Bae Systems Net Income jumped on 15.1% in 2015 while EBITDA Margin decreased slightly on 1.1 pp from 12.1% to 11.0%
18 Feb 2016 • About Bae Systems (
$BA.) • By InTwits
Bae Systems reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Bae Systems has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's in pair with industry average of 4.1%.
- CAPEX is quite volatile: 1,928 in FY2015, 657 in FY2014, 737 in FY2013, 604 in FY2012, 1,454 in FY2011
- The company has highly profitable business model: ROIC is at 27.9%
- It operates with high leverage: Net Debt/EBITDA is 0.8x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Bae Systems ($BA.) key annual financial indicators
| mln. £ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 28,501 | 26,457 | 26,389 | 25,419 | 25,656 | 0.9% |
| EBITDA | 3,529 | 3,460 | 3,274 | 3,087 | 2,830 | -8.3% |
| Net Income | 1,989 | 1,503 | 263 | 1,219 | 1,403 | 15.1% |
Balance Sheet
|
|---|
| Cash | 3,320 | 5,449 | 3,681 | 3,596 | 3,738 | 3.9% |
| Short Term Debt | 803 | 34 | 666 | 751 | 349 | -53.5% |
| Long Term Debt | 4,160 | 4,819 | 4,181 | 4,469 | 5,562 | 24.5% |
Cash flow
|
|---|
| Capex | 576 | 569 | 369 | 433 | 549 | 26.6% |
Ratios
|
|---|
| Revenue growth | -12.1% | -7.2% | -0.3% | -3.7% | 0.9% | |
| EBITDA growth | -3.6% | -1.9% | -5.4% | -5.7% | -8.3% | |
| EBITDA Margin | 12.4% | 13.1% | 12.4% | 12.1% | 11.0% | -1.1% |
| Net Income Margin | 7.0% | 5.7% | 1.0% | 4.8% | 5.5% | 0.7% |
| CAPEX, % of revenue | 2.0% | 2.2% | 1.4% | 1.7% | 2.1% | 0.4% |
| ROIC | 21.6% | 26.3% | 12.8% | 26.0% | 27.9% | 2.0% |
| ROE | 25.9% | 23.8% | 4.7% | 28.3% | 38.0% | 9.7% |
| Net Debt/EBITDA | 0.5x | -0.2x | 0.4x | 0.5x | 0.8x | 0.2x |
Revenue and profitability
Bae Systems's Revenue increased slightly on 0.93% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.6 pp from 13.5% to 15.1% in 2015.
Net Income marign increased slightly on 0.67 pp from 4.8% to 5.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 2.1%. The company showed almost no change in CAPEX/Revenue from 2012 to 2015. For the last three years the average CAPEX/Revenue was 1.7%.
Return on investment
The company operates at high and attractive ROIC (27.94%) and ROE (38.00%). ROIC increased slightly on 2.0 pp from 26.0% to 27.9% in 2015. ROE increased on 9.7 pp from 28.3% to 38.0% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is 2.1x. Net Debt / EBITDA surged on 0.2x from 0.5x to 0.8x in 2015. Debt surged on 13.3% in 2015 while cash increased on 3.9% in 2015.
Valuation
The company's trades at EV/EBITDA 0.8x and P/E 0.2x while industy averages are 10.5x and 26.1x. The company's EV/(EBITDA-CAPEX) is 1.1x with the industry average at 4.7x.
