Newmark Security Net Income dropped on 42.7% in 2016 and Revenue decreased on 4.5%
17 Aug 2016 • About Newmark Security (
$NWT) • By InTwits
Newmark Security reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Newmark Security has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's in pair with industry average of 1.9%.
- CAPEX is quite volatile: 0.25 in FY2016, 0.57 in FY2015, 0.54 in FY2014, 0.49 in FY2013, 0.20 in FY2012
- The company has business model with low profitability: ROIC is at 7.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Newmark Security ($NWT) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 13.094 | 18.316 | 19.171 | 22.854 | 21.823 | -4.5% |
| Gross Profit | 5.268 | 7.395 | 7.430 | 9.712 | 9.098 | -6.3% |
| SG&A | | | 6.446 | 7.444 | 7.900 | 6.1% |
| EBITDA | 1.073 | 3.384 | 3.712 | 3.494 | 2.357 | -32.5% |
| Net Income | 0.177 | 0.140 | 0.857 | 2.143 | 1.227 | -42.7% |
Balance Sheet
|
|---|
| Cash | 2.100 | 1.128 | 1.441 | 4.202 | 4.299 | 2.3% |
| Short Term Debt | 2.147 | 0.294 | 0.196 | 0.143 | 0.099 | -30.8% |
| Long Term Debt | 0.113 | 0.184 | 0.124 | 0.113 | 0.064 | -43.4% |
Cash flow
|
|---|
| Capex | 0.136 | 0.249 | 0.324 | 0.288 | 0.205 | -28.8% |
Ratios
|
|---|
| Revenue growth | 3.5% | 39.9% | 4.7% | 19.2% | -4.5% | |
| EBITDA growth | -23.8% | 215.4% | 9.7% | -5.9% | -32.5% | |
| Gross Margin | 40.2% | 40.4% | 38.8% | 42.5% | 41.7% | -0.8% |
| EBITDA Margin | 8.2% | 18.5% | 19.4% | 15.3% | 10.8% | -4.5% |
| Net Income Margin | 1.4% | 0.8% | 4.5% | 9.4% | 5.6% | -3.8% |
| SG&A, % of revenue | | | 33.6% | 32.6% | 36.2% | 3.6% |
| CAPEX, % of revenue | 1.0% | 1.4% | 1.7% | 1.3% | 0.9% | -0.3% |
| ROIC | 1.2% | 1.6% | 15.2% | 16.9% | 7.9% | -9.0% |
| ROE | 1.6% | 1.3% | 7.6% | 17.0% | 8.8% | -8.3% |
| Net Debt/EBITDA | 0.1x | -0.2x | -0.3x | -1.1x | -1.8x | -0.6x |
Revenue and profitability
The company's Revenue decreased on 4.5% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.7 pp from 8.0% to 11.7% in FY2016.
Gross Margin decreased slightly on 0.81 pp from 42.5% to 41.7% in FY2016. SG&A as a % of Revenue increased on 3.6 pp from 32.6% to 36.2% in FY2016.
Net Income marign decreased on 3.8 pp from 9.4% to 5.6% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.94% in FY2016. Newmark Security's CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 1.3%.
Return on investment
The company operates at low ROIC (7.93%) and ROE (8.77%). ROIC decreased on 9.0 pp from 16.9% to 7.9% in FY2016. ROE decreased on 8.3 pp from 17.0% to 8.8% in FY2016.
Leverage (Debt)
Debt level is -1.8x Net Debt / EBITDA and 0.1x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from -1.1x to -1.8x in FY2016. Debt dropped on 36.3% in FY2016 while cash increased on 2.3% in FY2016.
Valuation
The company's trades at EV/EBITDA 2.0x and P/E 7.2x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 2.2x with the industry average at 19.0x.
