Volution Group reports 47.0% Net Income decline in 2020 and 8.1% Revenue decline
08 Oct 2020 • About Volution Group (
$FAN) • By InTwits
Volution Group reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Volution Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 2.7%
- CAPEX is quite volatile: £4m in FY2020, £4m in FY2019, £3m in FY2018, £4m in FY2017, £1m in FY2016
- The company has potentially unprofitable business model: ROIC is 6.5%
- It operates with high leverage: Net Debt/EBITDA is 1.8x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 8.1%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 11.3 pp from 16.8% to 5.6% in FY2020.
Gross Margin decreased slightly on 1.3 pp from 47.1% to 45.8% in FY2020. Gross Margin stuck to a declining trend at -0.80 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 3.1 pp from 35.9% to 39.0% in FY2020.
Net Income margin decreased on 3.3 pp from 7.7% to 4.5% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 1.3%. Volution Group showed almost no change in CAPEX/Revenue from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 1.8%.
Return on investment
The company operates at low ROIC (6.5%) and ROE (5.5%). ROIC decreased on 2.3 pp from 8.8% to 6.5% in FY2020. ROE decreased on 5.2 pp from 10.7% to 5.5% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.8x and Debt / EBITDA is 2.2x. Net Debt / EBITDA surged on 0.1x from 1.7x to 1.8x in FY2020. Debt increased on 7.6% while cash surged on 60.2%.
Volution Group has no short term refinancing risk: cash is higher than short term debt (617.7%).
Valuation and dividends
The company's trades at EV/EBITDA 11.6x and P/E 41.6x.
Financial and operational results
Volution Group ($FAN) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 154.5 | 185.1 | 205.7 | 235.7 | 216.6 | -8.1% |
| Gross Profit | 75.4 | 91.0 | 96.6 | 111.1 | 99.3 | -10.6% |
| SG&A | 55.8 | 69.2 | 74.2 | 84.6 | 84.5 | -0.1% |
| EBITDA | 34.3 | 38.1 | 36.3 | 44.6 | 41.0 | -8.1% |
| Net Income | 15.6 | 13.9 | 13.3 | 18.2 | 9.7 | -47.0% |
Balance Sheet
|
|---|
| Cash | 15.7 | 14.5 | 18.2 | 11.5 | 18.5 | 60.2% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.3 | 3.0 | 841.5% |
| Long Term Debt | 51.2 | 51.1 | 94.6 | 85.4 | 89.2 | 4.5% |
Cash flow
|
|---|
| Capex | 2.9 | 2.4 | 4.6 | 4.2 | 2.8 | -33.3% |
Ratios
|
|---|
| Revenue growth | 18.7% | 19.8% | 11.1% | 14.6% | -8.1% | |
| EBITDA growth | 11.1% | 11.0% | -4.9% | 23.1% | -8.1% | |
|
|---|
| Gross Margin | 48.8% | 49.2% | 47.0% | 47.1% | 45.8% | -1.3% |
| EBITDA Margin | 22.2% | 20.6% | 17.6% | 18.9% | 18.9% | -0.0% |
| SG&A, % of revenue | 36.1% | 37.4% | 36.1% | 35.9% | 39.0% | 3.1% |
| Net Income Margin | 10.1% | 7.5% | 6.5% | 7.7% | 4.5% | -3.3% |
| CAPEX, % of revenue | 1.9% | 1.3% | 2.3% | 1.8% | 1.3% | -0.5% |
|
|---|
| ROIC | 9.0% | 9.2% | 6.9% | 8.8% | 6.5% | -2.3% |
| ROE | 10.5% | 8.8% | 8.2% | 10.7% | 5.5% | -5.2% |
| Net Debt/EBITDA | 1.0x | 1.0x | 2.1x | 1.7x | 1.8x | 0.1x |
