diluted number of common shares outstanding for the purpose of calculating basic and diluted earnings per share: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 (In thousands) Weighted average common shares outstanding - basic 37,119 37,528 37,349 37,527 Dilutive effect of common stock options and awards — — — — Weighted average common shares outstanding - diluted 37,119 37,528 37,349 37,527 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | For the three and nine months ended September 30, 2018 , the Company has excluded the following common stock options and awards because their impact on the loss per share is anti-dilutive (in thousands on a weighted average basis): Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 (In thousands) Director stock awards 11 15 9 13 Stock options 181 328 196 333 Performance share units 126 212 90 207 Restricted stock awards 172 315 125 293 |
Revenue Recognition (Adoption_2
Revenue Recognition (Adoption of ASC 606) (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue from Contract with Customer | Revenues from contracts with customers consisted of the following: Three months ended September 30, 2018 Western Hemisphere Eastern Hemisphere Asia-Pacific Intercompany Total (In thousands) Product Revenues $ 43,825 $ 17,834 $ 1,587 $ — $ 63,246 Service Revenues 10,169 4,364 3,008 — 17,541 Total $ 53,994 $ 22,198 $ 4,595 $ — $ 80,787 Nine months ended September 30, 2018 Western Hemisphere Eastern Hemisphere Asia-Pacific Intercompany Total (In thousands) Product Revenues $ 130,259 $ 52,238 $ 16,513 $ — $ 199,010 Service Revenues 29,173 15,485 8,345 — 53,003 Total $ 159,432 $ 67,723 $ 24,858 $ — $ 252,013 |
Schedule of Contract Asset and Liability | Balances related to contracts with customers consisted of the following: Contract Assets (amounts shown in thousands) Contract Assets at December 31, 2017 $ 41,825 Additions 44,110 Transfers to Accounts Receivable 10,180 Contract Assets at September 30, 2018 $ 75,755 Contract Liabilities (amounts shown in thousands) Contract Liabilities at December 31, 2017 $ 4,767 Additions 25,039 Revenue Recognized 23,018 Contract Liabilities at September 30, 2018 $ 6,788 |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following: September 30, December 31, 2018 2017 (In thousands) Raw materials and supplies $ 59,505 $ 70,188 Work in progress 53,546 65,382 Finished goods 206,543 239,083 319,594 374,653 Less: allowance for obsolete and excess inventory (77,471 ) (83,566 ) Total inventory $ 242,123 $ 291,087 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill by reporting unit during the nine months ended September 30, 2018 were as follows: Carrying Value Carrying Value December 31, 2017 Foreign Currency Translation September 30, 2018 (In thousands) Western Hemisphere $ 39,158 $ (93 ) $ 39,065 Eastern Hemisphere 8,466 (411 ) 8,055 Asia-Pacific — — — Total $ 47,624 $ (504 ) $ 47,120 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets | Intangible assets, substantially all of which were acquired in the acquisition of TIW and OPT, consist of the following: Estimated Useful Lives September 30, 2018 Gross Book Value Accumulated Amortization Foreign Currency Translation Net Book Value (In thousands) Trademarks indefinite $ 8,275 $ — $ (73 ) $ 8,202 Patents 15 - 30 years 5,950 (1,309 ) (32 ) 4,609 Customer relationships 5 - 15 years 25,889 (3,101 ) (136 ) 22,652 Non-compete agreements 3 years 171 (99 ) — 72 $ 40,285 $ (4,509 ) $ (241 ) $ 35,535 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 |
Geographic Areas (Tables)
Geographic Areas (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | Three months ended September 30, Western Hemisphere Eastern Hemisphere Asia-Pacific DQ Corporate Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 (In thousands) Revenues Products Standard Products $ 34,101 $ 43,344 $ 12,918 $ 9,246 $ 1,587 $ 7,940 $ — $ — $ 48,606 $ 60,530 Percentage of Completion 9,724 — 4,916 7,954 — 7,401 — — 14,640 15,355 Total Products 43,825 43,344 17,834 17,200 1,587 15,341 — — 63,246 75,885 Services — Technical Advisory 7,305 6,732 3,612 3,931 2,889 1,701 — — 13,806 12,364 Reconditioning 2,864 2,008 752 844 119 19 — — 3,735 2,871 Total Services (excluding rental tools) 10,169 8,740 4,364 4,775 3,008 1,720 — — 17,541 15,235 Leasing 5,899 5,666 3,115 2,782 3,456 778 — — 12,470 9,226 Total Services (including rental