Computer Modelling Group Ltd reports 22.5% Net Income decline and 4.5 pp EBITDA Margin decline from 50.8% to 46.3%
19.05.2016 • About Computer Modelling Group Ltd (
$CMG) • By InTwits
Computer Modelling Group Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 46.3% in FY2016 vs. 50.8% in FY2015 vs. 53.8% in FY2012
- Computer Modelling Group Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 1.4%.
- CAPEX is quite volatile: 204 in 2016, 107 in 2015, 264 in 2014, 143 in 2013, 234 in 2012
- The company has highly profitable business model: ROIC is at 57.1%
- It operates with high leverage: Net Debt/EBITDA is -1.9x while industry average is -4.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Computer Modelling Group Ltd ($CMG) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 61.034 | 68.620 | 74.503 | 84.861 | 80.798 | -4.8% |
| SG&A | 18.801 | 21.813 | 23.098 | 26.351 | 27.897 | 5.9% |
| EBITDA | 32.831 | 35.829 | 38.373 | 43.099 | 37.418 | -13.2% |
| Net Income | 23.391 | 24.822 | 27.630 | 32.648 | 25.302 | -22.5% |
Balance Sheet
|
|---|
| Cash | 55.374 | 59.419 | 72.410 | 75.342 | 72.680 | -3.5% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 1.501 | 2.014 | 0.839 | 1.749 | 1.909 | 9.1% |
Ratios
|
|---|
| Revenue growth | 17.8% | 12.4% | 8.6% | 13.9% | -4.8% | |
| EBITDA growth | 22.9% | 9.1% | 7.1% | 12.3% | -13.2% | |
| EBITDA Margin | 53.8% | 52.2% | 51.5% | 50.8% | 46.3% | -4.5% |
| Net Income Margin | 38.3% | 36.2% | 37.1% | 38.5% | 31.3% | -7.2% |
| SG&A, % of revenue | 30.8% | 31.8% | 31.0% | 31.1% | 34.5% | 3.5% |
| CAPEX, % of revenue | 2.5% | 2.9% | 1.1% | 2.1% | 2.4% | 0.3% |
| ROIC | 74.2% | 68.6% | 62.9% | 63.5% | 57.1% | -6.4% |
| ROE | 57.2% | 50.9% | 48.2% | 51.6% | 41.2% | -10.3% |
| Net Debt/EBITDA | -1.7x | -1.7x | -1.9x | -1.7x | -1.9x | -0.2x |
Computer Modelling Group Ltd ($CMG) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 21 | 19 | 21 | 19 | 9.7% | -3.1% | -15.8% | -6.7% |
| EBITDA | 11 | 9 | 11 | 7 | 14.1% | -14.4% | -27.4% | -17.4% |
| Net Income | 7 | 7 | 8 | 4 | 8.9% | -9.5% | -28.5% | -51.2% |
Balance Sheet
|
|---|
| Cash | 79 | 67 | 66 | 73 | 8.5% | 2.1% | 0.4% | -3.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| EBITDA Margin | 50.5% | 44.5% | 50.4% | 38.9% | 2.0% | -5.9% | -8.0% | -5.1% |
| Net Income Margin | 31.7% | 35.4% | 37.0% | 20.4% | -0.2% | -2.5% | -6.6% | -18.6% |
Revenue and profitability
The company's Revenue decreased on 4.8%. Revenue decline showed acceleration in FY16Q4 - it was 6.7% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.5 pp from 50.8% to 46.3% in FY2016.
SG&A as a % of Revenue increased on 3.5 pp from 31.1% to 34.5% in FY2016.
Net Income marign decreased on 7.2 pp from 38.5% to 31.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.4% in FY2016. Computer Modelling Group Ltd showed small CAPEX/Revenue decline of 0.57 pp from 2.9% in FY2013 to 2.4% in FY2016. Average CAPEX/Revenue for the last three years was 1.8%.
Return on investment
The company operates at high and attractive ROIC (57.07%) and ROE (41.24%). ROIC decreased on 6.4 pp from 63.5% to 57.1% in FY2016. ROE dropped on 10.3 pp from 51.6% to 41.2% in FY2016.
Leverage (Debt)
The company has no debt. Cash decreased on 3.5%.
Management team
Kenneth M Dedeluk is a Computer Modelling Group Ltd's CEO. Kenneth M Dedeluk is a founder and has spent 18 years at the company. Sandra Balic is a The company's CFO. Sandra Balic has spent 5 years at the company.
