Solid State reports 44.1% Net Income growth and 1.5 pp EBITDA Margin growth from 9.7% to 11.2%
05 Jul 2016 • About Solid State (
$SSP) • By InTwits
Solid State reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Solid State is a fast growth stock: FY2016 revenue growth was 20.6%, 5 year revenue CAGR was 15.8% at FY2016 ROIC 23.0%
- EBITDA Margin is quite volatile: 11.2% in FY2016, 9.7% in FY2015, 17.3% in FY2014, 6.3% in FY2013, 6.7% in FY2012
- Solid State has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 23.3%.
- CAPEX is quite volatile: 0.90 in FY2016, 0.52 in FY2015, 0.40 in FY2014, 0.31 in FY2013, 0.29 in FY2012
- The company has highly profitable business model: ROIC is at 23.0%
- It operates with high leverage: Net Debt/EBITDA is 0.7x while industry average is 0.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Solid State ($SSP) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 25.874 | 31.495 | 32.085 | 36.559 | 44.100 | 20.6% |
| Gross Profit | 7.197 | 8.234 | 9.357 | 11.164 | 14.028 | 25.7% |
| SG&A | | | 7.131 | 8.101 | 9.720 | 20.0% |
| EBITDA | 1.737 | 1.990 | 5.551 | 3.561 | 4.940 | 38.7% |
| Net Income | 1.317 | 1.487 | 1.876 | 2.892 | 4.168 | 44.1% |
Balance Sheet
|
|---|
| Cash | 0.042 | 1.098 | 0.685 | 1.738 | 0.994 | -42.8% |
| Short Term Debt | 2.432 | 3.402 | 3.038 | 4.201 | 4.398 | 4.7% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.289 | 0.314 | 0.403 | 0.525 | 0.900 | 71.5% |
Ratios
|
|---|
| Revenue growth | 22.2% | 21.7% | 1.9% | 13.9% | 20.6% | |
| EBITDA growth | 43.3% | 14.5% | 178.9% | -35.8% | 38.7% | |
| Gross Margin | 27.8% | 26.1% | 29.2% | 30.5% | 31.8% | 1.3% |
| EBITDA Margin | 6.7% | 6.3% | 17.3% | 9.7% | 11.2% | 1.5% |
| Net Income Margin | 5.1% | 4.7% | 5.8% | 7.9% | 9.5% | 1.5% |
| SG&A, % of revenue | | | 22.2% | 22.2% | 22.0% | -0.1% |
| CAPEX, % of revenue | 1.1% | 1.0% | 1.3% | 1.4% | 2.0% | 0.6% |
| ROIC | 22.3% | 19.7% | 44.5% | 20.0% | 23.0% | 3.0% |
| ROE | 29.1% | 26.1% | 22.5% | 25.4% | 29.6% | 4.2% |
| Net Debt/EBITDA | 1.4x | 1.2x | 0.4x | 0.7x | 0.7x | -0.0x |
Revenue and profitability
Solid State's Revenue surged on 20.6% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.88 pp from 7.2% to 8.1% in FY2016.
Gross Margin increased slightly on 1.3 pp from 30.5% to 31.8% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign increased slightly on 1.5 pp from 7.9% to 9.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 the company had CAPEX/Revenue of 2.0%. The company's CAPEX/Revenue increased slightly on 1.0 pp from 1.00% in FY2013 to 2.0% in FY2016. It's average CAPEX/Revenue for the last three years was 1.6%.
Return on investment
The company operates at high and attractive ROIC (23.05%) and ROE (29.61%). ROIC increased on 3.0 pp from 20.0% to 23.0% in FY2016. ROE increased on 4.2 pp from 25.4% to 29.6% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.7x and Debt / EBITDA is 0.9x. Net Debt / EBITDA showed almost no change in FY2016. Debt increased on 4.7% in FY2016 while cash dropped on 42.8% in FY2016.
Valuation
The company's trades at EV/EBITDA 5.5x and P/E 5.7x while industy averages are 15.6x and 19.1x. Solid State's EV/(EBITDA-CAPEX) is 6.7x with the industry average at 19.0x.
