Dechra Pharmaceuticals reports 36.1% EBITDA growth in 2020 and 2.8 pp EBITDA Margin growth from 10.1% to 12.9%
07 Sep 2020 • About Dechra Pharmaceuticals (
$DPH) • By InTwits
Dechra Pharmaceuticals reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Dechra Pharmaceuticals is a growth stock: FY2020 revenue growth was 6.9%, 5 year revenue CAGR was 20.4% at FY2020 ROIC 5.2%
- Dechra Pharmaceuticals has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: £8m in FY2020, £12m in FY2019, £5m in FY2018, £4m in FY2017, £3m in FY2016
- The company has potentially unprofitable business model: ROIC is 5.2%
- It operates with high leverage: Net Debt/EBITDA is 1.9x while industry average is 1.1x
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 6.9%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 9.1 pp from 32.3% to 41.4% in FY2020. During the last 5 years EBITDA Margin bottomed in FY2019 at 10.1%.
Gross Margin showed almost no change in FY2020. Gross Margin grew at 0.95 pp per annum in FY2016-FY2020. SG&A as a % of Revenue decreased on 2.4 pp from 36.8% to 34.3% in FY2020.
Net Income margin showed almost no change in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 1.5%. CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 1.7%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2019 at 2.5%.
Return on investment
The company operates at low ROIC (5.2%) and ROE (5.9%). ROIC increased slightly on 0.92 pp from 4.3% to 5.2% in FY2020. ROE showed almost no change in FY2020. During the last 5 years ROE topped in FY2017 at 9.1% and was declining since that time.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 5.3x Debt / EBITDA. Net Debt / EBITDA dropped on 2.7x from 4.7x to 1.9x in FY2020. Debt jumped on 15.2% while cash jumped on 183%. During FY2016-FY2020 Net Debt/EBITDA topped in FY2018 at 5.1x and was declining since that time.
Dechra Pharmaceuticals has no short term refinancing risk: cash is higher than short term debt (4,943.5%).
Valuation and dividends
Dechra Pharmaceuticals's trades at EV/EBITDA 55.5x and P/E 104.9x.
Management team
The company's CEO is Ian David Page. Ian David Page has 19 years tenure with the company. Paul Nicholas Sandland is a Dechra Pharmaceuticals's CFO. Paul Nicholas Sandland has spent 1 year at the company.
Financial and operational results
FY ended 30 Jun 2020
Dechra Pharmaceuticals ($DPH) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 247.6 | 359.3 | 407.1 | 481.8 | 515.1 | 6.9% |
| Gross Profit | 132.4 | 191.7 | 222.4 | 273.1 | 291.6 | 6.8% |
| SG&A | 77.3 | 132.1 | 143.7 | 177.1 | 176.9 | -0.1% |
| EBITDA | 44.8 | 40.1 | 41.5 | 48.8 | 66.4 | 36.1% |
| Net Income | 12.7 | 26.1 | 36.1 | 30.9 | 33.9 | 9.7% |
Balance Sheet
|
|---|
| Cash | 39.1 | 61.2 | 79.7 | 80.3 | 227.4 | 183.2% |
| Short Term Debt | 1.7 | 1.0 | 1.2 | 1.2 | 4.6 | 283.3% |
| Long Term Debt | 154.1 | 180.2 | 289.9 | 306.9 | 350.4 | 14.2% |
Cash flow
|
|---|
| Capex | 2.8 | 4.2 | 4.9 | 12.0 | 7.8 | -35.0% |
Ratios
|
|---|
| Revenue growth | 21.7% | 45.1% | 13.3% | 18.3% | 6.9% | |
| EBITDA growth | -5.7% | -10.6% | 3.6% | 17.6% | 36.1% | |
|
|---|
| Gross Margin | 53.5% | 53.4% | 54.6% | 56.7% | 56.6% | -0.1% |
| EBITDA Margin | 18.1% | 11.2% | 10.2% | 10.1% | 12.9% | 2.8% |
| SG&A, % of revenue | 31.2% | 36.8% | 35.3% | 36.8% | 34.3% | -2.4% |