tools) 16,068 14,406 7,479 7,557 6,464 2,498 — — 30,011 24,461 Intercompany 2,564 12,569 1,302 267 573 416 — — 4,439 13,252 Eliminations — — — — — — (4,439 ) (13,252 ) (4,439 ) (13,252 ) Total Revenues $ 62,457 $ 70,319 $ 26,615 $ 25,024 $ 8,624 $ 18,255 $ (4,439 ) $ (13,252 ) $ 93,257 $ 100,346 Depreciation and amortization $ 5,607 $ 6,827 $ 1,057 $ 1,073 $ 1,390 $ 1,015 $ 670 $ 603 $ 8,724 $ 9,518 Income (loss) before income taxes $ 13,902 $ (40,472 ) $ 8,133 $ (2,882 ) $ (301 ) $ (4,525 ) $ (34,120 ) $ (13,221 ) $ (12,386 ) $ (61,100 ) Nine months ended September 30, Western Hemisphere Eastern Hemisphere Asia-Pacific DQ Corporate Total 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 (In thousands) Revenues Products Standard Products $ 110,074 $ 162,656 $ 35,556 $ 29,919 $ 13,031 $ 26,298 $ — $ — $ 158,661 $ 218,873 Percentage of Completion 20,185 275 16,682 23,648 3,482 26,774 — — 40,349 50,697 Total Products 130,259 162,931 52,238 53,567 16,513 53,072 — — 199,010 269,570 Services Technical Advisory 20,835 21,709 12,785 11,135 7,021 5,340 — — 40,641 38,184 Reconditioning 8,338 5,985 2,700 1,392 1,324 204 — — 12,362 7,581 Total Services (excluding rental tools) 29,173 27,694 15,485 12,527 8,345 5,544 — — 53,003 45,765 Leasing 18,162 21,604 10,837 8,158 6,279 2,401 — — 35,278 32,163 Total Services (including rental tools) 47,335 49,298 26,322 20,685 14,624 7,945 — — 88,281 77,928 Intercompany 9,685 22,700 1,835 554 1,300 533 — — 12,820 23,787 Eliminations — — — — — — (12,820 ) (23,787 ) (12,820 ) (23,787 ) Total $ 187,279 $ 234,929 $ 80,395 $ 74,806 $ 32,437 $ 61,550 $ (12,820 ) $ (23,787 ) $ 287,291 $ 347,498 Depreciation and amortization $ 17,091 $ 24,153 $ 3,402 $ 3,228 $ 3,521 $ 3,046 $ 1,952 $ 1,804 $ 25,966 $ 32,231 Income (loss) before income taxes $ 12,999 $ (28,558 ) $ 13,792 $ 3,401 $ (45 ) $ 3,115 $ (45,238 ) $ (39,066 ) $ (18,492 ) $ (61,108 ) Western Hemisphere Eastern Hemisphere Asia-Pacific DQ Corporate Total September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 (In thousands) Long-Lived Assets $ 466,703 $ 482,636 $ 256,779 $ 264,828 $ 66,466 $ 58,606 $ (394,640 ) $ (414,814 ) $ 395,309 $ 391,256 Total Assets $ 800,936 $ 877,779 $ 777,868 $ 752,967 $ 161,662 $ 185,229 $ (447,707 ) $ (416,170 ) $ 1,292,759 $ 1,399,805 |
Organization and Principles o_2
Organization and Principles of Consolidation (Details) $ in Millions | Jan. 06, 2017USD ($) | Sep. 30, 2018SegmentLocation |
Organization and Principles of Consolidation [Line Items] | ||
Number of geographic segments | Segment | 3 | |
Number of headquarter locations | Location | 3 | |
Technology Alliance Inc. | ||
Organization and Principles of Consolidation [Line Items] | ||
Consideration transferred in acquisition | $ | $ 20 |
Significant Accounting Polici_4
Significant Accounting Policies - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2018USD ($)$ / sharesshares | Sep. 30, 2018USD ($)Project$ / sharesshares | Sep. 30, 2017Project | Sep. 30, 2018USD ($)ProjectSource | Sep. 30, 2017Project | Dec. 31, 2017USD ($) | Jul. 26, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||||
Number of product revenue sources | Source | 2 | ||||||
Unbilled receivables | $ 47,300,000 | $ 47,300,000 | $ 41,000,000 | ||||
Number of projects | Project | 8 | 7 | 14 | 8 | |||
Percentage of total revenues | 15.70% | 15.00% | 14.00% | 15.00% | |||
Percentage of product revenues | 23.10% | 20.00% | 20.30% | 19.00% | |||
Number of service revenue sources | Source | 2 | ||||||
Restructuring and other charges | $ 3,700,000 | $ 3,700,000 | |||||
Average price of shares (in dollars per share) | $ / shares | $ 44.87 | $ 50.95 | |||||
Treasury shares (at cost) | $ 71,107,000 | $ 71,107,000 | $ 0 | ||||
Common Stock | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Shares authorized to be purchased (up to) (in shares) | $ 100,000,000 | ||||||
Treasury shares purchased (in shares) | shares | 1,395,521 | ||||||
Treasury stock, value of acquired shares | $ 71,100,000 | ||||||
Stock repurchased and retired during period (in shares) | shares | 219,102 | ||||||
Stock repurchased and retired during period | $ 9,800,000 |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Weighted average common shares outstanding—basic (in shares) | 37,119 | 37,528 | 37,349 | 37,527 |
Dilutive effect of common stock options and awards (in shares) | 0 | 0 | 0 | 0 |