Peers in Construction & Materials
Below we provide Volution Group benchmarking against other companies in Construction & Materials 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 |
|---|
| Aukett Swanke Group ($AUK) | 9.0% | -12.7% | -18.5% | 4.7% | - |
| James Halstead ($JHD) | - | 6.5% | 3.6% | 1.4% | -5.7% |
| Kier Group ($KIE) | - | 3.4% | 2.7% | -6.8% | -13.4% |
| Alumasc Group ($ALU) | - | 13.6% | -6.1% | -8.4% | -15.7% |
| Titon Hldgs ($TON) | 6.6% | 18.1% | 6.3% | -8.8% | - |
| |
|---|
| Median (6 companies) | 7.7% | 6.9% | 5.0% | -7.6% | -14.5% |
|---|
| Volution Group ($FAN) | - | 19.8% | 11.1% | 14.6% | -8.1% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| James Halstead ($JHD) | 42.4% | 43.5% | 41.9% | 43.0% | 42.1% |
| Alumasc Group ($ALU) | 33.4% | 31.3% | 30.6% | 29.8% | 29.7% |
| Kier Group ($KIE) | 8.9% | 7.0% | 9.5% | 7.4% | 5.9% |
| Galliford Try ($GFRD) | 10.9% | 7.9% | 9.7% | 0.7% | 2.6% |
| |
|---|
| Median (4 companies) | 29.7% | 25.9% | 26.2% | 29.8% | 17.8% |
|---|
| Volution Group ($FAN) | 48.8% | 49.2% | 47.0% | 47.1% | 45.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| James Halstead ($JHD) | 21.6% | 20.8% | - | 20.3% | 21.1% |
| Titon Hldgs ($TON) | 9.8% | 8.8% | 9.0% | 8.8% | - |
| Alumasc Group ($ALU) | 9.7% | 9.8% | 7.8% | 3.9% | 6.9% |
| Aukett Swanke Group ($AUK) | 6.6% | -0.9% | -18.2% | 1.3% | - |
| Kier Group ($KIE) | 0.7% | 0.8% | 3.5% | -4.0% | -2.9% |
| |
|---|
| Median (7 companies) | 9.8% | 8.9% | 7.8% | 1.3% | 2.3% |
|---|
| Volution Group ($FAN) | 22.2% | 20.6% | 17.6% | 18.9% | 18.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Alumasc Group ($ALU) | 1.1% | 0.9% | 3.1% | 2.6% | 1.8% |
| Titon Hldgs ($TON) | 3.0% | 1.9% | 1.9% | 2.6% | - |
| James Halstead ($JHD) | 2.1% | 1.8% | 1.4% | 1.7% | 1.8% |
| Aukett Swanke Group ($AUK) | 0.8% | 0.2% | 0.6% | 0.7% | - |
| Kier Group ($KIE) | 0.4% | 0.4% | 0.5% | 0.3% | 0.1% |
| |
|---|
| Median (7 companies) | 2.4% | 2.0% | 1.7% | 0.7% | 0.9% |
|---|
| Volution Group ($FAN) | 1.9% | 1.3% | 2.3% | 1.8% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| James Halstead ($JHD) | 47.1% | 46.5% | 39.9% | 36.7% | 32.3% |
| Titon Hldgs ($TON) | 13.3% | 12.0% | 12.2% | 9.5% | - |
| Alumasc Group ($ALU) | 47.8% | 50.2% | 23.1% | 4.8% | 7.8% |
| Aukett Swanke Group ($AUK) | 9.6% | -6.9% | -41.3% | -0.9% | - |
| Galliford Try ($GFRD) | 12.7% | 4.5% | 8.9% | -4.5% | -5.2% |
| |
|---|
| Median (8 companies) | 8.7% | 8.0% | 8.3% | -2.7% | 1.3% |
|---|
| Volution Group ($FAN) | 9.0% | 9.2% | 6.9% | 8.8% | 6.5% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Alumasc Group ($ALU) | -1.0x | -0.6x | 0.6x | 1.5x | 1.9x |
| James Halstead ($JHD) | -0.9x | -1.0x | - | -1.3x | -1.2x |
| Titon Hldgs ($TON) | -1.0x | -1.3x | -1.3x | -1.9x | - |
| Aukett Swanke Group ($AUK) | -0.6x | - | - | -3.0x | - |
| |
|---|
| Median (4 companies) | -0.7x | -0.2x | -0.7x | -1.6x | 0.4x |
|---|
| Volution Group ($FAN) | 1.0x | 1.0x | 2.1x | 1.7x | 1.8x |
