Rws Hldgs Net Income jumped on 59.7% and Revenue surged on 16.2%

10 Dec 2019 • About Rws Hldgs ($RWS) • By InTwits

Rws Hldgs reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:

Rws Hldgs is a fast growth stock: FY2019 revenue growth was 16.2%, 5 year revenue CAGR was 30.6% at FY2019 ROIC 12.3%
Rws Hldgs has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
The company has highly profitable business model: ROIC is 12.3%

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

Revenue and profitability

Rws Hldgs's Revenue jumped on 16.2%. During the last 5 years Revenue growth topped in FY2018 at 86.6%. The company managed to expand EBITDA margin at stable revenue. EBITDA Margin surged on 12.8 pp from -390% to -378% in FY2019.

Gross Margin increased slightly on 1.2 pp from 38.8% to 40.1% in FY2019. SG&A as a % of Revenue decreased slightly on 1.7 pp from 24.4% to 22.7% in FY2019. During the last 5 years SG&A as a % of Revenue topped in FY2018 at 24.4%.

Net Income margin increased on 3.5 pp from 9.2% to 12.7% in FY2019. During the last 5 years Net Income margin bottomed in FY2018 at 9.2%.

Investments (CAPEX, working capital and M&A)

Rws Hldgs's CAPEX/Revenue was 1.1% in FY2019. The company's CAPEX/Revenue showed almost no change from FY2016 to FY2019. It's average level of CAPEX/Revenue for the last three years was 0.87%.

Return on investment

The company operates at good ROIC (12.3%) while ROE is low (12.0%). ROIC showed almost no change in FY2019. ROE increased slightly on 1.0 pp from 11.0% to 12.0% in FY2019. ROIC followed a declining trend at -3.3 pp per annum in the last 5 years.

Leverage (Debt)

Debt level is 0.4x Net Debt / EBITDA and 1.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from 1.0x to 0.4x in FY2019. Debt dropped on 18.9% while cash jumped on 23.1%. During the last 5 years Net Debt/EBITDA topped in FY2018 at 1.0x.

Rws Hldgs has no short term refinancing risk: cash is higher than short term debt (182.9%).

Valuation and dividends

The company's trades at EV/EBITDA 21.0x and P/E 37.9x.

Financial and operational results

FY ended 30 Nov -0001

Rws Hldgs ($RWS) key annual financial indicators

mln. £	2015	2016	2017	2018	2019	2019/2018
P&L
Revenue	95.2	122.0	164.0	306.0	355.7	16.2%
Gross Profit	37.5	52.2	71.8	118.8	142.5	19.9%
SG&A	16.7	25.7	37.8	74.7	80.6	7.9%
EBITDA	22.0	32.2	41.9	63.5	83.3	31.1%
Net Income	15.5	19.3	24.6	28.3	45.1	59.7%
Balance Sheet
Cash	30.6	27.9	20.1	38.2	47.0	23.1%
Short Term Debt	0.0	6.9	9.0	24.3	25.7	5.6%
Long Term Debt	0.0	22.5	31.3	79.0	58.0	-26.5%
Cash flow
Capex	1.3	0.7	1.5	1.9	3.8	105.3%
Ratios
Revenue growth	1.8%	28.1%	34.5%	86.6%	16.2%
EBITDA growth	3.2%	46.2%	30.1%	51.8%	31.1%

Gross Margin	39.4%	42.8%	43.8%	38.8%	40.1%	1.2%
EBITDA Margin	23.1%	26.4%	25.5%	20.8%	23.4%	2.7%
SG&A, % of revenue	17.5%	21.0%	23.0%	24.4%	22.7%	-1.7%
Net Income Margin	16.3%	15.8%	15.0%	9.2%	12.7%	3.5%
CAPEX, % of revenue	1.3%	0.6%	0.9%	0.6%	1.1%	0.5%

ROIC	23.3%	23.5%	20.2%	12.8%	12.3%	-0.5%
ROE	18.9%	19.9%	18.4%	11.0%	12.0%	1.0%
Net Debt/EBITDA	-1.4x	0.0x	0.5x	1.0x	0.4x	-0.6x

Peers in Support Services

Below you can find Rws Hldgs 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 ($CCE)	99.4%	-2.5%	9.3%	97,196.8%
Croma Security Solutions Group ($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%
Mortice Ltd ($MORT)	18.9%	51.1%	36.1%	21.1%
Median (24 companies)	7.0%	2.2%	6.9%	8.7%	-6.6%
Rws Hldgs ($RWS)		28.1%	34.5%	86.6%	16.2%

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 ($MUR)	55.4%	53.7%	54.6%	55.2%
Median (21 companies)	28.1%	27.0%	27.9%	26.0%	23.1%
Rws Hldgs ($RWS)	39.4%	42.8%	43.8%	38.8%	40.1%

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%
Camco Clean Energy ($CCE)	-13.2%	-51.7%	-65.5%	15.7%
Median (23 companies)	6.9%	4.9%	4.9%	6.5%	6.4%
Rws Hldgs ($RWS)	23.1%	26.4%	25.5%	20.8%	23.4%

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 ($CCE)	0.5%	0.7%	4.4%	4.6%
Median (23 companies)	0.9%	1.1%	0.9%	1.1%	0.6%
Rws Hldgs ($RWS)	1.3%	0.6%	0.9%	0.6%	1.1%

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 ($CPS)	18.1%	17.5%	15.2%	17.4%
Median (27 companies)	10.4%	7.8%	7.4%	7.9%	14.7%
Rws Hldgs ($RWS)	23.3%	23.5%	20.2%	12.8%	12.3%

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 ($VP.)	1.2x	1.5x	1.4x	2.1x
Median (20 companies)	0.2x	0.3x	0.2x	0.5x	-1.4x
Rws Hldgs ($RWS)	-1.4x	0.0x	0.5x	1.0x	0.4x

Rws Hldgs stock price chart

Rws Hldgs financials

mln.	FY2013	FY2014	FY2015

Revenue	77.404	93.556	95.215
EBITDA	20.014	21.336	22.014
Net income	15.918	15.199	15.528
CAPEX	0.376	4.919	1.258
Debt	0.000	0.000	0.000
Cash	18.305	22.479	30.569

About Rws Hldgs

RWS Holdings plc, through its subsidiaries, provides patent translation, intellectual property (IP) support services, and technical translation services in the United Kingdom and internationally. The company operates through four divisions: Patent Translations, Commercial Translations, Information, and inovia. It offers European patent translation and validation solutions; and an optional filing service for patent cooperation treaty, national, and European patent applications, as well as additional IP related translation services for litigation and information purposes, including prior-art documents, office actions, opposition proceedings and correspondence, and written opinions of international searching authorities. The company also provides technical and commercial translation services, including translation of software user manuals, aeroplane specifications, financial reports, insurance policies, press releases, holiday brochures, and birth certificates, as well as language support services. In addition, it offers medical and pharmaceutical translation services, such as translation of clinical trials documentation, health authorities' opinions, approvals and authorizations, healthcare educational material, marketing collateral, pharmacovigilance material, EMA and FDA marketing authorization applications, Training courses, presentations, and video scripts, as well as language support services. Further, the company provides search and retrieval services that encompass IP and other technical literature, such as journals, text books, conference proceedings, and trade literature; and PatBase, a patent database for professional searchers, as well as localization and Web based international filing solutions. It primarily serves chemical, aerospace, defense, automotive, telecom, manufacturing and engineering, energy, law, insurance, and finance industries. RWS Holdings Plc was founded in 1958 and is headquartered in Chalfont St Peter, the United Kingdom.