Sykes Enterprises, Incorporated revenue increased on 5.9% while EBITDA Margin decreased slightly on 1.4 pp from 13.3% to 11.9%
02/23/2021 • About Sykes Enterprises, Incorporated (
$SYKE) • By InTwits
Sykes Enterprises, Incorporated reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Sykes Enterprises, Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.5%. At the same time it's a lot of higher than industry average of 3.2%.
- CAPEX is quite volatile: $15m in FY2020, $47m in FY2019, $45m in FY2018, $70m in FY2017, $187m in FY2016
- The company has business model with low profitability: ROIC is 7.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sykes Enterprises, Incorporated's Revenue increased on 5.9%. Revenue growth showed acceleration in 20Q4 - it increased 5.9% YoY. During the last 5 years Revenue growth bottomed in 2019 at -0.67%. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 1.4 pp from 13.3% to 11.9% in 2020.
Gross Margin showed almost no change in 2020. During 2016-2020 Gross Margin bottomed in 2018 at 34.0% and was growing since that time. SG&A as a % of Revenue decreased slightly on 0.87 pp from 25.5% to 24.7% in 2020.
Net Income margin decreased slightly on 0.67 pp from 4.0% to 3.3% in 2020.
Investments (CAPEX, working capital and M&A)
In 2020 Sykes Enterprises, Incorporated had CAPEX/Revenue of 3.1%. CAPEX/Revenue decreased slightly on 0.91 pp from 4.0% in 2017 to 3.1% in 2020. It's average CAPEX/Revenue for the last three years was 2.8%. During the last 5 years CAPEX as a % of Revenue bottomed in 2019 at 2.4%.
Return on investment
The company operates at low ROIC (7.6%) and ROE (6.4%). ROIC decreased slightly on 1.7 pp from 9.3% to 7.6% in 2020. ROE decreased slightly on 1.2 pp from 7.5% to 6.4% in 2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 1.2x. Net Debt / EBITDA decreased on 0.1x from 0.8x to 0.7x in 2020. Debt dropped on 15.6% while cash dropped on 19.0%.
Sykes Enterprises, Incorporated has no short term refinancing risk: cash is higher than short term debt (184.3%).
Valuation and dividends
Sykes Enterprises, Incorporated's trades at EV/EBITDA 8.6x and P/E 28.6x.
Management team
Sykes Enterprises, Incorporated's CEO Charles E Sykes "Chuck" has spent 16 years with the company. John Chapman is a Sykes Enterprises, Incorporated's CFO. John Chapman has spent 6 years at the company.
Financial and operational results
FY ended 12/31/2020
Sykes Enterprises, Incorporated ($SYKE) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,460 | 1,586 | 1,626 | 1,615 | 1,710 | 5.9% |
| Gross Profit | 512 | 546 | 553 | 572 | 611 | 6.7% |
| SG&A | 351 | 377 | 407 | 412 | 422 | 2.3% |
| EBITDA | 161 | 164 | 137 | 215 | 204 | -5.3% |
| Net Income | 62 | 32 | 49 | 64 | 56 | -11.9% |
Balance Sheet
|
|---|
| Cash | 267 | 344 | 129 | 127 | 103 | -19.0% |
| Short Term Debt | 0 | 0 | 0 | 51 | 56 | 10.0% |
| Long Term Debt | 267 | 275 | 102 | 240 | 189 | -21.0% |
Cash flow
|
|---|
| Capex | 78 | 63 | 47 | 39 | 53 | 36.1% |
Ratios
|
|---|
| Revenue growth | 13.5% | 8.6% | 2.5% | -0.7% | 5.9% | |
| EBITDA growth | 5.4% | 2.0% | -17.0% | 57.7% | -5.3% | |
