Husky Energy Inc reports 406% Net Income decline and 3.3 pp EBITDA Margin decline from 24.7% to 21.4%
26.02.2016 • About Husky Energy Inc (
$HSE) • By InTwits
Husky Energy Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Husky Energy Inc doesn't have a profitable business model yet: 2015 ROIC is -18.0%
- Husky Energy Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.8%. At the same time it's a lot of higher than industry average of 6.9%.
- CAPEX is quite volatile: 1,114 in 2015, 1,098 in 2014, 1,374 in 2013, 3,565 in 2012, 2,047 in 2011
- The company has unprofitable business model: ROIC is at -18.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Husky Energy Inc ($HSE) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 21,957 | 22,255 | 23,317 | 24,092 | 16,369 | -32.1% |
| Gross Profit | 6,578 | 6,229 | 6,405 | 6,564 | 3,978 | -39.4% |
| SG&A | 428 | 448 | 506 | 462 | 342 | -26.0% |
| EBITDA | 5,873 | 5,560 | 5,740 | 5,944 | 3,498 | -41.2% |
| Net Income | 2,224 | 2,022 | 1,829 | 1,258 | -3,850 | -406.0% |
Balance Sheet
|
|---|
| Cash | 1,841 | 2,025 | 1,097 | 1,267 | 70 | -94.5% |
| Short Term Debt | 407 | 0 | 798 | 1,195 | 997 | -16.6% |
| Long Term Debt | 3,491 | 3,840 | 3,290 | 4,097 | 5,759 | 40.6% |
Cash flow
|
|---|
| Capex | 4,800 | 4,701 | 5,028 | 5,023 | 3,005 | -40.2% |
Ratios
|
|---|
| Revenue growth | 28.4% | 1.4% | 4.8% | 3.3% | -32.1% | |
| EBITDA growth | 67.6% | -5.3% | 3.2% | 3.6% | -41.2% | |
| Gross Margin | 30.0% | 28.0% | 27.5% | 27.2% | 24.3% | -2.9% |
| EBITDA Margin | 26.7% | 25.0% | 24.6% | 24.7% | 21.4% | -3.3% |
| Net Income Margin | 10.1% | 9.1% | 7.8% | 5.2% | -23.5% | -28.7% |
| SG&A, % of revenue | 1.9% | 2.0% | 2.2% | 1.9% | 2.1% | 0.2% |
| CAPEX, % of revenue | 21.9% | 21.1% | 21.6% | 20.8% | 18.4% | -2.5% |
| ROIC | 14.1% | 11.1% | 9.6% | 6.5% | -18.0% | -24.5% |
| ROE | 13.8% | 11.1% | 9.4% | 6.3% | -21.7% | -28.0% |
| Net Debt/EBITDA | 0.4x | 0.3x | 0.5x | 0.7x | 1.9x | 1.2x |
Revenue and profitability
Husky Energy Inc's Revenue dropped on 32.1% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.96 pp from 4.2% to 5.1% in FY2015.
Gross Margin decreased on 2.9 pp from 27.2% to 24.3% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign dropped on 28.7 pp from 5.2% to -23.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
Husky Energy Inc's CAPEX/Revenue was 18.4% in 2015. Husky Energy Inc's CAPEX/Revenue decreased on 2.8 pp from 21.1% in 2012 to 18.4% in 2015. It's average CAPEX/Revenue for the last three years was 20.3%.The company invested a big chunk of EBITDA (85.9%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-18.00%) and ROE (-21.74%). ROIC dropped on 24.5 pp from 6.5% to -18.0% in 2015. ROE dropped on 28.0 pp from 6.3% to -21.7% in 2015.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 1.9x Debt / EBITDA. Net Debt / EBITDA jumped on 1.2x from 0.7x to 1.9x in 2015. Debt jumped on 27.7% in 2015 while cash dropped on 94.5% in 2015.
Appendix 1: Peers in Energy
Below we provide Husky Energy Inc 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 39.0% | 10.4% | 17.1% | 18.5% | -24.0% |
|---|
| Husky Energy Inc ($HSE) | | 1.4% | 4.8% | 3.3% | -32.1% |
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 ($SFD) | -43.2% | 65.6% | 36.0% | 87.3% | |
| |
|---|
| Median (140 companies) | 34.2% | 29.3% | 31.6% | 30.3% | 30.7% |
|---|
| Husky Energy Inc ($HSE) | 30.0% | 28.0% | 27.5% | 27.2% | 24.3% |
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 ($BNP) | 63.8% | 64.6% | 62.6% | 91.6% | 54.5% |
| Bellatrix Exploration Ltd ($BXE) | 42.7% | 58.6% | 83.6% | 89.6% | |
| Advantage Oil & Gas Ltd ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | |
| |
|---|
| Median (159 companies) | 24.7% | 25.7% | 31.1% | 29.6% | 11.5% |
|---|
| Husky Energy Inc ($HSE) | 26.7% | 25.0% | 24.6% | 24.7% | 21.4% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 50.0% | 39.2% | 48.8% | 21.5% |
|---|
| Husky Energy Inc ($HSE) | 21.9% | 21.1% | 21.6% | 20.8% | 18.4% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -6.0% |
|---|
| Husky Energy Inc ($HSE) | 14.1% | 11.1% | 9.6% | 6.5% | -18.0% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 4.1x |
|---|
| Husky Energy Inc ($HSE) | 0.4x | 0.3x | 0.5x | 0.7x | 1.9x |
