Dril-Quip, Inc. (NYSE:DRQ) Q3 2023 Results Conference Call October 27, 2023 10:00 AM ET

Company Participants

Erin Fazio - Corporate Finance Director

Jeff Bird - President and CEO

Kyle McClure - VP and CFO

Conference Call Participants

Eddie Kim - Barclays

Operator

Good morning, and welcome to Drill-Quip's Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded.

At this time, I will turn the call over to Erin Fazio, Corporate Finance Director for Drill-Quip. Please go ahead.

Erin Fazio

Thank you, and good morning. We appreciate you joining us on today's call. An updated investor presentation has been posted under the Investors tab on the company's website along with the earnings release. This call is being recorded, and a replay will be made available on the company's website following the call.

Before we begin, I would like to remind you that Drill-Quip's comments may include forward-looking statements and discuss non-GAAP financial measures. It should be noted that a variety of factors could cause Drill-Quip's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Please refer to the third quarter 2023 financial and operational results announcement we released yesterday for a full disclosure on forward-looking statements and reconciliations of non-GAAP measures.

Speaking on the call today from Drill-Quip, we have Jeff Bird, President and Chief Executive Officer; and Kyle McClure, Vice President and Chief Financial Officer. I would now like to turn the call over to Jeff Bird.

Jeff Bird

Thank you, Erin, and thank you for joining us today. During the third quarter, we delivered strong top line results that were up 31% sequentially and 33% year-over-year. In addition to the revenue from Great North, we saw continued strength in key end markets, specifically Latin America, the Middle East and a further strengthening African market.

While revenue was consistent with our guidance, we did see some customer-specific headwinds as a result of both rig availability in a very tight rig market and FPSO delivery timing. This directly impacts our ability to service certain customers, and as a result, our higher-margin service segment delivered lower revenue than expected. We do expect our service segment to rebound in Q4.

The availability also directly impacts the timing of certain bookings, specifically MSA call-offs in Latin America and the Middle East as well as the timing of certain subsea tree orders. Accordingly, we are adjusting our outlook slightly for the fourth quarter of 2023, which Kyle will go into in more detail later.