Swallowfield reports 36.2% EBITDA growth in 2018 and almost no change in Revenue of 73.9

25 Sep 2018 • About Swallowfield ($SWL) • By InTwits

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

• Swallowfield has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 2.3%
• CAPEX is quite volatile: $4m in FY2018, $4m in FY2017, $2m in FY2016, $1m in FY2015, $3m in FY2014
• The company has highly profitable business model: ROIC is 17.2%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Swallowfield's Revenue showed almost no change in FY2018. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 2.4 pp from 6.5% to 8.9% in FY2018. EBITDA Margin stuck to a growing trend at 1.2 pp per annum in FY2014-FY2018.

Gross Margin showed almost no change in FY2018. Gross Margin grew at 2.3 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 2.0 pp from 13.8% to 11.8% in FY2018.

Net Income margin increased slightly on 1.4 pp from 3.4% to 4.8% in FY2018. Net Income margin followed a growing trend at 1.1 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

Swallowfield's CAPEX/Revenue was 2.2% in FY2018. Swallowfield's CAPEX/Revenue decreased slightly on 0.91 pp from 3.1% in FY2015 to 2.2% in FY2018. It's average level of CAPEX/Revenue for the last three years was 2.1%.

Return on investment

The company operates at good ROIC (17.2%) and ROE (14.5%). ROIC decreased slightly on 1.2 pp from 18.4% to 17.2% in FY2018. ROE showed almost no change in FY2018. During FY2014-FY2018 ROIC topped in FY2016 at 18.7% and was declining since that time. During FY2014-FY2018 ROE topped in FY2016 at 15.6% and was declining since that time.

Leverage (Debt)

Debt level is 0.5x Net Debt / EBITDA and 0.7x Debt / EBITDA. Net Debt / EBITDA surged on 0.9x from -0.4x to 0.5x in FY2018. Debt jumped on 108% while cash dropped on 77.0%.

Swallowfield has short term refinancing risk: cash is only 82.9% of short term debt.

Financial and operational results

FY ended 30 Nov -0001

Swallowfield ($SWL) key annual financial indicators

mln. £	2014	2015	2016	2017	2018	2018/2017
P&L
Revenue	50.033	49.447	54.455	74.314	73.945	-0.5%
Gross Profit	5.174	5.838	8.062	13.910	13.692	-1.6%
SG&A		4.842	6.269	10.235	8.716	-14.8%
EBITDA	2.000	2.224	3.657	4.820	6.563	36.2%
Net Income	0.157	0.746	2.001	2.554	3.542	38.7%
Balance Sheet
Cash	0.533	0.148	0.798	4.057	0.934	-77.0%
Short Term Debt	0.000	0.137	0.141	0.534	1.127	111.0%
Long Term Debt	0.000	0.583	0.442	1.559	3.230	107.2%
Cash flow
Capex	0.879	1.543	1.181	1.367	1.631	19.3%
Ratios
Revenue growth	3.0%	-1.2%	10.1%	36.5%	-0.5%
EBITDA growth	127.8%	11.2%	64.4%	31.8%	36.2%
Gross Margin	10.3%	11.8%	14.8%	18.7%	18.5%	-0.2%
EBITDA Margin	4.0%	4.5%	6.7%	6.5%	8.9%	2.4%
SG&A, % of revenue		9.8%	11.5%	13.8%	11.8%	-2.0%
Net Income Margin	0.3%	1.5%	3.7%	3.4%	4.8%	1.4%
CAPEX, % of revenue	1.8%	3.1%	2.2%	1.8%	2.2%	0.4%
ROIC	5.1%	8.4%	18.7%	18.4%	17.2%	-1.2%
ROE	1.3%	5.9%	15.6%	14.7%	14.5%	-0.2%
Net Debt/EBITDA	-0.3x	0.3x	-0.1x	-0.4x	0.5x	0.9x

