Velan Inc EBITDA dropped on 29.6% in 2016 and EBITDA Margin decreased on 3.5 pp from 10.0% to 6.5%
19.05.2016 • About Velan Inc (
$VLN) • By InTwits
Velan Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 6.5% in FY2016, 10.0% in FY2015, 12.0% in FY2014, 7.7% in FY2013, 4.7% in FY2012
- Velan Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: 25.9 in FY2016, 14.4 in FY2015, 18.8 in FY2014, 28.4 in FY2013, 12.7 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Velan Inc ($VLN) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 437.1 | 499.9 | 511.9 | 513.0 | 557.8 | 8.7% |
| Gross Profit | 87.3 | 113.8 | 137.2 | 133.1 | 136.3 | 2.3% |
| SG&A | | | | 93.4 | 95.5 | 2.2% |
| EBITDA | 20.6 | 38.7 | 61.5 | 51.4 | 36.2 | -29.6% |
| Net Income | 7.9 | 6.2 | 30.8 | 20.9 | 4.8 | -77.3% |
Balance Sheet
|
|---|
| Cash | 65.4 | 79.4 | 117.9 | 124.6 | 120.9 | -2.9% |
| Short Term Debt | 35.0 | 63.1 | 47.7 | 35.5 | 19.4 | -45.4% |
| Long Term Debt | 7.9 | 16.9 | 12.9 | 5.2 | 19.6 | 274.3% |
Cash flow
|
|---|
| Capex | 12.7 | 28.4 | 18.8 | 14.4 | 25.9 | 79.2% |
Ratios
|
|---|
| Revenue growth | 14.8% | 14.4% | 2.4% | 0.2% | 8.7% | |
| EBITDA growth | -44.8% | 87.7% | 58.8% | -16.4% | -29.6% | |
| Gross Margin | 20.0% | 22.8% | 26.8% | 26.0% | 24.4% | -1.5% |
| EBITDA Margin | 4.7% | 7.7% | 12.0% | 10.0% | 6.5% | -3.5% |
| Net Income Margin | 1.8% | 1.2% | 6.0% | 4.1% | 0.9% | -3.2% |
| SG&A, % of revenue | | | | 18.2% | 17.1% | -1.1% |
| CAPEX, % of revenue | 2.9% | 5.7% | 3.7% | 2.8% | 4.6% | 1.8% |
| ROIC | 2.1% | 6.7% | 10.7% | 7.4% | 3.4% | -4.1% |
| ROE | 2.4% | 1.9% | 8.8% | 5.4% | 1.1% | -4.3% |
| Net Debt/EBITDA | -1.1x | 0.0x | -0.9x | -1.6x | -2.3x | -0.6x |
Velan Inc ($VLN) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 103 | 112 | 104 | 108 | 0.1% | 0.6% | -18.3% | -5.5% |
| EBITDA | 8 | 11 | 9 | 0 | -13.7% | -11.1% | -27.2% | -98.0% |
| Net Income | 3 | 5 | 4 | -8 | -22.4% | -6.8% | -24.2% | -265.8% |
Balance Sheet
|
|---|
| Cash | 92 | 88 | 81 | 89 | -9.8% | -10.8% | -9.0% | -10.3% |
| Short Term Debt | 36 | 26 | 18 | 14 | 0.8% | -22.1% | -33.0% | -49.5% |
| Long Term Debt | 3 | 7 | 6 | 14 | -73.0% | -18.4% | -10.3% | 245.9% |
Ratios
|
|---|
| Gross Margin | 22.8% | 23.9% | 25.0% | 26.0% | -2.9% | -2.5% | -1.3% | 0.6% |
| EBITDA Margin | 7.7% | 9.6% | 8.5% | 0.2% | -1.2% | -1.3% | -1.0% | -10.5% |
| Net Income Margin | 3.0% | 4.3% | 3.5% | -7.2% | -0.9% | -0.3% | -0.3% | -11.4% |
Revenue and profitability
The company's Revenue increased on 8.7%. Revenue growth showed slow down in FY16Q4 - it was -5.5% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 59.9 pp from -28.4% to 31.5% in 2016.
Gross Margin decreased slightly on 1.5 pp from 26.0% to 24.4% in FY2016. SG&A as a % of Revenue decreased slightly on 1.1 pp from 18.2% to 17.1% in FY2016.
Net Income marign decreased on 3.2 pp from 4.1% to 0.85% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 4.6%. CAPEX/Revenue decreased slightly on 1.0 pp from 5.7% in FY2013 to 4.6% in FY2016. It's average level of CAPEX/Revenue for the last three years was 3.7%.Velan Inc maintained rich investment policy and has spent a big chunk of EBITDA (71.5%) to CAPEX.
