Eurasia Drilling Co Ltd reports 65.4% Net Income decline and 40.9% Revenue decline
15 Apr 2016 • About Eurasia Drilling Co Ltd (
$EDCL) • By InTwits
Eurasia Drilling Co Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Eurasia Drilling Co Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.0%. At the same time it's a lot of higher than industry average of 9.0%.
- CAPEX is quite volatile: 84 in FY2015, 0 in FY2014, 47 in FY2013, 154 in FY2012, 387 in FY2011
- The company has business model with low profitability: ROIC is at 9.0%
- It operates with high leverage: Net Debt/EBITDA is 2.8x while industry average is 2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Eurasia Drilling Co Ltd ($EDCL) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,767 | 3,237 | 3,478 | 2,975 | 1,758 | -40.9% |
| Gross Profit | 860 | 1,086 | 856 | 723 | 392 | -45.8% |
| SG&A | 145 | 161 | 187 | 168 | 120 | -28.5% |
| EBITDA | 594 | 795 | 890 | 833 | 381 | -54.2% |
| Net Income | 283 | 382 | 432 | 421 | 145 | -65.4% |
Balance Sheet
|
|---|
| Cash | 510 | 305 | 778 | 327 | 259 | -20.8% |
| Short Term Debt | 175 | 258 | 104 | 126 | 279 | 120.3% |
| Long Term Debt | 578 | 442 | 964 | 907 | 1,037 | 14.4% |
Cash flow
|
|---|
| Capex | 418 | 616 | 553 | 530 | 216 | -59.3% |
Ratios
|
|---|
| Revenue growth | 52.7% | 17.0% | 7.4% | -14.5% | -40.9% | |
| EBITDA growth | 36.2% | 33.8% | 12.0% | -6.5% | -54.2% | |
| Gross Margin | 31.1% | 33.5% | 24.6% | 24.3% | 22.3% | -2.0% |
| EBITDA Margin | 21.5% | 24.6% | 25.6% | 28.0% | 21.7% | -6.3% |
| Net Income Margin | 10.2% | 11.8% | 12.4% | 14.1% | 8.3% | -5.9% |
| SG&A, % of revenue | 5.2% | 5.0% | 5.4% | 5.7% | 6.8% | 1.2% |
| CAPEX, % of revenue | 15.1% | 19.0% | 15.9% | 17.8% | 12.3% | -5.5% |
| ROIC | 20.3% | 23.8% | 22.8% | 20.9% | 9.0% | -11.9% |
| ROE | 22.8% | 25.8% | 24.8% | 28.0% | 16.8% | -11.2% |
| Net Debt/EBITDA | 0.4x | 0.5x | 0.3x | 0.8x | 2.8x | 1.9x |
Revenue and profitability
Eurasia Drilling Co Ltd's Revenue dropped on 40.9% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 6.3 pp from 28.0% to 21.7% in FY2015.
Gross Margin decreased on 2.0 pp from 24.3% to 22.3% in FY2015. SG&A as a % of Revenue increased slightly on 1.2 pp from 5.7% to 6.8% in FY2015.
Net Income marign decreased on 5.9 pp from 14.1% to 8.3% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Eurasia Drilling Co Ltd's CAPEX/Revenue was 12.3% in FY2015. The company showed decline in CAPEX/Revenue of 6.8 pp from 19.0% in FY2012 to 12.3% in FY2015. It's average level of CAPEX/Revenue for the last three years was 15.3%.Eurasia Drilling Co Ltd invested a big chunk of EBITDA (56.7%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at good ROE (16.83%) while ROIC is low (9.04%). ROIC dropped on 11.9 pp from 20.9% to 9.0% in FY2015. ROE dropped on 11.2 pp from 28.0% to 16.8% in FY2015.
Leverage (Debt)
Debt level is 2.8x Net Debt / EBITDA and 3.5x Debt / EBITDA. Net Debt / EBITDA surged on 1.9x from 0.8x to 2.8x in FY2015. Debt jumped on 27.4% in FY2015 while cash dropped on 20.8% in FY2015.
