Clarke Inc Net Income jumped on 330% in 2016 while Revenue decreased on 4.5%
23.02.2017 • About Clarke Inc (
$CKI) • By InTwits
Clarke Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Clarke Inc is a company in decline: 2016 revenue growth was -4.5%, 5 years revenue CAGR was -49.8%
- The company operates at negative EBITDA Margin: -4.6%
- Clarke Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: 0.061 in 2016, 0.14 in 2015, 0.15 in 2014, 0.72 in 2013, 2.3 in 2012
- The company has unprofitable business model: ROIC is at -0.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 7.3x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Clarke Inc ($CKI) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 58.270 | 8.248 | 8.514 | 7.303 | 6.971 | -4.5% |
| Gross Profit | 16.399 | 1.650 | 1.612 | 3.168 | 2.900 | -8.5% |
| SG&A | | | | 3.262 | 3.271 | 0.3% |
| EBITDA | 6.555 | -4.347 | 2.399 | -1.095 | -0.318 | |
| Net Income | -0.939 | 52.737 | 102.646 | -11.069 | 25.406 | |
Balance Sheet
|
|---|
| Cash | 2.092 | 1.568 | 79.061 | 42.130 | 6.770 | -83.9% |
| Short Term Debt | 31.098 | 47.400 | 0.644 | 0.644 | 0.644 | 0.0% |
| Long Term Debt | 19.851 | 66.123 | 2.363 | 1.719 | 1.075 | -37.5% |
Cash flow
|
|---|
| Capex | 2.306 | 0.722 | 0.150 | 0.135 | 0.061 | -54.8% |
Ratios
|
|---|
| Revenue growth | -73.4% | -85.8% | 3.2% | -14.2% | -4.5% | |
| EBITDA growth | | -166.3% | -155.2% | -145.6% | -71.0% | |
| Gross Margin | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% | -1.8% |
| EBITDA Margin | 11.2% | -52.7% | 28.2% | -15.0% | -4.6% | 10.4% |
| Net Income Margin | -1.6% | 639.4% | 1,205.6% | -151.6% | 364.5% | 516.0% |
| SG&A, % of revenue | | | | 44.7% | 46.9% | 2.3% |
| CAPEX, % of revenue | 4.0% | 8.8% | 1.8% | 1.8% | 0.9% | -1.0% |
| ROIC | 2.5% | -2.9% | 0.6% | -0.7% | -0.4% | 0.3% |
| ROE | -1.1% | 45.3% | 52.4% | -5.1% | 14.0% | 19.1% |
| Net Debt/EBITDA | 7.5x | | -31.7x | | | 0.0x |
Clarke Inc ($CKI) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 0 | 2 | 4 | 1 | -1.6% | -2.8% | 0.5% | -21.4% |
| EBITDA | -1 | 0 | 2 | -1 | | | 26.2% | |
| Net Income | -5 | 6 | 14 | 9 | -228.6% | | | 42.4% |
Balance Sheet
|
|---|
| Cash | 41 | 6 | 8 | 7 | -52.4% | -89.4% | -82.3% | -83.9% |
| Short Term Debt | 1 | 1 | 1 | 1 | 0.0% | 0.0% | 0.0% | 0.0% |
| Long Term Debt | 2 | 2 | 1 | 1 | -28.1% | -30.0% | -33.3% | -37.5% |
Ratios
|
|---|
| Gross Margin | -152.7% | 35.1% | 70.7% | 18.2% | -19.4% | -7.7% | -0.1% | -3.2% |
| EBITDA Margin | -357.4% | 4.3% | 56.8% | -116.8% | 214.8% | 14.5% | 11.5% | -88.9% |
| Net Income Margin | -1,215.2% | 369.4% | 374.8% | 854.5% | -2,145.0% | 477.2% | 888.8% | 383.1% |
Revenue and profitability
Clarke Inc's Revenue decreased on 4.5%. Revenue decline showed acceleration in 16Q4 - it was 21.4% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 10.4 pp from -15.0% to -4.6% in 2016.
Gross Margin decreased slightly on 1.8 pp from 43.4% to 41.6% in 2016. SG&A as a % of Revenue increased on 2.3 pp from 44.7% to 46.9% in 2016.
Net Income marign jumped on 516 pp from -152% to 364% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 0.88%. Clarke Inc showed decline in CAPEX/Revenue of 7.9 pp from 8.8% in 2013 to 0.88% in 2016. It's average CAPEX/Revenue for the last three years was 1.5%.
Return on investment
The company operates at negative ROIC (-0.40%) and low but positive ROE (13.99%). ROIC showed almost no change in 2016. ROE jumped on 19.1 pp from -5.1% to 14.0% in 2016.
Leverage (Debt)
Debt level is 7.3x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2016. Debt dropped on 27.3% while cash dropped on 83.9%.
Appendix 1: Peers in Financial
Below we provide Clarke 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% | 3.6% | 5.8% |
|---|
| Clarke Inc ($CKI) | | -85.8% | 3.2% | -14.2% | -4.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($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 ($SVI) | 18.2% | 22.6% | 18.3% | 52.4% | |
| Onex Corp ($OCX) | 20.1% | 26.2% | 27.9% | 31.0% | 30.3% |
| |
|---|
| Median (8 companies) | 37.0% | 41.5% | 28.6% | 41.7% | 29.7% |
|---|
| Clarke Inc ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firm Capital Mortgage Investment Corp ($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% |
|---|
| Clarke Inc ($CKI) | 11.2% | -52.7% | 28.2% | -15.0% | -4.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dundee Corp ($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% | 0.6% |
|---|
| Clarke Inc ($CKI) | 4.0% | 8.8% | 1.8% | 1.8% | 0.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CI Financial Corp ($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% | 4.3% | 4.3% | 3.5% | 3.2% |
|---|
| Clarke Inc ($CKI) | 2.5% | -2.9% | 0.6% | -0.7% | -0.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Element Financial Corp ($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 (28 companies) | 5.2x | 4.6x | 4.7x | 6.0x | 7.8x |
|---|
