Cass Information Systems, Inc reports 21.0% Net Income growth in 2018 while 1.5 pp EBITDA Margin decline from 35.2% to 33.8%
01/31/2019 • About Cass Information Systems, Inc (
$CASS) • By InTwits
Cass Information Systems, Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is relatively stable: 33.8% in 2018 vs. 35.2% in 2017 vs. 35.5% in 2014
- Cass Information Systems, Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $5m in FY2018, $6m in FY2017, $3m in FY2016, $7m in FY2015, $2m in FY2014
- The company has highly profitable business model: ROIC is 15.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Cass Information Systems, Inc's Revenue jumped on 10.6%. Revenue growth showed acceleration in 18Q4 - it increased 10.7% YoY. Revenue growth was accelerating on average by 2.6 pp per annum in the last 5 years. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018.
Net Income margin increased slightly on 1.7 pp from 18.2% to 19.9% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Cass Information Systems, Inc had CAPEX/Revenue of 2.9%. CAPEX/Revenue decreased slightly on 1.8 pp from 4.7% in 2015 to 2.9% in 2018. It's average level of CAPEX/Revenue for the last three years was 3.2%. CAPEX as a % of Revenue stuck to a declining trend at -0.64 pp per annum in 2014-2018.
Return on investment
The company operates at good ROIC (15.7%) and ROE (13.3%). ROIC showed almost no change in 2018. ROE increased slightly on 1.8 pp from 11.6% to 13.3% in 2018.
Leverage (Debt)
The company has no debt. Cash dropped on 13.7%.
Valuation and dividends
Cass Information Systems, Inc's trades at EV/EBITDA 13.8x and P/E 23.9x.
Management team
Cass Information Systems, Inc's CEO is Eric H Brunngraber. Eric H Brunngraber is a founder and has 11 years tenure with the company. Cass Information Systems, Inc's CFO is P Stephen Appelbaum "Steve". P Stephen Appelbaum "Steve" has 7 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
Cass Information Systems, Inc ($CASS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 119.7 | 122.1 | 126.1 | 137.5 | 152.0 | 10.6% |
| EBITDA | 42.4 | 42.0 | 43.5 | 48.4 | 51.3 | 6.0% |
| Net Income | 24.0 | 23.1 | 24.3 | 25.0 | 30.3 | 21.0% |
Balance Sheet
|
|---|
| Cash | 11.3 | 9.0 | 11.8 | 17.4 | 15.0 | -13.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 6.3 | 5.7 | 4.7 | 4.1 | 4.4 | 6.6% |
Ratios
|
|---|
| Revenue growth | 1.3% | 2.0% | 3.3% | 9.1% | 10.6% | |
| EBITDA growth | 3.7% | -1.0% | 3.6% | 11.3% | 6.0% | |
|
|---|
| EBITDA Margin | 35.5% | 34.4% | 34.5% | 35.2% | 33.8% | -1.5% |
| Net Income Margin | 20.1% | 18.9% | 19.3% | 18.2% | 19.9% | 1.7% |
| CAPEX, % of revenue | 5.3% | 4.7% | 3.7% | 3.0% | 2.9% | -0.1% |
|
|---|
| ROIC | 16.5% | 15.6% | 15.8% | 16.1% | 15.7% | -0.4% |
| ROE | 12.3% | 11.3% | 11.7% | 11.6% | 13.3% | 1.8% |
| Net Debt/EBITDA | -0.3x | -0.2x | -0.3x | -0.4x | -0.3x | 0.1x |
Cass Information Systems, Inc ($CASS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 37 | 37 | 39 | 40 | | 11.9% | 8.9% | 10.8% | 10.7% |
| EBITDA | 13 | 12 | 13 | 13 | | 21.0% | 4.1% | 0.8% | -0.4% |
| Net Income | 8 | 8 | 8 | 7 | | 28.3% | 15.3% | 10.9% | 32.4% |
Balance Sheet
|
|---|
| Cash | 10 | 13 | 12 | 15 | | -10.9% | -10.1% | -15.2% | -13.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| EBITDA Margin | 36.8% | 33.6% | 33.2% | 31.6% | | 2.8% | -1.5% | -3.3% | -3.5% |
| Net Income Margin | 22.1% | 20.2% | 19.7% | 17.8% | | 2.8% | 1.1% | 0.0% | 2.9% |
Peers in Data Processing & Outsourced S
Below we provide Cass Information Systems, Inc benchmarking against other companies in Data Processing & Outsourced S 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 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 11.8% | 7.4% |
|---|
| Cass Information Systems, Inc ($CASS) | | 2.0% | 3.3% | 9.1% | 10.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (45 companies) | 38.8% | 39.5% | 39.3% | 39.3% | 41.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.2% | 20.6% | 19.2% |
|---|
| Cass Information Systems, Inc ($CASS) | 35.5% | 34.4% | 34.5% | 35.2% | 33.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.2% |
|---|
| Cass Information Systems, Inc ($CASS) | 5.3% | 4.7% | 3.7% | 3.0% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.3% | 12.8% | 11.1% | 10.6% | 10.2% |
|---|
| Cass Information Systems, Inc ($CASS) | 16.5% | 15.6% | 15.8% | 16.1% | 15.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.6x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| Cass Information Systems, Inc ($CASS) | -0.3x | -0.2x | -0.3x | -0.4x | -0.3x |
