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Trakm8 Hldgs reports 32.6% EBITDA growth and 1.6 pp EBITDA Margin growth from 8.7% to 10.2%

02 Jul 2018 • About Trakm8 Holdings ($TRAK) • By InTwits

Trakm8 Hldgs reported FY2018 financial results today. Overall looking at the company's long term financial model we can say that:
  • Trakm8 Hldgs has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's a lot of higher than industry average of 2.1%.
  • CAPEX is quite volatile: 0.091 in FY2018, 0.18 in FY2017, 0.45 in FY2016, 0.36 in FY2015, 0.30 in FY2014
  • The company has potentially unprofitable business model: ROIC is at 4.6%
  • It operates with high leverage: Net Debt/EBITDA is 1.1x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Trakm8 Hldgs ($TRAK) key annual financial indicators

mln. £201420152016201720182018/2017
P&L
Revenue9.19317.85325.64926.75930.08112.4%
Gross Profit5.2618.06212.39813.20914.84912.4%
SG&A4.3996.3017.86812.46214.08613.0%
EBITDA1.1842.4984.0442.3193.07532.6%
Net Income0.4711.6893.3441.4701.5716.8%
Balance Sheet
Cash2.9113.4083.8711.9903.47274.5%
Short Term Debt0.5000.5760.9811.0511.1519.5%
Long Term Debt1.7922.2363.9764.8065.62117.0%
Cash flow
Capex0.3030.3550.4490.1810.091-49.6%
Ratios
Revenue growth93.5%94.2%43.7%4.3%12.4%
EBITDA growth265.8%111.0%61.9%-42.7%32.6%
Gross Margin57.2%45.2%48.3%49.4%49.4%-0.0%
EBITDA Margin12.9%14.0%15.8%8.7%10.2%1.6%
Net Income Margin5.1%9.5%13.0%5.5%5.2%-0.3%
SG&A, % of revenue47.8%35.3%30.7%46.6%46.8%0.3%
CAPEX, % of revenue3.3%2.0%1.8%0.7%0.3%-0.4%
ROIC18.7%22.5%20.8%3.6%4.6%1.0%
ROE12.3%27.9%27.8%7.9%7.4%-0.5%
Net Debt/EBITDA-0.5x-0.2x0.3x1.7x1.1x-0.6x

Revenue and profitability


The company's Revenue surged on 12.4% in FY2018. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.6 pp from 8.7% to 10.2% in FY2018.

Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue showed almost no change in FY2018.

Net Income marign showed almost no change in FY2018.

Capital expenditures (CAPEX) and working capital investments


In FY2018 the company had CAPEX/Revenue of 0.30%. The company showed small CAPEX/Revenue decline of 1.7 pp from 2.0% in FY2015 to 0.30% in FY2018. It's average level of CAPEX/Revenue for the last three years was 0.91%.

Return on investment


The company operates at low ROIC (4.64%) and ROE (7.42%). ROIC increased slightly on 1.00 pp from 3.6% to 4.6% in FY2018. ROE showed almost no change in FY2018.

Leverage (Debt)


Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 2.2x. Net Debt / EBITDA dropped on 0.6x from 1.7x to 1.1x in FY2018. Debt surged on 15.6% in FY2018 while cash jumped on 74.5% in FY2018.

Valuation


Trakm8 Hldgs's trades at EV/EBITDA 12.3x and P/E 22.0x.

Appendix 1: Peers in Technology Hardware & Equipment


Below we provide Trakm8 Hldgs benchmarking against other companies in Technology Hardware & Equipment 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.