Brunel Q4 and FY 2020 results

Friday, February 12, 2021

Brunel Q4 and FY 2020 results: Operational discipline delivers strong results
Brunel International N.V. (Brunel; BRNL), a global provider of flexible workforce solutions and expertise today announced its fourth quarter and full year 2020 results.

Key points Q4 2020

  • EBIT increased substantially to EUR 9.8 million helped by continued strong cost control resulting in 21% cost reduction 
  • Revenue stable vs Q3-20, despite seasonality effects 

Key points full year 2020

  • EBIT of EUR 28.8 million driven by 15% lower cost base
  • Revenue down 14% due to Covid-19 related impact on global demand for flexible workforce solutions
  • Free cash flow of EUR 68 million resulting in an increase of net cash to EUR 155 million
  • Earnings per share of EUR 0.31 with a proposed dividend of EUR 0.30 (pay-out: 99%) over the 2020 financial year
  • Capital markets day planned in H1 2021 as Brunel gears up for the next phase of development and growth post-Covid
 

Jilko Andringa, CEO of Brunel International N.V.: “We finished the year strong, thanks to the enormous flexibility and hard work of all Brunellers around the world. In a year with revenues severely under pressure due to Covid-19, we have truly shown agility and resilience. After putting in place strict cost control and cash preservation measures, we have worked hard to improve our gross margins and deliver higher value added services. We also made progress in our diversification strategy reducing our dependency on the Oil & Gas market. Our organizational discipline has truly been tested in 2020 and along the way we have further improved this capability resulting in a high quality, future ready, lean and agile organization. In the last quarter of 2020, we were able to stop the downward trend in the month over month revenue development. Despite the ongoing limitations we experience in almost all our markets, the recruitment and client activities are high and we see a positive trend in our pipeline. When the world opens up in 2021, we expect to return to top line growth and increased profitability.” 

 

Brunel International (unaudited)

P&L amounts in EUR million

Q4 2020

Q4 2019

Δ%

FY 2020

FY 2019

Δ%

Revenue

209.3

257.1

-19%

a

892.6

1,041.1

-14%

b

Gross Profit

48.3

47.5

2%

191.4

209.4

-9%

Gross margin

23.1%

18.5%

21.4%

20.1%

Operating costs

38.5

49.0

-21%

c

162.6

192.0

-15%

d

EBIT

9.8

-1.5

+743%

28.8

17.4

65%

EBIT %

4.7%

-0.6%

3.2%

1.7%

Average directs

9,518

11,365

-16%

10,227

12,046

-15%

Average indirects

1,324

1,612

-18%

1,442

1,631

-12%

Ratio direct / Indirect

7.2

7.1

7.1

7.4

       

a -15.8 % like-for-like
b 12.7 % like-for-like
c -20.1 % like-for-like
d -14.4 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

 

Q4 2020 and FY 2020 results by division

P&L amounts in EUR million

 

Summary:

Revenue

Q4 2020

Q4 2019

Δ%

FY 2020

FY 2019

Δ%

DACH region

53.5

66.6

-20%

230.5

284.3

-19%

The Netherlands

47.9

51.1

-6%

190.6

206.8

-8%

Australasia

25.4

30.6

-17%

110.4

119.0

-7%

Middle East & India

24.7

32.3

-23%

113.4

117.4

-3%

Americas

18.8

27.9

-33%

88.3

104.1

-15%

Rest of world

38.8

46.9

-17%

158.3

167.8

-6%

Subtotal

209.1

255.4

-18%

891.5

999.4

-11%

BIS

0.2

1.7

-89%

1.0

41.7

-98%

Total

209.3

257.1

-19%

892.6

1041.1

-14%

EBIT

Q4 2020

Q4 2019

Δ%

FY 2020

FY 2019

Δ%

DACH region

6.8

3.6

87%

17.0

27.1

-37%

The Netherlands

4.0

2.7

48%

11.8

9.7

22%

Australasia

0.3

-0.4

181%

0.2

-1.6

111%

Middle East & India

2.3

3.3

-32%

9.4

11.0

-15%

Americas

-0.3

-0.3

23%

-2.2

-0.8

-172%

Rest of world

0.8

1.5

-48%

3.7

1.3

181%

Unallocated 1)

