Express, Inc. Debt surged on 1,626% while Revenue decreased on 4.6%
03/11/2020 • About Express, Inc. (
$EXPR) • By InTwits
Express, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 7.3% in FY2020, 5.4% in FY2019, 5.6% in FY2018, 8.5% in FY2017, 12.0% in FY2016
- Express, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 1.8%.
- CAPEX is quite volatile: $37m in FY2020, $50m in FY2019, $57m in FY2018, $99m in FY2017, $115m in FY2016
- The company has unprofitable business model: ROIC is -15.5%
- It operates with high leverage: Net Debt/EBITDA is 6.2x while industry average is 6.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Express, Inc.'s Revenue decreased on 4.6%. Annual revenue decline showed slowdown in FY20Q4 - revenue decreased on 3.5%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.9 pp from 5.4% to 7.3% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2019 at 5.4%.
Gross Margin decreased slightly on 1.8 pp from 29.1% to 27.3% in FY2020. Gross Margin stuck to a declining trend at -1.4 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in FY2020. SG&A as a % of Revenue followed a growing trend at 0.81 pp per annum in the last 5 years.
Net Income margin decreased on 8.6 pp from 0.46% to -8.1% in FY2020. Net Income margin followed a declining trend at -2.8 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
Express, Inc.'s CAPEX/Revenue was 1.8% in FY2020. The company's CAPEX/Revenue decreased on 2.7 pp from 4.5% in FY2017 to 1.8% in FY2020. Average CAPEX/Revenue for the last three years was 2.3%. CAPEX as a % of Revenue stuck to a declining trend at -0.83 pp per annum in the last 5 years.
Return on investment
The company operates at negative ROIC (-15.5%) and ROE (-33.2%). ROIC dropped on 19.6 pp from 4.2% to -15.5% in FY2020. ROE dropped on 34.7 pp from 1.6% to -33.2% in FY2020. ROIC followed a declining trend at -9.7 pp per annum in FY2016-FY2020. ROE followed a declining trend at -11.4 pp per annum in FY2016-FY2020.
Leverage (Debt)
Debt level is 6.2x Net Debt / EBITDA and 7.6x Debt / EBITDA. Net Debt / EBITDA surged on 7.1x from -0.9x to 6.2x in FY2020. Debt surged on 1,626% while cash surged on 20.7%. During FY2016-FY2020 Net Debt/EBITDA bottomed in FY2018 at -1.4x and was growing since that time.
Express, Inc. has short term refinancing risk: cash is only 91.6% of short term debt.
Management team
The company's CEO Timothy G Baxter "Tim" has spent 1 year with the company. Periclis Pericleous "Perry" is a Express, Inc.'s CFO. Periclis Pericleous "Perry" has spent 5 years at the company.
Financial and operational results
FY ended 02/01/2020
Express, Inc. ($EXPR) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,350 | 2,193 | 2,159 | 2,116 | 2,019 | -4.6% |
| Gross Profit | 795 | 663 | 628 | 615 | 551 | -10.5% |
| SG&A | 588 | 560 | 574 | 587 | 564 | -3.9% |
| EBITDA | 282 | 186 | 121 | 114 | 148 | 29.5% |
| Net Income | 117 | 57 | 19 | 10 | -164 | -1,806.7% |
Balance Sheet
|
|---|
| Cash | 187 | 207 | 236 | 172 | 207 | 20.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | 226 | |
| Long Term Debt | 70 | 68 | 67 | 65 | 897 | 1,278.3% |
Cash flow
|
|---|
| Capex | 115 | 99 | 57 | 50 | 37 | -25.6% |
Ratios
|
|---|
| Revenue growth | 8.5% | -6.7% | -1.6% | -2.0% | -4.6% | |
| EBITDA growth | 32.4% | -34.2% | -35.0% | -5.6% | 29.5% | |
|
|---|
| Gross Margin | 33.8% | 30.2% | 29.1% | 29.1% | 27.3% | -1.8% |
| EBITDA Margin | 12.0% | 8.5% | 5.6% | 5.4% | 7.3% | 1.9% |
| SG&A, % of revenue | 25.0% | 25.5% | 26.6% | 27.8% | 27.9% | 0.2% |
| Net Income Margin | 5.0% | 2.6% | 0.9% | 0.5% | -8.1% | -8.6% |
| CAPEX, % of revenue | 4.9% | 4.5% | 2.7% | 2.4% | 1.8% | -0.5% |
|
|---|
| ROIC | 27.8% | 15.2% | 4.3% | 4.2% | -15.5% | -19.6% |
| ROE | 19.8% | 9.2% | 2.9% | 1.6% | -33.2% | -34.7% |
| Net Debt/EBITDA | -0.4x | -0.7x | -1.4x | -0.9x | 6.2x | 7.1x |
Express, Inc. ($EXPR) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 451 | 473 | 488 | 607 | | -5.9% | -4.2% | -5.1% | -3.5% |
| EBITDA | 80 | 149 | 221 | -95 | | 232.1% | 523.3% | 593.1% | -377.2% |
| Net Income | -10 | -10 | -3 | -142 | | -2,021.5% | -534.3% | -139.0% | - |
Balance Sheet
|
|---|
| Cash | 144 | 154 | 168 | 207 | | -21.8% | -19.3% | 4.2% | 20.7% |
| Short Term Debt | 228 | 224 | 222 | 226 | | - | - | - | - |
| Long Term Debt | 1,042 | 993 | 937 | 897 | | 1,471.9% | 1,407.3% | 1,329.8% | 1,278.3% |
Ratios
|
|---|
| Gross Margin | 27.1% | 26.8% | 28.2% | 27.0% | | -2.7% | -1.7% | -2.5% | -0.5% |
| EBITDA Margin | 17.6% | 31.6% | 45.2% | -15.7% | | 12.6% | 26.7% | 39.0% | -21.1% |
| Net Income Margin | -2.2% | -2.1% | -0.6% | -23.3% | | -2.3% | -2.5% | -2.2% | -23.2% |
Peers in Apparel Retail
Below we provide Express, Inc. benchmarking against other companies in Apparel Retail 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.
