Arcontech Group EBITDA jumped on 29.4% and Revenue increased on 4.0%
02 Sep 2020 • About Arcontech Group (
$ARC) • By InTwits
Arcontech Group reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 40.4% in FY2020 vs. 32.4% in FY2019 vs. 14.5% in FY2016
- EBITDA Margin is quite volatile: 40.4% in FY2020, 32.4% in FY2019, 23.0% in FY2018, 16.7% in FY2017, 14.5% in FY2016
- Arcontech Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.5%.
- The company has highly profitable business model: ROIC is 20.4%
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 increased on 4.0%. During the last 5 years Revenue growth topped in FY2019 at 12.8%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.9 pp from 12.9% to 7.1% in FY2020. EBITDA Margin followed a growing trend at 6.8 pp per annum in FY2016-FY2020.
SG&A as a % of Revenue decreased on 3.3 pp from 68.2% to 64.9% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -5.9 pp per annum in the last 5 years.
Net Income margin increased on 6.3 pp from 34.9% to 41.2% in FY2020. Net Income margin stuck to a growing trend at 5.9 pp per annum in FY2016-FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.43% in FY2020. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 0.33%.
Return on investment
The company operates at high and attractive ROIC (20.4%) and ROE (23.5%). ROIC decreased on 2.5 pp from 22.9% to 20.4% in FY2020. ROE showed almost no change in FY2020.
Leverage (Debt)
Debt level is -3.8x Net Debt / EBITDA and 0.4x Debt / EBITDA. Debt jumped while cash surged on 23.2%.
Arcontech Group has no short term refinancing risk: cash is higher than short term debt (3,533.7%).
Valuation and dividends
The company's trades at EV/EBITDA 16.3x and P/E 19.6x.
Financial and operational results
FY ended 30 Jun 2020
Arcontech Group ($ARC) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2.142 | 2.308 | 2.520 | 2.841 | 2.955 | 4.0% |
| SG&A | 1.849 | 1.942 | 1.958 | 1.937 | 1.918 | -1.0% |
| EBITDA | 0.310 | 0.384 | 0.579 | 0.921 | 1.193 | 29.4% |
| Net Income | 0.408 | 0.470 | 0.915 | 0.992 | 1.218 | 22.7% |
Balance Sheet
|
|---|
| Cash | 1.633 | 2.636 | 3.210 | 4.063 | 5.007 | 23.2% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.142 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.344 | |
Cash flow
|
|---|
| Capex | 0.021 | 0.008 | 0.002 | 0.014 | 0.013 | -7.6% |
Ratios
|
|---|
| Revenue growth | 0.5% | 7.8% | 9.2% | 12.8% | 4.0% | |
| EBITDA growth | 21.3% | 24.2% | 50.7% | 59.0% | 29.4% | |
|
|---|
| EBITDA Margin | 14.5% | 16.7% | 23.0% | 32.4% | 40.4% | 7.9% |
| SG&A, % of revenue | 86.3% | 84.2% | 77.7% | 68.2% | 64.9% | -3.3% |
| Net Income Margin | 19.1% | 20.4% | 36.3% | 34.9% | 41.2% | 6.3% |
| CAPEX, % of revenue | 1.0% | 0.4% | 0.1% | 0.5% | 0.4% | -0.1% |
|
|---|
| ROIC | 14.5% | 14.5% | 17.8% | 22.9% | 20.4% | -2.5% |
| ROE | 20.3% | 18.7% | 27.8% | 23.5% | 23.5% | -0.0% |
| Net Debt/EBITDA | -5.3x | -6.9x | -5.5x | -4.4x | -3.8x | 0.6x |
Peers in Software & Computer Services
