MEG Energy Corp Net Debt / EBITDA surged on 14.2x from 4.0x to 18.2x in 2015 and Debt jumped on 19.3%
04.02.2016 • About MEG Energy Corp (
$MEG) • By InTwits
MEG Energy Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MEG Energy Corp doesn't have a profitable business model yet: 2015 ROIC is -2.2%
- MEG Energy Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 93.2%. At the same time it's in pair with industry average of 94.3%.
- CAPEX is quite volatile: 307 in 2015, 1,290 in 2014, 2,170 in 2013, 1,599 in 2012, 929 in 2011
- The company has unprofitable business model: ROIC is at -2.2%
- It operates with high leverage: Net Debt/EBITDA is 18.2x while industry average is 2.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
MEG Energy Corp ($MEG) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,037 | 1,051 | 1,334 | 2,830 | 1,926 | -31.9% |
| Gross Profit | 887 | 911 | 1,167 | 2,478 | 1,619 | -34.7% |
| SG&A | 524 | 583 | 716 | 1,339 | 1,169 | -12.7% |
| EBITDA | 335 | 258 | 302 | 921 | 263 | -71.4% |
| Net Income | 64 | 53 | -166 | -106 | -1,170 | 1,008.3% |
Balance Sheet
|
|---|
| Cash | 1,495 | 1,475 | 1,179 | 656 | 408 | -37.8% |
| Short Term Debt | 10 | 10 | 14 | 15 | 18 | 19.3% |
| Long Term Debt | 1,741 | 2,479 | 3,991 | 4,350 | 5,190 | 19.3% |
Cash flow
|
|---|
| Capex | 929 | 1,599 | 2,170 | 1,290 | 307 | -76.2% |
Ratios
|
|---|
| Revenue growth | 41.9% | 1.3% | 27.0% | 112.1% | -31.9% | |
| EBITDA growth | 80.0% | -22.9% | 17.0% | 205.1% | -71.4% | |
| Gross Margin | 85.5% | 86.8% | 87.4% | 87.6% | 84.1% | -3.5% |
| EBITDA Margin | 32.3% | 24.6% | 22.6% | 32.6% | 13.7% | -18.9% |
| Net Income Margin | 6.2% | 5.0% | -12.5% | -3.7% | -60.7% | -57.0% |
| SG&A, % of revenue | 50.5% | 55.5% | 53.7% | 47.3% | 60.7% | 13.4% |
| CAPEX, % of revenue | 89.6% | 152.2% | 162.6% | 45.6% | 15.9% | -29.6% |
| ROIC | 4.0% | 1.7% | 1.4% | 6.0% | -2.2% | -8.2% |
| ROE | 1.6% | 1.2% | -3.4% | -2.2% | -27.7% | -25.5% |
| Net Debt/EBITDA | 0.8x | 3.9x | 9.4x | 4.0x | 18.2x | 14.2x |
Revenue and profitability
The company's Revenue dropped on 31.9% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 18.9 pp from 32.6% to 13.7% in 2015.
Gross Margin decreased on 3.5 pp from 87.6% to 84.1% in 2015. SG&A as a % of Revenue surged on 13.4 pp from 47.3% to 60.7% in 2015.
Net Income marign dropped on 57.0 pp from -3.7% to -60.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 MEG Energy Corp had CAPEX/Revenue of 15.9%. MEG Energy Corp's CAPEX/Revenue dropped on 136 pp from 152% in 2012 to 15.9% in 2015. Average CAPEX/Revenue for the last three years was 74.7%.MEG Energy Corp has spent a lot to CAPEX (117% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-2.24%) and ROE (-27.70%). ROIC decreased on 8.2 pp from 6.0% to -2.2% in 2015. ROE dropped on 25.5 pp from -2.2% to -27.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 18.2x and Debt / EBITDA is 19.8x. Net Debt / EBITDA surged on 14.2x from 4.0x to 18.2x in 2015. Debt surged on 19.3% in 2015 while cash dropped on 37.8% in 2015.
Management team
William J Mccaffrey "Bill" is a the company's CEO. William J Mccaffrey "Bill" is a founder and has spent 19 years at the company. The company's CFO is Eric L Toews. Eric L Toews has 5 years tenure at the company.
Appendix 1: Peers in Energy
Below we provide MEG Energy Corp benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 37.7% | 10.4% | 16.2% | 17.6% | -21.9% |
|---|
| MEG Energy Corp ($MEG) | | 1.3% | 27.0% | 112.1% | -31.9% |
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 ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| Serinus Energy Inc ($SEN) | 80.4% | 80.5% | 76.5% | 86.8% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 46.5% |
|---|
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | 84.1% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.7% | 31.1% | 28.9% | -8.0% |
|---|
| MEG Energy Corp ($MEG) | 32.3% | 24.6% | 22.6% | 32.6% | 13.7% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 42.0% | 47.3% | 39.1% | 48.8% | 49.5% |
|---|
| MEG Energy Corp ($MEG) | 89.6% | 152.2% | 162.6% | 45.6% | 15.9% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.5% | 3.5% | 4.6% | 5.0% | -11.9% |
|---|
| MEG Energy Corp ($MEG) | 4.0% | 1.7% | 1.4% | 6.0% | -2.2% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 2.2x |
|---|
| MEG Energy Corp ($MEG) | 0.8x | 3.9x | 9.4x | 4.0x | 18.2x |
