Tree Island Steel Ltd EBITDA jumped on 24.0% in 2016 and EBITDA Margin increased slightly on 1.8 pp from 7.4% to 9.2%
23.02.2017 • About Tree Island Steel Ltd (
$TSL) • By InTwits
Tree Island Steel Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 9.2% in 2016, 7.4% in 2015, 4.2% in 2014, 4.7% in 2013, 2.4% in 2012
- Tree Island Steel Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 6.3 in 2016, 6.3 in 2015, 1.5 in 2014, 0.51 in 2013, 0.35 in 2012
- The company has highly profitable business model: ROIC is at 15.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.4x while industry average is 2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tree Island Steel Ltd ($TSL) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 146.2 | 153.4 | 183.9 | 231.3 | 231.3 | -0.0% |
| Gross Profit | 16.1 | 17.3 | 19.3 | 32.1 | 37.4 | 16.5% |
| SG&A | 12.5 | 13.0 | 14.4 | 18.0 | 19.4 | 7.5% |
| EBITDA | 3.6 | 7.2 | 7.7 | 17.2 | 21.3 | 24.0% |
| Net Income | 10.4 | -0.7 | 1.0 | 16.1 | 13.6 | -16.0% |
Balance Sheet
|
|---|
| Cash | 2.4 | 1.3 | 2.3 | 1.3 | 1.4 | 1.9% |
| Short Term Debt | 12.5 | 18.3 | 32.5 | 30.8 | 33.3 | 8.1% |
| Long Term Debt | 29.7 | 28.2 | 13.0 | 21.9 | 18.3 | -16.7% |
Cash flow
|
|---|
| Capex | 0.3 | 0.5 | 1.5 | 6.3 | 6.3 | 0.7% |
Ratios
|
|---|
| Revenue growth | -2.5% | 4.9% | 19.9% | 25.7% | -0.0% | |
| EBITDA growth | 177.9% | 101.6% | 7.1% | 122.6% | 24.0% | |
| Gross Margin | 11.0% | 11.3% | 10.5% | 13.9% | 16.2% | 2.3% |
| EBITDA Margin | 2.4% | 4.7% | 4.2% | 7.4% | 9.2% | 1.8% |
| Net Income Margin | 7.1% | -0.4% | 0.5% | 7.0% | 5.9% | -1.1% |
| SG&A, % of revenue | 8.6% | 8.5% | 7.8% | 7.8% | 8.4% | 0.6% |
| CAPEX, % of revenue | 0.2% | 0.3% | 0.8% | 2.7% | 2.7% | 0.0% |
| ROIC | 0.7% | 5.9% | 5.8% | 13.9% | 15.7% | 1.8% |
| ROE | 52.2% | -2.5% | 2.7% | 31.7% | 21.5% | -10.2% |
| Net Debt/EBITDA | 11.1x | 6.3x | 5.6x | 3.0x | 2.4x | -0.6x |
Tree Island Steel Ltd ($TSL) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 62 | 65 | 58 | 46 | 5.4% | 15.6% | -6.0% | -15.4% |
| EBITDA | 7 | 8 | 6 | 1 | 50.6% | 55.0% | -8.3% | -22.2% |
| Net Income | 5 | 6 | 3 | -1 | 147.0% | 208.1% | -58.3% | -112.8% |
Balance Sheet
|
|---|
| Cash | 2 | 2 | 6 | 1 | 38.7% | -24.5% | 355.0% | 1.9% |
| Short Term Debt | 31 | 27 | 29 | 33 | -33.8% | -35.6% | -15.6% | 8.1% |
| Long Term Debt | 20 | 20 | 19 | 18 | 50.6% | 27.2% | 21.5% | -16.7% |
Ratios
|
|---|
| Gross Margin | 17.7% | 17.6% | 16.6% | 11.5% | 3.7% | 3.2% | 0.6% | 0.6% |
| EBITDA Margin | 11.2% | 11.5% | 9.6% | 2.9% | 3.4% | 2.9% | -0.2% | -0.2% |
| Net Income Margin | 8.4% | 9.7% | 4.7% | -1.5% | 4.8% | 6.1% | -5.8% | -11.7% |
Revenue and profitability
The company's Revenue showed almost no change in 2016. Revenue decline showed acceleration in 16Q4 - it was 15.4% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.8 pp from 7.4% to 9.2% in 2016.
Gross Margin increased on 2.3 pp from 13.9% to 16.2% in 2016. SG&A as a % of Revenue increased slightly on 0.59 pp from 7.8% to 8.4% in 2016.
Net Income marign decreased slightly on 1.1 pp from 7.0% to 5.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
Tree Island Steel Ltd's CAPEX/Revenue was 2.7% in 2016. CAPEX/Revenue increased on 2.4 pp from 0.33% in 2013 to 2.7% in 2016. It's average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at high and attractive ROE (21.47%) while ROIC is a bit lower (15.70%). ROIC increased slightly on 1.8 pp from 13.9% to 15.7% in 2016. ROE dropped on 10.2 pp from 31.7% to 21.5% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 2.4x. Net Debt / EBITDA dropped on 0.6x from 3.0x to 2.4x in 2016. Debt decreased on 2.2% while cash increased slightly on 1.9%.
Appendix 1: Peers in Industrial
Below we provide Tree Island Steel Ltd benchmarking against other companies in Industrial 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 |
|---|
| 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% | 9.9% | 7.7% | 3.2% |
|---|
| Tree Island Steel Ltd ($TSL) | | 4.9% | 19.9% | 25.7% | -0.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pure Technologies Ltd ($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% | 22.9% |
|---|
| Tree Island Steel Ltd ($TSL) | 11.0% | 11.3% | 10.5% | 13.9% | 16.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian National Railway Co ($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) | 10.5% | 8.4% | 8.6% | 9.5% | 11.1% |
|---|
| Tree Island Steel Ltd ($TSL) | 2.4% | 4.7% | 4.2% | 7.4% | 9.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newalta Corp ($NAL) | 21.7% | 34.5% | 35.1% | 42.0% | 9.6% |
| Cargojet Inc ($CJT.A) | 7.0% | 6.3% | 54.1% | 41.3% | |
| Algoma Central Corp ($ALC) | 15.9% | 7.3% | 5.0% | 27.4% | 58.2% |
| 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% |
| |
|---|
| Median (54 companies) | 3.2% | 3.7% | 4.4% | 3.9% | 4.8% |
|---|
| Tree Island Steel Ltd ($TSL) | 0.2% | 0.3% | 0.8% | 2.7% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($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% | 8.3% | 8.5% |
|---|
| Tree Island Steel Ltd ($TSL) | 0.7% | 5.9% | 5.8% | 13.9% | 15.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Conifex Timber Inc ($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 | 1.5x | 1.2x | 1.0x | 1.8x |
|---|
| Tree Island Steel Ltd ($TSL) | 11.1x | 6.3x | 5.6x | 3.0x | 2.4x |
