Pembina Pipeline Corp reports 28.3% CAPEX growth while 23.1% Revenue decline
25.02.2016 • About Pembina Pipeline Corp (
$PPL) • By InTwits
Pembina Pipeline Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Pembina Pipeline Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 25.0%. At the same time it's a lot of higher than industry average of 8.6%.
- CAPEX is quite volatile: 1,811 in 2015, 1,412 in 2014, 880 in 2013, 584 in 2012, 477 in 2011
- The company has potentially unprofitable business model: ROIC is at 6.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Pembina Pipeline Corp ($PPL) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,676 | 3,427 | 5,006 | 6,079 | 4,672 | -23.1% |
| Gross Profit | 344 | 507 | 787 | 862 | 869 | 0.8% |
| SG&A | 62 | 97 | 132 | 156 | 157 | 0.6% |
| EBITDA | 361 | 595 | 831 | 914 | 951 | 4.0% |
| Net Income | 166 | 225 | 351 | 383 | 406 | 6.0% |
Balance Sheet
|
|---|
| Cash | 0 | 27 | 51 | 53 | 28 | -47.2% |
| Short Term Debt | 325 | 12 | 262 | 4 | 5 | 25.0% |
| Long Term Debt | 1,301 | 2,543 | 2,013 | 2,857 | 3,318 | 16.1% |
Cash flow
|
|---|
| Capex | 477 | 584 | 880 | 1,412 | 1,811 | 28.3% |
Ratios
|
|---|
| Revenue growth | 36.0% | 104.5% | 46.1% | 21.4% | -23.1% | |
| EBITDA growth | 23.0% | 64.9% | 39.7% | 10.0% | 4.0% | |
| Gross Margin | 20.5% | 14.8% | 15.7% | 14.2% | 18.6% | 4.4% |
| EBITDA Margin | 21.5% | 17.4% | 16.6% | 15.0% | 20.4% | 5.3% |
| Net Income Margin | 9.9% | 6.6% | 7.0% | 6.3% | 8.7% | 2.4% |
| SG&A, % of revenue | 3.7% | 2.8% | 2.6% | 2.6% | 3.4% | 0.8% |
| CAPEX, % of revenue | 28.5% | 17.0% | 17.6% | 23.2% | 38.8% | 15.5% |
| ROIC | 11.3% | 8.2% | 8.5% | 7.6% | 6.3% | -1.2% |
| ROE | 16.5% | 8.6% | 7.6% | 6.8% | 6.0% | -0.8% |
| Net Debt/EBITDA | 4.5x | 4.2x | 2.7x | 3.1x | 3.5x | 0.4x |
Revenue and profitability
The company's Revenue dropped on 23.1% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.3 pp from 15.0% to 20.4% in 2015.
Gross Margin increased on 4.4 pp from 14.2% to 18.6% in 2015. SG&A as a % of Revenue increased slightly on 0.79 pp from 2.6% to 3.4% in 2015.
Net Income marign increased on 2.4 pp from 6.3% to 8.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
Pembina Pipeline Corp's CAPEX/Revenue was 38.8% in 2015. Pembina Pipeline Corp showed fast CAPEX/Revenue growth of 21.7 pp from 17.0% in 2012 to 38.8% in 2015. Average CAPEX/Revenue for the last three years was 26.5%.Battling declining revenue Pembina Pipeline Corp made large investments to CAPEX (190% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (6.34%) and ROE (6.03%). ROIC decreased slightly on 1.2 pp from 7.6% to 6.3% in 2015. ROE decreased slightly on 0.78 pp from 6.8% to 6.0% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 3.5x. Net Debt / EBITDA jumped on 0.4x from 3.1x to 3.5x in 2015. Debt surged on 16.1% in 2015 while cash dropped on 47.2% in 2015.
Management team
Pembina Pipeline Corp's CEO Michael H Dilger "Mick" is a founder and has spent 4 years at the company. J Scott Burrows is a Pembina Pipeline Corp's CFO. J Scott Burrows has spent 3 years at the company.
Appendix 1: Peers in Energy
Below you can find Pembina Pipeline Corp benchmarking vs. other companies in Energy 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 |
|---|
| 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 38.6% | 9.5% | 16.2% | 17.6% | -25.6% |
|---|
| Pembina Pipeline Corp ($PPL) | | 104.5% | 46.1% | 21.4% | -23.1% |
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 ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 34.2% | 29.3% | 31.6% | 30.3% | 34.0% |
|---|
| Pembina Pipeline Corp ($PPL) | 20.5% | 14.8% | 15.7% | 14.2% | 18.6% |
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 ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | 54.5% |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 25.5% | 25.7% | 31.1% | 29.6% | 5.9% |
|---|
| Pembina Pipeline Corp ($PPL) | 21.5% | 17.4% | 16.6% | 15.0% | 20.4% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 21.2% |
|---|
| Pembina Pipeline Corp ($PPL) | 28.5% | 17.0% | 17.6% | 23.2% | 38.8% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Pason Systems Inc ($PSI) | 33.5% | 30.0% | 29.7% | 41.0% | 6.0% |
| Sea Dragon Energy Inc ($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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -7.1% |
|---|
| Pembina Pipeline Corp ($PPL) | 11.3% | 8.2% | 8.5% | 7.6% | 6.3% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 4.8x |
|---|
| Pembina Pipeline Corp ($PPL) | 4.5x | 4.2x | 2.7x | 3.1x | 3.5x |
