Berry Corporation (BRY) Bundle
Understanding Berry Corporation (BRY) Revenue Streams
Understanding Berry Corporation’s Revenue Streams
The revenue of the company is derived from several key sources, primarily focusing on the sales of oil, natural gas, natural gas liquids (NGL), and well services.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | 9M 2024 (in thousands) | 9M 2023 (in thousands) |
|---|---|---|---|---|
| Oil Sales | $151,735 | $168,491 | $480,953 | $475,138 |
| Natural Gas Sales | $1,751 | $3,130 | $5,910 | $19,083 |
| Natural Gas Liquids Sales | $952 | $990 | $2,674 | $2,450 |
| Service Revenue | $25,465 | $45,511 | $88,303 | $137,808 |
| Electricity Sales | $4,410 | $3,849 | $12,344 | $12,372 |
| Other Revenues | $37 | $113 | $140 | $194 |
Year-over-Year Revenue Growth Rate
The company experienced a decline in total revenues in Q3 2024 compared to Q3 2023, with total revenues falling from $222,084 thousand to $184,350 thousand, marking a decrease of approximately 17%.
For the nine months ending September 30, 2024, total revenues were $590,324 thousand, down from $647,045 thousand in 2023, reflecting a decrease of about 9%.
Contribution of Different Business Segments to Overall Revenue
The exploration and production (E&P) segment contributed significantly to the overall revenue. In Q3 2024, the E&P segment generated $158,886 thousand, while well servicing and abandonment generated $30,836 thousand. This indicates that the E&P segment accounts for about 86% of total revenue in that quarter.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include a significant drop in service revenue, which decreased by 44% in Q3 2024 compared to Q3 2023, attributed to lower activity and rates in the well servicing segment. Additionally, oil sales decreased by 11% in the same period, primarily due to a decline in oil prices and volumes sold.
The electricity sales showed slight improvement, increasing from $3,849 thousand in Q3 2023 to $4,410 thousand in Q3 2024, driven by higher prices compared to the previous year.
A Deep Dive into Berry Corporation (BRY) Profitability
Profitability Metrics
Analyzing the profitability metrics of the company provides essential insights into its financial health and operational efficiency. The key metrics include gross profit margin, operating profit margin, and net profit margin, which are indicative of the company's ability to generate profit relative to its revenue.
Gross Profit Margin
For the nine months ended September 30, 2024, the gross profit margin was calculated as follows:
| Period | Revenue (in thousands) | Cost of Goods Sold (COGS) (in thousands) | Gross Profit (in thousands) | Gross Profit Margin (%) |
|---|---|---|---|---|
| 2024 | $590,324 | $532,242 | $58,082 | 9.83% |
| 2023 | $647,045 | $609,965 | $37,080 | 5.73% |
Operating Profit Margin
The operating profit margin reflects the efficiency of the company in managing its operational expenses. The operating profit for the nine months ended September 30, 2024, was:
| Period | Operating Income (in thousands) | Revenue (in thousands) | Operating Profit Margin (%) |
|---|---|---|---|
| 2024 | $28,216 | $590,324 | 4.78% |
| 2023 | $(32,791) | $647,045 | -5.07% |
Net Profit Margin
The net profit margin is a critical indicator of overall profitability after all expenses and taxes. For the nine months ended September 30, 2024, the net profit margin was:
| Period | Net Income (in thousands) | Revenue (in thousands) | Net Profit Margin (%) |
|---|---|---|---|
| 2024 | $21,010 | $590,324 | 3.56% |
| 2023 | $(25,151) | $647,045 | -3.89% |
Trends in Profitability Over Time
Over the past year, there has been a noticeable improvement in the profitability metrics:
- Gross Profit Margin: Increased from 5.73% in 2023 to 9.83% in 2024.
- Operating Profit Margin: Shifted from -5.07% in 2023 to 4.78% in 2024.
- Net Profit Margin: Improved from -3.89% in 2023 to 3.56% in 2024.
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios can be compared with industry averages to gauge performance:
| Metric | Company (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 9.83% | 10.50% |
| Operating Profit Margin | 4.78% | 5.00% |
| Net Profit Margin | 3.56% | 4.00% |
Analysis of Operational Efficiency
Operational efficiency can be assessed through cost management and gross margin trends:
- Cost Management: Total expenses decreased from $609,965 thousand in 2023 to $532,242 thousand in 2024.
- Gross Margin Trends: The gross profit improved significantly, reflecting better management of production costs.
Debt vs. Equity: How Berry Corporation (BRY) Finances Its Growth
Debt vs. Equity: How Berry Corporation Finances Its Growth
As of September 30, 2024, Berry Corporation reported a long-term debt of $398 million and a current portion of long-term debt amounting to $27.5 million. This indicates a total debt of $425.5 million .
