Holders Technology revenue growth accelerated from 5.1% in FY2015 to 8.6% in FY2016

17 Feb 2017 • About Holders Technology ($HDT) • By InTwits

Holders Technology reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Holders Technology doesn't have a profitable business model yet: FY2016 ROIC is -9.6%
The company operates at negative EBITDA Margin: -2.6%
Holders Technology spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 is 0.0%. Average EBITDA Margin for the same period was -0.4%0
Holders Technology has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
The company has unprofitable business model: ROIC is at -9.6%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Holders Technology ($HDT) key annual financial indicators

mln. £	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	15.605	14.265	13.478	11.195	11.380	1.7%
Gross Profit	3.842	4.181	3.254	2.799	2.841	1.5%
SG&A				3.016	3.148	4.4%
EBITDA	0.088	0.215	-0.249	-0.015	-0.300	1,900.0%
Net Income	-0.374	-0.179	-0.373	-0.361	-0.395	9.4%
Balance Sheet
Cash	0.700	1.290	0.634	0.443	0.781	76.3%
Short Term Debt	0.000	0.000	0.000	0.000	0.000
Long Term Debt	0.000	0.000	0.000	0.000	0.000
Cash flow
Capex	0.074	0.048	0.074	0.161	0.110	-31.7%
Ratios
Revenue growth	-20.5%	-8.6%	-5.5%	-16.9%	1.7%
EBITDA growth	-82.9%	144.3%	-215.8%	-94.0%	1,900.0%
Gross Margin	24.6%	29.3%	24.1%	25.0%	25.0%	-0.0%
EBITDA Margin	0.6%	1.5%	-1.8%	-0.1%	-2.6%	-2.5%
Net Income Margin	-2.4%	-1.3%	-2.8%	-3.2%	-3.5%	-0.2%
SG&A, % of revenue				26.9%	27.7%	0.7%
CAPEX, % of revenue	0.5%	0.3%	0.5%	1.4%	1.0%	-0.5%
ROIC	-1.1%	2.1%	-7.5%	-2.4%	-9.6%	-7.2%
ROE	-6.7%	-3.5%	-7.8%	-8.6%	-10.2%	-1.6%
Net Debt/EBITDA	-8.0x	-6.0x				0.0x

Revenue and profitability

The company's Revenue increased slightly on 1.7% in FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.5 pp from -0.13% to -2.6% in FY2016.

Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased slightly on 0.72 pp from 26.9% to 27.7% in FY2016.

Net Income marign showed almost no change in FY2016.

Capital expenditures (CAPEX) and working capital investments

Holders Technology's CAPEX/Revenue was 0.97% in FY2016. CAPEX/Revenue increased slightly on 0.63 pp from 0.34% in FY2013 to 0.97% in FY2016. It's average level of CAPEX/Revenue for the last three years was 0.98%.

Return on investment

The company operates at negative ROIC (-9.65%) and ROE (-10.22%). ROIC decreased on 7.2 pp from -2.4% to -9.6% in FY2016. ROE decreased slightly on 1.6 pp from -8.6% to -10.2% in FY2016.

Leverage (Debt)

The company has no debt. Cash surged on 76.3% in FY2016.

Appendix 1: Peers in Electronic & Electrical Equipment

Below we provide Holders Technology 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%
Solid State ($SSP)		21.7%	1.9%	13.9%	20.6%
Zytronic ($ZYT)		-15.4%	9.3%	12.6%	-0.8%
Apc Technology Group ($APC)		58.7%	-4.7%	10.4%	-21.2%
Median (13 companies)	-8.8%	-4.9%	-1.1%	-1.1%	-1.7%
Holders Technology ($HDT)		-8.6%	-5.5%	-16.9%	1.7%