Weighted average common shares outstanding—diluted (in shares) | 37,119 | 37,528 | 37,349 | 37,527 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Director stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 11 | 15 | 9 | 13 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 181 | 328 | 196 | 333 |
Performance share units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 126 | 212 | 90 | 207 |
Restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 172 | 315 | 125 | 293 |
New Accounting Standards (Detai
New Accounting Standards (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Retained earnings | $ 1,371,368 | $ 1,371,368 | $ 1,400,296 | |
Revenue from contract with customer | 80,787 | 252,013 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Retained earnings | $ 1,800 | |||
Revenue from contract with customer | $ 100 | $ 2,400 |
Revenue Recognition (Adoption_3
Revenue Recognition (Adoption of ASC 606) - Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 80,787 | $ 252,013 |
Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 63,246 | 199,010 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 17,541 | 53,003 |
Intercompany | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 0 | 0 |
Intercompany | Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 0 | 0 |
Intercompany | Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 0 | 0 |
Western Hemisphere | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 53,994 | 159,432 |
Western Hemisphere | Operating Segments | Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 43,825 | 130,259 |
Western Hemisphere | Operating Segments | Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 10,169 | 29,173 |
Eastern Hemisphere | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 22,198 | 67,723 |
Eastern Hemisphere | Operating Segments | Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 17,834 | 52,238 |
Eastern Hemisphere | Operating Segments | Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 4,364 | 15,485 |
Asia-Pacific | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 4,595 | 24,858 |
Asia-Pacific | Operating Segments | Products | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | 1,587 | 16,513 |
Asia-Pacific | Operating Segments | Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customer | $ 3,008 | $ 8,345 |
Revenue Recognition (Adoption_4
Revenue Recognition (Adoption of ASC 606) - Contract Asset and Liability (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Change in Contract with Customer, Asset [Abstract] | |
Contract Assets at December 31, 2017 | $ 41,825 |
Additions | 44,110 |
Transfers to Accounts Receivable | 10,180 |
Contract Assets at September 30, 2018 | 75,755 |
Change in Contract with Customer, Liability [Abstract] | |
Contract Liabilities at December 31, 2017 | 4,767 |
Additions | 25,039 |
Revenue Recognized | 23,018 |
Contract Liabilities at September 30, 2018 | $ 6,788 |
Revenue Recognition (Adoption_5
Revenue Recognition (Adoption of ASC 606) - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Revenue from Contract with Customer [Abstract] | |||
Accounts receivable | $ 98.3 | $ 98.3 | $ 136.5 |
Performance obligation satisfied in previous period | 3.9 | 15.7 | |
Performance obligation | $ 33.8 | $ 33.8 | |
Transferred over Time | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-10-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Remaining performance obligation percentage | 85.00% | 85.00% | |
Expected timing of satisfaction period | 12 months | 12 months | |
Transferred over Time | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-10-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Remaining performance obligation percentage | 15.00% | 15.00% | |
Expected timing of satisfaction period | 24 months | 24 months |
Stock-Based Compensation and _2
Stock-Based Compensation and Stock Awards (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Capitalized expense | $ 0 | $ 0 | $ 0 | $ 0 |
Selling, General and Administrative Expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Allocated share-based compensation expense | $ 2,400,000 | $ 3,700,000 | $ 10,000,000 | $ 10,500,000 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 59,505 | $ 70,188 |
Work in progress | 53,546 | 65,382 |
Finished goods | 206,543 | 239,083 |
Inventory, gross, total | 319,594 | 374,653 |
