Clarke Inc reports 146% EBITDA decline and 14.2% Revenue decline
24.02.2016 • About Clarke Inc (
$CKI) • By InTwits
Clarke Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Clarke Inc is a company in decline: 2015 revenue growth was -14.2%, 5 years revenue CAGR was -48.3%
- The company operates at negative EBITDA Margin: -15.0%
- Clarke Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's a lot of higher than industry average of 8.6%.
- CAPEX is quite volatile: 0.14 in 2015, 0.15 in 2014, 0.72 in 2013, 2.3 in 2012, 3.9 in 2011
- The company has unprofitable business model: ROIC is at -0.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Clarke Inc ($CKI) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 219.1 | 58.3 | 8.2 | 8.5 | 7.3 | -14.2% |
| Gross Profit | 21.7 | 16.4 | 1.6 | 1.6 | 3.2 | 96.5% |
| SG&A | | | | | 3.3 | |
| EBITDA | | 6.6 | -4.3 | 2.4 | -1.1 | -145.6% |
| Net Income | -2.6 | -0.9 | 52.7 | 102.6 | -11.1 | -110.8% |
Balance Sheet
|
|---|
| Cash | 11.2 | 2.1 | 1.6 | 79.1 | 42.1 | -46.7% |
| Short Term Debt | 28.8 | 31.1 | 47.4 | 0.6 | 0.6 | 0.0% |
| Long Term Debt | 89.2 | 19.9 | 66.1 | 2.4 | 1.7 | -27.3% |
Cash flow
|
|---|
| Capex | 3.9 | 2.3 | 0.7 | 0.2 | 0.1 | -10.0% |
Ratios
|
|---|
| Revenue growth | 10.8% | -73.4% | -85.8% | 3.2% | -14.2% | |
| EBITDA growth | | | -166.3% | -155.2% | -145.6% | |
| Gross Margin | 9.9% | 28.1% | 20.0% | 18.9% | 43.4% | 24.4% |
| EBITDA Margin | 0.0% | 11.2% | -52.7% | 28.2% | -15.0% | -43.2% |
| Net Income Margin | -1.2% | -1.6% | 639.4% | 1,205.6% | -151.6% | -1,357.2% |
| SG&A, % of revenue | | | | | 44.7% | 44.7% |
| CAPEX, % of revenue | 1.8% | 4.0% | 8.8% | 1.8% | 1.8% | 0.1% |
| ROIC | 7.9% | 2.5% | -2.9% | 0.6% | -0.7% | -1.3% |
| ROE | -2.8% | -1.1% | 45.3% | 52.4% | -5.1% | -57.5% |
| Net Debt/EBITDA | | 7.5x | | -31.7x | | 31.7x |
Revenue and profitability
Clarke Inc's Revenue dropped on 14.2% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 43.2 pp from 28.2% to -15.0% in 2015.
Gross Margin jumped on 24.4 pp from 18.9% to 43.4% in 2015.
Net Income marign dropped on 1,357 pp from 1,206% to -152% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Clarke Inc had CAPEX/Revenue of 1.8%. Clarke Inc's CAPEX/Revenue decreased on 2.1 pp from 4.0% in 2012 to 1.8% in 2015. For the last three years the average CAPEX/Revenue was 4.1%.
Return on investment
The company operates at negative ROIC (-0.69%) and ROE (-5.08%). ROIC decreased slightly on 1.3 pp from 0.57% to -0.69% in 2015. ROE dropped on 57.5 pp from 52.4% to -5.1% in 2015.
Leverage (Debt)
Debt level is 1.6x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA surged on 31.7x from -31.7x to in 2015. Debt dropped on 21.4% in 2015 while cash dropped on 46.7% in 2015.
Appendix 1: Peers in Financial
Below we provide Clarke Inc 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 ($GS) | | -39.1% | 60.6% | 97.9% | -33.5% |
| |
|---|
| Median (73 companies) | 11.6% | 9.4% | 7.4% | 8.9% | 1.2% |
|---|
| Clarke Inc ($CKI) | | -73.4% | -85.8% | 3.2% | -14.2% |
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 ($OCX) | 20.0% | 20.1% | 26.2% | 27.9% | |
| |
|---|
| Median (10 companies) | 29.8% | 20.1% | 26.2% | 24.2% | 27.6% |
|---|
| Clarke Inc ($CKI) | 9.9% | 28.1% | 20.0% | 18.9% | 43.4% |
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 ($FN) | 66.1% | 67.8% | 76.5% | 77.1% | 74.6% |
| |
|---|
| Median (48 companies) | 35.8% | 32.7% | 32.1% | 34.8% | 43.8% |
|---|
| Clarke Inc ($CKI) | | 11.2% | -52.7% | 28.2% | -15.0% |
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 ($FCR) | 102.8% | 127.9% | 76.1% | 73.8% | 56.7% |
| |
|---|
| Median (75 companies) | 1.2% | 1.2% | 0.7% | 1.0% | 1.1% |
|---|
| Clarke Inc ($CKI) | 1.8% | 4.0% | 8.8% | 1.8% | 1.8% |
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 ($SCB) | 2.3% | 10.9% | 11.0% | 13.4% | |
| |
|---|
| Median (77 companies) | 4.9% | 4.8% | 4.6% | 4.8% | 4.9% |
|---|
| Clarke Inc ($CKI) | 7.9% | 2.5% | -2.9% | 0.6% | -0.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| First National Financial Corp ($FN) | 37.6x | 34.3x | 33.7x | 40.9x | 37.4x |
| Element Financial Corp ($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 ($SVI) | 6.0x | 11.2x | 9.7x | 13.6x | |
| |
|---|
| Median (40 companies) | 4.1x | 5.1x | 4.8x | 4.5x | 2.9x |
|---|
| Clarke Inc ($CKI) | | 7.5x | | -31.7x | |
