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Driver Group EBITDA dropped on 556% in 2016 and EBITDA Margin dropped on 10.6 pp from 2.2% to -8.4%

17 Feb 2017 • About Driver Group ($DRV) • By InTwits

Driver Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Driver Group doesn't have a profitable business model yet: FY2016 ROIC is -32.6%
  • EBITDA Margin is declining: -8.4% in FY2016 vs. 2.2% in FY2015 vs. 6.8% in FY2012
  • EBITDA Margin is quite volatile: -8.4% in FY2016, 2.2% in FY2015, 8.7% in FY2014, 8.9% in FY2013, 6.8% in FY2012
  • Driver Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's a lot of higher than industry average of 3.1%.
  • CAPEX is quite volatile: 0.73 in FY2016, 0.53 in FY2015, 0.43 in FY2014, 0.31 in FY2013, 0.18 in FY2012
  • The company has unprofitable business model: ROIC is at -32.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Driver Group ($DRV) key annual financial indicators

mln. £201220132014201520162016/2015
P&L
Revenue26.25836.64039.07847.95058.26121.5%
Gross Profit7.0499.5099.74210.57011.68210.5%
SG&A12.50817.01036.0%
EBITDA1.7953.2593.4091.067-4.867-556.1%
Net Income0.8092.1012.293-1.959-5.230167.0%
Balance Sheet
Cash1.3572.6671.4301.1110.555-50.0%
Short Term Debt0.7580.5740.3380.4793.352599.8%
Long Term Debt1.5631.0201.2593.1007.110129.4%
Cash flow
Capex0.1840.3070.4320.5320.72836.8%
Ratios
Revenue growth51.2%39.5%6.7%22.7%21.5%
EBITDA growth151.0%81.6%4.6%-68.7%-556.1%
Gross Margin26.8%26.0%24.9%22.0%20.1%-2.0%
EBITDA Margin6.8%8.9%8.7%2.2%-8.4%-10.6%
Net Income Margin3.1%5.7%5.9%-4.1%-9.0%-4.9%
SG&A, % of revenue26.1%29.2%3.1%
CAPEX, % of revenue0.7%0.8%1.1%1.1%1.2%0.1%
ROIC18.7%27.9%24.0%3.2%-32.6%-35.8%
ROE11.5%24.5%20.9%-16.2%-53.3%-37.0%
Net Debt/EBITDA0.5x-0.3x0.0x2.3x-2.3x

Revenue and profitability


Driver Group's Revenue jumped on 21.5% in FY2016. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.3 pp from 3.3% to 4.6% in 2016.

Gross Margin decreased slightly on 2.0 pp from 22.0% to 20.1% in FY2016. SG&A as a % of Revenue increased on 3.1 pp from 26.1% to 29.2% in FY2016.

Net Income marign decreased on 4.9 pp from -4.1% to -9.0% in FY2016.

Capital expenditures (CAPEX) and working capital investments


Driver Group's CAPEX/Revenue was 1.2% in FY2016. The company's CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 1.2%.

Return on investment


The company operates at negative ROIC (-32.63%) and ROE (-53.26%). ROIC dropped on 35.8 pp from 3.2% to -32.6% in FY2016. ROE dropped on 37.0 pp from -16.2% to -53.3% in FY2016.

Leverage (Debt)


Debt level is -3.8x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 2.3x from 2.3x to in FY2016. Debt jumped on 192% in FY2016 while cash dropped on 50.0% in FY2016.

Appendix 1: Peers in Support Services


Below we provide Driver Group benchmarking against other companies in Support Services 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
Camco Clean Energy ($CCE)88.0%-54.7%99.4%
Optimal Payments ($OPAY)39.9%41.5%44.0%68.1%
Inspired Energy ($INSE)83.8%44.8%42.2%40.2%
21St Century Technology ($C21)0.1%-22.8%-16.6%35.5%
Ibex Global Solutions ($IBEX)35.7%30.0%29.8%7.0%
 
Median (55 companies)0.1%6.9%4.7%6.6%2.0%
Driver Group ($DRV)39.5%6.7%22.7%21.5%


Top companies by Gross margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Inspired Energy ($INSE)94.6%86.8%78.7%76.2%
Ienergizer Ltd ($IBPO)56.2%78.4%76.8%72.7%71.3%
Grafenia ($GRA)53.4%54.3%56.1%70.8%66.3%
Vianet Group ($VNET)53.3%51.3%58.8%69.2%70.1%
Prime People ($PRP)63.4%58.3%57.7%61.4%59.2%
 
Median (49 companies)29.5%28.8%30.4%28.7%27.1%
Driver Group ($DRV)26.8%26.0%24.9%22.0%20.1%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
21St Century Technology ($C21)13.4%-0.2%36.0%44.8%
Northgate ($67GX)41.2%40.4%40.6%39.4%38.3%
Inspired Energy ($INSE)46.2%48.5%1.5%35.4%
Vianet Group ($VNET)18.6%17.3%19.7%27.1%22.1%
Vp ($VP.)23.9%24.5%24.2%26.2%28.4%
 
Median (55 companies)6.7%6.3%6.8%7.6%7.5%
Driver Group ($DRV)6.8%8.9%8.7%2.2%-8.4%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Vp ($VP.)21.4%17.7%21.6%25.7%24.1%
Sagentia Group ($SAG)1.9%1.4%1.5%25.2%
Nature Group ($NGR)14.3%7.2%5.6%22.9%
Augean ($AUG)9.8%15.9%12.3%12.3%
Falkland Islands Hldgs ($FKL)3.7%6.8%12.9%11.9%4.8%
 
Median (55 companies)1.1%1.1%1.0%1.0%1.0%
Driver Group ($DRV)0.7%0.8%1.1%1.1%1.2%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
21St Century Technology ($C21)20.3%-2.9%45.6%111.0%
Inspired Energy ($INSE)63.9%65.5%-7.5%28.0%
Petards Group ($PEG)35.5%-78.0%24.7%23.9%
Servoca ($SVCA)1.0%7.8%14.9%22.3%22.8%
Rtc Group ($RTC)14.6%17.6%19.9%22.2%
 
Median (55 companies)9.5%7.8%9.3%10.4%11.3%
Driver Group ($DRV)18.7%27.9%24.0%3.2%-32.6%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Redhall Group ($RHL)22.8x5.8x6.6x16.8x16.2x
Mitsubishi Corp ($MBC)9.9x15.9x14.3x12.5x25.0x
Ienergizer Ltd ($IBPO)6.3x2.8x3.0x4.0x2.4x
Ceps ($CEPS)3.0x6.6x3.8x
Kellan Group(The ($KLN)6.5x3.6x
 
Median (51 companies)0.8x0.7x0.6x0.4x0.5x
Driver Group ($DRV)0.5x-0.3x0.0x2.3x


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