Victrex reports 129% CAPEX growth in 2019 while 9.8% Revenue decline
05 Dec 2019 • About Victrex (
$VCT) • By InTwits
Victrex reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Victrex has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.5%. At the same time it's in pair with industry average of 10.2%
- CAPEX is quite volatile: £23m in FY2019, £10m in FY2018, £17m in FY2017, £26m in FY2016, £41m in FY2015
- The company has highly profitable business model: ROIC is 21.0%
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 on 9.8%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 3.1 pp from 44.4% to 41.3% in FY2019.
Gross Margin decreased on 3.8 pp from 63.8% to 60.0% in FY2019. SG&A as a % of Revenue showed almost no change in FY2019. During FY2015-FY2019 SG&A as a % of Revenue topped in FY2017 at 25.1% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2019.
Net Income margin decreased on 2.5 pp from 33.9% to 31.4% in FY2019. During the last 5 years Net Income margin topped in FY2017 at 34.3% and was declining since that time. The efficient tax rate was 11.7% in FY2019.
Investments (CAPEX, working capital and M&A)
Victrex's CAPEX/Revenue was 7.7% in FY2019. Victrex showed decline in CAPEX/Revenue of 2.5 pp from 10.3% in FY2016 to 7.7% in FY2019. Average CAPEX/Revenue for the last three years was 5.5%. During FY2015-FY2019 CAPEX as a % of Revenue bottomed in FY2018 at 3.0%.
Inventories as a % of Revenue surged on 10.1 pp from 21.3% to 31.4% in FY2019.
Victrex has spent £12m on M&A in FY2019 which accounts for 4.0% of revenue.
Return on investment
The company operates at high and attractive ROIC (21.0%) while ROE is a bit lower (19.4%). ROIC decreased on 4.3 pp from 25.3% to 21.0% in FY2019. ROE decreased on 3.4 pp from 22.8% to 19.4% in FY2019. ROIC stuck to a declining trend at -1.7 pp per annum in FY2015-FY2019.
Leverage (Debt)
The company has no debt. Cash increased slightly on 1.8%.
Valuation and dividends
The company's trades at EV/EBITDA 16.4x and P/E 22.4x.
The company paid 132.0% of Net Income as dividends in FY2019.
Management team
Victrex's CEO is Jakob Sigurdsson. Jakob Sigurdsson has 2 years tenure with the company. CEO total compensation was £763,672 in FY2019 which included £545,000 salary. Richard Armitage is a Victrex's CFO. Richard Armitage has spent 1 year at the company.
At the end of financial year the company had 3.0% shares owned by insiders. Insider ownership didn't change in 2019.
At the end of financial year the company had 973 employees. The number of employees jumped on 11.3%. Average revenue per employee in FY2019 was £302,158 and it dropped on 19.0%.
Financial and operational results
FY ended 30 Sep 2019
Victrex ($VCT) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 263.5 | 252.3 | 290.2 | 326.0 | 294.0 | -9.8% |
| Gross Profit | 168.2 | 158.7 | 183.8 | 208.0 | 176.3 | -15.2% |
| SG&A | 24.0 | 58.4 | 72.7 | 81.1 | 72.2 | -11.0% |
| EBITDA | 119.2 | 115.9 | 128.7 | 144.9 | 121.5 | -16.1% |
| EBIT | | | | 126.9 | 104.1 | -18.0% |
| Tax | | | | 16.9 | 12.3 | -27.2% |
| Net Income | 83.5 | 82.5 | 99.5 | 110.6 | 92.4 | -16.5% |
| Stock Based Compensation | | | | 2.6 | 2.1 | -19.2% |
Balance Sheet
|
|---|
| Cash | 53.8 | 64.0 | 120.1 | 71.2 | 72.5 | 1.8% |
| Inventory | | | | 69.3 | 92.2 | 33.0% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 41.2 | 25.9 | 16.7 | 9.9 | 22.7 | 129.3% |
