Brookfield Asset Management Inc Net Income dropped on 29.5% in 2016 and EBITDA Margin showed almost no change
09.02.2017 • About Brookfield Asset Management Inc (
$BAM.A) • By InTwits
Brookfield Asset Management Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company has potentially unprofitable business model: ROIC is at 3.4%
- It operates with high leverage: Net Debt/EBITDA is 9.7x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Brookfield Asset Management Inc ($BAM.A) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 18,766 | 20,093 | 18,364 | 19,913 | 24,411 | 22.6% |
| Gross Profit | 4,805 | 6,165 | 5,246 | 5,480 | 6,693 | 22.1% |
| EBITDA | 4,647 | 6,013 | 5,123 | 5,374 | 6,601 | 22.8% |
| Net Income | 1,380 | 2,120 | 3,110 | 2,341 | 1,651 | -29.5% |
Balance Sheet
|
|---|
| Cash | 2,850 | 3,663 | 3,160 | 2,774 | 4,299 | 55.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 46,022 | 48,739 | 56,309 | 61,614 | 68,456 | 11.1% |
Cash flow
|
|---|
| Capex | 3,565 | 1,374 | 1,098 | 1,114 | | -100.0% |
Ratios
|
|---|
| Revenue growth | 3.5% | 7.1% | -8.6% | 8.4% | 22.6% | |
| EBITDA growth | -23.2% | 29.4% | -14.8% | 4.9% | 22.8% | |
| Gross Margin | 25.6% | 30.7% | 28.6% | 27.5% | 27.4% | -0.1% |
| EBITDA Margin | 24.8% | 29.9% | 27.9% | 27.0% | 27.0% | 0.1% |
| Net Income Margin | 7.4% | 10.6% | 16.9% | 11.8% | 6.8% | -5.0% |
| CAPEX, % of revenue | 19.0% | 6.8% | 6.0% | 5.6% | | -5.6% |
| ROIC | 3.9% | 4.6% | 3.4% | 3.0% | 3.4% | 0.3% |
| ROE | 7.2% | 11.0% | 15.6% | 10.6% | 7.5% | -3.1% |
| Net Debt/EBITDA | 9.3x | 7.5x | 10.4x | 10.9x | 9.7x | -1.2x |
Brookfield Asset Management Inc ($BAM.A) key quoterly financial indicators
| mln. $ | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 5,218 | 5,973 | 6,285 | 6,935 | 18.7% | 21.3% | 24.3% | 25.2% |
| EBITDA | 1,547 | 1,618 | 1,675 | 1,761 | 13.7% | 24.6% | 29.7% | 23.8% |
| Net Income | 257 | 185 | 1,036 | 173 | -64.7% | -71.3% | 258.5% | -74.5% |
Balance Sheet
|
|---|
| Cash | 3,563 | 4,020 | 4,372 | 4,299 | 34.8% | 37.5% | 43.0% | 55.0% |
| Long Term Debt | 68,142 | 68,890 | 68,790 | 68,456 | 19.9% | 22.4% | 9.5% | 11.1% |
Ratios
|
|---|
| Gross Margin | 30.1% | 27.5% | 27.0% | 25.7% | -1.5% | 0.5% | 0.9% | -0.4% |
| EBITDA Margin | 29.6% | 27.1% | 26.7% | 25.4% | -1.3% | 0.7% | 1.1% | -0.3% |
| Net Income Margin | 4.9% | 3.1% | 16.5% | 2.5% | -11.7% | -10.0% | 10.8% | -9.7% |
Revenue and profitability
Brookfield Asset Management Inc's Revenue surged on 22.6%. Revenue growth showed acceleration in FY16Q4 - it increased 25.2% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.2 pp from 13.0% to 7.8% in 2016.
Gross Margin showed almost no change in FY2016.
Net Income marign decreased on 5.0 pp from 11.8% to 6.8% in FY2016.
Return on investment
The company operates at low ROIC (3.36%) and ROE (7.49%). ROIC showed almost no change in FY2016. ROE decreased on 3.1 pp from 10.6% to 7.5% in FY2016.
Leverage (Debt)
Debt level is 9.7x Net Debt / EBITDA and 10.4x Debt / EBITDA. Net Debt / EBITDA dropped on 1.2x from 10.9x to 9.7x in FY2016. Debt surged on 11.1% while cash jumped on 55.0%.
Management team
Brookfield Asset Management Inc's CEO is J Bruce Flatt. J Bruce Flatt has 16 years tenure at the company.
Appendix 1: Peers in Financial
Below we provide Brookfield Asset Management Inc benchmarking against other companies in Financial 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 |
|---|
| 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 ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
| |
|---|
| Median (53 companies) | | 7.5% | 9.1% | 3.0% | 5.1% |
|---|
| Brookfield Asset Management Inc ($BAM.A) | | 7.1% | -8.6% | 8.4% | 22.6% |
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 ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| |
|---|
| Median (8 companies) | 38.3% | 39.3% | 27.9% | 47.9% | 36.0% |
|---|
| Brookfield Asset Management Inc ($BAM.A) | 25.6% | 30.7% | 28.6% | 27.5% | 27.4% |
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 ($FN) | 67.8% | 76.5% | 77.1% | 74.6% | |
| |
|---|
| Median (36 companies) | 43.9% | 35.0% | 41.4% | 36.2% | 45.4% |
|---|
| Brookfield Asset Management Inc ($BAM.A) | 24.8% | 29.9% | 27.9% | 27.0% | 27.0% |
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 ($SVI) | 150.5% | 73.3% | 79.1% | 21.4% | |
| |
|---|
| Median (55 companies) | 0.5% | 0.5% | 0.6% | 0.7% | 0.7% |
|---|
| Brookfield Asset Management Inc ($BAM.A) | 19.0% | 6.8% | 6.0% | 5.6% | |
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 ($MIC) | 11.9% | 9.6% | 9.7% | 9.5% | 9.4% |
| |
|---|
| Median (55 companies) | 4.8% | 3.3% | 4.3% | 3.2% | 3.0% |
|---|
| Brookfield Asset Management Inc ($BAM.A) | 3.9% | 4.6% | 3.4% | 3.0% | 3.4% |
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 ($EQB) | 11.8x | 10.2x | 9.8x | 12.3x | 13.7x |
| |
|---|
| Median (27 companies) | 5.2x | 4.4x | 4.5x | 5.6x | 6.0x |
|---|
| Brookfield Asset Management Inc ($BAM.A) | 9.3x | 7.5x | 10.4x | 10.9x | 9.7x |
