Morneau Shepell Inc reports 14.1% EBITDA decline while 5.9% Revenue growth
02.03.2016 • About Morneau Shepell Inc (
$MSI) • By InTwits
Morneau Shepell Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Morneau Shepell Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's a lot of higher than industry average of 27.4%.
- CAPEX is quite volatile: 10.7 in 2015, 19.7 in 2014, 9.7 in 2013, 4.3 in 2012, 13.0 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Morneau Shepell Inc ($MSI) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 365.0 | 419.3 | 471.2 | 535.9 | 567.3 | 5.9% |
| SG&A | 41.3 | 46.0 | 50.6 | 58.4 | 61.1 | 4.6% |
| EBITDA | 69.5 | 67.1 | 76.3 | 83.9 | 72.0 | -14.1% |
| Net Income | 24.9 | 21.0 | 10.4 | 25.1 | 16.4 | -34.7% |
Balance Sheet
|
|---|
| Cash | 12.2 | 14.2 | 16.0 | 13.1 | 14.3 | 9.4% |
| Short Term Debt | 0.8 | 0.1 | 5.2 | 7.7 | 2.5 | -67.6% |
| Long Term Debt | 207.1 | 224.2 | 247.7 | 297.7 | 315.6 | 6.0% |
Cash flow
|
|---|
| Capex | 13.0 | 4.3 | 9.7 | 19.7 | 10.7 | -45.6% |
Ratios
|
|---|
| Revenue growth | 8.9% | 14.9% | 12.4% | 13.7% | 5.9% | |
| EBITDA growth | 29.2% | -3.5% | 13.7% | 9.9% | -14.1% | |
| EBITDA Margin | 19.1% | 16.0% | 16.2% | 15.6% | 12.7% | -2.9% |
| Net Income Margin | 6.8% | 5.0% | 2.2% | 4.7% | 2.9% | -1.8% |
| SG&A, % of revenue | 11.3% | 11.0% | 10.7% | 10.9% | 10.8% | -0.1% |
| CAPEX, % of revenue | 3.5% | 1.0% | 2.0% | 3.7% | 1.9% | -1.8% |
| ROIC | 8.8% | 7.1% | 5.2% | 7.8% | 5.9% | -1.9% |
| ROE | 7.5% | 6.0% | 3.1% | 7.8% | 5.3% | -2.5% |
| Net Debt/EBITDA | 2.8x | 3.1x | 3.1x | 3.5x | 4.2x | 0.7x |
Revenue and profitability
Morneau Shepell Inc's Revenue increased on 5.9% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.9 pp from 15.6% to 12.7% in 2015.
SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased slightly on 1.8 pp from 4.7% to 2.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 1.9%. The company showed small growth in CAPEX/Revenue of 0.85 pp from 1.0% in 2012 to 1.9% in 2015. It's average CAPEX/Revenue for the last three years was 2.5%.
Return on investment
The company operates at low ROIC (5.93%) and ROE (5.34%). ROIC decreased slightly on 1.9 pp from 7.8% to 5.9% in 2015. ROE decreased on 2.5 pp from 7.8% to 5.3% in 2015.
Leverage (Debt)
Debt level is 4.2x Net Debt / EBITDA and 4.4x Debt / EBITDA. Net Debt / EBITDA jumped on 0.7x from 3.5x to 4.2x in 2015. Debt increased on 4.2% in 2015 while cash increased on 9.4% in 2015.
Management team
Morneau Shepell Inc's CEO Alan D Torrie is a founder and has spent 9 years at the company. The company's CFO Scott Milligan has spent 9 years at the company.