Appendix 1: Peers in Support Services
Below you can find Newmark Security benchmarking vs. other companies in Support Services 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Camco Clean Energy ($CCE) | | 88.0% | -54.7% | 99.4% | |
| Optimal Payments ($OPAY) | 39.9% | 41.5% | 44.0% | 68.1% | |
| Inspired Energy ($INSE) | 83.8% | 44.8% | 42.2% | 40.2% | |
| 21St Century Technology ($C21) | 0.1% | -22.8% | -16.6% | 35.5% | |
| Ibex Global Solutions ($IBEX) | 7.4% | 35.7% | 30.0% | 29.8% | |
| |
|---|
| Median (55 companies) | 4.9% | 6.9% | 5.0% | 6.6% | 0.9% |
|---|
| Newmark Security ($NWT) | | 39.9% | 4.7% | 19.2% | -4.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Inspired Energy ($INSE) | 94.6% | 86.8% | 78.7% | 76.2% | |
| Ienergizer Ltd ($IBPO) | 56.2% | 78.4% | 76.8% | 72.7% | 71.3% |
| Grafenia ($GRA) | 53.4% | 54.3% | 56.1% | 70.8% | 66.3% |
| Vianet Group ($VNET) | 53.3% | 51.3% | 58.8% | 69.2% | 70.1% |
| Prime People ($PRP) | 63.4% | 58.3% | 57.7% | 61.4% | 59.2% |
| |
|---|
| Median (49 companies) | 28.2% | 28.5% | 29.2% | 28.4% | 28.3% |
|---|
| Newmark Security ($NWT) | 40.2% | 40.4% | 38.8% | 42.5% | 41.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 21St Century Technology ($C21) | 13.4% | -0.2% | 36.0% | 44.8% | |
| Northgate ($67GX) | 41.2% | 40.4% | 40.6% | 39.4% | 38.3% |
| Inspired Energy ($INSE) | 46.2% | 48.5% | 1.5% | 35.4% | |
| Vianet Group ($VNET) | 18.6% | 17.3% | 19.7% | 27.1% | 22.1% |
| Vp ($VP.) | 23.9% | 24.5% | 24.2% | 26.2% | 28.4% |
| |
|---|
| Median (55 companies) | 6.7% | 6.3% | 6.8% | 6.9% | 9.6% |
|---|
| Newmark Security ($NWT) | 8.2% | 18.5% | 19.4% | 15.3% | 10.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Vp ($VP.) | 21.4% | 17.7% | 21.6% | 25.7% | 24.1% |
| Sagentia Group ($SAG) | 1.9% | 1.4% | 1.5% | 25.2% | |
| Nature Group ($NGR) | 14.3% | 7.2% | 5.6% | 22.9% | |
| Augean ($AUG) | 9.8% | 15.9% | 12.3% | 12.3% | |
| Falkland Islands Hldgs ($FKL) | 3.7% | 6.8% | 12.9% | 11.9% | 4.8% |
| |
|---|
| Median (55 companies) | 1.1% | 1.1% | 1.0% | 1.0% | 1.2% |
|---|
| Newmark Security ($NWT) | 1.0% | 1.4% | 1.7% | 1.3% | 0.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 21St Century Technology ($C21) | 20.3% | -2.9% | 45.6% | 111.0% | |
| Inspired Energy ($INSE) | 63.9% | 65.5% | -7.5% | 28.0% | |
| Petards Group ($PEG) | 35.5% | -78.0% | 24.7% | 23.9% | |
| Servoca ($SVCA) | 1.0% | 7.8% | 14.9% | 22.3% | |
| Rtc Group ($RTC) | 14.6% | 17.6% | 19.9% | 22.2% | |
| |
|---|
| Median (55 companies) | 9.9% | 7.9% | 9.3% | 10.2% | 8.6% |
|---|
| Newmark Security ($NWT) | 1.2% | 1.6% | 15.2% | 16.9% | 7.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Redhall Group ($RHL) | 22.8x | 5.8x | 6.6x | 16.8x | |
| Mitsubishi Corp ($MBC) | 9.9x | 15.9x | 14.3x | 12.5x | 25.0x |
| Ienergizer Ltd ($IBPO) | 6.3x | 2.8x | 3.0x | 4.0x | 2.4x |
| Ceps ($CEPS) | | 3.0x | 6.6x | 3.8x | |
| Kellan Group(The ($KLN) | | | 6.5x | 3.6x | |
| |
|---|
| Median (51 companies) | 0.8x | 0.7x | 0.6x | 0.4x | 1.1x |
|---|
| Newmark Security ($NWT) | 0.1x | -0.2x | -0.3x | -1.1x | -1.8x |
