Second Cup Ltd/The EBITDA dropped on 91.6% in 2015 while Revenue jumped on 32.5%
22.02.2016 • About Second Cup Ltd/The (
$SCU) • By InTwits
Second Cup Ltd/The reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Second Cup Ltd/The doesn't have a profitable business model yet: FY2015 ROIC is -2.9%
- EBITDA Margin is declining: 1.0% in FY2015 vs. 16.2% in FY2014 vs. 39.7% in FY2011
- EBITDA Margin is quite volatile: 1.0% in FY2015, 16.2% in FY2014, 27.8% in FY2013, 29.1% in FY2012, 39.7% in FY2011
- Second Cup Ltd/The has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.2%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 11.7 in 2015, 101 in 2014, 119 in 2013, 62.6 in 2012, 46.0 in 2011
- The company has unprofitable business model: ROIC is at -2.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 7.5x while industry average is 8.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Second Cup Ltd/The ($SCU) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 25.001 | 26.346 | 27.188 | 28.172 | 37.341 | 32.5% |
| Gross Profit | 22.778 | 22.823 | 23.134 | 20.493 | 30.273 | 47.7% |
| SG&A | | | | | 5.787 | |
| EBITDA | 9.930 | 7.671 | 7.565 | 4.571 | 0.384 | -91.6% |
| Net Income | 13.301 | -9.404 | -7.369 | -27.032 | -1.153 | -95.7% |
Balance Sheet
|
|---|
| Cash | 5.465 | 3.880 | 6.501 | 10.918 | 3.080 | -71.8% |
| Short Term Debt | 0.613 | 0.554 | 0.000 | 11.119 | 0.000 | -100.0% |
| Long Term Debt | 10.909 | 10.941 | 11.089 | 0.000 | 5.977 | |
Cash flow
|
|---|
| Capex | 3.043 | 1.938 | 2.904 | 1.575 | 1.942 | 23.3% |
Ratios
|
|---|
| Revenue growth | -0.7% | 5.4% | 3.2% | 3.6% | 32.5% | |
| EBITDA growth | -6.2% | -22.7% | -1.4% | -39.6% | -91.6% | |
| Gross Margin | 91.1% | 86.6% | 85.1% | 72.7% | 81.1% | 8.3% |
| EBITDA Margin | 39.7% | 29.1% | 27.8% | 16.2% | 1.0% | -15.2% |
| Net Income Margin | 53.2% | -35.7% | -27.1% | -96.0% | -3.1% | 92.9% |
| SG&A, % of revenue | | | | | 15.5% | 15.5% |
| CAPEX, % of revenue | 12.2% | 7.4% | 10.7% | 5.6% | 5.2% | -0.4% |
| ROIC | 10.4% | 8.2% | 9.0% | 6.2% | -2.9% | -9.1% |
| ROE | 18.8% | -14.7% | -14.4% | -76.2% | -4.7% | 71.5% |
| Net Debt/EBITDA | 0.6x | 1.0x | 0.6x | 0.0x | 7.5x | 7.5x |
Revenue and profitability
The company's Revenue surged on 32.5% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 15.2 pp from 16.2% to 1.0% in FY2015.
Gross Margin increased on 8.3 pp from 72.7% to 81.1% in FY2015.
Net Income marign jumped on 92.9 pp from -96.0% to -3.1% in FY2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 5.2% in FY2015. The company showed decline in CAPEX/Revenue of 2.2 pp from 7.4% in FY2012 to 5.2% in FY2015. It's average CAPEX/Revenue for the last three years was 7.2%.To secure this fast growth Second Cup Ltd/The made large investments to CAPEX (506% of EBITDA).
Return on investment
The company operates at negative ROIC (-2.86%) and ROE (-4.71%). ROIC decreased on 9.1 pp from 6.2% to -2.9% in FY2015. ROE jumped on 71.5 pp from -76.2% to -4.7% in FY2015.
Leverage (Debt)
Debt level is 7.5x Net Debt / EBITDA and 15.6x Debt / EBITDA. Net Debt / EBITDA jumped on 7.5x from 0.044x to 7.5x in FY2015. Debt dropped on 46.2% in FY2015 while cash dropped on 71.8% in FY2015.
Appendix 1: Peers in Consumer, Cyclical
Below we provide Second Cup Ltd/The 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 ($HLC) | 5.4% | -24.6% | 2.7% | 62.7% | |
| |
|---|
| Median (67 companies) | 14.3% | 5.3% | 5.3% | 7.7% | 3.3% |
|---|
| Second Cup Ltd/The ($SCU) | | 5.4% | 3.2% | 3.6% | 32.5% |
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 ($DEQ) | 74.3% | 77.5% | 78.4% | 84.7% | |
| New Look Vision Group Inc ($BCI) | 72.3% | 71.8% | 72.6% | 72.6% | |
| Spot Coffee Canada Ltd ($SPP) | 66.9% | 66.5% | 68.8% | 67.7% | |
| |
|---|
| Median (59 companies) | 36.1% | 34.1% | 31.6% | 32.5% | 36.9% |
|---|
| Second Cup Ltd/The ($SCU) | 91.1% | 86.6% | 85.1% | 72.7% | 81.1% |
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 ($MTY) | 32.2% | 36.3% | 38.7% | 37.0% | 34.9% |
| |
|---|
| Median (65 companies) | 8.4% | 7.9% | 9.7% | 9.6% | 10.0% |
|---|
| Second Cup Ltd/The ($SCU) | 39.7% | 29.1% | 27.8% | 16.2% | 1.0% |
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 ($KLS) | 79.2% | 0.4% | 0.7% | 13.5% | |
| |
|---|
| Median (68 companies) | 2.6% | 2.7% | 2.7% | 2.2% | 2.8% |
|---|
| Second Cup Ltd/The ($SCU) | 12.2% | 7.4% | 10.7% | 5.6% | 5.2% |
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 ($IPC) | -35.4% | 23.0% | 58.5% | 33.6% | 10.9% |
| |
|---|
| Median (68 companies) | 10.7% | 9.8% | 10.8% | 9.8% | 10.9% |
|---|
| Second Cup Ltd/The ($SCU) | 10.4% | 8.2% | 9.0% | 6.2% | -2.9% |
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 | 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 ($AYA) | | 17.9x | 1.8x | 13.5x | |
| |
|---|
| Median (57 companies) | 1.3x | 1.4x | 1.8x | 2.0x | 1.4x |
|---|
| Second Cup Ltd/The ($SCU) | 0.6x | 1.0x | 0.6x | 0.0x | 7.5x |