The debt-to-equity ratio stands at 0.54 as of September 30, 2024, calculated by dividing total debt ($425.5 million) by total stockholders' equity of $732.2 million . This ratio is below the industry average of approximately 0.75, suggesting a relatively conservative approach to leveraging compared to its peers in the energy sector.
Recent debt issuances include borrowings under the 2021 RBL credit facility of $502.5 million and repayments of $506 million . The company’s credit ratings reflect this financial strategy, with the 2026 Notes valued at approximately $388 million .
Berry Corporation has actively balanced debt financing with equity funding. In 2024, the company declared dividends totaling $46.7 million and has maintained a stock repurchase program, cumulatively repurchasing shares worth approximately $114 million . This strategy illustrates a commitment to returning value to shareholders while managing debt levels effectively.
| Financial Metric | Amount (in millions) |
|---|---|
| Long-term Debt | $398 |
| Current Portion of Long-term Debt | $27.5 |
| Total Debt | $425.5 |
| Total Stockholders' Equity | $732.2 |
| Debt-to-Equity Ratio | 0.54 |
| Dividends Declared in 2024 | $46.7 |
| Share Repurchases (Cumulative) | $114 |
| Credit Rating of 2026 Notes | $388 |
This comprehensive analysis of Berry Corporation's debt and equity structure provides key insights into its financial health and strategies for growth financing.
Assessing Berry Corporation (BRY) Liquidity
Assessing Berry Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated at 1.31, indicating that current assets covered current liabilities adequately.
Quick Ratio: The quick ratio stood at 0.72, suggesting some potential liquidity concerns as it is below the ideal threshold of 1.0.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was $9.3 million, a decrease from $23.1 million at December 31, 2023. This decline reflects increased current liabilities due to recent borrowings.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets | $124.6 million | $136.7 million |
| Current Liabilities | $115.3 million | $113.6 million |
| Working Capital | $9.3 million | $23.1 million |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flow from operating activities totaled $168.9 million, an increase from $119.6 million in the same period of 2023.
Cash flows from investing activities showed a net usage of $85.6 million, down from $126.5 million in the prior year, primarily due to lower acquisition activity.
Cash flows from financing activities reflected a net outflow of $78.6 million, significantly higher than $22.2 million in the previous year, driven by debt repayments and the deferred consideration for acquisitions.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $168,859 | $119,639 |
| Investing Activities | ($85,649) | ($126,450) |
| Financing Activities | ($78,574) | ($22,239) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had liquidity of $104 million, comprising $9 million in cash, $88 million available under the 2021 RBL Facility, and $7 million from the 2022 ABL Facility. The liquidity position is deemed sufficient to meet short-term obligations, although the quick ratio indicates some caution is warranted.
The company plans to fund its remaining 2024 capital development programs primarily through cash flow from operations, reflecting a strategy focused on maintaining liquidity while managing operational needs effectively.
Is Berry Corporation (BRY) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 10.15, based on a stock price of $9.25 and earnings per share (EPS) of $0.91 for the most recent quarter.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.27, calculated using a book value per share of $7.27 and the latest stock price of $9.25.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 5.5, with an enterprise value of approximately $1.57 billion and EBITDA of $285 million for the trailing twelve months.
Stock Price Trends
Over the last 12 months, the stock price has shown a range between $6.50 and $11.00. The stock has experienced a 20% increase year-to-date, reflecting positive investor sentiment.
Dividend Yield and Payout Ratios
The current dividend yield is 2.7%, with a quarterly dividend of $0.12 per share. The payout ratio is approximately 32%, indicating a sustainable dividend policy.
Analyst Consensus
Analysts have a consensus rating of Hold, with 40% rating it as a Buy, 50% as Hold, and 10% as Sell. The average target price is $10.50, suggesting a potential upside of 13.5%.
| Metric | Value |
|---|---|
| P/E Ratio | 10.15 |
| P/B Ratio | 1.27 |
| EV/EBITDA Ratio | 5.5 |
| 12-Month Price Range | $6.50 - $11.00 |
| Year-to-Date Price Increase | 20% |
| Dividend Yield | 2.7% |
| Quarterly Dividend | $0.12 |
| Payout Ratio | 32% |
| Analyst Consensus | Hold |
| Average Target Price | $10.50 |
| Potential Upside | 13.5% |
Key Risks Facing Berry Corporation (BRY)
Key Risks Facing Berry Corporation
Industry Competition: The energy sector is characterized by significant competition from both domestic and international producers. Companies within this industry are constantly vying for market share, which can lead to pricing pressures. For example, the company reported a revenue of $590.3 million for the nine months ended September 30, 2024, compared to $647.0 million for the same period in 2023, reflecting the competitive environment.
