EACO Corp EBITDA jumped on 59.6% and EBITDA Margin increased slightly on 1.3 pp from 4.5% to 5.9%
11/05/2018 • About EACO Corp (
$EACO) • By InTwits
EACO Corp reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 5.9% in FY2018 vs. 4.5% in FY2017 vs. 4.0% in FY2014
- EACO Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 0.6%.
- CAPEX is quite volatile: $2m in FY2018, $9m in FY2017, $0m in FY2016, $1m in FY2015, $1m in FY2014
- The company has highly profitable business model: ROIC is 21.2%
- It operates with high leverage: Net Debt/EBITDA is 0.5x while industry average is 0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
EACO Corp's Revenue jumped on 23.1%. Revenue growth showed acceleration in FY18Q4 - it increased 28.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 10.9 pp from -15.1% to -4.2% in FY2018.
Gross Margin showed almost no change in FY2018. During FY2014-FY2018 Gross Margin topped in FY2016 at 29.3% and was declining since that time. SG&A as a % of Revenue decreased slightly on 1.4 pp from 24.5% to 23.1% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue topped in FY2015 at 25.2% and was declining since that time.
Net Income margin increased slightly on 1.0 pp from 2.6% to 3.6% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 EACO Corp had CAPEX/Revenue of 0.83%. EACO Corp showed almost no change in CAPEX/Revenue from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 2.2%.
Return on investment
The company operates at high and attractive ROIC (21.2%) while ROE is a bit lower (18.1%). ROIC increased on 5.0 pp from 16.1% to 21.2% in FY2018. ROE increased on 6.0 pp from 12.1% to 18.1% in FY2018. During FY2014-FY2018 ROE bottomed in FY2017 at 12.1%.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.5x and Debt / EBITDA is 0.7x. Net Debt / EBITDA dropped on 0.7x from 1.2x to 0.5x in FY2018. Debt dropped on 32.3% while cash dropped on 30.1%.
EACO Corp has no short term refinancing risk: cash is higher than short term debt (1,852.7%).
Financial and operational results
FY ended 08/31/2018
EACO Corp ($EACO) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 134.7 | 140.2 | 148.5 | 157.0 | 193.3 | 23.1% |
| Gross Profit | 37.0 | 41.1 | 43.6 | 44.8 | 55.0 | 22.9% |
| SG&A | 32.2 | 35.4 | 37.1 | 38.5 | 44.7 | 16.3% |
| EBITDA | 5.4 | 6.3 | 7.0 | 7.1 | 11.3 | 59.6% |
| Net Income | 5.6 | 3.7 | 4.1 | 4.1 | 6.9 | 71.5% |
Balance Sheet
|
|---|
| Cash | 3.5 | 5.3 | 4.9 | 3.9 | 2.7 | -30.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 5.0% |
| Long Term Debt | 1.7 | 0.0 | 0.0 | 12.2 | 8.2 | -32.7% |
Cash flow
|
|---|
| Capex | 0.7 | 0.5 | 0.4 | 8.6 | 1.6 | -81.5% |
Ratios
|
|---|
| Revenue growth | 11.9% | 4.1% | 5.9% | 5.7% | 23.1% | |
| EBITDA growth | 25.1% | 16.1% | 12.0% | 1.2% | 59.6% | |
|
|---|
| Gross Margin | 27.5% | 29.3% | 29.3% | 28.5% | 28.5% | -0.1% |
| EBITDA Margin | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% | 1.3% |
| SG&A, % of revenue | 23.9% | 25.2% | 25.0% | 24.5% | 23.1% | -1.4% |
| Net Income Margin | 4.2% | 2.7% | 2.8% | 2.6% | 3.6% | 1.0% |
| CAPEX, % of revenue | 0.6% | 0.4% | 0.3% | 5.5% | 0.8% | -4.7% |
|
|---|
| ROIC | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% | 5.0% |
