The Bapcor Ltd (ASX: BAP) share price finished the day almost 2% higher at $5.54 following the release of its full-year results.
Key takeaways from the release include:
- Revenue increased 47.8% to $1,013.6 million.
- Gross margin increased 1.5 percentage points to 45.7%.
- Pro forma EBITDA increased 52.4% to $117.4 million.
- Pro forma net profit after tax from continuing operations rose 50.9% to $65.8 million.
- Pro forma net profit after tax of $71.5 million, ahead of guidance.
- Earnings per share of 24.4 cents.
- Dividends per share of 13 cents.
- Outlook: Net profit from continuing operations expected to be up approximately 30% in FY 2018.
The key driver of the company's impressive result was of course the successful acquisitions it made during FY 2017. These include the Hellaby, Baxters, MTQ Engine Systems and Roadsafe businesses.
But as well as acquisitions, a strong performance from its Burson Trade segment helped lift revenue.
The segment delivered same store sales growth of 4.6%, which is especially pleasing given the weak retail environment.
This ultimately led to an 11% increase in segment revenue to $465.1 million. EBITDA grew at a quicker rate of 22% to $63.3 million thanks to margin improvements.
The company's Retail & Service segment posted a 28.3% increase in revenue to $221 million due partly to the Metcash Auto business being included in one extra month during FY 2017 compared to FY 2016.
The company's Specialist Wholesale segment was a notably strong performer during the year. Revenue in the segment grew a massive 105.7% to $212.7 million due to the acquisitions of Bearing Wholesalers, Roadsafe, Baxters, and MTQ in 2016.
Finally, its recently acquired Hellaby Automotive business delivered revenue of $146.7 million and EBITDA of $15.1 million. Same store sales growth in New Zealand was a solid 8% and in its Specialist Wholesale business same store sales came in at 7%.
Looking ahead, management appears very confident that the company will deliver another strong result in FY 2018.
Management has forecast net profit from continuing operations to increase 30% in FY 2018 thanks to the full-year impact of the Hellaby Auto acquisition, strong growth in Trade and Retail, and the expansion of its store footprint.
Should you invest?
I think Bapcor delivered an exceptionally strong result today and would class it as a buy.
Based on this result its shares are changing hands 22x full-year earnings. Given its forecast for net profit growth of 30% in FY 2018 I think this is an undemanding multiple. Especially for those willing to make a patient long-term buy and hold investment.
In light of this I would put it up there with Noni B Limited (ASX: NBL) and Premier Investments Limited (ASX: PMV) as one of the best options in the retail industry at present.
