Fortis Inc/Canada reports 112% Net Income growth and 2.5 pp EBITDA Margin growth from 31.1% to 33.6%
18.02.2016 • About Fortis Inc/Canada (
$FTS) • By InTwits
Fortis Inc/Canada reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fortis Inc/Canada has high CAPEX intensity: 5 year average CAPEX/Revenue was 30.7%. At the same time it's in pair with industry average of 4.4%.
- CAPEX is quite volatile: 130 in FY2015, 50 in FY2014, 146 in FY2013, 176 in FY2012, 136 in FY2011
- The company has potentially unprofitable business model: ROIC is at 6.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 5.3x while industry average is 6.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fortis Inc/Canada ($FTS) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,738 | 3,654 | 4,047 | 5,401 | 6,757 | 25.1% |
| Gross Profit | 1,191 | 1,264 | 1,393 | 3,204 | 4,166 | 30.0% |
| EBITDA | 1,194 | 1,262 | 1,376 | 1,680 | 2,268 | 35.0% |
| Net Income | 357 | 362 | 410 | 379 | 805 | 112.4% |
Balance Sheet
|
|---|
| Cash | 87 | 154 | 72 | 230 | 242 | 5.2% |
| Short Term Debt | 269 | 302 | 947 | 1,063 | 921 | -13.4% |
| Long Term Debt | 6,114 | 6,169 | 6,841 | 10,406 | 11,271 | 8.3% |
Cash flow
|
|---|
| Capex | 1,113 | 1,146 | 1,175 | 1,725 | 2,131 | 23.5% |
Ratios
|
|---|
| Revenue growth | 2.2% | -2.2% | 10.8% | 33.5% | 25.1% | |
| EBITDA growth | 4.1% | 5.7% | 9.0% | 22.1% | 35.0% | |
| Gross Margin | 31.9% | 34.6% | 34.4% | 59.3% | 61.7% | 2.3% |
| EBITDA Margin | 31.9% | 34.5% | 34.0% | 31.1% | 33.6% | 2.5% |
| Net Income Margin | 9.6% | 9.9% | 10.1% | 7.0% | 11.9% | 4.9% |
| CAPEX, % of revenue | 29.8% | 31.4% | 29.0% | 31.9% | 31.5% | -0.4% |
| ROIC | 6.7% | 6.4% | 6.1% | 5.4% | 6.0% | 0.6% |
| ROE | 8.7% | 8.1% | 8.1% | 5.4% | 9.8% | 4.3% |
| Net Debt/EBITDA | 5.3x | 5.0x | 5.6x | 6.7x | 5.3x | -1.4x |
Revenue and profitability
The company's Revenue jumped on 25.1% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 2.0 pp from 16.1% to 18.0% in FY2015.
Gross Margin increased on 2.3 pp from 59.3% to 61.7% in 2015.
Net Income marign increased on 4.9 pp from 7.0% to 11.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 31.5%. CAPEX/Revenue showed almost no change from 2012 to 2015. It's average level of CAPEX/Revenue for the last three years was 30.8%.To fuel this fast growth Fortis Inc/Canada invested a large share of EBITDA (94.0%) to CAPEX.
Return on investment
The company operates at low ROIC (6.03%) and ROE (9.75%). ROIC increased slightly on 0.58 pp from 5.4% to 6.0% in 2015. ROE increased on 4.3 pp from 5.4% to 9.8% in 2015.
Leverage (Debt)
Debt level is 5.3x Net Debt / EBITDA and 5.4x Debt / EBITDA. Net Debt / EBITDA dropped on 1.4x from 6.7x to 5.3x in 2015. Debt increased on 6.3% in 2015 while cash increased on 5.2% in 2015.
Management team
Barry V Perry is a the company's CEO. Barry V Perry is a founder and has spent 3 years at the company. Karl W Smith is a Fortis Inc/Canada's CFO. Karl W Smith has spent 19 years at the company.
