Finning International Inc EBITDA dropped on 82.2% in 2015 and Revenue decreased on 9.3%
18.02.2016 • About Finning International Inc (
$FTT) • By InTwits
Finning International Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Finning International Inc doesn't have a profitable business model yet: 2015 ROIC is -2.9%
- EBITDA Margin is quite volatile: 2.0% in 2015, 10.2% in 2014, 10.8% in 2013, 10.5% in 2012, 9.3% in 2011
- Finning International Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's in pair with industry average of 28.2%.
- CAPEX is quite volatile: 76 in 2015, 81.3 in 2014, 98.5 in 2013, 194 in 2012, 136 in 2011
- The company has unprofitable business model: ROIC is at -2.9%
- It operates with high leverage: Net Debt/EBITDA is 9.4x while industry average is 2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Finning International Inc ($FTT) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,895 | 6,576 | 6,756 | 6,918 | 6,275 | -9.3% |
| Gross Profit | 1,680 | 1,967 | 2,080 | 2,062 | 1,641 | -20.4% |
| SG&A | 1,279 | 1,490 | 1,555 | 1,556 | 1,369 | -12.0% |
| EBITDA | 549 | 691 | 727 | 709 | 126 | -82.2% |
| Net Income | 259 | 327 | 335 | 318 | -161 | -150.6% |
Balance Sheet
|
|---|
| Cash | 123 | 115 | 176 | 451 | 475 | 5.4% |
| Short Term Debt | 335 | 667 | 90 | 7 | 117 | 1,473.6% |
| Long Term Debt | 763 | 1,012 | 1,367 | 1,418 | 1,548 | 9.2% |
Cash flow
|
|---|
| Capex | 136 | 194 | 99 | 81 | 76 | -6.5% |
Ratios
|
|---|
| Revenue growth | 28.6% | 11.5% | 2.7% | 2.4% | -9.3% | |
| EBITDA growth | 23.2% | 25.8% | 5.2% | -2.6% | -82.2% | |
| Gross Margin | 28.5% | 29.9% | 30.8% | 29.8% | 26.2% | -3.7% |
| EBITDA Margin | 9.3% | 10.5% | 10.8% | 10.2% | 2.0% | -8.2% |
| Net Income Margin | 4.4% | 5.0% | 5.0% | 4.6% | -2.6% | -7.2% |
| SG&A, % of revenue | 21.7% | 22.7% | 23.0% | 22.5% | 21.8% | -0.7% |
| CAPEX, % of revenue | 2.3% | 3.0% | 1.5% | 1.2% | 1.2% | 0.0% |
| ROIC | 16.2% | 16.9% | 15.5% | 14.2% | -2.9% | -17.0% |
| ROE | 20.4% | 22.4% | 19.6% | 16.0% | -7.7% | -23.7% |
| Net Debt/EBITDA | 1.8x | 2.3x | 1.8x | 1.4x | 9.4x | 8.1x |
Revenue and profitability
Finning International Inc's Revenue decreased on 9.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.76 pp from 2.2% to 2.9% in 2015.
Gross Margin decreased on 3.7 pp from 29.8% to 26.2% in 2015. SG&A as a % of Revenue decreased slightly on 0.67 pp from 22.5% to 21.8% in 2015.
Net Income marign decreased on 7.2 pp from 4.6% to -2.6% in 2015.
Capital expenditures (CAPEX) and working capital investments
Finning International Inc's CAPEX/Revenue was 1.2% in 2015. CAPEX/Revenue decreased slightly on 1.7 pp from 3.0% in 2012 to 1.2% in 2015. Average CAPEX/Revenue for the last three years was 1.3%.Battling declining revenue the company invested a large share of EBITDA (60.3%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-2.85%) and ROE (-7.70%). ROIC dropped on 17.0 pp from 14.2% to -2.9% in 2015. ROE dropped on 23.7 pp from 16.0% to -7.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 9.4x and Debt / EBITDA is 13.2x. Net Debt / EBITDA surged on 8.1x from 1.4x to 9.4x in 2015. Debt jumped on 16.8% in 2015 while cash increased on 5.4% in 2015.
Management team
Finning International Inc's CEO L Scott Thomson is a founder and has spent 5 years at the company. Finning International Inc's CFO is Steven M Nielsen. Steven M Nielsen has 3 years tenure at the company.
