Western Energy Services Corp reports 45.3% revenue decline in 2016 and 33.9 pp EBITDA Margin growth from -36.7% to -2.8%
22.02.2017 • About Western Energy Services Corp (
$WRG) • By InTwits
Western Energy Services Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Western Energy Services Corp is a company in decline: 2016 revenue growth was -45.3%, 5 years revenue CAGR was -13.9%
- The company operates at negative EBITDA Margin: -2.8%
- EBITDA Margin is quite volatile: -2.8% in 2016, -36.7% in 2015, 34.1% in 2014, 30.2% in 2013, 34.7% in 2012
- Western Energy Services Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 21.2%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 4.7 in 2016, 33.6 in 2015, 109 in 2014, 95.2 in 2013, 127 in 2012
- The company has unprofitable business model: ROIC is at -8.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Western Energy Services Corp ($WRG) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 308.6 | 379.9 | 507.8 | 227.5 | 124.4 | -45.3% |
| Gross Profit | 98.6 | 99.0 | 144.2 | 47.7 | -32.8 | -168.7% |
| SG&A | | | | 30.9 | 24.7 | -20.1% |
| EBITDA | 107.1 | 114.9 | 172.9 | -83.5 | -3.5 | |
| Net Income | 45.2 | 35.1 | 36.2 | -129.4 | -62.0 | |
Balance Sheet
|
|---|
| Cash | 6.6 | 17.4 | 62.7 | 58.4 | 44.6 | -23.7% |
| Short Term Debt | 5.8 | 0.9 | 1.1 | 0.8 | 0.7 | -10.1% |
| Long Term Debt | 186.9 | 262.9 | 264.2 | 264.2 | 264.1 | -0.0% |
Cash flow
|
|---|
| Capex | 127.2 | 95.2 | 108.6 | 33.6 | 4.7 | -85.9% |
Ratios
|
|---|
| Revenue growth | 17.6% | 23.1% | 33.7% | -55.2% | -45.3% | |
| EBITDA growth | 9.3% | 7.3% | 50.5% | -148.3% | -95.8% | |
| Gross Margin | 32.0% | 26.0% | 28.4% | 21.0% | -26.3% | -47.3% |
| EBITDA Margin | 34.7% | 30.2% | 34.1% | -36.7% | -2.8% | 33.9% |
| Net Income Margin | 14.6% | 9.2% | 7.1% | -56.9% | -49.9% | 7.0% |
| SG&A, % of revenue | | | | 13.6% | 19.8% | 6.3% |
| CAPEX, % of revenue | 41.2% | 25.1% | 21.4% | 14.8% | 3.8% | -11.0% |
| ROIC | 12.6% | 8.9% | 12.9% | -15.3% | -8.9% | 6.4% |
| ROE | 10.4% | 6.9% | 6.2% | -24.2% | -14.2% | 10.0% |
| Net Debt/EBITDA | 1.7x | 2.1x | 1.2x | | | 0.0x |
Western Energy Services Corp ($WRG) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 34 | 13 | 32 | 45 | -67.9% | -59.8% | -30.8% | 5.7% |
| EBITDA | 2 | -8 | 0 | 3 | -94.1% | -360.3% | | |
| Net Income | -6 | -24 | -17 | -15 | -142.4% | | | |
Balance Sheet
|
|---|
| Cash | 50 | 57 | 47 | 45 | -18.7% | -31.3% | -16.9% | -23.7% |
| Short Term Debt | 1 | 1 | 1 | 1 | -31.3% | -35.6% | -23.8% | -10.1% |
| Long Term Debt | 264 | 264 | 264 | 264 | -0.0% | -0.0% | -0.0% | -0.0% |
Ratios
|
|---|
| Gross Margin | 4.3% | -115.8% | -34.2% | -18.1% | -28.2% | -126.2% | -45.5% | -29.2% |
| EBITDA Margin | 6.9% | -65.7% | 0.1% | 5.8% | -30.6% | -75.9% | 137.2% | 151.2% |
| Net Income Margin | -18.9% | -187.3% | -52.2% | -32.2% | -33.3% | -148.0% | 111.5% | 96.9% |
Revenue and profitability
Western Energy Services Corp's Revenue dropped on 45.3%. Annual revenue decline showed slowdown in 16Q4 - revenue increased on 5.7%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 33.9 pp from -36.7% to -2.8% in 2016.
Gross Margin dropped on 47.3 pp from 21.0% to -26.3% in 2016. SG&A as a % of Revenue increased on 6.3 pp from 13.6% to 19.8% in 2016.
Net Income marign increased on 7.0 pp from -56.9% to -49.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Western Energy Services Corp had CAPEX/Revenue of 3.8%. CAPEX/Revenue dropped on 21.3 pp from 25.1% in 2013 to 3.8% in 2016. Average CAPEX/Revenue for the last three years was 13.3%.
Return on investment
The company operates at negative ROIC (-8.94%) and ROE (-14.19%). ROIC increased on 6.4 pp from -15.3% to -8.9% in 2016. ROE surged on 10.0 pp from -24.2% to -14.2% in 2016.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2016. Debt showed almost no change in 2016 while cash dropped on 23.7%.
Appendix 1: Peers in Energy
Below you can find Western Energy Services Corp 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) | | 15.4% | 16.9% | -27.7% | -18.0% |
|---|
| Western Energy Services Corp ($WRG) | | 23.1% | 33.7% | -55.2% | -45.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% |
|---|
| Western Energy Services Corp ($WRG) | 32.0% | 26.0% | 28.4% | 21.0% | -26.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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) | 25.3% | 35.7% | 28.9% | 9.0% | 29.2% |
|---|
| Western Energy Services Corp ($WRG) | 34.7% | 30.2% | 34.1% | -36.7% | -2.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% |
|---|
| Western Energy Services Corp ($WRG) | 41.2% | 25.1% | 21.4% | 14.8% | 3.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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% | 5.4% | 5.5% | -8.2% | -1.9% |
|---|
| Western Energy Services Corp ($WRG) | 12.6% | 8.9% | 12.9% | -15.3% | -8.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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 (79 companies) | 1.5x | 1.4x | 1.4x | 2.6x | 2.7x |
|---|
