Finning International Inc reports 183% EBITDA growth while 10.3% Revenue decline
16.02.2017 • About Finning International Inc (
$FTT) • By InTwits
Finning International Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 6.3% in 2016, 2.0% in 2015, 10.2% in 2014, 10.8% in 2013, 10.5% in 2012
- Finning International Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 24.1%.
- CAPEX is quite volatile: 92 in 2016, 76 in 2015, 81.3 in 2014, 98.5 in 2013, 194 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.5x while industry average is 2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Finning International Inc ($FTT) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 6,576 | 6,756 | 6,918 | 6,275 | 5,628 | -10.3% |
| Gross Profit | 1,967 | 2,080 | 2,062 | 1,641 | 1,473 | -10.2% |
| SG&A | 1,490 | 1,555 | 1,556 | 1,369 | 1,280 | -6.5% |
| EBITDA | 691 | 727 | 709 | 126 | 357 | 183.3% |
| Net Income | 327 | 335 | 318 | -161 | 65 | |
Balance Sheet
|
|---|
| Cash | 115 | 176 | 451 | 475 | 593 | 24.8% |
| Short Term Debt | 667 | 90 | 7 | 117 | 7 | -94.0% |
| Long Term Debt | 1,012 | 1,367 | 1,418 | 1,548 | 1,487 | -3.9% |
Cash flow
|
|---|
| Capex | 194 | 99 | 81 | 76 | 92 | 21.1% |
Ratios
|
|---|
| Revenue growth | 11.5% | 2.7% | 2.4% | -9.3% | -10.3% | |
| EBITDA growth | 25.8% | 5.2% | -2.6% | -82.2% | 183.3% | |
| Gross Margin | 29.9% | 30.8% | 29.8% | 26.2% | 26.2% | 0.0% |
| EBITDA Margin | 10.5% | 10.8% | 10.2% | 2.0% | 6.3% | 4.3% |
| Net Income Margin | 5.0% | 5.0% | 4.6% | -2.6% | 1.2% | 3.7% |
| SG&A, % of revenue | 22.7% | 23.0% | 22.5% | 21.8% | 22.7% | 0.9% |
| CAPEX, % of revenue | 3.0% | 1.5% | 1.2% | 1.2% | 1.6% | 0.4% |
| ROIC | 16.9% | 15.5% | 14.2% | -2.9% | 4.6% | 7.5% |
| ROE | 22.4% | 19.6% | 16.0% | -7.7% | 3.3% | 11.0% |
| Net Debt/EBITDA | 2.3x | 1.8x | 1.4x | 9.4x | 2.5x | -6.9x |
Finning International Inc ($FTT) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,494 | 1,310 | 1,333 | 1,491 | -3.0% | -22.0% | -12.1% | -3.0% |
| EBITDA | 96 | 77 | 119 | 65 | -23.8% | -51.0% | -4.8% | |
| Net Income | 15 | 5 | 36 | 9 | -71.7% | -91.9% | 9.1% | |
Balance Sheet
|
|---|
| Cash | 425 | 384 | 460 | 593 | 101.0% | 57.1% | 82.1% | 24.8% |
| Short Term Debt | 76 | 65 | 8 | 7 | 647.1% | 362.5% | -95.4% | -94.0% |
| Long Term Debt | 1,492 | 1,470 | 1,474 | 1,487 | -3.9% | -0.8% | -5.1% | -3.9% |
Ratios
|
|---|
| Gross Margin | 25.5% | 26.2% | 27.7% | 25.5% | -1.4% | 0.3% | -0.1% | 1.4% |
| EBITDA Margin | 6.4% | 5.9% | 8.9% | 4.4% | -1.8% | -3.5% | 0.7% | 22.7% |
| Net Income Margin | 1.0% | 0.4% | 2.7% | 0.6% | -2.4% | -3.3% | 0.5% | 20.7% |
Revenue and profitability
The company's Revenue dropped on 10.3%. Annual revenue decline showed slowdown in 16Q4 - revenue decreased on 3.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.3 pp from 2.0% to 6.3% in 2016.
Gross Margin showed almost no change in 2016. SG&A as a % of Revenue increased slightly on 0.93 pp from 21.8% to 22.7% in 2016.
Net Income marign increased on 3.7 pp from -2.6% to 1.2% in 2016.
Capital expenditures (CAPEX) and working capital investments
Finning International Inc's CAPEX/Revenue was 1.6% in 2016. The company's CAPEX/Revenue showed almost no change from 2013 to 2016. Average CAPEX/Revenue for the last three years was 1.3%.
Return on investment
The company operates at low ROIC (4.62%) and ROE (3.29%). ROIC increased on 7.5 pp from -2.9% to 4.6% in 2016. ROE surged on 11.0 pp from -7.7% to 3.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 4.2x. Net Debt / EBITDA dropped on 6.9x from 9.4x to 2.5x in 2016. Debt dropped on 10.3% while cash surged on 24.8%.
