TransCanada Corp Net Debt / EBITDA surged on 16.4x from 5.7x to 22.1x in 2015 and Debt jumped on 23.6%
11.02.2016 • About TransCanada Corp (
$TRP) • By InTwits
TransCanada Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TransCanada Corp doesn't have a profitable business model yet: 2015 ROIC is -0.4%
- EBITDA Margin is quite volatile: 13.7% in 2015, 48.1% in 2014, 49.6% in 2013, 49.3% in 2012, 52.0% in 2011
- TransCanada Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 39.4%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 516 in FY2015, 539 in FY2014, 404 in FY2013, 222 in FY2012, 231 in FY2011
- The company has unprofitable business model: ROIC is at -0.4%
- It operates with high leverage: Net Debt/EBITDA is 22.1x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TransCanada Corp ($TRP) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 7,839 | 8,007 | 8,797 | 10,185 | 11,300 | 10.9% |
| Gross Profit | 5,071 | 4,996 | 5,678 | 6,739 | 7,533 | 11.8% |
| EBITDA | 4,080 | 3,947 | 4,361 | 4,903 | 1,551 | -68.4% |
| Net Income | 1,581 | 1,354 | 1,786 | 1,840 | -1,146 | -162.3% |
Balance Sheet
|
|---|
| Cash | 654 | 551 | 927 | 489 | 850 | 73.8% |
| Short Term Debt | 2,798 | 3,169 | 2,815 | 4,264 | 3,765 | -11.7% |
| Long Term Debt | 18,740 | 19,013 | 22,955 | 24,120 | 31,318 | 29.8% |
Cash flow
|
|---|
| Capex | 2,513 | 2,595 | 4,461 | 4,337 | 4,429 | 2.1% |
Ratios
|
|---|
| Revenue growth | -2.8% | 2.1% | 9.9% | 15.8% | 10.9% | |
| EBITDA growth | 7.7% | -3.3% | 10.5% | 12.4% | -68.4% | |
| Gross Margin | 64.7% | 62.4% | 64.5% | 66.2% | 66.7% | 0.5% |
| EBITDA Margin | 52.0% | 49.3% | 49.6% | 48.1% | 13.7% | -34.4% |
| Net Income Margin | 20.2% | 16.9% | 20.3% | 18.1% | -10.1% | -28.2% |
| CAPEX, % of revenue | 32.1% | 32.4% | 50.7% | 42.6% | 39.2% | -3.4% |
| ROIC | 6.4% | 5.9% | 6.1% | 6.3% | -0.4% | -6.7% |
| ROE | 9.8% | 8.3% | 10.6% | 10.4% | -8.1% | -18.5% |
| Net Debt/EBITDA | 5.1x | 5.5x | 5.7x | 5.7x | 22.1x | 16.4x |
Revenue and profitability
TransCanada Corp's Revenue jumped on 10.9% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 34.4 pp from 48.1% to 13.7% in 2015.
Gross Margin showed almost no change in 2015.
Net Income marign dropped on 28.2 pp from 18.1% to -10.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 TransCanada Corp had CAPEX/Revenue of 39.2%. The company showed CAPEX/Revenue growth of 6.8 pp from 32.4% in 2012 to 39.2% in 2015. It's average CAPEX/Revenue for the last three years was 44.2%.To fuel this fast growth TransCanada Corp made large investments to CAPEX (286% of EBITDA).
Return on investment
The company operates at negative ROIC (-0.38%) and ROE (-8.06%). ROIC decreased on 6.7 pp from 6.3% to -0.38% in 2015. ROE dropped on 18.5 pp from 10.4% to -8.1% in 2015.
Leverage (Debt)
Debt level is 22.1x Net Debt / EBITDA and 22.6x Debt / EBITDA. Net Debt / EBITDA jumped on 16.4x from 5.7x to 22.1x in 2015. Debt jumped on 23.6% in 2015 while cash jumped on 73.8% in 2015.
Management team
Russell K Girling "Russ" is a TransCanada Corp's CEO. Russell K Girling "Russ" is a founder and has spent 8 years at the company. TransCanada Corp's CFO Donald R Marchand "Don" has spent 8 years at the company.
Appendix 1: Peers in Energy
Below we provide TransCanada 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 38.1% | 10.4% | 17.1% | 18.5% | -25.6% |
|---|
| TransCanada Corp ($TRP) | | 2.1% | 9.9% | 15.8% | 10.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | 94.5% |
| Advantage Oil & Gas Ltd ($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 ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 44.3% |
|---|
| TransCanada Corp ($TRP) | 64.7% | 62.4% | 64.5% | 66.2% | 66.7% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 30.5% | 28.9% | 5.9% |
|---|
| TransCanada Corp ($TRP) | 52.0% | 49.3% | 49.6% | 48.1% | 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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.1% | 48.8% | 41.4% |
|---|
| TransCanada Corp ($TRP) | 32.1% | 32.4% | 50.7% | 42.6% | 39.2% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -6.0% |
|---|
| TransCanada Corp ($TRP) | 6.4% | 5.9% | 6.1% | 6.3% | -0.4% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 2.8x |
|---|
| TransCanada Corp ($TRP) | 5.1x | 5.5x | 5.7x | 5.7x | 22.1x |
