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Rtc Group reports 11.3% EBITDA decline and almost no change in EBITDA Margin of 2.2%

27 Feb 2017 • About Rtc Group ($RTC) • By InTwits

Rtc Group reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • EBITDA Margin is relatively stable: 2.2% in 2016 vs. 2.6% in 2015 vs. 1.7% in 2012
  • Rtc Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
  • The company has highly profitable business model: ROIC is at 15.4%
  • It operates with high leverage: Net Debt/EBITDA is 2.8x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Rtc Group ($RTC) key annual financial indicators

mln. £201220132014201520162016/2015
P&L
Revenue42.96348.81750.93264.89967.9004.6%
Gross Profit5.2285.52210.17612.70112.106-4.7%
SG&A4.6519.06711.32110.929-3.5%
EBITDA0.7410.9841.3151.7111.518-11.3%
Net Income0.5750.5120.8001.1100.800-27.9%
Balance Sheet
Cash0.0000.2320.0410.0580.0603.4%
Short Term Debt3.5093.8673.1663.9934.2917.5%
Long Term Debt0.0000.0220.0110.0000.000
Cash flow
Capex0.2600.2120.2450.2601.129334.2%
Ratios
Revenue growth40.1%13.6%4.3%27.4%4.6%
EBITDA growth973.9%32.8%33.6%30.1%-11.3%
Gross Margin12.2%11.3%20.0%19.6%17.8%-1.7%
EBITDA Margin1.7%2.0%2.6%2.6%2.2%-0.4%
Net Income Margin1.3%1.0%1.6%1.7%1.2%-0.5%
SG&A, % of revenue9.5%17.8%17.4%16.1%-1.3%
CAPEX, % of revenue0.6%0.4%0.5%0.4%1.7%1.3%
ROIC14.6%17.6%19.9%22.2%15.4%-6.8%
ROE63.6%35.7%38.6%41.4%25.4%-16.0%
Net Debt/EBITDA4.7x3.7x2.4x2.3x2.8x0.5x

Revenue and profitability


The company's Revenue increased on 4.6% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.1 pp from -3.9% to 2.2% in 2016.

Gross Margin decreased slightly on 1.7 pp from 19.6% to 17.8% in 2016. SG&A as a % of Revenue decreased slightly on 1.3 pp from 17.4% to 16.1% in 2016.

Net Income marign decreased slightly on 0.53 pp from 1.7% to 1.2% in 2016.

Capital expenditures (CAPEX) and working capital investments


In 2016 Rtc Group had CAPEX/Revenue of 1.7%. The company's CAPEX/Revenue increased slightly on 1.2 pp from 0.43% in 2013 to 1.7% in 2016. It's average level of CAPEX/Revenue for the last three years was 0.85%.Rtc Group invested a large share of EBITDA (74.4%) to CAPEX.

Return on investment


The company operates at high and attractive ROE (25.45%) while ROIC is a bit lower (15.38%). ROIC decreased on 6.8 pp from 22.2% to 15.4% in 2016. ROE dropped on 16.0 pp from 41.4% to 25.4% in 2016.

Leverage (Debt)


Company's Net Debt / EBITDA is 2.8x and Debt / EBITDA is 2.8x. Net Debt / EBITDA surged on 0.5x from 2.3x to 2.8x in 2016. Debt increased on 7.5% in 2016 while cash increased on 3.4% in 2016.

Valuation


Rtc Group's trades at EV/EBITDA 7.4x and P/E 8.8x while industy averages are 15.6x and 19.1x.

Appendix 1: Peers in Support Services


Below you can find Rtc Group benchmarking vs. other companies in Support Services 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
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)-2.0%6.9%5.0%6.6%2.2%
Rtc Group ($RTC)13.6%4.3%27.4%4.6%


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%
Rtc Group ($RTC)12.2%11.3%20.0%19.6%17.8%


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)6.8%6.4%6.9%7.6%7.2%
Rtc Group ($RTC)1.7%2.0%2.6%2.6%2.2%


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%1.1%1.1%1.0%
Rtc Group ($RTC)0.6%0.4%0.5%0.4%1.7%


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%
Mortice Ltd ($MORT)32.2%29.2%19.6%21.9%14.5%
 
Median (55 companies)9.5%7.8%9.3%10.2%9.4%
Rtc Group ($RTC)14.6%17.6%19.9%22.2%15.4%


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)0.8x0.5x0.6x0.4x0.4x
Rtc Group ($RTC)4.7x3.7x2.4x2.3x2.8x


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