MEG Energy Corp Net Debt / EBITDA surged on 12.6x from 18.2x to 30.8x in 2016 while Debt decreased on 2.6%
09.02.2017 • About MEG Energy Corp (
$MEG) • By InTwits
MEG Energy Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- MEG Energy Corp doesn't have a profitable business model yet: 2016 ROIC is -4.0%
- EBITDA Margin is quite volatile: 8.5% in 2016, 13.7% in 2015, 32.6% in 2014, 22.6% in 2013, 24.6% in 2012
- MEG Energy Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 76.6%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 123 in 2016, 307 in 2015, 1,290 in 2014, 2,170 in 2013, 1,599 in 2012
- The company has unprofitable business model: ROIC is at -4.0%
- It operates with high leverage: Net Debt/EBITDA is 30.8x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
MEG Energy Corp ($MEG) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,051 | 1,334 | 2,830 | 1,926 | 1,866 | -3.1% |
| Gross Profit | 911 | 1,167 | 2,478 | 1,619 | 1,613 | -0.4% |
| SG&A | 583 | 716 | 1,339 | 1,169 | 1,114 | -4.7% |
| EBITDA | 258 | 302 | 921 | 263 | 159 | -39.4% |
| Net Income | 53 | -166 | -106 | -1,170 | -429 | |
Balance Sheet
|
|---|
| Cash | 1,475 | 1,179 | 656 | 408 | 156 | -61.7% |
| Short Term Debt | 10 | 14 | 15 | 18 | 17 | -3.0% |
| Long Term Debt | 2,479 | 3,991 | 4,350 | 5,190 | 5,053 | -2.6% |
Cash flow
|
|---|
| Capex | 1,599 | 2,170 | 1,290 | 307 | 123 | -59.9% |
Ratios
|
|---|
| Revenue growth | 1.3% | 27.0% | 112.1% | -31.9% | -3.1% | |
| EBITDA growth | -22.9% | 17.0% | 205.1% | -71.4% | -39.4% | |
| Gross Margin | 86.8% | 87.4% | 87.6% | 84.1% | 86.4% | 2.3% |
| EBITDA Margin | 24.6% | 22.6% | 32.6% | 13.7% | 8.5% | -5.1% |
| Net Income Margin | 5.0% | -12.5% | -3.7% | -60.7% | -23.0% | 37.8% |
| SG&A, % of revenue | 55.5% | 53.7% | 47.3% | 60.7% | 59.7% | -1.0% |
| CAPEX, % of revenue | 152.2% | 162.6% | 45.6% | 15.9% | 6.6% | -9.4% |
| ROIC | 1.7% | 1.4% | 6.0% | -2.2% | -4.0% | -1.7% |
| ROE | 1.2% | -3.4% | -2.2% | -27.7% | -12.3% | 15.4% |
| Net Debt/EBITDA | 3.9x | 9.4x | 4.0x | 18.2x | 30.8x | 12.6x |
MEG Energy Corp ($MEG) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 290 | 513 | 497 | 566 | -37.8% | -7.4% | 8.1% | 27.3% |
| EBITDA | -50 | 47 | 93 | 46 | -322.6% | -67.6% | 23.3% | 118.9% |
| Net Income | 131 | -146 | -109 | -305 | | -330.5% | | |
Balance Sheet
|
|---|
| Cash | 125 | 153 | 103 | 156 | -73.5% | -65.2% | -70.6% | -61.7% |
| Short Term Debt | 17 | 17 | 17 | 17 | 2.3% | 4.3% | -2.1% | -3.0% |
| Long Term Debt | 4,859 | 4,871 | 4,910 | 5,053 | 2.1% | 4.1% | -2.3% | -2.6% |
Ratios
|
|---|
| Gross Margin | 78.2% | 88.9% | 87.0% | 87.9% | -0.1% | 1.4% | 3.8% | 3.6% |
| EBITDA Margin | -17.3% | 9.1% | 18.7% | 8.2% | -22.1% | -16.9% | 2.3% | 3.4% |
| Net Income Margin | 45.1% | -28.5% | -21.9% | -53.9% | 153.9% | -39.9% | 71.1% | 13.0% |
Revenue and profitability
MEG Energy Corp's Revenue decreased on 3.1%. Annual revenue decline showed slowdown in 16Q4 - revenue jumped on 27.3%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 5.1 pp from 13.7% to 8.5% in 2016.
Gross Margin increased on 2.3 pp from 84.1% to 86.4% in 2016. SG&A as a % of Revenue decreased slightly on 0.99 pp from 60.7% to 59.7% in 2016.
Net Income marign jumped on 37.8 pp from -60.7% to -23.0% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 6.6% in 2016. CAPEX/Revenue dropped on 156 pp from 163% in 2013 to 6.6% in 2016. It's average level of CAPEX/Revenue for the last three years was 22.7%.Battling declining revenue MEG Energy Corp invested a large share of EBITDA (77.2%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-3.95%) and ROE (-12.31%). ROIC decreased slightly on 1.7 pp from -2.2% to -4.0% in 2016. ROE surged on 15.4 pp from -27.7% to -12.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 30.8x and Debt / EBITDA is 31.8x. Net Debt / EBITDA jumped on 12.6x from 18.2x to 30.8x in 2016. Debt decreased on 2.6% while cash dropped on 61.7%.
