Sthree EBITDA jumped on 23.1% and EBITDA Margin showed almost no change
28 Jan 2019 • About Sthree (
$STHR) • By InTwits
Sthree reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Sthree is a growth stock: FY2018 revenue growth was 12.9%, 5 year revenue CAGR was 14.7% at FY2018 ROIC 36.3%
- EBITDA Margin is relatively stable: 4.3% in FY2018 vs. 3.9% in FY2017 vs. 4.0% in FY2014
- Sthree has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- The company has highly profitable business model: ROIC is 36.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sthree's Revenue jumped on 12.9%. Having stable revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 25.2 pp from -416% to -390% in FY2018.
Gross Margin showed almost no change in FY2018. Gross Margin stuck to a declining trend at -0.93 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue pursued a declining trend in the last 5 years.
Net Income margin showed almost no change in FY2018.
Investments (CAPEX, working capital and M&A)
Sthree's CAPEX/Revenue was 0.25% in FY2018. CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 0.27%.
Return on investment
The company operates at high and attractive ROIC (36.3%) and ROE (37.6%). ROIC decreased on 7.1 pp from 43.4% to 36.3% in FY2018. ROE increased on 2.2 pp from 35.3% to 37.6% in FY2018. During the last 5 years ROIC topped in FY2015 at 50.2% and was declining since that time.
Leverage (Debt)
Debt level is 0.1x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from -0.1x to 0.1x in FY2018. Debt surged on 250% while cash jumped on 138%. During FY2014-FY2018 Net Debt/EBITDA bottomed in FY2016 at -0.2x and was growing since that time.
Sthree has short term refinancing risk: cash is only 92.5% of short term debt.
Management team
Alexander David Smith "Alex" is a Sthree's CFO. Alexander David Smith "Alex" has spent 11 years at the company.
Financial and operational results
FY ended 30 Nov 2018
Sthree ($STHR) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 747 | 849 | 960 | 1,115 | 1,258 | 12.9% |
| Gross Profit | 218 | 236 | 259 | 288 | 321 | 11.6% |
| SG&A | 194 | 192 | 215 | 244 | 274 | 12.2% |
| EBITDA | 30 | 43 | 43 | 44 | 54 | 23.1% |
| Net Income | 16 | 27 | 27 | 28 | 34 | 24.0% |
Balance Sheet
|
|---|
| Cash | 14 | 26 | 16 | 21 | 51 | 138.3% |
| Short Term Debt | 24 | 20 | 6 | 16 | 55 | 249.6% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 3 | 4 | 3 | 2 | 3 | 33.2% |
Ratios
|
|---|
| Revenue growth | 17.8% | 13.6% | 13.1% | 16.1% | 12.9% | |
| EBITDA growth | 38.2% | 46.5% | -2.0% | 2.2% | 23.1% | |
|
|---|
| Gross Margin | 29.2% | 27.8% | 26.9% | 25.8% | 25.5% | -0.3% |
| EBITDA Margin | 4.0% | 5.1% | 4.4% | 3.9% | 4.3% | 0.4% |
| SG&A, % of revenue | 26.0% | 22.6% | 22.4% | 21.9% | 21.7% | -0.1% |
| Net Income Margin | 2.1% | 3.1% | 2.8% | 2.5% | 2.7% | 0.2% |
| CAPEX, % of revenue | 0.4% | 0.4% | 0.3% | 0.2% | 0.3% | 0.0% |
|
|---|
| ROIC | 38.1% | 50.2% | 46.2% | 43.4% | 36.3% | -7.1% |
| ROE | 30.9% | 48.2% | 40.3% | 35.3% | 37.6% | 2.2% |
| Net Debt/EBITDA | 0.3x | -0.1x | -0.2x | -0.1x | 0.1x | 0.2x |
Peers in Support Services
Below you can find Sthree 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 ($RWS) | | 1.8% | 28.1% | 34.5% | 86.6% |
| Empresaria Group ($EMR) | -3.3% | -0.3% | 44.4% | 32.1% | |
| Norish ($NSH) | 3.7% | 16.4% | 16.7% | 31.4% | |
| |
|---|
| Median (49 companies) | 3.4% | 6.9% | 2.2% | 6.9% | 8.2% |
|---|
| Sthree ($STHR) | | 13.6% | 13.1% | 16.1% | 12.9% |
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 ($GRA) | 56.1% | 70.8% | 66.3% | 63.0% | 57.0% |
| |
|---|
| Median (43 companies) | 29.2% | 28.4% | 27.3% | 28.1% | 28.8% |
|---|
| Sthree ($STHR) | 29.2% | 27.8% | 26.9% | 25.8% | 25.5% |
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 ($RWS) | 22.8% | 23.1% | 26.4% | 25.5% | 20.8% |
| |
|---|
| Median (49 companies) | 6.8% | 7.6% | 5.7% | 5.7% | 6.8% |
|---|
| Sthree ($STHR) | 4.0% | 5.1% | 4.4% | 3.9% | 4.3% |
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 ($BILL) | 2.1% | 4.1% | 3.0% | 4.5% | |
| |
|---|
| Median (49 companies) | 1.0% | 1.0% | 1.1% | 0.9% | 1.0% |
|---|
| Sthree ($STHR) | 0.4% | 0.4% | 0.3% | 0.2% | 0.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| 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 ($RWS) | 24.5% | 23.3% | 23.5% | 20.2% | 12.8% |
| Latham(James) ($LTHM) | 17.5% | 16.8% | 19.2% | 19.3% | 17.4% |
| Ienergizer Ltd ($IBPO) | 17.9% | 10.4% | 17.4% | 18.1% | 19.8% |
| |
|---|
| Median (50 companies) | 10.0% | 10.4% | 7.8% | 7.4% | 7.9% |
|---|
| Sthree ($STHR) | 38.1% | 50.2% | 46.2% | 43.4% | 36.3% |
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) ($68HN) | 2.0x | 2.4x | 1.2x | 3.0x | |
| |
|---|
| Median (42 companies) | 0.1x | 0.2x | 0.3x | 0.5x | 0.7x |
|---|
| Sthree ($STHR) | 0.3x | -0.1x | -0.2x | -0.1x | 0.1x |
