Velocity Composites Plc revenue decreased slightly on 0.66% and EBITDA Margin increased on 2.5 pp from -3.4% to -0.90%
28 Jan 2020 • About Velocity Composites Plc (
$VEL) • By InTwits
Velocity Composites Plc reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -0.9%
- EBITDA Margin is quite volatile: -0.9% in FY2019, -3.4% in FY2018, -0.9% in FY2017, 4.4% in FY2016, 8.0% in FY2015
- Velocity Composites Plc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's a lot of higher than industry average of 3.8%.
- CAPEX is quite volatile: £12m in FY2019, £11m in FY2018, £7m in FY2017, £4m in FY2016, £7m in FY2015
- The company has unprofitable business model: ROIC is -6.9%
- It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Velocity Composites Plc's Revenue decreased slightly on 0.66%. During FY2015-FY2019 Revenue growth topped in FY2017 at 46.2% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.5 pp from -3.4% to -0.90% in FY2019. EBITDA Margin stuck to a declining trend at -2.6 pp per annum in FY2015-FY2019.
Gross Margin increased on 3.3 pp from 18.3% to 21.7% in FY2019. During FY2015-FY2019 Gross Margin bottomed in FY2018 at 18.3%. SG&A as a % of Revenue decreased slightly on 1.5 pp from 22.8% to 21.3% in FY2019.
Net Income margin increased slightly on 1.4 pp from -4.1% to -2.6% in FY2019. During FY2015-FY2019 Net Income margin bottomed in FY2018 at -4.1%.
Investments (CAPEX, working capital and M&A)
Velocity Composites Plc's CAPEX/Revenue was 0.64% in FY2019. The company's CAPEX/Revenue showed almost no change from FY2016 to FY2019. Average CAPEX/Revenue for the last three years was 0.94%.
Return on investment
The company operates at negative ROIC (-6.9%) and ROE (-7.1%). ROIC increased on 4.2 pp from -11.1% to -6.9% in FY2019. ROE increased on 3.2 pp from -10.3% to -7.1% in FY2019. During the last 5 years ROIC bottomed in FY2018 at -11.1%. During FY2015-FY2019 ROE bottomed in FY2016 at -36.1% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.4x and Debt / EBITDA is . Debt increased slightly on 1.0% while cash dropped on 27.5%.
Velocity Composites Plc has no short term refinancing risk: cash is higher than short term debt (2,829.8%).
Financial and operational results
FY ended 31 Oct 2019
Velocity Composites Plc ($VEL) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 14.528 | 14.614 | 21.369 | 24.478 | 24.316 | -0.7% |
| Gross Profit | 3.483 | 3.479 | 3.931 | 4.487 | 5.269 | 17.4% |
| SG&A | 2.215 | 3.770 | 3.481 | 5.574 | 5.177 | -7.1% |
| EBITDA | 1.166 | 0.647 | -0.189 | -0.834 | -0.220 | |
| Net Income | 1.016 | -0.274 | -0.700 | -0.994 | -0.636 | |
Balance Sheet
|
|---|
| Cash | 0.161 | 0.039 | 5.414 | 4.726 | 3.424 | -27.5% |
| Short Term Debt | 0.114 | 0.092 | 0.145 | 0.116 | 0.121 | 4.3% |
| Long Term Debt | 0.198 | 0.106 | 0.211 | 0.171 | 0.169 | -1.2% |
Cash flow
|
|---|
| Capex | 0.250 | 0.120 | 0.271 | 0.220 | 0.156 | -29.1% |
Ratios
|
|---|
| Revenue growth | -4.9% | 0.6% | 46.2% | 14.5% | -0.7% | |
