Molins EBITDA dropped on 65.6% in 2016 and Revenue decreased on 7.9%

02 Mar 2017 • About Molins ($MLIN) • By InTwits

Molins reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Molins is a company in decline: FY2016 revenue growth was -7.9%, 5 years revenue CAGR was -2.3%
EBITDA Margin is declining: 2.6% in FY2016 vs. 7.0% in FY2015 vs. 9.0% in FY2012
EBITDA Margin is quite volatile: 2.6% in FY2016, 7.0% in FY2015, 8.1% in FY2014, 8.3% in FY2013, 9.0% in FY2012
Molins has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 3.1%.
CAPEX is quite volatile: 1.2 in FY2016, 1.3 in FY2015, 2.1 in FY2014, 2.6 in FY2013, 3.9 in FY2012
The company has unprofitable business model: ROIC is at -1.5%
It operates with high leverage: Net Debt/EBITDA is -0.4x while industry average is -34.3x

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Molins ($MLIN) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	93.0	105.2	87.4	87.0	80.1	-7.9%
Gross Profit	27.3	28.6	26.4	23.2	21.6	-6.9%
SG&A			22.0	19.8	21.5	8.6%
EBITDA	8.4	8.7	7.1	6.1	2.1	-65.6%
Net Income	3.8	3.5	-0.3	-4.1	-0.6	-85.4%
Balance Sheet
Cash	13.3	15.0	9.8	10.4	9.0	-13.5%
Short Term Debt	0.0	0.0	0.0	0.6	0.3	-50.0%
Long Term Debt	5.9	9.8	11.9	13.0	7.9	-39.2%
Cash flow
Capex	3.9	2.6	2.1	1.3	1.2	-7.7%
Ratios
Revenue growth	3.4%	13.1%	-16.9%	-0.5%	-7.9%
EBITDA growth	-18.4%	3.6%	-18.4%	-14.1%	-65.6%
Gross Margin	29.4%	27.2%	30.2%	26.7%	27.0%	0.3%
EBITDA Margin	9.0%	8.3%	8.1%	7.0%	2.6%	-4.4%
Net Income Margin	4.1%	3.3%	-0.3%	-4.7%	-0.7%	4.0%
SG&A, % of revenue			25.2%	22.8%	26.8%	4.1%
CAPEX, % of revenue	4.2%	2.5%	2.4%	1.5%	1.5%	0.0%
ROIC	14.6%	16.6%	12.5%	8.6%	-1.5%	-10.1%
ROE	10.6%	9.9%	-0.9%	-13.1%	-1.7%	11.5%
Net Debt/EBITDA	-0.9x	-0.6x	0.3x	0.5x	-0.4x	-0.9x

Revenue and profitability

The company's Revenue decreased on 7.9% in FY2016. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 4.4 pp from 7.0% to 2.6% in FY2016.

Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased on 4.1 pp from 22.8% to 26.8% in FY2016.

Net Income marign increased on 4.0 pp from -4.7% to -0.75% in FY2016.

Capital expenditures (CAPEX) and working capital investments

In FY2016 the company had CAPEX/Revenue of 1.5%. The company's CAPEX/Revenue decreased slightly on 0.97 pp from 2.5% in FY2013 to 1.5% in FY2016. It's average CAPEX/Revenue for the last three years was 1.8%.The company invested a big chunk of EBITDA (57.1%) to CAPEX which didn't stop revenue from falling.

Return on investment

The company operates at negative ROIC (-1.53%) and ROE (-1.67%). ROIC dropped on 10.1 pp from 8.6% to -1.5% in FY2016. ROE surged on 11.5 pp from -13.1% to -1.7% in FY2016.

Leverage (Debt)

Debt level is -0.4x Net Debt / EBITDA and 3.9x Debt / EBITDA. Net Debt / EBITDA dropped on 0.9x from 0.5x to -0.4x in FY2016. Debt dropped on 39.7% in FY2016 while cash dropped on 13.5% in FY2016.