Appendix 1: Peers in Oil Equipment, Services & Distribution
Below we provide Eurasia Drilling Co Ltd benchmarking against other companies in Oil Equipment, Services & Distribution 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 |
|---|
| Wood Group(John) ($WG.) | | 8.0% | -6.0% | 14.3% | -23.9% |
| Schlumberger ($SCL) | | 12.9% | 8.5% | 7.3% | -27.0% |
| Greka Drilling Ltd ($GDL) | 80.3% | 39.0% | -49.9% | -20.0% | |
| Mycelx Technologies Corp ($MYX) | 45.4% | 96.5% | 73.9% | -36.5% | |
| Thalassa Hldgs Ltd ($THAL) | | 476.9% | 118.1% | -49.2% | 21.6% |
| |
|---|
| Median (5 companies) | 62.9% | 39.0% | 8.5% | -20.0% | -23.9% |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | | 17.0% | 7.4% | -14.5% | -40.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mycelx Technologies Corp ($MYX) | 46.9% | 53.3% | 56.9% | 52.3% | |
| Thalassa Hldgs Ltd ($THAL) | 98.7% | 35.3% | 30.4% | 42.6% | 50.1% |
| Greka Drilling Ltd ($GDL) | 21.9% | 20.5% | 28.4% | 25.7% | |
| Schlumberger ($SCL) | 21.7% | 21.2% | 21.9% | 23.0% | 20.2% |
| Wood Group(John) ($WG.) | 16.8% | 16.3% | 16.5% | 15.4% | 16.3% |
| |
|---|
| Median (5 companies) | 21.9% | 21.2% | 28.4% | 25.7% | 20.2% |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 31.1% | 33.5% | 24.6% | 24.3% | 22.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Schlumberger ($SCL) | 26.2% | 25.5% | 28.3% | 24.3% | 19.9% |
| Wood Group(John) ($WG.) | 4.1% | 7.6% | 8.9% | 9.4% | 5.8% |
| Greka Drilling Ltd ($GDL) | 16.0% | 22.5% | 17.8% | 7.3% | |
| Thalassa Hldgs Ltd ($THAL) | | 13.2% | 16.1% | 4.3% | -9.2% |
| Mycelx Technologies Corp ($MYX) | -40.2% | -9.7% | 11.0% | -30.3% | |
| |
|---|
| Median (5 companies) | 10.0% | 13.2% | 16.1% | 7.3% | 5.8% |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 21.5% | 24.6% | 25.6% | 28.0% | 21.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Thalassa Hldgs Ltd ($THAL) | 7.4% | 10.0% | 3.1% | 63.9% | 6.6% |
| Mycelx Technologies Corp ($MYX) | 13.3% | 25.3% | 35.7% | 22.3% | |
| Schlumberger ($SCL) | 10.8% | 11.2% | 8.7% | 8.2% | 6.8% |
| Greka Drilling Ltd ($GDL) | 65.4% | 56.8% | 2.5% | 5.1% | |
| Wood Group(John) ($WG.) | 1.3% | 1.1% | 1.5% | 0.9% | 0.7% |
| |
|---|
| Median (5 companies) | 10.8% | 11.2% | 3.1% | 8.2% | 6.6% |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 15.1% | 19.0% | 15.9% | 17.8% | 12.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wood Group(John) ($WG.) | 5.7% | 14.0% | 13.3% | 16.0% | 4.5% |
| Schlumberger ($SCL) | 15.3% | 15.7% | 17.3% | 14.3% | 5.4% |
| Thalassa Hldgs Ltd ($THAL) | 4.1% | 13.4% | 13.8% | -2.4% | -12.0% |
| Greka Drilling Ltd ($GDL) | 10.5% | 5.2% | -0.3% | -2.9% | |
| Mycelx Technologies Corp ($MYX) | -27.9% | -9.4% | 7.3% | -19.3% | |
| |
|---|
| Median (5 companies) | 5.7% | 13.4% | 13.3% | -2.4% | 4.5% |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 20.3% | 23.8% | 22.8% | 20.9% | 9.0% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Greka Drilling Ltd ($GDL) | -0.7x | 0.6x | 1.9x | 2.2x | |
| Schlumberger ($SCL) | 0.8x | 0.9x | 0.8x | 0.9x | 2.3x |
| Wood Group(John) ($WG.) | 0.0x | 0.3x | 0.6x | 0.6x | 1.1x |
| Thalassa Hldgs Ltd ($THAL) | | -1.3x | -6.5x | -26.5x | |
| |
|---|
| Median (4 companies) | 0.0x | 0.5x | 0.8x | 0.7x | 1.7x |
|---|
| Eurasia Drilling Co Ltd ($EDCL) | 0.4x | 0.5x | 0.3x | 0.8x | 2.8x |
