Western Energy Services Corp reports 458% Net Income decline and 55.2% Revenue decline
25.02.2016 • About Western Energy Services Corp (
$WRG) • By InTwits
Western Energy Services Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Western Energy Services Corp doesn't have a profitable business model yet: 2015 ROIC is -15.3%
- EBITDA Margin is quite volatile: -36.7% in 2015, 34.1% in 2014, 30.2% in 2013, 34.7% in 2012, 37.3% in 2011
- Western Energy Services Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 27.3%. At the same time it's a lot of higher than industry average of 8.4%.
- CAPEX is quite volatile: 33.6 in 2015, 109 in 2014, 95.2 in 2013, 127 in 2012, 88.9 in 2011
- The company has unprofitable business model: ROIC is at -15.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Western Energy Services Corp ($WRG) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 262.5 | 308.6 | 379.9 | 507.8 | 227.5 | -55.2% |
| Gross Profit | 90.0 | 98.6 | 99.0 | 144.2 | 47.7 | -66.9% |
| SG&A | | | | | 30.9 | |
| EBITDA | 98.0 | 107.1 | 114.9 | 172.9 | -83.5 | -148.3% |
| Net Income | 64.7 | 45.2 | 35.1 | 36.2 | -129.4 | -457.5% |
Balance Sheet
|
|---|
| Cash | 0.0 | 6.6 | 17.4 | 62.7 | 58.4 | -6.7% |
| Short Term Debt | 8.2 | 5.8 | 0.9 | 1.1 | 0.8 | -28.3% |
| Long Term Debt | 108.0 | 186.9 | 262.9 | 264.2 | 264.2 | -0.0% |
Cash flow
|
|---|
| Capex | 88.9 | 127.2 | 95.2 | 108.6 | 33.6 | -69.1% |
Ratios
|
|---|
| Revenue growth | 368.7% | 17.6% | 23.1% | 33.7% | -55.2% | |
| EBITDA growth | 510.6% | 9.3% | 7.3% | 50.5% | -148.3% | |
| Gross Margin | 34.3% | 32.0% | 26.0% | 28.4% | 21.0% | -7.4% |
| EBITDA Margin | 37.3% | 34.7% | 30.2% | 34.1% | -36.7% | -70.7% |
| Net Income Margin | 24.7% | 14.6% | 9.2% | 7.1% | -56.9% | -64.0% |
| SG&A, % of revenue | | | | | 13.6% | 13.6% |
| CAPEX, % of revenue | 33.9% | 41.2% | 25.1% | 21.4% | 14.8% | -6.6% |
| ROIC | 19.2% | 12.6% | 8.9% | 12.9% | -15.3% | -28.2% |
| ROE | 21.5% | 10.4% | 6.9% | 6.2% | -24.2% | -30.5% |
| Net Debt/EBITDA | 1.2x | 1.7x | 2.1x | 1.2x | | -1.2x |
Revenue and profitability
The company's Revenue dropped on 55.2% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 70.7 pp from 34.1% to -36.7% in 2015.
Gross Margin decreased on 7.4 pp from 28.4% to 21.0% in 2015.
Net Income marign dropped on 64.0 pp from 7.1% to -56.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Western Energy Services Corp had CAPEX/Revenue of 14.8%. Western Energy Services Corp showed big decline in CAPEX/Revenue of 26.5 pp from 41.2% in 2012 to 14.8% in 2015. Average CAPEX/Revenue for the last three years was 20.4%.
Return on investment
The company operates at negative ROIC (-15.34%) and ROE (-24.23%). ROIC dropped on 28.2 pp from 12.9% to -15.3% in 2015. ROE dropped on 30.5 pp from 6.2% to -24.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is . Net Debt / EBITDA dropped on 1.2x from 1.2x to in 2015. Debt showed almost no change in 2015 while cash decreased on 6.7% in 2015.
Appendix 1: Peers in Energy
Below we provide Western Energy Services Corp 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 38.6% | 9.5% | 16.2% | 17.6% | -24.0% |
|---|
| Western Energy Services Corp ($WRG) | | 17.6% | 23.1% | 33.7% | -55.2% |
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 ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.6% | 30.3% | 34.0% |
|---|
| Western Energy Services Corp ($WRG) | 34.3% | 32.0% | 26.0% | 28.4% | 21.0% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 31.1% | 28.9% | 11.5% |
|---|
| Western Energy Services Corp ($WRG) | 37.3% | 34.7% | 30.2% | 34.1% | -36.7% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 21.5% |
|---|
| Western Energy Services Corp ($WRG) | 33.9% | 41.2% | 25.1% | 21.4% | 14.8% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -6.0% |
|---|
| Western Energy Services Corp ($WRG) | 19.2% | 12.6% | 8.9% | 12.9% | -15.3% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.5x | 1.5x | 1.4x | 4.6x |
|---|
| Western Energy Services Corp ($WRG) | 1.2x | 1.7x | 2.1x | 1.2x | |
