Rex Energy Corp. :REXX-US: Earnings Analysis: Q1, 2017 By the Numbers : May 12, 2017

Rex Energy Corp. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of Rex Energy Corp. – Range Resources Corporation, EQT Corporation, Cabot Oil & Gas Corporation, Rice Energy Inc., Antero Resources Corporation, Eclipse Resources Corp., Vanguard Natural Resources, LLC, EV Energy Partners, L.P. and Approach Resources Inc. (RRC-US, EQT-US, COG-US, RICE-US, AR-US, ECR-US, VNRSQ-US, EVEP-US and AREX-US) that have also reported for this period.


  • Summary numbers: Revenues of USD 52.07 million, Net Earnings of USD 2.68 million.
  • Gross margins widened from -100.76% to 14.31% compared to the same period last year, operating (EBITDA) margins now 35.37% from -20.26%.
  • Year-on-year change in operating cash flow of 155.69% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

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) 52.07 48.03 34.04 31.27 30.51
Revenue Growth (%YOY) 70.69 39.1 -9.41 -31.69 -43.63
Earnings (mil) 2.68 -75.6 -16.48 -52.91 -60.14
Earnings Growth (%YOY) 104.46 22.76 87.26 65.71 -204.11
Net Margin (%) 5.15 -157.41 -48.41 -169.23 -197.14
EPS 0.02 -0.69 -0.28 0.22 -1.11
Return on Equity (%) 71.05 -700.1 -101.26 85.52 -186.67
Return on Assets (%) 1.21 -33.24 -6.85 -20.53 -22.23

Access our Ratings and Scores for Rex Energy Corp.

Market Share Versus Profits

Revenues History
Earnings History

REXX-US‘s change in revenue this period compared to the same period last year of 70.69% 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 REXX-US is holding onto its market share. Also, for comparison purposes, revenues changed by 8.42% and earnings by 103.55% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from -100.76% to 14.31% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from -20.26% to 35.37% compared to the same period last year. For comparison, gross margins were 5.43% and EBITDA margins were 28.65% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

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

REXX-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 -101.67 days from -87.29 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.

REXX-US‘s change in operating cash flow of 155.69% 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


The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -121.72% to 5.64% and (2) one-time items. The company’s pretax margins are now 5.15% compared to -190.28% for the same period last year.

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

Access our Ratings and Scores for Rex Energy Corp.

Company Profile

Rex Energy Corp. is an independent energy company, which engages in acquisition, production, exploration and development of oil, natural gas and natural gas liquids with properties concentrated in the Appalachian and Illinois regions of the United States. It operates through the Exploration and Production and Field Services segment. The Exploration and Production segment engages in the exploration, acquisition, development and production of oil, natural gas and Liquids. The Field Services segment operates and manages water sourcing, water transfer and water disposal services, primarily in the Appalachian Basin. The company was founded by Thomas C. Stabley and Benjamin W. Hurlburt in 2004 and is headquartered in State College, PA.

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