Canadian Energy Services & Technology Corp reports 53.5% EBITDA decline and 3.2 pp EBITDA Margin decline from 8.4% to 5.2%
09.03.2017 • About Canadian Energy Services & Technology Corp (
$CEU) • By InTwits
Canadian Energy Services & Technology Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Canadian Energy Services & Technology Corp doesn't have a profitable business model yet: 2016 ROIC is -3.7%
- EBITDA Margin is quite volatile: 5.2% in 2016, 8.4% in 2015, 16.2% in 2014, 14.8% in 2013, 12.5% in 2012
- Canadian Energy Services & Technology Corp has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.7%. At the same time it's in pair with industry average of 7.1%.
- CAPEX is quite volatile: 34.8 in 2016, 46.0 in 2015, 60.2 in 2014, 41.1 in 2013, 17.8 in 2012
- The company has unprofitable business model: ROIC is at -3.7%
- It operates with high leverage: Net Debt/EBITDA is 10.2x while industry average is 4.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Canadian Energy Services & Technology Corp ($CEU) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 471.3 | 662.8 | 972.7 | 749.6 | 567.7 | -24.3% |
| Gross Profit | 110.2 | 174.8 | 265.5 | 159.7 | 111.8 | -30.0% |
| SG&A | 62.6 | 103.9 | 148.6 | 151.6 | 143.7 | -5.3% |
| EBITDA | 58.8 | 97.9 | 157.5 | 63.0 | 29.3 | -53.5% |
| Net Income | 27.9 | 37.3 | 67.7 | -92.3 | -64.6 | |
Balance Sheet
|
|---|
| Cash | 0.0 | 0.0 | 0.0 | 0.0 | 13.4 | |
| Short Term Debt | 3.6 | 5.1 | 7.8 | 7.5 | 7.2 | -3.1% |
| Long Term Debt | 71.6 | 310.0 | 367.8 | 306.1 | 306.3 | 0.1% |
Cash flow
|
|---|
| Capex | 17.8 | 41.1 | 60.2 | 46.0 | 34.8 | -24.3% |
Ratios
|
|---|
| Revenue growth | 2.6% | 40.6% | 46.8% | -22.9% | -24.3% | |
| EBITDA growth | -20.7% | 66.4% | 61.0% | -60.0% | -53.5% | |
| Gross Margin | 23.4% | 26.4% | 27.3% | 21.3% | 19.7% | -1.6% |
| EBITDA Margin | 12.5% | 14.8% | 16.2% | 8.4% | 5.2% | -3.2% |
| Net Income Margin | 5.9% | 5.6% | 7.0% | -12.3% | -11.4% | 0.9% |
| SG&A, % of revenue | 13.3% | 15.7% | 15.3% | 20.2% | 25.3% | 5.1% |
| CAPEX, % of revenue | 3.8% | 6.2% | 6.2% | 6.1% | 6.1% | -0.0% |
| ROIC | 15.6% | 14.3% | 14.3% | 0.9% | -3.7% | -4.6% |
| ROE | 13.3% | 12.9% | 15.0% | -17.2% | -11.7% | 5.5% |
| Net Debt/EBITDA | 1.3x | 3.2x | 2.4x | 5.0x | 10.2x | 5.3x |
Canadian Energy Services & Technology Corp ($CEU) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 137 | 98 | 145 | 188 | -41.3% | -40.1% | -22.7% | 13.8% |
| EBITDA | 0 | -2 | 13 | 18 | -99.2% | -112.5% | -24.2% | |
| Net Income | -24 | -26 | -11 | -4 | -269.6% | -1,556.0% | -276.4% | |
Balance Sheet
|
|---|
| Cash | 13 | 111 | 23 | 13 | | 125.5% | 8.2% | |
| Short Term Debt | 7 | 5 | 6 | 7 | -2.4% | -19.6% | -11.1% | -3.1% |
| Long Term Debt | 304 | 304 | 305 | 306 | -11.2% | -0.4% | -0.1% | 0.1% |
Ratios
|
|---|
| Gross Margin | 17.4% | 16.1% | 22.1% | 21.3% | -7.0% | -6.1% | 0.2% | 6.2% |
| EBITDA Margin | 0.2% | -1.7% | 8.6% | 9.7% | -14.4% | -10.1% | -0.2% | 10.6% |
| Net Income Margin | -17.2% | -26.2% | -7.8% | -2.1% | -23.2% | -27.3% | -11.3% | 67.2% |
Revenue and profitability
The company's Revenue dropped on 24.3%. Annual revenue decline showed slowdown in 16Q4 - revenue surged on 13.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 38.7 pp from -41.2% to -2.5% in FY2016.
Gross Margin decreased slightly on 1.6 pp from 21.3% to 19.7% in 2016. SG&A as a % of Revenue increased on 5.1 pp from 20.2% to 25.3% in 2016.
Net Income marign increased slightly on 0.94 pp from -12.3% to -11.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 6.1% in 2016. The company's CAPEX/Revenue showed almost no change from 2013 to 2016. For the last three years the average CAPEX/Revenue was 6.2%.Battling declining revenue the company made large investments to CAPEX (119% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-3.70%) and ROE (-11.73%). ROIC decreased on 4.6 pp from 0.90% to -3.7% in 2016. ROE increased on 5.5 pp from -17.2% to -11.7% in 2016.
Leverage (Debt)
Debt level is 10.2x Net Debt / EBITDA and 10.7x Debt / EBITDA. Net Debt / EBITDA surged on 5.3x from 5.0x to 10.2x in 2016. Debt showed almost no change in 2016 while cash jumped.
Management team
The company's CEO is Thomas James Simons "Tom". Thomas James Simons "Tom" is a founder and has 12 years tenure at the company.
Appendix 1: Peers in Energy
Below you can find Canadian Energy Services & Technology Corp 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% | 16.9% | -29.5% | -18.0% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | | 40.6% | 46.8% | -22.9% | -24.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Americas Petrogas Inc ($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% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 23.4% | 26.4% | 27.3% | 21.3% | 19.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Granite Oil Corp ($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) | 25.9% | 35.7% | 28.9% | 8.8% | 29.2% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 12.5% | 14.8% | 16.2% | 8.4% | 5.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Oryx Petroleum Corp Ltd ($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% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 3.8% | 6.2% | 6.2% | 6.1% | 6.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerplus Corp ($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% | -8.5% | -1.9% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 15.6% | 14.3% | 14.3% | 0.9% | -3.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BlackPearl Resources Inc ($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 | 1.4x | 1.4x | 2.6x | 2.6x |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 1.3x | 3.2x | 2.4x | 5.0x | 10.2x |
