Escher Group Hldgs reports 338% Net Income growth and 5.1 pp EBITDA Margin growth from 17.6% to 22.7%
07 Mar 2017 • About Escher Group Hldgs (
$ESCH) • By InTwits
Escher Group Hldgs reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 22.7% in FY2016, 17.6% in FY2015, 9.8% in FY2014, 16.2% in FY2013, 27.7% in FY2012
- Escher Group Hldgs has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 2.0%.
- CAPEX is quite volatile: 0.12 in FY2016, 0.057 in FY2015, 0.26 in FY2014, 0.54 in FY2013, 0.74 in FY2012
- The company has potentially unprofitable business model: ROIC is at 6.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Escher Group Hldgs ($ESCH) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 22.953 | 24.699 | 21.147 | 22.010 | 22.411 | 1.8% |
| Gross Profit | 15.149 | 15.169 | 12.924 | 13.649 | 14.975 | 9.7% |
| SG&A | | | 9.885 | 8.225 | 7.832 | -4.8% |
| EBITDA | 6.351 | 3.999 | 2.071 | 3.871 | 5.089 | 31.5% |
| Net Income | 2.999 | 0.919 | -0.995 | 0.426 | 1.867 | 338.3% |
Balance Sheet
|
|---|
| Cash | 7.828 | 6.712 | 5.720 | 7.346 | 6.055 | -17.6% |
| Short Term Debt | 3.169 | 0.865 | 3.866 | 3.911 | 0.939 | -76.0% |
| Long Term Debt | 6.410 | 7.630 | 6.766 | 5.844 | 4.954 | -15.2% |
Cash flow
|
|---|
| Capex | 0.742 | 0.541 | 0.258 | 0.057 | 0.117 | 105.3% |
Ratios
|
|---|
| Revenue growth | 65.6% | 7.6% | -14.4% | 4.1% | 1.8% | |
| EBITDA growth | 60.7% | -37.0% | -48.2% | 86.9% | 31.5% | |
| Gross Margin | 66.0% | 61.4% | 61.1% | 62.0% | 66.8% | 4.8% |
| EBITDA Margin | 27.7% | 16.2% | 9.8% | 17.6% | 22.7% | 5.1% |
| Net Income Margin | 13.1% | 3.7% | -4.7% | 1.9% | 8.3% | 6.4% |
| SG&A, % of revenue | | | 46.7% | 37.4% | 34.9% | -2.4% |
| CAPEX, % of revenue | 3.2% | 2.2% | 1.2% | 0.3% | 0.5% | 0.3% |
| ROIC | | 5.3% | 0.9% | 3.7% | 6.5% | 2.8% |
| ROE | 9.9% | 2.5% | -2.7% | 1.2% | 5.1% | 3.9% |
| Net Debt/EBITDA | 0.3x | 0.4x | 2.4x | 0.6x | -0.0x | -0.7x |
Revenue and profitability
The company's Revenue increased slightly on 1.8% in FY2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.1 pp from 17.6% to 22.7% in FY2016.
Gross Margin increased on 4.8 pp from 62.0% to 66.8% in FY2016. SG&A as a % of Revenue decreased on 2.4 pp from 37.4% to 34.9% in FY2016.
Net Income marign increased on 6.4 pp from 1.9% to 8.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 0.52%. The company's CAPEX/Revenue decreased slightly on 1.7 pp from 2.2% in FY2013 to 0.52% in FY2016. For the last three years the average CAPEX/Revenue was 0.67%.
Return on investment
The company operates at low ROIC (6.50%) and ROE (5.14%). ROIC increased on 2.8 pp from 3.7% to 6.5% in FY2016. ROE increased on 3.9 pp from 1.2% to 5.1% in FY2016.
Leverage (Debt)
Debt level is -0.0x Net Debt / EBITDA and 1.2x Debt / EBITDA. Net Debt / EBITDA dropped on 0.7x from 0.6x to -0.032x in FY2016. Debt dropped on 39.6% in FY2016 while cash dropped on 17.6% in FY2016.
Valuation
Escher Group Hldgs's trades at EV/EBITDA 5.9x and P/E 16.1x while industy averages are 15.6x and 19.1x. Escher Group Hldgs's EV/(EBITDA-CAPEX) is 6.0x with the industry average at 19.0x.