-3.2

-1.5

-111%

-9.6

-7.2

-34%

Subtotal

10.7

8.9

21%

30.3

39.6

-24%

BIS 2)

-0.8

-10.4

-1.5

-22.2

93%

Total

9.8

-1.5

28.8

17.4

65%

 

1) Unallocated Q4 includes an impairment of IT-assets of EUR 1 million.
2) The project of the water treatment plant project has been finalized and we have agreed the final settlement. This concludes the wind-down of BIS.


PERFORMANCE BY REGION

DACH (unaudited)

 

 

 

 

 

 

 

 

P&L amounts in EUR million

 

 

 

 

 

 

 

 

 

Q4 2020

Q4 2019

Δ%

 

 

 

FY 2020

FY 2019

Δ%

Revenue

53.5

66.6

-20%

 

 

 

230.5

284.3

-19%

Gross Profit

19.7

20.2

-3%

 

 

 

74.9

92.6

-19%

Gross margin

36.7%

30.3%

 

 

 

 

32.5%

32.6%

 

Operating costs

12.9

16.6

-22%

 

 

 

57.9

65.5

-12%

EBIT

6.8

3.6

87%

 

 

 

17.0

27.1

-37%

EBIT %

12.8%

5.5%

 

 

 

 

7.4%

9.5%

 

 

 

 

 

 

 

 

 

 

 

Average directs

1,992

2,650

-25%

 

 

 

2,148

2,697

-20%

Average indirects

392

517

-24%

 

 

 

454

513

-12%

Ratio direct / Indirect

5.1

5.1

 

 

 

 

4.7

5.3

 

The DACH region includes Germany, Switzerland, Austria and Czech Republic.

Revenue
Despite the last quarter of the year being typically weaker than the third quarter due to seasonality effects, we were able to keep our headcount and revenue on a stable level in Q4 compared to Q3. Revenue per working day decreased by 23% YoY. We brought short-time working down from 200 specialists in Q3 to 130 specialists in Q4. The drop at the change of the year was comparable to previous years. 

The headcount development in 2020 is as follows:

Working days:

 

Q1

Q2

Q3

Q4

FY

2021

63

61

66

65

255

2020

64

59

66

65

254

2019

63

59

66

62

250


Gross margin
The gross margin adjusted for working days in Q4 is 34.0% (2019: 30,3%). We had a high productivity and a low bench in Q4, compared to a fairly weak productivity in Q4 2019.

Operating costs
In Q4, operating costs decreased by 22.4%, mainly as a result of the lower indirect headcount.

 

Netherlands (unaudited)

 

 

 

 

 

 

 

P&L amounts in EUR million

 

 

 

 

 

 

 

 

Q4 2020

Q4 2019

Δ%

 

 

FY 2020

FY 2019

Δ%

Revenue

47.9

51.1

-6%

 

 

190.6

206.8

-8%

Gross Profit

13.4

13.7

-2%

 

 

51.3

55.7

-8%

Gross margin

27.9%

26.8%

 

 

 

26.9%

26.9%

 

Operating costs

9.4

11.0

-15%

 

 

39.5

46.0

-14%

EBIT

4.0

2.7

48%

 

 

11.8

9.7

22%

EBIT %

8.3%

5.3%

 

 

 

6.2%

4.7%

 

 

 

 

 

 

 

 

 

 

Average directs

1,838

2,135

-14%

 

 

1,899

2,242

-15%

Average indirects

311

386

-20%

 

 

337

409

-18%

Ratio direct / Indirect

5.9

5.5

 

 

 

5.6

5.5

 


Revenue
In Q4, headcount remained at a stable level. Adjusted for working days, revenue decreased by 7%. We continued to achieve growth in our business line Legal, with revenues up 41% compared to last year.  The drop at change of the year was comparable to previous years.

