EACO Corp ROIC decreased on 8.4 pp from 23.0% to 14.6% in 2020 while EBITDA increased on 6.0%
10/27/2020 • About EACO Corp (
$EACO) • By InTwits
EACO Corp reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EACO Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's a lot of higher than industry average of 0.8%.
- CAPEX is quite volatile: $7m in FY2020, $2m in FY2019, $2m in FY2018, $9m in FY2017, $0m in FY2016
- The company has highly profitable business model: ROIC is 14.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.0x while industry average is -0.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 1.8%. Revenue growth showed slowdown in FY20Q4 - it was -4.3% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.4 pp from 6.3% to -0.061% in FY2020. EBITDA Margin grew at 0.56 pp per annum in the last 5 years.
Gross Margin showed almost no change in FY2020. Gross Margin stuck to a declining trend at -0.50 pp per annum in FY2016-FY2020. SG&A as a % of Revenue increased slightly on 0.82 pp from 21.8% to 22.6% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -0.75 pp per annum in FY2016-FY2020.
Net Income margin decreased slightly on 0.80 pp from 4.3% to 3.5% in FY2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.0% in FY2020. CAPEX/Revenue decreased on 2.5 pp from 5.5% in FY2017 to 3.0% in FY2020. For the last three years the average CAPEX/Revenue was 1.5%.
Return on investment
The company operates at good ROIC (14.6%) and ROE (14.0%). ROIC decreased on 8.4 pp from 23.0% to 14.6% in FY2020. ROE decreased on 6.1 pp from 20.1% to 14.0% in FY2020.
Leverage (Debt)
Debt level is 1.0x Net Debt / EBITDA and 1.4x Debt / EBITDA. Net Debt / EBITDA surged on 0.5x from 0.5x to 1.0x in FY2020. Debt jumped on 85.8% while cash jumped on 29.6%.
EACO Corp has short term refinancing risk: cash is only 80.1% of short term debt.
Financial and operational results
FY ended 08/31/2020
EACO Corp ($EACO) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 148.5 | 157.0 | 193.3 | 221.2 | 225.2 | 1.8% |
| Gross Profit | 43.6 | 44.8 | 55.0 | 61.2 | 61.4 | 0.2% |
| SG&A | 37.1 | 38.5 | 44.7 | 48.2 | 50.9 | 5.6% |
| EBITDA | 7.0 | 7.1 | 11.3 | 14.1 | 14.9 | 6.0% |
| Net Income | 4.1 | 4.1 | 6.9 | 9.4 | 7.8 | -17.4% |
Balance Sheet
|
|---|
| Cash | 4.9 | 3.9 | 2.7 | 4.7 | 6.1 | 29.6% |
| Short Term Debt | 0.0 | 0.1 | 0.1 | 5.5 | 7.6 | 38.5% |
| Long Term Debt | 0.0 | 12.2 | 8.2 | 6.1 | 14.0 | 128.3% |
Cash flow
|
|---|
| Capex | 0.4 | 8.6 | 1.6 | 1.8 | 6.7 | 278.4% |
Ratios
|
|---|
| Revenue growth | 5.9% | 5.7% | 23.1% | 14.5% | 1.8% | |
| EBITDA growth | 12.0% | 1.2% | 59.6% | 24.1% | 6.0% | |
|
|---|
| Gross Margin | 29.3% | 28.5% | 28.5% | 27.7% | 27.2% | -0.4% |
| EBITDA Margin | 4.7% | 4.5% | 5.9% | 6.4% | 6.6% | 0.3% |
| SG&A, % of revenue | 25.0% | 24.5% | 23.1% | 21.8% | 22.6% | 0.8% |
| Net Income Margin | 2.8% | 2.6% | 3.6% | 4.3% | 3.5% | -0.8% |
| CAPEX, % of revenue | 0.3% | 5.5% | 0.8% | 0.8% | 3.0% | 2.2% |
|
|---|
| ROIC | 22.2% | 16.1% | 21.2% | 23.0% | 14.6% | -8.4% |
| ROE | 13.9% | 12.1% | 18.1% | 20.1% | 14.0% | -6.1% |
| Net Debt/EBITDA | -0.7x | 1.2x | 0.5x | 0.5x | 1.0x | 0.5x |
EACO Corp ($EACO) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 56 | 57 | 55 | 57 | | 10.3% | 8.1% | -5.0% | -4.3% |
| EBITDA | 4 | 3 | 3 | 5 | | 26.4% | 13.0% | -37.0% | 28.7% |
| Net Income | 2 | 3 | 2 | 2 | | -0.4% | 32.5% | -40.4% | -41.5% |
Balance Sheet
|
|---|
| Cash | 6 | 6 | 7 | 6 | | 82.0% | 48.2% | 28.7% | 29.6% |
| Short Term Debt | 2 | 2 | 2 | 8 | | 1,600.0% | 1,564.9% | -54.1% | 38.5% |
| Long Term Debt | 20 | 24 | 22 | 14 | | 114.1% | 86.0% | 223.8% | 128.3% |
