CSP Inc. reports 210% EBITDA decline in 2020 and 0.88 pp EBITDA Margin decline from 0.37% to -0.52%
12/28/2020 • About CSP Inc. (
$CSPI) • By InTwits
CSP Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- CSP Inc. is a company in decline: FY2020 revenue growth was -21.8%, 5 years revenue CAGR was -7.1%
- The company operates at negative EBITDA Margin: -0.5%
- EBITDA Margin is quite volatile: -0.5% in FY2020, 0.4% in FY2019, -1.3% in FY2018, 4.4% in FY2017, 4.4% in FY2016
- CSP Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has unprofitable business model: ROIC is -3.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
CSP Inc.'s Revenue dropped on 21.8%. Revenue decline showed acceleration in FY20Q4 - it was 35.6% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 0.88 pp from 0.37% to -0.52% in FY2020.
Gross Margin increased on 5.0 pp from 22.8% to 27.8% in FY2020. SG&A as a % of Revenue increased on 5.3 pp from 20.3% to 25.6% in FY2020.
Net Income margin decreased slightly on 1.9 pp from -0.47% to -2.3% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 19.8% and was declining since that time.
Investments (CAPEX, working capital and M&A)
CSP Inc.'s CAPEX/Revenue was 0.37% in FY2020. CSP Inc. showed almost no change in CAPEX/Revenue from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 0.68%.
Return on investment
The company operates at negative ROIC (-3.7%) and ROE (-4.8%). ROIC decreased slightly on 1.3 pp from -2.4% to -3.7% in FY2020. ROE decreased on 3.7 pp from -1.2% to -4.8% in FY2020.
Leverage (Debt)
Debt level is -1.1x Net Debt / EBITDA and Debt / EBITDA. Debt jumped on 125% while cash increased on 6.4%.
CSP Inc. has no short term refinancing risk: cash is higher than short term debt (498.4%).
Financial and operational results
FY ended 09/30/2020
CSP Inc. ($CSPI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 103.4 | 88.5 | 72.9 | 79.1 | 61.8 | -21.8% |
| Gross Profit | 25.0 | 21.4 | 18.4 | 18.0 | 17.2 | -4.8% |
| SG&A | 18.3 | 15.7 | 16.7 | 16.1 | 15.8 | -1.6% |
| EBITDA | 4.5 | 3.9 | -1.0 | 0.3 | -0.3 | -210.3% |
| Net Income | 2.6 | 2.5 | 14.4 | -0.4 | -1.4 | |
Balance Sheet
|
|---|
| Cash | 13.1 | 13.9 | 25.1 | 18.1 | 19.3 | 6.4% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 2.8 | 3.9 | 39.2% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.7 | 3.9 | 474.1% |
Cash flow
|
|---|
| Capex | 0.7 | 0.2 | 0.4 | 0.8 | 0.2 | -72.4% |
Ratios
|
|---|
| Revenue growth | 15.7% | -14.4% | -17.6% | 8.4% | -21.8% | |
| EBITDA growth | 416.1% | -13.8% | -125.2% | -129.7% | -210.3% | |
|
|---|
| Gross Margin | 24.2% | 24.2% | 25.2% | 22.8% | 27.8% | 5.0% |
| EBITDA Margin | 4.4% | 4.4% | -1.3% | 0.4% | -0.5% | -0.9% |
| SG&A, % of revenue | 17.7% | 17.7% | 22.9% | 20.3% | 25.6% | 5.3% |
| Net Income Margin | 2.5% | 2.8% | 19.8% | -0.5% | -2.3% | -1.9% |
| CAPEX, % of revenue | 0.7% | 0.2% | 0.6% | 1.1% | 0.4% | -0.7% |
|
|---|
| ROIC | 20.0% | 17.1% | -5.8% | -2.4% | -3.7% | -1.3% |
| ROE | 13.4% | 12.4% | 50.5% | -1.2% | -4.8% | -3.7% |
| Net Debt/EBITDA | -2.9x | -3.6x | | -50.5x | |
CSP Inc. ($CSPI) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17 | 16 | 14 | 14 | | -12.7% | -1.6% | -37.3% | -35.6% |
| EBITDA | -0 | 0 | -0 | -0 | | -328.9% | - | -145.6% | - |
| Net Income | -1 | -1 | -0 | 0 | | -1,180.0% | - | -139.5% | - |
Balance Sheet
|
|---|
| Cash | 18 | 15 | 20 | 19 | | -14.7% | -16.2% | 19.0% | 6.4% |
| Short Term Debt | 2 | 3 | 3 | 4 | | - | - | - | 39.2% |
| Long Term Debt | 4 | 3 | 5 | 4 | | - | - | - | 474.1% |
