TECSYS Inc reports 217% Net Income growth and 0.92 pp EBITDA Margin growth from 7.7% to 8.6%
06.07.2016 • About TECSYS Inc (
$TCS) • By InTwits
TECSYS Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TECSYS Inc is a growth stock: FY2016 revenue growth was 17.8%, 5 year revenue CAGR was 13.6% at FY2016 ROIC 16.3%
- EBITDA Margin is relatively stable: 8.6% in FY2016 vs. 7.7% in FY2015 vs. 8.0% in FY2012
- TECSYS Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 1.7%.
- CAPEX is quite volatile: 0.99 in FY2016, 0.44 in FY2015, 0.43 in FY2014, 0.69 in FY2013, 1.4 in FY2012
- The company has highly profitable business model: ROIC is at 16.3%
- It operates with high leverage: Net Debt/EBITDA is -1.1x while industry average is -4.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TECSYS Inc ($TCS) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 39.502 | 43.759 | 46.558 | 57.284 | 67.466 | 17.8% |
| Gross Profit | 17.451 | 18.283 | 20.293 | 27.573 | 34.825 | 26.3% |
| SG&A | 11.019 | 11.677 | 12.805 | 18.626 | 20.938 | 12.4% |
| EBITDA | 3.152 | 3.220 | 4.208 | 4.415 | 5.821 | 31.8% |
| Net Income | 1.057 | 0.885 | 1.795 | 1.515 | 4.804 | 217.1% |
Balance Sheet
|
|---|
| Cash | 5.217 | 5.348 | 8.839 | 10.815 | 9.704 | -10.3% |
| Short Term Debt | 0.085 | 1.070 | 1.000 | 1.456 | 1.455 | -0.1% |
| Long Term Debt | 0.000 | 3.500 | 2.500 | 3.333 | 1.889 | -43.3% |
Cash flow
|
|---|
| Capex | 1.413 | 0.685 | 0.427 | 0.435 | 0.988 | 127.1% |
Ratios
|
|---|
| Revenue growth | 10.8% | 10.8% | 6.4% | 23.0% | 17.8% | |
| EBITDA growth | 36.8% | 2.2% | 30.7% | 4.9% | 31.8% | |
| Gross Margin | 44.2% | 41.8% | 43.6% | 48.1% | 51.6% | 3.5% |
| EBITDA Margin | 8.0% | 7.4% | 9.0% | 7.7% | 8.6% | 0.9% |
| Net Income Margin | 2.7% | 2.0% | 3.9% | 2.6% | 7.1% | 4.5% |
| SG&A, % of revenue | 27.9% | 26.7% | 27.5% | 32.5% | 31.0% | -1.5% |
| CAPEX, % of revenue | 3.6% | 1.6% | 0.9% | 0.8% | 1.5% | 0.7% |
| ROIC | 8.5% | 7.4% | 11.8% | 8.3% | 16.3% | 7.9% |
| ROE | 6.7% | 5.7% | 11.3% | 7.6% | 18.9% | 11.3% |
| Net Debt/EBITDA | -1.6x | -0.2x | -1.3x | -1.4x | -1.1x | 0.3x |
TECSYS Inc ($TCS) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 15 | 16 | 16 | 21 | 14.7% | 16.3% | 4.5% | 34.1% |
| EBITDA | 1 | 1 | 1 | 4 | -50.3% | -29.4% | -28.8% | 279.1% |
| Net Income | 0 | 0 | 1 | 4 | -79.9% | -10.5% | 16.3% | 1,196.6% |
Balance Sheet
|
|---|
| Cash | 12 | 9 | 9 | 10 | 123.7% | 77.3% | 262.3% | -10.3% |
| Short Term Debt | 1 | 1 | 1 | 1 | 34.9% | 33.5% | 34.6% | -0.1% |
| Long Term Debt | 3 | 3 | 2 | 2 | 20.4% | 19.4% | 13.8% | -43.3% |
Ratios
|
|---|
| Gross Margin | 49.7% | 49.4% | 50.7% | 55.3% | 2.9% | 0.6% | 3.4% | 5.8% |
| EBITDA Margin | 3.4% | 5.2% | 5.9% | 16.9% | -4.5% | -3.3% | -2.8% | 10.9% |
| Net Income Margin | 0.5% | 2.3% | 3.5% | 18.1% | -2.2% | -0.7% | 0.4% | 16.2% |
Revenue and profitability
TECSYS Inc's Revenue surged on 17.8%. Revenue growth showed acceleration in FY16Q4 - it increased 34.1% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.8 pp from 5.9% to 7.7% in FY2016.
Gross Margin increased on 3.5 pp from 48.1% to 51.6% in FY2016. SG&A as a % of Revenue decreased slightly on 1.5 pp from 32.5% to 31.0% in FY2016.