Management team
Finning International Inc's CEO is L Scott Thomson. L Scott Thomson is a founder and has 5 years tenure 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Progressive Waste Solutions Ltd ($BIN) | | 16.1% | 7.8% | 1.8% | 59.4% |
| Baylin Technologies Inc ($BYL) | | 16.5% | -44.0% | -4.1% | 47.5% |
| CCL Industries Inc ($CCL.B) | | 44.4% | 36.8% | 17.5% | 30.8% |
| Stantec Inc ($STN) | | 17.9% | 13.3% | 14.4% | 30.5% |
| Avigilon Corp ($AVO) | | 72.6% | 41.9% | 17.7% | 22.2% |
| |
|---|
| Median (51 companies) | | 5.3% | 10.4% | 8.5% | 3.2% |
|---|
| Finning International Inc ($FTT) | | 2.7% | 2.4% | -9.3% | -10.3% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pure Technologies Ltd ($PUR) | 77.9% | 78.0% | 77.5% | 75.6% | |
| WSP Global Inc ($WSP) | 81.1% | 83.2% | 81.0% | 74.0% | 76.7% |
| Avigilon Corp ($AVO) | 49.3% | 54.2% | 56.6% | 57.4% | 52.0% |
| Stantec Inc ($STN) | 55.0% | 54.7% | 54.9% | 54.5% | 54.1% |
| IWG Technologies Inc ($IWG) | 53.3% | 54.0% | 49.0% | 47.8% | 54.9% |
| |
|---|
| Median (49 companies) | 23.4% | 23.4% | 20.9% | 21.5% | 22.1% |
|---|
| Finning International Inc ($FTT) | 29.9% | 30.8% | 29.8% | 26.2% | 26.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian National Railway Co ($CNR) | 46.5% | 45.9% | 46.8% | 50.9% | 54.3% |
| Canadian Pacific Railway Ltd ($CP) | 26.1% | 32.4% | 43.7% | 48.9% | 51.6% |
| Badger Daylighting Ltd ($BAD) | 25.7% | 25.9% | 27.9% | 24.6% | 24.2% |
| IWG Technologies Inc ($IWG) | 12.7% | 25.5% | 20.0% | 24.0% | 26.9% |
| Winpak Ltd ($WPK) | 19.5% | 18.6% | 18.7% | 22.7% | 23.5% |
| |
|---|
| Median (53 companies) | 10.2% | 8.3% | 8.0% | 9.5% | 11.1% |
|---|
| Finning International Inc ($FTT) | 10.5% | 10.8% | 10.2% | 2.0% | 6.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newalta Corp ($NAL) | 21.7% | 34.5% | 35.1% | 42.0% | 9.6% |
| Cargojet Inc ($CJT.A) | 7.0% | 6.3% | 54.1% | 41.3% | |
| Algoma Central Corp ($ALC) | 15.9% | 7.3% | 5.0% | 27.4% | 58.2% |
| Canadian Pacific Railway Ltd ($CP) | 20.2% | 20.2% | 21.9% | 22.7% | 19.0% |
| Canadian National Railway Co ($CNR) | 17.4% | 18.7% | 18.9% | 21.5% | 22.4% |
| |
|---|
| Median (54 companies) | 3.2% | 3.7% | 4.4% | 3.9% | 4.8% |
|---|
| Finning International Inc ($FTT) | 3.0% | 1.5% | 1.2% | 1.2% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($IBG) | 4.8% | -9.0% | 11.6% | 21.9% | 26.2% |
| IWG Technologies Inc ($IWG) | 17.0% | 36.3% | 23.4% | 27.2% | 25.7% |
| Winpak Ltd ($WPK) | 20.4% | 18.0% | 18.3% | 22.6% | 21.8% |
| Toromont Industries Ltd ($TIH) | 28.8% | 25.8% | 24.3% | 23.5% | 21.7% |
| Intertape Polymer Group Inc ($ITP) | 12.3% | 13.7% | 22.5% | 23.0% | 21.0% |
| |
|---|
| Median (55 companies) | 12.2% | 9.6% | 11.0% | 8.9% | 9.7% |
|---|
| Finning International Inc ($FTT) | 16.9% | 15.5% | 14.2% | -2.9% | 4.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Conifex Timber Inc ($CFF) | | 2.7x | 6.1x | 35.9x | 3.6x |
| Ag Growth International Inc ($AFN) | 2.9x | -0.1x | 2.1x | 14.1x | |
| Cargojet Inc ($CJT.A) | 1.5x | 1.5x | 31.5x | 12.9x | |
| Progressive Waste Solutions Ltd ($BIN) | 4.5x | 3.3x | 2.9x | 10.6x | 3.8x |
| ENTREC Corp ($ENT) | 3.4x | 2.6x | 4.1x | 8.4x | |
| |
|---|
| Median (49 companies) | 1.5x | 1.5x | 1.2x | 1.0x | 1.8x |
|---|
| Finning International Inc ($FTT) | 2.3x | 1.8x | 1.4x | 9.4x | 2.5x |