| ROE | 26.9% | 14.5% | 13.9% | 12.1% | 18.1% | 6.0% |
| Net Debt/EBITDA | -0.3x | -0.8x | -0.7x | 1.2x | 0.5x | -0.7x |
EACO Corp ($EACO) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 42 | 45 | 52 | 54 | | 13.3% | 20.8% | 28.4% | 28.8% |
| EBITDA | 2 | 2 | 4 | 3 | | 56.2% | 52.9% | 79.5% | 47.9% |
| Net Income | 1 | 1 | 2 | 2 | | 80.8% | 76.3% | 76.3% | 60.0% |
Balance Sheet
|
|---|
| Cash | 4 | 3 | 3 | 3 | | -29.2% | -34.3% | -44.9% | -30.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | 4.3% | 5.0% |
| Long Term Debt | 13 | 14 | 12 | 8 | | 206.8% | 240.7% | 0.4% | -32.7% |
Ratios
|
|---|
| Gross Margin | 28.9% | 27.6% | 29.1% | 28.2% | | 0.5% | -0.7% | 0.5% | -0.5% |
| EBITDA Margin | 5.0% | 4.9% | 7.1% | 6.1% | | 1.4% | 1.0% | 2.0% | 0.8% |
| Net Income Margin | 2.8% | 2.9% | 4.4% | 4.0% | | 1.1% | 0.9% | 1.2% | 0.8% |
Peers in Technology Distributors
Below you can find EACO Corp benchmarking vs. other companies in Technology Distributors 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tech Data Corporation ($TECD) | | 3.2% | -4.7% | -8.3% | 38.9% |
| Richardson Electronics, Ltd. ($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% |
| Arrow Electronics, Inc. ($ARW) | | 2.3% | 0.9% | 13.1% | 11.8% |
| |
|---|
| Median (16 companies) | | 4.5% | 4.6% | 4.2% | 8.3% |
|---|
| EACO Corp ($EACO) | | 4.1% | 5.9% | 5.7% | 23.1% |
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% |
| 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% |
| ePlus inc. ($PLUS) | 21.7% | 21.4% | 21.8% | 22.5% | 22.8% |
| |
|---|
| Median (16 companies) | 14.2% | 13.5% | 13.8% | 16.5% | 15.6% |
|---|
| EACO Corp ($EACO) | 27.5% | 29.3% | 29.3% | 28.5% | 28.5% |
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% |
| ePlus inc. ($PLUS) | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% |
| Surge Components Inc ($SPRS) | 2.8% | 3.8% | -1.5% | 1.2% | 4.8% |
| Anixter International Inc. ($AXE) | 6.3% | 5.1% | 4.6% | 4.8% | 4.5% |
| |
|---|
| Median (16 companies) | 3.2% | 3.5% | 3.4% | 3.5% | 4.0% |
|---|
| EACO Corp ($EACO) | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Richardson Electronics, Ltd. ($RELL) | 2.0% | 3.5% | 3.4% | 3.8% | 3.2% |
| ePlus inc. ($PLUS) | 0.9% | 1.0% | 2.1% | 1.5% | 1.0% |
| 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 ($SNX) | 0.4% | 0.8% | 0.9% | 0.6% | 0.6% |
| |
|---|
| Median (16 companies) | 0.4% | 0.6% | 0.4% | 0.5% | 0.5% |
|---|
| EACO Corp ($EACO) | 0.6% | 0.4% | 0.3% | 5.5% | 0.8% |
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% |
| ePlus inc. ($PLUS) | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% |
| Insight Enterprises, Inc. ($NSIT) | 17.0% | 17.4% | 20.7% | 19.3% | 20.0% |
| PC Connection, Inc. ($CNXN) | 20.1% | 19.9% | 18.6% | 16.6% | 17.0% |
| |
|---|
| Median (17 companies) | 11.9% | 11.9% | 12.1% | 9.9% | 11.2% |
|---|
| EACO Corp ($EACO) | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% |
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. ($ARW) | 1.8x | 2.2x | 2.2x | 2.3x | 2.2x |
| |
|---|
| Median (15 companies) | 0.1x | -0.2x | 0.7x | 0.9x | 1.2x |
|---|
| EACO Corp ($EACO) | -0.3x | -0.8x | -0.7x | 1.2x | 0.5x |
