Hammond Power Solutions Inc reports 51.3% EBITDA growth and 1.9 pp EBITDA Margin growth from 5.3% to 7.2%
10.03.2016 • About Hammond Power Solutions Inc (
$HPS.A) • By InTwits
Hammond Power Solutions Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Hammond Power Solutions Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's a lot of higher than industry average of 28.2%.
- CAPEX is quite volatile: 2.0 in 2015, 12.9 in 2014, 3.7 in 2013, 4.0 in 2012, 3.3 in 2011
- The company has potentially unprofitable business model: ROIC is at 5.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Hammond Power Solutions Inc ($HPS.A) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 221.3 | 257.4 | 242.9 | 247.8 | 274.6 | 10.9% |
| Gross Profit | 54.0 | 64.8 | 60.6 | 57.5 | 65.9 | 14.6% |
| SG&A | 22.6 | 25.9 | 27.2 | 28.2 | 53.2 | 88.5% |
| EBITDA | 18.0 | 23.3 | 17.1 | 13.0 | 19.7 | 51.3% |
| Net Income | 6.0 | 12.6 | 6.1 | 2.5 | 6.2 | 143.1% |
Balance Sheet
|
|---|
| Cash | 7.8 | 13.7 | 11.2 | 6.5 | 20.0 | 209.6% |
| Short Term Debt | 3.3 | 13.5 | 28.0 | 17.5 | 33.2 | 89.4% |
| Long Term Debt | 2.8 | 1.2 | 4.3 | 3.8 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 3.3 | 4.0 | 3.7 | 12.9 | 2.0 | -84.7% |
Ratios
|
|---|
| Revenue growth | 16.1% | 16.3% | -5.6% | 2.0% | 10.9% | |
| EBITDA growth | 3.6% | 30.0% | -26.6% | -24.0% | 51.3% | |
| Gross Margin | 24.4% | 25.2% | 24.9% | 23.2% | 24.0% | 0.8% |
| EBITDA Margin | 8.1% | 9.1% | 7.1% | 5.3% | 7.2% | 1.9% |
| Net Income Margin | 2.7% | 4.9% | 2.5% | 1.0% | 2.2% | 1.2% |
| SG&A, % of revenue | 10.2% | 10.1% | 11.2% | 11.4% | 19.4% | 8.0% |
| CAPEX, % of revenue | 1.5% | 1.6% | 1.5% | 5.2% | 0.7% | -4.5% |
| ROIC | 13.8% | 16.5% | 8.2% | 4.5% | 5.4% | 0.9% |
| ROE | 6.7% | 13.2% | 5.9% | 2.3% | 5.1% | 2.8% |
| Net Debt/EBITDA | -0.1x | 0.0x | 1.2x | 1.1x | 0.7x | -0.5x |
Revenue and profitability
Hammond Power Solutions Inc's Revenue surged on 10.9% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.9 pp from 5.3% to 7.2% in 2015.
Gross Margin increased slightly on 0.79 pp from 23.2% to 24.0% in 2015. SG&A as a % of Revenue increased on 8.0 pp from 11.4% to 19.4% in 2015.
Net Income marign increased slightly on 1.2 pp from 1.0% to 2.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.71% in 2015. CAPEX/Revenue decreased slightly on 0.86 pp from 1.6% in 2012 to 0.71% in 2015. For the last three years the average CAPEX/Revenue was 2.5%.
Return on investment
The company operates at low ROIC (5.43%) and ROE (5.10%). ROIC increased slightly on 0.94 pp from 4.5% to 5.4% in 2015. ROE increased on 2.8 pp from 2.3% to 5.1% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 1.7x. Net Debt / EBITDA dropped on 0.5x from 1.1x to 0.7x in 2015. Debt surged on 55.9% in 2015 while cash jumped on 210% in 2015.
Appendix 1: Peers in Industrial
Below you can find Hammond Power Solutions Inc 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 ($LMP) | | 56.7% | 33.9% | 47.0% | 61.8% |
| |
|---|
| Median (92 companies) | 5.8% | 10.4% | 5.3% | 9.4% | 8.3% |
|---|
| Hammond Power Solutions Inc ($HPS.A) | | 16.3% | -5.6% | 2.0% | 10.9% |
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 ($FLY) | 54.0% | 57.2% | 59.2% | 62.9% | |
| |
|---|
| Median (88 companies) | 23.2% | 23.0% | 23.3% | 22.6% | 24.4% |
|---|
| Hammond Power Solutions Inc ($HPS.A) | 24.4% | 25.2% | 24.9% | 23.2% | 24.0% |
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 ($BIN) | 32.2% | 30.7% | 33.1% | 34.0% | 9.8% |
| |
|---|
| Median (85 companies) | 8.3% | 9.4% | 8.3% | 7.7% | 9.5% |
|---|
| Hammond Power Solutions Inc ($HPS.A) | 8.1% | 9.1% | 7.1% | 5.3% | 7.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cargojet Inc ($CJT.A) | 6.8% | 7.0% | 6.3% | 54.1% | 41.3% |
| Newalta Corp ($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% | 18.0% |
| Horizon North Logistics Inc ($HNL) | 25.1% | 26.5% | 16.3% | 24.1% | 14.7% |
| |
|---|
| Median (92 companies) | 3.0% | 3.1% | 3.7% | 3.1% | 4.2% |
|---|
| Hammond Power Solutions Inc ($HPS.A) | 1.5% | 1.6% | 1.5% | 5.2% | 0.7% |
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 ($EBN) | 24.8% | 28.1% | 16.1% | 32.5% | 26.3% |
| |
|---|
| Median (93 companies) | 8.9% | 9.3% | 8.5% | 9.1% | 9.7% |
|---|
| Hammond Power Solutions Inc ($HPS.A) | 13.8% | 16.5% | 8.2% | 4.5% | 5.4% |
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 | 12.9x |
| IBI Group Inc ($IBG) | 4.2x | 6.5x | | 8.3x | |
| |
|---|
| Median (72 companies) | 1.1x | 1.5x | 1.5x | 1.3x | 1.6x |
|---|
| Hammond Power Solutions Inc ($HPS.A) | -0.1x | 0.0x | 1.2x | 1.1x | 0.7x |
