Clarke(T.) reports 629% EBITDA growth and 1.8 pp EBITDA Margin growth from 0.34% to 2.1%

22 Mar 2016 • About Clarke(T.) ($CTO) • By InTwits

Clarke(T.) reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

EBITDA Margin is quite volatile: 2.1% in 2015, 0.3% in 2014, 1.5% in 2013, 1.4% in 2012, 3.5% in 2011
Clarke(T.) has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
The company has highly profitable business model: ROIC is at 19.6%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Clarke(T.) ($CTO) key annual financial indicators

mln. £	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	183.8	193.8	217.1	207.9	242.4	16.6%
Gross Profit	26.1	23.9	23.4	22.4	27.5	22.8%
SG&A	23.0	22.3	21.2	22.6	23.2	2.7%
EBITDA	6.5	2.7	3.2	0.7	5.1	628.6%
Net Income	4.0	0.8	1.1	-0.6	0.1	-116.7%
Balance Sheet
Cash	0.6	5.6	1.0	10.3	11.7	13.6%
Short Term Debt	0.1	0.1	0.1	0.1	0.1	0.0%
Long Term Debt	0.1	0.0	0.0	5.0	5.0	0.0%
Cash flow
Capex	0.7	0.6	0.4	0.5	0.5	0.0%
Ratios
Revenue growth	2.7%	5.5%	12.0%	-4.2%	16.6%
EBITDA growth	-8.1%	-58.2%	18.0%	-78.1%	628.6%
Gross Margin	14.2%	12.3%	10.8%	10.8%	11.3%	0.6%
EBITDA Margin	3.5%	1.4%	1.5%	0.3%	2.1%	1.8%
Net Income Margin	2.2%	0.4%	0.5%	-0.3%	0.0%	0.3%
SG&A, % of revenue	12.5%	11.5%	9.8%	10.9%	9.6%	-1.3%
CAPEX, % of revenue	0.4%	0.3%	0.2%	0.2%	0.2%	-0.0%
ROIC	21.1%	6.9%	9.9%	-0.4%	19.6%	20.0%
ROE	16.0%	3.4%	4.5%	-2.8%	0.5%	3.3%
Net Debt/EBITDA	-0.1x	-2.0x	-0.3x	-7.4x	-1.3x	6.1x

Revenue and profitability

The company's Revenue jumped on 16.6% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.2 pp from 6.0% to 3.8% in FY2015.

Gross Margin increased slightly on 0.57 pp from 10.8% to 11.3% in 2015. SG&A as a % of Revenue decreased slightly on 1.3 pp from 10.9% to 9.6% in 2015.

Net Income marign showed almost no change in 2015.

Capital expenditures (CAPEX) and working capital investments

Clarke(T.)'s CAPEX/Revenue was 0.21% in 2015. Clarke(T.) showed almost no change in CAPEX/Revenue from 2012 to 2015. Average CAPEX/Revenue for the last three years was 0.21%.

Return on investment

The company operates at good ROIC (19.60%) while ROE is low (0.52%). ROIC jumped on 20.0 pp from -0.44% to 19.6% in 2015. ROE increased on 3.3 pp from -2.8% to 0.52% in 2015.

Leverage (Debt)

Company's Net Debt / EBITDA is -1.3x and Debt / EBITDA is 1.0x. Net Debt / EBITDA jumped on 6.1x from -7.4x to -1.3x in 2015. Debt didn't change in 2015 while cash jumped on 13.6% in 2015.

Appendix 1: Peers in Construction & Materials

Below we provide Clarke(T.) benchmarking against other companies in Construction & Materials 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
Kingspan Group ($KGP)		5.3%	9.1%	6.4%	46.7%
Accsys Technologies ($AXS)		9.5%	25.5%	78.0%	37.5%
Billington Hldgs ($BILN)		-34.0%	8.4%	14.5%	25.8%
Crh ($CRH)			-0.3%	4.9%	25.0%
Titon Hldgs ($TON)		-9.0%	8.2%	22.3%	15.6%
Median (21 companies)	29.0%	2.6%	5.5%	8.9%	1.6%
Clarke(T.) ($CTO)		5.5%	12.0%	-4.2%	16.6%

