Morneau Shepell Inc Debt dropped on 21.3% in 2016 and Net Debt / EBITDA dropped on 1.6x from 4.2x to 2.6x
02.03.2017 • About Morneau Shepell Inc (
$MSI) • By InTwits
Morneau Shepell Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Morneau Shepell Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 9.2 in 2016, 10.7 in 2015, 19.7 in 2014, 9.7 in 2013, 4.3 in 2012
- The company has business model with low profitability: ROIC is at 8.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Morneau Shepell Inc ($MSI) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 419.3 | 471.2 | 535.9 | 567.3 | 592.1 | 4.4% |
| SG&A | 46.0 | 50.6 | 58.4 | 61.1 | 68.7 | 12.4% |
| EBITDA | 67.1 | 76.3 | 83.9 | 72.0 | 88.2 | 22.4% |
| Net Income | 21.0 | 10.4 | 25.1 | 16.4 | 26.0 | 58.4% |
Balance Sheet
|
|---|
| Cash | 14.2 | 16.0 | 13.1 | 14.3 | 17.2 | 19.9% |
| Short Term Debt | 0.1 | 5.2 | 7.7 | 2.5 | 3.1 | 23.2% |
| Long Term Debt | 224.2 | 247.7 | 297.7 | 315.6 | 247.4 | -21.6% |
Cash flow
|
|---|
| Capex | 4.3 | 9.7 | 19.7 | 10.7 | 9.2 | -14.2% |
Ratios
|
|---|
| Revenue growth | 14.9% | 12.4% | 13.7% | 5.9% | 4.4% | |
| EBITDA growth | -3.5% | 13.7% | 9.9% | -14.1% | 22.4% | |
| EBITDA Margin | 16.0% | 16.2% | 15.6% | 12.7% | 14.9% | 2.2% |
| Net Income Margin | 5.0% | 2.2% | 4.7% | 2.9% | 4.4% | 1.5% |
| SG&A, % of revenue | 11.0% | 10.7% | 10.9% | 10.8% | 11.6% | 0.8% |
| CAPEX, % of revenue | 1.0% | 2.0% | 3.7% | 1.9% | 1.6% | -0.3% |
| ROIC | 7.1% | 5.2% | 7.8% | 5.9% | 8.0% | 2.1% |
| ROE | 6.0% | 3.1% | 7.8% | 5.3% | 7.9% | 2.6% |
| Net Debt/EBITDA | 3.1x | 3.1x | 3.5x | 4.2x | 2.6x | -1.6x |
Morneau Shepell Inc ($MSI) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 149 | 149 | 145 | 149 | 7.8% | 4.8% | 2.7% | 2.3% |
| EBITDA | 23 | 25 | 19 | 21 | -2.9% | 3.2% | 158.4% | 25.9% |
| Net Income | 7 | 8 | 5 | 6 | -14.2% | -12.8% | | 133.7% |
Balance Sheet
|
|---|
| Cash | 13 | 14 | 14 | 17 | -16.2% | 20.6% | 14.1% | 19.9% |
| Short Term Debt | 75 | 5 | 0 | 3 | 1,001.2% | -33.8% | -99.6% | 23.2% |
| Long Term Debt | 242 | 262 | 253 | 247 | -20.3% | -19.1% | -22.2% | -21.6% |
Ratios
|
|---|
| EBITDA Margin | 15.1% | 17.1% | 13.2% | 14.1% | -1.7% | -0.3% | 8.0% | 2.6% |
| Net Income Margin | 4.7% | 5.4% | 3.6% | 3.8% | -1.2% | -1.1% | 6.1% | 2.1% |
Revenue and profitability
The company's Revenue increased on 4.4%. Revenue growth showed slow down in 16Q4 - it was 2.3% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 38.1 pp from 69.7% to 108% in 2016.
SG&A as a % of Revenue increased slightly on 0.83 pp from 10.8% to 11.6% in 2016.
Net Income marign increased slightly on 1.5 pp from 2.9% to 4.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 1.6%. CAPEX/Revenue showed almost no change from 2013 to 2016. It's average level of CAPEX/Revenue for the last three years was 2.4%.
Return on investment
The company operates at low ROIC (8.03%) and ROE (7.90%). ROIC increased on 2.1 pp from 5.9% to 8.0% in 2016. ROE increased on 2.6 pp from 5.3% to 7.9% in 2016.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and 2.8x Debt / EBITDA. Net Debt / EBITDA dropped on 1.6x from 4.2x to 2.6x in 2016. Debt dropped on 21.3% while cash jumped on 19.9%.
Management team
Alan D Torrie is a the company's CEO. Alan D Torrie is a founder and has spent 9 years at the company. The company's CFO Scott Milligan has spent 9 years at the company.
