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Grand Prideco Earnings Surge

Royalty fees rise.

Grant Prideco


reported third-quarter earnings rose 163% from a year ago, led by higher license and royalty fees.

The company earned $126.5 million, or 95 cents a share, in the quarter, compared with $48.1 million, or 37 cents a share, a year ago. Earnings this quarter are also aided by a $20 million, or 10 cents a share license and royalty fee from a recently announced drill bit license agreement. Analysts surveyed by Thomson First Call were expecting the company to earn 84 cents a share.

Third-quarter revenue rose 34% from a year ago to $471.3 million. Analysts were expecting revenue of $461.2 million. Operating margin expanded to 34% in the most recent quarter, from 24% a year ago.

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While revenue from drilling products and services climbed 40% to $214.4 million, revenue from drill bits rose 48% to $148 million, including the $20 million license and royalty fee from Smith International. The company's backlog increased to a record $1.34 billion, up from $813.6 million at the end of the December, 2005.

For the fourth quarter, the company expects earnings in the range of 93 to 95 cents a share, and $3.36 to $3.38 for a share for the full year including the 10 cents a share for the license and royalty fee. Analysts were looking for 91 cents a share for the fourth quarter and $3.23 a share for the full year.

"While demand for certain products and services, such as premium connections, casings, tubular processing and VAT's North America OCTG, has experienced some softening in the near term, this has been offset by continued growth in the Drilling Products and Services and Drill Bits segments, which should result in another record quarter in the fourth quarter 2006," the company said.

Shares fell 18 cents to $37.22.

This story was created through a joint venture between and IRIS.