ALJ Regional Holdings, Inc. EBITDA dropped on 255% while Revenue increased on 9.6%
12/18/2020 • About ALJ Regional Holdings, Inc. (
$ALJJ) • By InTwits
ALJ Regional Holdings, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ALJ Regional Holdings, Inc. is a growth stock: FY2020 revenue growth was 9.6%, 5 year revenue CAGR was 13.1% at FY2020 ROIC -38.9%
- EBITDA Margin is declining: -10.0% in FY2020 vs. 7.1% in FY2019 vs. 10.1% in FY2016
- EBITDA Margin is quite volatile: -10.0% in FY2020, 7.1% in FY2019, 7.2% in FY2018, 9.0% in FY2017, 10.1% in FY2016
- ALJ Regional Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's a lot of higher than industry average of 14.0%.
- CAPEX is quite volatile: $10m in FY2020, $18m in FY2019, $9m in FY2018, $9m in FY2017, $4m in FY2016
- The company has unprofitable business model: ROIC is -38.9%
- It operates with high leverage: Net Debt/EBITDA is 2.1x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
ALJ Regional Holdings, Inc.'s Revenue increased on 9.6%. Revenue growth showed acceleration in FY20Q4 - it increased 20.6% YoY. During the last 5 years Revenue growth bottomed in FY2019 at -4.0%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 27.6% to 28.7% in FY2020. EBITDA Margin followed a declining trend in the last 5 years.
Gross Margin decreased on 2.5 pp from 21.8% to 19.3% in FY2020. Gross Margin stuck to a declining trend at -1.0 pp per annum in FY2016-FY2020. SG&A as a % of Revenue decreased slightly on 0.91 pp from 20.4% to 19.5% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue topped in FY2018 at 20.7% and was declining since that time.
Net Income margin dropped on 12.9 pp from -4.5% to -17.4% in FY2020. Net Income margin declined at -5.2 pp per annum in FY2016-FY2020.
Investments (CAPEX, working capital and M&A)
ALJ Regional Holdings, Inc.'s CAPEX/Revenue was 2.5% in FY2020. ALJ Regional Holdings, Inc. showed almost no change in CAPEX/Revenue from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 3.3%.
Return on investment
The company operates at negative ROIC (-38.9%) and ROE (-135.1%). ROIC dropped on 41.4 pp from 2.5% to -38.9% in FY2020. ROE dropped on 117 pp from -18.3% to -135% in FY2020. ROIC pursued a declining trend in FY2016-FY2020. During FY2016-FY2020 ROE topped in FY2017 at 18.5% and was declining since that time.
Leverage (Debt)
Debt level is 2.1x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 3.7x from 3.7x to in FY2020. Debt increased on 5.3% while cash jumped on 33.6%.
ALJ Regional Holdings, Inc. has short term refinancing risk: cash is only 49.3% of short term debt.
Management team
The company's CEO Jess M Ravich has spent 1 year with the company. The company's CFO is Brian Hartman. Brian Hartman has 3 years tenure at the company.
Financial and operational results
FY ended 09/30/2020
ALJ Regional Holdings, Inc. ($ALJJ) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 268.4 | 326.7 | 369.8 | 355.0 | 389.1 | 9.6% |
| Gross Profit | 63.9 | 76.0 | 83.9 | 77.5 | 75.2 | -3.1% |
| SG&A | 50.2 | 63.3 | 76.7 | 72.4 | 75.8 | 4.8% |
| EBITDA | 27.1 | 29.3 | 26.6 | 25.2 | -39.0 | -255.0% |
| Net Income | 10.9 | 15.7 | -7.3 | -16.0 | -67.7 | |
Balance Sheet
|
|---|
| Cash | 5.3 | 5.6 | 2.0 | 4.5 | 6.1 | 33.6% |
| Short Term Debt | 12.9 | 14.4 | 11.5 | 11.7 | 12.3 | 5.2% |
| Long Term Debt | 93.8 | 86.8 | 87.8 | 85.6 | 90.1 | 5.3% |
Cash flow
|
|---|
| Capex | 3.6 | 9.3 | 8.6 | 18.3 | 9.6 | -47.8% |
Ratios
|
|---|
| Revenue growth | 27.8% | 21.7% | 13.2% | -4.0% | 9.6% | |
| EBITDA growth | 67.4% | 8.1% | -9.3% | -5.2% | -255.0% | |
|
|---|
| Gross Margin | 23.8% | 23.3% | 22.7% | 21.8% | 19.3% | -2.5% |
| EBITDA Margin | 10.1% | 9.0% | 7.2% | 7.1% | -10.0% | -17.1% |
| SG&A, % of revenue | 18.7% | 19.4% | 20.7% | 20.4% | 19.5% | -0.9% |
| Net Income Margin | 4.1% | 4.8% | -2.0% | -4.5% | -17.4% | -12.9% |
| CAPEX, % of revenue | 1.4% | 2.8% | 2.3% | 5.2% | 2.5% | -2.7% |
|
|---|
| ROIC | 7.8% | 6.9% | 4.1% | 2.5% | -38.9% | -41.4% |
