Capital Power Corp reports 124% CAPEX growth while 2.2% Revenue decline
21.02.2017 • About Capital Power Corp (
$CPX) • By InTwits
Capital Power Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Capital Power Corp is a company in decline: 2016 revenue growth was -2.2%, 5 years revenue CAGR was -7.3%
- Capital Power Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 33.8%. At the same time it's in pair with industry average of 33.0%.
- CAPEX is quite volatile: 313 in 2016, 140 in 2015, 220 in 2014, 943 in 2013, 598 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Capital Power Corp ($CPX) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,296 | 1,393 | 1,228 | 1,241 | 1,214 | -2.2% |
| Gross Profit | 763 | 833 | 717 | 762 | 794 | 4.2% |
| SG&A | 81 | 88 | 88 | 85 | 86 | 1.2% |
| EBITDA | 367 | 497 | 413 | 461 | 403 | -12.6% |
| Net Income | 62 | 175 | 46 | 90 | 111 | 23.3% |
Balance Sheet
|
|---|
| Cash | 53 | 100 | 71 | 80 | 98 | 22.5% |
| Short Term Debt | 19 | 346 | 599 | 340 | 200 | -41.2% |
| Long Term Debt | 1,640 | 1,181 | 987 | 1,297 | 1,327 | 2.3% |
Cash flow
|
|---|
| Capex | 598 | 943 | 220 | 140 | 313 | 123.6% |
Ratios
|
|---|
| Revenue growth | -26.8% | 7.5% | -11.8% | 1.1% | -2.2% | |
| EBITDA growth | -14.5% | 35.4% | -16.9% | 11.6% | -12.6% | |
| Gross Margin | 58.9% | 59.8% | 58.4% | 61.4% | 65.4% | 4.0% |
| EBITDA Margin | 28.3% | 35.7% | 33.6% | 37.1% | 33.2% | -4.0% |
| Net Income Margin | 4.8% | 12.6% | 3.7% | 7.3% | 9.1% | 1.9% |
| SG&A, % of revenue | 6.3% | 6.3% | 7.2% | 6.8% | 7.1% | 0.2% |
| CAPEX, % of revenue | 46.1% | 67.7% | 17.9% | 11.3% | 25.8% | 14.5% |
| ROIC | 3.4% | 6.1% | 4.7% | 5.1% | 3.9% | -1.2% |
| ROE | 3.5% | 8.6% | 1.2% | 3.1% | 3.9% | 0.8% |
| Net Debt/EBITDA | 4.4x | 2.9x | 3.7x | 3.4x | 3.5x | 0.2x |
Capital Power Corp ($CPX) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 341 | 229 | 378 | 266 | -4.7% | 175.9% | -19.4% | -19.6% |
| EBITDA | 56 | 99 | 136 | 112 | -61.9% | 120.0% | -8.1% | -7.4% |
| Net Income | -6 | 23 | 66 | 28 | -115.0% | | 34.7% | -20.0% |
Balance Sheet
|
|---|
| Cash | 53 | 28 | 22 | 98 | -33.8% | -44.0% | -35.3% | 22.5% |
| Short Term Debt | 211 | 201 | 201 | 200 | -63.4% | -64.6% | -64.4% | -41.2% |
| Long Term Debt | 1,328 | 1,370 | 1,335 | 1,327 | 32.0% | 27.9% | 28.2% | 2.3% |
Ratios
|
|---|
| Gross Margin | 54.5% | 80.3% | 57.1% | 78.2% | -5.8% | | 9.0% | 6.6% |
| EBITDA Margin | 16.4% | 43.2% | 36.0% | 42.1% | -24.6% | -11.0% | 4.4% | 5.5% |
| Net Income Margin | -1.8% | 10.0% | 17.5% | 10.5% | -12.9% | 51.0% | 7.0% | -0.0% |
Revenue and profitability
Capital Power Corp's Revenue decreased on 2.2%. Revenue decline showed acceleration in 16Q4 - it was 19.6% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.0 pp from 37.1% to 33.2% in 2016.
Gross Margin increased on 4.0 pp from 61.4% to 65.4% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased slightly on 1.9 pp from 7.3% to 9.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
Capital Power Corp's CAPEX/Revenue was 25.8% in 2016. Capital Power Corp's CAPEX/Revenue dropped on 41.9 pp from 67.7% in 2013 to 25.8% in 2016. For the last three years the average CAPEX/Revenue was 18.3%.Battling declining revenue Capital Power Corp invested a large share of EBITDA (77.7%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.89%) and ROE (3.94%). ROIC decreased slightly on 1.2 pp from 5.1% to 3.9% in 2016. ROE increased slightly on 0.80 pp from 3.1% to 3.9% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 3.8x. Net Debt / EBITDA jumped on 0.2x from 3.4x to 3.5x in 2016. Debt decreased on 6.7% while cash surged on 22.5%.
Management team
Capital Power Corp's CEO is Brian Tellef Vaasjo. Brian Tellef Vaasjo is a founder and has 9 years tenure at the company. Capital Power Corp's CFO Bryan Deneve has spent 3 years at the company.
Appendix 1: Peers in Utilities
Below you can find Capital Power Corp benchmarking vs. other companies in Utilities 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 |
|---|
| Emera Inc ($EMA) | | 8.3% | 31.8% | -5.1% | 53.3% |
| 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% |
| |
|---|
| Median (14 companies) | | 11.0% | 13.1% | -9.3% | 1.1% |
|---|
| Capital Power Corp ($CPX) | | 7.5% | -11.8% | 1.1% | -2.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atco Ltd/Canada ($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% | 45.5% | 56.6% | 58.8% |
|---|
| Capital Power Corp ($CPX) | 58.9% | 59.8% | 58.4% | 61.4% | 65.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($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) | 31.1% | 34.0% | 34.3% | 33.4% | 37.2% |
|---|
| Capital Power Corp ($CPX) | 28.3% | 35.7% | 33.6% | 37.1% | 33.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($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) | 31.4% | 24.5% | 21.7% | 24.6% | 28.4% |
|---|
| Capital Power Corp ($CPX) | 46.1% | 67.7% | 17.9% | 11.3% | 25.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Keyera Corp ($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) | 5.3% | 5.6% | 5.4% | 5.4% | 4.7% |
|---|
| Capital Power Corp ($CPX) | 3.4% | 6.1% | 4.7% | 5.1% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atlantic Power Corp ($ATP) | 12.6x | 13.0x | 22.4x | 251.1x | 24.3x |
| Emera Inc ($EMA) | 5.7x | 5.6x | 3.8x | 4.3x | 13.3x |
| Algonquin Power & Utilities Corp ($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 |
| |
|---|
| Median (11 companies) | 5.3x | 5.5x | 4.6x | 5.2x | 7.8x |
|---|
| Capital Power Corp ($CPX) | 4.4x | 2.9x | 3.7x | 3.4x | 3.5x |
