Precision Drilling Corp EBITDA jumped on 828% in 2016 while Revenue dropped on 38.8%
09.02.2017 • About Precision Drilling Corp (
$PD) • By InTwits
Precision Drilling Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Precision Drilling Corp is a company in decline: 2016 revenue growth was -38.8%, 5 years revenue CAGR was -13.4%
- EBITDA Margin is quite volatile: 24.8% in 2016, 1.6% in 2015, 28.7% in 2014, 31.5% in 2013, 23.4% in 2012
- Precision Drilling Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 31.3%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 203 in 2016, 459 in 2015, 857 in 2014, 536 in 2013, 868 in 2012
- The company has unprofitable business model: ROIC is at -3.6%
- It operates with high leverage: Net Debt/EBITDA is 7.6x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Precision Drilling Corp ($PD) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,041 | 2,030 | 2,351 | 1,556 | 951 | -38.8% |
| Gross Profit | 797 | 781 | 945 | 621 | 344 | -44.6% |
| SG&A | 127 | 143 | 144 | 126 | 110 | -12.8% |
| EBITDA | 478 | 639 | 674 | 25 | 236 | 828.2% |
| Net Income | 52 | 191 | 33 | -363 | -156 | |
Balance Sheet
|
|---|
| Cash | 153 | 81 | 491 | 445 | 116 | -74.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 1,219 | 1,323 | 1,852 | 2,181 | 1,907 | -12.5% |
Cash flow
|
|---|
| Capex | 868 | 536 | 857 | 459 | 203 | -55.6% |
Ratios
|
|---|
| Revenue growth | 4.6% | -0.5% | 15.8% | -33.8% | -38.8% | |
| EBITDA growth | -17.6% | 33.6% | 5.5% | -96.2% | 828.2% | |
| Gross Margin | 39.1% | 38.5% | 40.2% | 39.9% | 36.2% | -3.7% |
| EBITDA Margin | 23.4% | 31.5% | 28.7% | 1.6% | 24.8% | 23.1% |
| Net Income Margin | 2.6% | 9.4% | 1.4% | -23.4% | -16.3% | 7.0% |
| SG&A, % of revenue | 6.2% | 7.0% | 6.1% | 8.1% | 11.6% | 3.5% |
| CAPEX, % of revenue | 42.5% | 26.4% | 36.4% | 29.5% | 21.4% | -8.1% |
| ROIC | 4.3% | 7.5% | 5.0% | -9.8% | -3.6% | 6.2% |
| ROE | 2.4% | 8.4% | 1.4% | -15.9% | -7.6% | 8.3% |
| Net Debt/EBITDA | 2.2x | 1.9x | 2.0x | 68.4x | 7.6x | -60.8x |
Precision Drilling Corp ($PD) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 302 | 164 | 202 | 284 | -41.1% | -51.0% | -44.6% | -17.7% |
| EBITDA | 99 | 22 | 41 | 73 | -39.2% | -74.6% | 31.6% | |
| Net Income | -20 | -58 | -47 | -31 | -182.7% | | | |
Balance Sheet
|
|---|
| Cash | 476 | 456 | 352 | 116 | 6.0% | 5.1% | -19.8% | -74.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 2,043 | 2,049 | 2,005 | 1,907 | 1.6% | 3.5% | -5.2% | -12.5% |
Ratios
|
|---|
| Gross Margin | 43.3% | 32.4% | 31.6% | 34.0% | 1.9% | -4.5% | -6.3% | -8.8% |
| EBITDA Margin | 32.9% | 13.7% | 20.5% | 25.6% | 1.0% | -12.8% | 11.9% | 100.3% |
| Net Income Margin | -6.6% | -35.2% | -23.5% | -10.8% | -11.3% | -26.3% | 0.3% | 67.8% |
Revenue and profitability
Precision Drilling Corp's Revenue dropped on 38.8%. Annual revenue decline showed slowdown in 16Q4 - revenue dropped on 17.7%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 23.1 pp from 1.6% to 24.8% in 2016.
Gross Margin decreased on 3.7 pp from 39.9% to 36.2% in 2016. SG&A as a % of Revenue increased on 3.5 pp from 8.1% to 11.6% in 2016.
Net Income marign increased on 7.0 pp from -23.4% to -16.3% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 21.4% in 2016. CAPEX/Revenue decreased on 5.0 pp from 26.4% in 2013 to 21.4% in 2016. It's average level of CAPEX/Revenue for the last three years was 29.1%.Battling declining revenue the company invested a large share of EBITDA (86.3%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-3.60%) and ROE (-7.62%). ROIC increased on 6.2 pp from -9.8% to -3.6% in 2016. ROE increased on 8.3 pp from -15.9% to -7.6% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 7.6x and Debt / EBITDA is 8.1x. Net Debt / EBITDA dropped on 60.8x from 68.4x to 7.6x in 2016. Debt dropped on 12.5% while cash dropped on 74.0%.
