Precision Drilling Corp Net Debt / EBITDA surged on 66.3x from 2.0x to 68.4x in 2015 while EBITDA dropped on 96.2%
11.02.2016 • About Precision Drilling Corp (
$PD) • By InTwits
Precision Drilling Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Precision Drilling Corp doesn't have a profitable business model yet: 2015 ROIC is -9.8%
- EBITDA Margin is quite volatile: 1.6% in 2015, 28.7% in 2014, 31.5% in 2013, 23.4% in 2012, 29.7% in 2011
- Precision Drilling Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 34.4%. At the same time it's a lot of higher than industry average of 28.7%.
- CAPEX is quite volatile: 37.4 in 2015, 24.2 in 2014, 26.2 in 2013, 14.8 in 2012, 7.8 in 2011
- The company has unprofitable business model: ROIC is at -9.8%
- It operates with high leverage: Net Debt/EBITDA is 68.4x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Precision Drilling Corp ($PD) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,951 | 2,041 | 2,030 | 2,351 | 1,556 | -33.8% |
| Gross Profit | 820 | 797 | 781 | 945 | 621 | -34.3% |
| SG&A | 125 | 127 | 143 | 144 | 126 | -12.4% |
| EBITDA | 580 | 478 | 639 | 674 | 25 | -96.2% |
| Net Income | 193 | 52 | 191 | 33 | -363 | -1,196.3% |
Balance Sheet
|
|---|
| Cash | 467 | 153 | 81 | 491 | 445 | -9.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 1,240 | 1,219 | 1,323 | 1,852 | 2,181 | 17.7% |
Cash flow
|
|---|
| Capex | 726 | 868 | 536 | 857 | 459 | -46.5% |
Ratios
|
|---|
| Revenue growth | 36.5% | 4.6% | -0.5% | 15.8% | -33.8% | |
| EBITDA growth | 33.4% | -17.6% | 33.6% | 5.5% | -96.2% | |
| Gross Margin | 42.0% | 39.1% | 38.5% | 40.2% | 39.9% | -0.3% |
| EBITDA Margin | 29.7% | 23.4% | 31.5% | 28.7% | 1.6% | -27.0% |
| Net Income Margin | 9.9% | 2.6% | 9.4% | 1.4% | -23.4% | -24.8% |
| SG&A, % of revenue | 6.4% | 6.2% | 7.0% | 6.1% | 8.1% | 2.0% |
| CAPEX, % of revenue | 37.2% | 42.5% | 26.4% | 36.4% | 29.5% | -7.0% |
| ROIC | 9.0% | 4.3% | 7.5% | 5.0% | -9.8% | -14.8% |
| ROE | 9.5% | 2.4% | 8.4% | 1.4% | -15.9% | -17.3% |
| Net Debt/EBITDA | 1.3x | 2.2x | 1.9x | 2.0x | 68.4x | 66.3x |
Revenue and profitability
Precision Drilling Corp's Revenue dropped on 33.8% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 27.0 pp from 28.7% to 1.6% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased slightly on 2.0 pp from 6.1% to 8.1% in 2015.
Net Income marign dropped on 24.8 pp from 1.4% to -23.4% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 29.5% in 2015. Precision Drilling Corp's CAPEX/Revenue dropped on 13.0 pp from 42.5% in 2012 to 29.5% in 2015. It's average CAPEX/Revenue for the last three years was 30.8%.Battling declining revenue Precision Drilling Corp made large investments to CAPEX (1,807% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-9.80%) and ROE (-15.93%). ROIC dropped on 14.8 pp from 5.0% to -9.8% in 2015. ROE dropped on 17.3 pp from 1.4% to -15.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 68.4x and Debt / EBITDA is 85.9x. Net Debt / EBITDA jumped on 66.3x from 2.0x to 68.4x in 2015. Debt surged on 17.7% in 2015 while cash decreased on 9.5% in 2015.
Management team
Precision Drilling Corp's CEO is Kevin A Neveu. Kevin A Neveu is a founder and has 11 years tenure at the company.
Appendix 1: Peers in Energy
Below we provide Precision Drilling Corp benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro Rio SA ($PRJ) | -36.3% | -32.1% | -34.9% | 10,977.1% | |
| ONEnergy Inc ($OEG) | | | | 6,002.6% | |
| Sterling Resources Ltd ($SLG) | | -94.8% | 4,514.9% | 2,244.4% | |
| Ikkuma Resources Corp ($IKM) | 22.5% | 17.0% | -4.5% | 1,231.1% | |
| Spartan Energy Corp ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 38.1% | 10.4% | 17.1% | 18.5% | -23.2% |
|---|
| Precision Drilling Corp ($PD) | | 4.6% | -0.5% | 15.8% | -33.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | 94.5% |
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | |
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | 84.1% |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 48.6% |
|---|
| Precision Drilling Corp ($PD) | 42.0% | 39.1% | 38.5% | 40.2% | 39.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Seven Generations Energy Ltd ($VII) | | 56.9% | 54.0% | 106.0% | |
| Tourmaline Oil Corp ($TOU) | 67.4% | 67.9% | 80.0% | 97.6% | |
| Bonavista Energy Corp ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.7% | 30.5% | 29.6% | 13.0% |
|---|
| Precision Drilling Corp ($PD) | 29.7% | 23.4% | 31.5% | 28.7% | 1.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | |
| Petroshale Inc ($PSH) | 30.6% | | 346.6% | 865.9% | |
| Toro Oil & Gas Ltd ($TOO) | 192.4% | 139.0% | 39.2% | 808.7% | |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | |
| BNK Petroleum Inc ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 41.4% |
|---|
| Precision Drilling Corp ($PD) | 37.2% | 42.5% | 26.4% | 36.4% | 29.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | |
| Sea Dragon Energy Inc ($SDX) | -10.1% | 8.1% | 21.8% | 32.9% | |
| Raging River Exploration Inc ($RRX) | | | | 29.1% | |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | |
| Rooster Energy Ltd ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.1% | -2.5% |
|---|
| Precision Drilling Corp ($PD) | 9.0% | 4.3% | 7.5% | 5.0% | -9.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | |
| Lightstream Resources Ltd ($LTS) | | 2.0x | | 27.8x | |
| Petroshale Inc ($PSH) | 0.1x | | | 21.7x | |
| Connacher Oil and Gas Ltd ($CLC) | 9.7x | 16.7x | 8.8x | 17.1x | |
| Pengrowth Energy Corp ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 2.8x |
|---|
| Precision Drilling Corp ($PD) | 1.3x | 2.2x | 1.9x | 2.0x | 68.4x |
