Emera Inc CAPEX surged on 179% in 2016 and Revenue surged on 53.3%
10.02.2017 • About Emera Inc (
$EMA) • By InTwits
Emera Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Emera Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.5%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 1,031 in 2016, 369 in 2015, 434 in 2014, 317 in 2013, 434 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.3%
- It operates with high leverage: Net Debt/EBITDA is 13.3x while industry average is 8.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Emera Inc ($EMA) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,059 | 2,230 | 2,939 | 2,789 | 4,277 | 53.3% |
| Gross Profit | 1,137 | 1,260 | 1,615 | 1,578 | 2,475 | 56.8% |
| EBITDA | 641 | 721 | 1,009 | 860 | 1,148 | 33.5% |
| Net Income | 232 | 237 | 433 | 428 | 255 | -40.4% |
Balance Sheet
|
|---|
| Cash | 87 | 101 | 221 | 1,073 | 404 | -62.4% |
| Short Term Debt | 458 | 766 | 352 | 1,018 | 1,437 | 41.2% |
| Long Term Debt | 3,257 | 3,364 | 3,660 | 3,751 | 14,276 | 280.6% |
Cash flow
|
|---|
| Capex | 434 | 317 | 434 | 369 | 1,031 | 179.3% |
Ratios
|
|---|
| Revenue growth | -0.3% | 8.3% | 31.8% | -5.1% | 53.3% | |
| EBITDA growth | 10.4% | 12.5% | 40.0% | -14.8% | 33.5% | |
| Gross Margin | 55.2% | 56.5% | 55.0% | 56.6% | 57.9% | 1.3% |
| EBITDA Margin | 31.1% | 32.3% | 34.3% | 30.8% | 26.8% | -4.0% |
| Net Income Margin | 11.3% | 10.6% | 14.7% | 15.3% | 6.0% | -9.4% |
| CAPEX, % of revenue | 21.1% | 14.2% | 14.8% | 13.2% | 24.1% | 10.9% |
| ROIC | 5.8% | 5.9% | 8.4% | 5.6% | 3.3% | -2.3% |
| ROE | 14.2% | 11.6% | 17.0% | 12.9% | 4.8% | -8.1% |
| Net Debt/EBITDA | 5.7x | 5.6x | 3.8x | 4.3x | 13.3x | 9.0x |
Emera Inc ($EMA) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 877 | 499 | 1,387 | 1,513 | -1.3% | -5.2% | 115.7% | 106.8% |
| EBITDA | 361 | 89 | 280 | 420 | 13.5% | -28.1% | 56.4% | 74.6% |
| Net Income | 51 | 215 | -81 | 70 | -69.4% | 1,106.7% | -262.0% | -63.6% |
Balance Sheet
|
|---|
| Cash | 1,000 | 7,459 | 415 | 404 | 227.4% | 4,121.2% | -47.8% | -62.4% |
| Short Term Debt | 965 | 276 | 1,100 | 1,437 | 878.3% | 178.9% | 51.4% | 41.2% |
| Long Term Debt | 3,714 | 11,683 | 14,338 | 14,276 | -2.3% | 223.3% | 289.9% | 280.6% |
Ratios
|
|---|
| Gross Margin | 62.7% | 49.9% | 56.8% | 58.7% | 8.0% | -4.8% | -2.1% | 0.4% |
| EBITDA Margin | 41.1% | 17.8% | 20.2% | 27.8% | 5.4% | -5.6% | -7.7% | -5.1% |
| Net Income Margin | 5.8% | 43.0% | -5.8% | 4.6% | -13.0% | 39.6% | -13.6% | -21.6% |
Revenue and profitability
Emera Inc's Revenue jumped on 53.3%. Revenue growth showed acceleration in 16Q4 - it increased 106.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.6 pp from -1.6% to 6.0% in 2016.
Gross Margin increased slightly on 1.3 pp from 56.6% to 57.9% in 2016.
Net Income marign decreased on 9.4 pp from 15.3% to 6.0% in 2016.
Capital expenditures (CAPEX) and working capital investments
Emera Inc's CAPEX/Revenue was 24.1% in 2016. CAPEX/Revenue increased on 9.9 pp from 14.2% in 2013 to 24.1% in 2016. It's average CAPEX/Revenue for the last three years was 17.4%.The company invested a big chunk of EBITDA (89.8%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (3.27%) and ROE (4.79%). ROIC decreased on 2.3 pp from 5.6% to 3.3% in 2016. ROE decreased on 8.1 pp from 12.9% to 4.8% in 2016.
Leverage (Debt)
Debt level is 13.3x Net Debt / EBITDA and 13.7x Debt / EBITDA. Net Debt / EBITDA surged on 9.0x from 4.3x to 13.3x in 2016. Debt jumped on 230% while cash dropped on 62.4%.
Management team
The company's CEO Christopher G Huskilson "Chris" is a founder and has spent 14 years at the company. Emera Inc's CFO Gregory Blunden "Greg" has spent 2 years at the company.