Top companies by Gross margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Inch Kenneth Kajang Rubber ($IKK)	37.8%	46.5%	24.5%	21.7%	51.7%
Swp Group ($SWP)	39.2%	43.0%	48.1%	39.2%	49.7%
Heath(Samuel)& Sons ($HSM)	49.2%	49.5%	47.3%	48.6%	47.6%
James Halstead ($JHD)		41.2%	41.6%	41.0%	41.7%
Michelmersh Brick Hldgs ($MBH)	29.9%	35.3%	28.4%	31.1%	38.2%
Median (19 companies)	25.6%	25.4%	25.2%	27.0%	30.1%
Clarke(T.) ($CTO)	14.2%	12.3%	10.8%	10.8%	11.3%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Lucky Cement Ltd ($LKCS)	25.0%	31.5%	26.8%	24.4%	26.5%
James Halstead ($JHD)		20.2%	19.8%	20.1%	20.9%
Michelmersh Brick Hldgs ($MBH)	11.8%	10.6%	7.9%	14.1%	20.3%
LSR Group OJSC ($LSRG)	19.8%	20.2%	19.5%	22.9%	19.3%
Swp Group ($SWP)	7.4%	8.7%	7.4%	9.7%	14.6%
Median (21 companies)	8.6%	8.7%	7.4%	9.7%	9.7%
Clarke(T.) ($CTO)	3.5%	1.4%	1.5%	0.3%	2.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Inch Kenneth Kajang Rubber ($IKK)	15.9%	74.2%	5.4%	12.8%	54.9%
Lucky Cement Ltd ($LKCS)	7.3%	3.2%	5.2%	6.9%	12.0%
Billington Hldgs ($BILN)	3.6%	1.0%	1.1%	2.9%	10.8%
Low & Bonar ($BD46)		3.5%	2.8%	4.6%	9.1%
Superglass Hldgs ($SPGH)	6.4%	12.9%	14.2%	3.4%	7.9%
Median (21 companies)	2.1%	2.2%	2.5%	2.6%	2.9%
Clarke(T.) ($CTO)	0.4%	0.3%	0.2%	0.2%	0.2%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
James Halstead ($JHD)		49.3%	46.2%	46.7%	45.3%
Alumasc Group ($ALU)	12.6%	6.5%	17.5%	22.6%	36.0%
Heath(Samuel)& Sons ($HSM)	8.1%	9.7%	8.7%	19.7%	32.0%
Aukett Swanke Group ($AUK)	-41.2%	2.7%	11.4%	27.3%	31.6%
Lucky Cement Ltd ($LKCS)	13.5%	23.8%	22.9%	20.3%	20.0%
Median (21 companies)	5.2%	4.0%	7.2%	7.4%	8.0%
Clarke(T.) ($CTO)	21.1%	6.9%	9.9%	-0.4%	19.6%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Crh ($CRH)		2.0x	3.6x	1.6x	3.1x
Low & Bonar ($BD46)		2.7x	2.1x	2.1x	2.4x
Saint-Gobain(Compagnie De) ($COD)	1.8x	2.1x	2.0x	2.1x	1.4x
Kingspan Group ($KGP)	1.4x	1.2x	0.6x	0.8x	1.1x
Swp Group ($SWP)	2.2x	1.8x	2.2x	1.0x	0.9x
Median (17 companies)	1.3x	1.7x	0.8x	0.5x	-0.1x
Clarke(T.) ($CTO)	-0.1x	-2.0x	-0.3x	-7.4x	-1.3x

Clarke(T.) stock price chart

Clarke(T.) financials

mln.	FY2010	FY2011	FY2012

Revenue	179.0	183.8	193.8
EBITDA	7.058	6.486	2.713
Net income	3.604	4.009	0.848
CAPEX	0.297	0.699	0.594
Debt	1.349	0.253	0.169
Cash	8.252	0.624	5.572

About Clarke(T.)

TClarke plc, together with its subsidiaries, operates as a building services contractor in the United Kingdom. It operates in three divisions: the South, the North, and Scotland. The company offers electrical and mechanical contracting and related services to the construction industry and end users; and works on data and power projects. It also provides various building systems and solutions, such as structured cabling systems, network infrastructure and security, data center and server room installation, wireless networks, IP CCTV solutions, IP access control systems, IP TV distribution, IP telephony, fire alarm integration, audio visual installations, central monitoring and control systems, graphical user interfaces, and building management systems. In addition, the company develops, invests in, and markets green technologies, including PV farms and recycling operations in commercial, residential, and industrial sectors; and provides facilities management services comprising the care of offices, commercial, or institutional buildings, such as hospitals, office complexes, arenas, schools, and residential developments. Further, it offers manufacturing services, such as precision prefabrication and engineering services; design and build services; and green and ICT services for residential and hotel projects, as well as design, procurement, installation, testing, and commissioning services for rail and airport construction sectors. The company serves global media, financial services, and manufacturing organizations; contractors in the construction industry; house builders; and a range of public and private sector clients. TClarke plc was founded in 1889 is headquartered in London, the United Kingdom.