Worldpay, Inc. reports 175% CAPEX growth in 2018 while 2.5% Revenue decline
02/26/2019 • About Worldpay, Inc. (
$WP) • By InTwits
Worldpay, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Worldpay, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.1%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $305m in 2018, $111m in 2017, $118m in 2016, $85m in 2015, $103m in 2014
- In the last 5 years the company invested considerably less than D&A: $722m vs. $2,201m. In 2018 this situation was still the same: CAPEX was 305 while D&A was 1,095
- The company has potentially unprofitable business model: ROIC is 2.9%
- It operates with high leverage: Net Debt/EBITDA is 5.4x while industry average is 2.6x
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 decreased on 2.5%. Annual revenue decline showed slowdown in 18Q4 - revenue decreased slightly on 1.5%. Revenue decline was accelerating on average at -6.0 pp per annum in 2014-2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 15.7 pp from 20.9% to 36.5% in 2018.
SG&A as a % of Revenue surged on 21.7 pp from 24.0% to 45.7% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2016 at 21.6% and was growing since that time. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 2.0 pp from 1.2% to 3.2% in 2018. During the last 5 years SBC as a % of Revenue bottomed in 2015 at 0.44% and was growing since that time.
Net Income margin decreased on 2.9 pp from 3.2% to 0.33% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 7.8%. The company's CAPEX/Revenue increased on 5.1 pp from 2.7% in 2015 to 7.8% in 2018. It's average CAPEX/Revenue for the last three years was 4.6%.
Accounts receivable as a % of Revenue jumped on 18.7 pp from 24.5% to 43.2% in 2018.
Worldpay, Inc. has spent $-1,390m on M&A in 2018 which accounts for -35.4% of revenue.
Return on investment
The company operates at low ROIC (2.9%) and ROE (0.2%). ROIC decreased on 7.8 pp from 10.7% to 2.9% in 2018. ROE dropped on 13.8 pp from 14.1% to 0.25% in 2018. During the last 5 years ROIC topped in 2016 at 14.7% and was declining since that time. During 2014-2018 ROE topped in 2016 at 18.8% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.4x and Debt / EBITDA is 5.5x. Net Debt / EBITDA dropped on 1.3x from 6.6x to 5.4x in 2018. Debt jumped on 38.5% while cash jumped on 55.3%.
Worldpay, Inc. has short term refinancing risk: cash is only 79.1% of short term debt.
Valuation and dividends
Worldpay, Inc.'s trades at EV/EBITDA 25.5x and P/E 2,248.3x.
Management team
Charles D Drucker is a the company's CEO. Charles D Drucker is a founder and has spent 1 year with the company. CEO total compensation was
$31,922,406 in 2018 which included
$2,041,237 salary. Stephanie Ferris is a Worldpay, Inc.'s CFO. Stephanie Ferris has spent 1 year at the company.
The company has 0.49% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 8,186 employees. The number of employees surged on 124%. Average revenue per employee in 2018 was
$479,526 and it dropped on 56.4%.
