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Zytronic Net Income dropped on 111% and EBITDA Margin dropped on 15.0 pp from 20.6% to 5.6%

08 Dec 2020 • About Zytronic ($ZYT) • By InTwits

Zytronic reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Zytronic is a company in decline: FY2020 revenue growth was -36.9%, 5 years revenue CAGR was -9.8%
  • EBITDA Margin is declining: 5.6% in FY2020 vs. 20.6% in FY2019 vs. 25.6% in FY2016
  • EBITDA Margin is quite volatile: 5.6% in FY2020, 20.6% in FY2019, 23.7% in FY2018, 28.8% in FY2017, 25.6% in FY2016
  • Zytronic has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 0.2%.
  • CAPEX is quite volatile: £0m in FY2020, £1m in FY2019, £0m in FY2018, £0m in FY2017, £0m in FY2016
  • In the last 5 years the company invested considerably less than D&A: £2m vs. £2m
  • The company has unprofitable business model: ROIC is -1.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability


Zytronic's Revenue dropped on 36.9%. During FY2016-FY2020 Revenue growth topped in FY2017 at 8.6% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 15.0 pp from 20.6% to 5.6% in FY2020. During FY2016-FY2020 EBITDA Margin topped in FY2017 at 28.8% and was declining since that time.

Gross Margin dropped on 13.7 pp from 33.8% to 20.1% in FY2020. Gross Margin followed a declining trend at -5.3 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 8.8 pp from 19.0% to 27.7% in FY2020. During FY2016-FY2020 SG&A as a % of Revenue bottomed in FY2017 at 17.4% and was growing since that time.

Net Income margin dropped on 15.7 pp from 13.4% to -2.3% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2017 at 20.0% and was declining since that time.

Investments (CAPEX, working capital and M&A)


In FY2020 the company had CAPEX/Revenue of 1.2%. CAPEX/Revenue decreased slightly on 0.86 pp from 2.1% in FY2017 to 1.2% in FY2020. It's average level of CAPEX/Revenue for the last three years was 1.6%.

Return on investment


The company operates at negative ROIC (-1.9%) and ROE (-1.2%). ROIC dropped on 12.9 pp from 11.1% to -1.9% in FY2020. ROE dropped on 11.4 pp from 10.2% to -1.2% in FY2020. ROIC declined at -5.0 pp per annum in the last 5 years. ROE declined at -4.8 pp per annum in FY2016-FY2020.

Leverage (Debt)


The company has no debt. Cash increased on 6.8%.

Financial and operational results


FY ended 30 Sep 2020

Zytronic ($ZYT) key annual financial indicators

mln. £201620172018201920202020/2019
P&L
Revenue21.08722.89222.28820.10412.680-36.9%
Gross Profit9.0169.4118.2416.7932.550-62.5%
SG&A4.3653.9844.1003.8123.514-7.8%
EBITDA5.3946.6005.2884.1370.711-82.8%
EBIT4.1412.981
Interest expence0.021
Tax0.5410.366
Net Income4.0874.5883.6472.691-0.294-110.9%
Balance Sheet
Cash12.76314.09914.62613.14314.0386.8%
Accounts Receivable3.738
Inventory3.0213.034
Short Term Debt1.1480.0000.0000.0000.000
Long Term Debt0.0000.0000.0000.0000.000
Cash flow
Capex0.3870.4720.2730.5060.153-69.8%
Dividends4.0004.000
Ratios
Revenue growth-0.8%8.6%-2.6%-9.8%-36.9%
EBITDA growth-8.8%22.4%-19.9%-21.8%-82.8%

Gross Margin42.8%41.1%37.0%33.8%20.1%-13.7%
EBITDA Margin25.6%28.8%23.7%20.6%5.6%-15.0%
EBIT Margin18.6%14.8%
SG&A, % of revenue20.7%17.4%18.4%19.0%27.7%8.8%
Net Income Margin19.4%20.0%16.4%13.4%-2.3%-15.7%
CAPEX, % of revenue1.8%2.1%1.2%2.5%1.2%-1.3%

