BOLT Technology - FY 2009 Results
Top line revenues down by 21% to $48.9 million for the fiscal year ended June 30, 2009. This is mainly due to the decrease in sales in two main reporting segments: seismic energy sources and seismic energy source controllers. More than $11 million decrease in sales reported in seismic energy sources segment. This is followed by air gun replacement systems segment (decreased by more than $2 million) and seismic energy source controllers segment (decreased by $0.6 million).
Only segment that witnessed growth in sales was underwater cables and connectors. Sales from this segment went up by $1.4 million, from FY’08.
However gross profit margin increased to 49% for the year, compared to 46% in 2008. This is due to the higher price level and decrease in material costs.
BOLT uses high quality steel in its manufacturing process, hence any drastic increase or decrease in prices of steel could adversely affect the profit margin of the company. Cost of sales was 51%, lowest in last five years. This somewhat helped the company to achieve the highest net profit margin of about 22% in 2009.
40% of revenues from just three major customers
Top three customers (Schlumberger (16%), Compagnie Generale (15%) and Petroleum Geo-services (9%)) constitute 40% of sales in 2009. This is a real concern for any investors, though the company was able to book orders from other clients as well.
Risk Factors
- Oil price movements affect the sales of BOLT directly; Increase in oil prices improve the marine seismic activities, which in turn increases the sales
- Global economic conditions affect the demand for oil and gas products. This in turn will have an impact on BOLT’s top line revenues
- Dependency on few major customers for major portion of revenues
- 85% of sales from outside US
Relation between Oil Price and BOLT’s Sales
There’s a correlation of more than 0.5 between the oil price and sales. This however clearly do support that BOLT’s sales don’t rely wholly on oil price movements.
International Energy Agency (IEA) recently increased its demand forecast for global oil demand in 2009 & 2010 to 84.4 mb/d and 85.7 mb/d respectively. This is strongly supported by increasing demand in North America and non-OECD Asian countries. Hence BOLT could report an increase in sales in 2010 as the projections for oil demand and price seems to be optimistic.
Strong Fundamentals
BOLT’s average return on equity (RoE) in last five years stands at a healthy 18.5% and return on assets (RoA) at 16.1% for the same period.
2005-009
RoE 18.5%
RoA 16.1%
EBIT margin 26.2%
Net profit margin 19.0%
Sales/Share ($) 4.8
Cash and cash equivalents increased by 34% Y-o-Y to $25.69 million in 2009. Moreover the company does not hold any long term liabilities.
BOLT spends an average 1% of sales on research and development activities. This helps the company to use latest technology based products to clients and also improve its manufacturing processes efficiently.
Valuation
P/E 10.17
P/B 1.60
P/S 2.18
P/CF 10.94
Market Cap ($ million) 106.60
EV ($ million) 78.87
EV/Sales 1.61
EV/EBITDA 4.84
Saturday, September 12, 2009
Monday, August 3, 2009
BOLT - Q3'09 Results Analysis & FY 2009 Sales Estimate
Q3’09 Sales Review
Sales for the third quarter ended 31 March’09, was at $12.96 million, a dip of about 18% from a year earlier. However, the gross profit margin showed an upward trend of 32.8% for the quarter. This is mainly because of reduced cost of sales and selling and other expenses. Operating margin also witnessed an increase and stood at 34%.
Net Income went down by about 12% to $3 million.
Analysis
The major contributor for the decline in sales was seismic energy systems, seismic energy controllers and air gun replacement parts, which went down by 29% in sales during the quarter.
This decrease in sales is partly offset by sales of underwater cables and connectors, which were up by 5% during the three months ended March 31, 2009.
Slowdown in global seismic exploration activity during the quarter was the reason behind the decrease in sales in seismic energy systems.
Strong Cash Position
BOLT has increased its cash and cash equivalents component by more than 100% in Q3’09. Cash and cash equivalents were at around $24 million.
The company also invested in other short term bank deposits, which helped in increasing the interest income by nearly 200% during the quarter ended March 31, 2009. Interest income during the period stood at $95,000.
R&D Expenses
The company is very keen in improving its products in the category of APG guns and SSMS. This can be inferred from the increase in R&D expenses during the quarter to $65,000, a 10% increase year-on-year.
Strong dependence on some major customers
About 62% of the company’s sales were represented by 5 major customers. This again shows the company’s strong dependence on some specified customers. Though the receivables reduced by almost 18%, dependency on some major customers is still to be considered as a ‘weak’ point for the company.
FY 2009 Sales Estimate
Based on the factors such as decreasing demand for the seismic exploration products, volatility in global oil market, decrease in number of global oil explorations (though BOLT’s positive outlook for its products and increase in R&D expenses), the sales for BOLT is expected to witness a decrease in FY 2009.
Estimate of the EPS for the fiscal year 2009 is around $1.49. Sales are expected to be in the range of $54.24 million.
Thursday, July 23, 2009
Indian Stock Market - Back on track?
