Transcontinental Inc reports 44.3% Net Income decline and 2.2 pp EBITDA Margin decline from 19.3% to 17.1%
06.12.2016 • About Transcontinental Inc (
$TCL.A) • By InTwits
Transcontinental Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 17.1% in FY2016, 19.3% in FY2015, 14.9% in FY2014, 7.9% in FY2013, 5.8% in FY2012
- Transcontinental Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 52.2 in 2016, 31.7 in 2015, 58.0 in 2014, 41.5 in 2013, 13.2 in 2012
- The company has highly profitable business model: ROIC is at 16.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Transcontinental Inc ($TCL.A) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 2,112 | 2,097 | 1,990 | 2,002 | 2,020 | 0.9% |
| Gross Profit | 358 | 339 | | | | |
| EBITDA | 123 | 167 | 297 | 387 | 346 | -10.7% |
| Net Income | -177 | -17 | 112 | 263 | 146 | -44.3% |
Balance Sheet
|
|---|
| Cash | 17 | 26 | 35 | 39 | 17 | -56.7% |
| Short Term Debt | 284 | 218 | 118 | 36 | 0 | -99.5% |
| Long Term Debt | 204 | 129 | 359 | 348 | 348 | 0.1% |
Cash flow
|
|---|
| Capex | 37 | 47 | 35 | 64 | 59 | -9.2% |
Ratios
|
|---|
| Revenue growth | 6.2% | -0.7% | -5.1% | 0.6% | 0.9% | |
| EBITDA growth | -61.6% | 35.1% | 78.3% | 30.3% | -10.7% | |
| Gross Margin | 16.9% | 16.1% | | | | 0.0% |
| EBITDA Margin | 5.8% | 7.9% | 14.9% | 19.3% | 17.1% | -2.2% |
| Net Income Margin | -8.4% | -0.8% | 5.6% | 13.1% | 7.2% | -5.9% |
| CAPEX, % of revenue | 1.8% | 2.2% | 1.8% | 3.2% | 2.9% | -0.3% |
| ROIC | -0.6% | 2.9% | 14.5% | 20.2% | 16.3% | -3.9% |
| ROE | -17.4% | -2.7% | 13.1% | 29.0% | 14.0% | -15.0% |
| Net Debt/EBITDA | 3.8x | 1.9x | 1.5x | 0.9x | 1.0x | 0.1x |
Transcontinental Inc ($TCL.A) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 499 | 497 | 468 | 556 | 1.9% | 1.4% | -2.9% | 2.9% |
| EBITDA | 85 | 51 | 97 | 113 | -2.7% | -53.8% | 2.3% | 18.3% |
| Net Income | 37 | 5 | 46 | 58 | -1.6% | -93.3% | 6.0% | -42.4% |
Balance Sheet
|
|---|
| Cash | 26 | 43 | 35 | 17 | 4.9% | 21.2% | -35.5% | -56.7% |
| Short Term Debt | 30 | 2 | 0 | 0 | -75.4% | -97.0% | -98.5% | -99.5% |
| Long Term Debt | 348 | 348 | 348 | 348 | -3.4% | 0.1% | 0.1% | 0.1% |
Ratios
|
|---|
| EBITDA Margin | 17.1% | 10.2% | 20.6% | 20.4% | -0.8% | -12.1% | 1.1% | 2.7% |
| Net Income Margin | 7.5% | 1.1% | 9.8% | 10.4% | -0.3% | -15.5% | 0.8% | -8.2% |
Revenue and profitability
Transcontinental Inc's Revenue increased slightly on 0.86%. Revenue growth showed acceleration in FY16Q4 - it increased 2.9% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.2 pp from 19.3% to 17.1% in FY2016.
Net Income marign decreased on 5.9 pp from 13.1% to 7.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 2.9%. Transcontinental Inc showed small growth in CAPEX/Revenue of 0.66 pp from 2.2% in FY2013 to 2.9% in FY2016. It's average CAPEX/Revenue for the last three years was 2.6%.
Return on investment
The company operates at good ROIC (16.33%) and ROE (14.03%). ROIC decreased on 3.9 pp from 20.2% to 16.3% in FY2016. ROE dropped on 15.0 pp from 29.0% to 14.0% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.0x and Debt / EBITDA is 1.0x. Net Debt / EBITDA increased on 0.1x from 0.9x to 1.0x in FY2016. Debt decreased on 9.4% while cash dropped on 56.7%.
