Covalon Technologies Ltd revenue decline decelerated from 16.3% in FY2015 to 11.6% in FY2016
30.01.2017 • About Covalon Technologies Ltd (
$COV) • By InTwits
Covalon Technologies Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Covalon Technologies Ltd doesn't have a profitable business model yet: FY2016 ROIC is -57.3%
- The company operates at negative EBITDA Margin: -40.7%
- Covalon Technologies Ltd motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -15.1% for the sames years0
- Covalon Technologies Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 0.10 in FY2016, 0.17 in FY2015, 0.012 in FY2014, 0.084 in FY2013, 0.12 in FY2012
- The company has unprofitable business model: ROIC is at -57.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Covalon Technologies Ltd ($COV) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3.793 | 4.134 | 9.061 | 7.589 | 6.711 | -11.6% |
| Gross Profit | 1.465 | 2.089 | 6.583 | 4.756 | 4.151 | -12.7% |
| SG&A | | 2.243 | 3.149 | 4.188 | 5.421 | 29.5% |
| EBITDA | -3.533 | -0.692 | 2.739 | -0.517 | -2.732 | |
| Net Income | -3.991 | -0.993 | 2.402 | -0.942 | -3.095 | |
Balance Sheet
|
|---|
| Cash | 1.143 | 0.633 | 3.575 | 1.305 | 1.454 | 11.5% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.846 | 0.000 | -100.0% |
| Long Term Debt | 0.000 | 0.516 | 0.661 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.125 | 0.084 | 0.012 | 0.172 | 0.102 | -40.9% |
Ratios
|
|---|
| Revenue growth | 46.6% | 9.0% | 119.2% | -16.3% | -11.6% | |
| EBITDA growth | 8.6% | -80.4% | -495.9% | -118.9% | 428.9% | |
| Gross Margin | 38.6% | 50.5% | 72.6% | 62.7% | 61.9% | -0.8% |
| EBITDA Margin | -93.1% | -16.7% | 30.2% | -6.8% | -40.7% | -33.9% |
| Net Income Margin | -105.2% | -24.0% | 26.5% | -12.4% | -46.1% | -33.7% |
| SG&A, % of revenue | | 54.3% | 34.8% | 55.2% | 80.8% | 25.6% |
| CAPEX, % of revenue | 3.3% | 2.0% | 0.1% | 2.3% | 1.5% | -0.8% |
| ROIC | -75.8% | -30.1% | 50.6% | -12.4% | -57.3% | -44.9% |
| ROE | -77.9% | -32.1% | 56.7% | -18.3% | -72.0% | -53.8% |
| Net Debt/EBITDA | | | -1.1x | | | 0.0x |
Covalon Technologies Ltd ($COV) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 1 | 3 | 1 | 82.6% | -63.4% | 31.7% | -58.4% |
| EBITDA | 0 | -1 | -0 | -2 | | -359.0% | | |
| Net Income | 0 | -1 | -0 | -2 | | -503.1% | | |
Balance Sheet
|
|---|
| Cash | 1 | 0 | 1 | 1 | -73.9% | -83.9% | -79.6% | 11.5% |
| Short Term Debt | 1 | 1 | 0 | 0 | | | | -100.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | -100.0% | -100.0% | -100.0% | |
Ratios
|
|---|
| Gross Margin | 66.4% | 60.4% | 64.2% | 42.7% | 1.9% | -6.8% | 4.1% | -16.5% |
| EBITDA Margin | 15.8% | -119.6% | -2.2% | -240.9% | 26.1% | -136.5% | 0.1% | -207.4% |
| Net Income Margin | 11.0% | -133.6% | -6.0% | -245.1% | 28.1% | -145.7% | 0.5% | -204.7% |
Revenue and profitability
The company's Revenue dropped on 11.6%. Revenue decline showed acceleration in FY16Q4 - it was 58.4% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 33.9 pp from -6.8% to -40.7% in FY2016.
Gross Margin decreased slightly on 0.82 pp from 62.7% to 61.9% in FY2016. SG&A as a % of Revenue jumped on 25.6 pp from 55.2% to 80.8% in FY2016.
Net Income marign dropped on 33.7 pp from -12.4% to -46.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 1.5% in FY2016. The company showed small CAPEX/Revenue decline of 0.53 pp from 2.0% in FY2013 to 1.5% in FY2016. It's average level of CAPEX/Revenue for the last three years was 1.3%.
Return on investment
The company operates at negative ROIC (-57.25%) and ROE (-72.03%). ROIC dropped on 44.9 pp from -12.4% to -57.3% in FY2016. ROE dropped on 53.8 pp from -18.3% to -72.0% in FY2016.
Leverage (Debt)
The company paid down all the debt in FY2016. Cash surged on 11.5%.
Appendix 1: Peers in Consumer, Non-cyclical
Below we provide Covalon Technologies Ltd benchmarking against other companies in Consumer, Non-cyclical 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 |
|---|
| 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 |
|---|