The headcount development in 2020 is as follows:

Working days:

 

Q1

Q2

Q3

Q4

FY

2021

63

61

66

66

256

2020

64

60

66

65

255

2019

63

62

66

64

255


Gross margin 
The gross margin adjusted for working days is 27.1% (2019: 26.8%). The increase in gross margin is mainly driven by a lower bench and a higher productivity. The business lines IT and Legal achieved a significant growth in gross profit positively contributing to gross margin on a group level in Q4.

Operating costs
Operating costs have decreased as a result of cost saving initiatives, including the reduction of indirect headcount executed in Q2. 

EBIT
Full year EBIT exceeds prior year EBIT. We did not receive any government relief (NOW) in 2020.

 

Australasia (unaudited)

 

 

 

 

 

 

 

 

P&L amounts in EUR million

 

 

 

 

 

 

 

 

 

Q4 2020

Q4 2019

Δ%

 

 

FY 2020

FY 2019

Δ%

 

Revenue

25.4

30.6

-17%

a

 

110.4

119.0

-7%

b

Gross Profit

2.6

2.6

0%

 

 

9.7

9.8

-1%

 

Gross margin

10.1%

8.4%

 

 

 

8.8%

8.3%

 

 

Operating costs

2.3

3.0

-23%

c

 

9.5

11.4

-17%

d

EBIT

0.3

-0.4

181%

 

 

0.2

-1.6

111%

 

EBIT %

1.3%

-1.3%

 

 

 

0.2%

-1.4%

 

 

 

 

 

 

 

 

 

 

 

 

Average directs

960

968

-1%

 

 

999

922

8%

 

Average indirects

76

84

-10%

 

 

80

85

-6%

 

Ratio direct / Indirect

12.7

11.5

 

 

 

12.5

10.9

 

 

 

a -15.2 % like-for-like
b -4.2 % like-for-like
c -23.5 % like-for-like
d -14.2 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

Australasia includes Australia and Papua New Guinea. 

Eastern Australia suffered from extreme weather conditions in Q4 2020, reducing the workable days and pushing back start dates of projects. This resulted in lower revenue. At the same time we were able to achieve higher margin as a result of diversification and increased client focus in combination with tight cost control. This led to a significantly better result.
 

Middle East & India (unaudited)

 

 

 

 

 

 

 

 

P&L amounts in EUR million

 

 

 

 

 

 

 

 

 

Q4 2020

Q4 2019

Δ%

 

 

FY 2020

FY 2019

Δ%

 

Revenue

24.7

32.3

-23%

a

 

113.4

117.4

-3%

b

Gross Profit

4.1

5.8

-30%

 

 

18.5

20.8

-11%

 

Gross margin

16.4%

17.9%

 

 

 

16.3%

17.7%

 

 

Operating costs

1.8

2.5

-28%

c

 

9.1

9.8

-7%

d

EBIT

2.3

3.3

-32%

 

 

9.4

11.0

-15%

 

EBIT %

9.1%

10.3%

 

 

 

8.3%

9.4%

 

 

 

 

 

 

 

 

 

 

 

 

Average directs

2,085

2,628

-21%

 

 

2,348

3,215

-27%

 

Average indirects

125

139

-10%

 

 

135

137

-1%

 

Ratio direct / Indirect

16.7

18.9

 

 

 

17.3

23.5

 

 

 

a -17.1 % like-for-like
b -0.5 % like-for-like
c -21.1 % like-for-like
d -3.9 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

Middle East & India includes, Qatar, Kuwait, Dubai, Oman, Kurdistan, Iraq and India.

The current travel restrictions continue to put a strain on our business in the Middle East & India. A shifted focus to local recruitment, smart project planning and tight cost control still enabled us to deliver solid results.

