Canadian Utilities Ltd Net Income dropped on 50.3% in 2015 and EBITDA Margin decreased slightly on 1.6 pp from 47.4% to 45.8%
25.02.2016 • About Canadian Utilities Ltd (
$CU) • By InTwits
Canadian Utilities Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Canadian Utilities Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 57.3%. At the same time it's a lot of higher than industry average of 46.9%.
- CAPEX is quite volatile: 87 in FY2015, 283 in FY2014, 418 in FY2013, 902 in FY2012, 1,039 in FY2011
- The company has potentially unprofitable business model: ROIC is at 5.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Canadian Utilities Ltd ($CU) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,999 | 3,039 | 3,381 | 3,600 | 3,264 | -9.3% |
| Gross Profit | 2,293 | 2,462 | 2,731 | 2,796 | 2,645 | -5.4% |
| EBITDA | 1,286 | 1,396 | 1,544 | 1,708 | 1,496 | -12.4% |
| Net Income | 515 | 572 | 606 | 724 | 360 | -50.3% |
Balance Sheet
|
|---|
| Cash | 613 | 349 | 498 | 351 | 520 | 48.1% |
| Short Term Debt | 179 | 34 | 179 | 102 | 21 | -79.4% |
| Long Term Debt | 4,551 | 5,440 | 6,114 | 7,217 | 7,971 | 10.4% |
Cash flow
|
|---|
| Capex | 1,312 | 2,149 | 2,245 | 2,105 | 1,541 | -26.8% |
Ratios
|
|---|
| Revenue growth | 11.1% | 1.3% | 11.3% | 6.5% | -9.3% | |
| EBITDA growth | 12.4% | 8.6% | 10.6% | 10.6% | -12.4% | |
| Gross Margin | 76.5% | 81.0% | 80.8% | 77.7% | 81.0% | 3.4% |
| EBITDA Margin | 42.9% | 45.9% | 45.7% | 47.4% | 45.8% | -1.6% |
| Net Income Margin | 17.2% | 18.8% | 17.9% | 20.1% | 11.0% | -9.1% |
| CAPEX, % of revenue | 43.7% | 70.7% | 66.4% | 58.5% | 47.2% | -11.3% |
| ROIC | 10.9% | 10.0% | 9.4% | 9.2% | 5.9% | -3.2% |
| ROE | 16.5% | 17.2% | 16.2% | 17.3% | 8.0% | -9.3% |
| Net Debt/EBITDA | 3.2x | 3.7x | 3.8x | 4.1x | 5.0x | 0.9x |
Revenue and profitability
Canadian Utilities Ltd's Revenue decreased on 9.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.6 pp from 47.4% to 45.8% in 2015.
Gross Margin increased on 3.4 pp from 77.7% to 81.0% in 2015.
Net Income marign decreased on 9.1 pp from 20.1% to 11.0% in 2015.
Capital expenditures (CAPEX) and working capital investments
Canadian Utilities Ltd's CAPEX/Revenue was 47.2% in 2015. Canadian Utilities Ltd's CAPEX/Revenue dropped on 23.5 pp from 70.7% in 2012 to 47.2% in 2015. For the last three years the average CAPEX/Revenue was 57.4%.The company has spent a lot to CAPEX (103% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (5.94%) and ROE (7.97%). ROIC decreased on 3.2 pp from 9.2% to 5.9% in 2015. ROE decreased on 9.3 pp from 17.3% to 8.0% in 2015.
Leverage (Debt)
Debt level is 5.0x Net Debt / EBITDA and 5.3x Debt / EBITDA. Net Debt / EBITDA jumped on 0.9x from 4.1x to 5.0x in 2015. Debt increased on 9.2% in 2015 while cash jumped on 48.1% in 2015.
Appendix 1: Peers in Utilities
Below you can find Canadian Utilities Ltd 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 ($JE) | | -10.1% | 13.4% | 17.4% | 10.2% |
| |
|---|
| Median (14 companies) | 16.4% | 0.1% | 10.9% | 13.3% | -4.6% |
|---|
| Canadian Utilities Ltd ($CU) | | 1.3% | 11.3% | 6.5% | -9.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Atco Ltd/Canada ($ACO.X) | 82.3% | 85.6% | 85.1% | 82.3% | 85.0% |
| Northland Power Inc ($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 ($TA) | 64.4% | 65.9% | 58.6% | 58.4% | 55.5% |
| |
|---|
| Median (13 companies) | 35.9% | 33.7% | 35.1% | 36.1% | 59.0% |
|---|
| Canadian Utilities Ltd ($CU) | 76.5% | 81.0% | 80.8% | 77.7% | 81.0% |
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 ($GTH) | -84.0% | -129.5% | 52.9% | 49.6% | |
| Atco Ltd/Canada ($ACO.X) | 36.7% | 39.8% | 41.0% | 41.4% | 38.7% |
| TransAlta Corp ($TA) | 44.2% | 27.3% | 34.0% | 39.5% | 33.2% |
| |
|---|
| Median (14 companies) | 29.6% | 27.8% | 33.2% | 32.4% | 33.4% |
|---|
| Canadian Utilities Ltd ($CU) | 42.9% | 45.9% | 45.7% | 47.4% | 45.8% |
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% |
| Atco Ltd/Canada ($ACO.X) | 36.2% | 58.8% | 54.2% | 48.3% | 39.6% |
| Algonquin Power & Utilities Corp ($AQN) | 22.4% | 21.7% | 23.5% | 45.9% | |
| Fortis Inc/Canada ($FTS) | 29.8% | 31.4% | 29.0% | 31.9% | 31.5% |
| |
|---|
| Median (14 companies) | 22.7% | 26.5% | 24.0% | 19.6% | 29.8% |
|---|
| Canadian Utilities Ltd ($CU) | 43.7% | 70.7% | 66.4% | 58.5% | 47.2% |
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 ($ACO.X) | 11.6% | 10.8% | 10.5% | 9.6% | 5.6% |
| Emera Inc ($EMA) | 6.1% | 5.8% | 5.9% | 8.4% | 5.6% |
| Northland Power Inc ($NPI) | 6.5% | 6.0% | 7.4% | 7.2% | 5.3% |
| |
|---|
| Median (14 companies) | 6.6% | 5.3% | 6.0% | 5.4% | 5.6% |
|---|
| Canadian Utilities Ltd ($CU) | 10.9% | 10.0% | 9.4% | 9.2% | 5.9% |
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 ($JE) | 2.5x | 4.3x | 7.4x | 6.4x | 3.9x |
| |
|---|
| Median (14 companies) | 4.5x | 5.0x | 5.6x | 4.8x | 4.6x |
|---|
| Canadian Utilities Ltd ($CU) | 3.2x | 3.7x | 3.8x | 4.1x | 5.0x |