| ROE | 15.8% | 18.5% | -7.8% | -18.3% | -135.1% | -116.8% |
| Net Debt/EBITDA | 3.7x | 3.3x | 3.7x | 3.7x | |
ALJ Regional Holdings, Inc. ($ALJJ) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 90 | 96 | 95 | 107 | | -3.5% | 9.1% | 13.2% | 20.6% |
| EBITDA | 3 | -55 | 5 | 8 | | -58.7% | -784.2% | 7.2% | 86.7% |
| Net Income | -4 | -62 | -3 | 1 | | -701.5% | -14,709.5% | - | - |
Balance Sheet
|
|---|
| Cash | 3 | 3 | 7 | 6 | | 17.8% | -58.9% | 148.8% | 33.6% |
| Short Term Debt | 11 | 8 | 10 | 12 | | -3.2% | -29.2% | -9.3% | 5.2% |
| Long Term Debt | 92 | 97 | 94 | 90 | | -7.5% | 5.8% | 2.0% | 5.3% |
Ratios
|
|---|
| Gross Margin | 16.3% | 18.0% | 21.3% | 21.3% | | -4.1% | -5.0% | 0.8% | -0.2% |
| EBITDA Margin | 3.7% | -57.6% | 5.3% | 7.3% | | -5.0% | -66.8% | -0.3% | 2.6% |
| Net Income Margin | -4.7% | -64.4% | -2.8% | 1.0% | | -5.5% | -64.8% | 5.8% | 12.1% |
Peers in Data Processing & Outsourced Services
Below we provide ALJ Regional Holdings, Inc. benchmarking against other companies in Data Processing & Outsourced Services 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 |
|---|
| Square, Inc. ($SQ) | - | 29.6% | 49.0% | 42.9% | 101.5% |
| Global Payments Inc. ($GPN) | - | 37.2% | -15.3% | 45.9% | 51.1% |
| Fiserv, Inc. ($FISV) | - | 3.5% | 2.2% | 74.9% | 45.8% |
| NIC Inc. ($EGOV) | - | 5.8% | 2.5% | 2.7% | 30.0% |
| StoneCo Ltd ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 10.1% | 7.4% | 11.5% | -3.3% |
|---|
| ALJ Regional Holdings, Inc. ($ALJJ) | - | 21.7% | 13.2% | -4.0% | 9.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Verra Mobility Corp ($VRRM) | - | 97.4% | 97.5% | 95.7% | 91.5% |
| EVO Payments, Inc. ($EVOP) | - | - | - | 80.2% | 80.8% |
| StoneCo Ltd ($STNE) | 69.7% | 70.8% | 79.5% | 83.4% | 76.8% |
| WEX Inc. ($WEX) | 54.7% | 58.8% | 63.3% | 61.7% | 56.8% |
| Sabre Corporation ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.5% | 39.5% | 41.0% | 41.7% | 36.7% |
|---|
| ALJ Regional Holdings, Inc. ($ALJJ) | 23.8% | 23.3% | 22.7% | 21.8% | 19.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Visa Inc. ($V) | 55.6% | 69.2% | 65.8% | 68.1% | 68.5% |
| Mastercard Incorporated ($MA) | 56.9% | 56.5% | 51.8% | 60.9% | 56.6% |
| FleetCor Technologies, Inc. ($FLT) | 52.0% | 50.8% | 55.9% | 57.6% | 52.2% |
| StoneCo Ltd ($STNE) | 31.4% | 26.0% | 53.0% | 62.4% | 52.1% |
| Black Knight, Inc. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.4% | 22.2% | 19.1% |
|---|
| ALJ Regional Holdings, Inc. ($ALJJ) | 10.1% | 9.0% | 7.2% | 7.1% | -10.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| PagSeguro Digital Ltd. ($PAGS) | 6.4% | 4.3% | 1.4% | 5.8% | 22.3% |
| StoneCo Ltd ($STNE) | 7.2% | 18.4% | 8.9% | 12.9% | 11.2% |
| Cardtronics plc ($CATM) | 9.9% | 9.6% | 8.0% | 9.3% | 8.3% |
| Verra Mobility Corp ($VRRM) | - | 11.5% | 7.2% | 6.6% | 6.2% |
| Fiserv, Inc. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.0% | 3.1% |
|---|
| ALJ Regional Holdings, Inc. ($ALJJ) | 1.4% | 2.8% | 2.3% | 5.2% | 2.5% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mastercard Incorporated ($MA) | 57.5% | 60.6% | 64.7% | 72.7% | 47.6% |
| International Money Express, Inc. ($IMXI) | -1.3% | -1.4% | 12.1% | 36.0% | 31.4% |
| NIC Inc. ($EGOV) | 63.1% | 52.1% | 39.3% | 26.5% | 30.8% |
| Visa Inc. ($V) | 18.1% | 21.9% | 23.0% | 27.2% | 23.2% |
| Western Union Company (The) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.7% | 12.1% | 8.3% | 6.4% |
|---|
| ALJ Regional Holdings, Inc. ($ALJJ) | 7.8% | 6.9% | 4.1% | 2.5% | -38.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| WEX Inc. ($WEX) | 6.7x | 4.4x | 3.1x | 3.4x | 12.1x |
| Exela Technologies Inc ($XELAU) | 8.1x | - | 9.7x | - | 10.7x |
| Alliance Data Systems Corporation ($ADS) | 10.7x | 10.1x | 9.0x | 11.7x | 9.2x |
| Verra Mobility Corp ($VRRM) | - | 10.7x | 6.9x | 3.5x | 4.7x |
| GreenSky, Inc. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (36 companies) | 1.3x | 2.3x | 2.0x | 2.1x | 2.0x |
|---|