Appendix 1: Peers in Electronic & Electrical Equipment
Below we provide Solid State benchmarking against other companies in Electronic & Electrical Equipment 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 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Stadium Group ($SDM) | -8.8% | 3.0% | -1.1% | 29.0% | |
| Flowgroup ($FLOW) | -92.9% | 125,263.6% | 141.9% | 21.1% | |
| Zytronic ($ZYT) | -0.3% | -15.4% | 9.3% | 12.6% | |
| Apc Technology Group ($APC) | -5.4% | 58.7% | -4.7% | 10.4% | |
| Volex ($VLX) | | -8.6% | -15.4% | 5.8% | -13.2% |
| |
|---|
| Median (13 companies) | -5.4% | -5.6% | -3.8% | -1.4% | -4.6% |
|---|
| Solid State ($SSP) | | 21.7% | 1.9% | 13.9% | 20.6% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Zytronic ($ZYT) | 36.3% | 30.8% | 36.6% | 41.9% | |
| Elektron Technology ($EKT) | 40.6% | 37.5% | 34.8% | 35.6% | 37.2% |
| Maruwa Co Ltd ($MAW) | 31.6% | 28.6% | 32.8% | 30.0% | 35.9% |
| Lpa Group ($LPA) | 28.3% | 27.2% | 29.6% | 27.4% | |
| Holders Technology ($HDT) | 24.6% | 29.3% | 24.1% | 25.0% | |
| |
|---|
| Median (11 companies) | 27.3% | 27.2% | 24.1% | 23.2% | 35.9% |
|---|
| Solid State ($SSP) | 27.8% | 26.1% | 29.2% | 30.5% | 31.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Zytronic ($ZYT) | 25.3% | 18.8% | 22.9% | 27.8% | |
| Maruwa Co Ltd ($MAW) | 22.3% | 17.7% | 17.8% | 14.7% | 19.6% |
| Dewhurst ($DWHA) | 12.9% | 12.6% | 13.7% | 14.7% | |
| Morgan Advanced Materials ($BA29) | 13.7% | 13.1% | 9.8% | 12.8% | 14.6% |
| Stadium Group ($SDM) | 6.1% | 7.1% | 9.9% | 12.1% | |
| |
|---|
| Median (13 companies) | 6.6% | 5.3% | 4.5% | 4.4% | 11.4% |
|---|
| Solid State ($SSP) | 6.7% | 6.3% | 17.3% | 9.7% | 11.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Morgan Advanced Materials ($BA29) | 2.9% | 3.8% | 3.7% | 7.0% | 4.0% |
| Maruwa Co Ltd ($MAW) | 23.8% | 15.3% | 7.6% | 6.5% | 4.4% |
| Zytronic ($ZYT) | 3.6% | 2.8% | 1.4% | 4.7% | |
| Stadium Group ($SDM) | 1.0% | 0.8% | 0.5% | 2.7% | |
| Dewhurst ($DWHA) | 2.7% | 1.3% | 0.9% | 1.9% | |
| |
|---|
| Median (13 companies) | 3.0% | 2.7% | 1.4% | 1.4% | 2.9% |
|---|
| Solid State ($SSP) | 1.1% | 1.0% | 1.3% | 1.4% | 2.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dewhurst ($DWHA) | 29.2% | 20.7% | 24.5% | 27.3% | |
| Zytronic ($ZYT) | 23.0% | 11.9% | 17.0% | 22.7% | |
| Stadium Group ($SDM) | 16.5% | 17.6% | 17.3% | 19.3% | |
| Morgan Advanced Materials ($BA29) | 17.9% | 16.3% | 10.9% | 18.4% | 21.9% |
| Elektron Technology ($EKT) | 24.1% | 7.9% | 3.3% | 9.9% | 7.0% |
| |
|---|
| Median (13 companies) | 13.8% | 6.7% | 4.7% | 3.9% | 8.0% |
|---|
| Solid State ($SSP) | 22.3% | 19.7% | 44.5% | 20.0% | 23.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Walsin Lihwa Corp ($WALS) | 5.3x | 8.7x | 3.9x | 4.6x | |
| Lpa Group ($LPA) | 1.9x | 0.7x | 1.5x | 3.8x | |
| Morgan Advanced Materials ($BA29) | 1.4x | 1.5x | 2.3x | 1.8x | 1.7x |
| Elektron Technology ($EKT) | 0.7x | 1.7x | 3.8x | 0.8x | 0.5x |
| Stadium Group ($SDM) | -0.0x | -0.0x | 1.2x | 0.3x | |
| |
|---|
| Median (9 companies) | 0.3x | 0.3x | 1.4x | 0.3x | 0.4x |
|---|
| Solid State ($SSP) | 1.4x | 1.2x | 0.4x | 0.7x | 0.7x |