Appendix 1: Peers in Utilities
Below we provide Fortis Inc/Canada benchmarking against other companies in Utilities 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 |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 50.1% | 28.8% | 93.6% | 39.4% | |
| Northland Power Inc ($NPI) | 14.0% | 1.5% | 54.1% | 36.4% | |
| Emera Inc ($EMA) | | -0.3% | 8.3% | 31.8% | -5.1% |
| Just Energy Group Inc ($JE) | | -10.1% | 13.4% | 17.4% | 10.2% |
| TransAlta Corp ($TA) | | -17.0% | 3.7% | 14.4% | -13.6% |
| |
|---|
| Median (14 companies) | 14.2% | 0.9% | 11.1% | 11.9% | -9.3% |
|---|
| Fortis Inc/Canada ($FTS) | | -2.2% | 10.8% | 33.5% | 25.1% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Atco Ltd/Canada ($ACO.X) | 82.3% | 85.6% | 85.1% | 82.3% | |
| Canadian Utilities Ltd ($CU) | 76.5% | 81.0% | 80.8% | 77.7% | |
| Northland Power Inc ($NPI) | 47.7% | 52.5% | 63.7% | 61.8% | |
| Capital Power Corp ($CPX) | 48.9% | 58.9% | 59.8% | 58.4% | 61.4% |
| TransAlta Corp ($TA) | 64.4% | 65.9% | 58.6% | 58.4% | 55.5% |
| |
|---|
| Median (13 companies) | 42.7% | 33.7% | 37.1% | 36.1% | 46.3% |
|---|
| Fortis Inc/Canada ($FTS) | 31.9% | 34.6% | 34.4% | 59.3% | 61.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Boralex Inc ($BLX) | 51.8% | 52.8% | 58.4% | 55.9% | |
| Northland Power Inc ($NPI) | 48.1% | 54.2% | 52.4% | 51.2% | |
| US Geothermal Inc ($GTH) | -84.0% | -129.5% | 52.9% | 49.6% | |
| Canadian Utilities Ltd ($CU) | 42.9% | 45.9% | 45.7% | 47.4% | |
| Atco Ltd/Canada ($ACO.X) | 36.7% | 39.8% | 41.0% | 41.4% | |
| |
|---|
| Median (14 companies) | 29.6% | 27.8% | 33.2% | 34.0% | 29.1% |
|---|
| Fortis Inc/Canada ($FTS) | 31.9% | 34.5% | 34.0% | 31.1% | 33.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Northland Power Inc ($NPI) | 101.7% | 84.0% | 60.2% | 238.7% | |
| Boralex Inc ($BLX) | 17.7% | 5.6% | 62.5% | 85.9% | |
| Canadian Utilities Ltd ($CU) | 43.7% | 70.7% | 66.4% | 58.5% | |
| Atco Ltd/Canada ($ACO.X) | 36.2% | 58.8% | 54.2% | 48.3% | |
| Algonquin Power & Utilities Corp ($AQN) | 22.4% | 21.7% | 23.5% | 45.9% | |
| |
|---|
| Median (14 companies) | 22.7% | 26.8% | 24.0% | 19.6% | 17.1% |
|---|
| Fortis Inc/Canada ($FTS) | 29.8% | 31.4% | 29.0% | 31.9% | 31.5% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Keyera Corp ($KEY) | 13.1% | 13.8% | 12.7% | 14.3% | 12.6% |
| Just Energy Group Inc ($JE) | 146.5% | 18.6% | 6.0% | 10.6% | 17.9% |
| Atco Ltd/Canada ($ACO.X) | 11.6% | 10.8% | 10.5% | 9.6% | |
| Canadian Utilities Ltd ($CU) | 10.9% | 10.0% | 9.4% | 9.2% | |
| Emera Inc ($EMA) | 6.1% | 5.8% | 5.9% | 8.4% | 5.6% |
| |
|---|
| Median (14 companies) | 6.6% | 5.3% | 6.0% | 5.7% | 5.6% |
|---|
| Fortis Inc/Canada ($FTS) | 6.7% | 6.4% | 6.1% | 5.4% | 6.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Atlantic Power Corp ($ATP) | 44.8x | 12.6x | 13.0x | 22.4x | |
| Boralex Inc ($BLX) | 5.9x | 6.6x | 7.6x | 12.1x | |
| Northland Power Inc ($NPI) | 5.9x | 6.4x | 5.8x | 6.9x | |
| Just Energy Group Inc ($JE) | 2.5x | 4.3x | 7.4x | 6.4x | 3.9x |
| US Geothermal Inc ($GTH) | | | 5.2x | 5.6x | |
| |
|---|
| Median (14 companies) | 3.4x | 4.9x | 5.3x | 4.3x | 4.1x |
|---|
| Fortis Inc/Canada ($FTS) | 5.3x | 5.0x | 5.6x | 6.7x | 5.3x |
