Stella-Jones Inc reports 17.9% revenue growth in 2016 and 1.2 pp EBITDA Margin decline from 15.6% to 14.4%
17.03.2017 • About Stella-Jones Inc (
$SJ) • By InTwits
Stella-Jones Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Stella-Jones Inc is a fast growth stock: 2016 revenue growth was 17.9%, 5 year revenue CAGR was 23.5% at 2016 ROIC 13.4%
- Stella-Jones Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's a lot of higher than industry average of 45.3%.
- CAPEX is quite volatile: 63.2 in 2016, 37.4 in 2015, 24.2 in 2014, 26.2 in 2013, 14.8 in 2012
- The company has highly profitable business model: ROIC is at 13.4%
- It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is 2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Stella-Jones Inc ($SJ) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 717 | 1,011 | 1,249 | 1,559 | 1,838 | 17.9% |
| Gross Profit | 152 | 197 | 224 | 307 | 334 | 8.6% |
| SG&A | 43 | 57 | 69 | 86 | 95 | 11.0% |
| EBITDA | 120 | 155 | 176 | 243 | 265 | 8.8% |
| Net Income | 73 | 93 | 104 | 141 | 154 | 8.9% |
Balance Sheet
|
|---|
| Cash | 14 | 3 | 0 | 3 | 2 | -15.4% |
| Short Term Debt | 20 | 3 | 6 | 61 | 7 | -88.6% |
| Long Term Debt | 343 | 370 | 439 | 609 | 687 | 12.9% |
Cash flow
|
|---|
| Capex | 15 | 26 | 24 | 37 | 63 | 69.2% |
Ratios
|
|---|
| Revenue growth | 12.1% | 40.9% | 23.6% | 24.8% | 17.9% | |
| EBITDA growth | 24.4% | 28.9% | 13.7% | 38.1% | 8.8% | |
| Gross Margin | 21.2% | 19.5% | 17.9% | 19.7% | 18.2% | -1.6% |
| EBITDA Margin | 16.8% | 15.3% | 14.1% | 15.6% | 14.4% | -1.2% |
| Net Income Margin | 10.2% | 9.2% | 8.3% | 9.1% | 8.4% | -0.7% |
| SG&A, % of revenue | 5.9% | 5.7% | 5.5% | 5.5% | 5.2% | -0.3% |
| CAPEX, % of revenue | 2.1% | 2.6% | 1.9% | 2.4% | 3.4% | 1.0% |
| ROIC | 15.3% | 14.9% | 14.3% | 15.4% | 13.4% | -2.0% |
| ROE | 18.3% | 17.8% | 16.4% | 17.6% | 15.9% | -1.7% |
| Net Debt/EBITDA | 2.9x | 2.4x | 2.5x | 2.7x | 2.6x | -0.1x |
Stella-Jones Inc ($SJ) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 421 | 563 | 513 | 342 | 23.6% | 31.5% | 18.4% | -4.4% |
| EBITDA | 62 | 90 | 76 | 37 | 15.5% | 35.0% | 10.9% | -32.3% |
| Net Income | 35 | 55 | 46 | 19 | 16.3% | 40.4% | 16.1% | -43.9% |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 0 | 2 | | | | -15.4% |
| Short Term Debt | 57 | 10 | 10 | 7 | 790.7% | -81.5% | -83.5% | -88.6% |
| Long Term Debt | 571 | 721 | 629 | 687 | 11.8% | 49.6% | 32.1% | 12.9% |
Ratios
|
|---|
| Gross Margin | 18.7% | 19.5% | 18.2% | 15.2% | -0.8% | -0.2% | -2.0% | -4.2% |
| EBITDA Margin | 14.6% | 16.0% | 14.9% | 10.8% | -1.0% | 0.4% | -1.0% | -4.5% |
| Net Income Margin | 8.3% | 9.7% | 8.9% | 5.4% | -0.5% | 0.6% | -0.2% | -3.8% |
Revenue and profitability
The company's Revenue jumped on 17.9%. Revenue growth showed slow down in 16Q4 - it was -4.4% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.5 pp from 12.6% to 14.0% in 2016.
Gross Margin decreased slightly on 1.6 pp from 19.7% to 18.2% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign decreased slightly on 0.69 pp from 9.1% to 8.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Stella-Jones Inc had CAPEX/Revenue of 3.4%. Stella-Jones Inc's CAPEX/Revenue increased slightly on 0.85 pp from 2.6% in 2013 to 3.4% in 2016. It's average CAPEX/Revenue for the last three years was 2.6%.
Return on investment
The company operates at good ROIC (13.39%) and ROE (15.87%). ROIC decreased on 2.0 pp from 15.4% to 13.4% in 2016. ROE decreased slightly on 1.7 pp from 17.6% to 15.9% in 2016.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and 2.6x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 2.7x to 2.6x in 2016. Debt increased on 3.7% while cash dropped on 15.4%.
Management team
The company's CEO is Brian Mcmanus. Brian Mcmanus is a founder and has 15 years tenure at the company. Stella-Jones Inc's CFO Eric Vachon has spent 6 years at the company.
Appendix 1: Peers in Industrial
Below you can find Stella-Jones Inc benchmarking vs. other companies in Industrial 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 |
|---|
| 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) | | 4.9% | 9.9% | 7.7% | 2.6% |
|---|
| Stella-Jones Inc ($SJ) | | 40.9% | 23.6% | 24.8% | 17.9% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Pure Technologies Ltd ($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% |
|---|
| Stella-Jones Inc ($SJ) | 21.2% | 19.5% | 17.9% | 19.7% | 18.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canadian National Railway Co ($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) | 10.2% | 8.3% | 8.0% | 7.8% | 11.0% |
|---|
| Stella-Jones Inc ($SJ) | 16.8% | 15.3% | 14.1% | 15.6% | 14.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Newalta Corp ($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% |
|---|
| Stella-Jones Inc ($SJ) | 2.1% | 2.6% | 1.9% | 2.4% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| IBI Group Inc ($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% | 9.6% | 11.0% | 8.3% | 8.5% |
|---|
| Stella-Jones Inc ($SJ) | 15.3% | 14.9% | 14.3% | 15.4% | 13.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Conifex Timber Inc ($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 |
|---|
| Stella-Jones Inc ($SJ) | 2.9x | 2.4x | 2.5x | 2.7x | 2.6x |
