Webco Industries Inc reports 58.9% EBITDA decline in 2020 and 21.8% Revenue decline
09/29/2020 • About Webco Industries Inc (
$WEBC) • By InTwits
Webco Industries Inc reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 4.9% in FY2020, 9.2% in FY2019, 8.1% in FY2018, 5.4% in FY2017, 3.4% in FY2016
- Webco Industries Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $8m in FY2020, $3m in FY2019, $3m in FY2018, $3m in FY2017, $1m in FY2016
- The company has potentially unprofitable business model: ROIC is 2.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.5x while industry average is 3.5x
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 dropped on 21.8%. Revenue decline showed acceleration in FY20Q4 - it was 31.4% YoY. During FY2016-FY2020 Revenue growth topped in FY2018 at 30.0% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.9 pp from -1.9% to 6.0% in FY2020. During the last 5 years EBITDA Margin topped in FY2019 at 9.2%.
Gross Margin decreased on 4.6 pp from 13.4% to 8.9% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2018 at 13.9% and was declining since that time. SG&A as a % of Revenue increased slightly on 0.60 pp from 6.7% to 7.3% in FY2020.
Net Income margin decreased on 3.7 pp from 4.7% to 0.99% in FY2020. During the last 5 years Net Income margin topped in FY2019 at 4.7%.
Investments (CAPEX, working capital and M&A)
In FY2020 Webco Industries Inc had CAPEX/Revenue of 3.7%. CAPEX/Revenue decreased slightly on 0.54 pp from 4.2% in FY2017 to 3.7% in FY2020. It's average level of CAPEX/Revenue for the last three years was 3.7%. Webco Industries Inc invested a big chunk of EBITDA (75.2%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (2.2%) and ROE (2.0%). ROIC decreased on 9.5 pp from 11.8% to 2.2% in FY2020. ROE dropped on 10.6 pp from 12.6% to 2.0% in FY2020. During the last 5 years ROIC topped in FY2019 at 11.8%. During FY2016-FY2020 ROE topped in FY2018 at 13.0% and was declining since that time.
Leverage (Debt)
Debt level is 3.5x Net Debt / EBITDA and 3.7x Debt / EBITDA. Net Debt / EBITDA surged on 1.6x from 1.8x to 3.5x in FY2020. Debt dropped on 23.4% while cash dropped on 35.6%. During the last 5 years Net Debt/EBITDA bottomed in FY2019 at 1.8x.
Webco Industries Inc has short term refinancing risk: cash is only 9.8% of short term debt.
Financial and operational results
Webco Industries Inc ($WEBC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 330.3 | 384.9 | 500.4 | 548.6 | 428.8 | -21.8% |
| Gross Profit | 22.4 | 34.6 | 69.6 | 73.6 | 38.0 | -48.4% |
| SG&A | 23.3 | 25.7 | 41.8 | 36.5 | 31.2 | -14.7% |
| EBITDA | 11.2 | 20.6 | 40.4 | 50.7 | 20.8 | -58.9% |
| Net Income | -3.2 | 5.6 | 23.3 | 25.6 | 4.2 | -83.4% |
Balance Sheet
|
|---|
| Cash | 6.3 | 7.2 | 7.1 | 7.1 | 4.6 | -35.6% |
| Short Term Debt | 43.4 | 67.9 | 110.5 | 88.6 | 46.8 | -47.2% |
| Long Term Debt | 12.0 | 12.0 | 12.0 | 12.2 | 30.4 | 149.5% |
Cash flow
|
|---|
| Capex | 13.0 | 16.1 | 19.0 | 19.7 | 15.7 | -20.6% |
Ratios
|
|---|
| Revenue growth | -20.2% | 16.5% | 30.0% | 9.6% | -21.8% | |
| EBITDA growth | -34.5% | 84.4% | 95.6% | 25.6% | -58.9% | |
|
|---|
| Gross Margin | 6.8% | 9.0% | 13.9% | 13.4% | 8.9% | -4.6% |
| EBITDA Margin | 3.4% | 5.4% | 8.1% | 9.2% | 4.9% | -4.4% |
| SG&A, % of revenue | 7.1% | 6.7% | 8.3% | 6.7% | 7.3% | 0.6% |
| Net Income Margin | -1.0% | 1.5% | 4.7% | 4.7% | 1.0% | -3.7% |
| CAPEX, % of revenue | 4.0% | 4.2% | 3.8% | 3.6% | 3.7% | 0.1% |
|
|---|
| ROIC | -0.4% | 3.8% | 9.9% | 11.8% | 2.2% | -9.5% |
| ROE | -2.0% | 3.4% | 13.0% | 12.6% | 2.0% | -10.6% |
| Net Debt/EBITDA | 4.4x | 3.5x | 2.9x | 1.8x | 3.5x | 1.6x |
Webco Industries Inc ($WEBC) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 122 | 112 | 105 | 89 | | -10.6% | -17.3% | -28.1% | -31.4% |
| EBITDA | 8 | 7 | 4 | 2 | | -51.8% | -39.9% | -70.5% | -80.4% |
| Net Income | 3 | 2 | 0 | -1 | | -67.6% | -58.7% | -97.5% | -125.4% |
Balance Sheet
|
|---|
| Cash | 6 | 3 | 11 | 5 | | 0.9% | -30.5% | 66.0% | -35.6% |
| Short Term Debt | 87 | 71 | 79 | 47 | | -22.1% | -34.1% | -21.3% | -47.2% |
| Long Term Debt | 19 | 25 | 24 | 30 | | 60.7% | 111.5% | 102.2% | 149.5% |
Ratios
|
|---|
| Gross Margin | 11.1% | 10.4% | 9.4% | 3.2% | | -6.6% | -3.1% | -4.1% | -5.6% |
| EBITDA Margin | 6.8% | 6.1% | 3.8% | 1.9% | | -5.8% | -2.3% | -5.4% | -4.7% |
| Net Income Margin | 2.6% | 1.8% | 0.2% | -1.2% | | -4.5% | -1.8% | -4.4% | -4.6% |
Peers in Steel
Below we provide Webco Industries Inc benchmarking against other companies in Steel 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.
