ePlus inc. reports 6.7% revenue growth in FY2018 and almost no change in EBITDA Margin of 7.1%
05/24/2018 • About ePlus inc. (
$PLUS) • By InTwits
ePlus inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 7.1% in FY2018 vs. 7.3% in FY2017 vs. 7.3% in FY2014
- ePlus inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's a lot of higher than industry average of 0.6%.
- CAPEX is quite volatile: $14m in FY2018, $19m in FY2017, $26m in FY2016, $12m in FY2015, $10m in FY2014
- The company has highly profitable business model: ROIC is 20.8%
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 6.7%. Revenue growth showed slowdown in FY18Q4 - it was -0.2% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 13.5 pp from 5.1% to 18.5% in 2018. During the last 5 years EBITDA Margin topped in FY2016 at 7.6% and was declining since that time.
Gross Margin showed almost no change in FY2018. Gross Margin stuck to a growing trend at 0.33 pp per annum in FY2014-FY2018. SG&A as a % of Revenue increased slightly on 0.64 pp from 15.4% to 16.1% in FY2018. SG&A as a % of Revenue grew at 4.1 pp per annum in the last 5 years.
Net Income margin showed almost no change in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.98% in FY2018. The company showed almost no change in CAPEX/Revenue from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 1.5%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2016 at 2.1% and was declining since that time.
Return on investment
The company operates at high and attractive ROIC (20.8%) while ROE is a bit lower (15.3%). ROIC decreased slightly on 1.9 pp from 22.8% to 20.8% in FY2018. ROE showed almost no change in FY2018. During FY2014-FY2018 ROIC topped in FY2017 at 22.8%.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.7x and Debt / EBITDA is 0.5x. Debt jumped on 39.7% while cash increased on 7.7%.
ePlus inc. has no short term refinancing risk: cash is higher than short term debt (280.1%).
Valuation and dividends
ePlus inc.'s trades at EV/EBITDA 11.2x and P/E 21.4x.
Management team
The company's CEO Mark P Marron is a founder and has spent 3 years with the company. The company's CFO Elaine D Marion has spent 10 years with the company.
Financial and operational results
FY ended 03/31/2018
ePlus inc. ($PLUS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,058 | 1,143 | 1,204 | 1,329 | 1,419 | 6.7% |
| Gross Profit | 230 | 245 | 262 | 300 | 323 | 7.9% |
| SG&A | 23 | 27 | 23 | 205 | 228 | 11.2% |
| EBITDA | 77 | 86 | 92 | 97 | 100 | 2.7% |
| Net Income | 35 | 46 | 45 | 51 | 55 | 9.0% |
Balance Sheet
|
|---|
| Cash | 80 | 76 | 95 | 110 | 118 | 7.7% |
| Short Term Debt | 32 | 29 | 28 | 27 | 42 | 56.4% |
| Long Term Debt | 37 | 27 | 19 | 10 | 10 | -3.4% |
Cash flow
|
|---|
| Capex | 10 | 12 | 26 | 19 | 14 | -28.1% |
Ratios
|
|---|
| Revenue growth | 7.6% | 8.1% | 5.3% | 10.4% | 6.7% | |
| EBITDA growth | 5.5% | 12.3% | 6.3% | 6.2% | 2.7% | |
|
|---|
| Gross Margin | 21.7% | 21.4% | 21.8% | 22.5% | 22.8% | 0.3% |
| EBITDA Margin | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% | -0.3% |
| SG&A, % of revenue | 2.1% | 2.3% | 1.9% | 15.4% | 16.1% | 0.6% |
| Net Income Margin | 3.3% | 4.0% | 3.7% | 3.8% | 3.9% | 0.1% |
| CAPEX, % of revenue | 0.9% | 1.0% | 2.1% | 1.5% | 1.0% | -0.5% |
|
|---|
| ROIC | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% | -1.9% |
| ROE | 13.9% | 16.8% | 15.0% | 15.2% | 15.3% | 0.1% |
| Net Debt/EBITDA | -0.1x | -0.2x | -0.5x | -0.7x | -0.7x | 0.1x |
ePlus inc. ($PLUS) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 373 | 371 | 344 | 332 | | 25.1% | -0.0% | 5.4% | -0.2% |
| EBITDA | 24 | 32 | 21 | 23 | | 17.1% | 3.5% | -13.5% | 6.0% |
| Net Income | 13 | 17 | 16 | 9 | | 25.8% | 2.7% | 23.5% | -15.2% |
