Melcor Developments Ltd reports 54.7% Net Income decline and almost no change in EBITDA Margin of 39.4%
15.03.2017 • About Melcor Developments Ltd (
$MRD) • By InTwits
Melcor Developments Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Melcor Developments Ltd has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 0.83 in 2016, 1.1 in 2015, 37.3 in 2014, 20.2 in 2013, 11.2 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 6.0x while industry average is 6.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Melcor Developments Ltd ($MRD) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 274.9 | 303.7 | 313.0 | 263.3 | 242.5 | -7.9% |
| EBITDA | 94.4 | 109.9 | 132.4 | 104.7 | 95.6 | -8.7% |
| Net Income | 105.0 | 98.6 | 100.7 | 76.0 | 34.4 | -54.7% |
Balance Sheet
|
|---|
| Cash | 11.6 | 29.0 | 19.0 | 48.7 | 39.9 | -18.0% |
| Short Term Debt | 0.6 | 0.6 | 32.0 | 104.1 | 82.8 | -20.5% |
| Long Term Debt | 490.5 | 574.3 | 614.7 | 526.9 | 525.8 | -0.2% |
Cash flow
|
|---|
| Capex | 11.2 | 20.2 | 37.3 | 1.1 | 0.8 | -27.2% |
Ratios
|
|---|
| Revenue growth | 24.8% | 10.5% | 3.1% | -15.9% | -7.9% | |
| EBITDA growth | 18.7% | 16.4% | 20.5% | -20.9% | -8.7% | |
| EBITDA Margin | 34.3% | 36.2% | 42.3% | 39.8% | 39.4% | -0.3% |
| Net Income Margin | 38.2% | 32.5% | 32.2% | 28.8% | 14.2% | -14.6% |
| CAPEX, % of revenue | 4.1% | 6.6% | 11.9% | 0.4% | 0.3% | -0.1% |
| ROIC | 7.7% | 7.9% | 8.3% | 5.9% | 5.2% | -0.7% |
| ROE | 16.3% | 13.5% | 12.1% | 8.1% | 3.5% | -4.6% |
| Net Debt/EBITDA | 5.1x | 5.0x | 4.7x | 5.6x | 6.0x | 0.4x |
Melcor Developments Ltd ($MRD) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 31 | 42 | 63 | 106 | -18.6% | -8.7% | -27.9% | 16.0% |
| EBITDA | 13 | 18 | 26 | 39 | -9.7% | 1.4% | -19.5% | -4.1% |
| Net Income | -8 | 2 | 16 | 24 | -153.0% | -54.6% | -34.5% | -26.2% |
Balance Sheet
|
|---|
| Cash | 26 | 35 | 37 | 40 | 82.9% | 340.0% | -0.7% | -18.0% |
| Short Term Debt | 86 | 91 | 77 | 83 | 169.1% | -10.8% | -32.0% | -20.5% |
| Long Term Debt | 555 | 567 | 558 | 526 | -15.8% | 1.1% | 3.4% | -0.2% |
Ratios
|
|---|
| EBITDA Margin | 42.2% | 41.7% | 41.5% | 36.5% | 4.2% | 4.2% | 4.3% | -7.6% |
| Net Income Margin | -25.2% | 4.2% | 25.6% | 22.7% | -64.0% | -4.3% | -2.6% | -12.9% |
Revenue and profitability
The company's Revenue decreased on 7.9%. Annual revenue decline showed slowdown in 16Q4 - revenue jumped on 16.0%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 30.6 pp from 7.9% to 38.5% in 2016.
Net Income marign dropped on 14.6 pp from 28.8% to 14.2% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 0.34%. Melcor Developments Ltd's CAPEX/Revenue decreased on 6.3 pp from 6.6% in 2013 to 0.34% in 2016. Average CAPEX/Revenue for the last three years was 4.2%.
Return on investment
The company operates at low ROIC (5.24%) and ROE (3.49%). ROIC decreased slightly on 0.66 pp from 5.9% to 5.2% in 2016. ROE decreased on 4.6 pp from 8.1% to 3.5% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 6.0x and Debt / EBITDA is 6.4x. Net Debt / EBITDA jumped on 0.4x from 5.6x to 6.0x in 2016. Debt decreased on 3.5% while cash dropped on 18.0%.
Appendix 1: Peers in Financial
Below you can find Melcor Developments Ltd 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 ($GO) | | 13.7% | 34.6% | 86.0% | 14.6% |
| Morguard Corp ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
| |
|---|
| Median (53 companies) | | 7.0% | 9.1% | 3.6% | 5.8% |
|---|
| Melcor Developments Ltd ($MRD) | | 10.5% | 3.1% | -15.9% | -7.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($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 ($SVI) | 18.2% | 22.6% | 18.3% | 52.4% | |
| Clarke Inc ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| |
|---|
| Median (9 companies) | 28.1% | 30.7% | 28.3% | 43.4% | 30.3% |
|---|
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 ($FN) | 67.8% | 76.5% | 77.1% | 74.6% | |
| |
|---|
| Median (36 companies) | 43.9% | 32.1% | 38.2% | 30.0% | 45.4% |
|---|
| Melcor Developments Ltd ($MRD) | 34.3% | 36.2% | 42.3% | 39.8% | 39.4% |
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 ($SVI) | 150.5% | 73.3% | 79.1% | 21.4% | |
| |
|---|
| Median (55 companies) | 0.5% | 0.5% | 0.6% | 0.7% | 0.9% |
|---|
| Melcor Developments Ltd ($MRD) | 4.1% | 6.6% | 11.9% | 0.4% | 0.3% |
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 ($MIC) | 11.9% | 9.6% | 9.7% | 9.5% | 9.4% |
| |
|---|
| Median (55 companies) | 4.4% | 3.3% | 3.9% | 2.8% | 3.0% |
|---|
| Melcor Developments Ltd ($MRD) | 7.7% | 7.9% | 8.3% | 5.9% | 5.2% |
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 ($EQB) | 11.8x | 10.2x | 9.8x | 12.3x | 13.7x |
| |
|---|
| Median (27 companies) | 5.5x | 4.4x | 4.5x | 6.5x | 9.7x |
|---|
| Melcor Developments Ltd ($MRD) | 5.1x | 5.0x | 4.7x | 5.6x | 6.0x |
