Veresen Inc reports 309 pp EBITDA Margin decline from 75.4% to -234% in 2016 and 71.7% Revenue decline
28.02.2017 • About Veresen Inc (
$VSN) • By InTwits
Veresen Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Veresen Inc is a company in decline: 2016 revenue growth was -71.7%, 5 years revenue CAGR was -21.2%
- Veresen Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 52.0%. At the same time it's in pair with industry average of 45.3%.
- CAPEX is quite volatile: 69 in 2016, 58 in 2015, 148 in 2014, 50 in 2013, 91.5 in 2012
- The company has unprofitable business model: ROIC is at -3.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 4.3x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Veresen Inc ($VSN) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 264.2 | 324.7 | 302.1 | 187.0 | 53.0 | -71.7% |
| Gross Profit | 151.8 | 170.9 | 161.1 | 111.0 | 29.0 | -73.9% |
| SG&A | 69.5 | 86.2 | 49.2 | 38.0 | 38.0 | 0.0% |
| EBITDA | 82.3 | 84.7 | 58.0 | 141.0 | -124.0 | -187.9% |
| Net Income | 51.3 | 63.5 | 68.7 | 84.0 | 6.0 | -92.9% |
Balance Sheet
|
|---|
| Cash | 16.1 | 26.6 | 51.4 | 58.0 | 108.0 | 86.2% |
| Short Term Debt | 11.7 | 212.4 | 11.5 | 13.0 | 304.0 | 2,238.5% |
| Long Term Debt | 1,333.8 | 1,061.3 | 1,799.9 | 1,087.0 | 903.0 | -16.9% |
Cash flow
|
|---|
| Capex | 91.5 | 50.0 | 147.8 | 58.0 | 69.0 | 19.0% |
Ratios
|
|---|
| Revenue growth | 51.7% | 22.9% | -7.0% | -38.1% | -71.7% | |
| EBITDA growth | 121.2% | 2.9% | -31.5% | 143.1% | -187.9% | |
| Gross Margin | 57.5% | 52.6% | 53.3% | 59.4% | 54.7% | -4.6% |
| EBITDA Margin | 31.2% | 26.1% | 19.2% | 75.4% | -234.0% | -309.4% |
| Net Income Margin | 19.4% | 19.6% | 22.7% | 44.9% | 11.3% | -33.6% |
| SG&A, % of revenue | 26.3% | 26.5% | 16.3% | 20.3% | 71.7% | 51.4% |
| CAPEX, % of revenue | 34.6% | 15.4% | 48.9% | 31.0% | 130.2% | 99.2% |
| ROIC | -0.0% | -0.2% | -0.7% | 1.8% | -3.3% | -5.1% |
| ROE | 4.5% | 5.3% | 3.3% | 2.5% | -0.8% | -3.4% |
| Net Debt/EBITDA | 16.2x | 14.7x | 30.3x | 7.4x | | -7.4x |
Veresen Inc ($VSN) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 37 | 38 | 39 | 16 | -48.8% | 0.0% | 5.4% | -60.0% |
| EBITDA | 0 | 5 | 14 | -103 | -100.0% | -64.3% | -48.1% | -590.5% |
| Net Income | 13 | 16 | 25 | -48 | -75.8% | | 78.6% | -328.6% |
Balance Sheet
|
|---|
| Cash | 54 | 42 | 106 | 108 | -30.3% | -55.0% | -1.6% | 86.2% |
| Short Term Debt | 12 | 313 | 313 | 304 | 2.6% | 2,530.3% | 1,629.3% | 2,238.5% |
| Long Term Debt | 1,210 | 907 | 997 | 903 | -12.3% | -23.0% | -13.2% | -16.9% |
Ratios
|
|---|
| Gross Margin | 59.5% | 63.2% | 61.5% | 43.8% | -1.6% | 7.9% | 2.1% | -16.3% |
| EBITDA Margin | 0.0% | 13.2% | 35.9% | -643.8% | -108.6% | -23.7% | -37.1% | -696.3% |
| Net Income Margin | 35.1% | 42.1% | 64.1% | -300.0% | -39.2% | 55.3% | 26.3% | -352.5% |
Revenue and profitability
Veresen Inc's Revenue dropped on 71.7%. Annual revenue decline showed slowdown in 16Q4 - revenue dropped on 60%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.7 pp from 27.4% to 35.1% in 2016.
Gross Margin decreased on 4.6 pp from 59.4% to 54.7% in 2016. SG&A as a % of Revenue surged on 51.4 pp from 20.3% to 71.7% in 2016.
Net Income marign dropped on 33.6 pp from 44.9% to 11.3% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Veresen Inc had CAPEX/Revenue of 130%. The company showed fast CAPEX/Revenue growth of 115 pp from 15.4% in 2013 to 130% in 2016. It's average CAPEX/Revenue for the last three years was 70.0%.
Return on investment
The company operates at negative ROIC (-3.29%) and ROE (-0.83%). ROIC decreased on 5.1 pp from 1.8% to -3.3% in 2016. ROE decreased on 3.4 pp from 2.5% to -0.83% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.3x and Debt / EBITDA is . Net Debt / EBITDA dropped on 7.4x from 7.4x to in 2016. Debt increased on 9.7% while cash surged on 86.2%.
Appendix 1: Peers in Energy
Below you can find Veresen Inc 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% | -27.7% | -18.0% |
|---|
| Veresen Inc ($VSN) | | 22.9% | -7.0% | -38.1% | -71.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% |
|---|
| Veresen Inc ($VSN) | 57.5% | 52.6% | 53.3% | 59.4% | 54.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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% | 8.1% | 29.2% |
|---|
| Veresen Inc ($VSN) | 31.2% | 26.1% | 19.2% | 75.4% | -234.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% | 45.0% | 27.6% | 22.9% |
|---|
| Veresen Inc ($VSN) | 34.6% | 15.4% | 48.9% | 31.0% | 130.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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) | 3.9% | 5.8% | 5.7% | -8.5% | -1.9% |
|---|
| Veresen Inc ($VSN) | -0.0% | -0.2% | -0.7% | 1.8% | -3.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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 (78 companies) | 1.5x | 1.4x | 1.4x | 2.6x | 2.7x |
|---|
| Veresen Inc ($VSN) | 16.2x | 14.7x | 30.3x | 7.4x | |