 

Americas (unaudited)

 

 

 

 

 

 

 

 

 

P&L amounts in EUR million

 

 

 

 

 

 

 

 

 

Q4 2020

Q4 2019

Δ%

 

 

FY 2020

FY 2019

Δ%

 

Revenue

18.8

27.9

-33%

a

 

88.3

104.1

-15%

b

Gross Profit

2.8

4.0

-30%

 

 

10.6

13.4

-20%

 

Gross margin

14.7%

14.2%

 

 

 

12.0%

12.8%

 

 

Operating costs

3.1

4.3

-28%

c

 

12.8

14.2

-10%

d

EBIT

-0.3

-0.3

23%

 

 

-2.2

-0.8

-172%

 

EBIT %

-1.4%

-1.2%

 

 

 

-2.5%

-0.8%

 

 

 

 

 

 

 

 

 

 

 

 

Average directs

686

903

-24%

 

 

750

861

-13%

 

Average indirects

103

125

-18%

 

 

108

127

-16%

 

Ratio direct / Indirect

6.6

7.2

 

 

 

7.0

6.8

 

 

 

 

 

 

 

 

 

 

 

 

 

a -24.5 % like-for-like
b -9.9 % like-for-like
c -23.1 % like-for-like
d -4.6 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

The Americas include Canada, United States, Mexico, Guyana and Brazil. 

The Covid-19 pandemic also continued to affect the Americas region in Q4. Our cost saving initiatives paid off during the quarter resulting in a significantly lower cost base. The quarterly result was close to break-even and in line with Q4 2019. We believe to have laid the foundation to ensure a return to profitability as soon as markets recover.
 

Rest of world (unaudited)

 

 

 

 

 

 

 

 

P&L amounts in EUR million

 

 

 

 

 

 

 

 

 

Q4 2020

Q4 2019

Δ%

 

 

FY 2020

FY 2019

Δ%

 

Revenue

38.8

46.9

-17%

a

 

158.3

167.8

-6%

b

Gross Profit

6.4

8.0

-20%

 

 

26.9

27.2

-1%

 

Gross margin

16.6%

17.1%

 

 

 

17.0%

16.2%

 

 

Operating costs

5.6

6.5

-14%

c

 

23.2

25.9

-10%

d

EBIT

0.8

1.5

-48%

 

 

3.7

1.3

181%

 

EBIT %

1.9%

3.1%

 

 

 

2.4%

0.8%

 

 

 

 

 

 

 

 

 

 

 

 

Average directs

1,956

1,984

-1%

 

 

2,070

1,855

12%

 

Average indirects

257

291

-12%

 

 

264

286

-8%

 

Ratio direct / Indirect

7.6

6.8

 

 

 

7.8

6.5

 

 

 

a -10.3 % like-for-like
b -2.1 % like-for-like
c -9.8 % like-for-like
d -7.8 % like-for-like
Like-for-like is measured excluding the impact of currencies and acquisitions

Rest of world includes Asia, Russia & Caspian, Belgium and rest of Europe & Africa. 

The main driver of the region is Asia with a continued strong performance in China and Singapore.  Europe & Africa continued to deliver solid results despite the impact of Covid-19. Tight cost controls and efficiency improvements have lowered our break-even levels and give us more agility to scale up and down in line with changing market circumstances.

 

Tax and net profit
The effective tax rate decreased from 99.2% in 2019 to 38.5% in 2020. As a result, net profit came in at EUR 15.6 million or an earnings per share of EUR 0.31.

Free cash flow and net cash
We achieved a strong cash flow in 2020, mainly as a result of an improvement in working capital. This improvement is the result of the lower activity level and strongly supported by a better collection. Total days outstanding for receivables decreased by 8 days, or 10% in 2020. The cash balance at 31 December 2020 is EUR 155 million (2019: EUR 91.9 million). This strong cash position will support our growth in the post Covid-19 recovery and our M&A strategy, and allows us to return to our normal dividend policy.

Dividend
We propose a cash dividend of EUR 0.30 per share over the 2020 financial year, which represents a pay-out ratio of 99% and is at the top end of our dividend policy range.

Outlook Q1 2021
The current trend will continue in Q1 2021: year on year a lower revenue, at slightly higher gross margins (%) and significantly lower cost, resulting in an EBIT similar to Q1 2020.

Capital markets day
Brunel will host a virtual Capital Markets Day in H1 2021 to provide an update on our strategy and growth plans and the execution thereof. Further details on start and end time will be announced at our website.