Algoma Central Corp reports 94.9% CAPEX growth while 8.2% Revenue decline
22.02.2017 • About Algoma Central Corp (
$ALC) • By InTwits
Algoma Central Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Algoma Central Corp is a company in decline: 2016 revenue growth was -8.2%, 5 years revenue CAGR was -8.2%
- Algoma Central Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 22.8%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: 221 in 2016, 113 in 2015, 23.7 in 2014, 35.8 in 2013, 84.0 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.1x while industry average is 2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Algoma Central Corp ($ALC) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 527.9 | 491.5 | 473.4 | 413.5 | 379.4 | -8.2% |
| Gross Profit | 97.4 | 76.8 | 76.6 | 86.3 | 98.6 | 14.3% |
| SG&A | | | | 26.3 | 29.7 | 13.0% |
| EBITDA | 110.7 | 94.9 | 92.0 | 72.6 | 52.6 | -27.5% |
| Net Income | 42.2 | 41.9 | 52.8 | 25.8 | 33.3 | 29.3% |
Balance Sheet
|
|---|
| Cash | 124.5 | 216.1 | 256.9 | 210.6 | 130.0 | -38.2% |
| Short Term Debt | 4.8 | 4.6 | 0.0 | 1.4 | 0.0 | -100.0% |
| Long Term Debt | 221.0 | 222.6 | 223.8 | 242.5 | 240.6 | -0.8% |
Cash flow
|
|---|
| Capex | 84.0 | 35.8 | 23.7 | 113.3 | 220.8 | 94.9% |
Ratios
|
|---|
| Revenue growth | -9.4% | -6.9% | -3.7% | -12.7% | -8.2% | |
| EBITDA growth | -18.6% | -14.3% | -3.1% | -21.1% | -27.5% | |
| Gross Margin | 18.5% | 15.6% | 16.2% | 20.9% | 26.0% | 5.1% |
| EBITDA Margin | 21.0% | 19.3% | 19.4% | 17.6% | 13.9% | -3.7% |
| Net Income Margin | 8.0% | 8.5% | 11.1% | 6.2% | 8.8% | 2.5% |
| SG&A, % of revenue | | | | 6.4% | 7.8% | 1.5% |
| CAPEX, % of revenue | 15.9% | 7.3% | 5.0% | 27.4% | 58.2% | 30.8% |
| ROIC | 8.9% | 6.2% | 6.1% | 3.1% | 0.6% | -2.5% |
| ROE | 8.7% | 7.9% | 9.0% | 4.2% | 5.3% | 1.1% |
| Net Debt/EBITDA | 0.9x | 0.1x | -0.4x | 0.5x | 2.1x | 1.6x |
Algoma Central Corp ($ALC) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 40 | 96 | 115 | 127 | -7.8% | -23.2% | -7.8% | 33.8% |
| EBITDA | -7 | 24 | 41 | -5 | | -34.6% | 35.3% | -126.0% |
| Net Income | -7 | 13 | 39 | -12 | | -43.2% | 159.4% | -211.0% |
Balance Sheet
|
|---|
| Cash | 150 | 22 | 116 | 130 | -37.7% | -89.0% | -43.4% | -38.2% |
| Short Term Debt | 302 | 1 | 0 | 0 | | | -100.0% | -100.0% |
| Long Term Debt | 0 | 237 | 238 | 241 | -100.0% | 2.4% | -0.2% | -0.8% |
Ratios
|
|---|
| Gross Margin | -45.0% | 31.5% | 35.1% | 36.1% | -12.2% | 8.4% | 5.2% | 10.8% |
| EBITDA Margin | -17.6% | 24.5% | 35.5% | -3.8% | 33.2% | -4.3% | 11.3% | -23.2% |
| Net Income Margin | -16.5% | 13.8% | 33.4% | -9.2% | 35.8% | -4.8% | 21.5% | -20.3% |
Revenue and profitability
Algoma Central Corp's Revenue decreased on 8.2%. Annual revenue decline showed slowdown in 16Q4 - revenue jumped on 33.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.3 pp from -7.1% to -0.78% in 2016.
Gross Margin increased on 5.1 pp from 20.9% to 26.0% in 2016. SG&A as a % of Revenue increased slightly on 1.5 pp from 6.4% to 7.8% in 2016.
Net Income marign increased on 2.5 pp from 6.2% to 8.8% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Algoma Central Corp had CAPEX/Revenue of 58.2%. CAPEX/Revenue surged on 50.9 pp from 7.3% in 2013 to 58.2% in 2016. For the last three years the average CAPEX/Revenue was 30.2%.The company has spent a lot to CAPEX (420% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (0.63%) and ROE (5.29%). ROIC decreased on 2.5 pp from 3.1% to 0.63% in 2016. ROE increased slightly on 1.1 pp from 4.2% to 5.3% in 2016.
Leverage (Debt)
Debt level is 2.1x Net Debt / EBITDA and 4.6x Debt / EBITDA. Net Debt / EBITDA surged on 1.6x from 0.5x to 2.1x in 2016. Debt decreased slightly on 1.4% while cash dropped on 38.2%.
Appendix 1: Peers in Industrial
Below you can find Algoma Central Corp benchmarking vs. other companies in Industrial 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 |
|---|
| 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 (51 companies) | | 5.3% | 10.4% | 8.5% | 3.2% |
|---|
| Algoma Central Corp ($ALC) | | -6.9% | -3.7% | -12.7% | -8.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pure Technologies Ltd ($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 (49 companies) | 23.9% | 24.0% | 21.9% | 21.9% | 22.1% |
|---|
| Algoma Central Corp ($ALC) | 18.5% | 15.6% | 16.2% | 20.9% | 26.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian National Railway Co ($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 (53 companies) | 10.2% | 8.3% | 8.0% | 7.8% | 11.0% |
|---|
| Algoma Central Corp ($ALC) | 21.0% | 19.3% | 19.4% | 17.6% | 13.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newalta Corp ($NAL) | 21.7% | 34.5% | 35.1% | 42.0% | 9.6% |
| Cargojet Inc ($CJT.A) | 7.0% | 6.3% | 54.1% | 41.3% | |
| Canadian Pacific Railway Ltd ($CP) | 20.2% | 20.2% | 21.9% | 22.7% | 19.0% |
| Canadian National Railway Co ($CNR) | 17.4% | 18.7% | 18.9% | 21.5% | 22.4% |
| ENTREC Corp ($ENT) | 35.0% | 26.7% | 29.5% | 18.0% | |
| |
|---|
| Median (54 companies) | 3.2% | 3.6% | 4.3% | 3.7% | 3.9% |
|---|
| Algoma Central Corp ($ALC) | 15.9% | 7.3% | 5.0% | 27.4% | 58.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($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 (55 companies) | 12.2% | 9.7% | 11.5% | 8.9% | 9.7% |
|---|
| Algoma Central Corp ($ALC) | 8.9% | 6.2% | 6.1% | 3.1% | 0.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Conifex Timber Inc ($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 (49 companies) | 1.5x | 1.6x | 1.3x | 1.0x | 1.8x |
|---|
| Algoma Central Corp ($ALC) | 0.9x | 0.1x | -0.4x | 0.5x | 2.1x |
