Morguard Corp Net Income surged on 114% in 2016 and EBITDA Margin decreased slightly on 0.88 pp from 48.6% to 47.7%
23.02.2017 • About Morguard Corp (
$MRC) • By InTwits
Morguard Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Morguard Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 46.9%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 150 in 2016, 185 in 2015, 62.6 in 2014, 359 in 2013, 454 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.1%
- It operates with high leverage: Net Debt/EBITDA is 9.7x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Morguard Corp ($MRC) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 396.8 | 504.8 | 551.4 | 875.7 | 915.6 | 4.6% |
| Gross Profit | 293.6 | 353.0 | 378.4 | 670.1 | 691.5 | 3.2% |
| SG&A | | | | 72.6 | 86.6 | 19.3% |
| EBITDA | 182.8 | | 247.2 | 425.4 | 436.7 | 2.7% |
| Net Income | 389.4 | 286.4 | 136.7 | 80.5 | 172.7 | 114.5% |
Balance Sheet
|
|---|
| Cash | 79.1 | 129.4 | 123.1 | 93.5 | 241.5 | 158.3% |
| Short Term Debt | 414.7 | 557.8 | 323.4 | 376.9 | 752.2 | 99.6% |
| Long Term Debt | 1,297.3 | 1,710.2 | 3,305.3 | 3,656.3 | 3,723.8 | 1.8% |
Cash flow
|
|---|
| Capex | 453.5 | 359.4 | 62.6 | 185.1 | 149.6 | -19.2% |
Ratios
|
|---|
| Revenue growth | 5.3% | 27.2% | 9.2% | 58.8% | 4.6% | |
| EBITDA growth | 1.1% | | | 72.1% | 2.7% | |
| Gross Margin | 74.0% | 69.9% | 68.6% | 76.5% | 75.5% | -1.0% |
| EBITDA Margin | 46.1% | 0.0% | 44.8% | 48.6% | 47.7% | -0.9% |
| Net Income Margin | 98.1% | 56.7% | 24.8% | 9.2% | 18.9% | 9.7% |
| SG&A, % of revenue | | | | 8.3% | 9.5% | 1.2% |
| CAPEX, % of revenue | 114.3% | 71.2% | 11.4% | 21.1% | 16.3% | -4.8% |
| ROIC | 4.8% | 4.6% | 3.9% | 5.4% | 5.1% | -0.3% |
| ROE | 20.9% | 13.1% | 5.7% | 3.1% | 6.2% | 3.1% |
| Net Debt/EBITDA | 8.9x | | 14.2x | 9.3x | 9.7x | 0.4x |
Morguard Corp ($MRC) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 231 | 225 | 229 | 230 | 6.7% | 5.1% | 4.0% | 2.6% |
| Net Income | -7 | 82 | 63 | 35 | | 110.7% | 77.0% | 188.1% |
Balance Sheet
|
|---|
| Cash | 74 | 89 | 99 | 242 | -24.4% | 16.5% | 44.9% | 158.3% |
| Short Term Debt | 490 | 483 | 531 | 752 | 61.6% | 31.8% | 3.1% | 99.6% |
| Long Term Debt | 3,486 | 3,453 | 3,404 | 3,724 | 1.9% | 4.9% | 1.2% | 1.8% |
Ratios
|
|---|
| Gross Margin | 77.2% | 76.0% | 75.7% | 73.2% | 0.2% | -1.0% | -2.0% | -1.2% |
| Net Income Margin | -3.1% | 36.3% | 27.7% | 15.1% | -0.3% | 18.2% | 11.4% | 9.7% |
Revenue and profitability
The company's Revenue increased on 4.6%. Revenue growth showed slow down in 16Q4 - it was 2.6% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 45.8 pp from 4.1% to -41.7% in FY2016.
Gross Margin decreased slightly on 1.00 pp from 76.5% to 75.5% in 2016. SG&A as a % of Revenue increased slightly on 1.2 pp from 8.3% to 9.5% in 2016.
Net Income marign increased on 9.7 pp from 9.2% to 18.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Morguard Corp had CAPEX/Revenue of 16.3%. The company showed big decline in CAPEX/Revenue of 54.9 pp from 71.2% in 2013 to 16.3% in 2016. For the last three years the average CAPEX/Revenue was 16.3%.
Return on investment
The company operates at low ROIC (5.08%) and ROE (6.21%). ROIC showed almost no change in 2016. ROE increased on 3.1 pp from 3.1% to 6.2% in 2016.
Leverage (Debt)
Debt level is 9.7x Net Debt / EBITDA and 10.3x Debt / EBITDA. Net Debt / EBITDA jumped on 0.4x from 9.3x to 9.7x in 2016. Debt surged on 11.0% while cash jumped on 158%.
Management team
Kuldip Rai Sahi is a the company's CEO. Kuldip Rai Sahi is a founder and has spent 16 years at the company. The company's CFO is Paul Miatello. Paul Miatello has 11 years tenure at the company.
Appendix 1: Peers in Financial
Below you can find Morguard Corp benchmarking vs. other companies in Financial 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 |
|---|
| 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 ($GO) | | 13.7% | 34.6% | 86.0% | 14.6% |
| Terra Firma Capital Corp ($TII) | | 61.9% | 39.1% | 56.9% | |
| |
|---|
| Median (53 companies) | | 7.0% | 9.0% | 3.0% | 5.8% |
|---|
| Morguard Corp ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($OLY) | 80.9% | 82.6% | 83.2% | 84.5% | 83.5% |
| 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 ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| Onex Corp ($OCX) | 20.1% | 26.2% | 27.9% | 31.0% | 30.3% |
| |
|---|
| Median (8 companies) | 26.9% | 28.4% | 27.9% | 37.2% | 29.7% |
|---|
| Morguard Corp ($MRC) | 74.0% | 69.9% | 68.6% | 76.5% | 75.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firm Capital Mortgage Investment Corp ($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) | 39.5% | 33.5% | 38.2% | 30.0% | 42.2% |
|---|
| Morguard Corp ($MRC) | 46.1% | | 44.8% | 48.6% | 47.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dundee Corp ($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% |
|---|
| Morguard Corp ($MRC) | 114.3% | 71.2% | 11.4% | 21.1% | 16.3% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CI Financial Corp ($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) | 4.4% | 3.3% | 4.3% | 2.8% | 3.0% |
|---|
| Morguard Corp ($MRC) | 4.8% | 4.6% | 3.9% | 5.4% | 5.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Element Financial Corp ($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 | 4.6x | 4.5x | 5.6x | 6.0x |
|---|
| Morguard Corp ($MRC) | 8.9x | | 14.2x | 9.3x | 9.7x |
