Rock Energy Inc reports 67.0% CAPEX decline and 36.4% Revenue decline
29.03.2016 • About Rock Energy Inc (
$RE) • By InTwits
Rock Energy Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Rock Energy Inc doesn't have a profitable business model yet: 2015 ROIC is -2.8%
- Rock Energy Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 87.7%. At the same time it's a lot of higher than industry average of 70.3%.
- CAPEX is quite volatile: 41.8 in 2015, 127 in 2014, 46.6 in 2013, 31.2 in 2012, 47.7 in 2011
- The company has unprofitable business model: ROIC is at -2.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Rock Energy Inc ($RE) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 53.160 | 39.534 | 60.594 | 99.711 | 63.415 | -36.4% |
| Gross Profit | 1.646 | -2.379 | 7.201 | 15.709 | 8.137 | -48.2% |
| SG&A | | | | | 4.765 | |
| EBITDA | 19.388 | 9.004 | 29.510 | 60.704 | 25.683 | -57.7% |
| Net Income | -6.918 | -12.210 | -1.806 | -17.203 | -4.517 | -73.7% |
Balance Sheet
|
|---|
| Cash | 0.000 | 2.649 | 0.000 | 0.000 | 0.000 | |
| Short Term Debt | 30.290 | 0.000 | 8.365 | 47.232 | 57.261 | 21.2% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 47.720 | 31.176 | 46.619 | 126.596 | 41.811 | -67.0% |
Ratios
|
|---|
| Revenue growth | -0.9% | -25.6% | 53.3% | 64.6% | -36.4% | |
| EBITDA growth | -19.7% | -53.6% | 227.7% | 105.7% | -57.7% | |
| Gross Margin | 3.1% | -6.0% | 11.9% | 15.8% | 12.8% | -2.9% |
| EBITDA Margin | 36.5% | 22.8% | 48.7% | 60.9% | 40.5% | -20.4% |
| Net Income Margin | -13.0% | -30.9% | -3.0% | -17.3% | -7.1% | 10.1% |
| SG&A, % of revenue | | | | | 7.5% | 7.5% |
| CAPEX, % of revenue | 89.8% | 78.9% | 76.9% | 127.0% | 65.9% | -61.0% |
| ROIC | -4.0% | -8.4% | 1.0% | 4.0% | -2.8% | -6.8% |
| ROE | -5.9% | -9.9% | -1.5% | -15.6% | -4.1% | 11.5% |
| Net Debt/EBITDA | 1.6x | -0.3x | 0.3x | 0.8x | 2.2x | 1.5x |
Revenue and profitability
The company's Revenue dropped on 36.4% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 20.4 pp from 60.9% to 40.5% in 2015.
Gross Margin decreased on 2.9 pp from 15.8% to 12.8% in 2015.
Net Income marign jumped on 10.1 pp from -17.3% to -7.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Rock Energy Inc had CAPEX/Revenue of 65.9%. CAPEX/Revenue dropped on 12.9 pp from 78.9% in 2012 to 65.9% in 2015. It's average CAPEX/Revenue for the last three years was 89.9%.Battling declining revenue Rock Energy Inc made large investments to CAPEX (163% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-2.82%) and ROE (-4.15%). ROIC decreased on 6.8 pp from 4.0% to -2.8% in 2015. ROE jumped on 11.5 pp from -15.6% to -4.1% in 2015.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.2x Debt / EBITDA. Net Debt / EBITDA jumped on 1.5x from 0.8x to 2.2x in 2015. Debt surged on 21.2% in 2015 while cash didn't change in 2015.
