The Awilco Drilling thesis has been generating some buzz, at least among the small contingent of value investors who can’t help but keep buying into obscure and illiquid companies. There’s a spirited debate going on over at the Corner of Berkshire and Fairfax forum and Alpha Vulture did a write up that is much more detailed than mine. I highly recommend reading it.
Amidst all the bluster, Awilco released stellar first quarter earnings.
- Revenue of $53.4 million, up 1.1% from the previous quarter.
- EBITDA of $33.9 million, up 4.0%.
- Net income of $24.7 million, up 7.9%. EPS was $0.82.
- Revenue efficiency (revenue achieved vs. maximum revenue potential) was 91.2%, down slightly due to poor weather and a stoppage for minor repairs on WilHunter.
- Net debt of $66.4 million, down substantially from last quarter’s $97.7 million.
Even better, Awilco’s management followed through on its intentions and declared a $1.00 quarterly dividend! If this quarterly dividend can be maintained (and perhaps it can, given rate increases on the horizon) then investors are looking at an incredible yield. Shares are up 10% since my original write up, but the potential yield is still in excess of 20%.
This might be the shortest post in my blog’s history, but it’s also probably the shortest I’ve ever had to wait to see an investment thesis confirmed. That’s not to say Awilco’s current successes will continue forever, but for now favorable economic conditions, the company’s great execution and the generous dividend could continue to drive shares higher.
I have a position in Awilco Drilling.