Hornby revenue dropped on 24.8% and EBITDA Margin decreased on 4.5 pp from -11.9% to -16.4%
19 Jun 2018 • About Hornby (
$HRN) • By InTwits
Hornby reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Hornby is a company in decline: FY2018 revenue growth was -24.8%, 5 years revenue CAGR was -9.1%
- The company operates at negative EBITDA Margin: -16.4%
- Hornby motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -6.4% for the sames years
- Hornby has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.8%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: £2m in FY2018, £2m in FY2017, £3m in FY2016, £4m in FY2015, £4m in FY2014
- The company has unprofitable business model: ROIC is -32.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.3x while industry average is -0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Hornby's Revenue dropped on 24.8%. During the last 5 years Revenue growth topped in FY2015 at 12.8% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 27.3 pp from -24.3% to 3.0% in FY2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue increased on 7.2 pp from 51.4% to 58.6% in FY2018. SG&A as a % of Revenue followed a growing trend at 5.5 pp per annum in the last 5 years.
Net Income margin decreased on 7.3 pp from -20.4% to -27.6% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 4.6%. Hornby's CAPEX/Revenue decreased on 2.4 pp from 7.0% in FY2015 to 4.6% in FY2018. It's average CAPEX/Revenue for the last three years was 4.7%. CAPEX as a % of Revenue stuck to a declining trend at -0.98 pp per annum in the last 5 years.
Return on investment
The company operates at negative ROIC (-32.5%) and ROE (-32.6%). ROIC decreased on 4.5 pp from -28.0% to -32.5% in FY2018. ROE decreased slightly on 1.3 pp from -31.3% to -32.6% in FY2018.
Leverage (Debt)
The company paid down all the debt in FY2018. Cash jumped on 145%.
Financial and operational results
FY ended 31 Mar 2018
Hornby ($HRN) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 51.557 | 58.135 | 55.757 | 47.420 | 35.651 | -24.8% |
| Gross Profit | 23.327 | 27.174 | 21.765 | 18.150 | 13.751 | -24.2% |
| SG&A | 19.689 | 21.424 | 30.565 | 24.393 | 20.892 | -14.4% |
| EBITDA | 0.952 | 4.312 | -9.653 | -5.628 | -5.836 | |
| Net Income | -4.445 | -0.120 | -13.714 | -9.666 | -9.854 | |
Balance Sheet
|
|---|
| Cash | 0.619 | 0.451 | 0.677 | 1.580 | 3.878 | 145.4% |
| Short Term Debt | 7.630 | 7.747 | 7.883 | 0.082 | 0.000 | -100.0% |
| Long Term Debt | 0.242 | 0.163 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 4.059 | 4.073 | 3.221 | 1.756 | 1.648 | -6.2% |
Ratios
|
|---|
| Revenue growth | -10.2% | 12.8% | -4.1% | -15.0% | -24.8% | |
| EBITDA growth | -9.1% | 352.9% | -323.9% | -41.7% | 3.7% | |
|
|---|
| Gross Margin | 45.2% | 46.7% | 39.0% | 38.3% | 38.6% | 0.3% |
| EBITDA Margin | 1.8% | 7.4% | -17.3% | -11.9% | -16.4% | -4.5% |
| SG&A, % of revenue | 38.2% | 36.9% | 54.8% | 51.4% | 58.6% | 7.2% |
| Net Income Margin | -8.6% | -0.2% | -24.6% | -20.4% | -27.6% | -7.3% |
| CAPEX, % of revenue | 7.9% | 7.0% | 5.8% | 3.7% | 4.6% | 0.9% |