| Net Income Margin | 5.1% | 7.3% | 8.9% | 6.4% | 6.6% | 0.2% |
| CAPEX, % of revenue | 1.1% | 1.2% | 1.2% | 2.5% | 1.5% | -1.0% |
|
|---|
| ROIC | 5.3% | 6.5% | 4.7% | 4.3% | 5.2% | 0.9% |
| ROE | 5.4% | 9.1% | 9.0% | 6.1% | 5.9% | -0.2% |
| Net Debt/EBITDA | 2.6x | 3.0x | 5.1x | 4.7x | 1.9x | -2.7x |
Peers in Pharmaceuticals & Biotechnology
Below you can find Dechra Pharmaceuticals benchmarking vs. other companies in Pharmaceuticals & Biotechnology 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evocutis ($EVO) | 51.2% | 54.5% | 37.6% | 49.0% | - |
| Ixico ($IXI) | 4.9% | 25.8% | 31.2% | 40.2% | - |
| Clinigen Group ($CLIN) | 84.4% | -11.1% | 26.1% | 19.9% | - |
| Abcam ($ABC) | 19.2% | 26.5% | 7.4% | 11.4% | - |
| Astrazeneca ($AZN) | -6.9% | -2.3% | -1.7% | 10.4% | - |
| |
|---|
| Median (11 companies) | 8.4% | 12.5% | 7.0% | 9.5% | - |
|---|
| Dechra Pharmaceuticals ($DPH) | - | 45.1% | 13.3% | 18.3% | 6.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Pfizer Inc ($PFZ) | 76.7% | 78.6% | 79.0% | 80.3% | - |
| Astrazeneca ($AZN) | 82.1% | 80.8% | 77.7% | 79.8% | - |
| Allergy Therapeutics ($AGY) | 71.0% | 73.9% | 75.1% | 75.1% | - |
| Abcam ($ABC) | 70.2% | 70.1% | 69.9% | 70.5% | - |
| Ixico ($IXI) | 48.6% | 56.5% | 58.8% | 65.4% | - |
| |
|---|
| Median (8 companies) | 48.4% | 52.8% | 68.3% | 67.9% | - |
|---|
| Dechra Pharmaceuticals ($DPH) | 53.5% | 53.4% | 54.6% | 56.7% | 56.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evocutis ($EVO) | 38.6% | 45.2% | 43.9% | 50.0% | - |
| GlaxoSmithKline ($GSK) | 15.9% | 20.6% | 24.1% | 29.5% | - |
| Abcam ($ABC) | 34.5% | 36.9% | 34.6% | 27.5% | - |
| Astrazeneca ($AZN) | 32.5% | 29.9% | 32.8% | 27.4% | - |
| Clinigen Group ($CLIN) | 12.1% | 21.2% | 17.1% | 14.5% | - |
| |
|---|
| Median (8 companies) | 15.6% | 18.8% | 20.6% | 20.9% | - |
|---|
| Dechra Pharmaceuticals ($DPH) | 18.1% | 11.2% | 10.2% | 10.1% | 12.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Abcam ($ABC) | 4.6% | 4.7% | 7.0% | 6.8% | - |
| Evocutis ($EVO) | 18.2% | 5.8% | 7.3% | 5.2% | - |
| Astrazeneca ($AZN) | 6.3% | 5.9% | 4.7% | 4.0% | - |
| Allergy Therapeutics ($AGY) | 2.5% | 2.3% | 2.9% | 3.8% | - |
| GlaxoSmithKline ($GSK) | 5.5% | 5.1% | 4.4% | 3.7% | - |
| |
|---|
| Median (8 companies) | 4.0% | 3.7% | 3.8% | 3.8% | - |
|---|
| Dechra Pharmaceuticals ($DPH) | 1.1% | 1.2% | 1.2% | 2.5% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Evocutis ($EVO) | 59.8% | 70.1% | 53.2% | 52.0% | - |
| GlaxoSmithKline ($GSK) | 10.9% | 20.2% | 23.3% | 18.0% | - |
| Abcam ($ABC) | 19.1% | 21.6% | 19.8% | 14.8% | - |
| Allergy Therapeutics ($AGY) | -33.9% | -5.6% | -22.4% | 12.8% | - |
| Astrazeneca ($AZN) | 13.7% | 9.7% | 9.5% | 8.4% | - |
| |
|---|
| Median (12 companies) | 9.7% | 10.9% | 9.3% | 8.4% | - |
|---|
| Dechra Pharmaceuticals ($DPH) | 5.3% | 6.5% | 4.7% | 4.3% | 5.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Clinigen Group ($CLIN) | 1.7x | 0.5x | 2.1x | 3.8x | - |
| Genus ($GNS) | 1.2x | 2.3x | 4.7x | 3.0x | - |
| GlaxoSmithKline ($GSK) | 3.1x | 2.1x | 3.0x | 2.6x | - |
| Astrazeneca ($AZN) | 1.6x | 2.2x | 2.0x | 1.9x | - |
| Evocutis ($EVO) | -0.4x | -0.5x | -0.7x | -0.9x | - |
| |
|---|
| Median (8 companies) | 1.1x | 1.3x | 2.0x | 0.5x | - |
|---|
| Dechra Pharmaceuticals ($DPH) | 2.6x | 3.0x | 5.1x | 4.7x | 1.9x |
