Algoma Central Corp reports 378% CAPEX growth while 12.7% Revenue decline
19.02.2016 • About Algoma Central Corp (
$ALC) • By InTwits
Algoma Central Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Algoma Central Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.4%. At the same time it's a lot of higher than industry average of 7.2%.
- CAPEX is quite volatile: 113 in 2015, 23.7 in 2014, 35.8 in 2013, 84.0 in 2012, 38.6 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Algoma Central Corp ($ALC) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 582.7 | 527.9 | 491.5 | 473.4 | 413.5 | -12.7% |
| Gross Profit | 118.6 | 97.4 | 76.8 | 76.6 | 86.3 | 12.7% |
| SG&A | | | | | 26.3 | |
| EBITDA | 136.1 | 110.7 | 94.9 | 92.0 | 72.6 | -21.1% |
| Net Income | 68.8 | 42.2 | 41.9 | 52.8 | 25.8 | -51.2% |
Balance Sheet
|
|---|
| Cash | 132.3 | 124.5 | 216.1 | 256.9 | 210.6 | -18.0% |
| Short Term Debt | 6.0 | 4.8 | 4.6 | 0.0 | 1.4 | |
| Long Term Debt | 227.2 | 221.0 | 222.6 | 223.8 | 242.5 | 8.4% |
Cash flow
|
|---|
| Capex | 38.6 | 84.0 | 35.8 | 23.7 | 113.3 | 378.1% |
Ratios
|
|---|
| Revenue growth | 48.0% | -9.4% | -6.9% | -3.7% | -12.7% | |
| EBITDA growth | 65.9% | -18.6% | -14.3% | -3.1% | -21.1% | |
| Gross Margin | 20.4% | 18.5% | 15.6% | 16.2% | 20.9% | 4.7% |
| EBITDA Margin | 23.4% | 21.0% | 19.3% | 19.4% | 17.6% | -1.9% |
| Net Income Margin | 11.8% | 8.0% | 8.5% | 11.1% | 6.2% | -4.9% |
| SG&A, % of revenue | | | | | 6.4% | 6.4% |
| CAPEX, % of revenue | 6.6% | 15.9% | 7.3% | 5.0% | 27.4% | 22.4% |
| ROIC | 13.4% | 8.9% | 6.2% | 6.1% | 3.1% | -3.0% |
| ROE | 15.7% | 8.7% | 7.9% | 9.0% | 4.2% | -4.8% |
| Net Debt/EBITDA | 0.7x | 0.9x | 0.1x | -0.4x | 0.5x | 0.8x |
Revenue and profitability
The company's Revenue dropped on 12.7% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 22.3 pp from -29.7% to -7.4% in 2015.
Gross Margin increased on 4.7 pp from 16.2% to 20.9% in 2015.
Net Income marign decreased on 4.9 pp from 11.1% to 6.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 27.4%. Algoma Central Corp showed fast CAPEX/Revenue growth of 11.5 pp from 15.9% in 2012 to 27.4% in 2015. For the last three years the average CAPEX/Revenue was 13.2%.Battling declining revenue the company made large investments to CAPEX (156% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.09%) and ROE (4.21%). ROIC decreased on 3.0 pp from 6.1% to 3.1% in 2015. ROE decreased on 4.8 pp from 9.0% to 4.2% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.5x and Debt / EBITDA is 3.4x. Net Debt / EBITDA surged on 0.8x from -0.4x to 0.5x in 2015. Debt increased on 9.0% in 2015 while cash dropped on 18.0% in 2015.
Appendix 1: Peers in Industrial
Below you can find Algoma Central Corp benchmarking vs. other companies in Industrial 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 |
|---|
| 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 ($LMP) | | 56.7% | 33.9% | 47.0% | 61.8% |
| |
|---|
| Median (92 companies) | 13.0% | 11.5% | 5.3% | 9.4% | 10.1% |
|---|
| Algoma Central Corp ($ALC) | | -9.4% | -6.9% | -3.7% | -12.7% |
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 ($FLY) | 54.0% | 57.2% | 59.2% | 62.9% | |
| |
|---|
| Median (88 companies) | 23.4% | 23.4% | 23.4% | 23.1% | 25.5% |
|---|
| Algoma Central Corp ($ALC) | 20.4% | 18.5% | 15.6% | 16.2% | 20.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Canadian National Railway Co ($CNR) | 46.3% | 46.5% | 45.9% | 46.8% | 50.9% |
| Canadian Pacific Railway Ltd ($CP) | 28.1% | 26.1% | 32.4% | 43.7% | 48.9% |
| 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 ($BIN) | 32.2% | 30.7% | 33.1% | 34.0% | 9.8% |
| |
|---|
| Median (85 companies) | 8.1% | 9.2% | 8.3% | 7.2% | 9.8% |
|---|
| Algoma Central Corp ($ALC) | 23.4% | 21.0% | 19.3% | 19.4% | 17.6% |
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 ($HNL) | 25.1% | 26.5% | 16.3% | 24.1% | |
| |
|---|
| Median (92 companies) | 2.4% | 3.0% | 3.5% | 3.1% | 3.3% |
|---|
| Algoma Central Corp ($ALC) | 6.6% | 15.9% | 7.3% | 5.0% | 27.4% |
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 ($EBN) | 24.8% | 28.1% | 16.1% | 32.5% | 26.3% |
| |
|---|
| Median (93 companies) | 8.9% | 10.0% | 8.5% | 9.1% | 10.3% |
|---|
| Algoma Central Corp ($ALC) | 13.4% | 8.9% | 6.2% | 6.1% | 3.1% |
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 ($IBG) | 4.2x | 6.5x | | 8.3x | |
| |
|---|
| Median (72 companies) | 1.1x | 1.5x | 1.5x | 1.3x | 1.6x |
|---|
| Algoma Central Corp ($ALC) | 0.7x | 0.9x | 0.1x | -0.4x | 0.5x |
