Hammond Manufacturing Co Ltd CAPEX surged on 783% in 2015 and Revenue jumped on 11.3%
04.03.2016 • About Hammond Manufacturing Co Ltd (
$HMM.A) • By InTwits
Hammond Manufacturing Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hammond Manufacturing Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's in pair with industry average of 6.9%.
- CAPEX is quite volatile: 17.1 in 2015, 1.9 in 2014, 1.3 in 2013, 2.8 in 2012, 4.9 in 2011
- The company has highly profitable business model: ROIC is at 12.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hammond Manufacturing Co Ltd ($HMM.A) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 85.5 | 92.4 | 92.9 | 105.3 | 117.2 | 11.3% |
| Gross Profit | 23.1 | 25.3 | 27.5 | 32.4 | 37.1 | 14.6% |
| SG&A | 15.7 | 17.5 | 19.1 | 26.2 | 30.2 | 15.2% |
| EBITDA | 5.0 | 4.8 | 6.1 | 8.1 | 8.8 | 9.0% |
| Net Income | 1.8 | 1.7 | 2.3 | 3.6 | 3.6 | -2.4% |
Balance Sheet
|
|---|
| Cash | 0.6 | 0.4 | 0.8 | 0.3 | 0.3 | -19.3% |
| Short Term Debt | 10.6 | 11.6 | 10.6 | 7.3 | 16.7 | 127.5% |
| Long Term Debt | 2.1 | 1.9 | 1.2 | 0.4 | 0.7 | 80.2% |
Cash flow
|
|---|
| Capex | 4.9 | 2.8 | 1.3 | 1.9 | 17.1 | 782.7% |
Ratios
|
|---|
| Revenue growth | 8.8% | 8.1% | 0.6% | 13.3% | 11.3% | |
| EBITDA growth | -21.3% | -4.1% | 25.8% | 33.3% | 9.0% | |
| Gross Margin | 27.0% | 27.4% | 29.6% | 30.8% | 31.7% | 0.9% |
| EBITDA Margin | 5.9% | 5.2% | 6.5% | 7.7% | 7.5% | -0.2% |
| Net Income Margin | 2.1% | 1.8% | 2.4% | 3.5% | 3.0% | -0.4% |
| SG&A, % of revenue | 18.4% | 18.9% | 20.5% | 24.9% | 25.8% | 0.9% |
| CAPEX, % of revenue | 5.7% | 3.1% | 1.4% | 1.8% | 14.6% | 12.7% |
| ROIC | 7.2% | 6.4% | 8.2% | 12.7% | 12.2% | -0.5% |
| ROE | 6.2% | 5.5% | 7.0% | 10.2% | 8.8% | -1.5% |
| Net Debt/EBITDA | 2.4x | 2.7x | 1.8x | 0.9x | 2.0x | 1.0x |
Revenue and profitability
The company's Revenue surged on 11.3% in 2015. EBITDA Margin showed almost no change in 2015.
Gross Margin increased slightly on 0.91 pp from 30.8% to 31.7% in 2015. SG&A as a % of Revenue increased slightly on 0.88 pp from 24.9% to 25.8% in 2015.
Net Income marign showed almost no change in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Hammond Manufacturing Co Ltd had CAPEX/Revenue of 14.6%. The company showed fast CAPEX/Revenue growth of 11.5 pp from 3.1% in 2012 to 14.6% in 2015. Average CAPEX/Revenue for the last three years was 5.9%.To fuel this fast growth the company made large investments to CAPEX (194% of EBITDA).
Return on investment
The company operates at good ROIC (12.16%) while ROE is low (8.76%). ROIC showed almost no change in 2015. ROE decreased slightly on 1.5 pp from 10.2% to 8.8% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 2.0x. Net Debt / EBITDA jumped on 1.0x from 0.9x to 2.0x in 2015. Debt jumped on 125% in 2015 while cash dropped on 19.3% in 2015.
Management team
Hammond Manufacturing Co Ltd's CEO Robert Frederick Hammond is a founder and has spent 40 years at the company. Alexander Stirling is a The company's CFO. Alexander Stirling has spent 11 years at the company.
Appendix 1: Peers in Industrial
Below you can find Hammond Manufacturing Co Ltd 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 ($LMP) | | 56.7% | 33.9% | 47.0% | 61.8% |
| |
|---|
| Median (92 companies) | 9.7% | 11.5% | 5.3% | 9.1% | 8.1% |
|---|
| Hammond Manufacturing Co Ltd ($HMM.A) | | 8.1% | 0.6% | 13.3% | 11.3% |
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 ($FLY) | 54.0% | 57.2% | 59.2% | 62.9% | |
| |
|---|
| Median (88 companies) | 23.2% | 23.0% | 23.3% | 22.6% | 24.8% |
|---|
| Hammond Manufacturing Co Ltd ($HMM.A) | 27.0% | 27.4% | 29.6% | 30.8% | 31.7% |
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 ($BIN) | 32.2% | 30.7% | 33.1% | 34.0% | 9.8% |
| |
|---|
| Median (85 companies) | 8.3% | 9.4% | 8.3% | 7.2% | 9.7% |
|---|
| Hammond Manufacturing Co Ltd ($HMM.A) | 5.9% | 5.2% | 6.5% | 7.7% | 7.5% |
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% | 42.0% |
| 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 ($HNL) | 25.1% | 26.5% | 16.3% | 24.1% | 14.7% |
| |
|---|
| Median (92 companies) | 2.4% | 3.0% | 3.7% | 3.2% | 3.9% |
|---|
| Hammond Manufacturing Co Ltd ($HMM.A) | 5.7% | 3.1% | 1.4% | 1.8% | 14.6% |
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 ($SNC) | 14.6% | 10.7% | 4.0% | 35.2% | 11.4% |
| Alarmforce Industries Inc ($AF) | 18.3% | 5.3% | 24.0% | 33.9% | 19.0% |
| Epicore BioNetworks Inc ($EBN) | 24.8% | 28.1% | 16.1% | 32.5% | 26.3% |
| |
|---|
| Median (93 companies) | 9.1% | 10.0% | 8.5% | 8.5% | 10.0% |
|---|
| Hammond Manufacturing Co Ltd ($HMM.A) | 7.2% | 6.4% | 8.2% | 12.7% | 12.2% |
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 ($IBG) | 4.2x | 6.5x | | 8.3x | |
| |
|---|
| Median (72 companies) | 1.1x | 1.5x | 1.4x | 1.3x | 1.3x |
|---|
| Hammond Manufacturing Co Ltd ($HMM.A) | 2.4x | 2.7x | 1.8x | 0.9x | 2.0x |