Appendix 1: Peers in Utilities
Below we provide Emera Inc benchmarking against other companies in Utilities 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 |
|---|
| Northland Power Inc ($NPI) | | 54.1% | 36.4% | -4.2% | 50.9% |
| Boralex Inc ($BLX) | | -6.7% | 13.5% | 37.1% | 11.7% |
| Algonquin Power & Utilities Corp ($AQN) | | 93.6% | 39.4% | 9.2% | 6.6% |
| TransAlta Corp ($TA) | | 3.7% | 14.4% | -13.6% | 5.7% |
| Canadian Utilities Ltd ($CU) | | 11.3% | 6.5% | -9.3% | 4.1% |
| |
|---|
| Median (14 companies) | | 11.0% | 10.6% | -9.3% | 0.2% |
|---|
| Emera Inc ($EMA) | | 8.3% | 31.8% | -5.1% | 53.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atco Ltd/Canada ($ACO.X) | 85.6% | 85.1% | 82.3% | 85.0% | 88.8% |
| Canadian Utilities Ltd ($CU) | 81.0% | 80.8% | 77.7% | 81.0% | 86.6% |
| Northland Power Inc ($NPI) | 52.5% | 63.7% | 61.8% | 69.0% | 82.4% |
| GWR Global Water Resources Corp ($GWR) | | | | 77.8% | 79.2% |
| Fortis Inc/Canada ($FTS) | 34.6% | 34.4% | 59.3% | 61.7% | 65.8% |
| |
|---|
| Median (12 companies) | 34.2% | 36.1% | 47.2% | 61.4% | 62.6% |
|---|
| Emera Inc ($EMA) | 55.2% | 56.5% | 55.0% | 56.6% | 57.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($NPI) | 54.2% | 52.4% | 51.2% | 57.5% | 68.8% |
| Canadian Utilities Ltd ($CU) | 45.9% | 45.7% | 47.4% | 45.8% | 53.5% |
| Atco Ltd/Canada ($ACO.X) | 39.8% | 41.0% | 41.4% | 38.7% | 47.7% |
| TransAlta Corp ($TA) | 27.3% | 34.0% | 39.5% | 33.2% | 47.6% |
| Algonquin Power & Utilities Corp ($AQN) | 26.1% | 29.5% | 26.7% | 32.5% | 39.3% |
| |
|---|
| Median (12 companies) | 28.3% | 34.0% | 33.6% | 35.4% | 37.2% |
|---|
| Emera Inc ($EMA) | 31.1% | 32.3% | 34.3% | 30.8% | 26.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($NPI) | 84.0% | 60.2% | 238.7% | 265.9% | 148.0% |
| Algonquin Power & Utilities Corp ($AQN) | 21.7% | 23.5% | 45.9% | 19.9% | 37.0% |
| Canadian Utilities Ltd ($CU) | 70.7% | 66.4% | 58.5% | 47.2% | 35.4% |
| Atco Ltd/Canada ($ACO.X) | 58.8% | 54.2% | 48.3% | 39.6% | 33.1% |
| Caribbean Utilities Co Ltd ($CUP.U) | 13.8% | 13.0% | 17.0% | 41.3% | 29.2% |
| |
|---|
| Median (12 companies) | 31.8% | 29.0% | 21.7% | 24.6% | 28.4% |
|---|
| Emera Inc ($EMA) | 21.1% | 14.2% | 14.8% | 13.2% | 24.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Keyera Corp ($KEY) | 13.8% | 12.7% | 14.3% | 12.6% | 10.5% |
| Atco Ltd/Canada ($ACO.X) | 10.8% | 10.5% | 9.6% | 5.6% | 8.1% |
| Canadian Utilities Ltd ($CU) | 10.0% | 9.4% | 9.2% | 5.9% | 8.0% |
| Northland Power Inc ($NPI) | 6.0% | 7.4% | 7.2% | 5.3% | 7.3% |
| Caribbean Utilities Co Ltd ($CUP.U) | 5.8% | 6.3% | 6.1% | 5.7% | 5.8% |
| |
|---|
| Median (14 companies) | 4.2% | 5.7% | 5.0% | 5.2% | 4.7% |
|---|
| Emera Inc ($EMA) | 5.8% | 5.9% | 8.4% | 5.6% | 3.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atlantic Power Corp ($ATP) | 12.6x | 13.0x | 22.4x | 251.1x | 24.3x |
| Algonquin Power & Utilities Corp ($AQN) | 7.9x | 6.2x | 5.0x | 4.1x | 9.7x |
| Fortis Inc/Canada ($FTS) | 5.0x | 5.6x | 6.7x | 5.3x | 9.2x |
| GWR Global Water Resources Corp ($GWR) | | | | 6.3x | 8.1x |
| Northland Power Inc ($NPI) | 6.4x | 5.8x | 6.9x | 11.1x | 7.8x |
| |
|---|
| Median (11 companies) | 5.0x | 5.2x | 4.6x | 5.2x | 4.4x |
|---|
| Emera Inc ($EMA) | 5.7x | 5.6x | 3.8x | 4.3x | 13.3x |