Net Income marign increased on 4.5 pp from 2.6% to 7.1% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 1.5%. CAPEX/Revenue showed almost no change from FY2013 to FY2016. For the last three years the average CAPEX/Revenue was 1.0%.
Return on investment
The company operates at good ROIC (16.28%) and ROE (18.91%). ROIC increased on 7.9 pp from 8.3% to 16.3% in FY2016. ROE jumped on 11.3 pp from 7.6% to 18.9% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.1x and Debt / EBITDA is 0.6x. Net Debt / EBITDA surged on 0.3x from -1.4x to -1.1x in FY2016. Debt dropped on 30.2% while cash dropped on 10.3%.
Appendix 1: Peers in Technology
Below you can find TECSYS Inc benchmarking vs. other companies in Technology 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 |
|---|
| Intrinsyc Technologies Corp ($ITC) | | -21.7% | 70.8% | 24.5% | 39.2% |
| ProntoForms Corp ($PFM) | | 75.4% | 43.9% | 46.4% | 28.2% |
| Kinaxis Inc ($KXS) | | 30.3% | 15.2% | 30.3% | 27.0% |
| NexJ Systems Inc ($NXJ) | | 4.3% | -12.6% | 19.7% | 17.3% |
| Constellation Software Inc/Canada ($CSU) | | 35.9% | 37.9% | 10.1% | 15.6% |
| |
|---|
| Median (12 companies) | | 0.3% | 13.3% | 11.5% | 12.7% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($CSU) | 86.2% | 85.5% | 86.1% | 86.2% | 87.1% |
| ProntoForms Corp ($PFM) | 96.1% | 98.1% | 98.0% | 79.4% | |
| Espial Group Inc ($ESP) | 77.5% | 81.7% | 78.5% | 74.3% | 74.7% |
| Halogen Software Inc ($HGN) | 72.0% | 74.8% | 71.8% | 73.8% | 76.2% |
| Kinaxis Inc ($KXS) | 71.8% | 70.4% | 70.4% | 71.8% | 69.1% |
| |
|---|
| Median (12 companies) | 71.8% | 55.6% | 61.9% | 61.9% | 71.9% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wi-LAN Inc ($WIN) | 40.9% | 12.2% | 56.2% | 53.2% | 57.8% |
| Kinaxis Inc ($KXS) | 18.7% | 23.0% | 19.2% | 28.0% | 17.6% |
| Constellation Software Inc/Canada ($CSU) | 20.9% | 20.1% | 21.8% | 25.2% | 26.0% |
| Intrinsyc Technologies Corp ($ITC) | -10.5% | -38.8% | 2.2% | 10.8% | |
| Mitel Networks Corp ($MNW) | 10.2% | 10.0% | 7.0% | 7.7% | |
| |
|---|
| Median (14 companies) | 0.9% | 3.9% | 4.4% | 0.1% | 7.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kinaxis Inc ($KXS) | 2.9% | 2.3% | 5.0% | 4.7% | 5.0% |
| Halogen Software Inc ($HGN) | 4.9% | 9.0% | 8.4% | 2.9% | 2.6% |
| Espial Group Inc ($ESP) | 1.6% | 0.2% | 1.9% | 2.1% | 1.5% |
| ProntoForms Corp ($PFM) | 1.1% | 0.8% | 3.6% | 1.9% | |
| Critical Control Energy Services Corp ($CCZ) | | 0.5% | 1.0% | 1.6% | |
| |
|---|
| Median (14 companies) | 1.1% | 1.1% | 1.2% | 1.2% | 1.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Constellation Software Inc/Canada ($CSU) | 45.9% | 22.4% | 24.7% | 38.5% | 40.5% |
| Kinaxis Inc ($KXS) | | 61.8% | 63.6% | 44.0% | 22.6% |
| Halogen Software Inc ($HGN) | | -28.4% | -45.9% | -40.5% | 12.6% |
| Wi-LAN Inc ($WIN) | 2.6% | -7.6% | 8.9% | 7.4% | 8.4% |
| NexJ Systems Inc ($NXJ) | | -44.6% | -19.8% | -13.9% | 4.5% |
| |
|---|
| Median (14 companies) | -7.5% | -17.5% | 0.5% | -1.2% | 8.4% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mitel Networks Corp ($MNW) | 3.7x | 3.8x | 2.6x | 6.2x | |
| Pivot Technology Solutions Inc ($PTG) | | -0.4x | 1.1x | 4.8x | |
| Constellation Software Inc/Canada ($CSU) | 0.0x | 1.6x | 0.6x | 0.4x | -0.0x |
| Wi-LAN Inc ($WIN) | -4.9x | -12.1x | -2.3x | -1.7x | -2.0x |
| Kinaxis Inc ($KXS) | 1.9x | 4.7x | -4.2x | -3.9x | -6.3x |
| |
|---|
| Median (7 companies) | 0.9x | 1.5x | -0.8x | -1.7x | -6.3x |
|---|
