Lpa Group CAPEX jumped on 351% in 2016 and Revenue surged on 31.7%

23 Jan 2017 • About Lpa Group ($LPA) • By InTwits

Lpa Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Lpa Group has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.7%. At the same time it's a lot of higher than industry average of 2.1%.
CAPEX is quite volatile: 1.3 in FY2016, 0.29 in FY2015, 2.5 in FY2014, 0.36 in FY2013, 1.7 in FY2012
The company has highly profitable business model: ROIC is at 13.4%
It operates with high leverage: Net Debt/EBITDA is 1.3x while industry average is 0.2x

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

Lpa Group ($LPA) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	18.352	17.630	16.835	16.265	21.422	31.7%
Gross Profit	5.199	4.790	4.975	4.455	6.280	41.0%
SG&A				2.607	3.050	17.0%
EBITDA	1.219	0.931	0.968	0.711	1.993	180.3%
Net Income	0.737	1.774	0.295	0.694	1.462	110.7%
Balance Sheet
Cash	0.007	0.940	0.525	0.005	0.149	2,880.0%
Short Term Debt	0.973	0.103	0.235	1.174	0.385	-67.2%
Long Term Debt	1.400	1.449	1.784	1.548	2.305	48.9%
Cash flow
Capex	1.676	0.355	2.489	0.287	1.294	350.9%
Ratios
Revenue growth	5.9%	-3.9%	-4.5%	-3.4%	31.7%
EBITDA growth	51.6%	-23.6%	4.0%	-26.5%	180.3%
Gross Margin	28.3%	27.2%	29.6%	27.4%	29.3%	1.9%
EBITDA Margin	6.6%	5.3%	5.7%	4.4%	9.3%	4.9%
Net Income Margin	4.0%	10.1%	1.8%	4.3%	6.8%	2.6%
SG&A, % of revenue				16.0%	14.2%	-1.8%
CAPEX, % of revenue	9.1%	2.0%	14.8%	1.8%	6.0%	4.3%
ROIC	13.8%	6.8%	7.0%	2.1%	13.4%	11.3%
ROE	14.8%	27.5%	4.1%	9.2%	17.5%	8.3%
Net Debt/EBITDA	1.9x	0.7x	1.5x	3.8x	1.3x	-2.5x

Revenue and profitability

The company's Revenue jumped on 31.7% in FY2016. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.9 pp from 4.4% to 9.3% in FY2016.

Gross Margin increased slightly on 1.9 pp from 27.4% to 29.3% in FY2016. SG&A as a % of Revenue decreased slightly on 1.8 pp from 16.0% to 14.2% in FY2016.

Net Income marign increased on 2.6 pp from 4.3% to 6.8% in FY2016.

Capital expenditures (CAPEX) and working capital investments

In FY2016 Lpa Group had CAPEX/Revenue of 6.0%. CAPEX/Revenue increased on 4.0 pp from 2.0% in FY2013 to 6.0% in FY2016. Average CAPEX/Revenue for the last three years was 7.5%.The company invested a big chunk of EBITDA (64.9%) to CAPEX to secure its growth.

Return on investment

The company operates at good ROIC (13.36%) and ROE (17.53%). ROIC jumped on 11.3 pp from 2.1% to 13.4% in FY2016. ROE increased on 8.3 pp from 9.2% to 17.5% in FY2016.

Leverage (Debt)

Debt level is 1.3x Net Debt / EBITDA and 1.3x Debt / EBITDA. Net Debt / EBITDA dropped on 2.5x from 3.8x to 1.3x in FY2016. Debt decreased slightly on 1.2% in FY2016 while cash jumped on 2,880% in FY2016.