Regulatory Changes: Recent legislative measures, such as California’s SB 1137 and AB 3233, impose stringent permitting requirements and allow local governments to restrict oil and gas operations. Compliance with these regulations could impact operational capabilities and costs. The company had to record a non-cash impairment charge of $44 million due to these regulatory changes.
Market Conditions: Fluctuations in commodity prices significantly affect revenue and profitability. The realized sales price of crude oil before derivatives for Q3 2024 was $72.40 per barrel, down from $78.89 in Q3 2023. These price changes can lead to volatility in revenue streams.
Operational Risks
The company faces operational risks related to its oil and gas extraction processes, including geological risks and environmental compliance issues. The total assets reported as of September 30, 2024, were $1.517 billion, indicating substantial investment in operational infrastructure.
Financial Risks: Berry Corporation reported a net income of $21 million for the nine months ended September 30, 2024, a recovery from a net loss of $25 million in the previous year. However, the company remains vulnerable to interest rate fluctuations and changes in credit availability. As of September 30, 2024, total long-term debt was $398 million, which could impact financial flexibility.
Mitigation Strategies
The company employs various strategies to manage risks, including hedging against commodity price fluctuations. The total losses on derivatives for the nine months ended September 30, 2024, amounted to $38.6 million, highlighting the importance of these financial instruments in mitigating exposure to price volatility. Additionally, the company has transitioned to a more flexible capital allocation strategy to prioritize debt repayment and operational investments, which is expected to enhance its resilience against market fluctuations.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | High competition leading to pricing pressures | Revenue decreased from $647 million (2023) to $590 million (2024) |
| Regulatory Changes | New regulations affecting operational capabilities | Impairment charge of $44 million |
| Market Conditions | Fluctuating commodity prices | Crude oil price fell from $78.89 (2023) to $72.40 (2024) |
| Operational Risks | Risks in extraction processes and compliance | Total assets: $1.517 billion |
| Financial Risks | Interest rate fluctuations and credit availability | Long-term debt of $398 million |
Future Growth Prospects for Berry Corporation (BRY)
Future Growth Prospects for Berry Corporation
Analysis of Key Growth Drivers
The company is strategically positioned for growth through several avenues:
- Product Innovations: Continued investment in enhancing production efficiency and reducing costs through advanced technologies.
- Market Expansions: Focused on expanding operations in California and Utah, leveraging existing infrastructure to enhance production capabilities.
- Acquisitions: The acquisition of Macpherson Energy in September 2023 added high-quality oil-producing properties, closely integrated with existing assets.
Future Revenue Growth Projections and Earnings Estimates
For 2024, the company projects a revenue growth of approximately 5% to 10% compared to 2023, driven by improved oil prices and increased production volumes. Earnings per share (EPS) estimates for 2024 are projected at $0.91, reflecting a substantial recovery from previous losses.
Strategic Initiatives or Partnerships Driving Future Growth
Berry Corporation has initiated several strategic partnerships aimed at enhancing operational efficiencies and expanding market reach:
- Partnerships with service providers: Collaborations with key service providers in well servicing and abandonment to optimize operational costs.
- Investment in renewable energy: Exploring opportunities in renewable energy sources to diversify revenue streams.
Competitive Advantages Positioning the Company for Growth
The company enjoys several competitive advantages that bolster its growth potential:
- Low Geologic Risk Reserves: The majority of its reserves are located in established oil fields in California, characterized by low decline rates.
- Strong Liquidity Position: As of September 30, 2024, the company reported liquidity of $104 million, comprising $9 million in cash and $88 million available for borrowings.
- Proven Track Record: A history of successful operational management and capital deployment enhances investor confidence.
Growth-Related Financial Overview
The following table summarizes key financial metrics and projections related to growth initiatives:
| Metric | Q3 2024 | Q3 2023 | 2024 Projection |
|---|---|---|---|
| Revenue (in thousands) | $259,784 | $222,084 | $588,714 - $603,133 |
| Net Income (in thousands) | $69,863 | $(45,062) | $21,010 |
| EPS | $0.91 | $(0.60) | $0.27 |
| Capital Expenditures (in thousands) | $85,135 | $56,124 | Projected increase due to expansion |
Berry Corporation's robust financial position, combined with its strategic initiatives, positions it well for future growth in the competitive energy market.
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Updated on 16 Nov 2024
Resources:
- Berry Corporation (BRY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Berry Corporation (BRY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Berry Corporation (BRY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.