Driver Group reports 9.6% EBITDA growth in 2019 while 6.6% Revenue decline
10 Dec 2019 • About Driver Group (
$DRV) • By InTwits
Driver Group reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 6.4% in FY2019, 5.5% in FY2018, 4.5% in FY2017, -4.9% in FY2016, 2.2% in FY2015
- Driver Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has highly profitable business model: ROIC is 14.7%
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 6.6%. Revenue decline was accelerating on average at -6.4 pp per annum in FY2015-FY2019. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.95 pp from 5.5% to 6.4% in FY2019. During FY2015-FY2019 EBITDA Margin bottomed in FY2016 at -4.9% and was growing since that time.
Gross Margin decreased on 2.9 pp from 26.0% to 23.1% in FY2019. SG&A as a % of Revenue decreased on 3.2 pp from 21.6% to 18.4% in FY2019. SG&A as a % of Revenue followed a declining trend at -2.1 pp per annum in FY2015-FY2019.
Net Income margin increased slightly on 1.2 pp from 3.5% to 4.7% in FY2019. During FY2015-FY2019 Net Income margin bottomed in FY2016 at -10.0% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2019 the company had CAPEX/Revenue of 0.58%. CAPEX/Revenue decreased slightly on 0.81 pp from 1.4% in FY2016 to 0.58% in FY2019. It's average CAPEX/Revenue for the last three years was 0.53%.
Return on investment
The company operates at good ROIC (14.7%) and ROE (14.1%). ROIC increased slightly on 1.4 pp from 13.2% to 14.7% in FY2019. ROE increased slightly on 1.9 pp from 12.2% to 14.1% in FY2019. During FY2015-FY2019 ROIC bottomed in FY2016 at -19.2% and was growing since that time. During the last 5 years ROE bottomed in FY2016 at -53.3% and was growing since that time.
Leverage (Debt)
Debt level is -1.4x Net Debt / EBITDA and 0.6x Debt / EBITDA. Debt dropped on 31.6% while cash dropped on 24.8%.
Driver Group has no short term refinancing risk: cash is higher than short term debt (354.2%).
Valuation and dividends
The company's trades at EV/EBITDA 6.7x and P/E 11.2x.
Financial and operational results
FY ended 30 Sep 2019
Driver Group ($DRV) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 47.950 | 52.385 | 60.227 | 62.615 | 58.486 | -6.6% |
| Gross Profit | 10.570 | 10.838 | 14.836 | 16.277 | 13.536 | -16.8% |
| SG&A | 12.508 | 14.318 | 13.485 | 13.546 | 10.760 | -20.6% |
| EBITDA | 1.067 | -2.557 | 2.716 | 3.421 | 3.750 | 9.6% |
| Net Income | -1.959 | -5.230 | 0.291 | 2.169 | 2.747 | 26.6% |
Balance Sheet
|
|---|
| Cash | 1.111 | 0.555 | 4.932 | 10.007 | 7.526 | -24.8% |
| Short Term Debt | 0.479 | 3.352 | 0.527 | 0.646 | 2.125 | 228.9% |
| Long Term Debt | 3.100 | 7.110 | 4.083 | 2.460 | 0.000 | -100.0% |
Cash flow
|
|---|
| Capex | 0.532 | 0.728 | 0.264 | 0.350 | 0.338 | -3.4% |
Ratios
|
|---|
| Revenue growth | 22.7% | 9.2% | 15.0% | 4.0% | -6.6% | |
| EBITDA growth | -68.7% | -339.6% | -206.2% | 26.0% | 9.6% | |
|
|---|
| Gross Margin | 22.0% | 20.7% | 24.6% | 26.0% | 23.1% | -2.9% |
| EBITDA Margin | 2.2% | -4.9% | 4.5% | 5.5% | 6.4% | 0.9% |
| SG&A, % of revenue | 26.1% | 27.3% | 22.4% | 21.6% | 18.4% | -3.2% |
| Net Income Margin | -4.1% | -10.0% | 0.5% | 3.5% | 4.7% | 1.2% |
