Algonquin Power & Utilities Corp CAPEX surged on 98.7% in 2016 and Revenue increased on 6.6%
02.03.2017 • About Algonquin Power & Utilities Corp (
$AQN) • By InTwits
Algonquin Power & Utilities Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Algonquin Power & Utilities Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 29.6%. At the same time it's in pair with industry average of 33.0%.
- CAPEX is quite volatile: 406 in 2016, 204 in 2015, 432 in 2014, 158 in 2013, 75.7 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.3%
- It operates with high leverage: Net Debt/EBITDA is 9.7x while industry average is 8.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Algonquin Power & Utilities Corp ($AQN) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 349 | 675 | 942 | 1,028 | 1,096 | 6.6% |
| Gross Profit | 111 | 223 | 287 | 372 | 468 | 25.6% |
| SG&A | 20 | 24 | 35 | 41 | 46 | 13.9% |
| EBITDA | 91 | 200 | 252 | 334 | 430 | 29.0% |
| Net Income | 15 | 20 | 76 | 117 | 131 | 11.4% |
Balance Sheet
|
|---|
| Cash | 53 | 14 | 9 | 124 | 110 | -11.2% |
| Short Term Debt | 2 | 8 | 9 | 9 | 10 | 12.6% |
| Long Term Debt | 770 | 1,247 | 1,263 | 1,478 | 4,262 | 188.4% |
Cash flow
|
|---|
| Capex | 76 | 158 | 432 | 204 | 406 | 98.7% |
Ratios
|
|---|
| Revenue growth | 28.8% | 93.6% | 39.4% | 9.2% | 6.6% | |
| EBITDA growth | 8.2% | 118.9% | 26.1% | 32.6% | 29.0% | |
| Gross Margin | 31.7% | 33.0% | 30.4% | 36.2% | 42.7% | 6.4% |
| EBITDA Margin | 26.1% | 29.5% | 26.7% | 32.5% | 39.3% | 6.8% |
| Net Income Margin | 4.2% | 3.0% | 8.0% | 11.4% | 11.9% | 0.5% |
| SG&A, % of revenue | 5.6% | 3.5% | 3.7% | 4.0% | 4.2% | 0.3% |
| CAPEX, % of revenue | 21.7% | 23.5% | 45.9% | 19.9% | 37.0% | 17.2% |
| ROIC | 2.6% | 4.2% | 4.6% | 5.1% | 4.3% | -0.8% |
| ROE | 2.2% | 2.3% | 6.2% | 7.1% | 7.0% | -0.0% |
| Net Debt/EBITDA | 7.9x | 6.2x | 5.0x | 4.1x | 9.7x | 5.6x |
Algonquin Power & Utilities Corp ($AQN) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 342 | 223 | 221 | 310 | -10.5% | 13.6% | 16.7% | 19.2% |
| EBITDA | 135 | 92 | 84 | 120 | 34.4% | 27.1% | 32.6% | 22.4% |
| Net Income | 42 | 25 | 18 | 46 | -2.5% | 24.4% | 7.8% | 22.0% |
Balance Sheet
|
|---|
| Cash | 309 | 269 | 48 | 110 | 1,265.2% | 923.7% | -8.7% | -11.2% |
| Short Term Debt | 10 | 10 | 76 | 10 | -0.1% | 15.0% | 248.2% | 12.6% |
| Long Term Debt | 2,205 | 2,190 | 2,305 | 4,262 | 49.7% | 53.0% | 44.8% | 188.4% |
Ratios
|
|---|
| Gross Margin | 42.2% | 43.8% | 42.4% | 42.6% | 12.6% | 3.0% | 4.5% | 1.3% |
| EBITDA Margin | 39.5% | 41.2% | 37.8% | 38.6% | 13.2% | 4.4% | 4.5% | 1.0% |
| Net Income Margin | 12.3% | 11.1% | 8.0% | 14.9% | 1.0% | 1.0% | -0.7% | 0.3% |
Revenue and profitability
The company's Revenue increased on 6.6%. Revenue growth showed acceleration in 16Q4 - it increased 19.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 57.3 pp from -45.2% to 12.0% in 2016.
Gross Margin increased on 6.4 pp from 36.2% to 42.7% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased slightly on 0.52 pp from 11.4% to 11.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 37.0% in 2016. CAPEX/Revenue surged on 13.6 pp from 23.5% in 2013 to 37.0% in 2016. For the last three years the average CAPEX/Revenue was 34.3%.The company maintained rich investment policy and has spent a big chunk of EBITDA (94.3%) to CAPEX.
Return on investment
The company operates at low ROIC (4.25%) and ROE (7.03%). ROIC decreased slightly on 0.82 pp from 5.1% to 4.3% in 2016. ROE showed almost no change in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 9.7x and Debt / EBITDA is 9.9x. Net Debt / EBITDA surged on 5.6x from 4.1x to 9.7x in 2016. Debt surged on 187% while cash dropped on 11.2%.