Appendix 1: Peers in Software & Computer Services
Below you can find Escher Group Hldgs benchmarking vs. other companies in Software & Computer 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 |
|---|
| Coms ($COMS) | | 46.8% | 763.3% | 110.4% | 36.1% |
| Centralnic Group ($CNIC) | 15.9% | 4.0% | 98.9% | 71.3% | |
| Proactis Holdings ($PHD) | | 7.0% | 26.2% | 69.6% | 12.5% |
| Progility ($PGY) | | | | 51.0% | 3.2% |
| Galasys ($GLS) | 14.3% | 20.9% | 311.1% | 33.0% | |
| |
|---|
| Median (45 companies) | 10.5% | 5.7% | 4.7% | 3.1% | 7.2% |
|---|
| Escher Group Hldgs ($ESCH) | | 7.6% | -14.4% | 4.1% | 1.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lombard Risk Management ($LRM) | 99.0% | 98.8% | 99.2% | 98.6% | 99.3% |
| Phoenix It Group ($PNX) | 97.0% | 97.2% | 97.6% | 97.9% | |
| Wandisco ($WAND) | 91.8% | 80.3% | 80.7% | 93.2% | |
| Netcall ($NET) | 88.2% | 89.7% | 91.0% | 90.9% | 91.2% |
| Idox ($IDOX) | 90.4% | 90.8% | 89.4% | 89.3% | 86.8% |
| |
|---|
| Median (38 companies) | 61.4% | 62.1% | 57.8% | 58.8% | 50.9% |
|---|
| Escher Group Hldgs ($ESCH) | 66.0% | 61.4% | 61.1% | 62.0% | 66.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mail.Ru Group Ltd ($61HE) | 43.1% | 47.4% | 50.5% | 34.6% | 35.2% |
| Dotdigital Group ($DOTD) | 31.4% | 39.4% | 29.2% | 32.0% | 30.4% |
| Idox ($IDOX) | 30.9% | 26.1% | 26.0% | 28.6% | 27.3% |
| Galasys ($GLS) | 44.0% | 83.6% | 32.6% | 28.5% | |
| Oxford Metrics ($OMG) | 15.7% | 6.0% | 14.7% | 28.4% | 23.1% |
| |
|---|
| Median (45 companies) | 13.3% | 12.8% | 13.0% | 12.3% | 9.6% |
|---|
| Escher Group Hldgs ($ESCH) | 27.7% | 16.2% | 9.8% | 17.6% | 22.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rapidcloud Intl ($RCI) | 1.0% | 23.1% | 11.6% | 19.6% | |
| Coms ($COMS) | 0.5% | 0.9% | 3.4% | 7.5% | 0.1% |
| Csf Group ($CSFG) | 1.5% | 4.0% | 2.4% | 7.1% | 4.9% |
| Nasstar ($NASA) | 17.9% | | 2.1% | 5.2% | |
| Unisys Corp ($USY) | 2.1% | 2.5% | 4.1% | 5.0% | 3.0% |
| |
|---|
| Median (45 companies) | 1.5% | 1.5% | 1.9% | 1.3% | 1.2% |
|---|
| Escher Group Hldgs ($ESCH) | 3.2% | 2.2% | 1.2% | 0.3% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rm ($RM.) | | 48.6% | 130.8% | 289.2% | 263.8% |
| Triad Group ($TRD) | 4.1% | -3.8% | 24.5% | 61.5% | 74.4% |
| Dotdigital Group ($DOTD) | 26.4% | 38.0% | 28.5% | 31.4% | 28.9% |
| International Bus Mach Corp ($IBM) | 36.1% | 31.0% | 28.1% | 25.7% | 18.7% |
| Galasys ($GLS) | 58.7% | 60.9% | 40.8% | 22.2% | |
| |
|---|
| Median (45 companies) | 13.0% | 11.6% | 9.8% | 7.7% | 9.8% |
|---|
| Escher Group Hldgs ($ESCH) | | 5.3% | 0.9% | 3.7% | 6.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Progility ($PGY) | 2.0x | | 1.8x | 12.8x | 6.8x |
| Parity Group ($PTY) | 4.7x | | 4.9x | 5.1x | |
| Nasstar ($NASA) | -5.3x | | 0.0x | 1.9x | |
| Phoenix It Group ($PNX) | 4.3x | | | 1.9x | |
| International Bus Mach Corp ($IBM) | 0.9x | 1.2x | 1.4x | 1.7x | 2.2x |
| |
|---|
| Median (35 companies) | -0.5x | -0.5x | -0.4x | -0.6x | -0.8x |
|---|
| Escher Group Hldgs ($ESCH) | 0.3x | 0.4x | 2.4x | 0.6x | -0.0x |