Ratios
|
|---|
| Gross Margin | 28.4% | 27.8% | 27.0% | 25.8% | | 0.6% | 0.2% | -0.8% | -1.6% |
| EBITDA Margin | 6.5% | 6.1% | 4.6% | 9.2% | | 0.8% | 0.3% | -2.3% | 2.4% |
| Net Income Margin | 3.4% | 4.6% | 3.2% | 2.7% | | -0.4% | 0.8% | -1.9% | -1.7% |
Peers in Technology Distributors
Below we provide EACO Corp benchmarking against other companies in Technology Distributors 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Galaxy Next Generation Inc ($GAXY) | - | 3.7% | - | - | 23.3% |
| Wayside Technology Group, Inc. ($WSTG) | - | -61.6% | 13.0% | 15.1% | 20.5% |
| Insight Enterprises, Inc. ($NSIT) | - | 22.2% | 5.6% | 9.2% | 7.9% |
| Synnex Corporation ($SNX) | - | 21.2% | 17.6% | 18.5% | 3.9% |
| CDW Corporation ($CDW) | - | 6.1% | 9.5% | 11.0% | 2.4% |
| |
|---|
| Median (8 companies) | 5.3% | 4.2% | 8.3% | 11.0% | 3.1% |
|---|
| EACO Corp ($EACO) | - | 5.7% | 23.1% | 14.5% | 1.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Galaxy Next Generation Inc ($GAXY) | 70.0% | 61.4% | - | 6.1% | 51.0% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.2% | 30.4% | 23.7% | 16.5% | 23.3% |
| CDW Corporation ($CDW) | 16.6% | 16.5% | 16.7% | 16.9% | 17.4% |
| PC Connection, Inc. ($CNXN) | 13.8% | 13.1% | 15.2% | 16.0% | 16.2% |
| Insight Enterprises, Inc. ($NSIT) | 13.5% | 13.7% | 14.0% | 14.7% | 15.6% |
| |
|---|
| Median (8 companies) | 13.8% | 16.5% | 15.6% | 14.5% | 15.9% |
|---|
| EACO Corp ($EACO) | 29.3% | 28.5% | 28.5% | 27.7% | 27.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CDW Corporation ($CDW) | 7.7% | 7.6% | 7.7% | 8.3% | 9.0% |
| Synnex Corporation ($SNX) | 3.6% | 3.9% | 3.9% | 5.0% | 5.7% |
| Insight Enterprises, Inc. ($NSIT) | 3.4% | 3.3% | 4.1% | 4.0% | 4.4% |
| Arrow Electronics, Inc. ($ARW) | 4.4% | 4.1% | 4.5% | 1.4% | 4.1% |
| PC Connection, Inc. ($CNXN) | 3.4% | 3.1% | 3.7% | 4.6% | 3.5% |
| |
|---|
| Median (8 companies) | 3.4% | 3.5% | 4.0% | 4.3% | 3.8% |
|---|
| EACO Corp ($EACO) | 4.7% | 4.5% | 5.9% | 6.4% | 6.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| ADDvantage Technologies Group, Inc. ($AEY) | 0.8% | 0.4% | 0.3% | 1.1% | 1.2% |
| CDW Corporation ($CDW) | 0.5% | 0.5% | 0.5% | 1.3% | 0.9% |
| Synnex Corporation ($SNX) | 0.9% | 0.6% | 0.6% | 0.6% | 0.8% |
| Galaxy Next Generation Inc ($GAXY) | 0.0% | 15.1% | - | 0.0% | 0.8% |
| Arrow Electronics, Inc. ($ARW) | 0.7% | 0.8% | 0.5% | 0.5% | 0.4% |
| |
|---|
| Median (8 companies) | 0.4% | 0.5% | 0.5% | 0.7% | 0.6% |
|---|
| EACO Corp ($EACO) | 0.3% | 5.5% | 0.8% | 0.8% | 3.0% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CDW Corporation ($CDW) | 18.8% | 20.1% | 23.1% | 26.0% | 23.5% |
| Insight Enterprises, Inc. ($NSIT) | 20.7% | 19.3% | 20.0% | 14.7% | 13.7% |
| Synnex Corporation ($SNX) | 13.5% | 13.7% | 9.6% | 11.6% | 11.7% |
| Arrow Electronics, Inc. ($ARW) | 12.5% | 12.1% | 13.3% | 1.4% | 11.3% |
| PC Connection, Inc. ($CNXN) | 18.6% | 16.6% | 17.0% | 19.6% | 11.2% |
| |
|---|
| Median (8 companies) | 12.1% | 9.9% | 11.2% | 14.7% | 11.3% |
|---|
| EACO Corp ($EACO) | 22.2% | 16.1% | 21.2% | 23.0% | 14.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Arrow Electronics, Inc. ($ARW) | 2.2x | 2.3x | 2.2x | 7.5x | 1.9x |
| CDW Corporation ($CDW) | 2.8x | 2.7x | 2.4x | 2.2x | 1.6x |
| Synnex Corporation ($SNX) | 1.2x | 2.1x | 3.9x | 2.4x | 1.3x |
| Insight Enterprises, Inc. ($NSIT) | -0.9x | 0.9x | 0.2x | 2.7x | 1.1x |
| PC Connection, Inc. ($CNXN) | -0.5x | -0.6x | -0.9x | -0.6x | -0.9x |
| |
|---|
| Median (6 companies) | 0.7x | 0.9x | 1.2x | 2.3x | 1.2x |
|---|
| EACO Corp ($EACO) | -0.7x | 1.2x | 0.5x | 0.5x | 1.0x |
