PFSweb, Inc. reports 15.3% EBITDA growth in 2018 and 0.74 pp EBITDA Margin growth from 4.7% to 5.5%
03/18/2019 • About PFSweb, Inc. (
$PFSW) • By InTwits
PFSweb, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- PFSweb, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $10m in 2018, $6m in 2017, $6m in 2016, $4m in 2015, $7m in 2014
- The company has business model with low profitability: ROIC is 7.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.6x while industry average is -0.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
PFSweb, Inc.'s Revenue showed almost no change in 2018. Annual revenue decline showed slowdown in 18Q4 - revenue showed almost no change in 18Q4. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.74 pp from 4.7% to 5.5% in 2018. EBITDA Margin grew at 0.58 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.5 pp from 24.7% to 26.2% in 2018. Gross Margin stuck to a growing trend at 2.0 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin increased slightly on 1.6 pp from -1.2% to 0.38% in 2018. During the last 5 years Net Income margin bottomed in 2015 at -2.7% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.5% in 2018. The company showed almost no change in CAPEX/Revenue from 2015 to 2018. For the last three years the average CAPEX/Revenue was 1.8%.
Return on investment
The company operates at low ROIC (7.1%) and ROE (2.8%). ROIC increased on 6.5 pp from 0.61% to 7.1% in 2018. ROE surged on 12.5 pp from -9.7% to 2.8% in 2018. ROIC stuck to a growing trend at 3.6 pp per annum in the last 5 years. During the last 5 years ROE bottomed in 2015 at -18.7% and was growing since that time.
Leverage (Debt)
Debt level is 1.6x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 2.0x to 1.6x in 2018. Debt dropped on 11.9% while cash dropped on 19.2%. During 2014-2018 Net Debt/EBITDA topped in 2016 at 3.1x and was declining since that time.
PFSweb, Inc. has no short term refinancing risk: cash is higher than short term debt (361.9%).
Valuation and dividends
The company's trades at EV/EBITDA 6.9x and P/E 78.0x.
Management team
PFSweb, Inc.'s CEO Michael C Willoughby "Mike" is a founder and has spent 3 years with the company. The company's CFO is Thomas J Madden. Thomas J Madden has 20 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
PFSweb, Inc. ($PFSW) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 247.0 | 288.3 | 334.6 | 326.8 | 326.2 | -0.2% |
| Gross Profit | 43.8 | 61.7 | 73.5 | 80.6 | 85.3 | 5.9% |
| SG&A | 47.7 | 66.3 | 76.3 | 80.0 | 78.8 | -1.5% |
| EBITDA | 7.8 | 10.2 | 12.5 | 15.5 | 17.9 | 15.3% |
| Net Income | -4.6 | -7.9 | -7.5 | -4.0 | 1.2 | |
Balance Sheet
|
|---|
| Cash | 18.1 | 21.8 | 24.4 | 19.1 | 15.4 | -19.2% |
| Short Term Debt | 8.9 | 5.7 | 10.4 | 11.6 | 4.3 | -63.3% |
| Long Term Debt | 4.1 | 32.2 | 52.4 | 37.9 | 39.3 | 3.9% |
Cash flow
|
|---|
| Capex | 5.4 | 4.5 | 8.7 | 4.7 | 4.9 | 6.1% |
Ratios
|
|---|
| Revenue growth | 2.3% | 16.7% | 16.1% | -2.3% | -0.2% | |
| EBITDA growth | 41.0% | 30.9% | 22.6% | 23.6% | 15.3% | |
|
|---|
| Gross Margin | 17.7% | 21.4% | 22.0% | 24.7% | 26.2% | 1.5% |
| EBITDA Margin | 3.2% | 3.5% | 3.7% | 4.7% | 5.5% | 0.7% |
| SG&A, % of revenue | 19.3% | 23.0% | 22.8% | 24.5% | 24.2% | -0.3% |
| Net Income Margin | -1.9% | -2.7% | -2.3% | -1.2% | 0.4% | 1.6% |
| CAPEX, % of revenue | 2.2% | 1.6% | 2.6% | 1.4% | 1.5% | 0.1% |
|
|---|
| ROIC | -7.2% | -6.8% | -3.1% | 0.6% | 7.1% | 6.5% |
| ROE | -11.4% | -18.7% | -17.9% | -9.7% | 2.8% | 12.5% |
| Net Debt/EBITDA | -0.7x | 1.6x | 3.1x | 2.0x | 1.6x | -0.4x |
PFSweb, Inc. ($PFSW) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 78 | 77 | 78 | 93 | | -0.4% | -1.3% | 0.5% | 0.3% |
| EBITDA | 4 | 4 | 3 | 7 | | 687.7% | 68.3% | -27.3% | -11.7% |
| Net Income | -1 | -1 | -1 | 3 | | | | | -8.3% |
Balance Sheet
|
|---|
| Cash | 17 | 14 | 14 | 15 | | 6.4% | -28.8% | 11.7% | -19.2% |
| Short Term Debt | 6 | 6 | 3 | 4 | | -9.7% | -29.3% | -53.8% | -63.3% |
| Long Term Debt | 37 | 40 | 40 | 39 | | -20.9% | -12.2% | -9.9% | 3.9% |
Ratios
|
|---|
| Gross Margin | 27.2% | 26.3% | 25.6% | 25.8% | | 4.0% | 1.8% | 0.5% | 0.2% |
| EBITDA Margin | 4.7% | 4.6% | 4.4% | 7.8% | | 4.1% | 1.9% | -1.7% | -1.1% |
| Net Income Margin | -1.0% | -0.8% | -0.9% | 3.5% | | 5.2% | 2.5% | -0.8% | -0.3% |
Peers in IT Consulting & Other Services
Below you can find PFSweb, Inc. benchmarking vs. other companies in IT Consulting & Other Services 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 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.3% | 7.7% | 4.0% | 3.9% |
|---|
| PFSweb, Inc. ($PFSW) | | 16.7% | 16.1% | -2.3% | -0.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 27.1% | 32.4% | 29.5% | 30.0% | 29.9% |
|---|
| PFSweb, Inc. ($PFSW) | 17.7% | 21.4% | 22.0% | 24.7% | 26.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 5.1% | 3.3% | 6.7% | 7.0% | 7.6% |
|---|
| PFSweb, Inc. ($PFSW) | 3.2% | 3.5% | 3.7% | 4.7% | 5.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 0.9% | 0.8% | 1.1% | 1.2% | 1.5% |
|---|
| PFSweb, Inc. ($PFSW) | 2.2% | 1.6% | 2.6% | 1.4% | 1.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 7.5% | 6.9% | 7.7% | 5.6% | 6.9% |
|---|
| PFSweb, Inc. ($PFSW) | -7.2% | -6.8% | -3.1% | 0.6% | 7.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (28 companies) | -0.2x | -0.3x | 0.0x | 0.4x | 0.4x |
|---|
| PFSweb, Inc. ($PFSW) | -0.7x | 1.6x | 3.1x | 2.0x | 1.6x |