Indian stock market benchmark index, Sensex, is doing better than most of the developed economies' stock markets. Sensex faced some sluggish movements after the budget, but now the market seems to be bouncing back.
There are lot of small and mid cap stocks in Sensex which are still undervalued. Here are some of the stocks that gave more than 100% returns in last six months:
1. Crompton Greaves
2. Essar Shipping
3. GVK Power
4. Ispat Industries
5. Jaiprakash Hydro
6. Steel Authority of India (SAIL)
7. Sujana Towers
8. Tanla Solutions
Stocks that are doubled or tripled in last six months:
1. Punj Lloyd (217% increase)
2. Wellspun Gujarat (311% increase)
Wellspun Gujarat - a value stock?
Wellspun Gujarat, a leading manufacturer of steel pipes in India, has announced a very attractive increase in net profit for the quarter ended June 30, 2009. Profit was up by 94% to Rs.138 crore.
Current stock price of Wellspun is around Rs.205.
Moreover Wellspun recently got an order worth Rs.960 crore. Backed by these strong fundamentals and healthy outlook for next financial year, Wellspun Gujarat' seems to be a good pick.
Sensex - Outlook
Supported by a strong Q1 results by most of the Indian companies and strong growth in FY2009-10, Sensex, is expected to be in the range of 16000-17000 in Q3 2009.
Tuesday, July 14, 2009
Sensex is bouncing back!
After some post-budget trembling, the Sensex is bouncing back today. Index is already up by 406 points, expected to close above 13,800 points. This shows that investors again put in confidence in Indian budget and its aggressive growth plans. Well, if the economy grows at more than 7%, then India will be the second fastest growing economy in the world, after China.
I would like to mention few stocks every week in this blog which has some 'value'.
Here's are the stocks to watch for this week:
1. Page Industries
2. ITC (a good stock that gives nominal returns even in bad times)
I would like to mention few stocks every week in this blog which has some 'value'.
Here's are the stocks to watch for this week:
1. Page Industries
2. ITC (a good stock that gives nominal returns even in bad times)
Monday, July 13, 2009
BOLT Technology Corp - a Undervalued Stock?
BOLT Technology Corp - a Undervalued Stock? (http://www.bolt-technology.com/)
- Low PE-G ratio 0.20 and PE multiple 4.03
- Strong fundamentals with good profit growth
- Market capitalization - $67.36 million (as of Dec 12) with no debts
Strong Fundamentals - Company’s growth
BOLT’s sales were up by almost 110% to $61.6 million in 2008 from the year 2006. Net income was $14.5 million in 2008, an increase of more than 200% for the same period.
The company has no debts, which shields BOLT from the global credit crunch. Moreover the cash & cash equivalents for the most recent quarter ended increased to $20.3 million and working capital increased to $41.5 million for the quarter ended Sep 30, 2008.
However the company reported a sales decrease of 21% in its sales for the most recent quarter ended Sep 30, 2008. This is due to decrease in sales of new air guns. The sales was dropped by 51% in this category for the period, mainly due to the uneven sales pattern for new air gun sales, which is expected to rebound in next quarters.
BOLT is optimistic about its fiscal year 2009 sales, though it believes that recent economic crisis and fall oil prices could affect the top line sales. Oil explorations by the companies may get affected due to the global economy slow down and decrease in oil demand by developed countries.
Profitability
A good Return on Equity at 26.2% for fiscal year 2008 shows the company’s good profitability. Net profit margin was 23.6% for the year 2008, a consecutive third year growth.
Valuation
The company is undervalued with a P-E multiple of 4.62 (for the market price of $7.85 on Dec 12), compared to the S&P’s 12.5. The P-B value is at 1.21 (whereas the S&P’s is at 2.8).
BOLT’s share was trading a little above the book value $6.47. The P-S ratio is at 1.09 (slightly above 1).
PE-G ratio is valued at 0.23 (much below 1), also clearly indicate that this stock is undervalued. (Assuming the earnings growth of 20.5%, average of last 3 years net earnings growth)
Factors for future growth
Global oil prices are expected to be back to the range of $50 per barrel in 2009[1]
According to World Geophysical News, the number of seismic crews in each region ranges between 11 and 68 (higher than the previous year). At least 18 new vessels are expected to be on stream during the period Q3 2007 - 2009[2]
As most of the developed economies are already declared into recession, the demand for oil from the US, UK and Japan are expected to come down in 2009-10. This could affect the sales for BOLT from these countries. However the crude oil demand from developing economies such as India and China are predicted to be robust. (BOLT’s sales from China and India were $4.3 million and $0.4 million respectively; almost 7% and 1% of total sales during the year 2008). Hence oil exploration companies may book more orders from these countries in 2009/10.
Moreover OPEC is already declared a production cut of 1.5 million barrels per day as a part of measure to help the oil prices to rebound. OPEC is expected to announce more production cuts in its December 17 meeting. This may help the oil prices to bounce back atleast in 2009. BOLT’s sales will improve once the oil prices are back at a decent level.
