Reko International Group Inc reports 84.2% Net Income growth and 10.4 pp EBITDA Margin growth from 17.1% to 27.5%
06.10.2016 • About Reko International Group Inc (
$REK) • By InTwits
Reko International Group Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 27.5% in FY2016 vs. 17.1% in FY2015 vs. 8.8% in FY2012
- EBITDA Margin is quite volatile: 27.5% in FY2016, 17.1% in FY2015, 13.0% in FY2014, 9.7% in FY2013, 8.8% in FY2012
- Reko International Group Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.4%. At the same time it's in pair with industry average of 7.1%.
- CAPEX is quite volatile: 2.9 in FY2016, 7.2 in FY2015, 3.1 in FY2014, 1.5 in FY2013, 2.0 in FY2012
- The company has highly profitable business model: ROIC is at 22.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Reko International Group Inc ($REK) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 42.091 | 40.674 | 38.894 | 48.296 | 50.599 | 4.8% |
| Gross Profit | 7.191 | 8.252 | 7.123 | 12.051 | 15.619 | 29.6% |
| SG&A | | 4.307 | 4.730 | 6.349 | 4.626 | -27.1% |
| EBITDA | 3.692 | 3.945 | 5.063 | 8.235 | 13.908 | 68.9% |
| Net Income | 1.267 | 1.673 | 2.298 | 4.127 | 7.601 | 84.2% |
Balance Sheet
|
|---|
| Cash | 1.213 | 2.334 | 1.720 | 1.590 | 5.225 | 228.6% |
| Short Term Debt | 21.541 | 9.721 | 11.074 | 12.813 | 2.427 | -81.1% |
| Long Term Debt | 0.825 | 5.594 | 5.754 | 8.327 | 6.134 | -26.3% |
Cash flow
|
|---|
| Capex | 1.981 | 1.546 | 3.089 | 7.155 | 2.927 | -59.1% |
Ratios
|
|---|
| Revenue growth | 5.6% | -3.4% | -4.4% | 24.2% | 4.8% | |
| EBITDA growth | -2,611.6% | 6.9% | 28.3% | 62.7% | 68.9% | |
| Gross Margin | 17.1% | 20.3% | 18.3% | 25.0% | 30.9% | 5.9% |
| EBITDA Margin | 8.8% | 9.7% | 13.0% | 17.1% | 27.5% | 10.4% |
| Net Income Margin | 3.0% | 4.1% | 5.9% | 8.5% | 15.0% | 6.5% |
| SG&A, % of revenue | | 10.6% | 12.2% | 13.1% | 9.1% | -4.0% |
| CAPEX, % of revenue | 4.7% | 3.8% | 7.9% | 14.8% | 5.8% | -9.0% |
| ROIC | 3.9% | 5.4% | 6.2% | 12.8% | 22.9% | 10.1% |
| ROE | 5.0% | 6.2% | 8.0% | 12.8% | 20.0% | 7.1% |
| Net Debt/EBITDA | 5.7x | 3.3x | 3.0x | 2.4x | 0.2x | -2.1x |
Reko International Group Inc ($REK) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 10 | 14 | 13 | 14 | -2.6% | 3.8% | -7.0% | 27.7% |
| EBITDA | 2 | 2 | 3 | 6 | 76.0% | 41.5% | 12.9% | 133.2% |
| Net Income | 1 | 1 | 1 | 4 | 229.5% | 122.7% | 24.5% | 75.5% |
Balance Sheet
|
|---|
| Cash | 3 | 2 | 4 | 5 | | | | 228.6% |
| Short Term Debt | 10 | 10 | 7 | 2 | -28.3% | -49.2% | -42.2% | -81.1% |
| Long Term Debt | 8 | 8 | 7 | 6 | 49.2% | 50.1% | -15.6% | -26.3% |
Ratios
|
|---|
| Gross Margin | 27.0% | 20.9% | 25.4% | 48.5% | 5.3% | 2.4% | -5.1% | 19.5% |
| EBITDA Margin | 22.1% | 17.5% | 22.3% | 46.1% | 9.9% | 4.7% | 3.9% | 20.8% |
| Net Income Margin | 11.7% | 8.5% | 8.8% | 29.6% | 8.2% | 4.5% | 2.2% | 8.1% |
Revenue and profitability
The company's Revenue increased on 4.8%. Revenue growth showed acceleration in FY16Q4 - it increased 27.7% 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 5.9 pp from 25.0% to 30.9% in FY2016. SG&A as a % of Revenue decreased on 4.0 pp from 13.1% to 9.1% in FY2016.
Net Income marign increased on 6.5 pp from 8.5% to 15.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Reko International Group Inc's CAPEX/Revenue was 5.8% in FY2016. Reko International Group Inc showed small growth in CAPEX/Revenue of 2.0 pp from 3.8% in FY2013 to 5.8% in FY2016. For the last three years the average CAPEX/Revenue was 9.5%.
Return on investment
The company operates at high and attractive ROIC (22.93%) while ROE is a bit lower (19.97%). ROIC surged on 10.1 pp from 12.8% to 22.9% in FY2016. ROE increased on 7.1 pp from 12.8% to 20.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 0.6x. Net Debt / EBITDA dropped on 2.1x from 2.4x to 0.2x in FY2016. Debt dropped on 59.5% while cash jumped on 229%.
Appendix 1: Peers in Industrial
Below we provide Reko International Group 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 |
|---|
