Heroux-Devtek Inc Net Income surged on 726% in 2016 and Revenue jumped on 11.5%
25.05.2016 • About Heroux-Devtek Inc (
$HRX) • By InTwits
Heroux-Devtek Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Heroux-Devtek Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 9.3%. At the same time it's a lot of higher than industry average of 6.5%.
- CAPEX is quite volatile: 47.7 in FY2016, 62.7 in FY2015, 22.4 in FY2014, 11.5 in FY2013, 12.5 in FY2012
- The company has business model with low profitability: ROIC is at 8.6%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 1.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Heroux-Devtek Inc ($HRX) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 253.5 | 257.0 | 272.0 | 364.9 | 406.8 | 11.5% |
| Gross Profit | 42.7 | 39.8 | 42.4 | 59.2 | 74.3 | 25.6% |
| SG&A | 18.9 | 19.3 | 19.9 | 29.8 | 35.1 | 17.8% |
| EBITDA | 37.4 | 33.0 | | | 62.6 | |
| Net Income | 26.5 | 131.6 | 9.2 | 3.2 | 26.6 | 726.3% |
Balance Sheet
|
|---|
| Cash | 62.0 | 101.3 | 47.3 | 35.1 | 19.3 | -45.1% |
| Short Term Debt | 10.9 | 3.8 | 3.6 | 6.0 | 6.3 | 6.1% |
| Long Term Debt | 108.2 | 59.1 | 145.2 | 107.0 | 140.0 | 30.8% |
Cash flow
|
|---|
| Capex | 12.5 | 11.5 | 22.4 | 62.7 | 47.7 | -23.9% |
Ratios
|
|---|
| Revenue growth | -29.1% | 1.4% | 5.8% | 34.1% | 11.5% | |
| EBITDA growth | -34.4% | -12.0% | | | | |
| Gross Margin | 16.8% | 15.5% | 15.6% | 16.2% | 18.3% | 2.1% |
| EBITDA Margin | 14.8% | 12.8% | 0.0% | 0.0% | 15.4% | 15.4% |
| Net Income Margin | 10.4% | 51.2% | 3.4% | 0.9% | 6.5% | 5.7% |
| SG&A, % of revenue | 7.4% | 7.5% | 7.3% | 8.2% | 8.6% | 0.5% |
| CAPEX, % of revenue | 4.9% | 4.5% | 8.2% | 17.2% | 11.7% | -5.5% |
| ROIC | 6.5% | 6.0% | 4.5% | 1.6% | 8.6% | 7.0% |
| ROE | 11.3% | 56.4% | 4.0% | 1.2% | 8.5% | 7.3% |
| Net Debt/EBITDA | 1.5x | -1.2x | | | 2.0x | 2.0x |
Heroux-Devtek Inc ($HRX) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 98 | 95 | 97 | 117 | 13.7% | 12.4% | 9.3% | 10.8% |
| EBITDA | 12 | 15 | 16 | 21 | | | | |
| Net Income | 5 | 6 | 7 | 9 | 28.9% | 84.2% | | |
Balance Sheet
|
|---|
| Cash | 15 | 4 | 21 | 19 | -66.0% | -91.7% | -47.4% | -45.1% |
| Short Term Debt | 5 | 5 | 6 | 6 | 26.7% | 48.0% | 10.9% | 6.1% |
| Long Term Debt | 126 | 127 | 142 | 140 | 31.9% | 29.2% | 41.7% | 30.8% |
Ratios
|
|---|
| Gross Margin | 16.9% | 18.5% | 18.7% | 18.9% | 0.4% | 3.0% | 2.2% | 2.6% |
| EBITDA Margin | 11.8% | 15.5% | 16.2% | 17.6% | 11.8% | 15.5% | 16.2% | 17.6% |
| Net Income Margin | 4.6% | 6.4% | 7.3% | 7.7% | 0.5% | 2.5% | 9.4% | 9.3% |
Revenue and profitability
The company's Revenue jumped on 11.5%. Revenue growth showed slow down in FY16Q4 - it was 10.8% YoY.
Gross Margin increased on 2.1 pp from 16.2% to 18.3% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased on 5.7 pp from 0.88% to 6.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Heroux-Devtek Inc had CAPEX/Revenue of 11.7%. The company showed CAPEX/Revenue growth of 7.3 pp from 4.5% in FY2013 to 11.7% in FY2016. Average CAPEX/Revenue for the last three years was 12.4%.To fuel this fast growth Heroux-Devtek Inc invested a large share of EBITDA (76.2%) to CAPEX.
Return on investment
The company operates at low ROIC (8.63%) and ROE (8.53%). ROIC increased on 7.0 pp from 1.6% to 8.6% in FY2016. ROE increased on 7.3 pp from 1.2% to 8.5% in FY2016.
Leverage (Debt)
Debt level is 2.0x Net Debt / EBITDA and 2.3x Debt / EBITDA. Net Debt / EBITDA surged2.0x from to 2.0x in FY2016. Debt jumped on 29.5% while cash dropped on 45.1%.
Appendix 1: Peers in Industrial
Below you can find Heroux-Devtek 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 | 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 |
|---|