| EBITDA growth | 17.5% | -44.5% | -129.2% | 341.3% | -73.6% | |
|
|---|
| Gross Margin | 24.0% | 23.8% | 18.4% | 18.3% | 21.7% | 3.3% |
| EBITDA Margin | 8.0% | 4.4% | -0.9% | -3.4% | -0.9% | 2.5% |
| SG&A, % of revenue | 15.2% | 25.8% | 16.3% | 22.8% | 21.3% | -1.5% |
| Net Income Margin | 7.0% | -1.9% | -3.3% | -4.1% | -2.6% | 1.4% |
| CAPEX, % of revenue | 1.7% | 0.8% | 1.3% | 0.9% | 0.6% | -0.3% |
|
|---|
| ROIC | 93.2% | 32.2% | -7.9% | -11.1% | -6.9% | 4.2% |
| ROE | 177.3% | -36.1% | -13.1% | -10.3% | -7.1% | 3.2% |
| Net Debt/EBITDA | 0.1x | 0.2x | | | |
Peers in Aerospace & Defense
Below we provide Velocity Composites Plc benchmarking against other companies in Aerospace & Defense 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Boeing Co ($BOE) | 5.9% | -1.6% | -1.2% | 8.3% | |
| Qinetiq Group ($QQ.) | -2.4% | -1.1% | 3.6% | 6.4% | |
| Chemring Group ($BC88) | | 26.5% | 14.8% | -45.7% | 12.7% |
| |
|---|
| Median (3 companies) | 0.9% | -1.3% | 4.6% | 6.4% | 12.7% |
|---|
| Velocity Composites Plc ($VEL) | | 0.6% | 46.2% | 14.5% | -0.7% |
Top companies by Gross margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Boeing Co ($BOE) | 14.6% | 14.6% | 18.6% | 19.4% | |
| |
|---|
| Median (1 company) | 25.8% | 19.9% | 19.5% | 19.4% | |
|---|
| Velocity Composites Plc ($VEL) | 24.0% | 23.8% | 18.4% | 18.3% | 21.7% |
Top companies by EBITDA margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Qinetiq Group ($QQ.) | 17.9% | 13.6% | 20.6% | 20.8% | |
| Boeing Co ($BOE) | 9.7% | 8.2% | 13.2% | 13.9% | |
| Chemring Group ($BC88) | 11.4% | 14.6% | 10.6% | 4.7% | 18.1% |
| |
|---|
| Median (3 companies) | 12.1% | 9.7% | 12.9% | 13.9% | 18.1% |
|---|
| Velocity Composites Plc ($VEL) | 8.0% | 4.4% | -0.9% | -3.4% | -0.9% |
Top companies by CAPEX/Revenue, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Chemring Group ($BC88) | 2.2% | 2.2% | 2.3% | 6.3% | 12.2% |
| Qinetiq Group ($QQ.) | 3.2% | 3.8% | 3.9% | 5.5% | |
| Boeing Co ($BOE) | 2.5% | 2.8% | 1.9% | 1.7% | |
| |
|---|
| Median (3 companies) | 2.9% | 3.3% | 2.8% | 5.5% | 12.2% |
|---|
| Velocity Composites Plc ($VEL) | 1.7% | 0.8% | 1.3% | 0.9% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Boeing Co ($BOE) | 38.9% | 38.5% | 82.7% | 78.8% | |
| Qinetiq Group ($QQ.) | 26.8% | 24.7% | 29.9% | 20.6% | |
| Chemring Group ($BC88) | 1.4% | 5.8% | 3.3% | -3.7% | 7.9% |
| Cobham ($85GU) | 0.5% | -36.8% | 5.9% | | |
| Bae Systems ($BA.) | 27.9% | 26.0% | 18.4% | | |
| |
|---|
| Median (6 companies) | 21.0% | 15.3% | 16.6% | 20.6% | 7.9% |
|---|
| Velocity Composites Plc ($VEL) | 93.2% | 32.2% | -7.9% | -11.1% | -6.9% |
Top companies by Net Debt / EBITDA
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Chemring Group ($BC88) | 3.6x | 1.3x | 1.4x | 5.8x | 1.2x |
| Boeing Co ($BOE) | -0.1x | 0.1x | 0.2x | 0.4x | |
| Qinetiq Group ($QQ.) | -1.3x | -2.6x | -1.3x | -1.5x | |
| |
|---|
| Median (3 companies) | 0.4x | 0.6x | 0.3x | 0.4x | 1.2x |
|---|
