Enerplus Corp EBITDA Margin surged on 140 pp from -67.4% to 72.5% in 2016 while Revenue dropped on 31.5%
24.02.2017 • About Enerplus Corp (
$ERF) • By InTwits
Enerplus Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Enerplus Corp is a company in decline: 2016 revenue growth was -31.5%, 5 years revenue CAGR was -6.4%
- EBITDA Margin is quite volatile: 72.5% in 2016, -67.4% in 2015, 58.4% in 2014, 63.5% in 2013, -5.8% in 2012
- Enerplus Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 60.0%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 337 in 2016, 507 in 2015, 836 in 2014, 933 in 2013, 1,051 in 2012
- The company has highly profitable business model: ROIC is at 16.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Enerplus Corp ($ERF) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,153 | 1,352 | 1,530 | 1,172 | 803 | -31.5% |
| Gross Profit | 808 | 969 | 998 | 666 | 411 | -38.4% |
| SG&A | 94 | 110 | 105 | 104 | 86 | -16.9% |
| EBITDA | -67 | 859 | 893 | -790 | 582 | |
| Net Income | -271 | 48 | 299 | -1,523 | 397 | |
Balance Sheet
|
|---|
| Cash | 5 | 3 | 2 | 7 | 1 | -83.2% |
| Short Term Debt | 46 | 49 | 99 | 0 | 30 | |
| Long Term Debt | 1,024 | 977 | 1,038 | 1,224 | 739 | -39.6% |
Cash flow
|
|---|
| Capex | 1,051 | 933 | 836 | 507 | 337 | -33.6% |
Ratios
|
|---|
| Revenue growth | 3.1% | 17.3% | 13.1% | -23.4% | -31.5% | |
| EBITDA growth | -110.1% | -1,377.9% | 4.0% | -188.5% | -173.7% | |
| Gross Margin | 70.0% | 71.7% | 65.3% | 56.8% | 51.1% | -5.7% |
| EBITDA Margin | -5.8% | 63.5% | 58.4% | -67.4% | 72.5% | 139.9% |
| Net Income Margin | -23.5% | 3.5% | 19.6% | -130.0% | 49.5% | 179.5% |
| SG&A, % of revenue | 8.1% | 8.2% | 6.9% | 8.9% | 10.7% | 1.9% |
| CAPEX, % of revenue | 91.1% | 69.0% | 54.7% | 43.3% | 41.9% | -1.4% |
| ROIC | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% | 71.8% |
| ROE | -10.4% | 2.5% | 14.4% | -97.6% | 33.7% | 131.3% |
| Net Debt/EBITDA | | 1.2x | 1.3x | | 1.3x | 1.3x |
Enerplus Corp ($ERF) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 182 | 196 | 198 | 227 | -37.5% | -39.7% | -29.8% | -17.0% |
| EBITDA | 153 | 9 | 25 | 395 | | | | |
| Net Income | -174 | -169 | -101 | 840 | | | | |
Balance Sheet
|
|---|
| Cash | 1 | 49 | 75 | 1 | -50.8% | 4,807.4% | 2,472.2% | -83.2% |
| Short Term Debt | 0 | 29 | 29 | 30 | -100.0% | 112.4% | 99.5% | |
| Long Term Debt | 994 | 695 | 700 | 739 | -15.1% | -37.3% | -42.4% | -39.6% |
Ratios
|
|---|
| Gross Margin | 42.0% | 52.2% | 51.9% | 56.9% | -15.2% | -11.1% | -0.2% | 3.3% |
| EBITDA Margin | 83.9% | 4.6% | 12.8% | 174.3% | 129.5% | 101.8% | 84.7% | 225.0% |
| Net Income Margin | -95.3% | -86.0% | -50.8% | 370.8% | 5.2% | 10.2% | 52.9% | 599.6% |
Revenue and profitability
Enerplus Corp's Revenue dropped on 31.5%. Annual revenue decline showed slowdown in 16Q4 - revenue dropped on 17.0%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 140 pp from -67.4% to 72.5% in 2016.
Gross Margin decreased on 5.7 pp from 56.8% to 51.1% in 2016. SG&A as a % of Revenue increased slightly on 1.9 pp from 8.9% to 10.7% in 2016.
Net Income marign jumped on 179 pp from -130% to 49.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Enerplus Corp had CAPEX/Revenue of 41.9%. The company's CAPEX/Revenue dropped on 27.0 pp from 69.0% in 2013 to 41.9% in 2016. It's average CAPEX/Revenue for the last three years was 46.6%.Battling declining revenue Enerplus Corp invested a large share of EBITDA (57.8%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at high and attractive ROE (33.70%) while ROIC is a bit lower (16.31%). ROIC jumped on 71.8 pp from -55.5% to 16.3% in 2016. ROE jumped on 131 pp from -97.6% to 33.7% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 1.3x. Net Debt / EBITDA jumped1.3x from to 1.3x in 2016. Debt dropped on 37.2% while cash dropped on 83.2%.
Management team
Ian C Dundas is a Enerplus Corp's CEO. Ian C Dundas is a founder and has spent 5 years at the company. Enerplus Corp's CFO is Jodine J Jenson Labrie. Jodine J Jenson Labrie has 3 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find Enerplus 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% | 17.0% | -29.5% | -18.0% |
|---|
| Enerplus Corp ($ERF) | | 17.3% | 13.1% | -23.4% | -31.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% |
|---|
| Enerplus Corp ($ERF) | 70.0% | 71.7% | 65.3% | 56.8% | 51.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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% | 34.1% | 28.9% | 9.0% | 27.3% |
|---|
| Enerplus Corp ($ERF) | -5.8% | 63.5% | 58.4% | -67.4% | 72.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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) | 42.3% | 39.0% | 45.0% | 27.6% | 22.9% |
|---|
| Enerplus Corp ($ERF) | 91.1% | 69.0% | 54.7% | 43.3% | 41.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Whitecap Resources Inc ($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 ($IPL) | 9.5% | 8.0% | 7.5% | 9.6% | 8.5% |
| Pembina Pipeline Corp ($PPL) | 8.2% | 8.5% | 7.6% | 6.3% | 6.9% |
| |
|---|
| Median (128 companies) | 3.9% | 5.4% | 5.5% | -8.2% | -1.9% |
|---|
| Enerplus Corp ($ERF) | -17.3% | 10.2% | 11.5% | -55.5% | 16.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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) | 1.6x | 1.5x | 1.4x | 2.6x | 2.7x |
|---|
