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BCA Marketplace PLC

BCA Marketplace PLC Adjusted EPS + 25.3% YOY – Zeus Capital

BCA Marketplace PLC (LON:BCA) has delivered another set of record results, which are 11% ahead of our forecasts at the adjusted PBT level and 9% at the adjusted EPS level. This reflects strong growth, progress and efficiency measures coming through across all divisions within the Group. In addition, contract momentum remains strong within its vehicle re-marketing business.

Final results: Revenues were +19.8% (organic) YOY and 8% ahead of our expectations. This was driven by strong volume growth across all parts of its business. Adjusted EBITDA was once again at record levels and +17.6% YOY and 6.7% ahead of our forecasts, with progress delivered in all divisions on a YOY basis as the benefits of strong operational gearing continues to come through. This flowed through to EPS, which was >25% YOY and 9% ahead of our forecasts. The dividend also showed strong growth YOY and was in line with its progressive policy set out in 2015. Cash generation was also exceptionally strong, with cash conversion from adjusted EBITDA 129.3% vs. 102.0% last year. As a result, net debt was -24% YOY and down by a similar margin vs. our forecasts as we anticipated flat net debt, which is a major positive.

Key performance drivers: Revenue growth in the core UK business was +24.9% at £941.4m (ZC 841.8m) as a result of new outsourced remarketing contracts where BCA takes title and remarkets them in its own capacity. There is strong momentum in this part of the business, and we note BCA has won another contract with BMW. International volumes were +4.3% YOY with FX continuing to provide a favourable impact on translation. Increased volume, service uptake and favourable FX delivered revenue of £154.3m and growth of 14.0% or 8.4% at constant FX, this compared to our forecast of £166.5m. Adjusted EBITDA was £30.1m and compared to our forecast of £30.8m. WBAC continues to deliver strong growth in a controlled manner, and celebrated its sixth consecutive year of double digit volume growth. Volumes were +12.9%, with revenues +15.3% at £920.3m (ZC £955.3m). This delivered an adjusted EBITDA of £23.0m (ZC £22.8m), with margins expanding by 10bps to 2.5% as well. Automotive Services performed ahead of our forecasts at the revenue level £355.3m (ZC £310.3m), with adjusted EBITDA coming in at £21.5m (ZC £20.4m).

Outlook: The trading outlook for BCA Marketplace PLC is positive, and in line with management expectations. We would expect to get more detail on this as and when the Group comes out of its current offer period, or when the potential bidder clarifies its intentions. We are therefore not in a position to publish our forecasts at this juncture, but will do so at the appropriate time.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.