Murgitroyd Group Net Income increased on 4.9% and EBITDA Margin showed almost no change

11 Sep 2018 • About Murgitroyd Group ($MUR) • By InTwits

Murgitroyd Group reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:

Murgitroyd Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
The company has business model with average profitability: ROIC is 10.9%

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 decreased slightly on 0.80%. EBITDA Margin showed almost no change in FY2018. EBITDA Margin stuck to a declining trend at -1.4 pp per annum in the last 5 years.

Gross Margin increased slightly on 0.55 pp from 54.6% to 55.2% in FY2018. During the last 5 years Gross Margin bottomed in FY2016 at 53.7% and was growing since that time. SG&A as a % of Revenue increased slightly on 1.0 pp from 46.0% to 47.0% in FY2018.

Net Income margin showed almost no change in FY2018.

Investments (CAPEX, working capital and M&A)

In FY2018 Murgitroyd Group had CAPEX/Revenue of 1.3%. CAPEX/Revenue increased slightly on 0.97 pp from 0.38% in FY2015 to 1.3% in FY2018. Average CAPEX/Revenue for the last three years was 0.82%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2015 at 0.38% and was growing since that time.

Return on investment

The company operates at low ROIC (10.9%) and ROE (8.2%). ROIC decreased slightly on 1.1 pp from 12.0% to 10.9% in FY2018. ROE showed almost no change in FY2018. ROIC stuck to a declining trend at -2.1 pp per annum in FY2014-FY2018. ROE stuck to a declining trend at -1.0 pp per annum in FY2014-FY2018.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.7x and Debt / EBITDA is 0.0x. Debt dropped on 44.4% while cash jumped on 19.2%.

Murgitroyd Group has no short term refinancing risk: cash is higher than short term debt (2,726.1%).

Financial and operational results

FY ended 31 May 2018

Murgitroyd Group ($MUR) key annual financial indicators

mln. £	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	38.353	39.819	42.231	44.251	43.896	-0.8%
Gross Profit	22.085	22.069	22.666	24.167	24.213	0.2%
SG&A		17.887	18.372	20.362	20.646	1.4%
EBITDA	5.823	4.519	4.589	4.140	4.004	-3.3%
Net Income	2.950	3.124	3.166	2.543	2.668	4.9%
Balance Sheet
Cash	1.457	1.617	3.298	2.539	3.026	19.2%
Short Term Debt	0.795	0.304	0.185	0.144	0.111	-22.9%
Long Term Debt	1.045	0.607	0.361	0.207	0.084	-59.4%
Cash flow
Capex	0.320	0.150	0.165	0.318	0.592	86.2%
Ratios
Revenue growth	6.6%	3.8%	6.1%	4.8%	-0.8%
EBITDA growth	-7.2%	-22.4%	1.5%	-9.8%	-3.3%

Gross Margin	57.6%	55.4%	53.7%	54.6%	55.2%	0.5%
EBITDA Margin	15.2%	11.3%	10.9%	9.4%	9.1%	-0.2%
SG&A, % of revenue		44.9%	43.5%	46.0%	47.0%	1.0%
Net Income Margin	7.7%	7.8%	7.5%	5.7%	6.1%	0.3%
CAPEX, % of revenue	0.8%	0.4%	0.4%	0.7%	1.3%	0.6%

ROIC	19.9%	14.6%	14.2%	12.0%	10.9%	-1.1%
ROE	11.6%	11.4%	10.8%	8.2%	8.2%	0.1%
Net Debt/EBITDA	0.1x	-0.2x	-0.6x	-0.5x	-0.7x	-0.2x

Peers in Support Services

Below you can find Murgitroyd Group benchmarking vs. other companies in Support 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
Mobilityone Ltd ($MBO)	3.7%	23.0%	-5.3%	37.9%
Mortice Ltd ($MORT)		18.9%	51.1%	36.1%	21.1%
Rws Hldgs ($RWS)	20.9%	1.8%	28.1%	34.5%
Empresaria Group ($EMR)	-3.3%	-0.3%	44.4%	32.1%
Norish ($NSH)	3.7%	16.4%	16.7%	31.4%
Median (49 companies)	4.5%	7.2%	2.2%	7.0%	8.2%
Murgitroyd Group ($MUR)		3.8%	6.1%	4.8%	-0.8%

