WestJet Airlines Ltd reports 29.4% Net Income growth and 3.1 pp EBITDA Margin growth from 17.7% to 20.7%
02.02.2016 • About WestJet Airlines Ltd (
$WJA) • By InTwits
WestJet Airlines Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 20.7% in 2015 vs. 17.7% in 2014 vs. 14.0% in 2011
- WestJet Airlines Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.5%. At the same time it's a lot of higher than industry average of 4.7%.
- CAPEX is quite volatile: 906 in 2015, 741 in 2014, 715 in 2013, 269 in 2012, 118 in 2011
- The company has highly profitable business model: ROIC is at 16.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
WestJet Airlines Ltd ($WJA) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 3,072 | 3,427 | 3,662 | 3,977 | 4,029 | 1.3% |
| Gross Profit | 1,390 | 1,460 | 1,578 | 1,738 | 2,478 | 42.6% |
| SG&A | 483 | 536 | 580 | 601 | 325 | -45.9% |
| EBITDA | 431 | 561 | 600 | 702 | 835 | 18.9% |
| Net Income | 149 | 242 | 269 | 284 | 368 | 29.4% |
Balance Sheet
|
|---|
| Cash | 1,244 | 1,408 | 1,256 | 1,358 | 1,184 | -12.8% |
| Short Term Debt | 159 | 165 | 189 | 160 | 142 | -11.4% |
| Long Term Debt | 673 | 574 | 689 | 1,029 | 1,033 | 0.4% |
Cash flow
|
|---|
| Capex | 118 | 269 | 715 | 741 | 906 | 22.3% |
Ratios
|
|---|
| Revenue growth | 17.8% | 11.6% | 6.9% | 8.6% | 1.3% | |
| EBITDA growth | 19.2% | 30.1% | 7.0% | 17.0% | 18.9% | |
| Gross Margin | 45.2% | 42.6% | 43.1% | 43.7% | 61.5% | 17.8% |
| EBITDA Margin | 14.0% | 16.4% | 16.4% | 17.7% | 20.7% | 3.1% |
| Net Income Margin | 4.8% | 7.1% | 7.3% | 7.1% | 9.1% | 2.0% |
| SG&A, % of revenue | 15.7% | 15.6% | 15.8% | 15.1% | 8.1% | -7.1% |
| CAPEX, % of revenue | 3.9% | 7.9% | 19.5% | 18.6% | 22.5% | 3.9% |
| ROIC | 10.0% | 14.7% | 15.0% | 15.7% | 16.9% | 1.2% |
| ROE | 11.1% | 17.1% | 17.6% | 16.9% | 19.7% | 2.8% |
| Net Debt/EBITDA | -1.0x | -1.2x | -0.6x | -0.2x | -0.0x | 0.2x |
Revenue and profitability
The company's Revenue increased slightly on 1.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.7 pp from 41.4% to 38.7% in 2015.
Gross Margin surged on 17.8 pp from 43.7% to 61.5% in 2015. SG&A as a % of Revenue decreased on 7.1 pp from 15.1% to 8.1% in 2015.
Net Income marign increased slightly on 2.0 pp from 7.1% to 9.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 22.5% in 2015. CAPEX/Revenue jumped on 14.6 pp from 7.9% in 2012 to 22.5% in 2015. It's average level of CAPEX/Revenue for the last three years was 20.2%.WestJet Airlines Ltd maintained rich investment policy and has spent a lot to CAPEX (109% of EBITDA).
Return on investment
The company operates at good ROIC (16.94%) and ROE (19.67%). ROIC increased slightly on 1.2 pp from 15.7% to 16.9% in 2015. ROE increased on 2.8 pp from 16.9% to 19.7% in 2015.
Leverage (Debt)
Debt level is -0.0x Net Debt / EBITDA and 1.4x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from -0.2x to -0.011x in 2015. Debt decreased slightly on 1.2% in 2015 while cash dropped on 12.8% in 2015.
Management team
The company's CEO Gregg A Saretsky is a founder and has spent 8 years at the company. WestJet Airlines Ltd's CFO Harry P Taylor has spent 3 years at the company.
Appendix 1: Peers in Consumer, Cyclical
Below we provide WestJet Airlines 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 ($HLC) | 5.4% | -24.6% | 2.7% | 62.7% | |
| |
|---|
| Median (67 companies) | 11.0% | 5.3% | 4.9% | 7.2% | 3.7% |
|---|
| WestJet Airlines Ltd ($WJA) | | 11.6% | 6.9% | 8.6% | 1.3% |
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% | 84.3% |
| 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 ($BCI) | 72.3% | 71.8% | 72.6% | 72.6% | |
| |
|---|
| Median (59 companies) | 36.1% | 34.1% | 31.6% | 32.5% | 36.8% |
|---|
| WestJet Airlines Ltd ($WJA) | 45.2% | 42.6% | 43.1% | 43.7% | 61.5% |
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 ($MTY) | 32.2% | 36.3% | 38.7% | 37.0% | |
| |
|---|
| Median (65 companies) | 8.4% | 7.9% | 9.7% | 9.6% | 9.4% |
|---|
| WestJet Airlines Ltd ($WJA) | 14.0% | 16.4% | 16.4% | 17.7% | 20.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Poydras Gaming Finance Corp ($PYD) | | | | 32.5% | |
| Exchange Income Corp ($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% | |
| Gildan Activewear Inc ($GIL) | 9.0% | 3.7% | 7.4% | 12.1% | |
| |
|---|
| Median (68 companies) | 2.6% | 2.7% | 2.7% | 2.2% | 2.7% |
|---|
| WestJet Airlines Ltd ($WJA) | 3.9% | 7.9% | 19.5% | 18.6% | 22.5% |
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 ($IPC) | -35.4% | 23.0% | 58.5% | 33.6% | 10.9% |
| |
|---|
| Median (68 companies) | 10.7% | 9.7% | 10.1% | 9.7% | 9.4% |
|---|
| WestJet Airlines Ltd ($WJA) | 10.0% | 14.7% | 15.0% | 15.7% | 16.9% |
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 ($AYA) | | 17.9x | 1.8x | 13.5x | |
| |
|---|
| Median (57 companies) | 1.3x | 1.4x | 1.8x | 2.0x | 0.8x |
|---|
| WestJet Airlines Ltd ($WJA) | -1.0x | -1.2x | -0.6x | -0.2x | -0.0x |