Top companies by Gross margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	36.3%	30.8%	36.6%	41.9%	42.8%
Elektron Technology ($EKT)	40.6%	37.5%	34.8%	35.6%	37.2%
Solid State ($SSP)	27.8%	26.1%	29.2%	30.5%	31.8%
Maruwa Co Ltd ($MAW)	31.6%	28.6%	32.8%	30.0%	35.9%
Lpa Group ($LPA)	28.3%	27.2%	29.6%	27.4%	29.3%
Median (11 companies)	27.8%	26.1%	29.2%	23.2%	31.8%
Holders Technology ($HDT)	24.6%	29.3%	24.1%	25.0%	25.0%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Zytronic ($ZYT)	25.3%	18.8%	22.9%	27.8%	25.6%
Maruwa Co Ltd ($MAW)	22.3%	17.7%	17.8%	14.7%	19.6%
Dewhurst ($DWHA)	12.9%	12.6%	13.7%	14.7%	13.4%
Morgan Advanced Materials ($BA29)	13.7%	13.1%	9.8%	12.8%	14.6%
Stadium Group ($SDM)	6.1%	7.1%	9.9%	12.1%
Median (13 companies)	6.7%	5.4%	5.7%	7.2%	10.3%
Holders Technology ($HDT)	0.6%	1.5%	-1.8%	-0.1%	-2.6%

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 ($ZYT)	3.6%	2.8%	1.4%	4.7%	1.8%
Stadium Group ($SDM)	1.0%	0.8%	0.5%	2.7%
Dewhurst ($DWHA)	2.7%	1.3%	0.9%	1.9%	1.9%
Median (13 companies)	3.0%	2.7%	1.4%	1.4%	2.0%
Holders Technology ($HDT)	0.5%	0.3%	0.5%	1.4%	1.0%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Dewhurst ($DWHA)	29.2%	20.7%	24.5%	27.3%	24.6%
Zytronic ($ZYT)	23.0%	11.9%	17.0%	22.7%	18.1%
Solid State ($SSP)	22.3%	19.7%	44.5%	20.0%	23.0%
Stadium Group ($SDM)	16.5%	17.6%	17.3%	19.3%
Morgan Advanced Materials ($BA29)	17.9%	16.3%	10.9%	18.4%	21.9%
Median (13 companies)	16.5%	6.8%	7.0%	7.8%	11.2%
Holders Technology ($HDT)	-1.1%	2.1%	-7.5%	-2.4%	-9.6%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Walsin Lihwa Corp ($WALS)	5.3x	8.7x	3.9x	4.6x	2.7x
Morgan Advanced Materials ($BA29)	1.4x	1.5x	2.3x	1.8x	1.7x
Lpa Group ($LPA)	1.9x	0.7x	1.5x	3.8x	1.3x
Solid State ($SSP)	1.4x	1.2x	0.4x	0.7x	0.7x
Elektron Technology ($EKT)	0.7x	1.7x	3.8x	0.8x	0.5x
Median (9 companies)	1.0x	0.9x	1.2x	0.5x	0.5x

Holders Technology stock price chart

Holders Technology financials

mln.	FY2010	FY2011	FY2012

Revenue	16.314	19.636	15.605
EBITDA	0.745	0.516	0.088
Net income	0.507	0.264	-0.374
CAPEX	0.118	0.137	0.074
Debt	0.056	0.026	0.000
Cash	0.888	0.067	0.700

About Holders Technology

Holders Technology plc, together with its subsidiaries, distributes special laminates and materials for printed circuit board (PCB) industry in the United Kingdom, rest of Europe, and Asia. The company operates through PCB and LED segments. It offers a varied and complementary product range of materials, consumables, tools, and equipment, as well as services, including tooling, sawing, drill re-grinding, and spindle servicing. The company also distributes LED components, such as LEDs and modules, remote phosphor solutions, optics, heatsinks, drivers, laminates, and soldermask, as well as LED products, such as highbays, tubes, panels, downlights, and tracklights; and provides LED solutions for retail, commercial, and industrial applications. It serves printed circuit board manufacturers who serve telecommunications, medical, defense, automotive, and consumer sectors. Holders Technology plc was founded in 1972 and is based in Borehamwood, the United Kingdom.