Adept Telecom reports 44.2% EBITDA growth in 2018 and 34.8% Revenue growth
10 Jul 2018 • About Adept Telecom (
$ADT) • By InTwits
Adept Telecom reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Adept Telecom is a fast growth stock: FY2018 revenue growth was 34.8%, 5 year revenue CAGR was 17.2% at FY2018 ROIC 14.1%
- Adept Telecom has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has highly profitable business model: ROIC is 14.1%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 1.5x
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 jumped on 34.8%. Revenue growth was accelerating on average by 8.5 pp per annum in FY2014-FY2018. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.4 pp from 20.6% to 22.0% in FY2018.
Gross Margin increased on 7.0 pp from 42.3% to 49.4% in FY2018. Gross Margin followed a growing trend at 3.1 pp per annum in FY2014-FY2018. SG&A as a % of Revenue increased on 6.5 pp from 29.7% to 36.3% in FY2018.
Net Income margin showed almost no change in FY2018. Net Income margin followed a growing trend at 0.52 pp per annum in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 0.78%. CAPEX/Revenue increased slightly on 0.55 pp from 0.24% in FY2015 to 0.78% in FY2018. It's average CAPEX/Revenue for the last three years was 1.0%.
Return on investment
The company operates at high and attractive ROE (27.0%) while ROIC is a bit lower (14.1%). ROIC showed almost no change in FY2018. ROE increased on 4.9 pp from 22.1% to 27.0% in FY2018. During FY2014-FY2018 ROIC topped in FY2016 at 16.5% and was declining since that time. ROE followed a growing trend at 3.7 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 3.0x. Net Debt / EBITDA jumped on 0.1x from 2.2x to 2.3x in FY2018. Debt surged on 84.3% while cash jumped on 476%. Net Debt/EBITDA grew at 0.5x per annum in FY2014-FY2018.
The company has no short term refinancing risk: short term debt is zero.
Financial and operational results
FY ended 31 Mar 2018
Adept Telecom ($ADT) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 20.852 | 22.066 | 28.881 | 34.436 | 46.434 | 34.8% |
| Gross Profit | 7.584 | 8.298 | 11.634 | 14.571 | 22.919 | 57.3% |
| SG&A | | 5.928 | 8.104 | 10.239 | 16.838 | 64.4% |
| EBITDA | 4.038 | 4.588 | 5.765 | 7.093 | 10.229 | 44.2% |
| Net Income | 1.330 | 1.534 | 2.390 | 2.749 | 3.936 | 43.2% |
Balance Sheet
|
|---|
| Cash | 3.777 | 2.094 | 6.166 | 1.238 | 7.127 | 475.7% |
| Short Term Debt | 1.206 | 0.538 | 0.000 | 0.706 | 0.000 | -100.0% |
| Long Term Debt | 5.533 | 3.095 | 12.148 | 15.988 | 30.760 | 92.4% |
Cash flow
|
|---|
| Capex | 0.063 | 0.052 | 0.532 | 0.146 | 0.364 | 149.3% |
Ratios
|
|---|
| Revenue growth | -0.8% | 5.8% | 30.9% | 19.2% | 34.8% | |
| EBITDA growth | -6.4% | 13.6% | 25.7% | 23.0% | 44.2% | |
|
|---|
| Gross Margin | 36.4% | 37.6% | 40.3% | 42.3% | 49.4% | 7.0% |
| EBITDA Margin | 19.4% | 20.8% | 20.0% | 20.6% | 22.0% | 1.4% |
| SG&A, % of revenue | | 26.9% | 28.1% | 29.7% | 36.3% | 6.5% |
| Net Income Margin | 6.4% | 7.0% | 8.3% | 8.0% | 8.5% | 0.5% |
| CAPEX, % of revenue | 0.3% | 0.2% | 1.8% | 0.4% | 0.8% | 0.4% |
|
|---|
| ROIC | 13.2% | 14.3% | 16.5% | 14.2% | 14.1% | -0.1% |
