Gluskin Sheff + Associates Inc reports 34.4% Net Income decline and 8.0 pp EBITDA Margin decline from 47.9% to 39.9%
15.09.2016 • About Gluskin Sheff + Associates Inc (
$GS) • By InTwits
Gluskin Sheff + Associates Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Gluskin Sheff + Associates Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 0.31 in FY2016, 0.20 in FY2015, 0.62 in FY2014, 0.27 in FY2013, 9.7 in FY2012
- The company has highly profitable business model: ROIC is at 42.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Gluskin Sheff + Associates Inc ($GS) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 77.8 | 125.0 | 247.5 | 164.5 | 142.1 | -13.6% |
| SG&A | | | | 13.9 | 21.2 | 53.3% |
| EBITDA | 20.2 | 67.3 | 150.3 | 78.8 | 56.7 | -28.0% |
| Net Income | 17.4 | 49.4 | 106.8 | 52.3 | 34.3 | -34.4% |
Balance Sheet
|
|---|
| Cash | 18.7 | 22.0 | 8.2 | 28.9 | 51.3 | 77.8% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 9.7 | 0.3 | 0.6 | 0.2 | 0.3 | 53.9% |
Ratios
|
|---|
| Revenue growth | -39.1% | 60.6% | 97.9% | -33.5% | -13.6% | |
| EBITDA growth | -69.9% | 233.3% | 123.3% | -47.5% | -28.0% | |
| EBITDA Margin | 25.9% | 53.8% | 60.7% | 47.9% | 39.9% | -8.0% |
| Net Income Margin | 22.4% | 39.5% | 43.1% | 31.8% | 24.1% | -7.7% |
| SG&A, % of revenue | | | | 8.4% | 14.9% | 6.5% |
| CAPEX, % of revenue | 12.4% | 0.2% | 0.3% | 0.1% | 0.2% | 0.1% |
| ROIC | 21.0% | 82.9% | 153.9% | 63.6% | 42.0% | -21.6% |
| ROE | 20.3% | 62.3% | 120.7% | 48.3% | 28.0% | -20.3% |
| Net Debt/EBITDA | -0.9x | -0.3x | -0.1x | -0.4x | -0.9x | -0.5x |
Gluskin Sheff + Associates Inc ($GS) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 30 | 59 | 26 | 27 | 5.6% | -15.3% | -8.8% | -28.2% |
| EBITDA | 12 | 29 | 9 | 7 | 1.9% | -24.7% | -10.1% | -63.1% |
| Net Income | 7 | 19 | 5 | 3 | -2.2% | -31.1% | -9.5% | -72.7% |
Balance Sheet
|
|---|
| Cash | 9 | 9 | 13 | 51 | -31.9% | -80.0% | -9.0% | 77.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| EBITDA Margin | 40.2% | 49.9% | 32.8% | 25.1% | -1.5% | -6.2% | -0.5% | -23.8% |
| Net Income Margin | 24.2% | 32.0% | 19.1% | 12.1% | -1.9% | -7.3% | -0.1% | -19.7% |
Revenue and profitability
The company's Revenue dropped on 13.6%. Revenue decline showed acceleration in FY16Q4 - it was 28.2% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 8.0 pp from 47.9% to 39.9% in FY2016.
SG&A as a % of Revenue increased on 6.5 pp from 8.4% to 14.9% in FY2016.
Net Income marign decreased on 7.7 pp from 31.8% to 24.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 0.22%. The company showed almost no change in CAPEX/Revenue from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 0.20%.
Return on investment
The company operates at high and attractive ROIC (42.00%) and ROE (27.98%). ROIC dropped on 21.6 pp from 63.6% to 42.0% in FY2016. ROE dropped on 20.3 pp from 48.3% to 28.0% in FY2016.
Leverage (Debt)
The company has no debt. Cash surged on 77.8%.
