Newmark Security Net Income jumped on 496% while Revenue decreased on 4.2%
09 Sep 2020 • About Newmark Security (
$NWT) • By InTwits
Newmark Security reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Newmark Security is a company in decline: FY2020 revenue growth was -4.2%, 5 years revenue CAGR was -3.9%
- EBITDA Margin is quite volatile: 7.1% in FY2020, 4.7% in FY2019, -1.8% in FY2018, -2.4% in FY2017, 10.8% in FY2016
- Newmark Security has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 2.3%
- CAPEX is quite volatile: £0m in FY2020, £0m in FY2019, £2m in FY2018, £0m in FY2017, £0m in FY2016
- In the last 5 years the company invested considerably less than D&A: £2m vs. £8m
- The company has potentially unprofitable business model: ROIC is 3.2%
- It operates with high leverage: Net Debt/EBITDA is 1.0x while industry average is 0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 4.2%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.4 pp from 4.7% to 7.1% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2017 at -2.4% and was growing since that time.
Gross Margin showed almost no change in FY2020. During FY2016-FY2020 Gross Margin bottomed in FY2017 at 27.9% and was growing since that time. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin increased on 5.0 pp from 0.97% to 6.0% in FY2020. During FY2016-FY2020 Net Income margin bottomed in FY2017 at -32.7% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 Newmark Security had CAPEX/Revenue of 0.80%. The company showed small CAPEX/Revenue decline of 0.52 pp from 1.3% in FY2017 to 0.80% in FY2020. It's average CAPEX/Revenue for the last three years was 3.9%. During the last 5 years CAPEX as a % of Revenue topped in FY2018 at 9.8% and was declining since that time.
Return on investment
The company operates at good ROE (14.7%) while ROIC is low (3.2%). ROIC showed almost no change in FY2020. ROE surged on 11.8 pp from 2.9% to 14.7% in FY2020. During FY2016-FY2020 ROE bottomed in FY2017 at -45.2% and was growing since that time.
Leverage (Debt)
Debt level is 1.0x Net Debt / EBITDA and 1.5x Debt / EBITDA. Net Debt / EBITDA surged on 1.1x from -0.1x to 1.0x in FY2020. Debt surged on 112% while cash dropped on 40.4%.
Newmark Security has short term refinancing risk: cash is only 45.9% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 5.3x and P/E 5.0x.
Financial and operational results
FY ended 30 Apr 2020
Newmark Security ($NWT) key annual financial indicators| mln. £ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 21.823 | 16.036 | 16.052 | 19.583 | 18.767 | -4.2% |
| Gross Profit | 9.098 | 4.474 | 5.792 | 7.705 | 7.449 | -3.3% |
| SG&A | 7.900 | 9.707 | 6.831 | 7.061 | 6.845 | -3.1% |
| EBITDA | 2.357 | -0.385 | -0.295 | 0.911 | 1.327 | 45.7% |
| EBIT | 1.156 | -5.233 | -1.877 | | | |
| Net Income | 1.227 | -5.236 | -1.868 | 0.189 | 1.127 | 496.3% |
Balance Sheet
|
|---|
| Cash | 4.299 | 1.370 | 1.069 | 1.041 | 0.620 | -40.4% |
| Accounts Receivable | 3.715 | 3.286 | 2.834 | | | |
| Inventory | 1.406 | 1.646 | 1.608 | | | |
| Short Term Debt | 0.099 | 0.079 | 0.491 | 0.796 | 1.351 | 69.7% |
| Long Term Debt | 0.064 | 0.098 | 0.053 | 0.149 | 0.654 | 338.9% |
Cash flow
|
|---|
| Capex | 0.205 | 0.211 | 1.576 | 0.196 | 0.150 | -23.5% |
| Dividends | 0.000 | 0.000 | | | | |
Ratios
|
|---|
| Revenue growth | -4.5% | -26.5% | 0.1% | 22.0% | -4.2% | |
| EBITDA growth | -32.5% | -116.3% | -23.4% | -408.8% | 45.7% | |
|
|---|
| Gross Margin | 41.7% | 27.9% | 36.1% | 39.3% | 39.7% | 0.3% |
