Canadian Pacific Railway Ltd Debt surged on 55.5% in 2015 and EBITDA jumped on 13.6%
21.01.2016 • About Canadian Pacific Railway Ltd (
$CP) • By InTwits
Canadian Pacific Railway Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 48.9% in 2015 vs. 43.7% in 2014 vs. 28.1% in 2011
- Canadian Pacific Railway Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 21.2%. At the same time it's a lot of higher than industry average of 6.9%.
- CAPEX is quite volatile: 130 in FY2015, 50 in FY2014, 146 in FY2013, 176 in FY2012, 136 in FY2011
- The company has highly profitable business model: ROIC is at 17.0%
- It operates with high leverage: Net Debt/EBITDA is 2.5x while industry average is 1.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Canadian Pacific Railway Ltd ($CP) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 5,177 | 5,695 | 6,133 | 6,620 | 6,712 | 1.4% |
| EBITDA | 1,457 | 1,488 | 1,985 | 2,891 | 3,283 | 13.6% |
| Net Income | 570 | 484 | 875 | 1,476 | 1,352 | -8.4% |
Balance Sheet
|
|---|
| Cash | 47 | 333 | 476 | 226 | 650 | 187.6% |
| Short Term Debt | 77 | 62 | 328 | 134 | 30 | -77.6% |
| Long Term Debt | 4,695 | 4,636 | 4,687 | 5,625 | 8,927 | 58.7% |
Cash flow
|
|---|
| Capex | 1,104 | 1,148 | 1,236 | 1,449 | 1,522 | 5.0% |
Ratios
|
|---|
| Revenue growth | 3.9% | 10.0% | 7.7% | 7.9% | 1.4% | |
| EBITDA growth | -9.2% | 2.1% | 33.4% | 45.6% | 13.6% | |
| EBITDA Margin | 28.1% | 26.1% | 32.4% | 43.7% | 48.9% | 5.2% |
| Net Income Margin | 11.0% | 8.5% | 14.3% | 22.3% | 20.1% | -2.2% |
| CAPEX, % of revenue | 21.3% | 20.2% | 20.2% | 21.9% | 22.7% | 0.8% |
| ROIC | 8.6% | 8.2% | 10.5% | 16.0% | 17.0% | 1.0% |
| ROE | 12.0% | 9.9% | 14.4% | 23.2% | 26.0% | 2.8% |
| Net Debt/EBITDA | 3.2x | 2.9x | 2.3x | 1.9x | 2.5x | 0.6x |
Revenue and profitability
Canadian Pacific Railway Ltd's Revenue increased slightly on 1.4% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 46.6 pp from 27.8% to -18.8% in 2015.
Net Income marign decreased on 2.2 pp from 22.3% to 20.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 22.7%. Canadian Pacific Railway Ltd showed CAPEX/Revenue growth of 2.5 pp from 20.2% in 2012 to 22.7% in 2015. It's average level of CAPEX/Revenue for the last three years was 21.6%.
Return on investment
The company operates at high and attractive ROE (25.99%) while ROIC is a bit lower (17.01%). ROIC increased slightly on 1.0 pp from 16.0% to 17.0% in 2015. ROE increased on 2.8 pp from 23.2% to 26.0% in 2015.
Leverage (Debt)
Debt level is 2.5x Net Debt / EBITDA and 2.7x Debt / EBITDA. Net Debt / EBITDA surged on 0.6x from 1.9x to 2.5x in 2015. Debt surged on 55.5% in 2015 while cash surged on 188% in 2015.
Appendix 1: Peers in Industrial
Below we provide Canadian Pacific Railway Ltd 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 ($LMP) | | 56.7% | 33.9% | 47.0% | 61.8% |
| |
|---|
| Median (92 companies) | 12.5% | 11.5% | 4.9% | 9.4% | 21.3% |
|---|
| Canadian Pacific Railway Ltd ($CP) | | 10.0% | 7.7% | 7.9% | 1.4% |
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 ($FLY) | 54.0% | 57.2% | 59.2% | 62.9% | |
| |
|---|
| Median (89 companies) | 23.3% | 23.2% | 23.4% | 22.9% | 26.5% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Canadian National Railway Co ($CNR) | 46.3% | 46.5% | 45.9% | 46.8% | |
| 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 ($BIN) | 32.2% | 30.7% | 33.1% | 34.0% | |
| Photon Control Inc ($PHO) | 8.1% | 17.6% | 24.8% | 29.3% | |
| |
|---|
| Median (85 companies) | 8.1% | 9.2% | 8.3% | 7.2% | 11.5% |
|---|
| Canadian Pacific Railway Ltd ($CP) | 28.1% | 26.1% | 32.4% | 43.7% | 48.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cargojet Inc ($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) | 2.4% | 3.0% | 3.5% | 3.1% | 3.0% |
|---|
| Canadian Pacific Railway Ltd ($CP) | 21.3% | 20.2% | 20.2% | 21.9% | 22.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Vitreous Glass Inc ($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) | 9.1% | 10.0% | 8.5% | 8.5% | 10.3% |
|---|
| Canadian Pacific Railway Ltd ($CP) | 8.6% | 8.2% | 10.5% | 16.0% | 17.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sigma Industries Inc ($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 | -0.2x |
|---|
| Canadian Pacific Railway Ltd ($CP) | 3.2x | 2.9x | 2.3x | 1.9x | 2.5x |
