Last close As at 05/08/2026
—
— 0.00 (0.00%)
Market capitalisation
—
Research: TMT
TXT e-solutions
TXT e-solutions |
Steady performance |
Q3 results |
Software & comp services |
6 November 2015 |
Share price performance
Business description
Next event
Analysts
TXT e-solutions is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||
TXT reported another strong quarter, with Q3 revenue growth of 12% y-o-y and both businesses contributing to growth. Profitability was higher than we forecast, leading to an upgrade to FY15 EPS; we leave our FY16 forecasts unchanged. The company continues to invest in expansion into Asia Pacific; this combined with progress in the North American business should drive growth in the medium term.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/13 |
52.6 |
4.8 |
0.41 |
0.23 |
20.3 |
2.8 |
12/14 |
54.4 |
4.0 |
0.28 |
0.23 |
29.8 |
2.8 |
12/15e |
60.6 |
5.5 |
0.37 |
0.24 |
22.5 |
2.9 |
12/16e |
63.2 |
6.7 |
0.45 |
0.25 |
18.5 |
3.0 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q3 results: Both divisions continue to grow
TXT reported Q315 revenue growth of 12.4% y-o-y, with growth of 10% for TXT Perform and 17% for TXT Next. Licences & maintenance revenues grew 15% y-o-y and Services revenues grew 11%. Gross margins were higher than forecast (52.5% vs 51.2%) resulting in EBITDA of €1.6m (11.4% margin), €0.2m ahead of our forecast. Orders received in the nine months to end September totalled €46.9m, up 19% y-o-y. For Q3, order intake was relatively flat y-o-y. The company set up a subsidiary in Singapore in Q3, following on from the subsidiary set up in Hong Kong earlier in the year, as part of its strategy to expand into Asia Pacific and support the Duty Free Stores contract signed last quarter.
Outlook and changes to forecasts
The strong year-to-date order intake leads the company to expect a positive business development in Q4. Based on slightly stronger than expected results in Q3, we have raised our FY15 revenue and EBITDA forecasts by 0.2% and 4.5% respectively. This results in a 5.4% upgrade to normalised EPS. We leave our FY16 forecasts unchanged.
Valuation: International expansion key to upside
The stock trades on a P/E of 22.5x FY15e and 18.5x FY16e normalised EPS. This is at a discount to global supply chain software vendors and at a premium to European IT services companies, which is reasonable considering the split of the business. TXT has a strong cash position and we forecast a dividend yield of at least 2.9% for FY15 and FY16. We view FY15 as an investment year as TXT puts in place the building blocks to support growth in the medium term, with a focus in expansion into Asia Pacific. Key milestones to assess progress will include a growing order backlog in North America, large licence deals for TXT Perform and further international deals for TXT Next. The company continues to assess acquisition targets in both businesses.
Exhibit 1: Financial summary
€000s |
2010 |
2011 |
2012 |
2013 |
2014 |
2015e |
2016e |
||
Year-end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
37,458 |
40,138 |
46,499 |
52,560 |
54,378 |
60,614 |
63,207 |
Cost of sales |
(18,757) |
(19,522) |
(22,351) |
(24,854) |
(26,455) |
(29,076) |
(31,023) |
||
Gross profit |
18,701 |
20,616 |
24,148 |
27,706 |
27,923 |
31,538 |
32,184 |
||
EBITDA |
|
|
2,769 |
4,397 |
5,322 |
6,263 |
5,292 |
6,498 |
7,414 |
Operating Profit (before amort and except) |
|
|
(776) |
843 |
4,283 |
5,241 |
4,296 |
5,688 |
6,814 |
Amortisation of acquired intangibles |
0 |
0 |
0 |
(285) |
(285) |
(285) |
(285) |
||
