Advantage Oil & Gas Ltd reports 174% Net Income decline while 32.0% Revenue growth
02.03.2017 • About Advantage Oil & Gas Ltd (
$AAV) • By InTwits
Advantage Oil & Gas Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 81.9% in 2016, 81.8% in 2015, 87.8% in 2014, 66.1% in 2013, 5.2% in 2012
- Advantage Oil & Gas Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 97.4%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 0.31 in FY2016, 0.20 in FY2015, 0.62 in FY2014, 0.27 in FY2013, 9.7 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Advantage Oil & Gas Ltd ($AAV) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 234.8 | 132.6 | 205.6 | 159.2 | 210.1 | 32.0% |
| Gross Profit | 145.6 | 112.0 | 190.2 | 140.9 | 189.8 | 34.7% |
| SG&A | 28.2 | 24.4 | 9.6 | 10.6 | 10.7 | 1.7% |
| EBITDA | 12.3 | 87.6 | 180.5 | 130.3 | 172.0 | 32.0% |
| Net Income | -89.1 | -3.4 | 60.6 | 21.4 | -15.7 | -173.6% |
Balance Sheet
|
|---|
| Cash | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Short Term Debt | 0.0 | 0.0 | 85.9 | 0.0 | 0.0 | |
| Long Term Debt | 351.6 | 353.8 | 110.0 | 286.5 | 153.1 | -46.6% |
Cash flow
|
|---|
| Capex | 201.8 | 146.5 | 225.3 | 191.5 | 127.3 | -33.5% |
Ratios
|
|---|
| Revenue growth | -22.3% | -43.5% | 55.1% | -22.6% | 32.0% | |
| EBITDA growth | -201.2% | 610.9% | 106.1% | -27.8% | 32.0% | |
| Gross Margin | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% | 1.8% |
| EBITDA Margin | 5.2% | 66.1% | 87.8% | 81.8% | 81.9% | 0.0% |
| Net Income Margin | -38.0% | -2.6% | 29.5% | 13.4% | -7.5% | -20.9% |
| SG&A, % of revenue | 12.0% | 18.4% | 4.7% | 6.6% | 5.1% | -1.5% |
| CAPEX, % of revenue | 86.0% | 110.6% | 109.6% | 120.3% | 60.6% | -59.7% |
| ROIC | -7.8% | 1.0% | 6.7% | 3.1% | 3.9% | 0.8% |
| ROE | -8.1% | -0.3% | 5.6% | 1.9% | -1.4% | -3.3% |
| Net Debt/EBITDA | 28.5x | 4.0x | 1.1x | 2.2x | 0.9x | -1.3x |
Advantage Oil & Gas Ltd ($AAV) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 40 | 47 | 55 | 67 | 5.3% | 30.1% | 27.3% | 63.4% |
| EBITDA | 33 | 38 | 46 | 55 | 4.1% | 30.1% | 28.0% | 64.0% |
| Net Income | 15 | -30 | 8 | -9 | 260.9% | | 17.6% | -171.3% |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 0 | 0 | | | | |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 203 | 194 | 179 | 153 | -22.5% | -30.0% | -37.4% | -46.6% |
Ratios
|
|---|
| Gross Margin | 87.0% | 88.0% | 91.1% | 93.3% | -1.9% | -0.5% | 2.4% | 5.5% |
| EBITDA Margin | 80.5% | 80.5% | 84.2% | 81.8% | -0.9% | -0.0% | 0.5% | 0.3% |
| Net Income Margin | 36.3% | -63.2% | 14.9% | -13.1% | 25.7% | -57.5% | -1.2% | -43.2% |
Revenue and profitability
The company's Revenue jumped on 32.0%. Revenue growth showed acceleration in 16Q4 - it increased 63.4% YoY. EBITDA Margin showed almost no change in 2016.
Gross Margin increased slightly on 1.8 pp from 88.5% to 90.3% in 2016. SG&A as a % of Revenue decreased slightly on 1.5 pp from 6.6% to 5.1% in 2016.
Net Income marign dropped on 20.9 pp from 13.4% to -7.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 60.6% in 2016. CAPEX/Revenue dropped on 50.0 pp from 111% in 2013 to 60.6% in 2016. It's average CAPEX/Revenue for the last three years was 96.8%.Advantage Oil & Gas Ltd invested a big chunk of EBITDA (74.0%) to CAPEX to secure its growth.
Return on investment
The company operates at low but positive ROIC (3.92%) and negative ROE (-1.35%). ROIC increased slightly on 0.83 pp from 3.1% to 3.9% in 2016. ROE decreased on 3.3 pp from 1.9% to -1.4% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 0.9x. Net Debt / EBITDA dropped on 1.3x from 2.2x to 0.9x in 2016. Debt dropped on 46.6% while cash didn't change in 2016.
Management team
Andy J Mah is a Advantage Oil & Gas Ltd's CEO. Andy J Mah is a founder and has spent 9 years at the company. Advantage Oil & Gas Ltd's CFO is Donald Craig Blackwood. Donald Craig Blackwood has 5 years tenure at the company.
Appendix 1: Peers in Energy
Below we provide Advantage Oil & Gas Ltd 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% | 16.9% | -29.5% | -19.1% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | | -43.5% | 55.1% | -22.6% | 32.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% | |
| Polaris Infrastructure Inc ($PIF) | 39.9% | 33.6% | 32.0% | 86.7% | 88.6% |
| Freehold Royalties Ltd ($FRU) | 90.4% | 89.0% | 90.2% | 86.3% | 86.3% |
| |
|---|
| Median (114 companies) | 32.0% | 32.1% | 32.2% | 33.6% | 31.5% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | 62.0% | 84.5% | 92.5% | 88.5% | 90.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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) | 25.9% | 34.1% | 28.9% | 8.1% | 27.3% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | 5.2% | 66.1% | 87.8% | 81.8% | 81.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | 86.0% | 110.6% | 109.6% | 120.3% | 60.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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% | 5.5% | -8.5% | -1.9% |
|---|
| Advantage Oil & Gas Ltd ($AAV) | -7.8% | 1.0% | 6.7% | 3.1% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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 (78 companies) | 1.5x | 1.4x | 1.4x | 2.7x | 2.7x |
|---|
| Advantage Oil & Gas Ltd ($AAV) | 28.5x | 4.0x | 1.1x | 2.2x | 0.9x |
