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$BOLT Bolt Technology: Focusing on US Sales Drive this Small Cap Up

As the U.S. is focusing on reducing its dependence on others for oil and gas, this has created significant opportunities within the U.S. for companies in the Oil & Gas Equipment & Services Industry. With the U.S. focusing on domestic oil and gas, the International Energy Agency (IEA) is forecasting the U.S. to become the world’s largest oil producer by 2020. The above factors should give the oil and gas equipment industry a boost and one company situated in this sector with strong fundamentals is Bolt Technology Corporation (BOLT).

Bolt Technology manufactures and sells marine seismic data acquisition equipment and underwater robotic vehicles.

Even though Bolt Technology operates internationally, over the past three of years Bolt Technology has focused on increasing it’s U.S. sales. Since 2010, Bolt Technology’s sales in the U.S. have gone from $6.781 million to $16.930 million in 2012. In 2010 the U.S. market represented 21.54% of the company’s sales while in 2012 the U.S. market represented to 32.18% of the company’s overall sales. This equaled a $10.149 million dollar increase in sales from the U.S. market.

In the article below, I will look at Bolt Technology’s past three year profitability, debt and capital, and operating efficiency. Based on this information, we will get to see the company’s sales, returns, margins, liabilities, assets, returns and turnovers. As the article below is over the same three year time period as the information above, we will get to see the impact that the increased U.S. market has had on the Bolt Technology.

All numbers sourced from Company Webpage and Morningstar.

Profitability

Profitability is a class of financial metrics used to assess a business’s ability to generate earnings compared with expenses and other relevant costs incurred during a specific period of time. In this section, we will look at four tests of profitability. They are: net Income, operating cash flow, return on assets, and quality of earnings. From these four metrics, we will establish if the company is making money, and gauge the quality of the reported profits.

  • Net Income 2010 = $4.954 million.
  • Net Income 2011 = $5.527 million.
  • Net Income 2012 = $1.982 million.

Over the past three years Bolt Technology’s net profits have decreased from $4.954 million in 2010 to $1.982 million in 2012. The earnings decrease was due to “the special charge on June 30, 2012 to reflect
additional estimated contingent earnout payments related to the SeaBotix acquisition.” The special charge was $4.500 million. Without the special charge, the company would have a net income of $6.482 million. This is an increase of 30.84% over 2010.

Operating cash flow is the cash generated from the operations of a company, generally defined as revenue less all operating expenses, but calculated through a series of adjustments to net income.

  • Operating Cash Flow 2010 = $7.304 million.
  • Operating Cash Flow 2011 = $7.975 million.
  • Operating Cash Flow 2012 = $9.377 million. (before adjustment
    of contingent earnout)

Over the past three years, the company’s operating cash flow has increased based on the operating cash flow before the adjustment
of contingent earnout. Bolt Technology’s operating cash before the earnings adjustment has increased by 28.38%.

ROA – Return On Assets = Net Income/Total Assets

ROA is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company’s net income by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as “return on investment.”

  • Net income growth
    • Net Income 2010 = $4.954 million.
    • Net Income 2011 = $5.527 million.
    • Net Income 2012 = $6.482 million. (before adjustment
      of contingent earnout)
  • Total asset growth
    • Total Assets 2010 = $74.821 million.
    • Total Assets 2011 = $87.740 million.
    • Total Assets 2012 = $82.714 million.
  • ROA – Return on assets
    • Return On Assets 2010 = 6.62%.
    • Return On Assets 2011 = 6.30%.
    • Return On Assets 2012 = 7.84%.

Over the past three years, Bolt Technology’s ROA has increased from 6.61% in 2010 to 7.84% in 2012. This indicates that the company is making more money on its assets than it did in 2010.

Quality Of Earnings

Quality of Earnings is the amount o