Exchange Income Corp reports 113% CAPEX growth and 10.4% Revenue growth
22.02.2017 • About Exchange Income Corp (
$EIF) • By InTwits
Exchange Income Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Exchange Income Corp is a growth stock: 2016 revenue growth was 10.4%, 5 year revenue CAGR was 11.8% at 2016 ROIC 10.5%
- EBITDA Margin is expanding: 23.9% in 2016 vs. 22.2% in 2015 vs. 11.8% in 2012
- Exchange Income Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.9%. At the same time it's a lot of higher than industry average of 7.8%.
- CAPEX is quite volatile: 265 in 2016, 124 in 2015, 84.1 in 2014, 80.3 in 2013, 63.3 in 2012
- The company has business model with average profitability: ROIC is at 10.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.0x while industry average is 2.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Exchange Income Corp ($EIF) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 800.6 | 509.1 | 542.5 | 807.4 | 891.0 | 10.4% |
| Gross Profit | 328.0 | 151.0 | 169.8 | 286.2 | 335.9 | 17.4% |
| SG&A | | | | 106.9 | 123.3 | 15.3% |
| EBITDA | 94.5 | 85.6 | 97.6 | 179.2 | 212.6 | 18.6% |
| Net Income | 25.4 | 9.0 | 8.3 | 40.2 | 61.5 | 52.8% |
Balance Sheet
|
|---|
| Cash | 4.2 | 23.2 | 15.0 | 15.5 | 26.5 | 71.0% |
| Short Term Debt | 1.4 | 5.7 | 1.1 | 1.0 | 1.1 | 3.7% |
| Long Term Debt | 238.8 | 434.5 | 271.7 | 507.8 | 657.6 | 29.5% |
Cash flow
|
|---|
| Capex | 63.3 | 80.3 | 84.1 | 124.1 | 264.7 | 113.2% |
Ratios
|
|---|
| Revenue growth | 56.9% | -36.4% | 6.6% | 48.8% | 10.4% | |
| EBITDA growth | 26.3% | -9.4% | 14.0% | 83.6% | 18.6% | |
| Gross Margin | 41.0% | 29.7% | 31.3% | 35.4% | 37.7% | 2.3% |
| EBITDA Margin | 11.8% | 16.8% | 18.0% | 22.2% | 23.9% | 1.7% |
| Net Income Margin | 3.2% | 1.8% | 1.5% | 5.0% | 6.9% | 1.9% |
| SG&A, % of revenue | | | | 13.2% | 13.8% | 0.6% |
| CAPEX, % of revenue | 7.9% | 15.8% | 15.5% | 15.4% | 29.7% | 14.3% |
| ROIC | 12.2% | 5.8% | 6.4% | 11.5% | 10.5% | -1.0% |
| ROE | 10.1% | 3.0% | 2.7% | 10.8% | 13.2% | 2.4% |
| Net Debt/EBITDA | 2.5x | 4.9x | 2.6x | 2.8x | 3.0x | 0.2x |
Exchange Income Corp ($EIF) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 218 | 227 | 225 | 222 | 25.3% | 15.6% | 5.6% | -1.3% |
| EBITDA | 44 | 57 | 60 | 51 | 42.6% | 18.5% | 11.0% | 11.4% |
| Net Income | 10 | 17 | 21 | 14 | 957.1% | 28.5% | 28.8% | 39.3% |
Balance Sheet
|
|---|
| Cash | 29 | 16 | 16 | 26 | -57.0% | -53.3% | -54.9% | 71.0% |
| Short Term Debt | 1 | 1 | 1 | 1 | -9.7% | -95.6% | -2.8% | 3.7% |
| Long Term Debt | 560 | 537 | 598 | 658 | 0.6% | -1.0% | 12.9% | 29.5% |
Ratios
|
|---|
| Gross Margin | 34.2% | 38.5% | 40.7% | 37.2% | 1.6% | 0.4% | 2.9% | 4.2% |
| EBITDA Margin | 20.3% | 25.1% | 26.7% | 23.1% | 2.5% | 0.6% | 1.3% | 2.6% |
| Net Income Margin | 4.5% | 7.6% | 9.2% | 6.2% | 4.0% | 0.8% | 1.7% | 1.8% |
Revenue and profitability
Exchange Income Corp's Revenue jumped on 10.4%. Revenue growth showed slow down in 16Q4 - it was -1.3% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 75.1 pp from 27.7% to -47.4% in 2016.
Gross Margin increased on 2.3 pp from 35.4% to 37.7% in 2016. SG&A as a % of Revenue increased slightly on 0.59 pp from 13.2% to 13.8% in 2016.
Net Income marign increased slightly on 1.9 pp from 5.0% to 6.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
Exchange Income Corp's CAPEX/Revenue was 29.7% in 2016. Exchange Income Corp showed fast CAPEX/Revenue growth of 13.9 pp from 15.8% in 2013 to 29.7% in 2016. For the last three years the average CAPEX/Revenue was 20.2%.The company has spent a lot to CAPEX (125% of EBITDA) to secure its growth.
Return on investment
The company operates at good ROE (13.18%) while ROIC is low (10.49%). ROIC decreased slightly on 1.0 pp from 11.5% to 10.5% in 2016. ROE increased on 2.4 pp from 10.8% to 13.2% in 2016.
