Petards Group CAPEX jumped on 672% in 2016 and Revenue jumped on 17.1%

14 Mar 2017 • About Petards Group ($PEG) • By InTwits

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

EBITDA Margin is quite volatile: 10.0% in FY2016, 9.6% in FY2015, 7.5% in FY2014, -16.3% in FY2013, 6.7% in FY2012
Petards Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 22.1%.
CAPEX is quite volatile: 0.91 in FY2016, 0.12 in FY2015, 0.070 in FY2014, 0.040 in FY2013, 0.074 in FY2012
The company has highly profitable business model: ROIC is at 22.7%

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

Petards Group ($PEG) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	9.013	6.259	13.462	13.072	15.311	17.1%
Gross Profit	3.888	2.526	4.092	4.599	5.563	21.0%
SG&A			3.323	3.664	4.468	21.9%
EBITDA	0.607	-1.022	1.015	1.260	1.537	22.0%
Net Income	0.200	-2.293	0.620	0.765	0.910	19.0%
Balance Sheet
Cash	0.082	1.440	1.488	2.478	2.322	-6.3%
Short Term Debt	0.094	0.000	0.000	0.000	0.007
Long Term Debt	0.000	1.518	1.524	1.543	1.521	-1.4%
Cash flow
Capex	0.074	0.040	0.070	0.118	0.911	672.0%
Ratios
Revenue growth	-25.7%	-30.6%	115.1%	-2.9%	17.1%
EBITDA growth	-17.2%	-268.4%	-199.3%	24.1%	22.0%
Gross Margin	43.1%	40.4%	30.4%	35.2%	36.3%	1.2%
EBITDA Margin	6.7%	-16.3%	7.5%	9.6%	10.0%	0.4%
Net Income Margin	2.2%	-36.6%	4.6%	5.9%	5.9%	0.1%
SG&A, % of revenue			24.7%	28.0%	29.2%	1.2%
CAPEX, % of revenue	0.8%	0.6%	0.5%	0.9%	5.9%	5.0%
ROIC	35.5%	-78.0%	24.7%	23.9%	22.7%	-1.2%
ROE	21.3%	-141.0%	30.0%	27.4%	24.7%	-2.7%
Net Debt/EBITDA	0.0x		0.0x	-0.7x	-0.5x	0.2x

Revenue and profitability

The company's Revenue surged on 17.1% in FY2016. EBITDA Margin showed almost no change in FY2016.

Gross Margin increased slightly on 1.2 pp from 35.2% to 36.3% in FY2016. SG&A as a % of Revenue increased slightly on 1.2 pp from 28.0% to 29.2% in FY2016.

Net Income marign showed almost no change in FY2016.

Capital expenditures (CAPEX) and working capital investments

Petards Group's CAPEX/Revenue was 5.9% in FY2016. CAPEX/Revenue increased on 5.3 pp from 0.64% in FY2013 to 5.9% in FY2016. For the last three years the average CAPEX/Revenue was 2.5%.Petards Group invested a big chunk of EBITDA (59.3%) to CAPEX to fuel its growth.

Return on investment

The company operates at high and attractive ROIC (22.70%) and ROE (24.70%). ROIC decreased slightly on 1.2 pp from 23.9% to 22.7% in FY2016. ROE decreased on 2.7 pp from 27.4% to 24.7% in FY2016.

Leverage (Debt)

Company's Net Debt / EBITDA is -0.5x and Debt / EBITDA is 1.0x. Net Debt / EBITDA jumped on 0.2x from -0.7x to -0.5x in FY2016. Debt decreased slightly on 0.97% in FY2016 while cash decreased on 6.3% in FY2016.

Valuation

Petards Group's trades at EV/EBITDA 6.1x and P/E 11.2x while industy averages are 15.6x and 19.1x. Petards Group's EV/(EBITDA-CAPEX) is 14.9x with the industry average at 19.0x.

Appendix 1: Peers in Support Services

Below you can find Petards Group 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)		41.5%	44.0%	68.1%	63.1%
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 ($IBEX)		35.7%	30.0%	29.8%	7.0%
Median (55 companies)	2.4%	8.0%	4.7%	6.9%	3.9%
Petards Group ($PEG)		-30.6%	115.1%	-2.9%	17.1%

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 ($PRP)	63.4%	58.3%	57.7%	61.4%	59.2%
Median (49 companies)	28.2%	28.5%	29.2%	28.4%	27.0%
Petards Group ($PEG)	43.1%	40.4%	30.4%	35.2%	36.3%

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)	6.8%	6.4%	6.8%	6.9%	7.1%
Petards Group ($PEG)	6.7%	-16.3%	7.5%	9.6%	10.0%

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%	6.6%
Nature Group ($NGR)	14.3%	7.2%	5.6%	22.9%
Augean ($AUG)	9.8%	15.9%	12.3%	12.3%
Falkland Islands Hldgs ($FKL)	3.7%	6.8%	12.9%	11.9%	4.8%
Median (55 companies)	1.1%	1.1%	1.1%	1.1%	1.0%
Petards Group ($PEG)	0.8%	0.6%	0.5%	0.9%	5.9%

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%
Servoca ($SVCA)	1.0%	7.8%	14.9%	22.3%	22.8%
Rtc Group ($RTC)	14.6%	17.6%	19.9%	22.2%	15.4%
Mortice Ltd ($MORT)	32.2%	29.2%	19.6%	21.9%	14.5%
Median (55 companies)	9.5%	7.9%	9.3%	10.2%	10.3%
Petards Group ($PEG)	35.5%	-78.0%	24.7%	23.9%	22.7%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Redhall Group ($RHL)	22.8x	5.8x	6.6x	16.8x	16.2x
Mitsubishi Corp ($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 ($KLN)			6.5x	3.6x
Median (51 companies)	0.8x	0.6x	0.6x	0.4x	0.7x
Petards Group ($PEG)	0.0x		0.0x	-0.7x	-0.5x

Petards Group stock price chart

Petards Group financials

mln.	FY2010	FY2011	FY2012

Revenue	11.392	12.127	9.013
EBITDA	0.473	0.733	0.607
Net income	0.364	0.312	0.200
CAPEX	0.053	0.046	0.074
Debt	2.003	1.501	0.094
Cash	0.000	0.098	0.082

About Petards Group

Petards Group plc, together with its subsidiaries, engages in the development, supply, and maintenance of technologies used in advanced security, surveillance, and ruggedized electronic applications in the United Kingdom, Continental Europe, and internationally. The company offers various products for the transport sector, including eyeTrain on-board CCTV systems, eyeTrain forward facing CCTV systems, eyeTrain passenger counting systems, eyeTrain driver only operation systems, and eyeTrain pantograph surveillance systems, as well as eyeTrain ProVida automatic number plate recognition (ANPR) systems for capturing and monitoring vehicle registration marks and overview images. It also provides ANPR cameras, front facing camera modules, video surveillance cameras, car video surveillance systems, mobile surveillance and speed enforcement systems, speed measurement systems, mobile speed enforcement systems, mobile thermal imaging IR cameras, and re-deployable ANPR systems for the emergency services sector. In addition, the company offers various products for the defense sector, such as rugged electronic control systems, airborne and land-based electronic countermeasure systems, ANPR cameras and technology, and mobile thermal imaging IR cameras, as well as rugged communications and information systems solutions for airborne, maritime, and land applications. Further, it provides various engineering services, such as product development, design, installation, support, maintenance, exchange and repair, product obsolescence support and management, operations management, manufacturing, post design, refurbishment, technical publication, and other services. Petards Group plc was incorporated in 1994 and is based in Gateshead, the United Kingdom.