PCM, Inc. EBITDA surged on 118% and Revenue showed almost no change
02/06/2019 • About PCM, Inc. (
$PCMI) • By InTwits
PCM, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 2.5% in 2018, 1.1% in 2017, 2.2% in 2016, -0.8% in 2015, 2.0% in 2014
- PCM, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
- The company has highly profitable business model: ROIC is 12.4%
- It operates with high leverage: Net Debt/EBITDA is 2.1x 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 showed almost no change in 2018. Annual revenue decline showed slowdown in 18Q4 - revenue increased on 3.6%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.4 pp from 1.1% to 2.5% in 2018.
Gross Margin increased slightly on 0.91 pp from 15.0% to 15.9% in 2018. During the last 5 years Gross Margin bottomed in 2015 at 13.5% and was growing since that time. SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin increased slightly on 0.93 pp from 0.12% to 1.1% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.27% in 2018. PCM, Inc. showed small CAPEX/Revenue decline of 1.0 pp from 1.3% in 2015 to 0.27% in 2018. Average CAPEX/Revenue for the last three years was 0.48%. CAPEX as a % of Revenue stuck to a declining trend at -0.39 pp per annum in 2014-2018.
Return on investment
The company operates at good ROIC (12.4%) and ROE (16.2%). ROIC increased on 9.1 pp from 3.3% to 12.4% in 2018. ROE jumped on 14.2 pp from 2.0% to 16.2% in 2018.
Leverage (Debt)
Debt level is 2.1x Net Debt / EBITDA and 2.2x Debt / EBITDA. Net Debt / EBITDA dropped on 7.6x from 9.7x to 2.1x in 2018. Debt dropped on 51.5% while cash dropped on 33.8%.
PCM, Inc. has short term refinancing risk: cash is only 6.6% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 9.1x and P/E 16.5x.
Management team
PCM, Inc.'s CFO Brandon H Laverne has spent 11 years with the company.
Financial and operational results
FY ended 12/31/2018
PCM, Inc. ($PCMI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,356 | 1,662 | 2,251 | 2,167 | 2,164 | -0.1% |
| Gross Profit | 192 | 224 | 319 | 325 | 344 | 5.9% |
| SG&A | 176 | 250 | 284 | 314 | 303 | -3.5% |
| EBITDA | 28 | -13 | 51 | 25 | 54 | 118.4% |
| Net Income | 5 | -18 | 18 | 3 | 23 | 777.6% |
Balance Sheet
|
|---|
| Cash | 9 | 11 | 7 | 9 | 6 | -33.8% |
| Short Term Debt | 57 | 175 | 119 | 217 | 92 | -57.8% |
| Long Term Debt | 28 | 21 | 19 | 33 | 30 | -10.3% |
Cash flow
|
|---|
| Capex | 27 | 21 | 9 | 17 | 6 | -66.9% |
Ratios
|
|---|
| Revenue growth | -0.3% | 22.5% | 35.4% | -3.7% | -0.1% | |
| EBITDA growth | -8.2% | -148.1% | -481.3% | -50.9% | 118.4% | |
|
|---|
| Gross Margin | 14.2% | 13.5% | 14.2% | 15.0% | 15.9% | 0.9% |
| EBITDA Margin | 2.0% | -0.8% | 2.2% | 1.1% | 2.5% | 1.4% |
| SG&A, % of revenue | 13.0% | 15.0% | 12.6% | 14.5% | 14.0% | -0.5% |
| Net Income Margin | 0.4% | -1.1% | 0.8% | 0.1% | 1.1% | 0.9% |
| CAPEX, % of revenue | 2.0% | 1.3% | 0.4% | 0.8% | 0.3% | -0.5% |
|
|---|