Appendix 1: Peers in Industrial
Below we provide Finning International Inc benchmarking against other companies in Industrial 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 |
|---|
| Electrovaya Inc ($EFL) | | -4.0% | -71.2% | 160.5% | 123.8% |
| Enterprise Group Inc ($E) | 14.5% | 3.5% | 88.3% | 128.5% | |
| Carmanah Technologies Corp ($CMH) | 5.8% | -26.4% | -2.0% | 68.8% | |
| Exco Technologies Ltd ($XTC) | | 19.7% | 0.9% | 50.5% | 35.3% |
| Lumenpulse Inc ($LMP) | | 56.7% | 33.9% | 47.0% | 61.8% |
| |
|---|
| Median (92 companies) | 13.6% | 10.4% | 5.3% | 9.4% | 11.7% |
|---|
| Finning International Inc ($FTT) | | 11.5% | 2.7% | 2.4% | -9.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| WSP Global Inc ($WSP) | 81.1% | 81.1% | 83.2% | 81.0% | |
| Pure Technologies Ltd ($PUR) | 75.7% | 77.9% | 78.0% | 77.5% | |
| Alarmforce Industries Inc ($AF) | 76.4% | 75.0% | 76.5% | 72.2% | 69.2% |
| Epicore BioNetworks Inc ($EBN) | 59.0% | 60.8% | 63.2% | 64.1% | 58.1% |
| FLYHT Aerospace Solutions Ltd ($FLY) | 54.0% | 57.2% | 59.2% | 62.9% | |
| |
|---|
| Median (88 companies) | 23.2% | 23.0% | 23.3% | 22.6% | 25.0% |
|---|
| Finning International Inc ($FTT) | 28.5% | 29.9% | 30.8% | 29.8% | 26.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Canadian National Railway Co ($CNR) | 46.3% | 46.5% | 45.9% | 46.8% | 50.9% |
| Canadian Pacific Railway Ltd ($CP) | 28.1% | 26.1% | 32.4% | 43.7% | 48.9% |
| Vitreous Glass Inc ($VCI) | 29.0% | 31.4% | 32.2% | 37.8% | 39.0% |
| Questor Technology Inc ($QST) | 25.1% | 25.7% | 34.9% | 34.1% | |
| Progressive Waste Solutions Ltd ($BIN) | 32.2% | 30.7% | 33.1% | 34.0% | 9.8% |
| |
|---|
| Median (85 companies) | 8.1% | 9.2% | 8.3% | 7.2% | 9.9% |
|---|
| Finning International Inc ($FTT) | 9.3% | 10.5% | 10.8% | 10.2% | 2.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cargojet Inc ($CJT.A) | 6.8% | 7.0% | 6.3% | 54.1% | |
| Newalta Corp ($NAL) | 17.2% | 21.7% | 34.5% | 35.1% | |
| Enterprise Group Inc ($E) | 3.6% | 17.4% | 27.2% | 32.7% | |
| ENTREC Corp ($ENT) | | 35.0% | 26.7% | 29.5% | |
| Horizon North Logistics Inc ($HNL) | 25.1% | 26.5% | 16.3% | 24.1% | |
| |
|---|
| Median (92 companies) | 3.0% | 3.1% | 3.7% | 3.2% | 3.5% |
|---|
| Finning International Inc ($FTT) | 2.3% | 3.0% | 1.5% | 1.2% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Vitreous Glass Inc ($VCI) | 26.1% | 30.5% | 32.3% | 48.3% | 51.0% |
| Photon Control Inc ($PHO) | 10.1% | 21.0% | 44.4% | 38.0% | |
| SNC-Lavalin Group Inc ($SNC) | 14.6% | 10.7% | 4.0% | 35.2% | |
| Alarmforce Industries Inc ($AF) | 18.3% | 5.3% | 24.0% | 33.9% | 19.0% |
| Epicore BioNetworks Inc ($EBN) | 24.8% | 28.1% | 16.1% | 32.5% | 26.3% |
| |
|---|
| Median (93 companies) | 8.9% | 9.3% | 8.5% | 8.5% | 11.2% |
|---|
| Finning International Inc ($FTT) | 16.2% | 16.9% | 15.5% | 14.2% | -2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sigma Industries Inc ($SSG) | | 4.4x | 11.3x | 225.9x | 2.9x |
| H2O Innovation Inc ($HEO) | | | 4.2x | 73.2x | 1.6x |
| Grand Power Logistics Group Inc ($GPW) | | 47.8x | | 53.1x | |
| Cargojet Inc ($CJT.A) | 1.8x | 1.5x | 1.5x | 31.5x | |
| IBI Group Inc ($IBG) | 4.2x | 6.5x | | 8.3x | |
| |
|---|
| Median (72 companies) | 1.1x | 1.5x | 1.4x | 1.2x | 1.6x |
|---|
| Finning International Inc ($FTT) | 1.8x | 2.3x | 1.8x | 1.4x | 9.4x |
