Imperial Oil Ltd reports 70.4% Net Income decline and 2.5 pp EBITDA Margin decline from 15.5% to 13.0%
02.02.2016 • About Imperial Oil Ltd (
$IMO) • By InTwits
Imperial Oil Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Imperial Oil Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.8%. At the same time it's in pair with industry average of 4.9%.
- CAPEX is quite volatile: 7,273 in 2015, 10,524 in 2014, 8,235 in 2013, 5,194 in 2012, 3,508 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.5x while industry average is 2.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Imperial Oil Ltd ($IMO) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 29,154 | 29,715 | 31,299 | 34,669 | 25,188 | -27.3% |
| Gross Profit | 6,193 | 6,782 | 5,856 | 6,528 | 4,470 | -31.5% |
| SG&A | 1,048 | 934 | 928 | 947 | 968 | 2.2% |
| EBITDA | 4,933 | 5,618 | 4,651 | 5,386 | 3,280 | -39.1% |
| Net Income | 3,371 | 3,766 | 2,828 | 3,785 | 1,122 | -70.4% |
Balance Sheet
|
|---|
| Cash | 1,202 | 482 | 272 | 215 | 203 | -5.6% |
| Short Term Debt | 364 | 472 | 1,843 | 1,978 | 1,952 | -1.3% |
| Long Term Debt | 843 | 1,175 | 4,444 | 4,913 | 6,564 | 33.6% |
Cash flow
|
|---|
| Capex | 3,919 | 5,478 | 6,297 | 5,290 | 2,994 | -43.4% |
Ratios
|
|---|
| Revenue growth | 23.4% | 1.9% | 5.3% | 10.8% | -27.3% | |
| EBITDA growth | 38.5% | 13.9% | -17.2% | 15.8% | -39.1% | |
| Gross Margin | 21.2% | 22.8% | 18.7% | 18.8% | 17.7% | -1.1% |
| EBITDA Margin | 16.9% | 18.9% | 14.9% | 15.5% | 13.0% | -2.5% |
| Net Income Margin | 11.6% | 12.7% | 9.0% | 10.9% | 4.5% | -6.5% |
| SG&A, % of revenue | 3.6% | 3.1% | 3.0% | 2.7% | 3.8% | 1.1% |
| CAPEX, % of revenue | 13.4% | 18.4% | 20.1% | 15.3% | 11.9% | -3.4% |
| ROIC | 26.4% | 25.3% | 14.0% | 13.6% | 5.3% | -8.4% |
| ROE | 27.5% | 25.4% | 15.8% | 18.0% | 4.9% | -13.1% |
| Net Debt/EBITDA | 0.0x | 0.2x | 1.3x | 1.2x | 2.5x | 1.3x |
Revenue and profitability
The company's Revenue dropped on 27.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.5 pp from 15.5% to 13.0% in 2015.
Gross Margin decreased slightly on 1.1 pp from 18.8% to 17.7% in 2015. SG&A as a % of Revenue increased slightly on 1.1 pp from 2.7% to 3.8% in 2015.
Net Income marign decreased on 6.5 pp from 10.9% to 4.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 11.9% in 2015. The company's CAPEX/Revenue decreased on 6.5 pp from 18.4% in 2012 to 11.9% in 2015. It's average level of CAPEX/Revenue for the last three years was 15.8%.Battling declining revenue Imperial Oil Ltd invested a large share of EBITDA (91.3%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (5.25%) and ROE (4.88%). ROIC decreased on 8.4 pp from 13.6% to 5.3% in 2015. ROE dropped on 13.1 pp from 18.0% to 4.9% in 2015.
Leverage (Debt)
Debt level is 2.5x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA surged on 1.3x from 1.2x to 2.5x in 2015. Debt surged on 23.6% in 2015 while cash decreased on 5.6% in 2015.
Management team
The company's CEO is Richard Michael Kruger "Rich". Richard Michael Kruger "Rich" has 5 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find Imperial Oil Ltd benchmarking vs. other companies in Energy industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Petro Rio SA ($PRJ) | -36.3% | -32.1% | -34.9% | 10,977.1% | |
| ONEnergy Inc ($OEG) | | | | 6,002.6% | |
| Sterling Resources Ltd ($SLG) | | -94.8% | 4,514.9% | 2,244.4% | |
| Ikkuma Resources Corp ($IKM) | 22.5% | 17.0% | -4.5% | 1,231.1% | |
| Spartan Energy Corp ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 37.7% | 10.4% | 17.1% | 18.5% | -16.1% |
|---|
| Imperial Oil Ltd ($IMO) | | 1.9% | 5.3% | 10.8% | -27.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | |
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 34.2% | 29.3% | 31.6% | 30.3% | 46.5% |
|---|
| Imperial Oil Ltd ($IMO) | 21.2% | 22.8% | 18.7% | 18.8% | 17.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Seven Generations Energy Ltd ($VII) | | 56.9% | 54.0% | 106.0% | |
| Tourmaline Oil Corp ($TOU) | 67.4% | 67.9% | 80.0% | 97.6% | |
| Bonavista Energy Corp ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 25.5% | 25.7% | 31.1% | 29.6% | -19.4% |
|---|
| Imperial Oil Ltd ($IMO) | 16.9% | 18.9% | 14.9% | 15.5% | 13.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | |
| Petroshale Inc ($PSH) | 30.6% | | 346.6% | 865.9% | |
| Toro Oil & Gas Ltd ($TOO) | 192.4% | 139.0% | 39.2% | 808.7% | |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | |
| BNK Petroleum Inc ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 68.2% |
|---|
| Imperial Oil Ltd ($IMO) | 13.4% | 18.4% | 20.1% | 15.3% | 11.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | |
| Sea Dragon Energy Inc ($SDX) | -10.1% | 8.1% | 21.8% | 32.9% | |
| Raging River Exploration Inc ($RRX) | | | | 29.1% | |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | |
| Rooster Energy Ltd ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -15.2% |
|---|
| Imperial Oil Ltd ($IMO) | 26.4% | 25.3% | 14.0% | 13.6% | 5.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | |
| Lightstream Resources Ltd ($LTS) | | 2.0x | | 27.8x | |
| Petroshale Inc ($PSH) | 0.1x | | | 21.7x | |
| Connacher Oil and Gas Ltd ($CLC) | 9.7x | 16.7x | 8.8x | 17.1x | |
| Pengrowth Energy Corp ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 8.7x |
|---|
| Imperial Oil Ltd ($IMO) | 0.0x | 0.2x | 1.3x | 1.2x | 2.5x |
