Canadian Utilities Ltd Net Income jumped on 72.2% in 2016 and EBITDA Margin increased on 7.7 pp from 45.8% to 53.5%
03.03.2017 • About Canadian Utilities Ltd (
$CU) • By InTwits
Canadian Utilities Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Canadian Utilities Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 55.6%. At the same time it's a lot of higher than industry average of 33.0%.
- CAPEX is quite volatile: 113 in 2016, 148 in 2015, 259 in 2014, 361 in 2013, 306 in 2012
- The company has business model with low profitability: ROIC is at 8.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Canadian Utilities Ltd ($CU) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,039 | 3,381 | 3,600 | 3,264 | 3,399 | 4.1% |
| Gross Profit | 2,462 | 2,731 | 2,796 | 2,645 | 2,945 | 11.3% |
| EBITDA | 1,396 | 1,544 | 1,708 | 1,496 | 1,820 | 21.7% |
| Net Income | 572 | 606 | 724 | 360 | 620 | 72.2% |
Balance Sheet
|
|---|
| Cash | 349 | 498 | 351 | 520 | 345 | -33.7% |
| Short Term Debt | 34 | 179 | 102 | 21 | 229 | 990.5% |
| Long Term Debt | 5,440 | 6,114 | 7,217 | 7,971 | 8,149 | 2.2% |
Cash flow
|
|---|
| Capex | 2,149 | 2,245 | 2,105 | 1,541 | 1,204 | -21.9% |
Ratios
|
|---|
| Revenue growth | 1.3% | 11.3% | 6.5% | -9.3% | 4.1% | |
| EBITDA growth | 8.6% | 10.6% | 10.6% | -12.4% | 21.7% | |
| Gross Margin | 81.0% | 80.8% | 77.7% | 81.0% | 86.6% | 5.6% |
| EBITDA Margin | 45.9% | 45.7% | 47.4% | 45.8% | 53.5% | 7.7% |
| Net Income Margin | 18.8% | 17.9% | 20.1% | 11.0% | 18.2% | 7.2% |
| CAPEX, % of revenue | 70.7% | 66.4% | 58.5% | 47.2% | 35.4% | -11.8% |
| ROIC | 10.0% | 9.4% | 9.2% | 5.9% | 8.0% | 2.1% |
| ROE | 17.2% | 16.2% | 17.3% | 8.0% | 11.9% | 4.0% |
| Net Debt/EBITDA | 3.7x | 3.8x | 4.1x | 5.0x | 4.4x | -0.6x |
Canadian Utilities Ltd ($CU) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 851 | 756 | 778 | 1,014 | -7.3% | -3.1% | 10.4% | 17.8% |
| EBITDA | 497 | 380 | 416 | 527 | 16.7% | 10.1% | 27.6% | 32.1% |
| Net Income | 194 | 110 | 126 | 196 | 10.2% | 144.4% | 38.5% | 308.3% |
Balance Sheet
|
|---|
| Cash | 388 | 489 | 421 | 345 | -6.1% | 25.1% | -27.2% | -33.7% |
| Short Term Debt | 24 | 306 | 398 | 229 | -84.8% | -34.8% | 1,994.7% | 990.5% |
| Long Term Debt | 7,958 | 7,932 | 7,958 | 8,149 | 8.9% | 8.7% | 3.6% | 2.2% |
Ratios
|
|---|
| Gross Margin | 87.3% | 86.8% | 85.9% | 86.6% | 6.7% | 6.6% | 3.0% | 5.8% |
| EBITDA Margin | 58.4% | 50.3% | 53.5% | 52.0% | 12.0% | 6.0% | 7.2% | 5.6% |
| Net Income Margin | 22.8% | 14.6% | 16.2% | 19.3% | 3.6% | 8.8% | 3.3% | 13.8% |
Revenue and profitability
The company's Revenue increased on 4.1%. Revenue growth showed acceleration in 16Q4 - it increased 17.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 10.1 pp from 8.1% to 18.2% in FY2016.
Gross Margin increased on 5.6 pp from 81.0% to 86.6% in 2016.
Net Income marign increased on 7.2 pp from 11.0% to 18.2% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 35.4%. Canadian Utilities Ltd's CAPEX/Revenue dropped on 31.0 pp from 66.4% in 2013 to 35.4% in 2016. It's average CAPEX/Revenue for the last three years was 47.0%.Canadian Utilities Ltd invested a large share of EBITDA (66.2%) to CAPEX.
