Mainstreet Equity Corp Net Income dropped on 73.5% in 2016 and EBITDA Margin decreased on 4.1 pp from 58.4% to 54.3%
06.12.2016 • About Mainstreet Equity Corp (
$MEQ) • By InTwits
Mainstreet Equity Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Mainstreet Equity Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 73.3%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 5.7 in FY2016, 3.5 in FY2015, 1.9 in FY2014, 1.6 in FY2013, 1.5 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.6%
- It operates with high leverage: Net Debt/EBITDA is 13.8x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Mainstreet Equity Corp ($MEQ) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 66.8 | 78.2 | 90.4 | 100.4 | 100.3 | -0.1% |
| EBITDA | 38.3 | 44.0 | 51.4 | 58.6 | 54.4 | -7.1% |
| Net Income | 56.1 | 63.3 | 66.6 | 64.7 | 17.2 | -73.5% |
Balance Sheet
|
|---|
| Cash | 2.2 | 1.8 | 1.0 | 1.5 | 1.1 | -28.2% |
| Short Term Debt | 0.0 | 105.5 | 61.1 | 0.0 | 0.0 | |
| Long Term Debt | 511.0 | 452.0 | 540.9 | 651.3 | 754.6 | 15.9% |
Cash flow
|
|---|
| Capex | 77.4 | 48.7 | 68.6 | 56.5 | 56.5 | -0.0% |
Ratios
|
|---|
| Revenue growth | 17.4% | 17.0% | 15.7% | 11.0% | -0.1% | |
| EBITDA growth | 19.7% | 14.8% | 16.8% | 14.0% | -7.1% | |
| EBITDA Margin | 57.4% | 56.3% | 56.8% | 58.4% | 54.3% | -4.1% |
| Net Income Margin | 83.9% | 80.9% | 73.6% | 64.5% | 17.1% | -47.3% |
| CAPEX, % of revenue | 115.8% | 62.3% | 75.8% | 56.3% | 56.4% | 0.1% |
| ROIC | 4.0% | 4.0% | 4.1% | 4.2% | 3.6% | -0.6% |
| ROE | 13.9% | 13.6% | 12.6% | 10.9% | 2.8% | -8.1% |
| Net Debt/EBITDA | 13.3x | 12.6x | 11.7x | 11.1x | 13.8x | 2.8x |
Mainstreet Equity Corp ($MEQ) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 25 | 25 | 25 | 25 | 2.9% | 1.1% | -2.3% | -2.1% |
| EBITDA | 15 | 14 | 13 | 13 | 6.7% | 1.7% | -10.2% | -20.5% |
| Net Income | -8 | -27 | -0 | 53 | -284.6% | | | -26.6% |
Balance Sheet
|
|---|
| Cash | 3 | 41 | 1 | 1 | 81.5% | 1,573.6% | -92.2% | -28.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 659 | 700 | 706 | 755 | 17.8% | 9.0% | 5.1% | 15.9% |
Ratios
|
|---|
| EBITDA Margin | 59.2% | 55.1% | 53.9% | 51.1% | 2.1% | 0.3% | -4.7% | -11.8% |
| Net Income Margin | -33.4% | -107.2% | -1.1% | 211.2% | -52.0% | -96.0% | 36.1% | -70.6% |
Revenue and profitability
Mainstreet Equity Corp's Revenue showed almost no change in FY2016. Revenue decline showed acceleration in FY16Q4 - it was 2.1% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.1 pp from 58.4% to 54.3% in FY2016.
Net Income marign dropped on 47.3 pp from 64.5% to 17.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 56.4%. CAPEX/Revenue decreased on 6.0 pp from 62.3% in FY2013 to 56.4% in FY2016. For the last three years the average CAPEX/Revenue was 62.8%.Battling declining revenue the company made large investments to CAPEX (104% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.62%) and ROE (2.84%). ROIC decreased slightly on 0.62 pp from 4.2% to 3.6% in FY2016. ROE decreased on 8.1 pp from 10.9% to 2.8% in FY2016.
Leverage (Debt)
Debt level is 13.8x Net Debt / EBITDA and 13.9x Debt / EBITDA. Net Debt / EBITDA jumped on 2.8x from 11.1x to 13.8x in FY2016. Debt jumped on 15.9% while cash dropped on 28.2%.
Appendix 1: Peers in Financial
Below you can find Mainstreet Equity Corp benchmarking vs. other companies in Financial 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 |
|---|
| 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 |
|---|
