Atco Ltd/Canada reports 63.3% Net Income decline and 2.7 pp EBITDA Margin decline from 41.4% to 38.7%
25.02.2016 • About Atco Ltd/Canada (
$ACO.X) • By InTwits
Atco Ltd/Canada reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Atco Ltd/Canada has high CAPEX intensity: 5 year average CAPEX/Revenue was 47.4%. At the same time it's in pair with industry average of 46.9%.
- CAPEX is quite volatile: 49.1 in FY2015, 43.5 in FY2014, 38.3 in FY2013, 33.0 in FY2012, 76.2 in FY2011
- The company has potentially unprofitable business model: ROIC is at 5.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Atco Ltd/Canada ($ACO.X) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,991 | 4,012 | 4,359 | 4,554 | 4,131 | -9.3% |
| Gross Profit | 3,284 | 3,433 | 3,708 | 3,749 | 3,511 | -6.3% |
| EBITDA | 1,463 | 1,598 | 1,789 | 1,887 | 1,599 | -15.3% |
| Net Income | 327 | 370 | 418 | 420 | 154 | -63.3% |
Balance Sheet
|
|---|
| Cash | 768 | 470 | 743 | 595 | 800 | 34.5% |
| Short Term Debt | 192 | 34 | 179 | 103 | 21 | -79.6% |
| Long Term Debt | 4,588 | 5,504 | 6,218 | 7,285 | 8,035 | 10.3% |
Cash flow
|
|---|
| Capex | 1,443 | 2,361 | 2,361 | 2,199 | 1,637 | -25.6% |
Ratios
|
|---|
| Revenue growth | 14.5% | 0.5% | 8.6% | 4.5% | -9.3% | |
| EBITDA growth | 11.9% | 9.2% | 12.0% | 5.5% | -15.3% | |
| Gross Margin | 82.3% | 85.6% | 85.1% | 82.3% | 85.0% | 2.7% |
| EBITDA Margin | 36.7% | 39.8% | 41.0% | 41.4% | 38.7% | -2.7% |
| Net Income Margin | 8.2% | 9.2% | 9.6% | 9.2% | 3.7% | -5.5% |
| CAPEX, % of revenue | 36.2% | 58.8% | 54.2% | 48.3% | 39.6% | -8.7% |
| ROIC | 11.6% | 10.8% | 10.5% | 9.6% | 5.6% | -4.1% |
| ROE | 15.8% | 16.3% | 16.0% | 13.9% | 4.7% | -9.2% |
| Net Debt/EBITDA | 2.7x | 3.2x | 3.2x | 3.6x | 4.5x | 0.9x |
Revenue and profitability
The company's Revenue decreased on 9.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.5 pp from 42.1% to 44.6% in FY2015.
Gross Margin increased on 2.7 pp from 82.3% to 85.0% in 2015.
Net Income marign decreased on 5.5 pp from 9.2% to 3.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Atco Ltd/Canada had CAPEX/Revenue of 39.6%. Atco Ltd/Canada showed big decline in CAPEX/Revenue of 19.2 pp from 58.8% in 2012 to 39.6% in 2015. It's average level of CAPEX/Revenue for the last three years was 47.4%.Battling declining revenue the company made large investments to CAPEX (102% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (5.56%) and ROE (4.72%). ROIC decreased on 4.1 pp from 9.6% to 5.6% in 2015. ROE decreased on 9.2 pp from 13.9% to 4.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.5x and Debt / EBITDA is 5.0x. Net Debt / EBITDA jumped on 0.9x from 3.6x to 4.5x in 2015. Debt increased on 9.0% in 2015 while cash jumped on 34.5% in 2015.
Management team
The company's CEO Nancy C Southern is a founder and has spent 20 years at the company. Atco Ltd/Canada's CFO Brian R Bale has spent 8 years at the company.
