Freehold Royalties Ltd Net Income dropped on 106% in 2015 and Revenue dropped on 31.3%
03.03.2016 • About Freehold Royalties Ltd (
$FRU) • By InTwits
Freehold Royalties Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Freehold Royalties Ltd doesn't have a profitable business model yet: 2015 ROIC is -1.4%
- Freehold Royalties Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.5%. At the same time it's a lot of higher than industry average of 28.7%.
- CAPEX is quite volatile: 22.3 in 2015, 33.7 in 2014, 29.3 in 2013, 97.6 in 2012, 33.1 in 2011
- The company has unprofitable business model: ROIC is at -1.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Freehold Royalties Ltd ($FRU) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 153.7 | 161.7 | 175.2 | 194.2 | 133.4 | -31.3% |
| Gross Profit | 140.9 | 146.1 | 155.8 | 175.2 | 115.2 | -34.3% |
| SG&A | 7.0 | 7.7 | 7.6 | 8.7 | 10.6 | 22.6% |
| EBITDA | 128.0 | 131.8 | 141.7 | 160.8 | 85.0 | -47.1% |
| Net Income | 55.3 | 46.3 | 57.9 | 66.4 | -4.1 | -106.1% |
Balance Sheet
|
|---|
| Cash | 0.2 | 0.1 | 0.2 | 1.1 | 0.9 | -22.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 48.0 | 18.0 | 49.0 | 139.0 | 152.0 | 9.4% |
Cash flow
|
|---|
| Capex | 33.1 | 97.6 | 29.3 | 33.7 | 22.3 | -33.8% |
Ratios
|
|---|
| Revenue growth | 14.7% | 5.2% | 8.4% | 10.8% | -31.3% | |
| EBITDA growth | 19.0% | 3.0% | 7.6% | 13.5% | -47.1% | |
| Gross Margin | 91.7% | 90.4% | 89.0% | 90.2% | 86.3% | -3.9% |
| EBITDA Margin | 83.3% | 81.5% | 80.9% | 82.8% | 63.8% | -19.1% |
| Net Income Margin | 35.9% | 28.7% | 33.0% | 34.2% | -3.1% | -37.3% |
| SG&A, % of revenue | 4.6% | 4.8% | 4.4% | 4.5% | 8.0% | 3.5% |
| CAPEX, % of revenue | 21.5% | 60.4% | 16.7% | 17.4% | 16.7% | -0.6% |
| ROIC | 20.6% | 17.1% | 20.2% | 18.8% | -1.4% | -20.3% |
| ROE | 19.9% | 15.7% | 19.0% | 18.6% | -0.7% | -19.3% |
| Net Debt/EBITDA | 0.4x | 0.1x | 0.3x | 0.9x | 1.8x | 0.9x |
Revenue and profitability
Freehold Royalties Ltd's Revenue dropped on 31.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 19.1 pp from 82.8% to 63.8% in 2015.
Gross Margin decreased on 3.9 pp from 90.2% to 86.3% in 2015. SG&A as a % of Revenue increased on 3.5 pp from 4.5% to 8.0% in 2015.
Net Income marign dropped on 37.3 pp from 34.2% to -3.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 16.7%. CAPEX/Revenue dropped on 43.7 pp from 60.4% in 2012 to 16.7% in 2015. It's average level of CAPEX/Revenue for the last three years was 16.9%.
Return on investment
The company operates at negative ROIC (-1.44%) and ROE (-0.70%). ROIC dropped on 20.3 pp from 18.8% to -1.4% in 2015. ROE dropped on 19.3 pp from 18.6% to -0.70% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 1.8x. Net Debt / EBITDA surged on 0.9x from 0.9x to 1.8x in 2015. Debt increased on 9.4% in 2015 while cash dropped on 22.2% in 2015.
Management team
Freehold Royalties Ltd's CEO is Thomas J Mullane "Tom". Thomas J Mullane "Tom" is a founder and has 5 years tenure at the company. Freehold Royalties Ltd's CFO is Darren G Gunderson. Darren G Gunderson has 10 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find Freehold Royalties Ltd 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 ($SPE) | -8.2% | 16.6% | 29.9% | 923.7% | |
| |
|---|
| Median (160 companies) | 39.6% | 10.4% | 17.1% | 18.5% | -27.7% |
|---|
| Freehold Royalties Ltd ($FRU) | | 5.2% | 8.4% | 10.8% | -31.3% |
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% | 88.5% |
| 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% | |
| Serinus Energy Inc ($SEN) | 80.4% | 80.5% | 76.5% | 86.8% | |
| |
|---|
| Median (140 companies) | 33.3% | 29.3% | 31.5% | 29.6% | 30.2% |
|---|
| Freehold Royalties Ltd ($FRU) | 91.7% | 90.4% | 89.0% | 90.2% | 86.3% |
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 ($AAV) | -4.0% | 5.2% | 66.1% | 87.8% | 81.8% |
| |
|---|
| Median (159 companies) | 24.7% | 25.0% | 30.5% | 28.9% | 12.2% |
|---|
| Freehold Royalties Ltd ($FRU) | 83.3% | 81.5% | 80.9% | 82.8% | 63.8% |
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 ($BKX) | 139.2% | 195.8% | 789.1% | 316.6% | |
| |
|---|
| Median (162 companies) | 43.3% | 47.3% | 39.2% | 48.8% | 25.4% |
|---|
| Freehold Royalties Ltd ($FRU) | 21.5% | 60.4% | 16.7% | 17.4% | 16.7% |
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 ($COQ) | | | | 22.9% | |
| |
|---|
| Median (165 companies) | 4.4% | 3.2% | 4.5% | 5.0% | -6.3% |
|---|
| Freehold Royalties Ltd ($FRU) | 20.6% | 17.1% | 20.2% | 18.8% | -1.4% |
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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (136 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 3.2x |
|---|
| Freehold Royalties Ltd ($FRU) | 0.4x | 0.1x | 0.3x | 0.9x | 1.8x |