Ratios
|
|---|
| Gross Margin | 24.3% | 27.9% | 31.2% | 31.0% | | 1.4% | 4.9% | 8.8% | 8.1% |
| EBITDA Margin | -1.7% | 0.8% | -0.8% | -1.5% | | -2.3% | 4.9% | -2.0% | -1.0% |
| Net Income Margin | -3.3% | -4.5% | -1.6% | 0.3% | | -3.5% | -0.8% | -4.0% | 1.8% |
Peers in IT Consulting & Other Services
Below you can find CSP Inc. benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CLPS Incorporation ($CLPS) | - | 8.1% | 56.0% | 32.7% | 37.7% |
| Endava plc ($DAVA) | - | 38.1% | 36.5% | 32.3% | 21.9% |
| EPAM Systems, Inc. ($EPAM) | - | 25.0% | 27.1% | 24.5% | 15.9% |
| Switch, Inc. ($SWCH) | - | 18.8% | 7.3% | 13.9% | 10.7% |
| Perficient, Inc. ($PRFT) | - | -0.4% | 2.7% | 13.5% | 8.2% |
| |
|---|
| Median (14 companies) | 8.3% | 4.8% | 4.3% | 5.4% | 2.3% |
|---|
| CSP Inc. ($CSPI) | - | -14.4% | -17.6% | 8.4% | -21.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gartner, Inc. ($IT) | 61.3% | 60.1% | 63.1% | 63.5% | 67.2% |
| Teradata Corporation ($TDC) | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% |
| Switch, Inc. ($SWCH) | 47.0% | 47.6% | 44.7% | 47.5% | 45.4% |
| Perficient, Inc. ($PRFT) | 31.1% | 33.3% | 35.8% | 37.4% | 37.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 39.9% | 38.2% | 39.0% | 36.6% | 35.9% |
| |
|---|
| Median (14 companies) | 29.5% | 30.2% | 30.4% | 35.9% | 34.4% |
|---|
| CSP Inc. ($CSPI) | 24.2% | 24.2% | 25.2% | 22.8% | 27.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 37.0% | 28.5% | 39.8% | 44.1% | 47.8% |
| Amdocs Limited ($DOX) | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% |
| Gartner, Inc. ($IT) | 15.0% | 7.1% | 13.0% | 16.2% | 19.8% |
| EPAM Systems, Inc. ($EPAM) | 13.5% | 13.9% | 15.3% | 17.9% | 19.4% |
| Accenture plc ($ACN) | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% |
| |
|---|
| Median (14 companies) | 6.8% | 7.1% | 8.0% | 14.6% | 13.6% |
|---|
| CSP Inc. ($CSPI) | 4.4% | 4.4% | -1.3% | 0.4% | -0.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 90.2% | 106.4% | 67.9% | 66.6% | 67.8% |
| Amdocs Limited ($DOX) | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% |
| ServiceSource International, Inc. ($SREV) | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% |
| Endava plc ($DAVA) | 2.4% | 4.1% | 2.5% | 2.6% | 2.8% |
| EPAM Systems, Inc. ($EPAM) | 2.5% | 2.1% | 2.0% | 4.3% | 2.6% |
| |
|---|
| Median (14 companies) | 1.2% | 1.4% | 1.5% | 2.4% | 2.2% |
|---|
| CSP Inc. ($CSPI) | 0.7% | 0.2% | 0.6% | 1.1% | 0.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Accenture plc ($ACN) | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% |
| EPAM Systems, Inc. ($EPAM) | 18.2% | 18.9% | 21.2% | 20.2% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 21.3% | 21.9% | 23.8% | 20.4% | 17.5% |
| Amdocs Limited ($DOX) | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% |
| Gartner, Inc. ($IT) | 41.0% | -0.2% | 6.9% | 10.8% | 12.7% |
| |
|---|
| Median (14 companies) | 7.3% | 4.7% | 7.0% | 11.0% | 9.6% |
|---|
| CSP Inc. ($CSPI) | 20.0% | 17.1% | -5.8% | -2.4% | -3.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 4.0x | 3.2x | 3.3x | 4.0x | 4.0x |
| Gartner, Inc. ($IT) | 0.6x | 11.7x | 4.1x | 4.1x | 2.6x |
| Perficient, Inc. ($PRFT) | 0.4x | 1.0x | 1.3x | 1.0x | 1.5x |
| ServiceSource International, Inc. ($SREV) | 156.0x | - | -35.5x | 2.9x | 0.6x |
| Teradata Corporation ($TDC) | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x |
| |
|---|
| Median (13 companies) | 0.3x | 0.6x | 0.5x | 0.3x | -0.3x |
|---|
