Odyssey Marine Exploration, Inc. :OMEX-US: Earnings Analysis: Q1, 2017 By the Numbers : May 12, 2017

Odyssey Marine Exploration, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Odyssey Marine Exploration, Inc. – BuildABear Workshop, Inc., Intrexon Corporation and ICF International, Inc. (BBW-US, XON-US and ICFI-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 0.65 million, Net Earnings of USD -2.20 million.
  • Year-on-year change in operating cash flow of 54.43% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings declined although operating margins improved from -686.35% to -351.60%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 0.65 0 2.88 1.22 0.58
Revenue Growth (%YOY) 11.48 -100 97.66 174.45 405.22
Earnings (mil) -2.2 -2.41 -2.13 -1.86 0.08
Earnings Growth (%YOY) -2698.25 -208.84 53.45 69.66 100.87
Net Margin (%) -338.69 N/A -73.96 -152.69 14.53
EPS -0.28 -0.31 -0.28 -0.25 0.01
Return on Equity (%) N/A N/A N/A N/A N/A
Return on Assets (%) -194.15 -195.3 -147.1 -105.81 4.78

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Market Share Versus Profits

Revenues History
Earnings History

OMEX-US‘s change in revenue this period compared to the same period last year of 11.48% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that OMEX-US is holding onto its market share. Also, for comparison purposes, revenues changed by 0% and earnings by 8.73% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

OMEX-US‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to -3,547.22 days from -3,132.78 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

OMEX-US‘s change in operating cash flow of 54.43% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

Despite an overall improvement in operating (EBIT) margins, the company’s earnings fell. EBIT margins went from -686.35% to -351.60%. The decline in earnings appears to be largely because of one-time items. Pretax margins declined from -105.14% to -455.58%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

Odyssey Marine Exploration, Inc. is engaged in deep-ocean exploration using innovative methods and state of-the-art technology for shipwreck projects and mineral exploration. It has a majority ownership stake in Oceanica Resources S. de. R.L. and minority ownership stakes in Neptune Minerals, Inc. and Chatham Rock Phosphate, Ltd. all companies controlling exclusive mineral licenses for areas believed to contain high-value ocean floor mineral deposits. The company also provides contracting services, including proprietary deep-ocean expertise and equipment, to governments and companies around the world. Odyssey Marine Exploration was founded by Gregory P. Stemm and John C. Morris in 1994 and is headquartered in Tampa, FL.

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