This article was first published by Seeking Alpha on March
27, 2015.
By Sarfaraz A. Khan
The oilfield services company Frank's International
(NYSE:FI) is a fairly unknown stock. The company is one of the oldest names in
the energy sector, yet it barely gets any coverage in the financial media. This
stock, however, could be an interesting pick for energy investors who have been
bottom-picking some high-quality names during the ongoing downturn.
Frank's International debuted at the New York Stock Exchange
in 2013 but it has been operating as a family business since 1938. Keith
Mosing, whose grandfather built Frank's International, now sits as the
executive chairman. The company provides variety of tubular services to
exploration and production companies all over the world. Frank's International,
together with Weatherford International (NYSE:WFT), forms the duopoly in the
global tubular services market. Last year, Frank's generated nearly half of its
total revenues and EBITDA from outside the U.S. while ~75% of its services
revenues - that represent 84% of its total revenues - came from offshore
projects.
Last year, Frank's reported 7% increase in revenues and 2.5%
increase in adjusted earnings to record levels of $1.15 billion and $450
million respectively. Frank's runs a free cash flow positive business, meaning
the company generates more cash from operations than what it spends on
expanding its asset base. Last year, Frank's generated $368.8 million as cash
flows from operations while its capital expenses came in at $172.9 million.
This translated into free cash flows of $196 million, up from $93 million in
2013.