|
|---|
| ROIC | -7.7% | 0.5% | -36.6% | -28.0% | -32.5% | -4.5% |
| ROE | -13.1% | -0.4% | -42.9% | -31.3% | -32.6% | -1.3% |
| Net Debt/EBITDA | 7.6x | 1.7x | | | |
Peers in Leisure Goods
Below you can find Hornby benchmarking vs. other companies in Leisure Goods 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 |
|---|
| Lightwaverf ($LWRF) | 188.5% | -30.9% | -31.3% | 110.1% | |
| Lg Electronics Inc ($39IB) | 1.5% | -4.3% | -2.0% | 10.9% | |
| Tandem Group ($TND) | 10.5% | 9.8% | 11.7% | -4.1% | |
| Character Group ($CCT) | 45.7% | 1.2% | 22.1% | -4.7% | |
| Konami Corp ($KNM) | | 0.3% | 14.6% | -8.0% | 4.2% |
| |
|---|
| Median (6 companies) | 45.7% | 0.7% | 4.8% | -4.4% | 4.2% |
|---|
| Hornby ($HRN) | | 12.8% | -4.1% | -15.0% | -24.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Konami Corp ($KNM) | 31.3% | 32.8% | 35.0% | 38.6% | 40.6% |
| Lightwaverf ($LWRF) | 33.9% | | 32.5% | 35.5% | |
| Character Group ($CCT) | 29.8% | 37.0% | 31.6% | 32.6% | |
| Tandem Group ($TND) | 30.5% | 29.4% | 26.0% | 29.6% | |
| Lg Electronics Inc ($39IB) | 23.3% | 22.8% | 24.8% | 23.9% | |
| |
|---|
| Median (6 companies) | 30.2% | 29.4% | 28.8% | 31.1% | 40.6% |
|---|
| Hornby ($HRN) | 45.2% | 46.7% | 39.0% | 38.3% | 38.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Konami Corp ($KNM) | 13.3% | 16.5% | 21.5% | 22.9% | 24.1% |
| Character Group ($CCT) | 10.0% | 14.1% | 13.1% | 13.9% | |
| Tandem Group ($TND) | 5.3% | 4.7% | 4.2% | 7.0% | |
| Lg Electronics Inc ($39IB) | 6.4% | 5.5% | 5.6% | 6.9% | |
| Lightwaverf ($LWRF) | -7.5% | | -43.8% | -15.2% | |
| |
|---|
| Median (6 companies) | 5.9% | 14.1% | 4.9% | 7.0% | 24.1% |
|---|
| Hornby ($HRN) | 1.8% | 7.4% | -17.3% | -11.9% | -16.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Konami Corp ($KNM) | 21.7% | 11.8% | 7.6% | 6.5% | 7.4% |
| Lg Electronics Inc ($39IB) | 3.7% | 3.1% | 3.6% | 4.2% | |
| Vmoto Ltd ($VMT) | 2.6% | 1.8% | 3.0% | 3.9% | |
| Lightwaverf ($LWRF) | 2.0% | | 0.3% | 0.9% | |
| Character Group ($CCT) | 0.4% | 0.4% | 0.2% | 0.2% | |
| |
|---|
| Median (6 companies) | 2.3% | 1.8% | 1.7% | 2.4% | 7.4% |
|---|
| Hornby ($HRN) | 7.9% | 7.0% | 5.8% | 3.7% | 4.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Character Group ($CCT) | 26.8% | 37.3% | 33.7% | 29.9% | |
| Tandem Group ($TND) | 37.6% | 16.6% | 13.2% | 24.9% | |
| Konami Corp ($KNM) | 3.2% | 6.6% | 10.4% | 15.0% | 17.5% |
| Lg Electronics Inc ($39IB) | 8.9% | 5.8% | 6.5% | 11.3% | |
| Vmoto Ltd ($VMT) | 1.4% | 24.2% | -34.5% | -33.0% | |
| |
|---|
| Median (6 companies) | 6.0% | 16.6% | 8.4% | 13.2% | 17.5% |
|---|
| Hornby ($HRN) | -7.7% | 0.5% | -36.6% | -28.0% | -32.5% |
Top companies by Net Debt / EBITDA
| Top | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lg Electronics Inc ($39IB) | 1.8x | 2.0x | 1.8x | 1.4x | |
| Character Group ($CCT) | 0.5x | -0.3x | -0.4x | -0.7x | |
| Tandem Group ($TND) | -1.1x | 3.5x | 0.6x | -0.9x | |
| Konami Corp ($KNM) | -0.2x | -0.6x | -1.4x | -2.0x | -2.2x |
| |
|---|
| Median (4 companies) | 0.5x | -0.3x | 0.1x | -0.8x | -2.2x |
|---|
