Heath(Samuel)& Sons Net Income jumped on 95.2% in 2016 and Revenue jumped on 12.4%
13 Jul 2016 • About Heath(Samuel)& Sons (
$HSM) • By InTwits
Heath(Samuel)& Sons reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 12.1% in FY2016 vs. 10.2% in FY2015 vs. 9.6% in FY2012
- Heath(Samuel)& Sons has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 2.1%.
- CAPEX is quite volatile: 0.032 in FY2016, 0.067 in FY2015, 0.37 in FY2014, 0.25 in FY2013, 0.27 in FY2012
- The company has highly profitable business model: ROIC is at 89.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Heath(Samuel)& Sons ($HSM) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 9.782 | 10.083 | 10.979 | 11.198 | 12.584 | 12.4% |
| Gross Profit | 4.846 | 4.772 | 5.332 | 5.325 | 6.056 | 13.7% |
| SG&A | 4.290 | 4.422 | 4.634 | 4.727 | 4.900 | 3.7% |
| EBITDA | 0.938 | 0.735 | 1.110 | 1.143 | 1.525 | 33.4% |
| Net Income | 0.515 | 0.415 | 0.443 | 0.394 | 0.769 | 95.2% |
Balance Sheet
|
|---|
| Cash | 0.477 | 0.219 | 2.026 | 1.648 | 2.078 | 26.1% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.235 | 0.268 | 0.221 | 0.225 | 0.390 | 73.3% |
Ratios
|
|---|
| Revenue growth | -0.5% | 3.1% | 8.9% | 2.0% | 12.4% | |
| EBITDA growth | 4.2% | -21.6% | 51.0% | 3.0% | 33.4% | |
| Gross Margin | 49.5% | 47.3% | 48.6% | 47.6% | 48.1% | 0.6% |
| EBITDA Margin | 9.6% | 7.3% | 10.1% | 10.2% | 12.1% | 1.9% |
| Net Income Margin | 5.3% | 4.1% | 4.0% | 3.5% | 6.1% | 2.6% |
| SG&A, % of revenue | 43.9% | 43.9% | 42.2% | 42.2% | 38.9% | -3.3% |
| CAPEX, % of revenue | 2.4% | 2.7% | 2.0% | 2.0% | 3.1% | 1.1% |
| ROIC | 9.7% | 8.7% | 19.7% | 32.0% | 89.2% | 57.2% |
| ROE | 8.9% | 8.9% | 10.6% | 12.4% | 32.1% | 19.7% |
| Net Debt/EBITDA | -0.5x | -0.3x | -1.8x | -1.4x | -1.4x | 0.1x |
Revenue and profitability
The company's Revenue jumped on 12.4% in FY2016. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 355 pp from -91.3% to -446% in FY2016.
Gross Margin increased slightly on 0.57 pp from 47.6% to 48.1% in FY2016. SG&A as a % of Revenue decreased on 3.3 pp from 42.2% to 38.9% in FY2016.
Net Income marign increased on 2.6 pp from 3.5% to 6.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Heath(Samuel)& Sons had CAPEX/Revenue of 3.1%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 2.4%.
Return on investment
The company operates at high and attractive ROIC (89.16%) and ROE (32.08%). ROIC jumped on 57.2 pp from 32.0% to 89.2% in FY2016. ROE surged on 19.7 pp from 12.4% to 32.1% in FY2016.
Leverage (Debt)
The company has no debt. Cash jumped on 26.1% in FY2016.
Valuation
The company's trades at EV/EBITDA 2.3x and P/E 7.2x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 3.1x with the industry average at 19.0x.