| Dividends | | | | 106.0 | 122.0 | 15.1% |
| Acquisitions | | | | | 11.8 | |
Ratios
|
|---|
| Revenue growth | 4.3% | -4.3% | 15.0% | 12.3% | -9.8% | |
| EBITDA growth | 6.2% | -2.8% | 11.0% | 12.6% | -16.1% | |
|
|---|
| Gross Margin | 63.8% | 62.9% | 63.3% | 63.8% | 60.0% | -3.8% |
| EBITDA Margin | 45.2% | 45.9% | 44.3% | 44.4% | 41.3% | -3.1% |
| EBIT Margin | | | | 38.9% | 35.4% | -3.5% |
| SG&A, % of revenue | 9.1% | 23.1% | 25.1% | 24.9% | 24.6% | -0.3% |
| SBC, % of revenue | | | | 0.8% | 0.7% | -0.1% |
| Net Income Margin | 31.7% | 32.7% | 34.3% | 33.9% | 31.4% | -2.5% |
| CAPEX, % of revenue | 15.6% | 10.3% | 5.8% | 3.0% | 7.7% | 4.7% |
|
|---|
| ROIC | 28.9% | 26.0% | 24.9% | 25.3% | 21.0% | -4.3% |
| ROE | 23.5% | 22.1% | 22.9% | 22.8% | 19.4% | -3.4% |
| Net Debt/EBITDA | -0.5x | -0.6x | -0.9x | -0.5x | -0.6x | -0.1x |
People
|
|---|
| Insider ownership | | | | 3.0% | 3.0% | 0.0% |
| Employees | | | | 874 | 973 | 11.3% |
| Revenue/Employee, th. £ | | | | 373 | 302 | -19.0% |
Peers in Chemicals
Below we provide Victrex benchmarking against other companies in Chemicals 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Hardide ($HDD) | -0.9% | -28.7% | 51.3% | 42.3% | |
| Plastics Capital ($PLA) | 21.9% | 28.4% | 29.5% | 16.6% | |
| Lg Chem ($LGCD) | -10.5% | 2.2% | 24.4% | 9.7% | |
| |
|---|
| Median (3 companies) | -0.9% | -15.7% | 16.6% | 16.6% | |
|---|
| Victrex ($VCT) | | -4.3% | 15.0% | 12.3% | -9.8% |
Top companies by Gross margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Hardide ($HDD) | | 32.0% | 49.1% | 52.3% | |
| Plastics Capital ($PLA) | 35.3% | 33.2% | 32.1% | 31.4% | |
| Lg Chem ($LGCD) | 18.1% | 19.7% | 21.6% | 19.0% | |
| |
|---|
| Median (3 companies) | 39.5% | 33.2% | 38.1% | 31.4% | |
|---|
| Victrex ($VCT) | 63.8% | 62.9% | 63.3% | 63.8% | 60.0% |
Top companies by EBITDA margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Lg Chem ($LGCD) | 15.2% | 16.1% | 16.9% | 13.2% | |
| Plastics Capital ($PLA) | 13.3% | 9.5% | 8.9% | 8.6% | |
| Hardide ($HDD) | | -49.1% | -22.7% | -11.9% | |
| |
|---|
| Median (3 companies) | 23.1% | 18.6% | 23.3% | 8.6% | |
|---|
| Victrex ($VCT) | 45.2% | 45.9% | 44.3% | 44.4% | 41.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Hardide ($HDD) | | 26.2% | 4.7% | 19.2% | |
| Lg Chem ($LGCD) | 8.1% | 6.8% | 8.8% | 15.0% | |
| Plastics Capital ($PLA) | 2.5% | 4.5% | 5.3% | 4.8% | |
| |
|---|
| Median (3 companies) | 8.2% | 7.8% | 7.5% | 15.0% | |
|---|
| Victrex ($VCT) | 15.6% | 10.3% | 5.8% | 3.0% | 7.7% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Lg Chem ($LGCD) | 11.6% | 12.0% | 16.0% | 10.7% | |
| Plastics Capital ($PLA) | 6.8% | 4.3% | 7.2% | 6.7% | |
| Hardide ($HDD) | | -35.4% | -32.1% | -21.6% | |
| Halosource Inc ($HALO) | -37.2% | -104.9% | | | |
| Croda International ($50GP) | 30.5% | 27.7% | 27.5% | | |
| |
|---|
| Median (9 companies) | 15.4% | 12.7% | 14.3% | 6.7% | |
|---|
| Victrex ($VCT) | 28.9% | 26.0% | 24.9% | 25.3% | 21.0% |
Top companies by Net Debt / EBITDA
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Plastics Capital ($PLA) | 2.2x | 2.3x | 2.8x | 2.3x | |
| Lg Chem ($LGCD) | 0.3x | 0.4x | 0.2x | 0.8x | |
| |
|---|
| Median (2 companies) | 1.3x | 1.5x | 2.0x | 1.5x | |
|---|
| Victrex ($VCT) | -0.5x | -0.6x | -0.9x | -0.5x | -0.6x |