| ROE | 13.0% | 13.4% | 19.9% | 22.1% | 27.0% | 4.9% |
| Net Debt/EBITDA | 0.7x | 0.3x | 1.0x | 2.2x | 2.3x | 0.1x |
Peers in Fixed Line Telecommunications
Below we provide Adept Telecom benchmarking against other companies in Fixed Line Telecommunications 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 |
|---|
| Telecom Egypt ($TEEG) | | 0.2% | 14.5% | 33.1% | |
| BT Group ($BT.A) | | -1.7% | 5.7% | 26.6% | -1.4% |
| Kt Corp ($KTCD) | -1.6% | -4.9% | 2.1% | 2.8% | |
| Rostelekom ($RKMD) | | -0.5% | 0.0% | 2.7% | |
| Ooredoo Qsc ($ORDS) | -1.9% | -3.2% | 1.1% | 0.7% | |
| |
|---|
| Median (11 companies) | -1.6% | -0.5% | 0.1% | 0.3% | -1.4% |
|---|
| Adept Telecom ($ADT) | | 5.8% | 30.9% | 19.2% | 34.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Kt Corp ($KTCD) | 77.9% | 77.9% | 78.5% | 83.5% | |
| Koninklijke Kpn Nv ($0O8F) | | | 68.7% | 70.4% | |
| Verizon Communications Inc ($VZC) | 60.7% | 60.1% | 59.2% | 59.1% | |
| O2 Czech Republic As ($O2CZ) | | | 48.5% | 48.7% | |
| Telecom Egypt ($TEEG) | 44.2% | 41.6% | 43.2% | 39.6% | |
| |
|---|
| Median (5 companies) | 44.2% | 41.6% | 53.8% | 59.1% | |
|---|
| Adept Telecom ($ADT) | 36.4% | 37.6% | 40.3% | 42.3% | 49.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ooredoo Qsc ($ORDS) | 37.6% | 39.2% | 39.2% | 40.5% | |
| Koninklijke Kpn Nv ($0O8F) | 39.1% | 33.2% | 35.7% | 35.5% | |
| Verizon Communications Inc ($VZC) | 28.4% | 37.3% | 34.1% | 35.2% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 35.4% | 31.3% | 32.4% | 32.2% | |
| Telefonica Sa ($TDE) | 31.7% | 24.1% | 29.1% | 31.1% | |
| |
|---|
| Median (11 companies) | 31.9% | 29.9% | 30.6% | 31.0% | 29.1% |
|---|
| Adept Telecom ($ADT) | 19.4% | 20.8% | 20.0% | 20.6% | 22.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telecom Egypt ($TEEG) | 13.0% | 21.4% | 23.7% | 32.8% | |
| Hellenic Telecom.Organization S.A. ($OTES) | 15.4% | 16.9% | 16.7% | 23.8% | |
| Rostelekom ($RKMD) | 19.3% | 21.1% | 20.8% | 19.9% | |
| Telefonica Sa ($TDE) | 19.1% | 18.7% | 17.7% | 17.3% | |
| Orange Polska Sa ($OPLD) | 17.6% | 16.9% | 44.8% | 17.0% | |
| |
|---|
| Median (11 companies) | 13.0% | 14.4% | 15.1% | 13.7% | 14.2% |
|---|
| Adept Telecom ($ADT) | 0.3% | 0.2% | 1.8% | 0.4% | 0.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| O2 Czech Republic As ($O2CZ) | 7.2% | 14.5% | 26.8% | 25.8% | |
| Verizon Communications Inc ($VZC) | 10.1% | 19.3% | 15.4% | 14.8% | |
| BT Group ($BT.A) | 34.7% | 37.5% | 20.7% | 13.9% | 15.4% |
| Telefonica Sa ($TDE) | 7.7% | 4.4% | 7.0% | 8.8% | |
| Koninklijke Kpn Nv ($0O8F) | 7.6% | 5.1% | 7.1% | 8.3% | |
| |
|---|
| Median (11 companies) | 7.7% | 7.1% | 7.1% | 7.9% | 15.4% |
|---|
| Adept Telecom ($ADT) | 13.2% | 14.3% | 16.5% | 14.2% | 14.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Telefonica Sa ($TDE) | 3.6x | 4.2x | 3.6x | 3.0x | |
| Koninklijke Kpn Nv ($0O8F) | 3.0x | 3.6x | 3.1x | 2.9x | |
| Verizon Communications Inc ($VZC) | 2.8x | 2.1x | 2.4x | 2.6x | |
| Orange Polska Sa ($OPLD) | 1.0x | 1.2x | 5.1x | 2.3x | |
| Rostelekom ($RKMD) | 1.8x | 1.8x | 1.9x | 2.0x | |
| |
|---|
| Median (11 companies) | 1.6x | 1.3x | 1.9x | 1.8x | 2.0x |
|---|
| Adept Telecom ($ADT) | 0.7x | 0.3x | 1.0x | 2.2x | 2.3x |
