Q3 results: Q3 adjusted EBITDA was €2.5m
Revenue for the first nine months of 2018 (9M18) rose by 22% to €98.8m, including €18.5m from acquisitions and a c 1% organic contraction. This compared with a 2% organic gain in H1, although the company has not divulged exchange rate impacts on revenues. The main considerations are the US$, which has weakened by 7% against the euro (9M18 vs 9M17) and strengthened by 1% (Q318 vs Q317) and the Argentine peso, which has plummeted. Professional services fared well, with 9M18 organic revenues down 3.9%, compared with 6.0% at the halfway stage. Adjusted EBITDA rose to €0.8m in 9M18 from a loss of €1.7m in H1. Statutory IFRS EBITDA was €0.3m lower at €0.5m, as a €2m benefit from a reduction in the earnout for Adepcon was more than cancelled by €2.1m in restructuring costs, €1.8m of which was incurred in H1, along with €0.2m of currency-related factors.
Q3 adjusted EBITDA rose to €2.5m (7.4% margin) from a loss in Q2 and small profit in Q317. The Q3 IFRS EBITDA was a record €4.0m, boosted by a €1.5m reduction in the earnout for Adepcon. The renewed profitability was aided by the recent restructurings and consequently significantly improved utilisation rates. Headcount stood at 1,324 at end-September, down from 1,350 at end June and 1,363 at end-March.
€2.4m was spent on acquisitions during the quarter, which related to Harlex and the final 20% of Innoplexia. Capex costs were relatively subdued at €2.4m. Net debt fell by €3.0m to €32.8m from €35.8m at end June. This was largely due to the reduction in the Adepcon earnout.
SNP increased its FY18 profit guidance (both statutory and adjusted EBITDA in the low- to mid-single digit million range) while maintaining revenue guidance (€135-140m).
Exhibit 1: Quarterly analysis
€000s |
Q117 |
Q217 |
Q317 |
Q417 |
FY17 |
Q118 |
Q218 |
Q318 |
Q418e |
FY18e |
FY19e |
Professional services |
19,089 |
22,151 |
25,936 |
31,157 |
98,333 |
25,441 |
26,867 |
25,996 |
26,547 |
104,851 |
117,267 |
Cloud |
|
|
|
|
|
424 |
565 |
1,158 |
1,200 |
3,347 |
3,665 |
Licences |
1,733 |
3,042 |
5,935 |
8,389 |
19,099 |
3,697 |
3,888 |
4,408 |
9,204 |
21,197 |
23,211 |
Maintenance |
776 |
1,237 |
1,140 |
1,758 |
4,911 |
1,991 |
2,172 |
2,165 |
2,171 |
8,499 |
9,306 |
Total revenue |
21,598 |
26,430 |
33,011 |
41,304 |
122,343 |
31,553 |
33,492 |
33,727 |
39,123 |
137,895 |
153,449 |
Other operating income* |
235 |
295 |
171 |
1,217 |
1,918 |
833 |
1,015 |
2,391 |
|
|
|
Cost of materials |
(2,260) |
(3,244) |
(7,037) |
(6,674) |
(19,215) |
(5,135) |
(5,346) |
(6,050) |
|
|
|
Personnel costs |
(14,657) |
(15,511) |
(18,849) |
(22,455) |
(71,472) |
(21,363) |
(23,010) |
(19,184) |
|
|
|
Other operating expenses |
(6,692) |
(6,461) |
(7,156) |
(9,626) |
(29,935) |
(7,183) |
(7,875) |
(6,738) |
|
|
|
Impairments on receivables etc |
|
|
|
|
|
|
(225) |
(13) |
|
|
|
Other taxes |
(28) |
(277) |
(32) |
(196) |
(533) |
(118) |
(137) |
(95) |
|
|
|
Exceptional items |
200 |
1,700 |
500 |
1,200 |
3,600 |