Less: allowance for obsolete and excess inventory | (77,471) | (83,566) |
Total inventory | $ 242,123 | $ 291,087 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | $ 47,624 |
Foreign Currency Translation | (504) |
Goodwill, Ending balance | 47,120 |
Western Hemisphere | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | 39,158 |
Foreign Currency Translation | (93) |
Goodwill, Ending balance | 39,065 |
Eastern Hemisphere | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | 8,466 |
Foreign Currency Translation | (411) |
Goodwill, Ending balance | 8,055 |
Asia-Pacific | |
Goodwill [Roll Forward] | |
Goodwill, Beginning balance | 0 |
Foreign Currency Translation | 0 |
Goodwill, Ending balance | $ 0 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Indefinite-lived Intangible Assets: | |||||
Gross Book Value | $ 8,275 | $ 8,275 | $ 8,416 | ||
Foreign Currency Translation | (73) | (73) | 56 | ||
Net Book Value | 8,202 | 8,202 | 8,472 | ||
Finite-Lived Intangible Assets: | |||||
Accumulated Amortization | (4,509) | (4,509) | (2,700) | ||
Intangible Assets: | |||||
Gross Book Value | 40,285 | 40,285 | 41,036 | ||
Accumulated Amortization | (4,509) | (4,509) | (2,700) | ||
Foreign Currency Translation | (241) | (241) | 72 | ||
Net Book Value | 35,535 | 35,535 | 38,408 | ||
Amortization of intangible assets | 600 | $ 600 | 1,700 | $ 1,800 | |
Patents | |||||
Finite-Lived Intangible Assets: | |||||
Gross Book Value | 5,950 | 5,950 | 5,946 | ||
Accumulated Amortization | (1,309) | (1,309) | (968) | ||
Foreign Currency Translation | (32) | (32) | 80 | ||
Net Book Value | 4,609 | 4,609 | 5,058 | ||
Intangible Assets: | |||||
Accumulated Amortization | (1,309) | $ (1,309) | $ (968) | ||
Patents | Minimum | |||||
Intangible Assets: | |||||
Estimated Useful Lives | 15 years | 15 years | |||
Patents | Maximum | |||||
Intangible Assets: | |||||
Estimated Useful Lives | 30 years | 30 years | |||
Customer relationships | |||||
Finite-Lived Intangible Assets: | |||||
Gross Book Value | 25,889 | $ 25,889 | $ 26,503 | ||
Accumulated Amortization | (3,101) | (3,101) | (1,675) | ||
Foreign Currency Translation | (136) | (136) | (64) | ||
Net Book Value | 22,652 | 22,652 | 24,764 | ||
Intangible Assets: | |||||
Accumulated Amortization | (3,101) | $ (3,101) | $ (1,675) | ||
Customer relationships | Minimum | |||||
Intangible Assets: | |||||
Estimated Useful Lives | 5 years | 5 years | |||
Customer relationships | Maximum | |||||
Intangible Assets: | |||||
Estimated Useful Lives | 15 years | 15 years | |||
Non-compete agreements | |||||
Finite-Lived Intangible Assets: | |||||
Gross Book Value | 171 | $ 171 | $ 171 | ||
Accumulated Amortization | (99) | (99) | (57) | ||
Foreign Currency Translation | 0 | 0 | 0 | ||
Net Book Value | 72 | 72 | 114 | ||
Intangible Assets: | |||||
Accumulated Amortization | $ (99) | $ (99) | $ (57) | ||
Estimated Useful Lives | 3 years | 3 years |
Gain on Sale of Assets (Details
Gain on Sale of Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Gain on sale of assets | $ (14) | $ 9 | $ (5,113) | $ (79) | |
Disposal Group, Held-for-sale or Disposed of by Sale, Not Discontinued Operations | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Gain on sale of assets | $ (5,100) |
Impairments and Other Charges (
Impairments and Other Charges (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Impairment charges related to inventory | $ 33,600,000 | |||
Impairment charges related to fixed assets | $ 27,400,000 | |||
Impairment and other charges | $ 0 | $ 60,968,000 | $ 0 | $ 60,968,000 |
Asset Backed Loan (ABL) Credi_2
Asset Backed Loan (ABL) Credit Facility (Details) - ABL Credit Facility - Revolving Credit Facility | Feb. 23, 2018USD ($) | Sep. 30, 2018USD ($) |
Debt Instrument [Line Items] | ||
Debt instrument, term | 5 years | |
Total commitments | $ 100,000,000 | |
Amount available for letters of credit (up to) | $ 10,000,000 | |
Fixed charges ratio | 1 | |
Available borrowing capacity | $ 56,000,000 | |
Letters of credit outstanding | $ 300,000 | |
Minimum | ||
Debt Instrument [Line Items] | ||
Commitment fee percentage | 0.25% | |
Minimum | CB Floating Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.00% | |
Minimum | Eurodollar | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.00% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Commitment fee percentage | 0.375% | |
