Husky Energy Inc Net Income surged on 124% in 2016 and EBITDA Margin increased on 7.8 pp from 21.4% to 29.2%
24.02.2017 • About Husky Energy Inc (
$HSE) • By InTwits
Husky Energy Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Husky Energy Inc is a company in decline: 2016 revenue growth was -21.1%, 5 years revenue CAGR was -10.1%
- Husky Energy Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 19.0%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: 1,705 in 2016, 3,005 in 2015, 5,023 in 2014, 5,028 in 2013, 4,701 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Husky Energy Inc ($HSE) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 22,255 | 23,317 | 24,092 | 16,369 | 12,919 | -21.1% |
| Gross Profit | 6,229 | 6,405 | 6,564 | 3,978 | 2,839 | -28.6% |
| SG&A | 448 | 506 | 462 | 342 | 544 | 59.1% |
| EBITDA | 5,560 | 5,740 | 5,944 | 3,498 | 3,768 | 7.7% |
| Net Income | 2,022 | 1,829 | 1,258 | -3,850 | 922 | |
Balance Sheet
|
|---|
| Cash | 2,025 | 1,097 | 1,267 | 70 | 1,319 | 1,784.3% |
| Short Term Debt | 0 | 798 | 1,195 | 997 | 603 | -39.5% |
| Long Term Debt | 3,840 | 3,290 | 4,097 | 5,759 | 4,736 | -17.8% |
Cash flow
|
|---|
| Capex | 4,701 | 5,028 | 5,023 | 3,005 | 1,705 | -43.3% |
Ratios
|
|---|
| Revenue growth | 1.4% | 4.8% | 3.3% | -32.1% | -21.1% | |
| EBITDA growth | -5.3% | 3.2% | 3.6% | -41.2% | 7.7% | |
| Gross Margin | 28.0% | 27.5% | 27.2% | 24.3% | 22.0% | -2.3% |
| EBITDA Margin | 25.0% | 24.6% | 24.7% | 21.4% | 29.2% | 7.8% |
| Net Income Margin | 9.1% | 7.8% | 5.2% | -23.5% | 7.1% | 30.7% |
| SG&A, % of revenue | 2.0% | 2.2% | 1.9% | 2.1% | 4.2% | 2.1% |
| CAPEX, % of revenue | 21.1% | 21.6% | 20.8% | 18.4% | 13.2% | -5.2% |
| ROIC | 11.1% | 9.6% | 6.5% | -18.0% | 5.0% | 23.0% |
| ROE | 11.1% | 9.4% | 6.3% | -21.7% | 5.5% | 27.2% |
| Net Debt/EBITDA | 0.3x | 0.5x | 0.7x | 1.9x | 1.1x | -0.8x |
Husky Energy Inc ($HSE) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,524 | 3,171 | 3,464 | 3,760 | -36.2% | -27.8% | -17.6% | -1.5% |
| EBITDA | 286 | 528 | 2,255 | 699 | -65.9% | -58.3% | | -7.3% |
| Net Income | -458 | -196 | 1,390 | 186 | -339.8% | -263.3% | | |
Balance Sheet
|
|---|
| Cash | 0 | 20 | 1,380 | 1,319 | -100.0% | -88.7% | | 1,784.3% |
| Short Term Debt | 1,127 | 1,120 | 856 | 603 | 123.2% | 29.3% | 7.8% | -39.5% |
| Long Term Debt | 5,850 | 5,213 | 4,652 | 4,736 | 6.5% | -1.8% | -23.1% | -17.8% |
Ratios
|
|---|
| Gross Margin | 14.1% | 27.3% | 19.9% | 24.7% | -10.5% | -3.1% | -1.0% | 4.0% |
| EBITDA Margin | 11.3% | 16.7% | 65.1% | 18.6% | -9.9% | -12.2% | 169.3% | -1.2% |
| Net Income Margin | -18.1% | -6.2% | 40.1% | 4.9% | -23.0% | -8.9% | 137.5% | 6.8% |
Revenue and profitability
Husky Energy Inc's Revenue dropped on 21.1%. Annual revenue decline showed slowdown in 16Q4 - revenue decreased slightly on 1.5%. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 7.8 pp from 21.4% to 29.2% in 2016.
Gross Margin decreased on 2.3 pp from 24.3% to 22.0% in 2016. SG&A as a % of Revenue increased on 2.1 pp from 2.1% to 4.2% in 2016.
Net Income marign jumped on 30.7 pp from -23.5% to 7.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 13.2% in 2016. The company showed decline in CAPEX/Revenue of 8.4 pp from 21.6% in 2013 to 13.2% in 2016. It's average CAPEX/Revenue for the last three years was 17.5%.
Return on investment
The company operates at low ROIC (4.97%) and ROE (5.46%). ROIC surged on 23.0 pp from -18.0% to 5.0% in 2016. ROE jumped on 27.2 pp from -21.7% to 5.5% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.4x. Net Debt / EBITDA dropped on 0.8x from 1.9x to 1.1x in 2016. Debt dropped on 21.0% while cash surged on 1,784%.
Management team
Robert J Peabody "Rob" is a the company's CEO. Robert J Peabody "Rob" is a founder and has spent 1 year at the company. Jonathan Mckenzie "Jon" is a Husky Energy Inc's CFO. Jonathan Mckenzie "Jon" has spent 3 years at the company.
Appendix 1: Peers in Energy
Below we provide Husky Energy 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) | | 16.2% | 17.0% | -27.7% | -18.0% |
|---|
| Husky Energy Inc ($HSE) | | 4.8% | 3.3% | -32.1% | -21.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% |
|---|
| Husky Energy Inc ($HSE) | 28.0% | 27.5% | 27.2% | 24.3% | 22.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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) | 25.9% | 35.7% | 28.9% | 8.1% | 27.3% |
|---|
| Husky Energy Inc ($HSE) | 25.0% | 24.6% | 24.7% | 21.4% | 29.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% |
|---|
| Husky Energy Inc ($HSE) | 21.1% | 21.6% | 20.8% | 18.4% | 13.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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% |
|---|
| Husky Energy Inc ($HSE) | 11.1% | 9.6% | 6.5% | -18.0% | 5.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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) | 1.6x | 1.5x | 1.4x | 2.7x | 2.7x |
|---|
| Husky Energy Inc ($HSE) | 0.3x | 0.5x | 0.7x | 1.9x | 1.1x |
