BCA Marketplace PLC (LON:BCA) has delivered another strong set of final results, which are 3% ahead of our forecasts at the adjusted EPS level. Strong growth across all divisions has led to an impressive YOY growth rate of 38% in adjusted EBITDA and 30% in adjusted EPS. We are maintaining our headline assumptions at the adjusted EPS level for 2018E and 2019E, which remain towards the top end of the consensus range.
Final results: Revenues were 10% ahead of our forecast driven by webuyanycar.com (WBAC), outsourced remarketing contracts and acquisitions. Adjusted EBITDA was also strong and 6% ahead of our forecast as the higher volumes across all its divisions filtered through. Adjusted EPS was also ahead of our forecast despite seeing higher depreciation and interest costs. Cash generation was strong with operating cashflow running at 102% of adjusted EBITDA, with net debt 8% below our forecast at £260.5m. The full year dividend was 13% ahead YOY and 2% ahead of our forecast as it continues to deliver on its progressive policy.
Key performance drivers: The core UK Vehicle Remarketing division performed well with higher volumes producing a slightly better than expected EBITDA (£84.0m vs. ZC at £83.2m) outturn vs. our forecast. International Remarketing also performed ahead of our EBITDA forecasts (£26.2m vs. ZC at £24.2m), albeit this continues to be aided by FX but EBITDA per vehicle was ahead of our forecast. WBAC performed in line with our forecasts from a volume perspective, with EBITDA ahead due to better than expected cost control. The Automotive Services division delivered adjusted EBITDA of £17.2m (ZC £11.3m) with part of the difference coming from the UK logistics business that was previously included in the core UK Vehicle Remarketing division. The key driver behind the growth was the Paragon acquisition with EBITDA margins advancing 160bps during the period.
Forecast assumptions: We are maintaining our headline EPS forecasts on the back of these results. We have increased our revenue forecasts by 7-8% from 2018 and beyond to reflect the higher volumes in the core business. This delivers a slightly higher EBITDA outcome, albeit also offset by higher depreciation, central and interest costs. We have also assumed a slightly higher tax rate at 22% to reflect the increase in European profitability. However, our adjusted EPS forecasts remain unchanged and remains towards the top end of the consensus range.
Investment view: We continue to believe the growth potential is significant from here as the Group benefits from value delivered by management in building a unique, and broad based services business in the automotive sector.