Below we provide Arcontech Group benchmarking against other companies in Software & Computer Services 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Actual Experience ($ACT) | 2.3% | -49.1% | 195.1% | 79.7% | - |
| Ideagen ($IDEA) | 52.4% | 23.6% | 33.2% | 29.2% | - |
| Eagle Eye Solutions Ltd ($EYE) | 33.0% | 71.2% | 24.6% | 22.8% | - |
| Oxford Metrics ($OMG) | 14.6% | -1.1% | 8.6% | 11.7% | - |
| Rosslyn Data Technologies ($RDT) | 36.9% | -9.4% | 83.5% | 8.3% | - |
| |
|---|
| Median (15 companies) | 14.6% | 15.9% | 21.8% | 4.7% | -17.9% |
|---|
| Arcontech Group ($ARC) | - | 7.8% | 9.2% | 12.8% | 4.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Craneware ($CRW) | 94.0% | 93.8% | 94.9% | 93.8% | - |
| Eagle Eye Solutions Ltd ($EYE) | 78.8% | 88.3% | 89.3% | 93.1% | - |
| Ideagen ($IDEA) | 88.0% | 89.5% | 91.2% | 91.6% | - |
| Netcall ($NET) | 91.2% | 91.7% | 90.2% | 89.8% | - |
| Dotdigital Group ($DOTD) | 87.4% | 86.1% | 78.9% | 89.7% | - |
| |
|---|
| Median (15 companies) | 61.3% | 59.0% | 51.2% | 76.4% | 36.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dotdigital Group ($DOTD) | 30.4% | 31.7% | 26.9% | 34.9% | - |
| Micro Focus International ($MCRO) | 40.9% | 38.9% | 27.5% | 30.3% | - |
| Craneware ($CRW) | 32.3% | 30.4% | 31.1% | 30.3% | - |
| Ideagen ($IDEA) | 23.9% | 21.8% | 23.8% | 23.5% | - |
| Oxford Metrics ($OMG) | 23.1% | 19.9% | 23.5% | 21.3% | - |
| |
|---|
| Median (15 companies) | 10.5% | 10.9% | 12.2% | 15.4% | 15.6% |
|---|
| Arcontech Group ($ARC) | 14.5% | 16.7% | 23.0% | 32.4% | 40.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Netcall ($NET) | 2.7% | 0.7% | 0.8% | 4.7% | - |
| International Bus Mach Corp ($IBM) | 4.5% | 4.1% | 4.3% | 3.1% | 4.1% |
| Unisys Corp ($USY) | 3.0% | 4.1% | 3.8% | 2.9% | 2.9% |
| Micro Focus International ($MCRO) | 0.8% | 0.9% | 0.8% | 1.7% | - |
| Ideagen ($IDEA) | 1.6% | 1.1% | 1.4% | 1.5% | - |
| |
|---|
| Median (15 companies) | 1.2% | 1.2% | 0.9% | 1.2% | 3.5% |
|---|
| Arcontech Group ($ARC) | 1.0% | 0.4% | 0.1% | 0.5% | 0.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Craneware ($CRW) | 27.9% | 30.0% | 34.9% | 33.4% | - |
| Rm ($RM.) | 254.7% | 73.8% | 39.0% | 31.6% | - |
| Dotdigital Group ($DOTD) | 28.9% | 29.3% | 26.6% | 25.9% | - |
| Oxford Metrics ($OMG) | 16.3% | 12.7% | 16.4% | 14.7% | - |
| International Bus Mach Corp ($IBM) | 21.5% | 19.5% | 19.8% | 13.0% | 6.7% |
| |
|---|
| Median (16 companies) | 7.0% | 4.7% | 5.0% | 2.0% | 6.7% |
|---|
| Arcontech Group ($ARC) | 14.5% | 14.5% | 17.8% | 22.9% | 20.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micro Focus International ($MCRO) | 2.1x | 6.6x | 4.2x | 4.3x | - |
| International Bus Mach Corp ($IBM) | 1.7x | 1.8x | 1.7x | 3.8x | 4.1x |
| Rm ($RM.) | -2.2x | 0.7x | 0.2x | 0.5x | - |
| Ncc Group ($NCC) | 0.5x | - | 0.8x | 0.5x | - |
| Unisys Corp ($USY) | -0.3x | -0.6x | 0.1x | 0.4x | -0.6x |
| |
|---|
| Median (10 companies) | -0.9x | -0.5x | -0.1x | 0.3x | 1.8x |
|---|
| Arcontech Group ($ARC) | -5.3x | -6.9x | -5.5x | -4.4x | -3.8x |