Top companies by Gross margin, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Inspired Energy ($INSE)	78.7%	76.2%	80.5%	83.1%
Ienergizer Ltd ($IBPO)	76.8%	72.7%	71.3%	71.2%	69.7%
Spectra Systems Corp ($SPSY)	51.4%	47.6%	68.3%	71.1%
Vianet Group ($VNET)	58.8%	69.2%	70.1%	69.7%	69.9%
Grafenia ($GRA)	56.1%	70.8%	66.3%	63.0%	57.0%
Median (43 companies)	29.2%	28.1%	27.0%	27.9%	24.9%
Murgitroyd Group ($MUR)	57.6%	55.4%	53.7%	54.6%	55.2%

Top companies by EBITDA margin, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Northgate ($67GX)	40.6%	39.4%	38.3%	35.9%	35.4%
Spectra Systems Corp ($SPSY)	12.3%	6.0%	19.7%	34.0%
Inspired Energy ($INSE)	1.5%	35.4%	34.4%	32.4%
Vp ($VP.)	24.2%	26.2%	28.4%	28.6%	27.2%
Rws Hldgs ($RWS)	22.8%	23.1%	26.4%	25.5%
Median (49 companies)	6.7%	6.9%	4.9%	4.9%	7.0%
Murgitroyd Group ($MUR)	15.2%	11.3%	10.9%	9.4%	9.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Vp ($VP.)	21.6%	25.7%	24.1%	26.0%	23.6%
Augean ($AUG)	12.3%	12.3%	11.0%	10.0%
Petards Group ($PEG)	0.5%	0.9%	1.7%	10.0%
Capital Drilling Ltd ($CAPD)	13.9%	10.1%	13.7%	9.0%
Billing Services Group ($BILL)	2.1%	4.1%	3.0%	4.5%
Median (49 companies)	1.0%	1.0%	1.1%	0.9%	1.0%
Murgitroyd Group ($MUR)	0.8%	0.4%	0.4%	0.7%	1.3%

Top companies by ROIC, %


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Sthree ($STHR)	38.1%	50.2%	46.2%	43.4%
Mortice Ltd ($MORT)	19.6%	21.9%	14.5%	23.2%	18.4%
Petards Group ($PEG)	24.7%	23.9%	22.7%	20.3%
Rws Hldgs ($RWS)	24.5%	23.3%	23.5%	20.2%
Latham(James) ($LTHM)	17.5%	16.8%	19.2%	19.3%	17.4%
Median (50 companies)	10.0%	10.4%	7.8%	7.4%	7.4%
Murgitroyd Group ($MUR)	19.9%	14.6%	14.2%	12.0%	10.9%

Top companies by Net Debt / EBITDA


Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Nakama Group ($NAK)	5.2x	1.4x	3.1x	48.5x
21St Century Technology ($C21)	-0.8x	-0.2x		11.2x
Ceps ($CEPS)	6.6x	3.8x	13.9x	5.8x
Ibex Global Solutions ($IBEX)	2.7x	1.0x	1.7x	4.5x
Menzies(John) ($68HN)	2.0x	2.4x	1.2x	3.0x
Median (42 companies)	0.3x	0.2x	0.3x	0.5x	0.9x
Murgitroyd Group ($MUR)	0.1x	-0.2x	-0.6x	-0.5x	-0.7x

Murgitroyd Group stock price chart

Murgitroyd Group financials

mln.	FY2010	FY2011	FY2012

Revenue	29.429	33.218	35.699
EBITDA	4.074	4.345	5.465
Net income	2.702	2.653	3.142
CAPEX	0.086	0.379	0.163
Debt	6.745	5.288	4.099
Cash	2.012	1.252	1.208

About Murgitroyd Group

Murgitroyd Group PLC, together with its subsidiaries, provides intellectual property advisory services. The company also offers patent and trade mark attorney, and technical support services. Its intellectual property services includes filing, prosecuting, litigating, licensing, assigning, and renewing patents, trademarks, and designs, as well as copyrights and domain name disputes to third party customers. In addition, the company provides IP portal, PCT national stage entry, European patent validation, solicitor, patent translations and drawings, and searching services. It provides patent services in various sectors, such as mechanical and automotive; electronics and software, life sciences and health care, nanotechnology, chemistry and materials, and energy. The company serves corporate in-house counsel, lawyers, start-up companies, and universities. It operates in the United Kingdom, the United States, France, Japan, the Republic of Ireland, Italy, Germany, Taiwan, Switzerland, the Netherlands, Australia, China, and internationally. The company was founded in 1975 and is headquartered in Glasgow, the United Kingdom.