Peers in Personal Goods

Below we provide Swallowfield benchmarking against other companies in Personal Goods 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
Creightons ($CRL)		4.2%	4.1%	45.6%	13.8%
Pittards ($PTD)	-3.0%	-12.1%	-11.5%	12.1%
Svenska Cellulosa Ab-Sca ($0MCK)		10.8%	-86.7%	8.4%
Far Eastern New Century Corp ($FETD)		-7.5%	-1.0%	0.9%
Bagir Grp Ltd ($BAGR)	-2.5%	-22.5%	-14.8%	-20.3%
Median (6 companies)	-2.5%	-9.8%	-6.2%	4.7%	13.8%
Swallowfield ($SWL)		-1.2%	10.1%	36.5%	-0.5%

Top companies by Gross margin, %

Top	FY2014	FY2015	FY2016	FY2017	FY2018
Creightons ($CRL)	40.8%	39.2%	42.2%	42.5%	40.6%
Pittards ($PTD)	20.3%	21.7%	8.0%	23.4%
Far Eastern New Century Corp ($FETD)	20.3%	23.2%	23.7%	22.8%
Bagir Grp Ltd ($BAGR)	17.4%	9.8%	16.4%	15.0%
Median (4 companies)	20.3%	23.2%	23.7%	23.1%	40.6%
Swallowfield ($SWL)	10.3%	11.8%	14.8%	18.7%	18.5%

Top companies by EBITDA margin, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Svenska Cellulosa Ab-Sca ($0MCK)	15.2%	14.6%	22.1%	21.9%
Far Eastern New Century Corp ($FETD)	12.1%	15.0%	15.7%	16.5%
Creightons ($CRL)	4.7%	5.0%	4.7%	6.1%	6.4%
Pittards ($PTD)	6.9%	6.2%	-10.9%	5.2%
Bagir Grp Ltd ($BAGR)	3.4%	-3.9%	2.2%	2.6%
Median (6 companies)	9.5%	10.4%	10.2%	5.7%	6.4%
Swallowfield ($SWL)	4.0%	4.5%	6.7%	6.5%	8.9%

Top companies by CAPEX/Revenue, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Svenska Cellulosa Ab-Sca ($0MCK)	5.5%	6.6%	19.8%	21.5%
Far Eastern New Century Corp ($FETD)	12.0%	11.1%	9.3%	10.8%
Paternoster Resources ($PRS)	38.5%	147.6%	102.1%	3.6%
Pittards ($PTD)	1.7%	14.3%	4.4%	2.3%
Creightons ($CRL)	1.1%	0.8%	3.7%	1.8%	1.8%
Median (6 companies)	3.6%	8.8%	6.8%	2.9%	1.8%
Swallowfield ($SWL)	1.8%	3.1%	2.2%	1.8%	2.2%

Top companies by ROIC, %

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Creightons ($CRL)	8.4%	8.8%	6.7%	15.5%	14.4%
Far Eastern New Century Corp ($FETD)	2.6%	3.0%	3.1%	3.3%
Pittards ($PTD)	8.2%	5.2%	-11.9%	3.3%
Svenska Cellulosa Ab-Sca ($0MCK)	8.7%	9.0%	1.9%	2.8%
Bagir Grp Ltd ($BAGR)	1.9%	-24.8%	-1.6%	-2.8%
Median (6 companies)	8.3%	4.1%	2.1%	3.0%	14.4%
Swallowfield ($SWL)	5.1%	8.4%	18.7%	18.4%	17.2%

Top companies by Net Debt / EBITDA

Top 5	FY2014	FY2015	FY2016	FY2017	FY2018
Pittards ($PTD)	3.2x	3.4x		5.1x
Far Eastern New Century Corp ($FETD)	5.6x	5.1x	4.7x	4.7x
Svenska Cellulosa Ab-Sca ($0MCK)	2.2x	1.7x	9.7x	1.8x
Bagir Grp Ltd ($BAGR)	4.0x		-5.9x	0.1x
Creightons ($CRL)	0.7x	0.1x	-0.8x	-1.1x	-0.1x
Median (5 companies)	2.7x	3.4x	4.7x	1.8x	-0.1x
Swallowfield ($SWL)	-0.3x	0.3x	-0.1x	-0.4x	0.5x

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