|
|---|
| Gross Margin | 35.1% | 34.4% | 34.0% | 35.5% | 35.7% | 0.3% |
| EBITDA Margin | 11.0% | 10.4% | 8.4% | 13.3% | 11.9% | -1.4% |
| SG&A, % of revenue | 24.1% | 23.8% | 25.1% | 25.5% | 24.7% | -0.9% |
| Net Income Margin | 4.3% | 2.0% | 3.0% | 4.0% | 3.3% | -0.7% |
| CAPEX, % of revenue | 5.4% | 4.0% | 2.9% | 2.4% | 3.1% | 0.7% |
|
|---|
| ROIC | 10.5% | 8.4% | 6.3% | 9.3% | 7.6% | -1.7% |
| ROE | 8.9% | 4.2% | 6.0% | 7.5% | 6.4% | -1.2% |
| Net Debt/EBITDA | 0.0x | -0.4x | -0.2x | 0.8x | 0.7x | -0.1x |
Sykes Enterprises, Incorporated ($SYKE) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 411 | 417 | 432 | 451 | | 2.0% | 7.2% | 8.6% | 5.9% |
| EBITDA | 57 | 59 | 30 | 64 | | 15.3% | 26.6% | -45.0% | -0.4% |
| Net Income | 14 | 22 | -5 | 25 | | 19.1% | 97.3% | -128.1% | 10.2% |
Balance Sheet
|
|---|
| Cash | 118 | 129 | 116 | 103 | | -20.1% | -5.5% | -18.4% | -19.0% |
| Short Term Debt | 53 | 55 | 55 | 56 | | 15.4% | 12.5% | 13.2% | 10.0% |
| Long Term Debt | 235 | 196 | 137 | 189 | | -15.8% | -26.3% | -43.9% | -21.0% |
Ratios
|
|---|
| Gross Margin | 35.1% | 35.6% | 36.3% | 35.9% | | 0.0% | 0.4% | 0.1% | 0.5% |
| EBITDA Margin | 13.9% | 14.3% | 7.0% | 14.1% | | 1.6% | 2.2% | -6.8% | -0.9% |
| Net Income Margin | 3.4% | 5.3% | -1.2% | 5.6% | | 0.5% | 2.4% | -5.7% | 0.2% |
Peers in Data Processing & Outsourced Services
Below you can find Sykes Enterprises, Incorporated benchmarking vs. other companies in Data Processing & Outsourced 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 |
|---|
| 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 ($STNE) | - | 74.3% | 106.0% | 63.1% | 28.9% |
| |
|---|
| Median (39 companies) | 6.7% | 11.8% | 7.5% | 11.5% | -3.3% |
|---|
| Sykes Enterprises, Incorporated ($SYKE) | - | 8.6% | 2.5% | -0.7% | 5.9% |
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 ($SABR) | 32.2% | 30.1% | 27.8% | 56.6% | 56.6% |
| |
|---|
| Median (31 companies) | 39.5% | 39.5% | 41.0% | 41.7% | 36.7% |
|---|
| Sykes Enterprises, Incorporated ($SYKE) | 35.1% | 34.4% | 34.0% | 35.5% | 35.7% |
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. ($BKI) | 43.0% | 44.6% | 43.3% | 46.0% | 44.9% |
| |
|---|
| Median (38 companies) | 21.3% | 21.1% | 19.4% | 22.2% | 19.1% |
|---|
| Sykes Enterprises, Incorporated ($SYKE) | 11.0% | 10.4% | 8.4% | 13.3% | 11.9% |
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. ($FISV) | 5.3% | 5.0% | 6.2% | 7.1% | 6.1% |
| |
|---|
| Median (38 companies) | 3.2% | 2.9% | 3.2% | 3.3% | 3.0% |
|---|
| Sykes Enterprises, Incorporated ($SYKE) | 5.4% | 4.0% | 2.9% | 2.4% | 3.1% |
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) ($WU) | 10.7% | 11.9% | 27.8% | 21.5% | 22.1% |
| |
|---|
| Median (39 companies) | 11.7% | 10.7% | 12.1% | 8.2% | 5.5% |
|---|
| Sykes Enterprises, Incorporated ($SYKE) | 10.5% | 8.4% | 6.3% | 9.3% | 7.6% |
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. ($GSKY) | -1.5x | -1.5x | 0.5x | 1.5x | 4.6x |
| |
|---|
| Median (35 companies) | 1.6x | 2.3x | 2.2x | 2.3x | 2.1x |
|---|
| Sykes Enterprises, Incorporated ($SYKE) | 0.0x | -0.4x | -0.2x | 0.8x | 0.7x |