Appendix 1: Peers in Utilities
Below you can find Atco Ltd/Canada benchmarking vs. other companies in Utilities 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 |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 50.1% | 28.8% | 93.6% | 39.4% | |
| Northland Power Inc ($NPI) | | 1.5% | 54.1% | 36.4% | -4.2% |
| Fortis Inc/Canada ($FTS) | | -2.2% | 10.8% | 33.5% | 25.1% |
| Emera Inc ($EMA) | | -0.3% | 8.3% | 31.8% | -5.1% |
| Just Energy Group Inc ($JE) | | -10.1% | 13.4% | 17.4% | 10.2% |
| |
|---|
| Median (14 companies) | 16.4% | 0.5% | 11.1% | 13.3% | -4.6% |
|---|
| Atco Ltd/Canada ($ACO.X) | | 0.5% | 8.6% | 4.5% | -9.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Canadian Utilities Ltd ($CU) | 76.5% | 81.0% | 80.8% | 77.7% | 81.0% |
| Northland Power Inc ($NPI) | 47.7% | 52.5% | 63.7% | 61.8% | 69.0% |
| Fortis Inc/Canada ($FTS) | 31.9% | 34.6% | 34.4% | 59.3% | 61.7% |
| Capital Power Corp ($CPX) | 48.9% | 58.9% | 59.8% | 58.4% | 61.4% |
| TransAlta Corp ($TA) | 64.4% | 65.9% | 58.6% | 58.4% | 55.5% |
| |
|---|
| Median (13 companies) | 35.9% | 33.7% | 35.1% | 36.1% | 59.0% |
|---|
| Atco Ltd/Canada ($ACO.X) | 82.3% | 85.6% | 85.1% | 82.3% | 85.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Boralex Inc ($BLX) | 51.8% | 52.8% | 58.4% | 55.9% | 60.4% |
| Northland Power Inc ($NPI) | 48.1% | 54.2% | 52.4% | 51.2% | 57.5% |
| US Geothermal Inc ($GTH) | -84.0% | -129.5% | 52.9% | 49.6% | |
| Canadian Utilities Ltd ($CU) | 42.9% | 45.9% | 45.7% | 47.4% | 45.8% |
| TransAlta Corp ($TA) | 44.2% | 27.3% | 34.0% | 39.5% | 33.2% |
| |
|---|
| Median (14 companies) | 29.6% | 27.8% | 33.2% | 32.4% | 33.4% |
|---|
| Atco Ltd/Canada ($ACO.X) | 36.7% | 39.8% | 41.0% | 41.4% | 38.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Northland Power Inc ($NPI) | 101.7% | 84.0% | 60.2% | 238.7% | 265.9% |
| Boralex Inc ($BLX) | 17.7% | 5.6% | 62.5% | 85.9% | 123.1% |
| Canadian Utilities Ltd ($CU) | 43.7% | 70.7% | 66.4% | 58.5% | 47.2% |
| Algonquin Power & Utilities Corp ($AQN) | 22.4% | 21.7% | 23.5% | 45.9% | |
| Fortis Inc/Canada ($FTS) | 29.8% | 31.4% | 29.0% | 31.9% | 31.5% |
| |
|---|
| Median (14 companies) | 22.7% | 26.5% | 24.0% | 19.6% | 29.8% |
|---|
| Atco Ltd/Canada ($ACO.X) | 36.2% | 58.8% | 54.2% | 48.3% | 39.6% |
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% |
| Canadian Utilities Ltd ($CU) | 10.9% | 10.0% | 9.4% | 9.2% | 5.9% |
| Emera Inc ($EMA) | 6.1% | 5.8% | 5.9% | 8.4% | 5.6% |
| Northland Power Inc ($NPI) | 6.5% | 6.0% | 7.4% | 7.2% | 5.3% |
| |
|---|
| Median (14 companies) | 6.6% | 5.3% | 6.0% | 5.4% | 5.6% |
|---|
| Atco Ltd/Canada ($ACO.X) | 11.6% | 10.8% | 10.5% | 9.6% | 5.6% |
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 | 9.0x |
| Northland Power Inc ($NPI) | 5.9x | 6.4x | 5.8x | 6.9x | 11.1x |
| Fortis Inc/Canada ($FTS) | 5.3x | 5.0x | 5.6x | 6.7x | 5.3x |
| Just Energy Group Inc ($JE) | 2.5x | 4.3x | 7.4x | 6.4x | 3.9x |
| |
|---|
| Median (14 companies) | 4.5x | 5.0x | 5.6x | 4.8x | 4.8x |
|---|
| Atco Ltd/Canada ($ACO.X) | 2.7x | 3.2x | 3.2x | 3.6x | 4.5x |