Appendix 1: Peers in Energy
Below we provide Rock 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 |
|---|
| ONEnergy Inc ($OEG) | | | | 6,002.6% | 231.5% |
| Seven Generations Energy Ltd ($VII) | | | 115.7% | 340.2% | 39.0% |
| Crown Point Energy Inc ($CWV) | | 177.6% | 110.5% | -34.4% | 38.3% |
| Oando Energy Resources Inc ($OER) | | | -5.9% | 200.1% | 34.7% |
| High Arctic Energy Services Inc ($HWO) | | 14.9% | 4.4% | 12.5% | 22.2% |
| |
|---|
| Median (131 companies) | 59.0% | 9.5% | 17.1% | 18.5% | -27.7% |
|---|
| Rock Energy Inc ($RE) | | -25.6% | 53.3% | 64.6% | -36.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Americas Petrogas Inc ($BOE) | | 77.1% | 43.3% | -34.3% | 121.1% |
| TransAlta Renewables Inc ($RNW) | | | 94.4% | 94.5% | 94.5% |
| Serinus Energy Inc ($SEN) | 80.4% | 80.5% | 76.5% | 86.8% | 88.5% |
| Advantage Oil & Gas Ltd ($AAV) | 70.5% | 62.0% | 84.5% | 92.5% | 88.5% |
| Polaris Infrastructure Inc ($PIF) | 58.4% | 39.9% | 33.6% | 32.0% | 86.7% |
| |
|---|
| Median (118 companies) | 34.3% | 29.7% | 31.6% | 30.3% | 33.9% |
|---|
| Rock Energy Inc ($RE) | 3.1% | -6.0% | 11.9% | 15.8% | 12.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Granite Oil Corp ($GXO) | 9.2% | 59.4% | 64.5% | 70.8% | 201.9% |
| Perpetual Energy Inc ($PMT) | 26.1% | 35.5% | 70.7% | 58.0% | 110.3% |
| Petro Rio SA ($PRJ) | -4,925.5% | -4,809.7% | -6,899.7% | 28.2% | 90.7% |
| Peyto Exploration & Development Corp ($PEY) | 83.6% | 86.1% | 83.2% | 86.3% | 84.6% |
| Innergex Renewable Energy Inc ($INE) | 109.4% | 111.8% | 110.0% | 82.9% | 83.4% |
| |
|---|
| Median (134 companies) | 25.5% | 25.0% | 31.1% | 29.6% | 7.2% |
|---|
| Rock Energy Inc ($RE) | 36.5% | 22.8% | 48.7% | 60.9% | 40.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Primeline Energy Holdings Inc ($PEH) | | | | | 1,091.8% |
| Oryx Petroleum Corp Ltd ($OXC) | | | | 1,997.8% | 712.8% |
| WesternZagros Resources Ltd ($WZR) | | | | | 385.6% |
| Athabasca Oil Corp ($ATH) | 176.2% | 2,426.4% | 596.6% | 504.7% | 315.2% |
| TORC Oil & Gas Ltd ($TOG) | 6,833.4% | 453.8% | 466.9% | 104.5% | 229.4% |
| |
|---|
| Median (134 companies) | 42.0% | 50.0% | 39.2% | 48.8% | 31.3% |
|---|
| Rock Energy Inc ($RE) | 89.8% | 78.9% | 76.9% | 127.0% | 65.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Granite Oil Corp ($GXO) | -10.9% | 4.4% | 10.8% | 16.1% | 37.7% |
| High Arctic Energy Services Inc ($HWO) | 27.0% | 31.4% | 26.3% | 24.9% | 24.2% |
| Petro Rio SA ($PRJ) | -15.5% | -9.6% | -12.7% | -3.5% | 19.4% |
| Perpetual Energy Inc ($PMT) | -10.6% | -10.1% | 9.1% | 10.4% | 16.1% |
| Macro Enterprises Inc ($MCR) | 33.6% | 52.7% | 47.6% | 10.8% | 12.4% |
| |
|---|
| Median (134 companies) | 4.5% | 3.2% | 4.6% | 5.3% | -8.4% |
|---|
| Rock Energy Inc ($RE) | -4.0% | -8.4% | 1.0% | 4.0% | -2.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Veresen Inc ($VSN) | 22.3x | 16.2x | 14.7x | 30.3x | 7.4x |
| Lightstream Resources Ltd ($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 ($PGF) | 1.5x | 2.9x | 2.1x | 16.8x | |
| |
|---|
| Median (138 companies) | 1.2x | 1.6x | 1.5x | 1.4x | 2.8x |
|---|
| Rock Energy Inc ($RE) | 1.6x | -0.3x | 0.3x | 0.8x | 2.2x |