Financial and operational results
FY ended 12/31/2018
Worldpay, Inc. ($WP) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 2,577 | 3,160 | 3,579 | 4,026 | 3,925 | -2.5% |
| Gross Profit | 1,403 | 1,682 | 1,905 | 2,123 | | |
| SG&A | 570 | 686 | 772 | 965 | 1,794 | 86.0% |
| EBITDA | 555 | 711 | 839 | 840 | 1,434 | 70.7% |
| EBIT | 315 | 434 | 569 | 522 | 339 | -35.1% |
| Tax | 66 | 88 | 142 | 631 | -28 | -104.4% |
| Net Income | 125 | 148 | 213 | 130 | 13 | -90.2% |
| Stock Based Compensation | 42 | 14 | 24 | 48 | 125 | 160.8% |
Balance Sheet
|
|---|
| Cash | 412 | 197 | 139 | 127 | 197 | 55.3% |
| Accounts Receivable | 608 | 680 | 940 | 986 | 1,695 | 71.9% |
| Short Term Debt | 125 | 124 | 139 | 116 | 248 | 114.2% |
| Long Term Debt | 3,292 | 2,965 | 3,103 | 5,591 | 7,656 | 36.9% |
Cash flow
|
|---|
| Capex | 103 | 85 | 118 | 111 | 305 | 175.2% |
| Acquisitions | 1,659 | | 407 | 532 | -1,390 | -361.4% |
Ratios
|
|---|
| Revenue growth | 22.3% | 22.6% | 13.3% | 12.5% | -2.5% | |
| EBITDA growth | 3.2% | 28.1% | 17.9% | 0.2% | 70.7% | |
|
|---|
| Gross Margin | 54.4% | 53.2% | 53.2% | 52.7% | | |
| EBITDA Margin | 21.6% | 22.5% | 23.4% | 20.9% | 36.5% | 15.7% |
| EBIT Margin | 12.2% | 13.7% | 15.9% | 13.0% | 8.6% | -4.3% |
| SG&A, % of revenue | 22.1% | 21.7% | 21.6% | 24.0% | 45.7% | 21.7% |
| SBC, % of revenue | 1.6% | 0.4% | 0.7% | 1.2% | 3.2% | 2.0% |
| Net Income Margin | 4.9% | 4.7% | 6.0% | 3.2% | 0.3% | -2.9% |
| CAPEX, % of revenue | 4.0% | 2.7% | 3.3% | 2.8% | 7.8% | 5.0% |
|
|---|
| ROIC | 9.0% | 11.0% | 14.7% | 10.7% | 2.9% | -7.8% |
| ROE | 15.0% | 15.9% | 18.8% | 14.1% | 0.2% | -13.8% |
| Net Debt/EBITDA | 5.4x | 4.1x | 3.7x | 6.6x | 5.4x | -1.3x |
People
|
|---|
| Insider ownership | 0.5% | 0.5% | 0.5% | 0.5% | 0.5% | 0.0% |
| Employees | 3,299 | 3,313 | 3,526 | 3,661 | 8,186 | 123.6% |
| Revenue/Employee, th. $ | 781 | 954 | 1,015 | 1,100 | 480 | -56.4% |
Worldpay, Inc. ($WP) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 851 | 1,007 | 1,018 | 1,050 | | -8.3% | 0.8% | -1.5% | -1.5% |
| EBITDA | 186 | 395 | 407 | 446 | | 18.6% | 75.2% | 0.2% | 0.6% |
| Net Income | -98 | -3 | 3 | 111 | | -437.9% | -104.2% | -97.0% | |
Balance Sheet
|
|---|
| Cash | 459 | 368 | 374 | 197 | | 232.2% | 206.6% | 303.4% | 55.3% |
| Short Term Debt | 257 | 257 | 252 | 248 | | 84.5% | 83.5% | 69.3% | 114.2% |
| Long Term Debt | 8,084 | 7,888 | 7,746 | 7,656 | | 163.4% | 132.5% | 68.5% | 36.9% |
Ratios
|
|---|
| EBITDA Margin | 21.8% | 39.2% | 39.9% | 42.5% | | 5.0% | 16.7% | 0.7% | 0.9% |
| Net Income Margin | -11.5% | -0.3% | 0.3% | 10.5% | | -14.6% | -7.2% | -8.6% | 16.1% |
Peers in Data Processing & Outsourced S
Below we provide Worldpay, 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. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.0% | 7.6% | 10.1% | 7.5% |
|---|
| Worldpay, Inc. ($WP) | | 22.6% | 13.3% | 12.5% | -2.5% |
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. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (45 companies) | 38.4% | 39.5% | 39.2% | 38.9% | 41.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($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% | 20.9% | 19.2% |
|---|
| Worldpay, Inc. ($WP) | 21.6% | 22.5% | 23.4% | 20.9% | 36.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($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% | 3.0% |
|---|
| Worldpay, Inc. ($WP) | 4.0% | 2.7% | 3.3% | 2.8% | 7.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($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) | 14.1% | 13.1% | 11.1% | 10.6% | 12.1% |
|---|
| Worldpay, Inc. ($WP) | 9.0% | 11.0% | 14.7% | 10.7% | 2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($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) | 0.4x | 0.5x | 1.3x | 2.3x | 2.0x |
|---|
| Worldpay, Inc. ($WP) | 5.4x | 4.1x | 3.7x | 6.6x | 5.4x |
