H2O Innovation Inc EBITDA surged on 28.5% in 2016 and Revenue increased on 4.0%
27.09.2016 • About H2O Innovation Inc (
$HEO) • By InTwits
H2O Innovation Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 6.5% in FY2016, 5.2% in FY2015, 0.2% in FY2014, 4.1% in FY2013, -0.3% in FY2012
- H2O Innovation Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%.
- The company has potentially unprofitable business model: ROIC is at 5.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.9x while industry average is 2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
H2O Innovation Inc ($HEO) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 35.910 | 36.137 | 34.832 | 48.700 | 50.668 | 4.0% |
| Gross Profit | 8.275 | 9.252 | 9.250 | 13.566 | 15.542 | 14.6% |
| SG&A | | 7.042 | 8.143 | 9.318 | 11.155 | 19.7% |
| EBITDA | -0.112 | 1.475 | 0.058 | 2.546 | 3.271 | 28.5% |
| Net Income | -8.055 | 0.313 | -1.456 | 0.272 | 0.210 | -22.8% |
Balance Sheet
|
|---|
| Cash | 0.577 | 0.304 | 0.498 | 1.336 | 3.052 | 128.5% |
| Short Term Debt | 5.604 | 6.441 | 4.394 | 4.978 | 7.205 | 44.7% |
| Long Term Debt | 1.102 | 0.065 | 0.331 | 0.500 | 2.125 | 325.2% |
Cash flow
|
|---|
| Capex | 0.259 | 0.159 | 0.099 | 0.596 | 1.096 | 84.0% |
Ratios
|
|---|
| Revenue growth | 30.0% | 0.6% | -3.6% | 39.8% | 4.0% | |
| EBITDA growth | -35.9% | -1,421.6% | -96.1% | 4,310.5% | 28.5% | |
| Gross Margin | 23.0% | 25.6% | 26.6% | 27.9% | 30.7% | 2.8% |
| EBITDA Margin | -0.3% | 4.1% | 0.2% | 5.2% | 6.5% | 1.2% |
| Net Income Margin | -22.4% | 0.9% | -4.2% | 0.6% | 0.4% | -0.1% |
| SG&A, % of revenue | | 19.5% | 23.4% | 19.1% | 22.0% | 2.9% |
| CAPEX, % of revenue | 0.7% | 0.4% | 0.3% | 1.2% | 2.2% | 0.9% |
| ROIC | -4.7% | 2.6% | -5.5% | 4.9% | 5.3% | 0.3% |
| ROE | -44.5% | 2.2% | -7.9% | 1.1% | 0.8% | -0.3% |
| Net Debt/EBITDA | | 4.2x | 73.2x | 1.6x | 1.9x | 0.3x |
H2O Innovation Inc ($HEO) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 12 | 13 | 14 | 11 | 9.3% | -3.8% | 17.1% | -5.4% |
| EBITDA | 1 | 1 | 2 | 0 | -5.3% | 28.8% | 115.6% | -54.7% |
| Net Income | 0 | 0 | 1 | -1 | -81.5% | 48.2% | 329.5% | |
Balance Sheet
|
|---|
| Cash | 2 | 2 | 1 | 3 | 244.7% | 796.3% | -31.8% | 128.5% |
| Short Term Debt | 6 | 7 | 7 | 7 | 33.5% | 35.5% | 40.3% | 44.7% |
| Long Term Debt | 0 | 3 | 2 | 2 | 114.7% | 509.8% | 376.4% | 325.2% |
Ratios
|
|---|
| Gross Margin | 26.1% | 31.3% | 31.8% | 33.4% | -0.9% | 8.2% | -0.2% | 3.6% |
| EBITDA Margin | 6.2% | 5.9% | 10.8% | 1.7% | -1.0% | 1.5% | 4.9% | -1.9% |
| Net Income Margin | 0.4% | 1.3% | 4.6% | -6.0% | -2.1% | 0.5% | 3.3% | -3.6% |
Revenue and profitability
The company's Revenue increased on 4.0%. Revenue growth showed slow down in FY16Q4 - it was -5.4% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.0 pp from 29.1% to 27.1% in FY2016.
Gross Margin increased on 2.8 pp from 27.9% to 30.7% in FY2016. SG&A as a % of Revenue increased on 2.9 pp from 19.1% to 22.0% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 2.2%. H2O Innovation Inc's CAPEX/Revenue increased slightly on 1.7 pp from 0.44% in FY2013 to 2.2% in FY2016. For the last three years the average CAPEX/Revenue was 1.2%.
Return on investment
The company operates at low ROIC (5.26%) and ROE (0.80%). ROIC showed almost no change in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.9x and Debt / EBITDA is 2.9x. Net Debt / EBITDA surged on 0.3x from 1.6x to 1.9x in FY2016. Debt jumped on 70.3% while cash jumped on 128%.
Appendix 1: Peers in Industrial
Below we provide H2O Innovation 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 |
|---|
| Progressive Waste Solutions Ltd ($BIN) | | 16.1% | 7.8% | 1.8% | 59.4% |
| Baylin Technologies Inc ($BYL) | | 16.5% | -44.0% | -4.1% | 47.5% |
| CCL Industries Inc ($CCL.B) | | 44.4% | 36.8% | 17.5% | 30.8% |
| Stantec Inc ($STN) | | 17.9% | 13.3% | 14.4% | 30.5% |
| Avigilon Corp ($AVO) | | 72.6% | 41.9% | 17.7% | 22.2% |
| |
|---|
| Median (52 companies) | | 5.1% | 10.1% | 8.1% | 2.9% |
|---|
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 ($AVO) | 49.3% | 54.2% | 56.6% | 57.4% | 52.0% |
| Stantec Inc ($STN) | 55.0% | 54.7% | 54.9% | 54.5% | 54.1% |
| IWG Technologies Inc ($IWG) | 53.3% | 54.0% | 49.0% | 47.8% | 54.9% |
| |
|---|
| Median (50 companies) | 23.6% | 23.4% | 21.7% | 21.7% | 22.2% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian National Railway Co ($CNR) | 46.5% | 45.9% | 46.8% | 50.9% | 54.3% |
| Canadian Pacific Railway Ltd ($CP) | 26.1% | 32.4% | 43.7% | 48.9% | 51.6% |
| Badger Daylighting Ltd ($BAD) | 25.7% | 25.9% | 27.9% | 24.6% | 24.2% |
| IWG Technologies Inc ($IWG) | 12.7% | 25.5% | 20.0% | 24.0% | 26.9% |
| Winpak Ltd ($WPK) | 19.5% | 18.6% | 18.7% | 22.7% | 23.5% |
| |
|---|
| Median (54 companies) | 10.4% | 8.4% | 8.4% | 8.6% | 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 ($CNR) | 17.4% | 18.7% | 18.9% | 21.5% | 22.4% |
| |
|---|
| Median (55 companies) | 3.2% | 3.7% | 4.3% | 3.9% | 4.3% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($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 (56 companies) | 12.2% | 9.6% | 11.5% | 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 (50 companies) | 1.5x | 1.6x | 1.3x | 1.0x | 1.9x |
|---|