Return on investment
The company operates at low ROIC (3.36%) and ROE (1.09%). ROIC decreased on 4.1 pp from 7.4% to 3.4% in FY2016. ROE decreased on 4.3 pp from 5.4% to 1.1% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.3x and Debt / EBITDA is 1.1x. Net Debt / EBITDA dropped on 0.6x from -1.6x to -2.3x in FY2016. Debt decreased on 4.4% while cash decreased on 2.9%.
Appendix 1: Peers in Industrial
Below we provide Velan Inc benchmarking against other companies in Industrial 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 |
|---|
| Diversified Royalty Corp ($DIV) | | | | 503.3% | |
| WSP Global Inc ($WSP) | | 60.3% | 44.0% | 108.9% | 5.2% |
| CEMATRIX Corp ($CVX) | | -5.6% | 7.9% | 76.5% | -37.6% |
| Carmanah Technologies Corp ($CMH) | | -2.0% | 68.8% | 56.0% | -30.0% |
| STT Enviro Corp ($STT) | 10.3% | -2.6% | -21.4% | 51.1% | |
| |
|---|
| Median (65 companies) | 10.1% | 5.7% | 10.2% | 8.5% | 3.2% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pure Technologies Ltd ($PUR) | 77.9% | 78.0% | 77.5% | 75.6% | |
| WSP Global Inc ($WSP) | 81.1% | 83.2% | 81.0% | 74.0% | 76.7% |
| Avigilon Corp ($AVO) | 49.3% | 54.2% | 56.6% | 57.4% | 52.0% |
| Omni-Lite Industries Canada Inc ($OML) | 55.3% | 54.9% | 54.9% | 54.8% | |
| Stantec Inc ($STN) | 55.0% | 54.7% | 54.9% | 54.5% | 54.1% |
| |
|---|
| Median (59 companies) | 22.6% | 22.8% | 20.1% | 21.1% | 22.2% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian National Railway Co ($CNR) | 46.5% | 45.9% | 46.8% | 50.9% | 54.3% |
| Canadian Pacific Railway Ltd ($CP) | 26.1% | 32.4% | 43.7% | 48.9% | 51.6% |
| Photon Control Inc ($PHO) | 17.6% | 24.8% | 29.3% | 38.3% | |
| Omni-Lite Industries Canada Inc ($OML) | 17.7% | 17.0% | 20.4% | 26.2% | |
| Badger Daylighting Ltd ($BAD) | 25.7% | 25.9% | 27.9% | 24.6% | 24.2% |
| |
|---|
| Median (63 companies) | 9.6% | 7.9% | 7.1% | 7.5% | 11.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newalta Corp ($NAL) | 21.7% | 34.5% | 35.1% | 42.0% | 9.6% |
| Cargojet Inc ($CJT.A) | 7.0% | 6.3% | 54.1% | 41.3% | |
| Algoma Central Corp ($ALC) | 15.9% | 7.3% | 5.0% | 27.4% | 58.2% |
| Canadian Pacific Railway Ltd ($CP) | 20.2% | 20.2% | 21.9% | 22.7% | 19.0% |
| Canadian National Railway Co ($CNR) | 17.4% | 18.7% | 18.9% | 21.5% | 22.4% |
| |
|---|
| Median (64 companies) | 3.1% | 3.6% | 4.2% | 3.5% | 4.3% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($IBG) | 4.8% | -9.0% | 11.6% | 21.9% | 26.2% |
| IWG Technologies Inc ($IWG) | 17.0% | 36.3% | 23.4% | 27.2% | 25.7% |
| Winpak Ltd ($WPK) | 20.4% | 18.0% | 18.3% | 22.6% | 21.8% |
| Toromont Industries Ltd ($TIH) | 28.8% | 25.8% | 24.3% | 23.5% | 21.7% |
| Intertape Polymer Group Inc ($ITP) | 12.3% | 13.7% | 22.5% | 23.0% | 21.0% |
| |
|---|
| Median (55 companies) | 10.4% | 9.5% | 9.5% | 8.3% | 9.0% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Conifex Timber Inc ($CFF) | | 2.7x | 6.1x | 35.9x | 3.6x |
| Ag Growth International Inc ($AFN) | 2.9x | -0.1x | 2.1x | 14.1x | |
| Cargojet Inc ($CJT.A) | 1.5x | 1.5x | 31.5x | 12.9x | |
| Progressive Waste Solutions Ltd ($BIN) | 4.5x | 3.3x | 2.9x | 10.6x | 3.8x |
| Finning International Inc ($FTT) | 2.3x | 1.8x | 1.4x | 9.4x | 2.5x |
| |
|---|
| Median (56 companies) | 1.5x | 1.6x | 1.3x | 1.0x | 1.9x |
|---|