Management team
Kevin A Neveu is a Precision Drilling Corp's CEO. Kevin A Neveu is a founder and has spent 11 years at the company. The company's CFO Carey Ford has spent 2 years 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | -18.4% | 141.2% |
| Seven Generations Energy Ltd ($VII) | | 115.7% | 340.2% | 39.0% | 94.4% |
| Athabasca Oil Corp ($ATH) | | 342.7% | 5.5% | -22.9% | 73.1% |
| Painted Pony Petroleum Ltd ($PPY) | | 41.3% | 56.0% | -42.5% | 60.7% |
| ONEnergy Inc ($OEG) | | | 6,002.6% | 231.5% | 57.4% |
| |
|---|
| Median (116 companies) | | 16.2% | 17.0% | -27.7% | -18.0% |
|---|
| Precision Drilling Corp ($PD) | | -0.5% | 15.8% | -33.8% | -38.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($BOE) | 77.1% | 43.3% | -34.3% | 121.1% | |
| TransAlta Renewables Inc ($RNW) | | 94.4% | 94.5% | 94.5% | 91.1% |
| Serinus Energy Inc ($SEN) | 80.5% | 76.5% | 86.8% | 88.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% |
| Polaris Infrastructure Inc ($PIF) | 39.9% | 33.6% | 32.0% | 86.7% | 88.6% |
| |
|---|
| Median (114 companies) | 32.0% | 32.1% | 32.2% | 33.6% | 31.5% |
|---|
| Precision Drilling Corp ($PD) | 39.1% | 38.5% | 40.2% | 39.9% | 36.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($GXO) | 59.4% | 64.5% | 70.8% | 201.9% | |
| Perpetual Energy Inc ($PMT) | 35.5% | 70.7% | 58.0% | 110.3% | |
| Petro Rio SA ($PRJ) | -4,809.7% | -6,899.7% | 28.2% | 90.7% | |
| Peyto Exploration & Development Corp ($PEY) | 86.1% | 83.2% | 86.3% | 84.6% | 80.7% |
| Innergex Renewable Energy Inc ($INE) | 111.8% | 110.0% | 82.9% | 83.4% | 83.5% |
| |
|---|
| Median (128 companies) | 25.9% | 35.7% | 28.9% | 9.0% | 29.2% |
|---|
| Precision Drilling Corp ($PD) | 23.4% | 31.5% | 28.7% | 1.6% | 24.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | 1,997.8% | 712.8% | |
| WesternZagros Resources Ltd ($WZR) | | | | 385.6% | |
| Athabasca Oil Corp ($ATH) | 2,426.4% | 596.6% | 504.7% | 315.2% | 83.7% |
| TORC Oil & Gas Ltd ($TOG) | 453.8% | 466.9% | 104.5% | 229.4% | 76.3% |
| Seven Generations Energy Ltd ($VII) | 452.8% | 513.1% | 227.4% | 191.2% | 73.5% |
| |
|---|
| Median (129 companies) | 43.5% | 39.2% | 45.6% | 27.6% | 23.8% |
|---|
| Precision Drilling Corp ($PD) | 42.5% | 26.4% | 36.4% | 29.5% | 21.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($ERF) | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% |
| Whitecap Resources Inc ($WCP) | 7.1% | 8.1% | 9.6% | -10.6% | 10.1% |
| Ecopetrol SA ($ECP) | 29.3% | 24.4% | 16.5% | 3.0% | 9.6% |
| Parkland Fuel Corp ($PKI) | 22.3% | 23.3% | 9.9% | 7.8% | 8.6% |
| Inter Pipeline Ltd ($IPL) | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% |
| |
|---|
| Median (128 companies) | 3.6% | 5.4% | 5.7% | -8.2% | -1.9% |
|---|
| Precision Drilling Corp ($PD) | 4.3% | 7.5% | 5.0% | -9.8% | -3.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($PXX) | -0.2x | -0.1x | 0.2x | 3,726.1x | -0.2x |
| Paramount Resources Ltd ($POU) | 14.6x | 23.9x | 8.9x | 421.5x | -5.8x |
| Trican Well Service Ltd ($TCW) | 2.5x | 3.4x | 2.9x | 31.4x | |
| Trilogy Energy Corp ($TET) | 2.6x | 1.8x | 2.3x | 25.5x | 7.3x |
| TransCanada Corp ($TRP) | 5.5x | 5.7x | 5.7x | 22.1x | 9.6x |
| |
|---|
| Median (78 companies) | 1.5x | 1.4x | 1.4x | 2.6x | 2.6x |
|---|
| Precision Drilling Corp ($PD) | 2.2x | 1.9x | 2.0x | 68.4x | 7.6x |