Maximum | CB Floating Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 1.50% | |
Maximum | Eurodollar | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.50% |
Geographic Areas - Schedule of
Geographic Areas - Schedule of Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||
Revenues | $ 93,257 | $ 100,346 | $ 287,291 | $ 347,498 | |
Depreciation and amortization | 8,724 | 9,518 | 25,966 | 32,231 | |
Income (loss) before income taxes | (12,386) | (61,100) | (18,492) | (61,108) | |
Long-Lived Assets | 395,309 | 395,309 | $ 391,256 | ||
Total Assets | 1,292,759 | 1,292,759 | 1,399,805 | ||
Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 63,246 | 75,885 | 199,010 | 269,570 | |
Total Services (including rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 30,011 | 24,461 | 88,281 | 77,928 | |
Western Hemisphere | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 62,457 | 70,319 | 187,279 | 234,929 | |
Eastern Hemisphere | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 26,615 | 25,024 | 80,395 | 74,806 | |
Asia-Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 8,624 | 18,255 | 32,437 | 61,550 | |
Operating Segments | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 63,246 | 75,885 | 199,010 | 269,570 | |
Operating Segments | Technical Advisory | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 13,806 | 12,364 | 40,641 | 38,184 | |
Operating Segments | Reconditioning | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 3,735 | 2,871 | 12,362 | 7,581 | |
Operating Segments | Total Services (excluding rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 17,541 | 15,235 | 53,003 | 45,765 | |
Operating Segments | Leasing | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 12,470 | 9,226 | 35,278 | 32,163 | |
Operating Segments | Total Services (including rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 30,011 | 24,461 | 88,281 | 77,928 | |
Operating Segments | Standard Products | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 48,606 | 60,530 | 158,661 | 218,873 | |
Operating Segments | Percentage of Completion | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 14,640 | 15,355 | 40,349 | 50,697 | |
Operating Segments | Western Hemisphere | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation and amortization | 5,607 | 6,827 | 17,091 | 24,153 | |
Income (loss) before income taxes | 13,902 | (40,472) | 12,999 | (28,558) | |
Long-Lived Assets | 466,703 | 466,703 | 482,636 | ||
Total Assets | 800,936 | 800,936 | 877,779 | ||
Operating Segments | Western Hemisphere | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 43,825 | 43,344 | 130,259 | 162,931 | |
Operating Segments | Western Hemisphere | Technical Advisory | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 7,305 | 6,732 | 20,835 | 21,709 | |
Operating Segments | Western Hemisphere | Reconditioning | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 2,864 | 2,008 | 8,338 | 5,985 | |
Operating Segments | Western Hemisphere | Total Services (excluding rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 10,169 | 8,740 | 29,173 | 27,694 | |
Operating Segments | Western Hemisphere | Leasing | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 5,899 | 5,666 | 18,162 | 21,604 | |
Operating Segments | Western Hemisphere | Total Services (including rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 16,068 | 14,406 | 47,335 | 49,298 | |
Operating Segments | Western Hemisphere | Standard Products | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 34,101 | 43,344 | 110,074 | 162,656 | |
Operating Segments | Western Hemisphere | Percentage of Completion | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 9,724 | 0 | 20,185 | 275 | |
Operating Segments | Eastern Hemisphere | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation and amortization | 1,057 | 1,073 | 3,402 | 3,228 | |
Income (loss) before income taxes | 8,133 | (2,882) | 13,792 | 3,401 | |
Long-Lived Assets | 256,779 | 256,779 | 264,828 | ||
Total Assets | 777,868 | 777,868 | 752,967 | ||
Operating Segments | Eastern Hemisphere | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 17,834 | 17,200 | 52,238 | 53,567 | |
Operating Segments | Eastern Hemisphere | Technical Advisory | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 3,612 | 3,931 | 12,785 | 11,135 | |
Operating Segments | Eastern Hemisphere | Reconditioning | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 752 | 844 | 2,700 | 1,392 | |
