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Qinetiq Group Net Income surged on 924% in 2015 while Revenue decreased on 2.4%

21 May 2015 • About Qinetiq Group ($QQ.) • By InTwits

Qinetiq Group reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Qinetiq Group is a company in decline: FY2015 revenue growth was -2.4%, 5 years revenue CAGR was -14.0%
  • EBITDA Margin is quite volatile: 17.9% in FY2015, 16.8% in FY2014, -5.4% in FY2013, 28.8% in FY2012, 7.7% in FY2011
  • Qinetiq Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 3.1%.
  • CAPEX is quite volatile: 23.9 in 2015, 21.4 in 2014, 20.1 in 2013, 12.6 in 2012, 7.8 in 2011
  • The company has highly profitable business model: ROIC is at 26.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Qinetiq Group ($QQ.) key annual financial indicators

mln. £201120122013201420152015/2014
P&L
Revenue1,7031,4701,328783764-2.4%
EBITDA132423-711321373.9%
Net Income5246-133-13105-924.4%
Balance Sheet
Cash103118240322184-42.8%
Short Term Debt9785431-48.1%
Long Term Debt2771641711540-100.0%
Cash flow
Capex20222724252.5%
Ratios
Revenue growth4.7%-13.7%-9.6%-41.1%-2.4%
EBITDA growth5.9%221.0%-116.9%-284.5%3.9%
EBITDA Margin7.7%28.8%-5.4%16.8%17.9%1.1%
Net Income Margin0.3%16.8%-10.0%-1.6%13.7%15.3%
CAPEX, % of revenue1.2%1.5%2.0%3.1%3.2%0.2%
ROIC6.1%44.3%-17.2%17.4%26.8%9.4%
ROE1.1%46.6%-25.7%-3.1%31.0%34.1%
Net Debt/EBITDA2.1x0.3x-1.3x-1.3x-0.1x

Revenue and profitability


Qinetiq Group's Revenue decreased on 2.4% in FY2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.1 pp from 16.8% to 17.9% in FY2015.

Net Income marign surged on 15.3 pp from -1.6% to 13.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments


In FY2015 Qinetiq Group had CAPEX/Revenue of 3.2%. Qinetiq Group's CAPEX/Revenue increased slightly on 1.7 pp from 1.5% in FY2012 to 3.2% in FY2015. It's average level of CAPEX/Revenue for the last three years was 2.8%.

Return on investment


The company operates at high and attractive ROIC (26.83%) and ROE (30.98%). ROIC increased on 9.4 pp from 17.4% to 26.8% in FY2015. ROE jumped on 34.1 pp from -3.1% to 31.0% in FY2015.

Leverage (Debt)


Company's Net Debt / EBITDA is -1.3x and Debt / EBITDA is 0.0x. Net Debt / EBITDA decreased on 0.1x from -1.3x to -1.3x in FY2015. Debt dropped on 99.1% in FY2015 while cash dropped on 42.8% in FY2015.

Appendix 1: Peers in Aerospace & Defense


Below we provide Qinetiq Group benchmarking against other companies in Aerospace & Defense industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Boeing Co ($BOE)6.9%18.9%6.0%4.8%
Cobham ($85GU)2.3%3.5%11.9%
Bae Systems ($BA.)-12.1%-7.2%-0.3%-3.7%
Rolls-Royce Hldgs ($RR.)0.4%9.3%20.4%-6.2%
Chemring Group ($BC88)-36.2%-14.7%-6.4%
 
Median (5 companies)0.4%9.3%2.3%-3.7%2.7%
Qinetiq Group ($QQ.)-13.7%-9.6%-41.1%-2.4%


Top companies by Gross margin, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Chemring Group ($BC88)25.4%31.1%31.4%27.8%
Cobham ($85GU)32.9%31.8%30.3%32.0%
Rolls-Royce Hldgs ($RR.)22.0%22.4%21.6%23.3%
Boeing Co ($BOE)18.7%16.0%15.4%15.4%
 
Median (4 companies)20.4%23.9%26.3%26.8%29.9%


Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Chemring Group ($BC88)11.1%-0.4%16.1%11.4%
Rolls-Royce Hldgs ($RR.)13.3%13.9%14.5%14.8%
Cobham ($85GU)20.5%21.8%13.4%12.9%
Bae Systems ($BA.)12.4%13.1%12.4%12.1%
Boeing Co ($BOE)10.9%9.9%9.7%10.3%
 
Median (5 companies)12.4%13.1%12.4%13.4%12.1%
Qinetiq Group ($QQ.)7.7%28.8%-5.4%16.8%17.9%


Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Rolls-Royce Hldgs ($RR.)3.7%3.6%4.6%4.7%
Cobham ($85GU)2.8%3.2%3.4%4.7%
Chemring Group ($BC88)4.1%2.6%2.7%2.2%
Boeing Co ($BOE)2.5%2.1%2.4%2.5%
Bae Systems ($BA.)2.0%2.2%1.4%1.7%
 
Median (5 companies)2.5%2.8%2.6%2.7%3.4%
Qinetiq Group ($QQ.)1.2%1.5%2.0%3.1%3.2%


Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Boeing Co ($BOE)33.4%31.8%25.4%29.5%
Bae Systems ($BA.)21.6%26.3%12.8%26.0%
Rolls-Royce Hldgs ($RR.)18.4%18.0%15.8%13.8%
Chemring Group ($BC88)4.9%-6.3%4.4%1.4%
Cobham ($85GU)13.9%9.0%2.6%0.5%
 
Median (5 companies)21.6%18.0%12.8%13.8%0.9%
Qinetiq Group ($QQ.)6.1%44.3%-17.2%17.4%26.8%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Cobham ($85GU)1.0x1.2x4.9x4.5x
Chemring Group ($BC88)3.0x2.1x3.6x
Bae Systems ($BA.)0.5x-0.2x0.4x0.5x
Boeing Co ($BOE)0.3x0.0x0.1x-0.3x
Rolls-Royce Hldgs ($RR.)-0.1x-0.7x-0.8x-0.3x
 
Median (5 companies)0.3x0.0x0.2x0.5x4.1x
Qinetiq Group ($QQ.)2.1x0.3x-1.3x-1.3x