Methode Electronics, Inc. CAPEX surged on 113% and Revenue surged on 11.2%
06/21/2018 • About Methode Electronics, Inc. (
$MEI) • By InTwits
Methode Electronics, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Methode Electronics, Inc. is a growth stock: FY2018 revenue growth was 11.2%, 5 year revenue CAGR was 11.8% at FY2018 ROIC 19.2%
- Methode Electronics, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $48m in FY2018, $22m in FY2017, $23m in FY2016, $23m in FY2015, $29m in FY2014
- The company has highly profitable business model: ROIC is 19.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 11.2%. Revenue growth showed acceleration in FY18Q4 - it increased 13.3% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2016 at -8.2% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.86 pp from -9.6% to -8.8% in 2018. During FY2014-FY2018 EBITDA Margin topped in FY2017 at 16.5%.
Gross Margin showed almost no change in FY2018. During FY2014-FY2018 Gross Margin topped in FY2017 at 26.7%. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue followed a growing trend at 1.7 pp per annum in FY2014-FY2018.
Net Income margin decreased on 5.1 pp from 11.4% to 6.3% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Methode Electronics, Inc. had CAPEX/Revenue of 5.3%. The company showed CAPEX/Revenue growth of 2.7 pp from 2.6% in FY2015 to 5.3% in FY2018. It's average level of CAPEX/Revenue for the last three years was 3.6%.
Return on investment
The company operates at good ROIC (19.2%) while ROE is low (9.8%). ROIC decreased slightly on 1.5 pp from 20.8% to 19.2% in FY2018. ROE decreased on 8.6 pp from 18.4% to 9.8% in FY2018. During the last 5 years ROIC topped in FY2015 at 26.1% and was declining since that time. ROE stuck to a declining trend at -4.2 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.3x and Debt / EBITDA is 0.4x. Debt surged on 114% while cash dropped on 16.3%.
Methode Electronics, Inc. has no short term refinancing risk: cash is higher than short term debt (5,593.2%).
Valuation and dividends
The company's trades at EV/EBITDA 8.9x and P/E 26.0x.
Management team
Methode Electronics, Inc.'s CEO Donald W Duda is a founder and has spent 15 years with the company. Methode Electronics, Inc.'s CFO is Ronald L G Tsoumas "Ron". Ronald L G Tsoumas "Ron" has 1 year tenure at the company.
Financial and operational results
FY ended 04/28/2018
Methode Electronics, Inc. ($MEI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 772.8 | 881.1 | 809.1 | 816.5 | 908.3 | 11.2% |
| Gross Profit | 156.7 | 218.8 | 212.9 | 218.3 | 239.6 | 9.8% |
| SG&A | 53.9 | 69.5 | 75.4 | 105.2 | 115.7 | 10.0% |
| EBITDA | 97.5 | 135.6 | 133.6 | 135.1 | 146.4 | 8.4% |
| Net Income | 96.1 | 101.1 | 84.6 | 92.9 | 57.2 | -38.4% |
Balance Sheet
|
|---|
| Cash | 116.4 | 168.1 | 227.8 | 294.0 | 246.1 | -16.3% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 4.4 | |
| Long Term Debt | 48.0 | 5.0 | 57.0 | 27.0 | 53.4 | 97.8% |
Cash flow
|
|---|
| Capex | 29.0 | 22.5 | 23.2 | 22.4 | 47.7 | 112.9% |
Ratios
|
|---|
| Revenue growth | 48.7% | 14.0% | -8.2% | 0.9% | 11.2% | |
| EBITDA growth | 68.1% | 39.1% | -1.5% | 1.1% | 8.4% | |
|
|---|
| Gross Margin | 20.3% | 24.8% | 26.3% | 26.7% | 26.4% | -0.4% |
| EBITDA Margin | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% | -0.4% |
| SG&A, % of revenue | 7.0% | 7.9% | 9.3% | 12.9% | 12.7% | -0.1% |
| Net Income Margin | 12.4% | 11.5% | 10.5% | 11.4% | 6.3% | -5.1% |
| CAPEX, % of revenue | 3.8% | 2.6% | 2.9% | 2.7% | 5.3% | 2.5% |
|
|---|
| ROIC | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% | -1.5% |
| ROE | 27.9% | 23.8% | 18.2% | 18.4% | 9.8% | -8.6% |
| Net Debt/EBITDA | -0.7x | -1.2x | -1.3x | -2.0x | -1.3x | 0.7x |
Methode Electronics, Inc. ($MEI) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 201 | 230 | 228 | 249 | | 4.8% | 9.9% | 16.6% | 13.3% |
| EBITDA | 31 | 37 | 43 | 36 | | -4.6% | 5.7% | 22.0% | 9.5% |
| Net Income | 21 | 24 | -24 | 37 | | -3.3% | -2.8% | -202.5% | 59.3% |
Balance Sheet
|
|---|
| Cash | 298 | 259 | 304 | 246 | | 19.5% | 3.6% | 13.1% | -16.3% |
| Short Term Debt | 4 | 2 | 3 | 4 | | | | | |
| Long Term Debt | 48 | 106 | 116 | 53 | | -11.9% | 115.3% | 213.5% | 97.8% |
Ratios
|
|---|
| Gross Margin | 27.6% | 26.9% | 26.4% | 24.9% | | -0.6% | 0.4% | -0.9% | -0.3% |
| EBITDA Margin | 15.4% | 16.1% | 18.7% | 14.3% | | -1.5% | -0.6% | 0.8% | -0.5% |
| Net Income Margin | 10.2% | 10.5% | -10.7% | 14.8% | | -0.9% | -1.4% | -22.8% | 4.3% |
Peers in Electronic Manufacturing Servi
Below we provide Methode Electronics, Inc. benchmarking against other companies in Electronic Manufacturing Servi 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 | 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% |
| Kemet Corporation ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
| Deswell Industries, Inc. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
| |
|---|
| Median (27 companies) | | 2.6% | 1.7% | 3.0% | 7.1% |
|---|
| Methode Electronics, Inc. ($MEI) | | 14.0% | -8.2% | 0.9% | 11.2% |
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 ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.5% | 14.8% | 16.7% | 13.8% | 12.1% |
|---|
| Methode Electronics, Inc. ($MEI) | 20.3% | 24.8% | 26.3% | 26.7% | 26.4% |
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 ($CTS) | 14.7% | 9.0% | 20.7% | 14.0% | 17.8% |
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| Kemet Corporation ($KEM) | 3.8% | 7.7% | 9.7% | 9.7% | 13.6% |
| |
|---|
| Median (27 companies) | 4.4% | 5.2% | 4.8% | 4.5% | 4.7% |
|---|
| Methode Electronics, Inc. ($MEI) | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% |
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 ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.5% | 2.4% | 2.8% | 3.4% | 2.4% |
|---|
| Methode Electronics, Inc. ($MEI) | 3.8% | 2.6% | 2.9% | 2.7% | 5.3% |
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% |
| TE Connectivity Ltd. ($TEL) | 17.3% | 15.1% | 15.9% | 16.2% | 18.4% |
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| CTS Corporation ($CTS) | 11.4% | 5.3% | 18.1% | 9.8% | 14.8% |
| |
|---|
| Median (29 companies) | 4.4% | 4.9% | 6.2% | 4.2% | 6.4% |
|---|
| Methode Electronics, Inc. ($MEI) | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% |
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 ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (22 companies) | 0.2x | -0.2x | 0.6x | 0.5x | 0.5x |
|---|
| Methode Electronics, Inc. ($MEI) | -0.7x | -1.2x | -1.3x | -2.0x | -1.3x |
