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Qinetiq Group CAPEX surged on 49.8% and Revenue increased on 6.4%

24 May 2018 • About Qinetiq Group ($QQ.) • By InTwits

Qinetiq Group reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Qinetiq Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 2.7%.
  • CAPEX is quite volatile: 526 BHDm in 2018, 465 BHDm in 2017, 108 BHDm in 2016, 49 BHDm in 2015, 51 BHDm in 2014
  • The company has highly profitable business model: ROIC is 20.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


Qinetiq Group's Revenue increased on 6.4%. Revenue pursued a growing trend in the last 5 years. EBITDA Margin showed almost no change in FY2018.

Net Income margin increased slightly on 0.83 pp from 15.7% to 16.6% in FY2018. Net Income margin pursued a growing trend in FY2014-FY2018.

Investments (CAPEX, working capital and M&A)


Qinetiq Group's CAPEX/Revenue was 5.5% in FY2018. Qinetiq Group's CAPEX/Revenue increased on 2.3 pp from 3.2% in FY2015 to 5.5% in FY2018. It's average level of CAPEX/Revenue for the last three years was 4.4%. CAPEX as a % of Revenue stuck to a growing trend at 0.55 pp per annum in FY2014-FY2018.

Return on investment


The company operates at high and attractive ROIC (20.6%) and ROE (21.6%). ROIC decreased on 9.3 pp from 29.9% to 20.6% in FY2018. ROE decreased on 7.1 pp from 28.8% to 21.6% in FY2018. During the last 5 years ROE topped in FY2016 at 34.1% and was declining since that time.

Leverage (Debt)


The company paid down all the debt in FY2018. Cash jumped on 20.0%.

Financial and operational results


FY ended 31 Mar 2018

Qinetiq Group ($QQ.) key annual financial indicators

mln. £201420152016201720182018/2017
P&L
Revenue782.6763.8755.7783.1833.06.4%
EBITDA131.7136.9102.9161.4172.97.1%
Net Income-12.7104.7106.1123.3138.112.0%
Balance Sheet
Cash322.2184.3263.5211.8254.120.0%
Short Term Debt2.71.40.00.80.0-100.0%
Long Term Debt154.10.00.00.30.0-100.0%
Cash flow
Capex24.224.828.630.746.049.8%
Ratios
Revenue growth-41.1%-2.4%-1.1%3.6%6.4%
EBITDA growth-284.5%3.9%-24.8%56.9%7.1%

EBITDA Margin16.8%17.9%13.6%20.6%20.8%0.1%
Net Income Margin-1.6%13.7%14.0%15.7%16.6%0.8%
CAPEX, % of revenue3.1%3.2%3.8%3.9%5.5%1.6%

ROIC17.4%26.8%24.7%29.9%20.6%-9.3%
ROE-3.1%31.0%34.1%28.8%21.6%-7.1%
Net Debt/EBITDA-1.3x-1.3x-2.6x-1.3x-1.5x-0.2x

Peers in Aerospace & Defense


Below you can find Qinetiq Group 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 FY2014 FY2015 FY2016 FY2017 FY2018
Velocity Composites Plc ($VEL)-4.9%0.6%46.2%
Chemring Group ($BC88)-14.7%-6.4%26.5%14.8%
Rolls-Royce Hldgs ($RR.)-0.1%9.0%9.0%
Cobham ($85GU)11.9%-6.2%5.6%
Boeing Co ($BOE)4.8%5.9%-1.6%-1.2%
 
Median (6 companies)-4.9%0.4%-0.5%7.3%
Qinetiq Group ($QQ.)-2.4%-1.1%3.6%6.4%


Top companies by Gross margin, %

Top  FY2014 FY2015 FY2016 FY2017 FY2018
Cobham ($85GU)30.3%32.0%19.4%29.0%
Rolls-Royce Hldgs ($RR.)23.3%23.8%20.4%19.5%
Boeing Co ($BOE)15.4%14.6%14.6%18.6%
Velocity Composites Plc ($VEL)20.5%24.0%23.8%18.4%
 
Median (4 companies)23.3%24.0%20.4%19.0%


Top companies by EBITDA margin, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Cobham ($85GU)13.4%12.9%-27.3%16.0%
Boeing Co ($BOE)10.3%9.7%8.2%13.2%
Rolls-Royce Hldgs ($RR.)14.8%16.1%6.6%12.5%
Bae Systems ($BA.)12.1%11.0%11.2%11.4%
Chemring Group ($BC88)16.1%11.4%14.6%10.6%
 
Median (6 companies)12.8%11.2%7.4%12.0%
Qinetiq Group ($QQ.)16.8%17.9%13.6%20.6%20.8%


Top companies by CAPEX/Revenue, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Rolls-Royce Hldgs ($RR.)4.7%3.5%3.9%4.7%
Cobham ($85GU)3.4%4.7%4.3%3.4%
Chemring Group ($BC88)2.7%2.2%2.2%2.3%
Bae Systems ($BA.)1.7%2.1%2.3%2.1%
Boeing Co ($BOE)2.5%2.5%2.8%1.9%
 
Median (6 companies)3.1%2.4%2.5%2.2%
Qinetiq Group ($QQ.)3.1%3.2%3.8%3.9%5.5%


Top companies by ROIC, %

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Boeing Co ($BOE)29.5%38.9%38.5%82.7%
Bae Systems ($BA.)26.0%27.9%26.0%18.4%
Rolls-Royce Hldgs ($RR.)13.8%15.3%-1.0%14.8%
Cobham ($85GU)2.6%0.5%-36.8%5.9%
Chemring Group ($BC88)4.4%1.4%5.8%3.3%
 
Median (6 companies)13.8%21.6%15.9%10.3%
Qinetiq Group ($QQ.)17.4%26.8%24.7%29.9%20.6%


Top companies by Net Debt / EBITDA

Top 5 FY2014 FY2015 FY2016 FY2017 FY2018
Chemring Group ($BC88)2.1x3.6x1.3x1.4x
Cobham ($85GU)4.9x4.5x1.2x
Bae Systems ($BA.)0.5x0.8x0.8x0.4x
Rolls-Royce Hldgs ($RR.)-0.3x0.1x0.6x0.3x
Boeing Co ($BOE)-0.3x-0.1x0.1x0.2x
 
Median (5 companies)0.1x0.4x0.6x0.4x
Qinetiq Group ($QQ.)-1.3x-1.3x-2.6x-1.3x-1.5x