Appendix 1: Peers in Electronic & Electrical Equipment

Below you can find Lpa Group benchmarking vs. other companies in Electronic & Electrical Equipment 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
Stadium Group ($SDM)	-8.8%	3.0%	-1.1%	29.0%
Flowgroup ($FLOW)	-92.9%	125,263.6%	141.9%	21.1%
Solid State ($SSP)		21.7%	1.9%	13.9%	20.6%
Zytronic ($ZYT)		-15.4%	9.3%	12.6%	-0.8%
Apc Technology Group ($APC)		58.7%	-4.7%	10.4%	-21.2%
Median (13 companies)	-17.1%	-5.6%	-1.1%	-1.1%	-1.7%
Lpa Group ($LPA)		-3.9%	-4.5%	-3.4%	31.7%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	36.3%	30.8%	36.6%	41.9%	42.8%
Elektron Technology ($EKT)	40.6%	37.5%	34.8%	35.6%	37.2%
Solid State ($SSP)	27.8%	26.1%	29.2%	30.5%	31.8%
Maruwa Co Ltd ($MAW)	31.6%	28.6%	32.8%	30.0%	35.9%
Holders Technology ($HDT)	24.6%	29.3%	24.1%	25.0%
Median (11 companies)	27.3%	26.1%	24.1%	23.2%	33.9%
Lpa Group ($LPA)	28.3%	27.2%	29.6%	27.4%	29.3%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	25.3%	18.8%	22.9%	27.8%	25.6%
Maruwa Co Ltd ($MAW)	22.3%	17.7%	17.8%	14.7%	19.6%
Dewhurst ($DWHA)	12.9%	12.6%	13.7%	14.7%	13.4%
Morgan Advanced Materials ($BA29)	13.7%	13.1%	9.8%	12.8%	14.6%
Stadium Group ($SDM)	6.1%	7.1%	9.9%	12.1%
Median (13 companies)	6.7%	5.4%	4.5%	7.2%	12.3%
Lpa Group ($LPA)	6.6%	5.3%	5.7%	4.4%	9.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Morgan Advanced Materials ($BA29)	2.9%	3.8%	3.7%	7.0%	4.0%
Maruwa Co Ltd ($MAW)	23.8%	15.3%	7.6%	6.5%	4.4%
Zytronic ($ZYT)	3.6%	2.8%	1.4%	4.7%	1.8%
Stadium Group ($SDM)	1.0%	0.8%	0.5%	2.7%
Dewhurst ($DWHA)	2.7%	1.3%	0.9%	1.9%	1.9%
Median (13 companies)	2.9%	2.7%	1.3%	1.4%	1.9%
Lpa Group ($LPA)	9.1%	2.0%	14.8%	1.8%	6.0%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Dewhurst ($DWHA)	29.2%	20.7%	24.5%	27.3%	24.6%
Zytronic ($ZYT)	23.0%	11.9%	17.0%	22.7%	18.1%
Solid State ($SSP)	22.3%	19.7%	44.5%	20.0%	23.0%
Stadium Group ($SDM)	16.5%	17.6%	17.3%	19.3%
Morgan Advanced Materials ($BA29)	17.9%	16.3%	10.9%	18.4%	21.9%
Median (13 companies)	16.5%	6.7%	4.7%	7.8%	13.5%
Lpa Group ($LPA)	13.8%	6.8%	7.0%	2.1%	13.4%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Morgan Advanced Materials ($BA29)	1.4x	1.5x	2.3x	1.8x	1.7x
Solid State ($SSP)	1.4x	1.2x	0.4x	0.7x	0.7x
Elektron Technology ($EKT)	0.7x	1.7x	3.8x	0.8x	0.5x
Volex ($VLX)	-0.1x	1.9x	10.2x	-0.7x	0.3x
Zytronic ($ZYT)	-0.4x	-1.1x	-1.5x	-1.4x	-2.2x
Median (7 companies)	0.3x	0.6x	0.8x	0.3x	0.3x
Lpa Group ($LPA)	1.9x	0.7x	1.5x	3.8x	1.3x

Lpa Group stock price chart

Lpa Group financials

mln.	FY2010	FY2011	FY2012

Revenue	14.716	17.322	18.352
EBITDA	-0.035	0.804	1.219
Net income	-0.383	0.335	0.737
CAPEX	0.083	0.144	1.676
Debt	2.296	1.170	2.373
Cash	0.005	0.006	0.007

About Lpa Group

LPA Group Plc designs, manufactures, and distributes LED lighting, and electronic and electro-mechanical systems for rail, aerospace and defense, aircraft support, infrastructure, marine, and industrial markets primarily in the United Kingdom. The company offers ambient light responsive control systems; imperium LED highbay, a highbay luminaire; LumiBatten, a LED linear luminaire; LumiTray, a LED retrofit gear tray; LED lighting solutions; customized LED down lights; gooseneck LED reading lights; LED dimming unit and power supply units; LED emergency, flood, reading, step, and work lights; LumiMatrix light engine; LumiPanel LED luminaire replacement; LumiSpot for centralized power distribution; LumiStrip fluorescent tube replacement; LumiTile light engine; and marine LED spot lights. It also provides fluorescent lighting solutions for rail vehicles, such as battery back-up system, electronic ballast, and bespoke and long life fluorescent lighting solutions. In addition, the company offers connector systems, including aircraft ground power supply connectors, industrial and rail inter-car electrical connectors, rail electrical cabinets, rail auxiliary power systems, and rail repair and refurbishment systems. Further, it provides electrical components, including circuit breakers, connectors, contactors, fans, relays, snap action switches, and sockets for hermetically sealed relays; mechanical components comprising pipe and cable supports; and electronic and design manufacturing services for analogue and power electronics, printed circuit boards, and luminaries and electronics into enclosure or chassis. Additionally, the company offers LPA Transport+ support solutions, such as asset maintenance, refurbishment, repair, and upgrade solutions. The company also exports its products primarily to Europe, Asia, and Australia. LPA Group Plc was incorporated in 1961 and is based in Saffron Walden, the United Kingdom.