Evolution Petroleum Corporation, Inc. CAPEX jumped on 63.7% while Revenue dropped on 31.5%
09/09/2020 • About Evolution Petroleum Corporation, Inc. (
$EPM) • By InTwits
Evolution Petroleum Corporation, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Evolution Petroleum Corporation, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 34.3%. At the same time it's a lot of higher than industry average of 26.8%.
- CAPEX is quite volatile: $11m in FY2020, $7m in FY2019, $4m in FY2018, $10m in FY2017, $21m in FY2016
- The company has potentially unprofitable business model: ROIC is 4.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 31.5%. Revenue decline showed acceleration in FY20Q4 - it was 67.7% YoY. During FY2016-FY2020 Revenue growth topped in FY2017 at 30.9% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 23.2 pp from 55.3% to 32.1% in FY2020. During FY2016-FY2020 EBITDA Margin topped in FY2019 at 55.3%.
Gross Margin dropped on 17.9 pp from 52.3% to 34.4% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2018 at 56.4% and was declining since that time. SG&A as a % of Revenue increased on 6.0 pp from 11.7% to 17.8% in FY2020.
Net Income margin dropped on 15.5 pp from 35.6% to 20.1% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 37.4% in FY2020. Evolution Petroleum Corporation, Inc.'s CAPEX/Revenue increased on 7.8 pp from 29.6% in FY2017 to 37.4% in FY2020. Average CAPEX/Revenue for the last three years was 20.7%. The company has spent a lot to CAPEX (116% of EBITDA) which didn't stop revenue from falling. During FY2016-FY2020 CAPEX as a % of Revenue bottomed in FY2018 at 9.1% and was growing since that time.
Return on investment
The company operates at low ROIC (4.2%) and ROE (7.7%). ROIC dropped on 15.5 pp from 19.6% to 4.2% in FY2020. ROE dropped on 11.8 pp from 19.5% to 7.7% in FY2020. During FY2016-FY2020 ROIC topped in FY2019 at 19.6%.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.1x and Debt / EBITDA is 0.0x. Debt jumped while cash dropped on 37.7%.
Evolution Petroleum Corporation, Inc. has no short term refinancing risk: cash is higher than short term debt (36,217.6%).
Valuation and dividends
The company's trades at EV/EBITDA 6.6x and P/E 13.9x.
Management team
The company's CEO is Jason Brown. Jason Brown has 1 year tenure with the company. Davidson Joe "David" is a the company's CFO. Davidson Joe "David" has spent 5 years at the company.
Financial and operational results
FY ended 06/30/2020
Evolution Petroleum Corporation, Inc. ($EPM) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 26.350 | 34.485 | 40.774 | 43.230 | 29.599 | -31.5% |
| Gross Profit | 12.002 | 17.870 | 22.985 | 22.608 | 10.186 | -54.9% |
| SG&A | 9.080 | 4.985 | 6.774 | 5.073 | 5.260 | 3.7% |
| EBITDA | 6.877 | 18.656 | 22.370 | 23.905 | 9.511 | -60.2% |
| Net Income | 24.660 | 8.044 | 19.619 | 15.377 | 5.937 | -61.4% |
Balance Sheet
|
|---|
| Cash | 34.077 | 23.028 | 24.930 | 31.553 | 19.663 | -37.7% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.054 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.085 | |
Cash flow
|
|---|
| Capex | 21.103 | 10.191 | 3.699 | 6.758 | 11.063 | 63.7% |
Ratios
|
|---|
| Revenue growth | -5.4% | 30.9% | 18.2% | 6.0% | -31.5% | |
| EBITDA growth | -43.9% | 171.3% | 19.9% | 6.9% | -60.2% | |
|
|---|
| Gross Margin | 45.6% | 51.8% | 56.4% | 52.3% | 34.4% | -17.9% |
| EBITDA Margin | 26.1% | 54.1% | 54.9% | 55.3% | 32.1% | -23.2% |
