Discovery Air Inc reports 67.2% EBITDA growth and 11.6% Revenue growth
28.04.2016 • About Discovery Air Inc (
$DA.A) • By InTwits
Discovery Air Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Discovery Air Inc doesn't have a profitable business model yet: FY2016 ROIC is 1.4%
- EBITDA Margin is quite volatile: 14.0% in FY2016, 9.4% in FY2015, 10.7% in FY2014, 17.7% in FY2013, 22.9% in FY2012
- Discovery Air Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.7%. At the same time it's a lot of higher than industry average of 5.0%.
- CAPEX is quite volatile: 0.31 in FY2016, 0.20 in FY2015, 0.62 in FY2014, 0.27 in FY2013, 9.7 in FY2012
- The company has potentially unprofitable business model: ROIC is at 1.4%
- It operates with high leverage: Net Debt/EBITDA is 7.9x while industry average is 5.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Discovery Air Inc ($DA.A) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 191.7 | 229.4 | 213.5 | 163.2 | 182.2 | 11.6% |
| Gross Profit | 44.0 | 40.7 | 23.0 | | | |
| EBITDA | 44.0 | 40.7 | 23.0 | 15.3 | 25.5 | 67.2% |
| Net Income | 11.8 | 0.6 | -18.0 | -18.9 | -16.0 | |
Balance Sheet
|
|---|
| Cash | 13.1 | 5.8 | 0.0 | 0.7 | 0.4 | -45.8% |
| Short Term Debt | 0.4 | 7.1 | 19.0 | 17.3 | 30.8 | 77.7% |
| Long Term Debt | 135.2 | 153.9 | 153.6 | 157.7 | 172.4 | 9.4% |
Cash flow
|
|---|
| Capex | 32.8 | 38.5 | 21.5 | 22.3 | 28.6 | 28.4% |
Ratios
|
|---|
| Revenue growth | 26.7% | 19.6% | -6.9% | -23.5% | 11.6% | |
| EBITDA growth | 5.5% | -7.4% | -43.6% | -33.5% | 67.2% | |
| Gross Margin | 22.9% | 17.7% | 10.7% | | | 0.0% |
| EBITDA Margin | 22.9% | 17.7% | 10.7% | 9.4% | 14.0% | 4.7% |
| Net Income Margin | 6.1% | 0.3% | -8.4% | -11.6% | -8.8% | 2.8% |
| CAPEX, % of revenue | 17.1% | 16.8% | 10.1% | 13.7% | 15.7% | 2.1% |
| ROIC | 9.3% | 6.7% | -0.0% | -2.2% | 1.4% | 3.6% |
| ROE | 14.0% | 0.6% | -20.9% | -24.9% | -21.8% | 3.1% |
| Net Debt/EBITDA | 2.8x | 3.8x | 7.5x | 11.4x | 7.9x | -3.5x |
Discovery Air Inc ($DA.A) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 39 | 59 | 60 | 30 | -5.6% | 3.6% | 2.4% | 10.1% |
| EBITDA | 2 | 17 | 13 | -7 | | 67.1% | -3.9% | |
| Net Income | -4 | -1 | 2 | -13 | | -152.8% | -35.3% | |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 0 | 0 | | | | -45.8% |
| Short Term Debt | 31 | 40 | 40 | 31 | 1.1% | 46.6% | 64.9% | 77.7% |
| Long Term Debt | 170 | 173 | 173 | 172 | 8.4% | 37.2% | 11.2% | 9.4% |
Ratios
|
|---|
| EBITDA Margin | 5.4% | 29.2% | 22.4% | -22.1% | 8.8% | 11.1% | -1.5% | 2.7% |
| Net Income Margin | -11.5% | -1.0% | 3.2% | -43.0% | 7.3% | -3.0% | -1.8% | 12.9% |
Revenue and profitability
The company's Revenue jumped on 11.6%. Revenue growth showed slow down in FY16Q4 - it was 10.1% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.1 pp from 32.4% to 35.6% in 2016.
Net Income marign increased on 2.8 pp from -11.6% to -8.8% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 15.7%. The company showed small CAPEX/Revenue decline of 1.1 pp from 16.8% in FY2013 to 15.7% in FY2016. It's average CAPEX/Revenue for the last three years was 13.1%.To secure this fast growth the company made large investments to CAPEX (112% of EBITDA).
