Sunday, March 6, 2011

Further on Service Point Solutions' 2010 Plans and Results

Further to the post I did on March 2, 2011 (“SERVICE POINT SOLUTIONS RELEASES FINANCIAL RESULTS FOR YEAR 2010 and PROJECTIONS FOR 2011”), I spent some time, this morning, to see if I could determine what Service Point Solutions said in the documents that it released, sometime in late February, in conjunction with the “Shareholders Meeting” that it held in late February.

As I previously said, “my Spanish ain’t-so-good”, but, nevertheless, I made an attempt to translate bits-and-pieces of the Spanish-language documents into English. The document I mostly concentrated my efforts on was the “Presentation” document that SPS prepared for its February Meeting of Shareholders. (You can view the Spanish language version of that “Presentation” file at the Internet address just below this paragraphit is a large file, so, if you click on it, give it some time to fully load.) No telling how accurate my translations are. Inasmuch as you aren’t paying me anything to read this post, I guess you could say that “the translations are worth the price of admission.”

I’ve numbered the comments, simply to make this post flow a bit easier:

1. Apparently, Service Point Solutions (SPS) is planning to complete an issuance of shares sometime in March. Although I think that the new shares are going to be issued in a public offering, that may be an incorrect assumption on my part. It could be that the shares are going to be offered in a private placement. It appears that SPS is planning to issue 36.8 million shares at a price per share of .60 Euro, an equity-raise of approximately 22.8 million Euro, and it looks like 34% of the total raised will be for “reserves” and 66% of the total (approximately 14.573 million Euro) will be used to complete the acquisition of Holmbergs (Sweden.) I would imagine that SPS will issue a Press Release to announce the completion of the share issuance, after it is completed.

2. In the “Presentation” file, SPS gave a brief rundown of its situation and highlighted certain matters:

· Presence in 10 countries

· Leader in Europe

· Grew from 5 countries to 10 countries, 2006-2010

· Grew from 99mil Euros to 217mil Euros, 2006-2010

· 90% of sales outside of Spain (Spain is home HQ country)

· 816 FM installations (client-site FM deals)

· 133 production facilities worldwide

· Global Alliance (GlobalGrafixNet) (42 countries with 512)

· SPS is 10x larger than its local competitors

· SPS has significant market share in 7 of its 10 countries

· Strong leadership in the areas of finance and education

· Focus on “on-line” services

· Only European publicly-held company in a highly fragmented sector

3. In the “Presentation” file, SPS also pointed out its “large strategic strengths:”

· Business sector diversification (SPS positioned for growth in the fastest growing areas)

· Fotobooks – 6th largest producer in Europe, 3rd largest producer in Germany

· Web2Print – 80 large B2B clients in 2010

· E-commerce /Web2Print – 13 mil Euros revenue in 2010

· Solid client base – more than 30,000 B2B clients, including GE Healthcare, Morgan Stanley, Ferrovial, Shell and Standard Chartered

· Global Scope – SP in 10 countries and GGN (GlobalGrafixNet) represented in 42 countries

· Lead over local competitors (full range of products and services to the final client) – SPS 10x larger than local competitors

4. Specific comments in the Presentation file about results and plans:

From 2005 to 2008:

SPS’ A/E/C sector business 80% of SPS’ sales in 2005.

SPS’ A/E/C sector business 40% of SPS’ sales in 2008.

From 2008 to 2010:

Due to the crisis (the recession) SPS’s overall sales fell.

SPS’s A/E/C sector business fell 44% from 2008 to 2010, overall basis.

SPS’s A/E/C sector sales in Europe declined less than its A/E/C sales in the U.S.

One of SPS’ plans (which was previously announced by SPS):

Return to the original strategy of growth through acquisitions. (SPS has made 15 acquisitions in the past 5 years).

5. General Objectives of SPS’ Strategic Plan, 2011-2013:

Value creation levers

Hypothesis, 2011-2013

Key indicators

1. return of organic growth

+10-12% annual growth

Global sales growth, by country and key sectors

2. Fastest growing “on-line” business

50-60mil Euros; growth (in “on-line” business) greater than 50% annually

Group “on-line” business size

3. Lower costs for new operating model

+2 - 3% against the major annual pace of sales

revenue growth vs. cost growth

4. Acquisition growth

Holmbergs by 2013, Sales 16-18m Euro, EBITDA 2m-2.5m Euro

Evolution of results and synergies from acquisition

Past Results and Projections for Holmberg’s (Sales & EBITDA):

2008 – Sales 11.7 mil Euro, EBITDA 1.1 mil Euro

2010 – Sales 12.5 mil Euro, EBITDA 1.5 mil Euro

Estimated for 2011 – Sales 15.0-17.0 mil Euro, EBITDA 1.8-2.3 mil Euro

6. SPS’ “Business Plan”, 2011-2013 (all figures in millions of Euros)







230 - 240

250 - 260

260 - 280



22 - 26

38 - 42

50 - 60



20 - 22

25 - 29

31 - 36

*Restructuring costs EXCLUDED (Actual EBITDA for 2011 with restructuring costs INCLUDED was 8.5 mil Euro

7. SPS’ Actual Results, 2005-2010 (all figures in millions of Euros)





















*Restructuring costs EXCLUDED (Actual EBITDA for 2011 with restructuring costs INCLUDED was 8.5 mil Euro


It’s very interesting, I think, to compare:

a) ….. SPS’ results, 2005 (before it began buying companies) with SPS’ results in 2010. In 2005, SPS’s EBITDA was 14.6 mil Euro on Sales of 99.0 mil Euro. In 2010, SPS’ EBITDA (restructuring costs excluded) was 14.5 mil Euro, or approximately what it was in 2009 when SPS’ sales were 50% less. If you include restructuring costs in the 2010 EBITDA calculation, SPS’s EBITDA in 2010 was only 8.5 mil Euro, so about 42% less than the EBITDA in 2005.

b) ….. SPS’ projections for the future with its past results. In 2012, SPS is projecting Sales of 250 to 260 mil Euro and EBITDA of 25 to 29 mil Euro. If we look back to 2007, SPS’ Sales were 214 mil Euro and EBITDA was 28.7 mil Euro. So, if I’m understanding this correctly, SPS expects to achieve an increase in sales of 36 to 46 mil Euro, 2012 vs. 2007, but at the same time expects its EBITDA for 2012 to be about the same that it was in 2007, when it had substantially lower sales. To go a bit further on this same line of reasoning, SPS is projecting that its sales will rise to 260 to 280 mil Euro by 2013, but that its EBITDA, projected at 31 to 36 mil Euro, will be only nominally greater in 2013 than it was when SPS’ Sales were 214 mil Euro (2007.)

On February 16, 2011, prior to SPS issuing its 2010 results, SPS shares hit .68 Euro, which was the highest price at which SPS shares have traded, so far, in 2011. On March 4, 2011, SPS shares closed at .542 Euro. That represents a decline of approximately 20%.

Note: As I’ve mentioned, I Spanish-language skills are not great. I may have mistranslated or misunderstood some of what I read. For the most accurate information about Service Point Solutions’ Financial Results for 2010 and about Service Point Solutions’ Strategies, Plans and Projections, refer to the Spanish-language documents that Service Point Solutions issued. You can access those by visiting SPS’ web-site or by referring back to the post I did on this blog on March 1, 2011.

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