Vitec - Estimate beat in Q4 with strong ‘21e outlook
Q4 EBITA SEK 98m, +22. 8% vs. ABG, +16. 6% vs.
cons. Business model leverage to be further proved in ‘21e EV/EBITA 32-28x for ’21e-’22e, ~25% above peers Estimate beat driven by one-time revenues Vitec reported a strong set of Q4 figures yesterday, with a beat versus consensus that was mainly driven by one-time revenues. Net sales were SEK 362m, +7.
5% vs. ABGSCe and +10. 4% vs.
consensus, for total y-o-y growth of 21. 6%. Recurring revenues amounted to SEK 285m, +20.
4% y-o-y for organic growth of ~7%, thus representing 78. 6% of total revenues. The only real surprise in the report came in the form of higher-than-expected one-time Service and License revenues, likely due to recent acquisitions not having had time to transition towards recurring revenues.
In total, these revenues were SEK 23m higher than expected, and given that costs were in line with our estimates, this drove the EBITA beat. EBITA amounted to SEK 98m, +22. 8% vs.
ABGSCe and +16. 6% vs. consensus, for a margin of 27.
1%. Re-evaluation of margin potential drives estimate changes In 2020, Vitec took a step up in terms of EBITA margins, e. g.
reaching 27-30%. We think that this gives an indication of the type of EBITA margins we could see in the long term if Vitec were to focus on profitability. We will not extrapolate the ~30% margin too much, but we do note that ‘21e is likely to exceed historical results due to the leverage of the business model and good cost control.
This drives our revisions. M&A pace to continue in ‘21e, EV/EBITA 32-28x ‘21e-‘23e In 2020, we think that Vitec proved that it can maintain high M&A solely via digital communications channels. Given that Vitec has available overdraft facilities of SEK 250m, SEK 515m in unutilised portions of the credit facility and a seasonally strong cash flow in Q1, we think the high M&A pace is set to continue.
Vitec has already implemented two acquisitions in ‘21e so far, with Unikum Datasystem being quite large in Vitec terms, with a strong EB.