Appendix 1: Peers in Technology
Below we provide Computer Modelling Group Ltd benchmarking against other companies in Technology 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 |
|---|
| ProntoForms Corp ($PFM) | | 75.4% | 43.9% | 46.4% | 28.2% |
| iLOOKABOUT Corp ($ILA) | 19.6% | 8.9% | 58.8% | 32.3% | |
| Kinaxis Inc ($KXS) | | 30.3% | 15.2% | 30.3% | 27.0% |
| Halogen Software Inc ($HGN) | | 22.6% | 10.1% | 28.0% | 10.0% |
| Intrinsyc Technologies Corp ($ITC) | | -21.7% | 70.8% | 24.5% | 39.2% |
| |
|---|
| Median (18 companies) | 11.6% | 4.3% | 14.4% | 11.5% | 12.7% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($CSU) | 86.2% | 85.5% | 86.1% | 86.2% | 87.1% |
| ProntoForms Corp ($PFM) | 96.1% | 98.1% | 98.0% | 79.4% | |
| Espial Group Inc ($ESP) | 77.5% | 81.7% | 78.5% | 74.3% | 74.7% |
| Halogen Software Inc ($HGN) | 72.0% | 74.8% | 71.8% | 73.8% | 76.2% |
| Kinaxis Inc ($KXS) | 71.8% | 70.4% | 70.4% | 71.8% | 69.1% |
| |
|---|
| Median (16 companies) | 64.6% | 55.6% | 52.8% | 52.4% | 71.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wi-LAN Inc ($WIN) | 40.9% | 12.2% | 56.2% | 53.2% | 57.8% |
| Kinaxis Inc ($KXS) | 18.7% | 23.0% | 19.2% | 28.0% | 17.6% |
| Constellation Software Inc/Canada ($CSU) | 20.9% | 20.1% | 21.8% | 25.2% | 26.0% |
| Quorum Information Technologies Inc ($QIS) | 4.4% | 8.1% | 14.8% | 14.4% | |
| Intrinsyc Technologies Corp ($ITC) | -10.5% | -38.8% | 2.2% | 10.8% | |
| |
|---|
| Median (18 companies) | 0.1% | 0.9% | 3.4% | -2.3% | 7.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($KXS) | 2.9% | 2.3% | 5.0% | 4.7% | 5.0% |
| Halogen Software Inc ($HGN) | 4.9% | 9.0% | 8.4% | 2.9% | 2.6% |
| Espial Group Inc ($ESP) | 1.6% | 0.2% | 1.9% | 2.1% | 1.5% |
| ProntoForms Corp ($PFM) | 1.1% | 0.8% | 3.6% | 1.9% | |
| Critical Control Energy Services Corp ($CCZ) | | 0.5% | 1.0% | 1.6% | |
| |
|---|
| Median (18 companies) | 1.0% | 0.9% | 1.1% | 1.1% | 1.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($KXS) | | 61.8% | 63.6% | 44.0% | 22.6% |
| Constellation Software Inc/Canada ($CSU) | 45.9% | 22.4% | 24.7% | 38.5% | 40.5% |
| Pivot Technology Solutions Inc ($PTG) | | 92.9% | 42.9% | 14.5% | |
| Intrinsyc Technologies Corp ($ITC) | -7.5% | -22.7% | 0.9% | 12.3% | |
| Wi-LAN Inc ($WIN) | 2.6% | -7.6% | 8.9% | 7.4% | 8.4% |
| |
|---|
| Median (18 companies) | -5.4% | -17.5% | -0.9% | -12.3% | 8.4% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mitel Networks Corp ($MNW) | 3.7x | 3.8x | 2.6x | 6.2x | |
| Pivot Technology Solutions Inc ($PTG) | | -0.4x | 1.1x | 4.8x | |
| Constellation Software Inc/Canada ($CSU) | 0.0x | 1.6x | 0.6x | 0.4x | -0.0x |
| Wi-LAN Inc ($WIN) | -4.9x | -12.1x | -2.3x | -1.7x | -2.0x |
| Quorum Information Technologies Inc ($QIS) | -0.4x | -0.6x | -1.0x | -3.1x | |
| |
|---|
| Median (8 companies) | 0.0x | 1.4x | -1.0x | -2.4x | -6.3x |
|---|
