TransCanada Corp EBITDA surged on 195% in 2016 and EBITDA Margin surged on 22.8 pp from 13.7% to 36.6%
16.02.2017 • About TransCanada Corp (
$TRP) • By InTwits
TransCanada Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 36.6% in 2016, 13.7% in 2015, 48.1% in 2014, 49.6% in 2013, 49.3% in 2012
- TransCanada Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 41.5%. At the same time it's in pair with industry average of 45.3%.
- CAPEX is quite volatile: 3,797 in 2016, 4,468 in 2015, 11,398 in 2014, 7,211 in 2013, 6,104 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.8%
- It operates with high leverage: Net Debt/EBITDA is 9.6x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TransCanada Corp ($TRP) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 8,007 | 8,797 | 10,185 | 11,300 | 12,505 | 10.7% |
| Gross Profit | 4,996 | 5,678 | 6,739 | 7,533 | 8,131 | 7.9% |
| EBITDA | 3,947 | 4,361 | 4,903 | 1,551 | 4,571 | 194.7% |
| Net Income | 1,354 | 1,786 | 1,840 | -1,146 | 233 | |
Balance Sheet
|
|---|
| Cash | 551 | 927 | 489 | 850 | 1,016 | 19.5% |
| Short Term Debt | 3,169 | 2,815 | 4,264 | 3,765 | 2,612 | -30.6% |
| Long Term Debt | 19,013 | 22,955 | 24,120 | 31,318 | 42,243 | 34.9% |
Cash flow
|
|---|
| Capex | 2,595 | 4,461 | 4,337 | 4,429 | 5,302 | 19.7% |
Ratios
|
|---|
| Revenue growth | 2.1% | 9.9% | 15.8% | 10.9% | 10.7% | |
| EBITDA growth | -3.3% | 10.5% | 12.4% | -68.4% | 194.7% | |
| Gross Margin | 62.4% | 64.5% | 66.2% | 66.7% | 65.0% | -1.6% |
| EBITDA Margin | 49.3% | 49.6% | 48.1% | 13.7% | 36.6% | 22.8% |
| Net Income Margin | 16.9% | 20.3% | 18.1% | -10.1% | 1.9% | 12.0% |
| CAPEX, % of revenue | 32.4% | 50.7% | 42.6% | 39.2% | 42.4% | 3.2% |
| ROIC | 5.9% | 6.1% | 6.3% | -0.4% | 3.8% | 4.2% |
| ROE | 8.3% | 10.6% | 10.4% | -8.1% | 0.7% | 8.8% |
| Net Debt/EBITDA | 5.5x | 5.7x | 5.7x | 22.1x | 9.6x | -12.5x |
TransCanada Corp ($TRP) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,547 | 2,751 | 3,632 | 3,619 | -11.4% | 4.6% | 23.4% | 26.9% |
| EBITDA | 966 | 1,494 | 451 | 1,660 | -26.0% | 13.6% | -66.9% | |
| Net Income | 274 | 393 | -108 | -326 | -33.2% | -13.4% | -125.4% | |
Balance Sheet
|
|---|
| Cash | 1,238 | 1,727 | 2,280 | 1,016 | -32.0% | 192.7% | 202.0% | 19.5% |
| Short Term Debt | 3,799 | 2,194 | 1,790 | 2,612 | -22.9% | -47.7% | -52.9% | -30.6% |
| Long Term Debt | 31,237 | 41,416 | 47,115 | 42,243 | 15.7% | 54.7% | 60.7% | 34.9% |
Ratios
|
|---|
| Gross Margin | 66.4% | 67.9% | 63.8% | 63.4% | -2.7% | 1.8% | -3.7% | -0.3% |
| EBITDA Margin | 37.9% | 54.3% | 12.4% | 45.9% | -7.5% | 4.3% | -33.9% | 131.2% |
| Net Income Margin | 10.8% | 14.3% | -3.0% | -9.0% | -3.5% | -3.0% | -17.4% | 76.4% |
Revenue and profitability
TransCanada Corp's Revenue surged on 10.7%. Revenue growth showed acceleration in 16Q4 - it increased 26.9% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 22.8 pp from 13.7% to 36.6% in 2016.
Gross Margin decreased slightly on 1.6 pp from 66.7% to 65.0% in 2016.
Net Income marign surged on 12.0 pp from -10.1% to 1.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 42.4% in 2016. TransCanada Corp showed decline in CAPEX/Revenue of 8.3 pp from 50.7% in 2013 to 42.4% in 2016. It's average CAPEX/Revenue for the last three years was 41.4%.To fuel this fast growth the company made large investments to CAPEX (116% of EBITDA).
Return on investment
The company operates at low ROIC (3.82%) and ROE (0.70%). ROIC increased on 4.2 pp from -0.38% to 3.8% in 2016. ROE increased on 8.8 pp from -8.1% to 0.70% in 2016.
Leverage (Debt)
Debt level is 9.6x Net Debt / EBITDA and 9.8x Debt / EBITDA. Net Debt / EBITDA dropped on 12.5x from 22.1x to 9.6x in 2016. Debt surged on 27.9% while cash surged on 19.5%.
Management team
Russell K Girling "Russ" is a TransCanada Corp's CEO. Russell K Girling "Russ" is a founder and has spent 8 years at the company. The company's CFO Donald R Marchand "Don" has spent 8 years at the company.
Appendix 1: Peers in Energy
Below we provide TransCanada 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) | | 16.2% | 17.0% | -29.5% | -19.1% |
|---|
| TransCanada Corp ($TRP) | | 9.9% | 15.8% | 10.9% | 10.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% |
|---|
| TransCanada Corp ($TRP) | 62.4% | 64.5% | 66.2% | 66.7% | 65.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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) | 25.3% | 34.1% | 28.9% | 8.1% | 27.3% |
|---|
| TransCanada Corp ($TRP) | 49.3% | 49.6% | 48.1% | 13.7% | 36.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% | 39.0% | 45.6% | 27.6% | 22.9% |
|---|
| TransCanada Corp ($TRP) | 32.4% | 50.7% | 42.6% | 39.2% | 42.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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% |
|---|
| TransCanada Corp ($TRP) | 5.9% | 6.1% | 6.3% | -0.4% | 3.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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 |
|---|
| TransCanada Corp ($TRP) | 5.5x | 5.7x | 5.7x | 22.1x | 9.6x |
