Kemet Corporation reports 430% Net Income growth in 2018 and 4.0 pp EBITDA Margin growth from 9.7% to 13.6%
05/17/2018 • About Kemet Corporation (
$KEM) • By InTwits
Kemet Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 13.6% in FY2018, 9.7% in FY2017, 9.7% in FY2016, 7.7% in FY2015, 3.8% in FY2014
- Kemet Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $65m in FY2018, $26m in FY2017, $20m in FY2016, $22m in FY2015, $32m in FY2014
- The company has highly profitable business model: ROIC is 16.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Kemet Corporation's Revenue surged on 58.4%. Revenue growth showed acceleration in FY18Q4 - it increased 61.0% YoY. During the last 5 years Revenue growth bottomed in FY2016 at -10.7% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.0 pp from 9.7% to 13.6% in FY2018. EBITDA Margin stuck to a growing trend at 2.2 pp per annum in FY2014-FY2018.
Gross Margin increased on 3.6 pp from 24.7% to 28.3% in FY2018. Gross Margin grew at 3.3 pp per annum in FY2014-FY2018. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue grew at 0.82 pp per annum in the last 5 years.
Net Income margin surged on 14.8 pp from 6.3% to 21.2% in FY2018. Net Income margin grew at 6.7 pp per annum in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Kemet Corporation had CAPEX/Revenue of 5.4%. CAPEX/Revenue increased on 2.7 pp from 2.7% in FY2015 to 5.4% in FY2018. For the last three years the average CAPEX/Revenue was 3.9%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2015 at 2.7% and was growing since that time.
Return on investment
The company operates at high and attractive ROE (82.2%) while ROIC is a bit lower (16.9%). ROIC surged on 10.0 pp from 6.9% to 16.9% in FY2018. ROE surged on 46.2 pp from 36.0% to 82.2% in FY2018. ROIC grew at 4.3 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.2x and Debt / EBITDA is 2.0x. Net Debt / EBITDA dropped on 3.6x from 3.8x to 0.2x in FY2018. Debt dropped on 16.4% while cash jumped on 161%. Net Debt/EBITDA stuck to a declining trend at -2.3x per annum in the last 5 years.
Kemet Corporation has no short term refinancing risk: cash is higher than short term debt (1,396.5%).
Valuation and dividends
The company's trades at EV/EBITDA 6.6x and P/E 4.1x.
Financial and operational results
FY ended 03/31/2018
Kemet Corporation ($KEM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 834 | 823 | 735 | 758 | 1,200 | 58.4% |
| Gross Profit | 121 | 160 | 163 | 187 | 339 | 81.6% |
| SG&A | 96 | 99 | 101 | 108 | 174 | 61.3% |
| EBITDA | 31 | 63 | 71 | 73 | 164 | 123.6% |
| Net Income | -69 | -14 | -54 | 48 | 254 | 429.6% |
Balance Sheet
|
|---|
| Cash | 58 | 56 | 65 | 110 | 287 | 161.3% |
| Short Term Debt | 7 | 1 | 2 | 2 | 21 | 927.0% |
| Long Term Debt | 391 | 390 | 389 | 386 | 304 | -21.3% |
Cash flow
|
|---|
| Capex | 32 | 22 | 20 | 26 | 65 | 153.8% |
Ratios
|
|---|
| Revenue growth | 1.2% | -1.3% | -10.7% | 3.1% | 58.4% | |
| EBITDA growth | 210.7% | 101.6% | 13.0% | 2.5% | 123.6% | |
|
|---|
| Gross Margin | 14.5% | 19.4% | 22.2% | 24.7% | 28.3% | 3.6% |
| EBITDA Margin | 3.8% | 7.7% | 9.7% | 9.7% | 13.6% | 4.0% |
| SG&A, % of revenue | 11.5% | 12.0% | 13.8% | 14.2% | 14.5% | 0.3% |
| Net Income Margin | -8.2% | -1.7% | -7.3% | 6.3% | 21.2% | 14.8% |
| CAPEX, % of revenue | 3.9% | 2.7% | 2.8% | 3.4% | 5.4% | 2.0% |
|
|---|
| ROIC | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% | 10.0% |
| ROE | -27.5% | -7.3% | -38.7% | 36.0% | 82.2% | 46.2% |
| Net Debt/EBITDA | 10.9x | 5.3x | 4.6x | 3.8x | 0.2x | -3.6x |
Kemet Corporation ($KEM) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 274 | 302 | 307 | 318 | | 48.1% | 61.0% | 63.0% | 61.0% |
| EBITDA | 40 | 45 | 43 | 35 | | 113.9% | 252.4% | 86.3% | 90.8% |
