Air Canada EBITDA surged on 59.6% in 2015 and Revenue increased on 4.5%
17.02.2016 • About Air Canada (
$AC) • By InTwits
Air Canada reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 15.6% in 2015 vs. 10.2% in 2014 vs. 7.8% in 2011
- Air Canada has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.5%. At the same time it's a lot of higher than industry average of 4.7%.
- CAPEX is quite volatile: 1,815 in 2015, 1,501 in 2014, 962 in 2013, 444 in 2012, 220 in 2011
- The company has highly profitable business model: ROIC is at 28.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Air Canada ($AC) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 11,612 | 12,114 | 12,382 | 13,272 | 13,868 | 4.5% |
| Gross Profit | 7,230 | 7,561 | 7,865 | 8,494 | 9,965 | 17.3% |
| SG&A | 2,767 | 2,826 | 2,847 | 3,025 | 3,188 | 5.4% |
| EBITDA | 907 | 1,111 | 1,197 | 1,358 | 2,167 | 59.6% |
| Net Income | -255 | -140 | 6 | 100 | 303 | 203.0% |
Balance Sheet
|
|---|
| Cash | 848 | 754 | 750 | 661 | 572 | -13.5% |
| Short Term Debt | -424 | 499 | 374 | 484 | 524 | 8.3% |
| Long Term Debt | 3,906 | 3,259 | 3,959 | 4,732 | 5,870 | 24.0% |
Cash flow
|
|---|
| Capex | 220 | 444 | 962 | 1,501 | 1,815 | 20.9% |
Ratios
|
|---|
| Revenue growth | 7.7% | 4.3% | 2.2% | 7.2% | 4.5% | |
| EBITDA growth | -15.9% | 22.5% | 7.7% | 13.5% | 59.6% | |
| Gross Margin | 62.3% | 62.4% | 63.5% | 64.0% | 71.9% | 7.9% |
| EBITDA Margin | 7.8% | 9.2% | 9.7% | 10.2% | 15.6% | 5.4% |
| Net Income Margin | -2.2% | -1.2% | 0.0% | 0.8% | 2.2% | 1.4% |
| SG&A, % of revenue | 23.8% | 23.3% | 23.0% | 22.8% | 23.0% | 0.2% |
| CAPEX, % of revenue | 1.9% | 3.7% | 7.8% | 11.3% | 13.1% | 1.8% |
| ROIC | 12.9% | | 37.0% | 23.2% | 28.4% | 5.2% |
| Net Debt/EBITDA | 2.9x | 2.7x | 3.0x | 3.4x | 2.7x | -0.7x |
Revenue and profitability
The company's Revenue increased on 4.5% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.4 pp from 10.2% to 15.6% in 2015.
Gross Margin increased on 7.9 pp from 64.0% to 71.9% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased slightly on 1.4 pp from 0.75% to 2.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Air Canada had CAPEX/Revenue of 13.1%. CAPEX/Revenue increased on 9.4 pp from 3.7% in 2012 to 13.1% in 2015. It's average CAPEX/Revenue for the last three years was 10.7%.Air Canada invested a large share of EBITDA (83.8%) to CAPEX.
Leverage (Debt)
Debt level is 2.7x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.7x from 3.4x to 2.7x in 2015. Debt jumped on 22.6% in 2015 while cash dropped on 13.5% in 2015.
Appendix 1: Peers in Consumer, Cyclical
Below you can find Air Canada benchmarking vs. other companies in Consumer, Cyclical industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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 ($HLC) | 5.4% | -24.6% | 2.7% | 62.7% | |
| |
|---|
| Median (67 companies) | 12.0% | 5.3% | 5.3% | 7.7% | 3.3% |
|---|
| Air Canada ($AC) | | 4.3% | 2.2% | 7.2% | 4.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Restaurant Brands International Inc ($QSR) | | | 69.7% | 87.0% | 42.9% |
| Imvescor Restaurant Group Inc ($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 ($BCI) | 72.3% | 71.8% | 72.6% | 72.6% | |
| |
|---|
| Median (59 companies) | 36.1% | 34.1% | 31.6% | 32.5% | 36.8% |
|---|
| Air Canada ($AC) | 62.3% | 62.4% | 63.5% | 64.0% | 71.9% |
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 ($MTY) | 32.2% | 36.3% | 38.7% | 37.0% | 34.9% |
| |
|---|
| Median (65 companies) | 8.7% | 7.9% | 9.8% | 9.6% | 9.7% |
|---|
| Air Canada ($AC) | 7.8% | 9.2% | 9.7% | 10.2% | 15.6% |
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% | 22.5% |
| 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 ($KLS) | 79.2% | 0.4% | 0.7% | 13.5% | |
| |
|---|
| Median (68 companies) | 2.9% | 2.7% | 2.7% | 2.2% | 2.7% |
|---|
| Air Canada ($AC) | 1.9% | 3.7% | 7.8% | 11.3% | 13.1% |
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 ($IPC) | -35.4% | 23.0% | 58.5% | 33.6% | 10.9% |
| |
|---|
| Median (68 companies) | 10.4% | 9.8% | 10.1% | 9.7% | 7.9% |
|---|
| Air Canada ($AC) | 12.9% | | 37.0% | 23.2% | 28.4% |
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 | 5.8x |
| Allied Hotel Properties Inc ($AHP) | | | | 21.3x | |
| Hudson's Bay Co ($HBC) | 8.7x | 3.8x | 3.6x | 19.1x | 3.6x |
| Amaya Inc ($AYA) | | 17.9x | 1.8x | 13.5x | |
| |
|---|
| Median (57 companies) | 1.3x | 1.2x | 1.6x | 1.9x | 1.1x |
|---|
| Air Canada ($AC) | 2.9x | 2.7x | 3.0x | 3.4x | 2.7x |
