B.O.S. Better Online Solutions reports 12.9% revenue growth in 2018 and almost no change in EBITDA Margin of 4.6%
02/26/2019 • About B.O.S. Better Online Solutions (
$BOSC) • By InTwits
B.O.S. Better Online Solutions reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 4.6% in 2018, 4.6% in 2017, 3.5% in 2016, 3.5% in 2015, 1.4% in 2014
- B.O.S. Better Online Solutions has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
- The company has business model with low profitability: ROIC is 8.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.6x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
B.O.S. Better Online Solutions's Revenue surged on 12.9%. Revenue growth showed acceleration in 18Q4 - it increased 14.7% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.3 pp from 4.7% to -1.5% in 2018. EBITDA Margin stuck to a growing trend at 0.74 pp per annum in 2014-2018.
Gross Margin decreased slightly on 1.3 pp from 21.9% to 20.7% in 2018. SG&A as a % of Revenue decreased slightly on 1.2 pp from 18.2% to 17.0% in 2018.
Net Income margin showed almost no change in 2018. Net Income margin grew at 1.1 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.1%. CAPEX/Revenue increased slightly on 1.9 pp from 0.26% in 2015 to 2.1% in 2018. It's average CAPEX/Revenue for the last three years was 1.3%. CAPEX as a % of Revenue followed a growing trend at 0.48 pp per annum in the last 5 years.
Return on investment
The company operates at low ROIC (8.8%) and ROE (9.1%). ROIC showed almost no change in 2018. ROE increased slightly on 0.89 pp from 8.2% to 9.1% in 2018. ROIC followed a growing trend at 1.7 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 1.6x. Net Debt / EBITDA dropped on 0.5x from 1.1x to 0.6x in 2018. Debt dropped on 22.9% while cash decreased on 8.0%. Net Debt/EBITDA pursued a declining trend in the last 5 years.
B.O.S. Better Online Solutions has no short term refinancing risk: cash is higher than short term debt (301.9%).
Valuation and dividends
B.O.S. Better Online Solutions's trades at EV/EBITDA 7.1x and P/E 9.8x.
Financial and operational results
FY ended 12/31/2018
B.O.S. Better Online Solutions ($BOSC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 27.601 | 25.599 | 27.427 | 28.932 | 32.650 | 12.9% |
| Gross Profit | 5.045 | 5.137 | 5.315 | 6.345 | 6.743 | 6.3% |
| SG&A | 4.925 | 4.449 | 4.609 | 5.259 | 5.539 | 5.3% |
| EBITDA | 0.389 | 0.893 | 0.954 | 1.331 | 1.493 | 12.2% |
| Net Income | -0.433 | 0.334 | 0.360 | 0.773 | 0.990 | 28.1% |
Balance Sheet
|
|---|
| Cash | 1.522 | 1.419 | 1.286 | 1.533 | 1.410 | -8.0% |
| Short Term Debt | 4.867 | 0.400 | 0.400 | 0.505 | 0.467 | -7.5% |
| Long Term Debt | 0.190 | 3.458 | 2.734 | 2.523 | 1.867 | -26.0% |
Cash flow
|
|---|
| Capex | 0.060 | 0.066 | 0.139 | 0.368 | 0.689 | 87.2% |
Ratios
|
|---|
| Revenue growth | 6.6% | -7.3% | 7.1% | 5.5% | 12.9% | |
| EBITDA growth | -63.2% | 129.6% | 6.8% | 39.5% | 12.2% | |
|
|---|
| Gross Margin | 18.3% | 20.1% | 19.4% | 21.9% | 20.7% | -1.3% |
| EBITDA Margin | 1.4% | 3.5% | 3.5% | 4.6% | 4.6% | -0.0% |
| SG&A, % of revenue | 17.8% | 17.4% | 16.8% | 18.2% | 17.0% | -1.2% |
| Net Income Margin | -1.6% | 1.3% | 1.3% | 2.7% | 3.0% | 0.4% |
| CAPEX, % of revenue | 0.2% | 0.3% | 0.5% | 1.3% | 2.1% | 0.8% |
|
|---|
| ROIC | 1.2% | 6.5% | 6.3% | 8.6% | 8.8% | 0.2% |
| ROE | -9.6% | 5.7% | 4.8% | 8.2% | 9.1% | 0.9% |
| Net Debt/EBITDA | 9.1x | 2.7x | 1.9x | 1.1x | 0.6x | -0.5x |
B.O.S. Better Online Solutions ($BOSC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 8 | 8 | 9 | | 17.4% | 12.4% | 6.7% | 14.7% |
| EBITDA | 0 | 0 | 0 | 0 | | 17.8% | 2.4% | 30.6% | 4.3% |
| Net Income | 0 | 0 | 0 | 0 | | 39.5% | 15.7% | 63.6% | 14.9% |
Balance Sheet
|
|---|
| Cash | 1 | 1 | 1 | 1 | | -8.1% | -16.4% | -14.6% | -8.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | 24.5% | 19.8% | 20.5% | -7.5% |
| Long Term Debt | 2 | 2 | 2 | 2 | | -10.8% | -18.8% | -19.7% | -26.0% |
Ratios
|
|---|
| Gross Margin | 20.0% | 20.6% | 20.8% | 21.1% | | -0.5% | -1.2% | 0.3% | -3.5% |
| EBITDA Margin | 4.2% | 4.0% | 4.5% | 5.4% | | 0.0% | -0.4% | 0.8% | -0.5% |
| Net Income Margin | 2.5% | 2.5% | 2.8% | 4.1% | | 0.4% | 0.1% | 1.0% | 0.0% |
Peers in Communications Equipment
Below we provide B.O.S. Better Online Solutions benchmarking against other companies in Communications Equipment 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 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.2% | 2.8% |
|---|
| B.O.S. Better Online Solutions ($BOSC) | | -7.3% | 7.1% | 5.5% | 12.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| B.O.S. Better Online Solutions ($BOSC) | 18.3% | 20.1% | 19.4% | 21.9% | 20.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| B.O.S. Better Online Solutions ($BOSC) | 1.4% | 3.5% | 3.5% | 4.6% | 4.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 2.0% | 1.9% | 1.6% |
|---|
| B.O.S. Better Online Solutions ($BOSC) | 0.2% | 0.3% | 0.5% | 1.3% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.0% | 2.2% | 2.1% | 0.3% |
|---|
| B.O.S. Better Online Solutions ($BOSC) | 1.2% | 6.5% | 6.3% | 8.6% | 8.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.8x | -0.8x | -0.9x | -0.8x | -0.3x |
|---|
| B.O.S. Better Online Solutions ($BOSC) | 9.1x | 2.7x | 1.9x | 1.1x | 0.6x |