Appendix 1: Peers in Consumer, Non-cyclical
Below you can find Morneau Shepell Inc benchmarking vs. other companies in Consumer, Non-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 |
|---|
| Concordia Healthcare Corp ($CXR) | | | 159.5% | 275.7% | 107.0% |
| Heritage Global Inc ($HGP) | | -37.0% | 76.2% | 11.2% | 80.8% |
| EnerCare Inc ($ECI) | | 8.6% | 21.1% | 55.7% | 76.6% |
| CRH Medical Corp ($CRH) | | 12.5% | 56.0% | 284.2% | 70.2% |
| Nuvo Research Inc ($NRI) | | -25.3% | -29.1% | 57.0% | 31.9% |
| |
|---|
| Median (40 companies) | | 8.5% | 13.9% | 15.6% | 12.8% |
|---|
| Morneau Shepell Inc ($MSI) | | 12.4% | 13.7% | 5.9% | 4.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cipher Pharmaceuticals Inc ($CPH) | | 99.5% | 98.3% | 92.7% | |
| Ritchie Bros Auctioneers Inc ($RBA) | 88.7% | 88.4% | 88.0% | 89.1% | 88.3% |
| Information Services Corp ($ISV) | 77.5% | 80.4% | 80.9% | 87.6% | 85.1% |
| Biosyent Inc ($RX) | 79.3% | 79.2% | 78.1% | 78.7% | |
| Concordia Healthcare Corp ($CXR) | | 79.4% | 86.0% | 76.1% | 72.9% |
| |
|---|
| Median (35 companies) | 32.5% | 37.1% | 35.7% | 35.7% | 31.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CRH Medical Corp ($CRH) | 21.0% | 24.5% | 29.1% | 44.1% | |
| Valeant Pharmaceuticals International Inc ($VRX) | 30.6% | 27.8% | 45.6% | 39.8% | 23.8% |
| Concordia Healthcare Corp ($CXR) | | 43.7% | 37.0% | 39.8% | -92.8% |
| Ritchie Bros Auctioneers Inc ($RBA) | 36.8% | 36.3% | 36.4% | 39.7% | 31.4% |
| EnerCare Inc ($ECI) | 52.8% | 51.0% | 45.5% | 39.3% | 26.6% |
| |
|---|
| Median (43 companies) | 9.1% | 12.0% | 12.7% | 11.0% | 10.0% |
|---|
| Morneau Shepell Inc ($MSI) | 16.0% | 16.2% | 15.6% | 12.7% | 14.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| ProMetic Life Sciences Inc ($PLI) | 2.1% | 33.6% | 34.6% | 23.3% | |
| EnerCare Inc ($ECI) | 25.7% | 26.5% | 23.6% | 20.7% | 15.5% |
| Black Diamond Group Ltd ($BDI) | 61.9% | 27.5% | 31.0% | 17.6% | |
| easyhome Ltd ($EH) | 32.2% | 25.6% | 21.6% | 16.9% | 12.7% |
| K-Bro Linen Inc ($KBL) | 10.0% | 19.0% | 11.4% | 16.6% | |
| |
|---|
| Median (42 companies) | 3.1% | 2.8% | 2.3% | 2.4% | 2.2% |
|---|
| Morneau Shepell Inc ($MSI) | 1.0% | 2.0% | 3.7% | 1.9% | 1.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Information Services Corp ($ISV) | 71.8% | 72.8% | 58.9% | 38.1% | 27.6% |
| Colliers International Group Inc ($CIG) | 10.5% | 11.2% | 15.2% | 10.9% | 26.1% |
| Nuvo Research Inc ($NRI) | -11.6% | -17.4% | -37.9% | 12.9% | 20.8% |
| International Road Dynamics Inc ($IRD) | 0.9% | 6.7% | 4.4% | 10.6% | 16.5% |
| Premium Brands Holdings Corp ($PBH) | 10.3% | 9.9% | 6.9% | 12.6% | 15.3% |
| |
|---|
| Median (43 companies) | 8.8% | 9.2% | 8.5% | 7.5% | 8.4% |
|---|
| Morneau Shepell Inc ($MSI) | 7.1% | 5.2% | 7.8% | 5.9% | 8.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Concordia Healthcare Corp ($CXR) | | -1.3x | 5.6x | 20.2x | |
| SunOpta Inc ($SOY) | 2.9x | 3.5x | 1.3x | 16.9x | 140.8x |
| Centric Health Corp ($CHH) | 5.6x | 10.2x | 11.2x | 15.6x | |
| Sienna Senior Living Inc ($SIA) | 9.5x | 11.8x | 9.2x | 9.1x | 9.1x |
| Valeant Pharmaceuticals International Inc ($VRX) | 9.5x | 10.4x | 4.0x | 7.3x | 12.7x |
| |
|---|
| Median (37 companies) | 2.8x | 2.2x | 3.3x | 2.3x | 2.9x |
|---|
| Morneau Shepell Inc ($MSI) | 3.1x | 3.1x | 3.5x | 4.2x | 2.6x |