Management team
Francois Olivier is a Transcontinental Inc's CEO. Francois Olivier is a founder and has spent 10 years at the company. Nelson Gentiletti is a Transcontinental Inc's CFO. Nelson Gentiletti has spent 6 years at the company.
Appendix 1: Peers in Consumer, Non-cyclical
Below you can find Transcontinental Inc benchmarking vs. other companies in Consumer, Non-cyclical 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 |
|---|
| Concordia Healthcare Corp ($CXR) | | | 159.5% | 275.7% | 107.0% |
| Heritage Global Inc ($HGP) | | -37.0% | 76.2% | 11.2% | 80.8% |
| EnerCare Inc ($ECI) | | 8.6% | 21.1% | 55.7% | 76.6% |
| CRH Medical Corp ($CRH) | | 12.5% | 56.0% | 284.2% | 70.2% |
| Nuvo Research Inc ($NRI) | | -25.3% | -29.1% | 57.0% | 31.9% |
| |
|---|
| Median (41 companies) | | 8.6% | 13.8% | 15.2% | 12.8% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cipher Pharmaceuticals Inc ($CPH) | | 99.5% | 98.3% | 92.7% | |
| Ritchie Bros Auctioneers Inc ($RBA) | 88.7% | 88.4% | 88.0% | 89.1% | 88.3% |
| Information Services Corp ($ISV) | 77.5% | 80.4% | 80.9% | 87.6% | 85.1% |
| Biosyent Inc ($RX) | 79.3% | 79.2% | 78.1% | 78.7% | |
| Concordia Healthcare Corp ($CXR) | | 79.4% | 86.0% | 76.1% | 72.9% |
| |
|---|
| Median (35 companies) | 32.5% | 37.1% | 35.7% | 35.7% | 31.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CRH Medical Corp ($CRH) | 21.0% | 24.5% | 29.1% | 44.1% | |
| Valeant Pharmaceuticals International Inc ($VRX) | 30.6% | 27.8% | 45.6% | 39.8% | 23.8% |
| Concordia Healthcare Corp ($CXR) | | 43.7% | 37.0% | 39.8% | -92.8% |
| Ritchie Bros Auctioneers Inc ($RBA) | 36.8% | 36.3% | 36.4% | 39.7% | 31.4% |
| EnerCare Inc ($ECI) | 52.8% | 51.0% | 45.5% | 39.3% | 26.6% |
| |
|---|
| Median (44 companies) | 9.2% | 12.4% | 13.4% | 11.8% | 10.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| ProMetic Life Sciences Inc ($PLI) | 2.1% | 33.6% | 34.6% | 23.3% | |
| EnerCare Inc ($ECI) | 25.7% | 26.5% | 23.6% | 20.7% | 15.5% |
| Black Diamond Group Ltd ($BDI) | 61.9% | 27.5% | 31.0% | 17.6% | |
| easyhome Ltd ($EH) | 32.2% | 25.6% | 21.6% | 16.9% | 12.7% |
| K-Bro Linen Inc ($KBL) | 10.0% | 19.0% | 11.4% | 16.6% | |
| |
|---|
| Median (43 companies) | 3.1% | 2.7% | 2.3% | 2.4% | 2.1% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Information Services Corp ($ISV) | 71.8% | 72.8% | 58.9% | 38.1% | 27.6% |
| Colliers International Group Inc ($CIG) | 10.5% | 11.2% | 15.2% | 10.9% | 26.1% |
| Nuvo Research Inc ($NRI) | -11.6% | -17.4% | -37.9% | 12.9% | 20.8% |
| International Road Dynamics Inc ($IRD) | 0.9% | 6.7% | 4.4% | 10.6% | 16.5% |
| Premium Brands Holdings Corp ($PBH) | 10.3% | 9.9% | 6.9% | 12.6% | 15.3% |
| |
|---|
| Median (44 companies) | 8.8% | 8.4% | 8.4% | 6.9% | 8.0% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Concordia Healthcare Corp ($CXR) | | -1.3x | 5.6x | 20.2x | |
| SunOpta Inc ($SOY) | 2.9x | 3.5x | 1.3x | 16.9x | 140.8x |
| Centric Health Corp ($CHH) | 5.6x | 10.2x | 11.2x | 15.6x | |
| Sienna Senior Living Inc ($SIA) | 9.5x | 11.8x | 9.2x | 9.1x | 9.1x |
| Valeant Pharmaceuticals International Inc ($VRX) | 9.5x | 10.4x | 4.0x | 7.3x | 12.7x |
| |
|---|
| Median (38 companies) | 2.8x | 2.3x | 3.4x | 2.5x | 2.8x |
|---|
