Leon's Furniture Ltd reports 5.7% EBITDA growth and almost no change in EBITDA Margin of 7.9%
23.02.2017 • About Leon's Furniture Ltd (
$LNF) • By InTwits
Leon's Furniture Ltd reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Leon's Furniture Ltd is a growth stock: FY2016 revenue growth was 5.5%, 5 year revenue CAGR was 25.7% at FY2016 ROIC 11.8%
- Leon's Furniture Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 52.2 in 2016, 31.7 in 2015, 58.0 in 2014, 41.5 in 2013, 13.2 in 2012
- The company has business model with average profitability: ROIC is at 11.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Leon's Furniture Ltd ($LNF) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 682 | 1,695 | 2,008 | 2,032 | 2,144 | 5.5% |
| Gross Profit | 283 | 735 | 877 | 886 | 915 | 3.3% |
| SG&A | 183 | 479 | 757 | 767 | 787 | 2.5% |
| EBITDA | 75 | 144 | 163 | 161 | 170 | 5.7% |
| Net Income | 47 | 68 | 76 | 77 | 84 | 9.1% |
Balance Sheet
|
|---|
| Cash | 75 | 6 | 46 | 8 | 44 | 459.7% |
| Short Term Debt | 0 | 68 | 32 | 52 | 26 | -49.1% |
| Long Term Debt | 0 | 433 | 391 | 343 | 319 | -7.0% |
Cash flow
|
|---|
| Capex | 18 | 19 | 17 | 23 | 26 | 12.9% |
Ratios
|
|---|
| Revenue growth | -0.1% | 148.4% | 18.5% | 1.2% | 5.5% | |
| EBITDA growth | -16.0% | 92.4% | 13.1% | -1.1% | 5.7% | |
| Gross Margin | 41.6% | 43.4% | 43.7% | 43.6% | 42.7% | -0.9% |
| EBITDA Margin | 11.0% | 8.5% | 8.1% | 7.9% | 7.9% | 0.0% |
| Net Income Margin | 6.9% | 4.0% | 3.8% | 3.8% | 3.9% | 0.1% |
| SG&A, % of revenue | 26.8% | 28.2% | 37.7% | 37.8% | 36.7% | -1.1% |
| CAPEX, % of revenue | 2.6% | 1.1% | 0.8% | 1.1% | 1.2% | 0.1% |
| ROIC | 13.7% | 13.8% | 10.9% | 10.9% | 11.8% | 0.9% |
| ROE | 10.7% | 14.4% | 14.4% | 13.3% | 13.3% | -0.1% |
| Net Debt/EBITDA | -1.0x | 3.4x | 2.3x | 2.4x | 1.8x | -0.6x |
Leon's Furniture Ltd ($LNF) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 463 | 516 | 576 | 588 | 7.9% | 4.7% | 4.9% | 5.0% |
| EBITDA | 7 | 37 | 60 | 65 | -62.8% | 4.5% | 15.1% | 23.2% |
| Net Income | -5 | 17 | 34 | 37 | -214.8% | 13.1% | 24.8% | 23.3% |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 21 | 44 | | | | 459.7% |
| Short Term Debt | 304 | 301 | 256 | 26 | 424.8% | 274.4% | 435.1% | -49.1% |
| Long Term Debt | 12 | 11 | 11 | 225 | -96.9% | -97.1% | -97.1% | -34.2% |
Ratios
|
|---|
| Gross Margin | 41.8% | 41.9% | 42.5% | 43.9% | -1.2% | -1.5% | -1.1% | -0.5% |
| EBITDA Margin | 1.6% | 7.2% | 10.4% | 11.0% | -3.1% | -0.0% | 0.9% | 1.6% |
| Net Income Margin | -1.0% | 3.3% | 5.9% | 6.3% | -2.0% | 0.2% | 0.9% | 0.9% |
Revenue and profitability
The company's Revenue increased on 5.5%. Revenue growth showed slow down in FY16Q4 - it was 5.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.91 pp from 9.4% to 10.4% in 2016.
Gross Margin decreased slightly on 0.92 pp from 43.6% to 42.7% in FY2016. SG&A as a % of Revenue decreased slightly on 1.1 pp from 37.8% to 36.7% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 1.2%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. It's average level of CAPEX/Revenue for the last three years was 1.0%.
Return on investment
The company operates at good ROE (13.27%) while ROIC is low (11.76%). ROIC increased slightly on 0.88 pp from 10.9% to 11.8% in FY2016. ROE showed almost no change in FY2016.
Leverage (Debt)
Debt level is 1.8x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 2.4x to 1.8x in FY2016. Debt dropped on 12.5% while cash surged on 460%.
Management team
The company's CEO is Terrence Thomas Leon "Terry". Terrence Thomas Leon "Terry" is a founder and has 13 years tenure at the company. Leon's Furniture Ltd's CFO Dominic Scarangella has spent 16 years at the company.
Appendix 1: Peers in Consumer, Cyclical
Below we provide Leon's Furniture Ltd benchmarking against other companies in Consumer, 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 |
|---|
| 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) | | 4.7% | 6.6% | 7.5% | 4.6% |
|---|
| Leon's Furniture Ltd ($LNF) | | 148.4% | 18.5% | 1.2% | 5.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Innova Gaming Group Inc ($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% | 30.8% | 31.9% | 30.6% | 33.5% |
|---|
| Leon's Furniture Ltd ($LNF) | 41.6% | 43.4% | 43.7% | 43.6% | 42.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Westshore Terminals Investment Corp ($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% | 10.2% | 12.4% | 11.0% | 15.4% |
|---|
| Leon's Furniture Ltd ($LNF) | 11.0% | 8.5% | 8.1% | 7.9% | 7.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Holloway Lodging Corp ($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 ($IGG) | 20.6% | 26.7% | 15.9% | 15.6% | 15.1% |
| Exchange Income Corp ($EIF) | 7.9% | 15.8% | 15.5% | 15.4% | 29.7% |
| |
|---|
| Median (41 companies) | 3.2% | 3.2% | 3.4% | 3.5% | 5.0% |
|---|
| Leon's Furniture Ltd ($LNF) | 2.6% | 1.1% | 0.8% | 1.1% | 1.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Spin Master Corp ($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% | 12.4% | 10.8% | 10.2% | 11.0% |
|---|
| Leon's Furniture Ltd ($LNF) | 13.7% | 13.8% | 10.9% | 10.9% | 11.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Holloway Lodging Corp ($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) | 2.1x | 2.5x | 2.4x | 2.6x | 2.1x |
|---|
| Leon's Furniture Ltd ($LNF) | -1.0x | 3.4x | 2.3x | 2.4x | 1.8x |