Management team
Algonquin Power & Utilities Corp's CEO Ian E G Robertson is a founder and has spent 8 years at the company. Algonquin Power & Utilities Corp's CFO David John Bronicheski has spent 11 years at the company.
Appendix 1: Peers in Utilities
Below we provide Algonquin Power & Utilities Corp benchmarking against other companies in Utilities 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 |
|---|
| Emera Inc ($EMA) | | 8.3% | 31.8% | -5.1% | 53.3% |
| Northland Power Inc ($NPI) | | 54.1% | 36.4% | -4.2% | 50.9% |
| Boralex Inc ($BLX) | | -6.7% | 13.5% | 37.1% | 11.7% |
| TransAlta Corp ($TA) | | 3.7% | 14.4% | -13.6% | 5.7% |
| Canadian Utilities Ltd ($CU) | | 11.3% | 6.5% | -9.3% | 4.1% |
| |
|---|
| Median (14 companies) | | 10.8% | 10.6% | -9.3% | 0.2% |
|---|
| Algonquin Power & Utilities Corp ($AQN) | | 93.6% | 39.4% | 9.2% | 6.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atco Ltd/Canada ($ACO.X) | 85.6% | 85.1% | 82.3% | 85.0% | 88.8% |
| Canadian Utilities Ltd ($CU) | 81.0% | 80.8% | 77.7% | 81.0% | 86.6% |
| Northland Power Inc ($NPI) | 52.5% | 63.7% | 61.8% | 69.0% | 82.4% |
| GWR Global Water Resources Corp ($GWR) | | | | 77.8% | 79.2% |
| Fortis Inc/Canada ($FTS) | 34.6% | 34.4% | 59.3% | 61.7% | 65.8% |
| |
|---|
| Median (12 companies) | 43.5% | 46.8% | 56.7% | 61.4% | 62.6% |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 31.7% | 33.0% | 30.4% | 36.2% | 42.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($NPI) | 54.2% | 52.4% | 51.2% | 57.5% | 68.8% |
| Canadian Utilities Ltd ($CU) | 45.9% | 45.7% | 47.4% | 45.8% | 53.5% |
| Atco Ltd/Canada ($ACO.X) | 39.8% | 41.0% | 41.4% | 38.7% | 47.7% |
| TransAlta Corp ($TA) | 27.3% | 34.0% | 39.5% | 33.2% | 47.6% |
| GWR Global Water Resources Corp ($GWR) | | | | 46.1% | 38.8% |
| |
|---|
| Median (12 companies) | 31.1% | 34.0% | 34.3% | 35.4% | 35.4% |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 26.1% | 29.5% | 26.7% | 32.5% | 39.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($NPI) | 84.0% | 60.2% | 238.7% | 265.9% | 148.0% |
| Canadian Utilities Ltd ($CU) | 70.7% | 66.4% | 58.5% | 47.2% | 35.4% |
| Atco Ltd/Canada ($ACO.X) | 58.8% | 54.2% | 48.3% | 39.6% | 33.1% |
| Caribbean Utilities Co Ltd ($CUP.U) | 13.8% | 13.0% | 17.0% | 41.3% | 29.2% |
| GWR Global Water Resources Corp ($GWR) | | | | 10.5% | 28.8% |
| |
|---|
| Median (12 companies) | 31.8% | 29.0% | 20.6% | 24.6% | 26.9% |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 21.7% | 23.5% | 45.9% | 19.9% | 37.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Keyera Corp ($KEY) | 13.8% | 12.7% | 14.3% | 12.6% | 10.5% |
| Atco Ltd/Canada ($ACO.X) | 10.8% | 10.5% | 9.6% | 5.6% | 8.1% |
| Canadian Utilities Ltd ($CU) | 10.0% | 9.4% | 9.2% | 5.9% | 8.0% |
| Northland Power Inc ($NPI) | 6.0% | 7.4% | 7.2% | 5.3% | 7.3% |
| Caribbean Utilities Co Ltd ($CUP.U) | 5.8% | 6.3% | 6.1% | 5.7% | 5.8% |
| |
|---|
| Median (14 companies) | 5.3% | 6.0% | 5.4% | 5.4% | 4.7% |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 2.6% | 4.2% | 4.6% | 5.1% | 4.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atlantic Power Corp ($ATP) | 12.6x | 13.0x | 22.4x | 251.1x | 24.3x |
| Emera Inc ($EMA) | 5.7x | 5.6x | 3.8x | 4.3x | 13.3x |
| Fortis Inc/Canada ($FTS) | 5.0x | 5.6x | 6.7x | 5.3x | 9.2x |
| GWR Global Water Resources Corp ($GWR) | | | | 6.3x | 8.1x |
| Northland Power Inc ($NPI) | 6.4x | 5.8x | 6.9x | 11.1x | 7.8x |
| |
|---|
| Median (11 companies) | 5.0x | 5.2x | 4.1x | 5.2x | 4.4x |
|---|
| Algonquin Power & Utilities Corp ($AQN) | 7.9x | 6.2x | 5.0x | 4.1x | 9.7x |