Return on investment
The company operates at low ROIC (8.04%) and ROE (11.92%). ROIC increased on 2.1 pp from 5.9% to 8.0% in 2016. ROE increased on 4.0 pp from 8.0% to 11.9% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.4x and Debt / EBITDA is 4.6x. Net Debt / EBITDA dropped on 0.6x from 5.0x to 4.4x in 2016. Debt increased on 4.8% while cash dropped on 33.7%.
Appendix 1: Peers in Utilities
Below we provide Canadian Utilities Ltd 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% |
| Algonquin Power & Utilities Corp ($AQN) | | 93.6% | 39.4% | 9.2% | 6.6% |
| TransAlta Corp ($TA) | | 3.7% | 14.4% | -13.6% | 5.7% |
| |
|---|
| Median (14 companies) | | 10.8% | 13.1% | -5.1% | 0.2% |
|---|
| Canadian Utilities Ltd ($CU) | | 11.3% | 6.5% | -9.3% | 4.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atco Ltd/Canada ($ACO.X) | 85.6% | 85.1% | 82.3% | 85.0% | 88.8% |
| 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 ($FTS) | 34.6% | 34.4% | 59.3% | 61.7% | 65.8% |
| Capital Power Corp ($CPX) | 58.9% | 59.8% | 58.4% | 61.4% | 65.4% |
| |
|---|
| Median (12 companies) | 34.2% | 36.1% | 45.5% | 56.6% | 58.8% |
|---|
| Canadian Utilities Ltd ($CU) | 81.0% | 80.8% | 77.7% | 81.0% | 86.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($NPI) | 54.2% | 52.4% | 51.2% | 57.5% | 68.8% |
| 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% |
| Algonquin Power & Utilities Corp ($AQN) | 26.1% | 29.5% | 26.7% | 32.5% | 39.3% |
| GWR Global Water Resources Corp ($GWR) | | | | 46.1% | 38.8% |
| |
|---|
| Median (12 companies) | 28.3% | 34.0% | 33.6% | 33.4% | 35.4% |
|---|
| Canadian Utilities Ltd ($CU) | 45.9% | 45.7% | 47.4% | 45.8% | 53.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Northland Power Inc ($NPI) | 84.0% | 60.2% | 238.7% | 265.9% | 148.0% |
| Algonquin Power & Utilities Corp ($AQN) | 21.7% | 23.5% | 45.9% | 19.9% | 37.0% |
| Atco Ltd/Canada ($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) | 31.4% | 24.5% | 20.6% | 21.1% | 26.9% |
|---|
| Canadian Utilities Ltd ($CU) | 70.7% | 66.4% | 58.5% | 47.2% | 35.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Keyera Corp ($KEY) | 13.8% | 12.7% | 14.3% | 12.6% | 10.5% |
| Atco Ltd/Canada ($ACO.X) | 10.8% | 10.5% | 9.6% | 5.6% | 8.1% |
| Northland Power Inc ($NPI) | 6.0% | 7.4% | 7.2% | 5.3% | 7.3% |
| Caribbean Utilities Co Ltd ($CUP.U) | 5.8% | 6.3% | 6.1% | 5.7% | 5.8% |
| TransAlta Corp ($TA) | 0.5% | 2.4% | 5.3% | 1.7% | 5.0% |
| |
|---|
| Median (14 companies) | 4.2% | 5.6% | 5.0% | 5.2% | 4.3% |
|---|
| Canadian Utilities Ltd ($CU) | 10.0% | 9.4% | 9.2% | 5.9% | 8.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Atlantic Power Corp ($ATP) | 12.6x | 13.0x | 22.4x | 251.1x | 24.3x |
| Emera Inc ($EMA) | 5.7x | 5.6x | 3.8x | 4.3x | 13.3x |
| Algonquin Power & Utilities Corp ($AQN) | 7.9x | 6.2x | 5.0x | 4.1x | 9.7x |
| Fortis Inc/Canada ($FTS) | 5.0x | 5.6x | 6.7x | 5.3x | 9.2x |
| GWR Global Water Resources Corp ($GWR) | | | | 6.3x | 8.1x |
| |
|---|
| Median (11 companies) | 5.3x | 5.5x | 4.6x | 5.2x | 7.8x |
|---|
| Canadian Utilities Ltd ($CU) | 3.7x | 3.8x | 4.1x | 5.0x | 4.4x |