| Net Income | 220 | 13 | 19 | 2 | | | | 51.4% | -95.7% |
Balance Sheet
|
|---|
| Cash | 226 | 254 | 284 | 287 | | 326.2% | 239.3% | 225.3% | 161.3% |
| Short Term Debt | 20 | 20 | 20 | 21 | | | | | 927.0% |
| Long Term Debt | 315 | 311 | 308 | 304 | | -18.4% | -19.3% | -20.3% | -21.3% |
Ratios
|
|---|
| Gross Margin | 27.1% | 28.2% | 30.1% | 27.7% | | 3.9% | 3.3% | 4.9% | 2.3% |
| EBITDA Margin | 14.6% | 15.0% | 14.1% | 11.0% | | 4.5% | 8.1% | 1.8% | 1.7% |
| Net Income Margin | 80.5% | 4.3% | 6.1% | 0.7% | | 87.1% | 6.9% | -0.5% | -26.1% |
Peers in Electronic Manufacturing Servi
Below you can find Kemet Corporation benchmarking vs. other companies in Electronic Manufacturing Servi 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | | 41.9% | -7.8% | -24.0% | 118.4% |
| Alpine 4 Technologies Ltd ($ALPP) | | | 35,893.8% | 5.8% | 71.5% |
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
| IEC Electronics Corp. ($IEC) | | 5.1% | 0.0% | -24.1% | 21.2% |
| eMagin Corporation ($EMAN) | | -2.2% | -14.9% | 3.0% | 19.1% |
| |
|---|
| Median (26 companies) | -24.3% | 2.8% | 1.7% | 1.9% | 6.9% |
|---|
| Kemet Corporation ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Neonode Inc. ($NEON) | 68.2% | 66.0% | 86.9% | 77.1% | 89.2% |
| Andrea Electronics Corp ($ANDR) | 83.8% | 99.1% | 88.5% | 96.2% | 70.4% |
| Data I/O Corporation ($DAIO) | 53.9% | 52.4% | 55.0% | 58.9% | 59.4% |
| IPG Photonics Corporation ($IPGP) | 54.1% | 54.6% | 54.9% | 56.6% | 54.8% |
| CTS Corporation ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (26 companies) | 14.7% | 14.8% | 16.7% | 13.8% | 11.9% |
|---|
| Kemet Corporation ($KEM) | 14.5% | 19.4% | 22.2% | 24.7% | 28.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.5% | 42.4% | 41.8% | 44.7% | 40.9% |
| TE Connectivity Ltd. ($TEL) | 19.7% | 19.3% | 20.9% | 20.4% | 21.4% |
| CTS Corporation ($CTS) | 14.7% | 9.0% | 20.7% | 14.0% | 17.8% |
| Methode Electronics, Inc. ($MEI) | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% |
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (26 companies) | 4.8% | 5.2% | 4.8% | 4.5% | 4.5% |
|---|
| Kemet Corporation ($KEM) | 3.8% | 7.7% | 9.7% | 9.7% | 13.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Maxwell Technologies, Inc. ($MXWL) | 3.7% | 2.5% | 4.9% | 6.6% | 11.3% |
| IPG Photonics Corporation ($IPGP) | 11.5% | 7.8% | 12.6% | 9.0% | 11.0% |
| eMagin Corporation ($EMAN) | 5.8% | 4.7% | 6.7% | 6.2% | 8.8% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 4.9% | 5.3% | 5.6% | 6.7% |
| CTS Corporation ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (26 companies) | 2.5% | 2.4% | 2.8% | 2.7% | 2.4% |
|---|
| Kemet Corporation ($KEM) | 3.9% | 2.7% | 2.8% | 3.4% | 5.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% |
| IPG Photonics Corporation ($IPGP) | 27.0% | 27.8% | 25.1% | 29.9% | 22.9% |
| Methode Electronics, Inc. ($MEI) | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% |
| TE Connectivity Ltd. ($TEL) | 17.3% | 15.1% | 15.9% | 16.2% | 18.4% |
| CTS Corporation ($CTS) | 11.4% | 5.3% | 18.1% | 9.8% | 14.8% |
| |
|---|
| Median (28 companies) | 5.0% | 5.3% | 6.7% | 4.2% | 6.6% |
|---|
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpine 4 Technologies Ltd ($ALPP) | | | | 34.1x | 65.7x |
| SigmaTron International, Inc. ($SGMA) | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x |
| SMTC Corporation ($SMTX) | 3.5x | 1.8x | 1.0x | | 11.3x |
| IEC Electronics Corp. ($IEC) | 7.1x | 14.0x | 2.0x | 5.6x | 4.9x |
| Key Tronic Corporation ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (21 companies) | -0.5x | -0.9x | -0.0x | -0.1x | 0.8x |
|---|
| Kemet Corporation ($KEM) | 10.9x | 5.3x | 4.6x | 3.8x | 0.2x |
