Dril-Quip’s net debt
Since 2013, Dril-Quip’s (DRQ) net debt has been negative, as the company has had no debt and positive cash and equivalents. In 2017, DRQ’s net debt was -$493.2 million, and its cash and equivalents rose 16% YoY (year-over-year). In effect, its net debt went further into negative territory in 2017.
In 2017, DRQ generated less CFO (cash flow from operations) than in 2016, led by a decline in revenue and changes in working capital. However, its net cash used in investing activities dropped more. In 2016, DRQ acquired TIW for $142.7 million, increasing DRQ’s cash used in investing activities that year. DRQ’s CFF (cash flow from financing) was negative in 2016 due to a $24.2 million share repurchase, but then turned positive in 2017. Therefore, despite lower CFO, DRQ’s cash and cash equivalents increased YoY in 2017.
Dril-Quip’s shareholder equity
Dril-Quip’s shareholder equity fell 5% YoY in 2017, primarily due to it switching to a net loss. DRQ comprises 1.3% of the VanEck Vectors Oil Services ETF (OIH), which tracks an index of 25 oilfield equipment and service companies. OIH has fallen 24% in the past year, whereas DRQ has fallen 19%.
Dril-Quip’s net debt-to-equity ratio
The effect of a steeper negative net debt and a YoY decrease in shareholder equity in 2017 resulted in DRQ’s net debt-to-equity ratio increasing YoY to -0.38x from -0.31x. It has had a negative net debt-to-equity ratio for five years, reflecting balance sheet strength. Next, we’ll discuss RPC’s (RES) debt and equity.
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