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J. W. Mays, Inc. Net Income dropped on 160% and EBITDA Margin dropped on 16.3 pp from 18.5% to 2.2%

10/08/2020 • About J. W. Mays, Inc. ($MAYS) • By InTwits

J. W. Mays, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • EBITDA Margin is declining: 2.2% in FY2020 vs. 18.5% in FY2019 vs. 22.3% in FY2016
  • EBITDA Margin is quite volatile: 2.2% in FY2020, 18.5% in FY2019, 18.8% in FY2018, 24.1% in FY2017, 22.3% in FY2016
  • J. W. Mays, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.8%. At the same time it's in pair with industry average of 18.3%
  • CAPEX is quite volatile: $6m in FY2020, $4m in FY2019, $3m in FY2018, $2m in FY2017, $3m in FY2016
  • The company has unprofitable business model: ROIC is -1.5%
  • It operates with high leverage: Net Debt/EBITDA is 81.6x while industry average is 49.8x
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 decreased on 4.6%. Revenue decline showed acceleration in FY20Q4 - it was 17.4% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 16.3 pp from 18.5% to 2.2% in FY2020. During the last 5 years EBITDA Margin topped in FY2017 at 24.1% and was declining since that time.

Net Income margin dropped on 12.0 pp from 7.4% to -4.6% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 15.4% and was declining since that time.

Investments (CAPEX, working capital and M&A)


In FY2020 J. W. Mays, Inc. had CAPEX/Revenue of 32.6%. J. W. Mays, Inc.'s CAPEX/Revenue jumped on 21.8 pp from 10.8% in FY2017 to 32.6% in FY2020. It's average level of CAPEX/Revenue for the last three years was 23.2%. Battling declining revenue the company made large investments to CAPEX (1,508% of EBITDA) but that didn't help at least in this year. CAPEX as a % of Revenue grew at 4.8 pp per annum in FY2016-FY2020.

Return on investment


The company operates at negative ROIC (-1.5%) and ROE (-1.7%). ROIC decreased on 4.4 pp from 2.8% to -1.5% in FY2020. ROE decreased on 4.5 pp from 2.8% to -1.7% in FY2020. During FY2016-FY2020 ROIC topped in FY2017 at 5.0% and was declining since that time. During FY2016-FY2020 ROE topped in FY2018 at 5.8% and was declining since that time.

Leverage (Debt)


Company's Net Debt / EBITDA is 81.6x and Debt / EBITDA is 89.3x. Net Debt / EBITDA surged on 81.3x from 0.3x to 81.6x in FY2020. Debt surged on 613% while cash dropped on 20.8%. During the last 5 years Net Debt/EBITDA bottomed in FY2017 at 0.041x and was growing since that time.

The company has no short term refinancing risk: short term debt is zero.

Management team


The company's CEO is Lloyd J Shulman. Lloyd J Shulman has 25 years tenure with the company.

Financial and operational results


FY ended 07/31/2020

J. W. Mays, Inc. ($MAYS) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue18.58319.54919.30120.47819.532-4.6%
EBITDA4.1454.7213.6283.7790.422-88.8%
Net Income1.5181.9262.9741.515-0.906-159.8%
Balance Sheet
Cash5.2295.3815.2554.1183.260-20.8%
Short Term Debt1.0000.0000.0000.0000.000
Long Term Debt5.7065.5725.4335.28737.673612.5%
Cash flow
Capex2.5092.1033.0844.2976.36148.0%
Ratios
Revenue growth-1.7%5.2%-1.3%6.1%-4.6%
EBITDA growth-15.5%13.9%-23.1%4.1%-88.8%

EBITDA Margin22.3%24.1%18.8%18.5%2.2%-16.3%
Net Income Margin8.2%9.8%15.4%7.4%-4.6%-12.0%
CAPEX, % of revenue13.5%10.8%16.0%21.0%32.6%11.6%

ROIC4.3%5.0%3.0%2.8%-1.5%-4.4%
ROE3.2%3.9%5.8%2.8%-1.7%-4.5%
Net Debt/EBITDA0.4x0.0x0.0x0.3x81.6x81.3x

J. W. Mays, Inc. ($MAYS) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
P&L
Revenue5554 -2.4%-5.3%-2.8%-17.4%
EBITDA10-0-0 29.5%-82.3%-106.5%-117.9%
Net Income0-0-1-0 --119.5%-189.2%-160.9%
Balance Sheet
Cash5363 -18.8%-29.6%14.9%-20.8%
Long Term Debt23253838 322.6%361.5%622.9%612.5%
Ratios
EBITDA Margin 11.4% 3.2% -1.4% -5.5% 2.8%-13.7%-22.6%-30.6%
Net Income Margin 2.6% -1.1% -11.4% -9.1% 4.1%-6.7%-23.8%-21.3%

Peers in Real Estate Operating Companie


Below we provide J. W. Mays, Inc. benchmarking against other companies in Real Estate Operating Companie 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  FY2016 FY2017 FY2018 FY2019 FY2020
The Intergroup Corporation ($INTG)--5.3%3.7%4.4%-22.4%
 
Median (1 company)--5.3%3.7%4.4%-22.4%
J. W. Mays, Inc. ($MAYS)-5.2%-1.3%6.1%-4.6%


Top companies by EBITDA margin, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
The Intergroup Corporation ($INTG)14.7%26.6%36.8%26.7%16.6%
 
Median (1 company)14.7%26.6%36.8%26.7%16.6%
J. W. Mays, Inc. ($MAYS)22.3%24.1%18.8%18.5%2.2%


Top companies by CAPEX/Revenue, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
The Intergroup Corporation ($INTG)9.3%1.7%1.3%3.0%4.0%
 
Median (1 company)9.3%1.7%1.3%3.0%4.0%
J. W. Mays, Inc. ($MAYS)13.5%10.8%16.0%21.0%32.6%


Top companies by ROIC, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
The Intergroup Corporation ($INTG)4.9%12.0%19.8%13.8%4.4%
 
Median (1 company)4.9%12.0%19.8%13.8%4.4%
J. W. Mays, Inc. ($MAYS)4.3%5.0%3.0%2.8%-1.5%


Top companies by Net Debt / EBITDA

Top  FY2016 FY2017 FY2018 FY2019 FY2020
The Intergroup Corporation ($INTG)16.5x9.8x6.5x8.3x18.1x
 
Median (1 company)16.5x9.8x6.5x8.3x18.1x
J. W. Mays, Inc. ($MAYS)0.4x0.0x0.0x0.3x81.6x