Where Food Comes From Inc reports 94.0% EBITDA growth in 2018 and 4.1 pp EBITDA Margin growth from 6.1% to 10.2%
03/25/2019 • About Where Food Comes From Inc (
$WFCF) • By InTwits
Where Food Comes From Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Where Food Comes From Inc is a fast growth stock: 2018 revenue growth was 15.2%, 5 year revenue CAGR was 25.2% at 2018 ROIC 7.4%
- Where Food Comes From Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $0m in 2018, $0m in 2017, $0m in 2016, $0m in 2015, $0m in 2014
- The company has business model with low profitability: ROIC is 7.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 15.2%. Revenue growth showed slowdown in 18Q4 - it was 11.6% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.7 pp from 4.4% to -1.3% in FY2018.
Gross Margin decreased slightly on 0.66 pp from 44.2% to 43.5% in 2018. During the last 5 years Gross Margin topped in 2015 at 46.7% and was declining since that time. SG&A as a % of Revenue decreased on 5.0 pp from 43.6% to 38.6% in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2017 at 43.6%.
Net Income margin increased on 3.6 pp from 0.92% to 4.5% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.1% in 2018. Where Food Comes From Inc showed small growth in CAPEX/Revenue of 1.9 pp from 0.25% in 2015 to 2.1% in 2018. It's average CAPEX/Revenue for the last three years was 2.5%.
Return on investment
The company operates at low ROIC (7.4%) and ROE (7.8%). ROIC increased on 6.7 pp from 0.73% to 7.4% in 2018. ROE increased on 6.3 pp from 1.5% to 7.8% in 2018.
Leverage (Debt)
Debt level is -0.8x Net Debt / EBITDA and 0.0x Debt / EBITDA. Debt increased slightly on 1.9% while cash dropped on 45.2%.
Where Food Comes From Inc has no short term refinancing risk: cash is higher than short term debt (6,900.6%).
Valuation and dividends
Where Food Comes From Inc's trades at EV/EBITDA 26.5x and P/E 61.8x.
Financial and operational results
FY ended 12/31/2018
Where Food Comes From Inc ($WFCF) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 8.765 | 10.395 | 11.615 | 15.448 | 17.804 | 15.2% |
| Gross Profit | 3.763 | 4.855 | 5.413 | 6.821 | 7.744 | 13.5% |
| SG&A | 3.419 | 4.060 | 4.778 | 6.739 | 6.869 | 1.9% |
| EBITDA | 0.570 | 1.052 | 0.902 | 0.936 | 1.817 | 94.0% |
| Net Income | 0.229 | 0.534 | 0.433 | 0.142 | 0.801 | 462.7% |
Balance Sheet
|
|---|
| Cash | 2.583 | 3.781 | 2.490 | 2.706 | 1.482 | -45.2% |
| Short Term Debt | 0.012 | 0.012 | 0.004 | 0.017 | 0.021 | 26.6% |
| Long Term Debt | 0.023 | 0.010 | 0.016 | 0.068 | 0.065 | -4.3% |
Cash flow
|
|---|
| Capex | 0.075 | 0.026 | 0.446 | 0.243 | 0.375 | 54.4% |
Ratios
|
|---|
| Revenue growth | 51.2% | 18.6% | 11.7% | 33.0% | 15.2% | |
| EBITDA growth | 288.0% | 84.4% | -14.2% | 3.8% | 94.0% | |
|
|---|
| Gross Margin | 42.9% | 46.7% | 46.6% | 44.2% | 43.5% | -0.7% |
| EBITDA Margin | 6.5% | 10.1% | 7.8% | 6.1% | 10.2% | 4.1% |
| SG&A, % of revenue | 39.0% | 39.1% | 41.1% | 43.6% | 38.6% | -5.0% |
| Net Income Margin | 2.6% | 5.1% | 3.7% | 0.9% | 4.5% | 3.6% |
| CAPEX, % of revenue | 0.9% | 0.3% | 3.8% | 1.6% | 2.1% | 0.5% |
|
|---|
| ROIC | 6.6% | 11.4% | 6.7% | 0.7% | 7.4% | 6.7% |
| ROE | 4.6% | 8.2% | 5.4% | 1.5% | 7.8% | 6.3% |
| Net Debt/EBITDA | -4.5x | -3.6x | -2.7x | -2.8x | -0.8x | 2.0x |
Where Food Comes From Inc ($WFCF) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4 | 4 | 5 | 5 | | 17.8% | 26.7% | 8.3% | 11.6% |
| EBITDA | 0 | 0 | 1 | 0 | | 48.4% | 421.7% | -0.6% | |
| Net Income | 0 | 0 | 0 | 0 | | -69.2% | 183.5% | 30.0% | |
Balance Sheet
|
|---|
| Cash | 4 | 3 | 2 | 1 | | 17.7% | -0.9% | -41.1% | -45.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | 319.4% | 321.5% | 32.6% | 26.6% |
| Long Term Debt | 0 | 0 | 0 | 0 | | 331.9% | 332.3% | -3.4% | -4.3% |
Ratios
|
|---|
| Gross Margin | 47.8% | 45.3% | 43.6% | 38.2% | | 0.2% | -0.1% | -4.8% | 2.5% |
| EBITDA Margin | 8.3% | 10.6% | 12.9% | 8.4% | | 1.7% | 8.0% | -1.2% | 8.9% |
| Net Income Margin | 1.0% | 4.0% | 7.4% | 4.6% | | -2.8% | 2.2% | 1.2% | 12.4% |
Peers in Application Software
Below we provide Where Food Comes From Inc benchmarking against other companies in Application Software 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 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 14.3% | 14.8% | 15.2% |
|---|
| Where Food Comes From Inc ($WFCF) | | 18.6% | 11.7% | 33.0% | 15.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| Where Food Comes From Inc ($WFCF) | 42.9% | 46.7% | 46.6% | 44.2% | 43.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Where Food Comes From Inc ($WFCF) | 6.5% | 10.1% | 7.8% | 6.1% | 10.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Where Food Comes From Inc ($WFCF) | 0.9% | 0.3% | 3.8% | 1.6% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Where Food Comes From Inc ($WFCF) | 6.6% | 11.4% | 6.7% | 0.7% | 7.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.2x | -0.9x | -0.9x | -0.8x | -0.6x |
|---|
| Where Food Comes From Inc ($WFCF) | -4.5x | -3.6x | -2.7x | -2.8x | -0.8x |