| SG&A, % of revenue | 34.5% | 14.5% | 16.6% | 11.7% | 17.8% | 6.0% |
| Net Income Margin | 93.6% | 23.3% | 48.1% | 35.6% | 20.1% | -15.5% |
| CAPEX, % of revenue | 80.1% | 29.6% | 9.1% | 15.6% | 37.4% | 21.7% |
|
|---|
| ROIC | 2.2% | 14.9% | 18.8% | 19.6% | 4.2% | -15.5% |
| ROE | 44.0% | 9.9% | 26.9% | 19.5% | 7.7% | -11.8% |
| Net Debt/EBITDA | -5.0x | -1.2x | -1.1x | -1.3x | -2.1x | -0.7x |
Evolution Petroleum Corporation, Inc. ($EPM) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 9 | 9 | 8 | 3 | | -25.6% | -15.1% | -18.8% | -67.7% |
| EBITDA | 5 | 4 | 2 | -1 | | -37.2% | -41.3% | -47.6% | -124.0% |
| Net Income | 3 | 2 | 4 | -2 | | -51.8% | -54.8% | 54.7% | -171.1% |
Balance Sheet
|
|---|
| Cash | 31 | 21 | 21 | 20 | | 8.9% | -30.2% | -30.0% | -37.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 50.4% | 39.3% | 31.3% | -11.4% | | -8.9% | -14.9% | -12.3% | -62.0% |
| EBITDA Margin | 51.8% | 39.7% | 30.7% | -39.4% | | -9.6% | -17.7% | -16.8% | -92.5% |
| Net Income Margin | 30.5% | 18.8% | 48.1% | -69.5% | | -16.6% | -16.5% | 22.9% | -101.1% |
Peers in Oil & Gas Exploration & Production
Below we provide Evolution Petroleum Corporation, Inc. benchmarking against other companies in Oil & Gas Exploration & Production 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Marathon Oil Corporation ($MRO) | - | 39.2% | 34.9% | -15.3% | -39.1% |
| Camber Energy, Inc. ($CEI) | - | 447.6% | 29.4% | -60.0% | -85.5% |
| |
|---|
| Median (2 companies) | - | 243.4% | 32.1% | -37.7% | -62.3% |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | - | 30.9% | 18.2% | 6.0% | -31.5% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Marathon Oil Corporation ($MRO) | 6.3% | 27.1% | 40.8% | 33.3% | 1.6% |
| Camber Energy, Inc. ($CEI) | -80.1% | -17.2% | 3.0% | -27.0% | -29.6% |
| |
|---|
| Median (2 companies) | -36.9% | 4.9% | 21.9% | 3.1% | -14.0% |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 45.6% | 51.8% | 56.4% | 52.3% | 34.4% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Marathon Oil Corporation ($MRO) | 35.7% | 44.6% | 64.2% | 59.1% | 43.9% |
| Camber Energy, Inc. ($CEI) | -2,457.0% | -1,535.3% | -250.5% | 696.1% | -1,260.8% |
| |
|---|
| Median (2 companies) | -1,210.7% | -745.3% | -93.2% | 377.6% | -608.4% |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 26.1% | 54.1% | 54.9% | 55.3% | 32.1% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Marathon Oil Corporation ($MRO) | 37.4% | 44.0% | 45.5% | 49.8% | 43.0% |
| Camber Energy, Inc. ($CEI) | 22.9% | 71.5% | 29.8% | 76.4% | 0.0% |
| |
|---|
| Median (2 companies) | 30.1% | 57.7% | 37.7% | 63.1% | 21.5% |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 80.1% | 29.6% | 9.1% | 15.6% | 37.4% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Marathon Oil Corporation ($MRO) | -3.7% | -1.7% | 8.1% | 3.1% | -5.9% |
| Camber Energy, Inc. ($CEI) | -110.4% | -372.7% | -83.6% | 227.2% | -71.8% |
| |
|---|
| Median (2 companies) | -57.0% | -187.2% | -37.7% | 115.2% | -38.8% |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | 2.2% | 14.9% | 18.8% | 19.6% | 4.2% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Marathon Oil Corporation ($MRO) | 4.2x | 2.5x | 1.0x | 1.6x | 3.5x |
| Camber Energy, Inc. ($CEI) | - | - | - | -0.4x | - |
| |
|---|
| Median (2 companies) | 4.2x | 2.5x | 1.0x | 0.6x | 3.5x |
|---|
| Evolution Petroleum Corporation, Inc. ($EPM) | -5.0x | -1.2x | -1.1x | -1.3x | -2.1x |