| EBITDA Margin | 10.8% | -2.4% | -1.8% | 4.7% | 7.1% | 2.4% |
| EBIT Margin | 5.3% | -32.6% | -11.7% | | |
| SG&A, % of revenue | 36.2% | 60.5% | 42.6% | 36.1% | 36.5% | 0.4% |
| Net Income Margin | 5.6% | -32.7% | -11.6% | 1.0% | 6.0% | 5.0% |
| CAPEX, % of revenue | 0.9% | 1.3% | 9.8% | 1.0% | 0.8% | -0.2% |
|
|---|
| ROIC | 7.9% | -43.5% | -22.7% | 3.6% | 3.2% | -0.5% |
| ROE | 8.8% | -45.2% | -25.4% | 2.9% | 14.7% | 11.8% |
| Net Debt/EBITDA | -1.8x | | | -0.1x | 1.0x | 1.1x |
People
|
|---|
| Insider ownership | 34.1% | 34.1% | 34.1% | | | |
| Employees | 161 | | | | | |
| Revenue/Employee, th. £ | 136 | | | | | |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Mobilityone Ltd ($MBO) | - | 37.9% | 47.4% | 35.0% | - |
| Rws Hldgs ($RWS) | 28.1% | 34.5% | 86.6% | 16.2% | - |
| Sthree ($STHR) | 13.1% | 16.1% | 12.9% | 6.9% | - |
| Camco Clean Energy ($CCE) | -2.5% | 9.3% | 97,196.8% | 4.3% | - |
| Christie Group ($CTG) | - | 11.1% | 6.2% | 2.6% | - |
| |
|---|
| Median (8 companies) | 4.5% | 7.0% | 9.2% | 3.4% | - |
|---|
| Newmark Security ($NWT) | - | -26.5% | 0.1% | 22.0% | -4.2% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Rws Hldgs ($RWS) | 42.8% | 43.8% | 38.8% | 40.1% | - |
| Camco Clean Energy ($CCE) | 20.9% | 30.5% | 38.7% | 38.2% | - |
| Ricardo ($RCDO) | 39.0% | 37.7% | 37.7% | 35.1% | - |
| Sthree ($STHR) | 26.9% | 25.8% | 25.5% | 25.5% | - |
| Driver Group ($DRV) | 20.7% | 24.6% | 26.0% | 23.1% | - |
| |
|---|
| Median (7 companies) | 27.1% | 28.4% | 26.0% | 25.5% | - |
|---|
| Newmark Security ($NWT) | 41.7% | 27.9% | 36.1% | 39.3% | 39.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Rws Hldgs ($RWS) | 26.4% | 25.5% | 20.8% | 23.4% | - |
| Camco Clean Energy ($CCE) | -51.7% | -65.5% | 15.7% | 18.2% | - |
| Ricardo ($RCDO) | 14.7% | 14.5% | 11.9% | 11.6% | - |
| Christie Group ($CTG) | 4.8% | 6.5% | 6.7% | 10.5% | - |
| Driver Group ($DRV) | -4.9% | 4.5% | 5.5% | 6.4% | - |
| |
|---|
| Median (8 companies) | 5.3% | 5.7% | 6.9% | 8.4% | - |
|---|
| Newmark Security ($NWT) | 10.8% | -2.4% | -1.8% | 4.7% | 7.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Camco Clean Energy ($CCE) | 0.7% | 4.4% | 4.6% | 4.2% | - |
| Ricardo ($RCDO) | 2.6% | 1.8% | 2.0% | 2.0% | - |
| Rws Hldgs ($RWS) | 0.6% | 0.9% | 0.6% | 1.1% | - |
| Croma Security Solutions Group ($CSSG) | 0.4% | 0.5% | 0.8% | 1.0% | - |
| Christie Group ($CTG) | 1.3% | 0.8% | 0.9% | 0.7% | - |
| |
|---|
| Median (8 companies) | 1.1% | 0.9% | 0.9% | 0.9% | - |
|---|
| Newmark Security ($NWT) | 0.9% | 1.3% | 9.8% | 1.0% | 0.8% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Christie Group ($CTG) | - | - | 472.3% | 82.9% | - |
| Sthree ($STHR) | 46.2% | 43.4% | 36.3% | 40.2% | - |
| Mobilityone Ltd ($MBO) | 15.0% | -8.6% | -35.1% | 29.9% | - |
| Driver Group ($DRV) | -19.2% | 7.6% | 13.2% | 14.7% | - |
| Rws Hldgs ($RWS) | 23.5% | 20.2% | 12.8% | 12.3% | - |
| |
|---|
| Median (9 companies) | 8.0% | 7.9% | 8.9% | 12.3% | - |
|---|
| Newmark Security ($NWT) | 7.9% | -43.5% | -22.7% | 3.6% | 3.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Camco Clean Energy ($CCE) | - | - | 2.9x | 2.8x | - |
| Mobilityone Ltd ($MBO) | 1.0x | - | - | 1.3x | - |
| Ricardo ($RCDO) | 0.7x | 0.7x | 0.6x | 1.1x | - |
| Christie Group ($CTG) | 1.3x | 0.5x | 0.4x | 0.6x | - |
| Rws Hldgs ($RWS) | 0.0x | 0.5x | 1.0x | 0.4x | - |
| |
|---|
| Median (8 companies) | 0.4x | 0.5x | 0.6x | 0.5x | - |
|---|
| Newmark Security ($NWT) | -1.8x | - | - | -0.1x | 1.0x |
