Cenovus Energy Inc CAPEX dropped on 39.7% in 2016 and Revenue dropped on 10.0%
16.02.2017 • About Cenovus Energy Inc (
$CVE) • By InTwits
Cenovus Energy Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cenovus Energy Inc is a company in decline: 2016 revenue growth was -10.0%, 5 years revenue CAGR was -4.7%
- EBITDA Margin is declining: 11.4% in 2016 vs. 14.2% in 2015 vs. 21.1% in 2012
- Cenovus Energy Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.8%. At the same time it's a lot of higher than industry average of 7.8%.
- CAPEX is quite volatile: 1,034 in 2016, 1,714 in 2015, 3,058 in 2014, 3,269 in 2013, 3,449 in 2012
- The company has unprofitable business model: ROIC is at -0.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Cenovus Energy Inc ($CVE) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 17,178 | 18,779 | 19,708 | 13,720 | 12,345 | -10.0% |
| Gross Profit | 6,370 | 6,547 | 6,807 | 4,232 | 3,869 | -8.6% |
| SG&A | 350 | 349 | 358 | 335 | 326 | -2.7% |
| EBITDA | 3,627 | 3,985 | 3,364 | 1,946 | 1,407 | -27.7% |
| Net Income | 995 | 662 | 744 | 618 | -545 | -188.2% |
Balance Sheet
|
|---|
| Cash | 1,160 | 2,452 | 883 | 4,105 | 3,720 | -9.4% |
| Short Term Debt | 386 | 438 | 0 | 0 | 0 | |
| Long Term Debt | 4,679 | 4,997 | 5,458 | 6,525 | 6,332 | -3.0% |
Cash flow
|
|---|
| Capex | 3,449 | 3,269 | 3,058 | 1,714 | 1,034 | -39.7% |
Ratios
|
|---|
| Revenue growth | 9.4% | 9.3% | 4.9% | -30.4% | -10.0% | |
| EBITDA growth | 0.6% | 9.9% | -15.6% | -42.2% | -27.7% | |
| Gross Margin | 37.1% | 34.9% | 34.5% | 30.8% | 31.3% | 0.5% |
| EBITDA Margin | 21.1% | 21.2% | 17.1% | 14.2% | 11.4% | -2.8% |
| Net Income Margin | 5.8% | 3.5% | 3.8% | 4.5% | -4.4% | -8.9% |
| SG&A, % of revenue | 2.0% | 1.9% | 1.8% | 2.4% | 2.6% | 0.2% |
| CAPEX, % of revenue | 20.1% | 17.4% | 15.5% | 12.5% | 8.4% | -4.1% |
| ROIC | 12.3% | 11.9% | 7.5% | -0.8% | -0.4% | 0.4% |
| ROE | 10.4% | 6.7% | 7.4% | 5.5% | -4.5% | -10.0% |
| Net Debt/EBITDA | 1.1x | 0.7x | 1.4x | 1.2x | 1.9x | 0.6x |
Cenovus Energy Inc ($CVE) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,410 | 3,000 | 3,281 | 3,654 | -26.8% | -20.5% | -6.1% | 25.0% |
| Net Income | -118 | -267 | -251 | 91 | | -311.9% | -113.9% | |
Balance Sheet
|
|---|
| Cash | 3,883 | 3,780 | 3,850 | 3,720 | 115.2% | 137.7% | -12.5% | -9.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 6,113 | 6,132 | 6,184 | 6,332 | 2.3% | 4.4% | -2.0% | -3.0% |
Ratios
|
|---|
| Gross Margin | 21.0% | 33.6% | 21.5% | 45.2% | -11.2% | -3.0% | -9.8% | 29.5% |
| Net Income Margin | -4.9% | -8.9% | -7.7% | 2.5% | 15.4% | -12.2% | -59.2% | 24.4% |
Revenue and profitability
The company's Revenue dropped on 10.0%. Annual revenue decline showed slowdown in 16Q4 - revenue surged on 25.0%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 2.8 pp from 14.2% to 11.4% in 2016.
Gross Margin showed almost no change in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign decreased on 8.9 pp from 4.5% to -4.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 8.4%. CAPEX/Revenue decreased on 9.0 pp from 17.4% in 2013 to 8.4% in 2016. Average CAPEX/Revenue for the last three years was 12.1%.Battling declining revenue the company invested a large share of EBITDA (73.5%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-0.43%) and ROE (-4.55%). ROIC showed almost no change in 2016. ROE dropped on 10.0 pp from 5.5% to -4.5% in 2016.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 4.5x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 1.2x to 1.9x in 2016. Debt decreased on 3.0% while cash decreased on 9.4%.
Management team
Brian C Ferguson is a the company's CEO. Brian C Ferguson is a founder and has spent 9 years at the company. Cenovus Energy Inc's CFO Ivor M Ruste has spent 9 years at the company.
Appendix 1: Peers in Energy
Below you can find Cenovus Energy Inc 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 | 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) | | 16.2% | 17.0% | -27.7% | -19.1% |
|---|
| Cenovus Energy Inc ($CVE) | | 9.3% | 4.9% | -30.4% | -10.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% | 33.9% | 32.5% |
|---|
| Cenovus Energy Inc ($CVE) | 37.1% | 34.9% | 34.5% | 30.8% | 31.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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% |
|---|
| Cenovus Energy Inc ($CVE) | 21.1% | 21.2% | 17.1% | 14.2% | 11.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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) | 43.8% | 39.2% | 45.6% | 28.1% | 23.8% |
|---|
| Cenovus Energy Inc ($CVE) | 20.1% | 17.4% | 15.5% | 12.5% | 8.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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) | 3.6% | 5.4% | 5.5% | -8.5% | -1.9% |
|---|
| Cenovus Energy Inc ($CVE) | 12.3% | 11.9% | 7.5% | -0.8% | -0.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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) | 1.6x | 1.5x | 1.4x | 2.7x | 2.7x |
|---|
| Cenovus Energy Inc ($CVE) | 1.1x | 0.7x | 1.4x | 1.2x | 1.9x |