Appendix 1: Peers in Financial
Below we provide Gluskin Sheff + Associates Inc benchmarking against other companies in Financial 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 |
|---|
| Grenville Strategic Royalty Corp ($GRC) | | | | 317.2% | |
| StorageVault Canada Inc ($SVI) | | 22.2% | 7.5% | 111.8% | |
| Slate Retail REIT ($SRT.UN) | | 316.8% | 229.7% | 92.5% | 21.6% |
| Mogo Finance Technology Inc ($GO) | | 13.7% | 34.6% | 86.0% | 14.6% |
| Morguard Corp ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
| |
|---|
| Median (54 companies) | | 7.1% | 9.0% | 3.3% | 5.2% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($OLY) | 80.9% | 82.6% | 83.2% | 84.5% | 83.5% |
| Morguard Corp ($MRC) | 74.0% | 69.9% | 68.6% | 76.5% | 75.5% |
| Mogo Finance Technology Inc ($GO) | 70.4% | 64.5% | 63.4% | 62.3% | |
| StorageVault Canada Inc ($SVI) | 18.2% | 22.6% | 18.3% | 52.4% | |
| Clarke Inc ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| |
|---|
| Median (9 companies) | 28.1% | 30.7% | 28.3% | 43.4% | 30.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firm Capital Mortgage Investment Corp ($FC) | 87.6% | 87.9% | 88.8% | 86.6% | |
| Equitable Group Inc ($EQB) | 88.1% | 87.4% | 86.0% | 84.7% | 83.0% |
| Atrium Mortgage Investment Corp ($AI) | 79.8% | | | 81.9% | 83.2% |
| Trez Capital Mortgage Investment Corp ($TZZ) | | | | 76.2% | |
| First National Financial Corp ($FN) | 67.8% | 76.5% | 77.1% | 74.6% | |
| |
|---|
| Median (37 companies) | 43.7% | 33.5% | 39.8% | 32.5% | 43.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dundee Corp ($DC.A) | 10.3% | 14.1% | 88.8% | 123.6% | |
| Gazit-Globe Ltd ($GZT) | 80.2% | 43.3% | 52.1% | 69.3% | 95.5% |
| First Capital Realty Inc ($FCR) | 127.9% | 76.1% | 73.8% | 56.7% | 79.7% |
| Killam Properties Inc ($KMP) | 80.7% | 114.1% | 143.5% | 46.7% | 59.9% |
| StorageVault Canada Inc ($SVI) | 150.5% | 73.3% | 79.1% | 21.4% | |
| |
|---|
| Median (56 companies) | 0.6% | 0.6% | 0.7% | 0.7% | 0.7% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CI Financial Corp ($CIX) | | | | | 24.1% |
| FirstService Corp ($FSV) | | | | | 17.4% |
| IGM Financial Inc ($IGM) | 14.2% | 14.2% | 13.7% | 13.7% | 13.1% |
| Alaris Royalty Corp ($AD) | 9.5% | 10.1% | 10.7% | 7.3% | 12.3% |
| Genworth MI Canada Inc ($MIC) | 11.9% | 9.6% | 9.7% | 9.5% | 9.4% |
| |
|---|
| Median (56 companies) | 4.6% | 3.8% | 3.9% | 3.0% | 3.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Element Financial Corp ($EFN) | 140.2x | 31.9x | 37.6x | 79.9x | 22.6x |
| First National Financial Corp ($FN) | 34.3x | 33.7x | 40.9x | 37.4x | |
| StorageVault Canada Inc ($SVI) | 11.2x | 9.7x | 13.6x | 35.7x | |
| Gazit-Globe Ltd ($GZT) | 12.8x | 12.7x | 15.3x | 22.1x | 15.2x |
| Equitable Group Inc ($EQB) | 11.8x | 10.2x | 9.8x | 12.3x | 13.7x |
| |
|---|
| Median (28 companies) | 5.3x | 4.6x | 4.7x | 6.0x | 7.8x |
|---|
