Orbital Corp. Ltd. :OEC-AU: Earnings Analysis: For the six months ended December 31, 2015 : July 22, 2016

Orbital Corp. Ltd. reports financial results for the half-year ended December 31, 2015.

Highlights

  • Summary numbers: Revenues of AUD 7.07 million, Net Earnings of AUD 1.56 million.
  • Gross margins widened from -27.69% to -24.87% compared to the same period last year, operating (EBITDA) margins now -47.62% from -26.97%.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2013-06-30 2013-12-31 2014-06-30 2014-12-31 2015-12-31
Relevant Numbers (Semi-Annual)
Revenues 13.64 11.19 6.97 7.89 7.07
Revenue Growth (YOY) 47.03 -12.86 -48.94 -29.49 1.49
Earnings 0.22 -0.53 2.21 -1.23 1.56
Earnings Growth (YOY) 106.88 -460.54 916.59 -132.08 -29.42
Net Margin 1.59 -4.74 31.67 -15.59 22.02
EPS 0 -0.01 0.04 -0.03 0.03
Return on Equity 2.34 -5.39 21.58 -11.43 13.07
Return on Assets 1.13 -2.87 11.65 -6.48 6.88

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Market Share Versus Profits

Revenues History
Earnings History

Compared to the same period last year, OEC-AU‘s change in revenue was close to the amount of its change in earnings. It remains to be seen how the rest of its peer group’s results will turn out and if OEC-AU‘s performance is a sign of any major shift in the composition of market share in this sector. Also, for comparison purposes, revenues changed by -10.42% and earnings by 226.59% compared to the previous period.

Earnings Growth Analysis

The company’s earnings declined year-on-year largely because of the increases in operating costs. Its operating margins (EBITDA margins) went from -26.97% to -47.62%. This decline in earnings would have been worse except for the fact that the company showed improvement in gross margins, from -27.69% to -24.87%. For comparison, gross margins were -16.43% and EBITDA margins -43.23% in the immediate last period.

Margins

Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History

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Company Profile

Orbital Corp. Ltd. provides engine and vehicle technologies and alternative fuel solutions. It operates through four business segments: System Sales, Synerject, Consulting Services and Royalties & Licences. The System Sales segment develops and supplies engines, propulsion systems, engine management systems and fuel system components for original equipment manufacturers and the motor vehicle aftermarket and also operates in alternative fuel markets and provides systems that range from heavy fuels for unmanned aerial vehicles to liquid propane gas for motor vehicles. The Synerject segment supplies engine management systems and fuel systems to the non-automotive market. The Consulting Services segment provides engineering consulting services in engine design, development and supply of combustion systems, fuel and engine management systems, along with engine and vehicle testing and certification. The Royalties & Licences segment earns licensing and royalty from production using its FlexDITM systems and technology. The company was founded in 1972 and is headquartered in Balcatta, Australia.

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