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Reitmans Canada Ltd revenue decreased on 2.2% in 2015 and EBITDA Margin showed almost no change

01.04.2015 • About Reitmans Canada Ltd ($RET) • By InTwits

Reitmans Canada Ltd reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Reitmans Canada Ltd is a company in decline: FY2015 revenue growth was -2.2%, 5 years revenue CAGR was -2.3%
  • EBITDA Margin is quite volatile: 7.1% in FY2015, 7.0% in FY2014, 9.0% in FY2013, 12.4% in FY2012, 17.4% in FY2011
  • Reitmans Canada Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.1%. At the same time it's in pair with industry average of 4.4%.
  • CAPEX is quite volatile: 29.0 in FY2015, 34.5 in FY2014, 84.4 in FY2013, 59.2 in FY2012, 46.9 in FY2011
  • The company has potentially unprofitable business model: ROIC is at 3.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Reitmans Canada Ltd ($RET) key annual financial indicators

mln. CAD201120122013201420152015/2014
Gross Profit708656628595567-4.6%
Net Income894826111324.4%
Balance Sheet
Short Term Debt112226.5%
Long Term Debt109754-33.4%
Cash flow
Revenue growth0.2%-3.7%-1.9%-4.0%-2.2%
EBITDA growth16.0%-31.0%-28.9%-25.9%-0.4%
Gross Margin66.9%64.4%62.8%61.9%60.4%-1.6%
EBITDA Margin17.4%12.4%9.0%7.0%7.1%0.1%
Net Income Margin8.4%4.7%2.6%1.1%1.4%0.3%
SG&A, % of revenue55.2%58.3%59.8%61.6%59.1%-2.6%
CAPEX, % of revenue4.4%5.8%8.4%3.6%3.1%-0.5%
Net Debt/EBITDA-1.2x-1.5x-1.0x-1.7x-2.0x-0.3x

Revenue and profitability

Reitmans Canada Ltd's Revenue decreased on 2.2% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.62 pp from 7.5% to 6.9% in FY2015.

Gross Margin decreased slightly on 1.6 pp from 61.9% to 60.4% in FY2015. SG&A as a % of Revenue decreased on 2.6 pp from 61.6% to 59.1% in FY2015.

Net Income marign showed almost no change in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 Reitmans Canada Ltd had CAPEX/Revenue of 3.1%. CAPEX/Revenue decreased on 2.7 pp from 5.8% in FY2012 to 3.1% in FY2015. It's average level of CAPEX/Revenue for the last three years was 5.0%.

Return on investment

The company operates at low ROIC (3.12%) and ROE (3.18%). ROIC increased on 2.4 pp from 0.74% to 3.1% in FY2015. ROE increased slightly on 0.72 pp from 2.5% to 3.2% in FY2015.

Leverage (Debt)

Company's Net Debt / EBITDA is -2.0x and Debt / EBITDA is 0.1x. Net Debt / EBITDA dropped on 0.3x from -1.7x to -2.0x in FY2015. Debt dropped on 23.9% in FY2015 while cash surged on 14.4% in FY2015.

Appendix 1: Peers in Consumer, Cyclical

Below we provide Reitmans Canada Ltd benchmarking against other companies in Consumer, Cyclical 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 FY2011 FY2012 FY2013 FY2014 FY2015
Amaya Inc ($AYA)216.4%311.5%85.2%254.0%
Partner Jet Corp ($PJT)-19.9%-15.2%1.2%119.7%
Kelso Technologies Inc ($KLS)80.5%577.5%487.8%81.4%
XPEL Technologies Corp ($DAP.U)46.3%76.6%67.7%65.5%
Holloway Lodging Corp ($HLC)5.4%-24.6%2.7%62.7%
Median (62 companies)10.9%5.4%5.3%6.7%10.4%
Reitmans Canada Ltd ($RET)-3.7%-1.9%-4.0%-2.2%

Top companies by Gross margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Restaurant Brands International Inc ($QSR)69.7%87.0%
Imvescor Restaurant Group Inc ($IRG)96.2%94.2%89.7%84.9%
DEQ Systems Corp ($DEQ)74.3%77.5%78.4%84.7%
Second Cup Ltd/The ($SCU)91.1%86.6%85.1%72.7%
New Look Vision Group Inc ($BCI)72.3%71.8%72.6%72.6%
Median (55 companies)36.1%34.1%31.6%32.5%32.6%
Reitmans Canada Ltd ($RET)66.9%64.4%62.8%61.9%60.4%

Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Westshore Terminals Investment Corp ($WTE)49.7%65.9%60.9%59.6%
Gamehost Inc ($GH)44.2%46.1%45.7%45.9%
Great Canadian Gaming Corp ($GC)34.1%16.8%41.1%40.1%
Amaya Inc ($AYA)-5.7%7.2%38.2%39.3%
MTY Food Group Inc ($MTY)32.2%36.3%38.7%37.0%
Median (60 companies)8.8%8.2%10.5%10.3%10.9%
Reitmans Canada Ltd ($RET)17.4%12.4%9.0%7.0%7.1%

Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Poydras Gaming Finance Corp ($PYD)32.5%
WestJet Airlines Ltd ($WJA)3.9%7.9%19.5%18.6%
Exchange Income Corp ($EIF)8.2%7.9%15.8%15.5%
Holloway Lodging Corp ($HLC)3.4%8.2%6.7%14.8%
Kelso Technologies Inc ($KLS)79.2%0.4%0.7%13.5%
Median (63 companies)2.6%2.6%2.6%2.2%3.2%
Reitmans Canada Ltd ($RET)4.4%5.8%8.4%3.6%3.1%

Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Partner Jet Corp ($PJT)-30.7%-51.6%-50.8%85.1%
Kelso Technologies Inc ($KLS)-121.3%48.8%
XPEL Technologies Corp ($DAP.U)52.9%54.7%57.5%43.2%
Westshore Terminals Investment Corp ($WTE)24.0%37.8%35.0%38.3%
Iplayco Corp Ltd ($IPC)-35.4%23.0%58.5%33.6%
Median (63 companies)10.9%10.2%12.4%10.2%5.6%
Reitmans Canada Ltd ($RET)24.2%12.5%6.7%0.7%3.1%

Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Restaurant Brands International Inc ($QSR)3.8x33.6x
Hudson's Bay Co ($HBC)8.7x3.8x3.6x19.1x
Amaya Inc ($AYA)17.9x1.8x13.5x
Dorel Industries Inc ($DII.A)1.6x1.5x2.8x12.2x
Performance Sports Group Ltd ($PSG)2.6x3.5x12.2x6.5x
Median (54 companies)1.3x1.4x1.8x1.8x1.5x
Reitmans Canada Ltd ($RET)-1.2x-1.5x-1.0x-1.7x-2.0x