Operating Segments | Eastern Hemisphere | Total Services (excluding rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 4,364 | 4,775 | 15,485 | 12,527 | |
Operating Segments | Eastern Hemisphere | Leasing | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 3,115 | 2,782 | 10,837 | 8,158 | |
Operating Segments | Eastern Hemisphere | Total Services (including rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 7,479 | 7,557 | 26,322 | 20,685 | |
Operating Segments | Eastern Hemisphere | Standard Products | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 12,918 | 9,246 | 35,556 | 29,919 | |
Operating Segments | Eastern Hemisphere | Percentage of Completion | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 4,916 | 7,954 | 16,682 | 23,648 | |
Operating Segments | Asia-Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation and amortization | 1,390 | 1,015 | 3,521 | 3,046 | |
Income (loss) before income taxes | (301) | (4,525) | (45) | 3,115 | |
Long-Lived Assets | 66,466 | 66,466 | 58,606 | ||
Total Assets | 161,662 | 161,662 | 185,229 | ||
Operating Segments | Asia-Pacific | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 1,587 | 15,341 | 16,513 | 53,072 | |
Operating Segments | Asia-Pacific | Technical Advisory | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 2,889 | 1,701 | 7,021 | 5,340 | |
Operating Segments | Asia-Pacific | Reconditioning | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 119 | 19 | 1,324 | 204 | |
Operating Segments | Asia-Pacific | Total Services (excluding rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 3,008 | 1,720 | 8,345 | 5,544 | |
Operating Segments | Asia-Pacific | Leasing | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 3,456 | 778 | 6,279 | 2,401 | |
Operating Segments | Asia-Pacific | Total Services (including rental tools) | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 6,464 | 2,498 | 14,624 | 7,945 | |
Operating Segments | Asia-Pacific | Standard Products | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 1,587 | 7,940 | 13,031 | 26,298 | |
Operating Segments | Asia-Pacific | Percentage of Completion | Products | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 0 | 7,401 | 3,482 | 26,774 | |
Intercompany | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 4,439 | 13,252 | 12,820 | 23,787 | |
Intercompany | Western Hemisphere | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 2,564 | 12,569 | 9,685 | 22,700 | |
Intercompany | Eastern Hemisphere | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 1,302 | 267 | 1,835 | 554 | |
Intercompany | Asia-Pacific | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 573 | 416 | 1,300 | 533 | |
Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | (4,439) | (13,252) | (12,820) | (23,787) | |
Corporate, Non-Segment | |||||
Segment Reporting Information [Line Items] | |||||
Depreciation and amortization | 670 | 603 | 1,952 | 1,804 | |
Income (loss) before income taxes | (34,120) | $ (13,221) | (45,238) | $ (39,066) | |
Long-Lived Assets | (394,640) | (394,640) | (414,814) | ||
Total Assets | $ (447,707) | $ (447,707) | $ (416,170) |
Geographic Areas - Narrative (D
Geographic Areas - Narrative (Details) | 9 Months Ended |
Sep. 30, 2018SegmentLocation | |
Segment Reporting [Abstract] | |
Number of geographic segments | Segment | 3 |
Number of headquarter locations | Location | 3 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate, percent | 16.40% | 52.00% | (12.40%) | 52.20% |
Reclassification from current to non-current income tax payable | $ 28 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Brazil $ in Millions | 2 Months Ended | ||
Jan. 31, 2011USD ($)Assessment | Dec. 31, 2016USD ($) | Dec. 31, 2014USD ($) | |
Commitments And Contingencies [Line Items] | |||
Number of additional assessments | Assessment | 2 | ||
Value of assessments served on Brazilian subsidiary | $ 13 | ||
Court deposit | $ 8.8 | $ 8.8 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event $ in Millions | Oct. 18, 2018USD ($)production_system |
Subsequent Event [Line Items] | |
Number of subsea production systems (up to) | production_system | 30 |
Percentage of vendor financing (up to) | 30.00% |
Portion of Frame Agreement | |
Subsequent Event [Line Items] | |
Estimated value of subsea production systems | $ | $ 207 |