PRGX Global, Inc. reports 21.6% EBITDA growth in 2018 and 6.3% Revenue growth
03/07/2019 • About PRGX Global, Inc. (
$PRGX) • By InTwits
PRGX Global, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- PRGX Global, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.4%. At the same time it's in pair with industry average of 7.4%
- CAPEX is quite volatile: $10m in 2018, $9m in 2017, $6m in 2016, $4m in 2015, $5m in 2014
- The company has business model with low profitability: ROIC is 9.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
PRGX Global, Inc.'s Revenue increased on 6.3%. Revenue growth showed slowdown in 18Q4 - it was 5.4% YoY. Revenue decline was slowing down on average by 7.6 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.4 pp from 1.1% to 2.5% in 2018.
Gross Margin increased on 2.1 pp from 36.9% to 39.0% in 2018. Gross Margin grew at 1.9 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2018. SG&A as a % of Revenue grew at 1.7 pp per annum in the last 5 years.
Net Income margin increased slightly on 0.70 pp from 2.0% to 2.7% in 2018. Net Income margin followed a growing trend at 1.9 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
PRGX Global, Inc.'s CAPEX/Revenue was 6.1% in 2018. PRGX Global, Inc.'s CAPEX/Revenue increased on 2.8 pp from 3.2% in 2015 to 6.1% in 2018. It's average level of CAPEX/Revenue for the last three years was 5.3%. PRGX Global, Inc. invested a large share of EBITDA (57.4%) to CAPEX. CAPEX as a % of Revenue followed a growing trend at 0.88 pp per annum in 2014-2018.
Return on investment
The company operates at low ROIC (9.2%) and ROE (7.3%). ROIC decreased slightly on 1.2 pp from 10.4% to 9.2% in 2018. ROE increased slightly on 1.6 pp from 5.7% to 7.3% in 2018. ROE followed a growing trend at 4.4 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 0.4x Net Debt / EBITDA and 1.2x Debt / EBITDA. Net Debt / EBITDA jumped on 0.8x from -0.4x to 0.4x in 2018. Debt jumped on 59.1% while cash dropped on 25.8%. Net Debt/EBITDA followed a growing trend at 0.6x per annum in 2014-2018.
PRGX Global, Inc. has no short term refinancing risk: cash is higher than short term debt (29,110.4%).
Valuation and dividends
The company's trades at EV/EBITDA 10.9x and P/E 41.4x.
Management team
The company's CEO is Ronald E Stewart "Ron". Ronald E Stewart "Ron" is a founder and has 5 years tenure with the company. PRGX Global, Inc.'s CFO Kurt J Abkemeier has spent 0 years with the company.
Financial and operational results
FY ended 12/31/2018
PRGX Global, Inc. ($PRGX) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 161.6 | 138.3 | 140.8 | 161.6 | 171.8 | 6.3% |
| Gross Profit | 50.7 | 45.1 | 49.5 | 59.6 | 67.0 | 12.4% |
| SG&A | 38.6 | 32.3 | 39.4 | 46.9 | 50.5 | 7.5% |
| EBITDA | 12.3 | 12.9 | 10.2 | 14.9 | 18.1 | 21.6% |
| Net Income | -7.5 | -3.2 | 0.9 | 3.2 | 4.6 | 44.3% |
Balance Sheet
|
|---|
| Cash | 25.7 | 15.1 | 15.7 | 18.8 | 14.0 | -25.8% |
| Short Term Debt | 0.0 | 0.0 | 3.6 | 0.0 | 0.0 | 0.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 13.5 | 21.6 | 59.3% |
Cash flow
|
|---|
| Capex | 4.7 | 4.5 | 5.9 | 9.4 | 10.4 | 11.1% |
Ratios
|
|---|
| Revenue growth | -17.2% | -14.4% | 1.8% | 14.8% | 6.3% | |
| EBITDA growth | -21.9% | 5.0% | -21.1% | 46.8% | 21.6% | |
|
|---|
| Gross Margin | 31.4% | 32.6% | 35.2% | 36.9% | 39.0% | 2.1% |
| EBITDA Margin | 7.6% | 9.3% | 7.2% | 9.2% | 10.6% | 1.3% |
| SG&A, % of revenue | 23.9% | 23.3% | 28.0% | 29.0% | 29.4% | 0.3% |
| Net Income Margin | -4.7% | -2.3% | 0.6% | 2.0% | 2.7% | 0.7% |
| CAPEX, % of revenue | 2.9% | 3.2% | 4.2% | 5.8% | 6.1% | 0.3% |
|
|---|
| ROIC | 3.0% | 8.1% | 6.2% | 10.4% | 9.2% | -1.2% |
| ROE | -9.1% | -5.2% | 1.7% | 5.7% | 7.3% | 1.6% |
| Net Debt/EBITDA | -2.1x | -1.2x | -1.2x | -0.4x | 0.4x | 0.8x |
PRGX Global, Inc. ($PRGX) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 37 | 42 | 43 | 50 | | 9.4% | 9.3% | 2.0% | 5.4% |
| EBITDA | 1 | 2 | 6 | 9 | | 6,500.0% | 28.4% | 74.9% | -5.6% |
| Net Income | -3 | -3 | 2 | 8 | | | | 213.9% | 48.0% |
Balance Sheet
|
|---|
| Cash | 15 | 10 | 10 | 14 | | 29.6% | -24.4% | -12.1% | -25.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -99.6% | | 0.0% | 0.0% |
| Long Term Debt | 14 | 18 | 18 | 22 | | | 29.0% | 28.3% | 59.3% |
Ratios
|
|---|
| Gross Margin | 32.5% | 34.9% | 39.6% | 46.6% | | 1.1% | 1.4% | 2.5% | 3.4% |
| EBITDA Margin | 1.8% | 4.5% | 14.5% | 18.7% | | 1.8% | 0.7% | 6.1% | -2.2% |
| Net Income Margin | -7.2% | -6.9% | 5.3% | 15.8% | | -0.7% | -5.2% | 3.6% | 4.6% |
Peers in Data Processing & Outsourced S
Below we provide PRGX Global, 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. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.1% | 7.7% | 10.1% | 7.5% |
|---|
| PRGX Global, Inc. ($PRGX) | | -14.4% | 1.8% | 14.8% | 6.3% |
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. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| PRGX Global, Inc. ($PRGX) | 31.4% | 32.6% | 35.2% | 36.9% | 39.0% |
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. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.6% | 21.2% | 21.3% | 21.1% | 19.4% |
|---|
| PRGX Global, Inc. ($PRGX) | 7.6% | 9.3% | 7.2% | 9.2% | 10.6% |
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 ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.0% |
|---|
| PRGX Global, Inc. ($PRGX) | 2.9% | 3.2% | 4.2% | 5.8% | 6.1% |
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. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 14.1% | 13.1% | 11.7% | 10.7% | 12.1% |
|---|
| PRGX Global, Inc. ($PRGX) | 3.0% | 8.1% | 6.2% | 10.4% | 9.2% |
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 ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.6x | 0.7x | 1.6x | 2.3x | 2.2x |
|---|
| PRGX Global, Inc. ($PRGX) | -2.1x | -1.2x | -1.2x | -0.4x | 0.4x |
