Inter Pipeline Ltd reports 72.4% CAPEX decline while 7.7% Revenue growth
18.02.2016 • About Inter Pipeline Ltd (
$IPL) • By InTwits
Inter Pipeline Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Inter Pipeline Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 57.6%. At the same time it's in pair with industry average of 28.1%.
- CAPEX is quite volatile: 342 in 2015, 1,236 in 2014, 1,948 in 2013, 384 in 2012, 152 in 2011
- The company has business model with low profitability: ROIC is at 9.6%
- It operates with high leverage: Net Debt/EBITDA is 4.9x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Inter Pipeline Ltd ($IPL) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,152 | 1,206 | 1,363 | 1,556 | 1,676 | 7.7% |
| Gross Profit | 588 | 699 | 776 | 891 | 1,112 | 24.7% |
| SG&A | 55 | 64 | 77 | 86 | 63 | -26.7% |
| EBITDA | 523 | 589 | 616 | 700 | 981 | 40.1% |
| Net Income | 248 | 307 | -58 | 335 | 427 | 27.7% |
Balance Sheet
|
|---|
| Cash | 50 | 65 | 47 | 61 | 40 | -34.0% |
| Short Term Debt | 1,555 | 1,351 | 1,597 | 1,428 | 1,384 | -3.0% |
| Long Term Debt | 1,102 | 1,761 | 2,516 | 3,144 | 3,422 | 8.8% |
Cash flow
|
|---|
| Capex | 152 | 384 | 1,948 | 1,236 | 342 | -72.4% |
Ratios
|
|---|
| Revenue growth | 15.5% | 4.7% | 13.0% | 14.2% | 7.7% | |
| EBITDA growth | 40.0% | 12.6% | 4.6% | 13.7% | 40.1% | |
| Gross Margin | 51.1% | 57.9% | 56.9% | 57.3% | 66.3% | 9.1% |
| EBITDA Margin | 45.4% | 48.8% | 45.2% | 45.0% | 58.5% | 13.5% |
| Net Income Margin | 21.5% | 25.5% | -4.3% | 21.5% | 25.5% | 4.0% |
| SG&A, % of revenue | 4.8% | 5.3% | 5.7% | 5.5% | 3.8% | -1.8% |
| CAPEX, % of revenue | 13.2% | 31.9% | 143.0% | 79.4% | 20.4% | -59.0% |
| ROIC | 9.5% | 9.5% | 8.0% | 7.5% | 9.6% | 2.1% |
| ROE | 18.0% | 19.9% | -3.1% | 14.4% | 15.9% | 1.5% |
| Net Debt/EBITDA | 5.0x | 5.2x | 6.6x | 6.4x | 4.9x | -1.6x |
Revenue and profitability
The company's Revenue increased on 7.7% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 72.8 pp from -16.1% to -88.9% in 2015.
Gross Margin increased on 9.1 pp from 57.3% to 66.3% in 2015. SG&A as a % of Revenue decreased slightly on 1.8 pp from 5.5% to 3.8% in 2015.
Net Income marign increased on 4.0 pp from 21.5% to 25.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Inter Pipeline Ltd had CAPEX/Revenue of 20.4%. CAPEX/Revenue dropped on 11.5 pp from 31.9% in 2012 to 20.4% in 2015. For the last three years the average CAPEX/Revenue was 80.9%.
Return on investment
The company operates at good ROE (15.92%) while ROIC is low (9.58%). ROIC increased on 2.1 pp from 7.5% to 9.6% in 2015. ROE increased slightly on 1.5 pp from 14.4% to 15.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.9x and Debt / EBITDA is 4.9x. Net Debt / EBITDA dropped on 1.6x from 6.4x to 4.9x in 2015. Debt increased on 5.1% in 2015 while cash dropped on 34.0% in 2015.
Management team
Inter Pipeline Ltd's CEO Christian P Bayle is a founder and has spent 4 years at the company. Inter Pipeline Ltd's CFO Brent C Heagy has spent 4 years at the company.
Appendix 1: Peers in Energy
Below we provide Inter Pipeline Ltd 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 38.4% | 10.4% | 17.1% | 18.5% | -26.7% |
|---|
| Inter Pipeline Ltd ($IPL) | | 4.7% | 13.0% | 14.2% | 7.7% |
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 ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 46.5% |
|---|
| Inter Pipeline Ltd ($IPL) | 51.1% | 57.9% | 56.9% | 57.3% | 66.3% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 30.5% | 28.9% | 9.5% |
|---|
| Inter Pipeline Ltd ($IPL) | 45.4% | 48.8% | 45.2% | 45.0% | 58.5% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.1% | 47.1% | 34.3% |
|---|
| Inter Pipeline Ltd ($IPL) | 13.2% | 31.9% | 143.0% | 79.4% | 20.4% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -4.2% |
|---|
| Inter Pipeline Ltd ($IPL) | 9.5% | 9.5% | 8.0% | 7.5% | 9.6% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 2.8x |
|---|
| Inter Pipeline Ltd ($IPL) | 5.0x | 5.2x | 6.6x | 6.4x | 4.9x |