Appendix 1: Peers in Aerospace & Defense
Below you can find Bae Systems benchmarking vs. other companies in Aerospace & Defense industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cobham ($85GU) | | | 2.3% | 3.5% | 11.9% |
| Boeing Co ($BOE) | | 18.9% | 6.0% | 4.8% | 5.9% |
| Rolls-Royce Hldgs ($RR.) | | 9.3% | 20.4% | -6.2% | -0.1% |
| Qinetiq Group ($QQ.) | | -13.7% | -9.6% | -41.1% | -2.4% |
| Chemring Group ($BC88) | | | -36.2% | -14.7% | -6.4% |
| |
|---|
| Median (5 companies) | | 9.3% | 2.3% | -6.2% | -0.1% |
|---|
| Bae Systems ($BA.) | | -7.2% | -0.3% | -3.7% | 0.9% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cobham ($85GU) | | 32.9% | 31.8% | 30.3% | 32.0% |
| Chemring Group ($BC88) | | 25.4% | 31.1% | 31.4% | 27.8% |
| Rolls-Royce Hldgs ($RR.) | 22.0% | 22.4% | 21.6% | 23.3% | 23.8% |
| Boeing Co ($BOE) | 18.7% | 16.0% | 15.4% | 15.4% | 14.6% |
| |
|---|
| Median (4 companies) | 20.4% | 23.9% | 26.3% | 26.8% | 25.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Qinetiq Group ($QQ.) | 7.7% | 28.8% | -5.4% | 16.8% | 17.9% |
| Rolls-Royce Hldgs ($RR.) | 13.3% | 13.9% | 14.5% | 14.8% | 16.1% |
| Cobham ($85GU) | | 20.5% | 21.8% | 13.4% | 12.9% |
| Chemring Group ($BC88) | | 11.1% | -0.4% | 16.1% | 11.4% |
| Boeing Co ($BOE) | 10.9% | 9.9% | 9.7% | 10.3% | 9.7% |
| |
|---|
| Median (5 companies) | 10.9% | 13.9% | 9.7% | 14.8% | 12.9% |
|---|
| Bae Systems ($BA.) | 12.4% | 13.1% | 12.4% | 12.1% | 11.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cobham ($85GU) | | 2.8% | 3.2% | 3.4% | 4.7% |
| Rolls-Royce Hldgs ($RR.) | 3.7% | 3.6% | 4.6% | 4.7% | 3.5% |
| Qinetiq Group ($QQ.) | 1.2% | 1.5% | 2.0% | 3.1% | 3.2% |
| Boeing Co ($BOE) | 2.5% | 2.1% | 2.4% | 2.5% | 2.5% |
| Chemring Group ($BC88) | | 4.1% | 2.6% | 2.7% | 2.2% |
| |
|---|
| Median (5 companies) | 2.5% | 2.8% | 2.6% | 3.1% | 3.2% |
|---|
| Bae Systems ($BA.) | 2.0% | 2.2% | 1.4% | 1.7% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Boeing Co ($BOE) | 33.4% | 31.8% | 25.4% | 29.5% | 38.9% |
| Qinetiq Group ($QQ.) | 6.1% | 44.3% | -17.2% | 17.4% | 26.8% |
| Rolls-Royce Hldgs ($RR.) | 18.4% | 18.0% | 15.8% | 13.8% | 15.3% |
| Chemring Group ($BC88) | | 4.9% | -6.3% | 4.4% | 1.4% |
| Cobham ($85GU) | | 13.9% | 9.0% | 2.6% | 0.5% |
| |
|---|
| Median (5 companies) | 18.4% | 18.0% | 9.0% | 13.8% | 15.3% |
|---|
| Bae Systems ($BA.) | 21.6% | 26.3% | 12.8% | 26.0% | 27.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cobham ($85GU) | | 1.0x | 1.2x | 4.9x | 4.5x |
| Chemring Group ($BC88) | | 3.0x | | 2.1x | 3.6x |
| Rolls-Royce Hldgs ($RR.) | -0.1x | -0.7x | -0.8x | -0.3x | 0.1x |
| Boeing Co ($BOE) | 0.3x | 0.0x | 0.1x | -0.3x | -0.1x |
| Qinetiq Group ($QQ.) | 2.1x | 0.3x | | -1.3x | -1.3x |
| |
|---|
| Median (5 companies) | 0.3x | 0.3x | 0.1x | -0.3x | 0.1x |
|---|
| Bae Systems ($BA.) | 0.5x | -0.2x | 0.4x | 0.5x | 0.8x |