Appendix 1: Peers in Consumer, Non-cyclical
Below we provide Morneau Shepell Inc benchmarking against other companies in Consumer, Non-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 |
|---|
| GDI Integrated Facility Services Inc ($GDI) | | -38.8% | -72.9% | 218,969.1% | 18.7% |
| Cardiome Pharma Corp ($COM) | -97.7% | -47.6% | 471.7% | 566.0% | |
| Patient Home Monitoring Corp ($PHM) | | 170.2% | 1.9% | 433.0% | 238.4% |
| Family Memorials Inc ($FAM) | -13.6% | 54.7% | 22.9% | 245.3% | |
| Nobilis Health Corp ($NHC) | 16.6% | 45.3% | 49.0% | 169.9% | |
| |
|---|
| Median (86 companies) | 17.7% | 8.1% | 5.3% | 12.7% | 9.3% |
|---|
| Morneau Shepell Inc ($MSI) | | 14.9% | 12.4% | 13.7% | 5.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nobilis Health Corp ($NHC) | | | | 99.8% | |
| Cipher Pharmaceuticals Inc ($CPH) | | | 99.5% | 98.3% | 92.7% |
| Heritage Global Inc ($HGP) | 99.5% | | | 95.7% | |
| Ritchie Bros Auctioneers Inc ($RBA) | 87.9% | 88.7% | 88.4% | 88.0% | 89.1% |
| Concordia Healthcare Corp ($CXR) | | | 79.4% | 86.0% | |
| |
|---|
| Median (75 companies) | 35.4% | 37.4% | 36.1% | 35.6% | 31.7% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cipher Pharmaceuticals Inc ($CPH) | -50.0% | 40.6% | 71.4% | 63.7% | 12.8% |
| Merus Labs International Inc ($MSL) | | 32.9% | 64.7% | 46.2% | 61.5% |
| Valeant Pharmaceuticals International Inc ($VRX) | 37.0% | 30.6% | 27.8% | 45.6% | |
| EnerCare Inc ($ECI) | 59.0% | 52.8% | 51.0% | 45.5% | |
| Information Services Corp ($ISV) | 34.1% | 39.6% | 39.6% | 37.6% | |
| |
|---|
| Median (85 companies) | 7.7% | 7.4% | 8.7% | 10.6% | 10.3% |
|---|
| Morneau Shepell Inc ($MSI) | 19.1% | 16.0% | 16.2% | 15.6% | 12.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Neptune Technologies & Bioressources Inc ($NTB) | 6.0% | 4.7% | 73.6% | 84.6% | 119.0% |
| CanaDream Corp ($CDN) | 68.6% | 43.3% | 38.1% | 70.4% | 63.4% |
| Ceapro Inc ($CZO) | 2.2% | 3.9% | 35.3% | 52.0% | |
| Feronia Inc/Canada ($FRN) | 129.0% | 191.4% | 117.4% | 42.4% | |
| Microbix Biosystems Inc ($MBX) | 1.0% | 1.2% | 3.0% | 40.3% | 38.7% |
| |
|---|
| Median (86 companies) | 2.4% | 2.8% | 2.4% | 2.5% | 2.2% |
|---|
| Morneau Shepell Inc ($MSI) | 3.5% | 1.0% | 2.0% | 3.7% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Biosyent Inc ($RX) | 45.5% | 71.7% | 62.4% | 62.9% | |
| Information Services Corp ($ISV) | 56.0% | 71.8% | 72.8% | 58.9% | |
| Covalon Technologies Ltd ($COV) | -49.6% | -75.8% | -30.1% | 50.6% | -12.4% |
| Cipher Pharmaceuticals Inc ($CPH) | -22.9% | 21.8% | 81.4% | 44.6% | -0.1% |
| Ceapro Inc ($CZO) | 69.9% | -33.5% | 15.5% | 43.5% | |
| |
|---|
| Median (86 companies) | 7.4% | 6.3% | 6.9% | 6.7% | 6.7% |
|---|
| Morneau Shepell Inc ($MSI) | 8.8% | 7.1% | 5.2% | 7.8% | 5.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Noble Iron Inc ($NIR) | | 25.5x | 12.9x | 227.3x | |
| Family Memorials Inc ($FAM) | | | | 15.2x | |
| Amica Mature Lifestyles Inc ($ACC) | 11.7x | 9.4x | 14.7x | 13.8x | 12.3x |
| Cott Corp ($BCB) | 2.6x | 2.0x | 2.2x | 13.4x | 4.9x |
| CRH Medical Corp ($CRH) | -2.3x | -3.1x | -3.5x | 12.0x | 1.3x |
| |
|---|
| Median (70 companies) | 1.8x | 2.5x | 2.2x | 2.6x | 1.6x |
|---|
| Morneau Shepell Inc ($MSI) | 2.8x | 3.1x | 3.1x | 3.5x | 4.2x |