Countries like India and China are still expected to grow at 7-8% GDP in 2009. Global economy is also expected to stabilize in 2009/10, boosting more demand for crude oil.
Customers
A more than 50% of sales come from five major customers for BOLT. Two new customers have been added in 2008. All the major customers (such as Schlumberger Limited) are into the oil services industry. Hence once the oil prices bounce back, the top line revenues for BOLT is expected to improve drastically.
Profile
Bolt Technology is the leading energy source supplier to the marine seismic industry. The Company recently acquired A-G Geophysical Products (in 1999) and Real Time Systems (in 2007).
A-G Geophysical Products is the leading supplier of underwater cables, connectors, hydrophones and depth and pressure transducers to the marine seismic industry. Real-Time Systems develops, manufactures and sells controllers and synchronizers for air guns. The Company’s products are mostly used in offshore marine seismic surveys. BOLT started its operations in 1960.
[1] http://www.news.com.au/heraldsun/story/0,21985,24764335-664,00.html
[2] http://www.energycurrent.com/index.php?id=2&storyid=3506
- Low PE-G ratio 0.20 and PE multiple 4.03
- Strong fundamentals with good profit growth
- Market capitalization - $67.36 million (as of Dec 12) with no debts
Strong Fundamentals - Company’s growth
BOLT’s sales were up by almost 110% to $61.6 million in 2008 from the year 2006. Net income was $14.5 million in 2008, an increase of more than 200% for the same period.
The company has no debts, which shields BOLT from the global credit crunch. Moreover the cash & cash equivalents for the most recent quarter ended increased to $20.3 million and working capital increased to $41.5 million for the quarter ended Sep 30, 2008.
However the company reported a sales decrease of 21% in its sales for the most recent quarter ended Sep 30, 2008. This is due to decrease in sales of new air guns. The sales was dropped by 51% in this category for the period, mainly due to the uneven sales pattern for new air gun sales, which is expected to rebound in next quarters.
BOLT is optimistic about its fiscal year 2009 sales, though it believes that recent economic crisis and fall oil prices could affect the top line sales. Oil explorations by the companies may get affected due to the global economy slow down and decrease in oil demand by developed countries.
Profitability
A good Return on Equity at 26.2% for fiscal year 2008 shows the company’s good profitability. Net profit margin was 23.6% for the year 2008, a consecutive third year growth.
Valuation
The company is undervalued with a P-E multiple of 4.62 (for the market price of $7.85 on Dec 12), compared to the S&P’s 12.5. The P-B value is at 1.21 (whereas the S&P’s is at 2.8).
BOLT’s share was trading a little above the book value $6.47. The P-S ratio is at 1.09 (slightly above 1).
PE-G ratio is valued at 0.23 (much below 1), also clearly indicate that this stock is undervalued. (Assuming the earnings growth of 20.5%, average of last 3 years net earnings growth)
Factors for future growth
Global oil prices are expected to be back to the range of $50 per barrel in 2009[1]
According to World Geophysical News, the number of seismic crews in each region ranges between 11 and 68 (higher than the previous year). At least 18 new vessels are expected to be on stream during the period Q3 2007 - 2009[2]
As most of the developed economies are already declared into recession, the demand for oil from the US, UK and Japan are expected to come down in 2009-10. This could affect the sales for BOLT from these countries. However the crude oil demand from developing economies such as India and China are predicted to be robust. (BOLT’s sales from China and India were $4.3 million and $0.4 million respectively; almost 7% and 1% of total sales during the year 2008). Hence oil exploration companies may book more orders from these countries in 2009/10.
Moreover OPEC is already declared a production cut of 1.5 million barrels per day as a part of measure to help the oil prices to rebound. OPEC is expected to announce more production cuts in its December 17 meeting. This may help the oil prices to bounce back atleast in 2009. BOLT’s sales will improve once the oil prices are back at a decent level.
Countries like India and China are still expected to grow at 7-8% GDP in 2009. Global economy is also expected to stabilize in 2009/10, boosting more demand for crude oil.
Customers
A more than 50% of sales come from five major customers for BOLT. Two new customers have been added in 2008. All the major customers (such as Schlumberger Limited) are into the oil services industry. Hence once the oil prices bounce back, the top line revenues for BOLT is expected to improve drastically.
Profile
Bolt Technology is the leading energy source supplier to the marine seismic industry. The Company recently acquired A-G Geophysical Products (in 1999) and Real Time Systems (in 2007).
A-G Geophysical Products is the leading supplier of underwater cables, connectors, hydrophones and depth and pressure transducers to the marine seismic industry. Real-Time Systems develops, manufactures and sells controllers and synchronizers for air guns. The Company’s products are mostly used in offshore marine seismic surveys. BOLT started its operations in 1960.
[1] http://www.news.com.au/heraldsun/story/0,21985,24764335-664,00.html
[2] http://www.energycurrent.com/index.php?id=2&storyid=3506
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