Datatec reports 158% EBITDA decline in 2018 and 1.4 pp EBITDA Margin decline from 0.91% to -0.52%
17 May 2018 • About Datatec (
$DTC) • By InTwits
Datatec reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is declining: -0.5% in FY2018 vs. 0.9% in FY2017 vs. 3.2% in FY2014
- EBITDA Margin is quite volatile: -0.5% in FY2018, 0.9% in FY2017, 3.0% in FY2016, 3.3% in FY2015, 3.2% in FY2014
- Datatec has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has unprofitable business model: ROIC is -5.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Datatec's Revenue increased slightly on 1.6%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.4 pp from 24.6% to 26.0% in 2018. EBITDA Margin stuck to a declining trend at -0.99 pp per annum in the last 5 years.
Gross Margin showed almost no change in FY2018. During the last 5 years Gross Margin bottomed in FY2016 at 13.5% and was growing since that time.
Net Income margin increased slightly on 1.1 pp from 0.079% to 1.1% in FY2018.
Investments (CAPEX, working capital and M&A)
Datatec's CAPEX/Revenue was 0.66% in FY2018. Datatec's CAPEX/Revenue showed almost no change from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 0.65%.
Return on investment
The company operates at negative ROIC (-5.1%) and low but positive ROE (5.6%). ROIC decreased on 3.6 pp from -1.5% to -5.1% in FY2018. ROE increased on 5.3 pp from 0.36% to 5.6% in FY2018. ROIC declined at -4.4 pp per annum in FY2014-FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -65.3x and Debt / EBITDA is . Debt dropped on 34.3% while cash jumped on 37.8%.
Datatec has no short term refinancing risk: cash is higher than short term debt (119.1%).
Financial and operational results
FY ended 28 Feb 2018
Datatec ($DTC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 5,688 | 6,444 | 6,455 | 3,862 | 3,924 | 1.6% |
| Gross Profit | 841 | 933 | 869 | 622 | 636 | 2.2% |
| EBITDA | 184 | 210 | 195 | 35 | -20 | -157.9% |
| Net Income | 56 | 74 | 40 | 3 | 44 | 1,360.1% |
Balance Sheet
|
|---|
| Cash | 379 | 366 | 413 | 346 | 476 | 37.8% |
| Short Term Debt | 420 | 432 | 597 | 671 | 400 | -40.4% |
| Long Term Debt | 17 | 22 | 21 | 32 | 62 | 93.5% |
Cash flow
|
|---|
| Capex | 33 | 35 | 32 | 31 | 26 | -15.6% |
Ratios
|
|---|
| Revenue growth | 12.3% | 13.3% | 0.2% | -40.2% | 1.6% | |
| EBITDA growth | -4.5% | 13.9% | -7.2% | -82.0% | -157.9% | |
|
|---|
| Gross Margin | 14.8% | 14.5% | 13.5% | 16.1% | 16.2% | 0.1% |
| EBITDA Margin | 3.2% | 3.3% | 3.0% | 0.9% | -0.5% | -1.4% |
| Net Income Margin | 1.0% | 1.1% | 0.6% | 0.1% | 1.1% | 1.1% |
| CAPEX, % of revenue | 0.6% | 0.5% | 0.5% | 0.8% | 0.7% | -0.1% |
|
|---|
| ROIC | 10.6% | 11.6% | 9.8% | -1.5% | -5.1% | -3.6% |
| ROE | 6.4% | 8.5% | 4.7% | 0.4% | 5.6% | 5.3% |
| Net Debt/EBITDA | 0.3x | 0.4x | 1.1x | 10.2x | |
Peers in Software & Computer Services