Balance Sheet
|
|---|
| Cash | 98 | 60 | 76 | 118 | | 24.7% | 25.3% | 9.2% | 7.7% |
| Short Term Debt | 30 | 32 | 28 | 42 | | -28.6% | -29.1% | -36.3% | 56.4% |
| Long Term Debt | 7 | 5 | 4 | 10 | | -55.4% | -59.9% | -63.8% | -3.4% |
Ratios
|
|---|
| Gross Margin | 20.8% | 23.6% | 22.3% | 24.6% | | -1.9% | 1.5% | -0.3% | 1.6% |
| EBITDA Margin | 6.4% | 8.7% | 6.1% | 6.9% | | -0.4% | 0.3% | -1.3% | 0.4% |
| Net Income Margin | 3.6% | 4.6% | 4.5% | 2.7% | | 0.0% | 0.1% | 0.7% | -0.5% |
Peers in Technology Distributors
Below we provide ePlus inc. benchmarking against other companies in Technology Distributors 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tech Data Corporation ($TECD) | | 3.2% | -4.7% | -8.3% | 38.9% |
| EACO Corp ($EACO) | | 4.1% | 5.9% | 5.7% | 23.1% |
| Richardson Electronics, Ltd. ($RELL) | | -0.7% | 3.7% | -3.6% | 19.2% |
| Synnex Corporation ($SNX) | | -3.6% | 5.4% | 21.2% | 17.6% |
| Wayside Technology Group, Inc. ($WSTG) | | 12.1% | 9.4% | -61.6% | 13.0% |
| |
|---|
| Median (16 companies) | | 4.1% | 4.6% | 4.2% | 8.9% |
|---|
| ePlus inc. ($PLUS) | | 8.1% | 5.3% | 10.4% | 6.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | 25.4% | 31.1% | -10.8% | 39.4% | 44.0% |
| Richardson Electronics, Ltd. ($RELL) | 29.7% | 30.0% | 31.6% | 32.1% | 33.7% |
| EACO Corp ($EACO) | 27.5% | 29.3% | 29.3% | 28.5% | 28.5% |
| Surge Components Inc ($SPRS) | 24.5% | 25.0% | 25.2% | 25.2% | 25.6% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.3% | 35.0% | 32.2% | 30.4% | 23.7% |
| |
|---|
| Median (16 companies) | 14.2% | 13.5% | 13.8% | 16.5% | 15.6% |
|---|
| ePlus inc. ($PLUS) | 21.7% | 21.4% | 21.8% | 22.5% | 22.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | -8.6% | -3.2% | -39.0% | 13.0% | 19.2% |
| CDW Corporation ($CDW) | 7.3% | 7.5% | 7.7% | 7.6% | 7.7% |
| EACO Corp ($EACO) | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% |
| Surge Components Inc ($SPRS) | 2.8% | 3.8% | -1.5% | 1.2% | 4.8% |
| Anixter International Inc. ($AXE) | 6.3% | 5.1% | 4.6% | 4.8% | 4.5% |
| |
|---|
| Median (16 companies) | 3.2% | 3.5% | 3.4% | 3.5% | 4.0% |
|---|
| ePlus inc. ($PLUS) | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Richardson Electronics, Ltd. ($RELL) | 2.0% | 3.5% | 3.4% | 3.8% | 3.2% |
| EACO Corp ($EACO) | 0.6% | 0.4% | 0.3% | 5.5% | 0.8% |
| Avnet, Inc. ($AVT) | 0.4% | 0.6% | 0.8% | 0.7% | 0.8% |
| PC Connection, Inc. ($CNXN) | 0.3% | 0.5% | 0.4% | 0.4% | 0.8% |
| Synnex Corporation ($SNX) | 0.4% | 0.8% | 0.9% | 0.6% | 0.6% |
| |
|---|
| Median (16 companies) | 0.4% | 0.5% | 0.4% | 0.5% | 0.5% |
|---|
| ePlus inc. ($PLUS) | 0.9% | 1.0% | 2.1% | 1.5% | 1.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Surge Components Inc ($SPRS) | 6.7% | 9.5% | -4.0% | 3.9% | 24.6% |
| CDW Corporation ($CDW) | 16.5% | 17.3% | 18.8% | 20.1% | 23.1% |
| EACO Corp ($EACO) | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% |
| Insight Enterprises, Inc. ($NSIT) | 17.0% | 17.4% | 20.7% | 19.3% | 20.0% |
| PC Connection, Inc. ($CNXN) | 20.1% | 19.9% | 18.6% | 16.6% | 17.0% |
| |
|---|
| Median (17 companies) | 11.9% | 11.9% | 12.1% | 9.9% | 11.2% |
|---|
| ePlus inc. ($PLUS) | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Synnex Corporation ($SNX) | 2.0x | 0.9x | 1.2x | 2.1x | 3.9x |
| Anixter International Inc. ($AXE) | 3.2x | 4.7x | 3.6x | 3.0x | 3.1x |
| ScanSource, Inc. ($SCSC) | -1.4x | -0.9x | 0.2x | 0.6x | 2.5x |
| CDW Corporation ($CDW) | 3.2x | 3.3x | 2.8x | 2.7x | 2.4x |
| Arrow Electronics, Inc. ($ARW) | 1.8x | 2.2x | 2.2x | 2.3x | 2.2x |
| |
|---|
| Median (15 companies) | 0.0x | -0.4x | 0.7x | 1.2x | 1.2x |
|---|
| ePlus inc. ($PLUS) | -0.1x | -0.2x | -0.5x | -0.7x | -0.7x |
