BioHiTech Global, Inc. :BHTG-US: Earnings Analysis: 2016 By the Numbers : March 31, 2017

BioHiTech Global, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of BioHiTech Global, Inc. – Ricoh Company, Ltd. Sponsored ADR (RICOY-US) that have also reported for this period.

Highlights

  • Gross margins widened from 3.08% to 20.51% compared to the same period last year, operating (EBITDA) margins now -243.71% from -288.43%.
  • Year-on-year change in operating cash flow of -63.43% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016 2015 2014 N/A N/A
Relevant Numbers (Annual)
Revenues 2.24 1.51 0 N/A N/A
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings -6.75 -5 -0.06 N/A N/A
Earnings Growth (YOY) -34.87 -7873.36 N/A N/A N/A
Net Margin -300.67 -330.35 -2204.82 N/A N/A
EPS -0.82 -0.68 -0.01 N/A N/A
Return on Equity N/A N/A N/A N/A N/A
Return on Assets -295.07 -495.24 -165071.05 N/A N/A

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Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 3.08% to 20.51%, while operating margins improved from -288.43% to -243.71% over this period. For comparison, gross margins were 3.08% and EBITDA margins -288.43% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

BHTG-US‘s change in operating cash flow of -63.43% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from -312.22% to -264.09% and (2) one-time items. The company’s pretax margins are now -300.67% compared to -330.35% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

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Company Profile

BioHiTech Global, Inc. engages in the development, marketing and sales of systems for disposing of biodegradable waste. It provides food waste disposal systems which transform food waste into nutrient-neutral water which may be disposed of via sewer systems while utilizing proprietary software to collect and transmit environmental performance data to its customers. The company was founded on March 20, 2013 and is headquartered in New York, NY.

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