Appendix 1: Peers in Industrial Engineering

Below you can find Molins benchmarking vs. other companies in Industrial Engineering 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
Slingsby(H.C.) ($SLNG)	-4.2%	-4.3%	-9.9%	35.5%
Mincon Group ($MCON)	53.5%	-17.1%	4.2%	28.8%
Ab Dynamics ($ABDP)		36.8%	13.8%	19.3%	23.9%
Flowtech Fluidpower ($FLO)	-5.8%	-5.1%	17.7%	18.7%
Somero Enterprise Inc ($SOMA)	47.1%	40.1%	31.5%	18.5%
Median (23 companies)	11.7%	2.9%	2.8%	5.0%	-2.2%
Molins ($MLIN)		13.1%	-16.9%	-0.5%	-7.9%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Somero Enterprise Inc ($SOMA)	48.7%	52.2%	54.0%	55.8%
Hydro International ($HYD)	37.3%	39.4%	45.3%	46.4%
Rotork ($76ID)	46.8%	47.4%	48.0%	45.7%	44.3%
Northbridge Industrial Services ($NBI)	57.0%	54.0%	48.4%	43.4%
Amiad Water Systems Ltd ($AFS)	42.8%	40.8%	38.9%	40.5%
Median (21 companies)	31.3%	30.0%	33.2%	34.2%	30.1%
Molins ($MLIN)	29.4%	27.2%	30.2%	26.7%	27.0%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Northbridge Industrial Services ($NBI)	30.3%	29.2%	32.4%	32.5%
Somero Enterprise Inc ($SOMA)	12.6%	23.9%	27.4%	28.2%
Rotork ($76ID)	27.0%	27.6%	28.0%	25.0%	22.8%
Ab Dynamics ($ABDP)	21.3%	18.9%	20.1%	24.0%	22.7%
Mincon Group ($MCON)	22.9%	30.0%	22.7%	17.6%
Median (23 companies)	8.6%	8.0%	7.4%	8.2%	9.1%
Molins ($MLIN)	9.0%	8.3%	8.1%	7.0%	2.6%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Pressure Technologies ($PRES)	2.4%	2.3%	3.3%	11.6%	2.5%
Somero Enterprise Inc ($SOMA)	1.7%	1.8%	2.1%	5.9%
Mitsubishi Electric Corp ($MEL)	4.4%	4.2%	3.7%	4.6%	4.1%
Ab Dynamics ($ABDP)	2.2%	5.6%	2.5%	4.2%	7.9%
Braime(T.F.& J.H.)(Hldgs) ($BMTO)	2.3%	9.6%	5.6%	3.8%
Median (23 companies)	2.4%	2.0%	2.4%	2.2%	4.2%
Molins ($MLIN)	4.2%	2.5%	2.4%	1.5%	1.5%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Somero Enterprise Inc ($SOMA)	6.0%	34.1%	51.7%	54.3%
Energy Technique ($ETQ)	18.9%	19.3%	47.5%	41.6%
Renold ($RNO)	18.8%	-12.7%	-2.5%	41.3%	39.1%
Ab Dynamics ($ABDP)	44.4%	34.3%	28.4%	31.4%	28.0%
Rotork ($76ID)	50.0%	45.4%	38.1%	21.9%	17.0%
Median (23 companies)	13.5%	11.4%	10.8%	9.5%	4.3%
Molins ($MLIN)	14.6%	16.6%	12.5%	8.6%	-1.5%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Tricorn Group ($TCN)	-0.3x	0.9x	5.8x	4.0x	7.2x
Slingsby(H.C.) ($SLNG)	-3.3x	-4.6x	-3.7x	3.7x
Avingtrans ($AVG)	3.1x	0.7x	1.2x	3.6x	-22.4x
600 Group ($SIXH)		3.2x	2.2x	3.1x
Chamberlin ($CMH)	0.5x	0.4x		2.2x	2.2x
Median (23 companies)	0.5x	0.6x	0.4x	1.1x	0.4x
Molins ($MLIN)	-0.9x	-0.6x	0.3x	0.5x	-0.4x

Molins stock price chart

Molins financials

mln.	FY2010	FY2011	FY2012

Revenue	86.400	89.900	93.000
EBITDA	7.200	10.300	8.400
Net income	2.900	7.100	3.800
CAPEX	2.200	2.300	3.900
Debt	4.800	5.200	5.900
Cash	13.800	12.300	13.300

About Molins

Molins PLC, a specialist technology and services company, provides instrumentation, machinery, and analytical services to the FMCG, healthcare, and pharmaceutical sectors worldwide. The company operates in three segments: Scientific Services, Packaging Machinery, and Tobacco Machinery. The Scientific Services segment develops, assembles, sells, and maintains process and quality control instruments, as well as analytical smoke constituent capture machinery for the tobacco industry. This segment also operates as an independent tobacco and cigarette smoke constituent testing laboratory for regulatory, research, and product development purposes serving multinational customers and regional tobacco organizations. The Packaging Machinery segment develops and supplies custom machinery and product solutions for packaging and processing applications; and designs and manufactures cartoning machinery, case packers, and end-of-line and robotic solutions, as well as provides complete turnkey projects involving design and integration of packaging systems. The Tobacco Machinery segment designs, manufactures, and services secondary tobacco processing machinery comprising mid-speed cigarette makers, and packing and handling equipment, as well as supplies machines, spares, and related services. Molins PLC serves fast-moving consumer goods sectors, including tobacco, food, and other high-volume products. The company was founded in 1874 and is headquartered in Milton Keynes, the United Kingdom.