Fairfax Financial Holdings Ltd Net Income dropped on 65.2% in 2015 and Revenue decreased on 4.4%
18.02.2016 • About Fairfax Financial Holdings Ltd (
$FFH) • By InTwits
Fairfax Financial Holdings Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fairfax Financial Holdings Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 201 in 2015, 67.1 in 2014, 48.1 in 2013, 71.5 in 2012, 42.2 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fairfax Financial Holdings Ltd ($FFH) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 7,475 | 8,023 | 5,945 | 10,018 | 9,580 | -4.4% |
| Net Income | 45 | 527 | -573 | 1,633 | 568 | -65.2% |
Balance Sheet
|
|---|
| Cash | 1,027 | 1,169 | 1,297 | 1,244 | 1,277 | 2.6% |
| Short Term Debt | 0 | 472 | 11 | 217 | 129 | -40.5% |
| Long Term Debt | 3,018 | 2,525 | 2,958 | 2,962 | 3,223 | 8.8% |
Cash flow
|
|---|
| Capex | 42 | 72 | 48 | 67 | 201 | 200.0% |
Ratios
|
|---|
| Revenue growth | 25.3% | 7.3% | -25.9% | 68.5% | -4.4% | |
| Net Income Margin | 0.6% | 6.6% | -9.6% | 16.3% | 5.9% | -10.4% |
| CAPEX, % of revenue | 0.6% | 0.9% | 0.8% | 0.7% | 2.1% | 1.4% |
| ROIC | 0.7% | 2.7% | -2.4% | 7.8% | 2.4% | -5.4% |
| ROE | -0.1% | 6.2% | -8.5% | 20.3% | 6.0% | -14.2% |
Revenue and profitability
Fairfax Financial Holdings Ltd's Revenue decreased on 4.4% in 2015.
Net Income marign dropped on 10.4 pp from 16.3% to 5.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.1% in 2015. The company showed small growth in CAPEX/Revenue of 1.2 pp from 0.89% in 2012 to 2.1% in 2015. For the last three years the average CAPEX/Revenue was 1.2%.
Return on investment
The company operates at low ROIC (2.38%) and ROE (6.03%). ROIC decreased on 5.4 pp from 7.8% to 2.4% in 2015. ROE dropped on 14.2 pp from 20.3% to 6.0% in 2015.
Leverage (Debt)
Debt increased on 5.4% in 2015 while cash increased on 2.6% in 2015.
Management team
The company's CEO is V Prem Watsa. V Prem Watsa is a founder and has 33 years tenure at the company. David J Bonham is a The company's CFO. David J Bonham has spent 6 years at the company.
Appendix 1: Peers in Financial
Below we provide Fairfax Financial Holdings Ltd benchmarking against other companies in Financial 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 |
|---|
| Westaim Corp/The ($WED) | 35.7% | -99.9% | 38.0% | 5,680.8% | |
| Wall Financial Corp ($WFC) | | 35.2% | -74.1% | 285.4% | -75.3% |
| Element Financial Corp ($EFN) | | | 206.6% | 189.1% | |
| DealNet Capital Corp ($DLS) | -73.3% | 4,437.5% | 540.4% | 112.7% | |
| Gluskin Sheff + Associates Inc ($GS) | | -39.1% | 60.6% | 97.9% | -33.5% |
| |
|---|
| Median (73 companies) | 10.8% | 9.4% | 7.4% | 8.9% | 1.1% |
|---|
| Fairfax Financial Holdings Ltd ($FFH) | | 7.3% | -25.9% | 68.5% | -4.4% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Olympia Financial Group Inc ($OLY) | 85.3% | 80.9% | 82.6% | 83.2% | |
| Morguard Corp ($MRC) | 74.8% | 74.0% | 69.9% | 68.6% | |
| DealNet Capital Corp ($DLS) | | 14.9% | 36.7% | 45.6% | |
| Brookfield Asset Management Inc ($BAM.A) | 34.3% | 25.6% | 30.7% | 28.6% | 27.5% |
| Onex Corp ($OCX) | 20.0% | 20.1% | 26.2% | 27.9% | |
| |
|---|
| Median (11 companies) | 25.2% | 22.6% | 25.7% | 20.5% | 27.6% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Firm Capital Mortgage Investment Corp ($FC) | 88.7% | 87.6% | 87.9% | 88.8% | |
| Equitable Group Inc ($EQB) | 89.7% | 88.1% | 87.4% | 86.0% | |
| Alaris Royalty Corp ($AD) | 97.0% | 81.3% | 61.8% | 81.8% | |
| Brookfield Real Estate Services Inc ($BRE) | 77.1% | 77.7% | 77.9% | 78.4% | |
| First National Financial Corp ($FN) | 66.1% | 67.8% | 76.5% | 77.1% | |
| |
|---|
| Median (49 companies) | 35.8% | 32.5% | 32.1% | 31.5% | 43.8% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Killam Properties Inc ($KMP) | 73.6% | 80.7% | 114.1% | 143.5% | 46.7% |
| Dundee Corp ($DC.A) | | 10.3% | 14.1% | 88.8% | 123.6% |
| StorageVault Canada Inc ($SVI) | 29.6% | 150.5% | 73.3% | 79.1% | |
| Mainstreet Equity Corp ($MEQ) | 152.4% | 115.8% | 62.3% | 75.8% | 56.3% |
| First Capital Realty Inc ($FCR) | 102.8% | 127.9% | 76.1% | 73.8% | 56.7% |
| |
|---|
| Median (75 companies) | 1.3% | 1.6% | 0.7% | 1.0% | 1.2% |
|---|
| Fairfax Financial Holdings Ltd ($FFH) | 0.6% | 0.9% | 0.8% | 0.7% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Gluskin Sheff + Associates Inc ($GS) | 71.3% | 21.0% | 82.9% | 153.9% | 63.6% |
| Brookfield Real Estate Services Inc ($BRE) | 17.1% | 26.0% | 31.0% | 47.0% | |
| Redishred Capital Corp ($KUT) | -3.9% | -24.5% | 6.5% | 15.8% | |
| IGM Financial Inc ($IGM) | 15.3% | 14.2% | 14.2% | 13.7% | 13.7% |
| Street Capital Group Inc ($SCB) | 2.3% | 10.9% | 11.0% | 13.4% | |
| |
|---|
| Median (77 companies) | 5.3% | 4.8% | 4.6% | 4.8% | 4.9% |
|---|
| Fairfax Financial Holdings Ltd ($FFH) | 0.7% | 2.7% | -2.4% | 7.8% | 2.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First National Financial Corp ($FN) | 37.6x | 34.3x | 33.7x | 40.9x | |
| Element Financial Corp ($EFN) | | 140.2x | 31.9x | 37.6x | |
| Gazit-Globe Ltd ($GZT) | 14.8x | 12.8x | 12.7x | 15.3x | |
| Morguard Corp ($MRC) | 7.5x | 8.9x | | 14.2x | |
| StorageVault Canada Inc ($SVI) | 6.0x | 11.2x | 9.7x | 13.6x | |
| |
|---|
| Median (41 companies) | 4.1x | 5.2x | 4.8x | 4.3x | 2.9x |
|---|
