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Grant Prideco Lowers Its Third Quarter Forecast Due to ReedHycalog(R) Charges

Published on September 25, 2007

Grant Prideco Lowers Its Third Quarter Forecast Due to ReedHycalog(R) Charges

September 25, 2007

As I am analysing GRP, there is an important piece of news. GRP lowered guidance due to consolidation of the old plants and starting-up new facility. Well, Mr market won’t like it but just look at it and think, is it really that bad?

HOUSTON, Sept. 25 /PRNewswire-FirstCall/ — Grant Prideco, Inc. (NYSE: GRP – News) today announced that it expects its results for the third quarter ended September 30, 2007 to fall below its earlier guidance of approximately $1.04 per share due primarily to charges at its ReedHycalog segment. Revenues, however, are expected to be in line with earlier estimates of approximately $550 million. The Company is in the process of consolidating four of its U.S. drill bit manufacturing facilities into a new facility in Conroe, Texas. The Company expects third quarter charges of approximately $15 million ($0.08 per share) associated with this consolidation including unabsorbed manufacturing costs due to the phase-out of production at four of its existing facilities and the startup of its new Conroe facility, an inventory valuation adjustment for PDC cutters transferred from its Provo facility and direct costs associated with moving equipment into the Conroe facility. The Company is currently forecasting third quarter earnings to be in the range of $0.95 to $0.97 per diluted share. The Company has also updated its forecast for its fourth quarter and is currently forecasting earnings of approximately $1.10 to $1.12 per share, net of $0.03 per share of additional costs associated with relocating people and equipment to the new drill bit facility.

Trade Carefully, trade profitably, OP

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