Leverage (Debt)
Debt level is 3.0x Net Debt / EBITDA and 3.1x Debt / EBITDA. Net Debt / EBITDA surged on 0.2x from 2.8x to 3.0x in 2016. Debt surged on 29.5% while cash jumped on 71.0%.
Management team
Exchange Income Corp's CEO is Michael Pyle. Michael Pyle is a founder and has 9 years tenure at the company. The company's CFO Tamara Schock has spent 3 years at the company.
Appendix 1: Peers in Consumer, Cyclical
Below you can find Exchange Income Corp benchmarking vs. other companies in Consumer, 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 |
|---|
| New Flyer Industries Inc ($NFI) | | 38.6% | 21.0% | 6.1% | 47.8% |
| Hardwoods Distribution Inc ($HWD) | | 21.3% | 22.8% | 25.4% | 38.1% |
| Spin Master Corp ($TOY) | | 21.5% | 41.0% | 22.9% | 31.3% |
| Great Canadian Gaming Corp ($GC) | | -0.3% | 9.6% | 3.7% | 22.4% |
| CanWel Building Materials Group Ltd ($CWX) | | 2.1% | 4.6% | 8.6% | 18.6% |
| |
|---|
| Median (35 companies) | | 5.2% | 7.2% | 6.1% | 4.6% |
|---|
| Exchange Income Corp ($EIF) | | -36.4% | 6.6% | 48.8% | 10.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Innova Gaming Group Inc ($IGG) | 89.3% | 82.4% | 85.3% | 92.9% | 88.1% |
| Second Cup Ltd/The ($SCU) | 86.6% | 85.1% | 72.7% | 81.1% | |
| New Look Vision Group Inc ($BCI) | 71.8% | 72.6% | 72.6% | 78.7% | |
| Cara Operations Ltd ($CAO) | | 79.2% | 78.9% | 78.4% | |
| Canlan Ice Sports Corp ($ICE) | 71.6% | 69.7% | 70.7% | 78.2% | |
| |
|---|
| Median (36 companies) | 34.1% | 34.2% | 33.5% | 30.6% | 33.5% |
|---|
| Exchange Income Corp ($EIF) | 41.0% | 29.7% | 31.3% | 35.4% | 37.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Westshore Terminals Investment Corp ($WTE) | 49.7% | 65.9% | 60.9% | 59.6% | |
| Gamehost Inc ($GH) | 46.1% | 45.7% | 45.9% | 42.8% | 42.6% |
| Great Canadian Gaming Corp ($GC) | 16.8% | 41.1% | 40.1% | 36.6% | 34.4% |
| Restaurant Brands International Inc ($QSR) | | 51.1% | 20.8% | 33.9% | 44.4% |
| Cara Operations Ltd ($CAO) | | 9.6% | 22.6% | 32.6% | |
| |
|---|
| Median (38 companies) | 8.0% | 9.8% | 12.2% | 10.0% | 15.0% |
|---|
| Exchange Income Corp ($EIF) | 11.8% | 16.8% | 18.0% | 22.2% | 23.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Holloway Lodging Corp ($HLC) | 8.2% | 6.7% | 14.8% | 26.7% | 9.3% |
| WestJet Airlines Ltd ($WJA) | 7.9% | 19.5% | 18.6% | 22.5% | 22.4% |
| Westshore Terminals Investment Corp ($WTE) | 25.7% | 11.5% | 6.2% | 21.2% | |
| Innova Gaming Group Inc ($IGG) | 20.6% | 26.7% | 15.9% | 15.6% | 15.1% |
| Chorus Aviation Inc ($CHR.A) | 9.9% | 9.6% | 3.9% | 15.0% | 34.2% |
| |
|---|
| Median (41 companies) | 2.7% | 2.9% | 3.3% | 3.2% | 4.9% |
|---|
| Exchange Income Corp ($EIF) | 7.9% | 15.8% | 15.5% | 15.4% | 29.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Spin Master Corp ($TOY) | | 19.2% | 56.9% | 48.2% | 44.5% |
| Magna International Inc ($MG) | 16.3% | 18.6% | 25.2% | 21.9% | 21.2% |
| Linamar Corp ($LNR) | 12.9% | 17.0% | 21.7% | 23.7% | 19.8% |
| Sleep Country Canada Holdings Inc ($ZZZ) | | | 9.7% | 12.7% | 19.0% |
| Air Canada ($AC) | | 37.0% | 23.2% | 28.4% | 18.8% |
| |
|---|
| Median (41 companies) | 10.2% | 12.6% | 10.9% | 10.2% | 11.4% |
|---|
| Exchange Income Corp ($EIF) | 12.2% | 5.8% | 6.4% | 11.5% | 10.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Holloway Lodging Corp ($HLC) | | 5.8x | 8.4x | 17.1x | 8.6x |
| AutoCanada Inc ($ACQ) | 4.2x | 4.7x | 6.4x | 8.0x | 13.7x |
| Second Cup Ltd/The ($SCU) | 1.0x | 0.6x | 0.0x | 7.5x | 0.0x |
| Amaya Inc ($AYA) | 17.9x | 1.8x | 13.5x | 6.6x | 5.0x |
| Performance Sports Group Ltd ($PSG) | 2.6x | 3.5x | 12.2x | 6.5x | |
| |
|---|
| Median (34 companies) | 1.7x | 2.5x | 2.3x | 2.4x | 1.9x |
|---|
| Exchange Income Corp ($EIF) | 2.5x | 4.9x | 2.6x | 2.8x | 3.0x |