Below you can find Datatec 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Pinnacle Technology Group ($PINN) | -17.1% | | | 108.6% | |
| Wandisco ($WAND) | 40.0% | -2.0% | 3.5% | 72.6% | |
| Microgen ($MCGN) | -0.0% | 7.2% | 34.5% | 45.7% | |
| Lombard Risk Management ($LRM) | 21.6% | 5.4% | 10.3% | 44.8% | |
| Zoo Digital Group ($ZOO) | -7.7% | 19.9% | 1.5% | 41.7% | |
| |
|---|
| Median (38 companies) | 4.7% | 4.7% | 11.7% | 14.1% | 1.8% |
|---|
| Datatec ($DTC) | | 13.3% | 0.2% | -40.2% | 1.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lombard Risk Management ($LRM) | 99.2% | 98.6% | 99.3% | 99.6% | |
| Netcall ($NET) | 91.0% | 90.9% | 91.2% | 91.7% | |
| Wandisco ($WAND) | 80.7% | 93.2% | 88.1% | 90.0% | |
| Eleco ($ELCO) | 87.8% | 88.9% | 86.7% | 87.9% | |
| Dotdigital Group ($DOTD) | 90.5% | 89.3% | 87.4% | 86.1% | |
| |
|---|
| Median (32 companies) | 57.6% | 58.8% | 60.0% | 57.6% | 35.4% |
|---|
| Datatec ($DTC) | 14.8% | 14.5% | 13.5% | 16.1% | 16.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rightster Group ($RSTR) | -146.3% | -64.1% | -19.9% | 114.2% | |
| Dotdigital Group ($DOTD) | 29.2% | 32.0% | 30.4% | 31.7% | |
| Sopheon ($SPE) | 6.8% | 19.8% | 22.6% | 27.9% | |
| Mail.Ru Group Ltd ($61HE) | 50.5% | 34.6% | 35.2% | 25.1% | |
| Gresham Computing ($GHT) | 8.8% | 18.1% | 20.6% | 22.6% | |
| |
|---|
| Median (38 companies) | 11.1% | 12.4% | 10.3% | 10.9% | 18.4% |
|---|
| Datatec ($DTC) | 3.2% | 3.3% | 3.0% | 0.9% | -0.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Actual Experience ($ACT) | 2.6% | 6.0% | 39.9% | 48.7% | |
| Csf Group ($CSFG) | 2.4% | 7.1% | 4.9% | 8.5% | |
| Pennant International Group ($PEN) | 1.4% | 0.2% | 6.3% | 7.1% | |
| Nasstar ($NASA) | 2.1% | 5.2% | 8.9% | 6.5% | |
| Oxford Metrics ($OMG) | 2.8% | 2.4% | 1.8% | 5.8% | |
| |
|---|
| Median (38 companies) | 1.9% | 1.4% | 1.2% | 1.3% | 4.1% |
|---|
| Datatec ($DTC) | 0.6% | 0.5% | 0.5% | 0.8% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rm ($RM.) | 130.8% | 289.2% | 254.7% | 73.8% | |
| Triad Group ($TRD) | 24.5% | 61.5% | 74.4% | 61.1% | |
| Sopheon ($SPE) | -10.5% | 14.7% | 22.7% | 32.3% | |
| Dotdigital Group ($DOTD) | 28.5% | 31.4% | 28.9% | 29.3% | |
| International Bus Mach Corp ($IBM) | 31.6% | 29.7% | 21.5% | 19.5% | 19.8% |
| |
|---|
| Median (40 companies) | 9.0% | 4.0% | 7.1% | 6.7% | 19.8% |
|---|
| Datatec ($DTC) | 10.6% | 11.6% | 9.8% | -1.5% | -5.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Progility ($PGY) | 1.8x | 12.8x | 6.8x | 3.9x | |
| Zoo Digital Group ($ZOO) | | | 38.3x | 3.2x | |
| Statpro Group ($SOG) | -0.3x | -0.2x | | 3.0x | |
| Idox ($IDOX) | 1.0x | 1.3x | 1.2x | 2.2x | |
| International Bus Mach Corp ($IBM) | 1.1x | 1.3x | 1.7x | 1.8x | 1.7x |
| |
|---|
| Median (30 companies) | -0.3x | -0.6x | -0.9x | -0.5x | 0.9x |
|---|
| Datatec ($DTC) | 0.3x | 0.4x | 1.1x | 10.2x | |
