Enbridge Inc Net Income jumped on 724% in 2016 and Revenue increased on 2.3%
17.02.2017 • About Enbridge Inc (
$ENB) • By InTwits
Enbridge Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Enbridge Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 22.1%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 906 in FY2016, 635 in FY2015, 529 in FY2014, 537 in FY2013, 317 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.6%
- It operates with high leverage: Net Debt/EBITDA is 8.2x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Enbridge Inc ($ENB) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 24,660 | 32,918 | 37,641 | 33,794 | 34,560 | 2.3% |
| Gross Profit | 5,481 | 6,111 | 8,158 | 8,553 | 10,555 | 23.4% |
| SG&A | 2,739 | 3,014 | 3,281 | 4,248 | 4,360 | 2.6% |
| EBITDA | 2,830 | 2,735 | 4,777 | 3,886 | 4,821 | 24.1% |
| Net Income | 707 | 629 | 1,405 | 251 | 2,069 | 724.3% |
Balance Sheet
|
|---|
| Cash | 1,776 | 756 | 1,261 | 1,015 | 2,117 | 108.6% |
| Short Term Debt | 1,714 | 3,523 | 2,552 | 2,950 | 5,074 | 72.0% |
| Long Term Debt | 20,203 | 22,357 | 33,423 | 39,391 | 36,494 | -7.4% |
Cash flow
|
|---|
| Capex | 5,194 | 8,235 | 10,524 | 7,273 | 5,128 | -29.5% |
Ratios
|
|---|
| Revenue growth | -8.8% | 33.5% | 14.3% | -10.2% | 2.3% | |
| EBITDA growth | -24.4% | -3.4% | 74.7% | -18.7% | 24.1% | |
| Gross Margin | 22.2% | 18.6% | 21.7% | 25.3% | 30.5% | 5.2% |
| EBITDA Margin | 11.5% | 8.3% | 12.7% | 11.5% | 13.9% | 2.5% |
| Net Income Margin | 2.9% | 1.9% | 3.7% | 0.7% | 6.0% | 5.2% |
| SG&A, % of revenue | 11.1% | 9.2% | 8.7% | 12.6% | 12.6% | 0.0% |
| CAPEX, % of revenue | 21.1% | 25.0% | 28.0% | 21.5% | 14.8% | -6.7% |
| ROIC | 4.4% | 3.2% | 5.9% | 2.8% | 3.6% | 0.8% |
| ROE | 9.3% | 6.0% | 12.4% | -0.3% | 13.4% | 13.7% |
| Net Debt/EBITDA | 7.1x | 9.2x | 7.3x | 10.6x | 8.2x | -2.5x |
Enbridge Inc ($ENB) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 8,795 | 7,939 | 8,488 | 9,338 | 10.9% | -8.0% | 2.0% | 4.8% |
| EBITDA | 2,233 | 1,349 | 346 | 893 | 311.2% | 16.6% | -59.2% | -33.3% |
| Net Income | 1,286 | 372 | -30 | 441 | | -42.5% | | -2.4% |
Balance Sheet
|
|---|
| Cash | 1,735 | 1,257 | 1,036 | 2,117 | 45.7% | 4.0% | 1.2% | 108.6% |
| Short Term Debt | 3,632 | 6,205 | 5,793 | 5,074 | 107.3% | 201.1% | 245.6% | 72.0% |
| Long Term Debt | 36,543 | 34,298 | 35,552 | 36,494 | 2.1% | -5.5% | -8.7% | -7.4% |
Ratios
|
|---|
| Gross Margin | 37.9% | 29.6% | 28.7% | 26.1% | 18.7% | 0.3% | 5.3% | -2.6% |
| EBITDA Margin | 25.4% | 17.0% | 4.1% | 9.6% | 18.5% | 3.6% | -6.1% | -5.4% |
| Net Income Margin | 14.6% | 4.7% | -0.4% | 4.7% | 18.5% | -2.8% | 6.1% | -0.3% |
Revenue and profitability
The company's Revenue increased on 2.3%. Revenue growth showed acceleration in 16Q4 - it increased 4.8% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.5 pp from 11.5% to 13.9% in 2016.
Gross Margin increased on 5.2 pp from 25.3% to 30.5% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased on 5.2 pp from 0.74% to 6.0% in 2016.
Capital expenditures (CAPEX) and working capital investments
Enbridge Inc's CAPEX/Revenue was 14.8% in 2016. CAPEX/Revenue dropped on 10.2 pp from 25.0% in 2013 to 14.8% in 2016. It's average CAPEX/Revenue for the last three years was 21.4%.The company maintained rich investment policy and has spent a lot to CAPEX (106% of EBITDA).
Return on investment
The company operates at good ROE (13.40%) while ROIC is low (3.64%). ROIC increased slightly on 0.81 pp from 2.8% to 3.6% in 2016. ROE jumped on 13.7 pp from -0.33% to 13.4% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 8.2x and Debt / EBITDA is 8.6x. Net Debt / EBITDA dropped on 2.5x from 10.6x to 8.2x in 2016. Debt decreased slightly on 1.8% while cash jumped on 109%.
Management team
The company's CEO is Albert Monaco "Al". Albert Monaco "Al" has 6 years tenure at the company. John Kendall Whelen is a The company's CFO. John Kendall Whelen has spent 4 years at the company.
Appendix 1: Peers in Energy
Below we provide Enbridge 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 | 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% | 17.0% | -29.5% | -19.1% |
|---|
| Enbridge Inc ($ENB) | | 33.5% | 14.3% | -10.2% | 2.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% | 32.2% | 32.4% | 33.9% | 32.5% |
|---|
| Enbridge Inc ($ENB) | 22.2% | 18.6% | 21.7% | 25.3% | 30.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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% |
|---|
| Enbridge Inc ($ENB) | 11.5% | 8.3% | 12.7% | 11.5% | 13.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% |
|---|
| Enbridge Inc ($ENB) | 21.1% | 25.0% | 28.0% | 21.5% | 14.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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% | 5.8% | 5.5% | -8.5% | -1.9% |
|---|
| Enbridge Inc ($ENB) | 4.4% | 3.2% | 5.9% | 2.8% | 3.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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 |
|---|
| Enbridge Inc ($ENB) | 7.1x | 9.2x | 7.3x | 10.6x | 8.2x |