Return on investment
The company operates at low but positive ROIC (1.38%) and negative ROE (-21.77%). ROIC increased on 3.6 pp from -2.2% to 1.4% in FY2016. ROE increased on 3.1 pp from -24.9% to -21.8% in FY2016.
Leverage (Debt)
Debt level is 7.9x Net Debt / EBITDA and 8.0x Debt / EBITDA. Net Debt / EBITDA dropped on 3.5x from 11.4x to 7.9x in FY2016. Debt surged on 16.1% while cash dropped on 45.8%.
Appendix 1: Peers in Consumer, Cyclical
Below we provide Discovery Air Inc 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Poydras Gaming Finance Corp ($PYD) | | | | 539.9% | |
| Restaurant Brands International Inc ($QSR) | | | 4.6% | 238.0% | 2.3% |
| Amaya Inc ($AYA) | 311.5% | 85.2% | 254.0% | 113.8% | |
| NYX Gaming Group Ltd ($NYX) | 65.2% | 52.8% | 45.8% | 91.8% | |
| Rainmaker Entertainment Inc ($RNK) | -24.6% | -45.0% | 30.1% | 56.4% | |
| |
|---|
| Median (49 companies) | 5.4% | 4.9% | 7.8% | 8.6% | -3.9% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| NYX Gaming Group Ltd ($NYX) | 91.3% | 86.7% | 88.3% | 85.6% | |
| DEQ Systems Corp ($DEQ) | 77.5% | 78.4% | 84.7% | 82.7% | |
| Second Cup Ltd/The ($SCU) | 86.6% | 85.1% | 72.7% | 81.1% | |
| New Look Vision Group Inc ($BCI) | 71.8% | 72.6% | 72.6% | 78.7% | |
| Cara Operations Ltd ($CAO) | | 79.2% | 78.9% | 78.4% | |
| |
|---|
| Median (42 companies) | 34.1% | 31.8% | 31.9% | 30.6% | 31.5% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Westshore Terminals Investment Corp ($WTE) | 49.7% | 65.9% | 60.9% | 59.6% | |
| Gamehost Inc ($GH) | 46.1% | 45.7% | 45.9% | 42.8% | |
| Great Canadian Gaming Corp ($GC) | 16.8% | 41.1% | 40.1% | 36.6% | |
| Restaurant Brands International Inc ($QSR) | | 51.1% | 20.8% | 33.9% | 44.4% |
| Cara Operations Ltd ($CAO) | | 9.6% | 22.6% | 32.6% | |
| |
|---|
| Median (46 companies) | 7.5% | 9.7% | 10.2% | 9.0% | 10.4% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Holloway Lodging Corp ($HLC) | 8.2% | 6.7% | 14.8% | 26.7% | |
| WestJet Airlines Ltd ($WJA) | 7.9% | 19.5% | 18.6% | 22.5% | |
| Westshore Terminals Investment Corp ($WTE) | 25.7% | 11.5% | 6.2% | 21.2% | |
| Exchange Income Corp ($EIF) | 7.9% | 15.8% | 15.5% | 15.4% | |
| Chorus Aviation Inc ($CHR.A) | 9.9% | 9.6% | 3.9% | 15.0% | |
| |
|---|
| Median (49 companies) | 2.7% | 3.1% | 3.4% | 2.8% | 0.8% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Partner Jet Corp ($PJT) | -51.6% | -50.8% | 85.1% | 51.1% | |
| Westshore Terminals Investment Corp ($WTE) | 24.0% | 37.8% | 35.0% | 38.3% | |
| Cara Operations Ltd ($CAO) | | | 24.7% | 35.1% | |
| Air Canada ($AC) | | 37.0% | 23.2% | 28.4% | |
| BMTC Group Inc ($GBT) | 33.0% | 32.5% | 25.2% | 25.2% | |
| |
|---|
| Median (49 companies) | 9.2% | 9.7% | 9.9% | 7.7% | 8.2% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Poydras Gaming Finance Corp ($PYD) | | | | 39.7x | |
| Mountain China Resorts Holding Ltd ($MCG) | | | 317.1x | 29.0x | |
| Rainmaker Entertainment Inc ($RNK) | | | | 18.6x | |
| Holloway Lodging Corp ($HLC) | | 5.8x | 8.4x | 17.1x | |
| AutoCanada Inc ($ACQ) | 4.2x | 4.7x | 6.4x | 8.0x | |
| |
|---|
| Median (38 companies) | 1.6x | 2.0x | 2.4x | 2.7x | 3.6x |
|---|
