Kromek Group reports 913% EBITDA decline in 2020 and 9.6% Revenue decline
07 Oct 2020 • About Kromek Group (
$KMK) • By InTwits
Kromek Group reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -115.3%
- Kromek Group spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -31.4%
- Kromek Group has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.7%. At the same time it's a lot of higher than industry average of 12.4%.
- CAPEX is quite volatile: £7m in FY2020, £4m in FY2019, £0m in FY2018, £0m in FY2017, £0m in FY2016
- The company has unprofitable business model: ROIC is -29.3%
- It operates with high leverage: Net Debt/EBITDA is 4.5x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Kromek Group's Revenue decreased on 9.6%. During the last 5 years Revenue growth topped in FY2018 at 32.1% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 128 pp from 12.8% to -115% in FY2020. During FY2016-FY2020 EBITDA Margin topped in FY2019 at 12.8%.
Gross Margin decreased on 9.9 pp from 57.2% to 47.3% in FY2020. SG&A as a % of Revenue jumped on 20.0 pp from 63.5% to 83.4% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2019 at 63.5%.
Net Income margin dropped on 124 pp from -1.9% to -126% in FY2020.
Investments (CAPEX, working capital and M&A)
Kromek Group's CAPEX/Revenue was 53.1% in FY2020. Kromek Group showed fast CAPEX/Revenue growth of 50.2 pp from 2.9% in FY2017 to 53.1% in FY2020. It's average CAPEX/Revenue for the last three years was 26.8%. During FY2016-FY2020 CAPEX as a % of Revenue bottomed in FY2018 at 2.3% and was growing since that time.
Return on investment
The company operates at negative ROIC (-29.3%) and ROE (-31.1%). ROIC dropped on 27.9 pp from -1.4% to -29.3% in FY2020. ROE dropped on 30.6 pp from -0.56% to -31.1% in FY2020. During FY2016-FY2020 ROIC topped in FY2019 at -1.4%. During FY2016-FY2020 ROE topped in FY2019 at -0.56%.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.5x and Debt / EBITDA is . Net Debt / EBITDA jumped on 5.9x from -5.9x to in FY2020. Debt increased slightly on 1.2% while cash dropped on 54.2%.
Kromek Group has no short term refinancing risk: cash is higher than short term debt (236.5%).
Financial and operational results
FY ended 30 Apr 2020
Kromek Group ($KMK) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 8.342 | 8.968 | 11.845 | 14.517 | 13.120 | -9.6% |
| Gross Profit | 4.429 | 5.117 | 6.684 | 8.309 | 6.208 | -25.3% |
| SG&A | 8.508 | 8.856 | 9.025 | 9.215 | 10.947 | 18.8% |
| EBITDA | -2.523 | -2.367 | 0.349 | 1.861 | -15.127 | -912.8% |
| Net Income | -2.151 | -3.084 | -1.104 | -0.283 | -16.540 | |
Balance Sheet
|
|---|
| Cash | 3.857 | 20.343 | 9.488 | 20.616 | 9.444 | -54.2% |
| Short Term Debt | 0.009 | 3.000 | 3.000 | 3.406 | 3.993 | 17.2% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 6.251 | 5.781 | -7.5% |
Cash flow
|
|---|
| Capex | 0.444 | 0.261 | 0.272 | 3.644 | 6.965 | 91.1% |
Ratios
|
|---|
| Revenue growth | 3.0% | 7.5% | 32.1% | 22.6% | -9.6% | |
| EBITDA growth | | -6.2% | -114.7% | 433.2% | -912.8% | |
|
|---|
| Gross Margin | 53.1% | 57.1% | 56.4% | 57.2% | 47.3% | -9.9% |
| EBITDA Margin | -30.2% | -26.4% | 2.9% | 12.8% | -115.3% | -128.1% |
| SG&A, % of revenue | 102.0% | 98.8% | 76.2% | 63.5% | 83.4% | 20.0% |
| Net Income Margin | -25.8% | -34.4% | -9.3% | -1.9% | -126.1% | -124.1% |
| CAPEX, % of revenue | 5.3% | 2.9% | 2.3% | 25.1% | 53.1% | 28.0% |
|
|---|
| ROIC | -18.9% | -12.9% | -5.2% | -1.4% | -29.3% | -27.9% |
| ROE | -10.5% | -9.2% | -2.7% | -0.6% | -31.1% | -30.6% |
| Net Debt/EBITDA | | | -18.6x | -5.9x | |
Peers in Health Care Equipment & Services
Below you can find Kromek Group benchmarking vs. other companies in Health Care Equipment & 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Caretech Hldgs ($CTH) | 19.9% | 11.4% | 11.8% | 112.7% | - |
| Abbott Laboratories ($ABT) | 2.2% | 31.3% | 11.6% | 4.3% | - |
| |
|---|
| Median (2 companies) | 5.3% | 11.4% | 9.6% | 58.5% | - |
|---|
| Kromek Group ($KMK) | - | 7.5% | 32.1% | 22.6% | -9.6% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Abbott Laboratories ($ABT) | 56.7% | 55.0% | 58.4% | 58.5% | - |
| Caretech Hldgs ($CTH) | 36.4% | 36.1% | 35.2% | 33.7% | - |
| |
|---|
| Median (2 companies) | 57.7% | 55.0% | 58.4% | 46.1% | - |
|---|
| Kromek Group ($KMK) | 53.1% | 57.1% | 56.4% | 57.2% | 47.3% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Caretech Hldgs ($CTH) | 27.7% | 21.3% | 18.1% | 15.3% | - |
| |
|---|
| Median (1 company) | 12.0% | 20.7% | 18.1% | 15.3% | - |
|---|
| Kromek Group ($KMK) | -30.2% | -26.4% | 2.9% | 12.8% | -115.3% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Caretech Hldgs ($CTH) | 7.2% | 9.6% | 7.8% | 7.0% | - |
| |
|---|
| Median (1 company) | 5.1% | 4.1% | 4.6% | 7.0% | - |
|---|
| Kromek Group ($KMK) | 5.3% | 2.9% | 2.3% | 25.1% | 53.1% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Caretech Hldgs ($CTH) | 9.4% | 6.4% | 5.3% | 7.0% | - |
| Abbott Laboratories ($ABT) | 8.6% | 3.4% | 6.6% | - | - |
| |
|---|
| Median (2 companies) | 3.3% | 6.4% | 5.3% | 7.0% | - |
|---|
| Kromek Group ($KMK) | -18.9% | -12.9% | -5.2% | -1.4% | -29.3% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Caretech Hldgs ($CTH) | 3.8x | 4.2x | 4.4x | 4.8x | - |
| |
|---|
| Median (1 company) | -0.5x | -0.5x | 0.5x | 4.8x | - |
|---|
| Kromek Group ($KMK) | - | - | -18.6x | -5.9x | - |
