Superior Drilling Products, Inc. :SDPI-US: Earnings Analysis: Q4, 2016 By the Numbers : April 4, 2017

Superior Drilling Products, Inc. reports financial results for the quarter ended December 31, 2016.

Highlights

  • Summary numbers: Revenues of USD 2.33 million, Net Earnings of USD -2.61 million.
  • Gross margins widened from -5.57% to 19.93% compared to the same period last year, operating (EBITDA) margins now -10.70% from -6.11%.
  • Change in operating cash flow of -1,045.81% compared to same period last year is about the same as 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:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 2.33 2.26 1.11 1.44 2.73
Revenue Growth (%YOY) -14.64 -25.07 -61.32 -64.55 -55.11
Earnings (mil) -2.61 -1.17 -3.1 -2.24 -9.24
Earnings Growth (%YOY) 71.7 39.52 -38.6 -114.99 -6061.85
Net Margin (%) -112.07 -51.89 -278.04 -155.23 -338
EPS -0.11 -0.07 -0.18 -0.13 -0.53
Return on Equity (%) -69.1 -34.13 -97.6 -59.08 -178.23
Return on Assets (%) -29.07 -12.91 -35.38 -23.91 -84.61

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, SDPI-US‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if SDPI-US‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by 3.16% and earnings by -122.78% compared to the previous period.

Earnings Growth Analysis

The company’s earnings growth has been influenced by the year-on-year improvement in gross margins from -5.57% to 19.93%. However the company’s overhead costs have prevented it from fully capitalizing on these gross margin improvements. In fact, the company’s operating margins (EBITDA margins) showed no improvement over the same period last year.

Cash Versus Earnings – Sustainable Performance?

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

SDPI-US‘s year-on-year change in operating cash flow of -1,045.81% is around its change in earnings. This suggests that there are likely no significant movement in accruals or reserves for managing earnings this period.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -53.41% to -49.80% and (2) one-time items. The company’s pretax margins are now -112.07% compared to -347.38% for the same period last year.

EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Superior Drilling Products, Inc.

Company Profile

Superior Drilling Products, Inc. a drilling and completion tool technology company, engages in the manufacture, repair, sale, and rental of drilling tools. It operates four lines of business: PDC Drill Bit, Drill N Ream Tool, Emerging Technologies and New Product Development. The PDC Drill Bit business offers remanufacturing service exclusively for Baker Hughes. The Drill N Ream Tool business serves as drilling tool marketing and distribution arm. The Emerging Technologies business manufactures the Drill N Ream tool, new drill bits, custom drill tool products to customer specifications, and innovative pending drill string enhancement tools. The New product Development business conducts research and development, and designs new drill bits, horizontal drill string enhancement tools, other down-hole drilling technologies, and drilling tool manufacturing technologies. The company was founded by Annette Deuel Meier and Gilbert Troy Meier on December 10, 2013 and is headquartered in Vernal, UT.

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