ROIC18.1%20.9%15.1%11.1%-1.9%-12.9%
ROE18.6%18.3%13.6%10.2%-1.2%-11.4%
Net Debt/EBITDA-2.2x-2.1x-2.8x-3.2x-19.7x-16.6x
People
Insider ownership1.7%1.7%
Employees195186
Revenue/Employee, th. £114108

Peers in Electronic & Electrical Equipment


Below we provide Zytronic 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 FY2016 FY2017 FY2018 FY2019 FY2020
Univision Engineering ($UVEL)-24.0%16.6%154.3%-24.6%
Dewhurst ($DWHA)2.6%12.2%3.1%3.6%-
Gooch & Housego ($GHH)-30.2%11.5%3.4%-5.5%
Thorpe(F.W.) ($TFW)-18.6%4.0%0.9%2.4%
Lpa Group ($LPA)31.7%4.9%24.5%-30.2%-
 
Median (6 companies)-2.0%10.7%4.0%2.2%-1.5%
Zytronic ($ZYT)-8.6%-2.6%-9.8%-36.9%


Top companies by Gross margin, %

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Image Scan Hldgs ($IGE)42.3%38.3%47.5%54.1%49.5%
Thorpe(F.W.) ($TFW)43.8%44.0%46.8%45.5%44.1%
Gooch & Housego ($GHH)37.5%41.1%40.1%34.8%32.1%
Univision Engineering ($UVEL)32.3%34.3%32.5%22.5%19.4%
 
Median (4 companies)31.8%32.2%40.1%34.8%38.1%
Zytronic ($ZYT)42.8%41.1%37.0%33.8%20.1%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Thorpe(F.W.) ($TFW)22.5%21.3%22.0%22.2%19.1%
Dewhurst ($DWHA)13.4%13.6%14.2%14.6%-
Gooch & Housego ($GHH)17.3%17.3%14.1%13.4%13.8%
Univision Engineering ($UVEL)3.7%9.8%13.5%12.9%7.1%
Lpa Group ($LPA)9.3%11.6%9.9%2.8%-
 
Median (6 companies)8.3%9.8%13.8%13.2%10.5%
Zytronic ($ZYT)25.6%28.8%23.7%20.6%5.6%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Dewhurst ($DWHA)1.9%1.8%2.1%9.3%-
Thorpe(F.W.) ($TFW)2.9%5.1%5.5%6.2%6.2%
Gooch & Housego ($GHH)11.3%5.2%4.7%4.5%4.5%
Lpa Group ($LPA)6.0%7.3%1.8%2.0%-
Univision Engineering ($UVEL)0.7%0.5%0.7%0.9%0.4%
 
Median (6 companies)1.7%1.6%1.6%3.3%2.4%
Zytronic ($ZYT)1.8%2.1%1.2%2.5%1.2%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Univision Engineering ($UVEL)2.1%7.8%12.0%25.7%5.9%
Thorpe(F.W.) ($TFW)18.5%19.0%18.1%16.3%12.2%
Dewhurst ($DWHA)24.6%24.1%18.9%14.1%-
Gooch & Housego ($GHH)10.8%12.1%8.3%5.7%4.1%
Lpa Group ($LPA)13.4%15.9%13.8%-1.2%-
 
Median (6 companies)9.4%13.4%14.5%9.9%6.9%
Zytronic ($ZYT)18.1%20.9%15.1%11.1%-1.9%


Top companies by Net Debt / EBITDA

Top  FY2016 FY2017 FY2018 FY2019 FY2020
Gooch & Housego ($GHH)-0.8x-0.8x0.6x0.8x0.9x
Univision Engineering ($UVEL)-7.6x-2.5x-1.3x-1.0x-0.0x
Thorpe(F.W.) ($TFW)-0.9x-1.1x-1.2x-1.3x-2.0x
Image Scan Hldgs ($IGE)-9.0x-2.4x---7.7x
 
Median (4 companies)0.4x-0.5x-1.0x-1.0x-1.0x
Zytronic ($ZYT)-2.2x-2.1x-2.8x-3.2x-19.7x