Exceptionals and other income |
13 |
(4,581) |
939 |
0 |
1,500 |
0 |
0 |
||
Other income |
0 |
0 |
0 |
0 |
0 |
(300) |
(300) |
||
Operating Profit |
(763) |
(3,738) |
5,222 |
4,956 |
5,511 |
5,103 |
6,229 |
||
Net Interest |
(198) |
72 |
(37) |
(435) |
(249) |
(150) |
(100) |
||
Profit Before Tax (norm) |
|
|
(974) |
915 |
4,246 |
4,806 |
4,047 |
5,538 |
6,714 |
Profit Before Tax (FRS 3) |
|
|
(961) |
(3,666) |
5,185 |
4,521 |
5,262 |
4,953 |
6,129 |
Tax |
255 |
(591) |
(188) |
121 |
(1,046) |
(991) |
(1,226) |
||
Profit After Tax (norm) |
(719) |
324 |
4,092 |
4,927 |
3,243 |
4,431 |
5,371 |
||
Profit After Tax (FRS 3) |
(706) |
(4,257) |
4,997 |
4,642 |
4,216 |
3,963 |
4,903 |
||
Average Number of Shares Outstanding (m) |
11.3 |
11.1 |
11.0 |
11.5 |
11.5 |
11.7 |
11.7 |
||
EPS - normalised (c) |
|
|
(6) |
3 |
37 |
43 |
28 |
38 |
46 |
EPS - normalised fully diluted (c) |
|
|
(6) |
3 |
34 |
41 |
28 |
37 |
45 |
EPS - (IFRS) (c) |
|
|
2 |
128 |
45 |
40 |
37 |
34 |
42 |
Dividend per share (c) |
0.0 |
90.9 |
18.2 |
22.7 |
22.7 |
23.6 |
24.5 |
||
Gross margin (%) |
49.9 |
51.4 |
51.9 |
52.7 |
51.3 |
52.0 |
50.9 |
||
EBITDA Margin (%) |
7.4 |
11.0 |
11.4 |
11.9 |
9.7 |
10.7 |
11.7 |
||
Operating Margin (before GW and except) (%) |
-2.1 |
2.1 |
9.2 |
10.0 |
7.9 |
9.4 |
10.8 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
14,328 |
7,735 |
18,570 |
17,850 |
18,019 |
17,543 |
17,278 |
Intangible Assets |
11,526 |
6,561 |
16,621 |
15,370 |
15,078 |
14,583 |
14,318 |
||
Tangible Assets |
1,528 |
819 |
1,154 |
1,118 |
1,249 |
1,268 |
1,268 |
||
Other |
1,274 |
355 |
795 |
1,362 |
1,692 |
1,692 |
1,692 |
||
Current Assets |
|
|
28,876 |
32,145 |
36,769 |
34,914 |
34,892 |
38,216 |
41,646 |
Stocks |
793 |
661 |
1,388 |
1,451 |
1,820 |
2,000 |
2,100 |
||
Debtors |
21,453 |
15,083 |
19,562 |
18,642 |
20,768 |
23,083 |
23,897 |
||
Cash |
6,630 |
14,181 |
15,819 |
14,821 |
12,304 |
13,133 |
15,648 |
||
Other |
0 |
2,220 |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(17,719) |
(14,049) |
(20,651) |
(17,864) |
(17,451) |
(17,988) |
(18,710) |
Creditors |
(15,615) |
(12,292) |
(15,155) |
(14,512) |
(15,297) |
(17,034) |
(17,756) |
||
Short term borrowings |
(2,104) |
(1,757) |
(5,496) |
(3,352) |
(2,154) |
(954) |
(954) |
||
Long Term Liabilities |
|
|
(8,398) |
(5,567) |
(8,666) |
(6,965) |
(6,491) |
(4,791) |
(4,791) |
Long term borrowings |
(3,870) |
(2,155) |
(4,301) |
(2,896) |
(1,685) |
15 |
15 |
||
Other long term liabilities |
(4,528) |
(3,412) |
(4,365) |
(4,069) |
(4,806) |
(4,806) |
(4,806) |
||
Net Assets |
|
|
17,087 |
20,264 |
26,022 |
27,935 |
28,969 |
32,981 |
35,422 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
9,967 |
19,265 |
2,760 |
7,630 |
5,404 |
5,740 |
7,222 |
Net Interest |
(198) |
166 |
(37) |
(435) |
(249) |
(150) |
(100) |
||
Tax |
255 |
390 |
64 |
(1,615) |
(1,344) |
(991) |
(1,226) |
||
Capex |
(2,340) |
(2,159) |
(405) |
(483) |
(615) |
(620) |
(620) |
||
Acquisitions/disposals |
(137) |
2,403 |
(8,450) |
19 |
0 |
0 |
0 |
||
Financing |
324 |
(106) |
1,690 |
(755) |
(597) |
2,349 |
0 |
||
Dividends |
0 |
(10,292) |
0 |
(2,107) |
(2,615) |
(2,599) |
(2,761) |
||
Net Cash Flow |
7,871 |
9,667 |
(4,378) |
2,254 |
(16) |
3,730 |
2,515 |
||
Opening net debt/(cash) |
|
|
7,248 |
(723) |
(10,266) |
(6,023) |
(8,575) |
(8,465) |
(12,194) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
100 |
(124) |
135 |
298 |
(94) |
(0) |
(0) |
||
Closing net debt/(cash) |
|
|
(723) |
(10,266) |
(6,023) |
(8,575) |
(8,465) |
(12,194) |
(14,709) |
Source: TXT e-solutions, Edison Investment Research
|