Appendix 1: Peers in Construction & Materials
Below we provide Heath(Samuel)& Sons benchmarking against other companies in Construction & Materials 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 |
|---|
| Kingspan Group ($KGP) | 5.3% | 9.1% | 6.4% | 46.7% | |
| Accsys Technologies ($AXS) | | 25.5% | 78.0% | 37.5% | 14.5% |
| Billington Hldgs ($BILN) | -34.0% | 8.4% | 14.5% | 25.8% | |
| Crh ($CRH) | | -0.3% | 4.9% | 25.0% | 14.7% |
| Clarke(T.) ($CTO) | 5.5% | 12.0% | -4.2% | 16.6% | |
| |
|---|
| Median (25 companies) | 3.1% | 5.6% | 8.8% | 1.6% | 10.5% |
|---|
| Heath(Samuel)& Sons ($HSM) | | 3.1% | 8.9% | 2.0% | 12.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inch Kenneth Kajang Rubber ($IKK) | 46.5% | 24.5% | 21.7% | 51.7% | |
| Swp Group ($SWP) | 43.0% | 48.1% | 39.2% | 49.7% | |
| James Halstead ($JHD) | 41.2% | 41.6% | 41.0% | 41.7% | 42.4% |
| Michelmersh Brick Hldgs ($MBH) | 35.3% | 28.4% | 31.1% | 38.2% | |
| Billington Hldgs ($BILN) | 41.1% | 41.7% | 38.8% | 36.3% | |
| |
|---|
| Median (23 companies) | 23.6% | 24.2% | 26.3% | 29.1% | 34.4% |
|---|
| Heath(Samuel)& Sons ($HSM) | 49.5% | 47.3% | 48.6% | 47.6% | 48.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucky Cement Ltd ($LKCS) | 31.5% | 26.8% | 24.4% | 26.5% | |
| Steppe Cement ($STCM) | 20.8% | 23.2% | 14.3% | 24.7% | |
| James Halstead ($JHD) | 20.2% | 19.8% | 20.1% | 20.9% | 21.6% |
| Michelmersh Brick Hldgs ($MBH) | 10.6% | 7.9% | 14.1% | 20.3% | |
| LSR Group OJSC ($LSRG) | 20.2% | 19.5% | 22.9% | 19.3% | |
| |
|---|
| Median (25 companies) | 8.5% | 7.4% | 9.5% | 9.5% | 11.5% |
|---|
| Heath(Samuel)& Sons ($HSM) | 9.6% | 7.3% | 10.1% | 10.2% | 12.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inch Kenneth Kajang Rubber ($IKK) | 74.2% | 5.4% | 12.8% | 54.9% | |
| Lucky Cement Ltd ($LKCS) | 3.2% | 5.2% | 6.9% | 12.0% | |
| Billington Hldgs ($BILN) | 1.0% | 1.1% | 2.9% | 10.8% | |
| Low & Bonar ($BD46) | 3.5% | 2.8% | 4.6% | 9.1% | 4.7% |
| Superglass Hldgs ($SPGH) | 12.9% | 14.2% | 3.4% | 7.9% | |
| |
|---|
| Median (25 companies) | 2.1% | 2.4% | 2.6% | 2.3% | 3.1% |
|---|
| Heath(Samuel)& Sons ($HSM) | 2.4% | 2.7% | 2.0% | 2.0% | 3.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| James Halstead ($JHD) | 49.3% | 46.2% | 46.7% | 45.3% | 47.1% |
| Alumasc Group ($ALU) | 6.5% | 17.5% | 22.6% | 36.0% | |
| Aukett Swanke Group ($AUK) | 2.7% | 11.4% | 27.3% | 31.6% | |
| Lucky Cement Ltd ($LKCS) | 23.8% | 22.9% | 20.3% | 20.0% | |
| Clarke(T.) ($CTO) | 6.9% | 9.9% | -0.4% | 19.6% | |
| |
|---|
| Median (25 companies) | 4.0% | 7.2% | 5.4% | 7.8% | 8.3% |
|---|
| Heath(Samuel)& Sons ($HSM) | 9.7% | 8.7% | 19.7% | 32.0% | 89.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mountfield Group ($MOGP) | 26.3x | 4.8x | 52.0x | 18.8x | |
| Asia Cement Corp ($ASCD) | 7.8x | 6.9x | 6.8x | 8.6x | |
| Crh ($CRH) | 2.0x | 3.6x | 1.6x | 3.1x | 1.7x |
| Low & Bonar ($BD46) | 2.7x | 2.1x | 2.1x | 2.4x | 2.1x |
| Saint-Gobain(Compagnie De) ($COD) | 2.1x | 2.0x | 2.1x | 1.4x | |
| |
|---|
| Median (21 companies) | 1.7x | 0.8x | 0.5x | -0.0x | 1.7x |
|---|
| Heath(Samuel)& Sons ($HSM) | -0.5x | -0.3x | -1.8x | -1.4x | -1.4x |
