Discovery Air Inc Net Debt / EBITDA jumped on 3.9x from 7.5x to 11.4x in 2015 while EBITDA dropped on 33.5%
27.04.2015 • About Discovery Air Inc (
$DA.A) • By InTwits
Discovery Air Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Discovery Air Inc doesn't have a profitable business model yet: FY2015 ROIC is -2.2%
- EBITDA Margin is declining: 9.4% in FY2015 vs. 10.7% in FY2014 vs. 27.5% in FY2011
- EBITDA Margin is quite volatile: 9.4% in FY2015, 10.7% in FY2014, 17.7% in FY2013, 22.9% in FY2012, 27.5% in FY2011
- Discovery Air Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 13.9%. At the same time it's a lot of higher than industry average of 4.4%.
- CAPEX is quite volatile: 0.20 in FY2015, 0.62 in FY2014, 0.27 in FY2013, 9.7 in FY2012, 14.4 in FY2011
- The company has unprofitable business model: ROIC is at -2.2%
- It operates with high leverage: Net Debt/EBITDA is 11.4x while industry average is 7.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Discovery Air Inc ($DA.A) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 151.3 | 191.7 | 229.4 | 213.5 | 163.2 | -23.5% |
| Gross Profit | 41.7 | 44.0 | 40.7 | 23.0 | | -100.0% |
| EBITDA | 41.7 | 44.0 | 40.7 | 23.0 | 15.3 | -33.5% |
| Net Income | 5.1 | 11.8 | 0.6 | -18.0 | -18.9 | 5.2% |
Balance Sheet
|
|---|
| Cash | 7.4 | 13.1 | 5.8 | 0.0 | 0.7 | |
| Short Term Debt | 38.8 | 0.4 | 7.1 | 19.0 | 17.3 | -8.7% |
| Long Term Debt | 100.4 | 135.2 | 153.9 | 153.6 | 157.7 | 2.6% |
Cash flow
|
|---|
| Capex | 17.8 | 32.8 | 38.5 | 21.5 | 22.3 | 3.6% |
Ratios
|
|---|
| Revenue growth | 22.8% | 26.7% | 19.6% | -6.9% | -23.5% | |
| EBITDA growth | 44.6% | 5.5% | -7.4% | -43.6% | -33.5% | |
| Gross Margin | 27.5% | 22.9% | 17.7% | 10.7% | | -10.7% |
| EBITDA Margin | 27.5% | 22.9% | 17.7% | 10.7% | 9.4% | -1.4% |
| Net Income Margin | 3.4% | 6.1% | 0.3% | -8.4% | -11.6% | -3.2% |
| CAPEX, % of revenue | 11.8% | 17.1% | 16.8% | 10.1% | 13.7% | 3.6% |
| ROIC | 9.0% | 9.3% | 6.7% | -0.0% | -2.2% | -2.2% |
| ROE | 7.0% | 14.0% | 0.6% | -20.9% | -24.9% | -3.9% |
| Net Debt/EBITDA | 3.2x | 2.8x | 3.8x | 7.5x | 11.4x | 3.9x |
Revenue and profitability
Discovery Air Inc's Revenue dropped on 23.5% in FY2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.4 pp from 10.7% to 9.4% in FY2015.
Net Income marign decreased on 3.2 pp from -8.4% to -11.6% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 13.7% in FY2015. Discovery Air Inc's CAPEX/Revenue decreased on 3.5 pp from 17.1% in FY2012 to 13.7% in FY2015. It's average level of CAPEX/Revenue for the last three years was 13.5%.Discovery Air Inc has spent a lot to CAPEX (146% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-2.21%) and ROE (-24.86%). ROIC decreased on 2.2 pp from -0.011% to -2.2% in FY2015. ROE decreased on 3.9 pp from -20.9% to -24.9% in FY2015.
Leverage (Debt)
Debt level is 11.4x Net Debt / EBITDA and 11.5x Debt / EBITDA. Net Debt / EBITDA surged on 3.9x from 7.5x to 11.4x in FY2015. Debt increased slightly on 1.4% in FY2015 while cash jumped.
Appendix 1: Peers in Consumer, Cyclical
Below we provide Discovery Air Inc 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 ($HLC) | 5.4% | -24.6% | 2.7% | 62.7% | |
| |
|---|
| Median (65 companies) | 10.8% | 5.3% | 4.7% | 7.2% | 10.4% |
|---|
| Discovery Air Inc ($DA.A) | | 26.7% | 19.6% | -6.9% | -23.5% |
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 ($BCI) | 72.3% | 71.8% | 72.6% | 72.6% | |
| |
|---|
| Median (57 companies) | 37.0% | 35.3% | 32.1% | 34.6% | 36.9% |
|---|
| Discovery Air Inc ($DA.A) | 27.5% | 22.9% | 17.7% | 10.7% | |
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 ($MTY) | 32.2% | 36.3% | 38.7% | 37.0% | |
| |
|---|
| Median (63 companies) | 8.7% | 8.0% | 9.7% | 9.6% | 10.0% |
|---|
| Discovery Air Inc ($DA.A) | 27.5% | 22.9% | 17.7% | 10.7% | 9.4% |
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 ($KLS) | 79.2% | 0.4% | 0.7% | 13.5% | |
| |
|---|
| Median (66 companies) | 2.5% | 2.7% | 2.7% | 2.2% | 3.2% |
|---|
| Discovery Air Inc ($DA.A) | 11.8% | 17.1% | 16.8% | 10.1% | 13.7% |
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 ($IPC) | -35.4% | 23.0% | 58.5% | 33.6% | |
| |
|---|
| Median (66 companies) | 10.8% | 9.9% | 11.0% | 10.0% | 5.6% |
|---|
| Discovery Air Inc ($DA.A) | 9.0% | 9.3% | 6.7% | -0.0% | -2.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Mountain China Resorts Holding Ltd ($MCG) | | | | 317.1x | |
| Restaurant Brands International Inc ($QSR) | | | 3.8x | 33.6x | |
| Allied Hotel Properties Inc ($AHP) | | | | 21.3x | |
| Hudson's Bay Co ($HBC) | 8.7x | 3.8x | 3.6x | 19.1x | 3.6x |
| Amaya Inc ($AYA) | | 17.9x | 1.8x | 13.5x | |
| |
|---|
| Median (56 companies) | 1.3x | 1.2x | 1.5x | 1.8x | 1.5x |
|---|
| Discovery Air Inc ($DA.A) | 3.2x | 2.8x | 3.8x | 7.5x | 11.4x |
