Triad Group reports 20.1 pp ROIC decline from 61.1% to 41.0% in 2018 in 2018 and 10.0% Revenue decline
11 Jun 2018 • About Triad Group (
$TRD) • By InTwits
Triad Group reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 6.3% in FY2018 vs. 5.2% in FY2017 vs. 1.0% in FY2014
- EBITDA Margin is quite volatile: 6.3% in FY2018, 5.2% in FY2017, 4.0% in FY2016, 2.3% in FY2015, 1.0% in FY2014
- Triad Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.2%.
- The company has highly profitable business model: ROIC is 41.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 10.0%. During the last 5 years Revenue growth topped in FY2016 at 20.6% and was decelerating since that time. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.1 pp from 5.2% to 6.3% in FY2018. EBITDA Margin stuck to a growing trend at 1.3 pp per annum in FY2014-FY2018.
Gross Margin increased slightly on 0.81 pp from 16.2% to 17.0% in FY2018. Gross Margin grew at 0.70 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in FY2018.
Net Income margin increased slightly on 0.88 pp from 5.0% to 5.8% in FY2018. Net Income margin stuck to a growing trend at 1.5 pp per annum in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.10% in FY2018. Triad Group showed almost no change in CAPEX/Revenue from FY2015 to FY2018. It's average level of CAPEX/Revenue for the last three years was 0.16%.
Return on investment
The company operates at high and attractive ROIC (41.0%) and ROE (37.1%). ROIC dropped on 20.1 pp from 61.1% to 41.0% in FY2018. ROE dropped on 16.8 pp from 53.9% to 37.1% in FY2018. During the last 5 years ROIC topped in FY2016 at 74.4% and was declining since that time. During the last 5 years ROE topped in FY2016 at 83.8% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.1x and Debt / EBITDA is 0.0x. Debt surged on 109% while cash surged on 66.9%.
Triad Group has no short term refinancing risk: cash is higher than short term debt (125,033.3%).
Financial and operational results
FY ended 31 Mar 2018
Triad Group ($TRD) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 19.702 | 23.482 | 28.317 | 30.912 | 27.819 | -10.0% |
| Gross Profit | 2.863 | 3.311 | 4.236 | 5.000 | 4.724 | -5.5% |
| SG&A | | 2.849 | 3.256 | 3.453 | 3.045 | -11.8% |
| EBITDA | 0.200 | 0.543 | 1.133 | 1.612 | 1.745 | 8.3% |
| Net Income | 0.011 | 0.352 | 1.213 | 1.534 | 1.624 | 5.9% |
Balance Sheet
|
|---|
| Cash | 0.108 | 0.390 | 0.955 | 2.248 | 3.751 | 66.9% |
| Short Term Debt | 0.109 | 0.006 | 0.007 | 0.011 | 0.003 | -72.7% |
| Long Term Debt | 0.024 | 0.018 | 0.011 | 0.000 | 0.020 | |
Cash flow
|
|---|
| Capex | 0.020 | 0.097 | 0.042 | 0.074 | 0.029 | -60.8% |
Ratios
|
|---|
| Revenue growth | 4.4% | 19.2% | 20.6% | 9.2% | -10.0% | |
| EBITDA growth | 316.7% | 171.5% | 108.7% | 42.3% | 8.3% | |
|
|---|
| Gross Margin | 14.5% | 14.1% | 15.0% | 16.2% | 17.0% | 0.8% |
| EBITDA Margin | 1.0% | 2.3% | 4.0% | 5.2% | 6.3% | 1.1% |
| SG&A, % of revenue | | 12.1% | 11.5% | 11.2% | 10.9% | -0.2% |
| Net Income Margin | 0.1% | 1.5% | 4.3% | 5.0% | 5.8% | 0.9% |
| CAPEX, % of revenue | 0.1% | 0.4% | 0.1% | 0.2% | 0.1% | -0.1% |
|
|---|
| ROIC | 24.5% | 61.5% | 74.4% | 61.1% | 41.0% | -20.1% |
| ROE | 2.5% | 53.4% | 83.8% | 53.9% | 37.1% | -16.8% |
| Net Debt/EBITDA | 0.1x | -0.7x | -0.8x | -1.4x | -2.1x | -0.7x |
Peers in Software & Computer Services
Below we provide Triad Group benchmarking against other companies in Software & Computer 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 | 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 ($ZOO) | -7.7% | 19.9% | 1.5% | 41.7% | |
| |
|---|
| Median (39 companies) | 4.7% | 4.7% | 10.9% | 12.4% | 2.3% |
|---|
| Triad Group ($TRD) | | 19.2% | 20.6% | 9.2% | -10.0% |
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 ($DOTD) | 90.5% | 89.3% | 87.4% | 86.1% | |
| |
|---|
| Median (33 companies) | 57.6% | 58.8% | 60.0% | 57.0% | 26.2% |
|---|
| Triad Group ($TRD) | 14.5% | 14.1% | 15.0% | 16.2% | 17.0% |
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 (39 companies) | 11.1% | 12.4% | 10.3% | 11.0% | 10.5% |
|---|
| Triad Group ($TRD) | 1.0% | 2.3% | 4.0% | 5.2% | 6.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Actual Experience ($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 (39 companies) | 1.9% | 1.4% | 1.2% | 1.3% | 2.3% |
|---|
| Triad Group ($TRD) | 0.1% | 0.4% | 0.1% | 0.2% | 0.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rm ($RM.) | 130.8% | 289.2% | 254.7% | 73.8% | |
| 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 ($IBM) | 31.6% | 29.7% | 21.5% | 19.5% | 19.8% |
| Microgen ($MCGN) | 9.0% | 12.1% | 15.4% | 18.4% | |
| |
|---|
| Median (41 companies) | 9.0% | 4.0% | 7.1% | 6.3% | 6.4% |
|---|
| Triad Group ($TRD) | 24.5% | 61.5% | 74.4% | 61.1% | 41.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Datatec ($DTC) | 0.3x | 0.4x | 1.1x | 10.2x | |
| 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 | |
| |
|---|
| Median (31 companies) | -0.3x | -0.5x | -0.9x | -0.5x | 0.1x |
|---|
| Triad Group ($TRD) | 0.1x | -0.7x | -0.8x | -1.4x | -2.1x |
