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Contingencies | 6 Months Ended
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Jun. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Contingencies | 14. Contingencies Steamfitters Complaint On March 21, 2024, a purported Company stockholder filed a putative class action complaint captioned Steamfitters Local 449 Pension Fund v. Dril-Quip, Inc., et al., C.A. No. 2024-0284-LWW (Del. Ch.) (the “Steamfitters Complaint”). The Steamfitters Complaint alleges that members of the Board breached their fiduciary duties by agreeing, in connection with the proposed merger with Innovex, to enter into a stockholders agreement with Amberjack Capital Partners (“Amberjack”) requiring Amberjack to vote in favor of the Board of Director’s nominees at the Company’s 2025 annual meeting of stockholders and prohibiting certain transfers from Amberjack directly to activist stockholders not through public market sales. The Steamfitters Complaint further alleges that Innovex and Amberjack aided and abetted the directors’ alleged breaches of fiduciary duties. The complaint seeks an order certifying a class of the Company’s stockholders, finding that the directors breached their fiduciary duties and that Innovex and Amberjack aided and abetted the directors’ breaches of fiduciary duties, enjoining enforcement of the challenged provisions of the stockholders agreement, and awarding the plaintiff its reasonable attorneys’ and experts’ witness fees and other costs. Although the Company and the Board believe that the stockholders agreement complies fully with all applicable law and deny the allegations in the Steamfitters Complaint, in order to moot the plaintiff’s claims, and avoid nuisance and possible expense, the Company and Amberjack amended the stockholders agreement to eliminate the requirement for Amberjack and certain of its affiliates to vote in favor of the combined company’s board nominees at the combined company’s 2025 annual meeting of stockholders, the prohibition against certain transfers from Amberjack and certain of its affiliates directly to activist stockholders not through public market sales and a provision entitling Amberjack to designate four director designees for election at the combined company’s 2025 annual meeting of stockholders irrespective of Amberjack’s and certain of its affiliates’ beneficial ownership of combined company common stock at that time. On May 21, 2024, the court dismissed the Steamfitters Complaint as moot. The Company has also received letters from additional purported stockholders who contend that the registration statement on Form S-4 fails to disclose certain allegedly material information and demands that the Company make supplemental disclosures. While the Company believes that the contentions made in each of the letters described above are without merit, each of these matters is at a preliminary stage and defendants have not yet answered or otherwise responded to the letters. It is possible that additional, similar complaints may be filed, and that additional, similar letters may be received by the Company, regarding the mergers. Absent new or different allegations that are material or constitute a disclosure obligation under the U.S. federal securities laws, the Company will not necessarily disclose such additional complaints or letters. Litigation is inherently uncertain, and there can be no assurance regarding the likelihood that the Company’s defense of these claims (or any lawsuits related to the mergers that may be filed in the future) will be successful, nor can the Company predict the amount of time and expense that will be required to resolve these matters. FMC Technologies Lawsuit On October 5, 2020, FMC Technologies, Inc. (“FMC”) sued the Company alleging misappropriation of trade secrets and sought money damages and injunctive relief in the 127th District Court of Harris County in an action styled FMC Technologies, Inc. v. Richard Murphy and Dril-Quip, Inc., Cause No. 2020-63081. FMC alleged that its former employee communicated FMC trade secrets to the Company and the Company used those trade secrets in its VXTe subsea tree systems. On April 29, 2021, the jury returned a verdict in favor of the Company. FMC filed a notice of appeal on August 20, 2021. On August 10, 2023, the First District of Texas Court of Appeals rendered a judgment that affirmed the judgment of the 127th District Court of Harris County in favor of the Company. In an effort to overturn the judgment for the Company and obtain a new trial, FMC filed a petition for review with the Texas Supreme Court on November 27, 2023. On June 21, 2024, the Texas Supreme Court denied FMC’s petition, declining to review the First District of Texas Court of Appeals judgment, bringing an end to litigation. 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 is dependent on the condition of the oil and gas industry. Additionally, certain of the Company’s products are used in potentially hazardous drilling, completion, and production applications that can cause personal injury, property damage and environmental claims. Although exposure to such risks has not resulted in any significant problems for the Company in the past, ongoing exposure to these risks and future developments could adversely impact the Company in the future. 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.

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