| CAPEX, % of revenue | 1.1% | 1.4% | 0.4% | 0.6% | 0.6% | 0.0% |
|
|---|
| ROIC | 3.2% | -19.2% | 7.6% | 13.2% | 14.7% | 1.4% |
| ROE | -16.2% | -53.3% | 2.5% | 12.2% | 14.1% | 1.9% |
| Net Debt/EBITDA | 2.3x | | -0.1x | -2.0x | -1.4x | 0.6x |
Peers in Support Services
Below you can find Driver 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Camco Clean Energy ($CCE) | 99.4% | -2.5% | 9.3% | 97,196.8% | |
| Rws Hldgs ($RWS) | | 28.1% | 34.5% | 86.6% | 16.2% |
| Croma Security Solutions Group ($CSSG) | 6.9% | 20.2% | 15.9% | 59.2% | |
| Grafenia ($GRA) | -43.3% | -2.3% | -3.0% | 40.1% | |
| Vp ($VP.) | 12.3% | 1.5% | 19.2% | 22.1% | |
| |
|---|
| Median (24 companies) | 7.0% | 2.2% | 6.9% | 10.3% | 16.2% |
|---|
| Driver Group ($DRV) | | 9.2% | 15.0% | 4.0% | -6.6% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Vianet Group ($VNET) | 69.2% | 70.1% | 69.7% | 69.9% | |
| Ienergizer Ltd ($IBPO) | 72.7% | 71.3% | 71.2% | 69.7% | |
| Prime People ($PRP) | 61.4% | 59.2% | 54.1% | 57.4% | |
| Grafenia ($GRA) | 70.8% | 66.3% | 63.0% | 57.0% | |
| Murgitroyd Group ($MUR) | 55.4% | 53.7% | 54.6% | 55.2% | |
| |
|---|
| Median (21 companies) | 28.4% | 27.3% | 28.1% | 31.6% | 40.1% |
|---|
| Driver Group ($DRV) | 22.0% | 20.7% | 24.6% | 26.0% | 23.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Northgate ($67GX) | 39.4% | 38.3% | 35.9% | 35.4% | |
| Vp ($VP.) | 26.2% | 28.4% | 28.6% | 27.2% | |
| Ienergizer Ltd ($IBPO) | 17.1% | 22.9% | 22.9% | 24.5% | |
| Vianet Group ($VNET) | 27.1% | 22.1% | 17.5% | 22.8% | |
| Rws Hldgs ($RWS) | 23.1% | 26.4% | 25.5% | 20.8% | 23.4% |
| |
|---|
| Median (23 companies) | 7.6% | 5.7% | 5.7% | 7.1% | 23.4% |
|---|
| Driver Group ($DRV) | 2.2% | -4.9% | 4.5% | 5.5% | 6.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Vp ($VP.) | 25.7% | 24.1% | 26.0% | 23.6% | |
| Newmark Security ($NWT) | 1.3% | 0.9% | 1.3% | 9.8% | |
| Grafenia ($GRA) | 1.6% | 4.1% | 1.1% | 7.8% | |
| Latham(James) ($LTHM) | 0.2% | 1.1% | 3.0% | 5.0% | |
| Camco Clean Energy ($CCE) | 0.5% | 0.7% | 4.4% | 4.6% | |
| |
|---|
| Median (23 companies) | 0.9% | 1.0% | 0.9% | 1.1% | 1.1% |
|---|
| Driver Group ($DRV) | 1.1% | 1.4% | 0.4% | 0.6% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Sthree ($STHR) | 50.2% | 46.2% | 43.4% | 36.3% | |
| Ienergizer Ltd ($IBPO) | 10.4% | 17.4% | 18.1% | 19.8% | |
| Mortice Ltd ($MORT) | 21.9% | 14.5% | 23.2% | 18.4% | |
| Croma Security Solutions Group ($CSSG) | 2.4% | 2.4% | 4.0% | 18.2% | |
| Cpl Resources ($CPS) | 18.1% | 17.5% | 15.2% | 17.4% | |
| |
|---|
| Median (27 companies) | 10.7% | 7.9% | 7.4% | 7.9% | 12.3% |
|---|
| Driver Group ($DRV) | 3.2% | -19.2% | 7.6% | 13.2% | 14.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Mitsubishi Corp ($MBC) | 12.5x | 53.4x | 2.9x | 6.2x | |
| Grafenia ($GRA) | -0.6x | -0.3x | -0.3x | 3.8x | |
| Camco Clean Energy ($CCE) | | | | 2.9x | |
| Premier Farnell ($PFLA) | 3.1x | 2.2x | 1.5x | 2.2x | |
| Vp ($VP.) | 1.2x | 1.5x | 1.4x | 2.1x | |
| |
|---|
| Median (20 companies) | -0.1x | 0.1x | 0.5x | 0.8x | 0.4x |
|---|
| Driver Group ($DRV) | 2.3x | | -0.1x | -2.0x | -1.4x |