Management team
William J Mccaffrey "Bill" is a MEG Energy Corp's CEO. William J Mccaffrey "Bill" is a founder and has spent 19 years at the company. Eric L Toews is a The company's CFO. Eric L Toews has spent 5 years at the company.
Appendix 1: Peers in Energy
Below we provide MEG Energy 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | | -18.4% | 141.2% |
| Seven Generations Energy Ltd ($VII) | | 115.7% | 340.2% | 39.0% | 94.4% |
| Athabasca Oil Corp ($ATH) | | 342.7% | 5.5% | -22.9% | 73.1% |
| Painted Pony Petroleum Ltd ($PPY) | | 41.3% | 56.0% | -42.5% | 60.7% |
| ONEnergy Inc ($OEG) | | | 6,002.6% | 231.5% | 57.4% |
| |
|---|
| Median (116 companies) | | 15.4% | 16.9% | -27.7% | -19.1% |
|---|
| MEG Energy Corp ($MEG) | | 27.0% | 112.1% | -31.9% | -3.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($BOE) | 77.1% | 43.3% | -34.3% | 121.1% | |
| TransAlta Renewables Inc ($RNW) | | 94.4% | 94.5% | 94.5% | 91.1% |
| Serinus Energy Inc ($SEN) | 80.5% | 76.5% | 86.8% | 88.5% | |
| Advantage Oil & Gas Ltd ($AAV) | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% |
| Polaris Infrastructure Inc ($PIF) | 39.9% | 33.6% | 32.0% | 86.7% | 88.6% |
| |
|---|
| Median (114 companies) | 32.0% | 32.1% | 32.2% | 33.6% | 31.5% |
|---|
| MEG Energy Corp ($MEG) | 86.8% | 87.4% | 87.6% | 84.1% | 86.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($GXO) | 59.4% | 64.5% | 70.8% | 201.9% | |
| Perpetual Energy Inc ($PMT) | 35.5% | 70.7% | 58.0% | 110.3% | |
| Petro Rio SA ($PRJ) | -4,809.7% | -6,899.7% | 28.2% | 90.7% | |
| Peyto Exploration & Development Corp ($PEY) | 86.1% | 83.2% | 86.3% | 84.6% | 80.7% |
| Innergex Renewable Energy Inc ($INE) | 111.8% | 110.0% | 82.9% | 83.4% | 83.5% |
| |
|---|
| Median (128 companies) | 25.9% | 35.7% | 28.9% | 8.1% | 29.2% |
|---|
| MEG Energy Corp ($MEG) | 24.6% | 22.6% | 32.6% | 13.7% | 8.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($OXC) | | | 1,997.8% | 712.8% | |
| WesternZagros Resources Ltd ($WZR) | | | | 385.6% | |
| Athabasca Oil Corp ($ATH) | 2,426.4% | 596.6% | 504.7% | 315.2% | 83.7% |
| TORC Oil & Gas Ltd ($TOG) | 453.8% | 466.9% | 104.5% | 229.4% | 76.3% |
| Seven Generations Energy Ltd ($VII) | 452.8% | 513.1% | 227.4% | 191.2% | 73.5% |
| |
|---|
| Median (129 companies) | 42.3% | 39.0% | 45.0% | 28.1% | 23.8% |
|---|
| MEG Energy Corp ($MEG) | 152.2% | 162.6% | 45.6% | 15.9% | 6.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($ERF) | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% |
| Whitecap Resources Inc ($WCP) | 7.1% | 8.1% | 9.6% | -10.6% | 10.1% |
| Ecopetrol SA ($ECP) | 29.3% | 24.4% | 16.5% | 3.0% | 9.6% |
| Parkland Fuel Corp ($PKI) | 22.3% | 23.3% | 9.9% | 7.8% | 8.6% |
| Inter Pipeline Ltd ($IPL) | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% |
| |
|---|
| Median (128 companies) | 3.9% | 5.8% | 5.5% | -8.5% | -1.9% |
|---|
| MEG Energy Corp ($MEG) | 1.7% | 1.4% | 6.0% | -2.2% | -4.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($PXX) | -0.2x | -0.1x | 0.2x | 3,726.1x | -0.2x |
| Paramount Resources Ltd ($POU) | 14.6x | 23.9x | 8.9x | 421.5x | -5.8x |
| Precision Drilling Corp ($PD) | 2.2x | 1.9x | 2.0x | 68.4x | 7.6x |
| Trican Well Service Ltd ($TCW) | 2.5x | 3.4x | 2.9x | 31.4x | |
| Trilogy Energy Corp ($TET) | 2.6x | 1.8x | 2.3x | 25.5x | 7.3x |
| |
|---|
| Median (78 companies) | 1.5x | 1.4x | 1.4x | 2.6x | 2.6x |
|---|
| MEG Energy Corp ($MEG) | 3.9x | 9.4x | 4.0x | 18.2x | 30.8x |
