ARC Resources Ltd Net Income dropped on 137% in 2015 and EBITDA Margin dropped on 16.3 pp from 75.3% to 59.0%
10.02.2016 • About ARC Resources Ltd (
$ARX) • By InTwits
ARC Resources Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ARC Resources Ltd doesn't have a profitable business model yet: 2015 ROIC is -6.0%
- ARC Resources Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 53.9%. At the same time it's a lot of higher than industry average of 89.7%.
- CAPEX is quite volatile: 1,543 in 2015, 2,064 in 2014, 1,393 in 2013, 754 in 2012, 837 in 2011
- The company has unprofitable business model: ROIC is at -6.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
ARC Resources Ltd ($ARX) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,219 | 1,194 | 1,401 | 2,406 | 1,276 | -46.9% |
| Gross Profit | 378 | 257 | 450 | 1,191 | -184 | -115.4% |
| SG&A | 80 | 97 | 97 | 84 | 69 | -18.6% |
| EBITDA | 794 | 718 | 932 | 1,811 | 753 | -58.5% |
| Net Income | 287 | 139 | 241 | 937 | -343 | -136.6% |
Balance Sheet
|
|---|
| Cash | 1 | 195 | 0 | 7 | 167 | 2,256.3% |
| Short Term Debt | 41 | 40 | 42 | 50 | 58 | 17.0% |
| Long Term Debt | 721 | 748 | 859 | 1,025 | 1,056 | 3.0% |
Cash flow
|
|---|
| Capex | 786 | 641 | 911 | 1,079 | 528 | -51.0% |
Ratios
|
|---|
| Revenue growth | 19.4% | -2.1% | 17.4% | 71.7% | -46.9% | |
| EBITDA growth | 27.2% | -9.5% | 29.7% | 94.4% | -58.5% | |
| Gross Margin | 31.0% | 21.5% | 32.1% | 49.5% | -14.4% | -63.9% |
| EBITDA Margin | 65.1% | 60.2% | 66.5% | 75.3% | 59.0% | -16.3% |
| Net Income Margin | 23.5% | 11.7% | 17.2% | 39.0% | -26.8% | -65.8% |
| SG&A, % of revenue | 6.6% | 8.1% | 6.9% | 3.5% | 5.4% | 1.9% |
| CAPEX, % of revenue | 64.5% | 53.7% | 65.0% | 44.9% | 41.4% | -3.5% |
| ROIC | 6.5% | 3.2% | 7.9% | 20.7% | -6.0% | -26.7% |
| ROE | 9.1% | 4.2% | 7.1% | 27.0% | -9.9% | -36.9% |
| Net Debt/EBITDA | 1.0x | 0.8x | 1.0x | 0.6x | 1.3x | 0.7x |
Revenue and profitability
The company's Revenue dropped on 46.9% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.57 pp from 7.2% to 7.8% in 2015.
Gross Margin dropped on 63.9 pp from 49.5% to -14.4% in 2015. SG&A as a % of Revenue increased slightly on 1.9 pp from 3.5% to 5.4% in 2015.
Net Income marign dropped on 65.8 pp from 39.0% to -26.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
ARC Resources Ltd's CAPEX/Revenue was 41.4% in 2015. CAPEX/Revenue dropped on 12.3 pp from 53.7% in 2012 to 41.4% in 2015. Average CAPEX/Revenue for the last three years was 50.4%.Battling declining revenue ARC Resources Ltd invested a large share of EBITDA (70.2%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-6.00%) and ROE (-9.88%). ROIC dropped on 26.7 pp from 20.7% to -6.0% in 2015. ROE dropped on 36.9 pp from 27.0% to -9.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 1.5x. Net Debt / EBITDA jumped on 0.7x from 0.6x to 1.3x in 2015. Debt increased on 3.7% in 2015 while cash surged on 2,256% in 2015.
Management team
ARC Resources Ltd's CEO is Myron M Stadnyk. Myron M Stadnyk is a founder and has 5 years tenure at the company. ARC Resources Ltd's CFO is P Van R Dafoe. P Van R Dafoe has 4 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find ARC Resources 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 37.8% | 10.4% | 16.2% | 17.6% | -23.2% |
|---|
| ARC Resources Ltd ($ARX) | | -2.1% | 17.4% | 71.7% | -46.9% |
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 ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | |
| MEG Energy Corp ($MEG) | 85.5% | 86.8% | 87.4% | 87.6% | 84.1% |
| NXT Energy Solutions Inc ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 34.2% | 29.3% | 31.5% | 29.6% | 48.6% |
|---|
| ARC Resources Ltd ($ARX) | 31.0% | 21.5% | 32.1% | 49.5% | -14.4% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 30.5% | 28.9% | 4.4% |
|---|
| ARC Resources Ltd ($ARX) | 65.1% | 60.2% | 66.5% | 75.3% | 59.0% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 42.0% | 47.3% | 39.1% | 48.8% | 49.3% |
|---|
| ARC Resources Ltd ($ARX) | 64.5% | 53.7% | 65.0% | 44.9% | 41.4% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.5% | 4.5% | 5.0% | -7.1% |
|---|
| ARC Resources Ltd ($ARX) | 6.5% | 3.2% | 7.9% | 20.7% | -6.0% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 2.8x |
|---|
| ARC Resources Ltd ($ARX) | 1.0x | 0.8x | 1.0x | 0.6x | 1.3x |