| ROIC | 6.3% | -9.4% | 12.1% | 3.3% | 12.4% | 9.1% |
| ROE | 4.2% | -15.0% | 14.8% | 2.0% | 16.2% | 14.2% |
| Net Debt/EBITDA | 2.7x | | 2.6x | 9.7x | 2.1x | -7.6x |
PCM, Inc. ($PCMI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 543 | 546 | 511 | 564 | | 3.8% | -1.7% | -6.0% | 3.6% |
| EBITDA | 10 | 17 | 14 | 14 | | 19.6% | 87.6% | 173.4% | 415.9% |
| Net Income | 3 | 8 | 6 | 6 | | -32.6% | 233.2% | | |
Balance Sheet
|
|---|
| Cash | 12 | 12 | 9 | 6 | | 57.3% | 57.5% | 2.4% | -33.8% |
| Short Term Debt | 188 | 153 | 138 | 92 | | 43.5% | 29.5% | -19.8% | -57.8% |
| Long Term Debt | 32 | 31 | 30 | 30 | | 49.9% | 24.3% | -10.4% | -10.3% |
Ratios
|
|---|
| Gross Margin | 15.4% | 16.5% | 16.7% | 15.0% | | 0.4% | 1.2% | 1.7% | 0.4% |
| EBITDA Margin | 1.8% | 3.0% | 2.7% | 2.5% | | 0.2% | 1.4% | 1.8% | 2.0% |
| Net Income Margin | 0.5% | 1.4% | 1.2% | 1.1% | | -0.3% | 1.0% | 1.3% | 1.7% |
Peers in Technology Distributors
Below you can find PCM, Inc. 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 ($TECD) | | 3.2% | -4.7% | -8.3% | 38.9% |
| EACO Corp ($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. ($WSTG) | | 12.1% | 9.4% | -61.6% | 13.0% |
| |
|---|
| Median (16 companies) | | 4.1% | 4.6% | 5.7% | 8.9% |
|---|
| PCM, Inc. ($PCMI) | | 22.5% | 35.4% | -3.7% | -0.1% |
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% |
| 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. ($AEY) | 32.3% | 35.0% | 32.2% | 30.4% | 23.7% |
| |
|---|
| Median (16 companies) | 15.9% | 16.3% | 13.8% | 16.9% | 15.9% |
|---|
| PCM, Inc. ($PCMI) | 14.2% | 13.5% | 14.2% | 15.0% | 15.9% |
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. ($PLUS) | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% |
| EACO Corp ($EACO) | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% |
| Surge Components Inc ($SPRS) | 2.8% | 3.8% | -1.5% | 1.2% | 4.8% |
| |
|---|
| Median (16 companies) | 3.2% | 3.5% | 3.6% | 3.8% | 4.1% |
|---|
| PCM, Inc. ($PCMI) | 2.0% | -0.8% | 2.2% | 1.1% | 2.5% |
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% |
| 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. ($CNXN) | 0.3% | 0.5% | 0.4% | 0.4% | 0.8% |
| |
|---|
| Median (16 companies) | 0.4% | 0.5% | 0.4% | 0.5% | 0.5% |
|---|
| PCM, Inc. ($PCMI) | 2.0% | 1.3% | 0.4% | 0.8% | 0.3% |
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 ($EACO) | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% |
| ePlus inc. ($PLUS) | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% |
| Insight Enterprises, Inc. ($NSIT) | 17.0% | 17.4% | 20.7% | 19.3% | 20.0% |
| |
|---|
| Median (17 companies) | 13.6% | 12.1% | 12.5% | 11.5% | 11.2% |
|---|
| PCM, Inc. ($PCMI) | 6.3% | -9.4% | 12.1% | 3.3% | 12.4% |
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. ($ARW) | 1.8x | 2.2x | 2.2x | 2.3x | 2.2x |
| |
|---|
| Median (15 companies) | -0.2x | -0.2x | 0.1x | 0.9x | 0.5x |
|---|
| PCM, Inc. ($PCMI) | 2.7x | | 2.6x | 9.7x | 2.1x |