200 |
1,600 |
(1,500) |
|
|
|
Op costs (before depreciation) |
(23,202) |
(23,498) |
(32,403) |
(36,372) |
(115,475) |
(32,766) |
(33,978) |
(31,189) |
(36,618) |
(134,551) |
(142,566) |
Adjusted EBITDA |
(1,604) |
2,932 |
608 |
4,932 |
6,868 |
(1,213) |
(486) |
2,538 |
2,504 |
3,343 |
10,883 |
Depreciation* |
(344) |
(390) |
(493) |
(528) |
(1,755) |
(808) |
(936) |
(754) |
(790) |
(3,288) |
(3,644) |
Adjusted operating profit |
(1,948) |
2,542 |
115 |
4,404 |
5,113 |
(2,021) |
(1,422) |
1,784 |
1,714 |
55 |
7,239 |
Operating Margin |
(9.0%) |
9.6% |
0.3% |
10.7% |
4.2% |
(6.4%) |
(4.2%) |
5.3% |
4.4% |
0.0% |
4.7% |
Net interest |
(577) |
(181) |
(218) |
(351) |
(1,327) |
(287) |
(351) |
(201) |
(361) |
(1,200) |
(1,300) |
Edison profit before tax (norm) |
(2,525) |
2,361 |
(103) |
4,053 |
3,786 |
(2,308) |
(1,773) |
1,583 |
1,353 |
(1,145) |
5,939 |
Amortisation of acq'd intangis* |
(250) |
(300) |
(350) |
(1,121) |
(2,021) |
(400) |
(400) |
(400) |
(400) |
(1,600) |
(1,600) |
Associates |
0 |
(1) |
0 |
(23) |
(24) |
0 |
0 |
0 |
0 |
0 |
0 |
Exceptional items |
(200) |
(1,700) |
(500) |
(1,200) |
(3,600) |
(200) |
(1,600) |
1,500 |
0 |
(300) |
0 |
Earnings before tax |
(2,975) |
360 |
(953) |
1,709 |
(1,859) |
(2,908) |
(3,773) |
2,683 |
953 |
(3,045) |
4,339 |
New orders and backlog |
|
|
|
|
|
|
|
|
|
|
|
Incoming orders |
24,400 |
33,200 |
37,400 |
35,700 |
130,700 |
40,900 |
26,300 |
31,500 |
|
|
|
Quarterly revenues |
21,598 |
26,430 |
33,011 |
41,304 |
122,343 |
31,553 |
33,492 |
33,727 |
|
|
|
Book-to-bill ratio |
1.13 |
1.26 |
1.13 |
0.86 |
1.07 |
1.30 |
0.79 |
0.93 |
|
|
|
Backlog |
40,800 |
48,500 |
62,200 |
61,300 |
|
70,200 |
63,300 |
61,400 |
|
|
|
Source: Company accounts, Edison Investment Research. Note: *Quarterly amortisation of acquired intangibles are estimated data.
The company now has two managing directors, following the appointment of Dr Uwe Schwellbach, CFO, as managing director in September. He joins Dr Andreas Schneider-Neureither, CEO, and SNP is making progress in the hunt for a chief operating officer (COO).
New contract win with Volkswagen Saxony
Volkswagen Saxony has mandated SNP to migrate its IT systems to SAP S/4HANA. Volkswagen Saxony is a wholly owned subsidiary of Volkswagen and has plants in Zwickau, Dresden and Chemnitz. We see this as an introductory S/4HANA migration project and, if successful, it has the potential to be extended more broadly across the Volkswagen group.
In addition to migrating data to S/4HANA, the project involves complex adjustments such as client merges, company code merges and plant relocations. There is a tight deadline to complete the S/4HANA migration (1 January 2019), which reflects SNP’s highly effective, automated, proprietary software-based transformation approach. The project includes the transfer of master and transaction data from various modules of the SAP system to the S/4HANA target system. The standard software SNP Transformation Backbone will be used for the migration.
