SigmaTron International, Inc. Net Debt / EBITDA surged on 12.6x from 3.4x to 16.0x in 2018 and Debt surged on 35.1%
07/20/2018 • About SigmaTron International, Inc. (
$SGMA) • By InTwits
SigmaTron International, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 1.0% in FY2018, 3.3% in FY2017, 3.9% in FY2016, 3.5% in FY2015, 3.9% in FY2014
- SigmaTron International, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 30.9%.
- CAPEX is quite volatile: $4m in FY2018, $4m in FY2017, $3m in FY2016, $6m in FY2015, $8m in FY2014
- The company has unprofitable business model: ROIC is -2.9%
- It operates with high leverage: Net Debt/EBITDA is 16.0x while industry average is 3.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SigmaTron International, Inc.'s Revenue increased on 9.8%. Revenue growth showed slowdown in FY18Q4 - it was 2.7% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 358 pp from -332% to 25.5% in 2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue showed almost no change in FY2018.
Net Income margin decreased slightly on 1.7 pp from 0.55% to -1.2% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 SigmaTron International, Inc. had CAPEX/Revenue of 1.3%. SigmaTron International, Inc.'s CAPEX/Revenue decreased slightly on 1.0 pp from 2.4% in FY2015 to 1.3% in FY2018. Average CAPEX/Revenue for the last three years was 1.3%. SigmaTron International, Inc. maintained rich investment policy and has spent a lot to CAPEX (141% of EBITDA).
Return on investment
The company operates at negative ROIC (-2.9%) and ROE (-5.4%). ROIC decreased on 6.5 pp from 3.5% to -2.9% in FY2018. ROE decreased on 7.7 pp from 2.3% to -5.4% in FY2018.
Leverage (Debt)
Debt level is 16.0x Net Debt / EBITDA and 16.7x Debt / EBITDA. Net Debt / EBITDA jumped on 12.6x from 3.4x to 16.0x in FY2018. Debt jumped on 35.1% while cash dropped on 50.7%.
SigmaTron International, Inc. has short term refinancing risk: cash is only 57.9% of short term debt.
Management team
SigmaTron International, Inc.'s CEO Gary R Fairhead is a founder and has spent 25 years with the company. Linda K Frauendorfer is a the company's CFO. Linda K Frauendorfer has spent 25 years at the company.
Financial and operational results
FY ended 04/30/2018
SigmaTron International, Inc. ($SGMA) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 222.5 | 230.2 | 253.9 | 253.4 | 278.1 | 9.8% |
| Gross Profit | 22.8 | 22.1 | 25.5 | 25.2 | 26.6 | 5.7% |
| SG&A | 19.2 | 19.4 | 21.2 | 21.9 | 23.1 | 5.4% |
| EBITDA | 8.8 | 8.1 | 9.9 | 8.5 | 2.6 | -68.8% |
| Net Income | 2.9 | 0.9 | 2.1 | 1.4 | -3.2 | -333.2% |
Balance Sheet
|
|---|
| Cash | 5.4 | 2.9 | 4.3 | 3.5 | 1.7 | -50.7% |
| Short Term Debt | 2.9 | 1.4 | 1.5 | 2.1 | 3.0 | 44.3% |
| Long Term Debt | 26.6 | 34.7 | 26.8 | 30.6 | 41.1 | 34.4% |
Cash flow
|
|---|
| Capex | 8.4 | 5.5 | 3.0 | 3.5 | 3.7 | 6.4% |
Ratios
|
|---|
| Revenue growth | 12.1% | 3.5% | 10.3% | -0.2% | 9.8% | |
| EBITDA growth | 40.9% | -8.1% | 23.1% | -14.6% | -68.8% | |
|
|---|
| Gross Margin | 10.3% | 9.6% | 10.1% | 9.9% | 9.6% | -0.4% |
| EBITDA Margin | 3.9% | 3.5% | 3.9% | 3.3% | 1.0% | -2.4% |
| SG&A, % of revenue | 8.6% | 8.4% | 8.3% | 8.6% | 8.3% | -0.3% |
| Net Income Margin | 1.3% | 0.4% | 0.8% | 0.5% | -1.2% | -1.7% |
| CAPEX, % of revenue | 3.8% | 2.4% | 1.2% | 1.4% | 1.3% | -0.0% |
|
|---|
| ROIC | 4.4% | 2.9% | 4.7% | 3.5% | -2.9% | -6.5% |
| ROE | 5.4% | 1.6% | 3.6% | 2.3% | -5.4% | -7.7% |
| Net Debt/EBITDA | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x | 12.6x |
SigmaTron International, Inc. ($SGMA) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 71 | 73 | 66 | 68 | | 20.9% | 10.8% | 5.7% | 2.7% |
| EBITDA | 2 | 3 | 2 | -4 | | 23.9% | 74.9% | -2.6% | -225.7% |
| Net Income | 0 | 1 | 0 | -4 | | 161.2% | 2,110.9% | | -449.1% |
Balance Sheet
|
|---|
| Cash | 2 | 2 | 3 | 2 | | -52.7% | -26.4% | -17.9% | -50.7% |
| Short Term Debt | 2 | 4 | 3 | 3 | | 41.7% | 121.1% | 60.5% | 44.3% |
| Long Term Debt | 33 | 36 | 43 | 41 | | 7.7% | 20.6% | 49.3% | 34.4% |
Ratios
|
|---|
| Gross Margin | 9.5% | 9.7% | 9.0% | 10.0% | | 0.1% | 1.4% | -0.2% | -2.7% |
| EBITDA Margin | 3.1% | 3.9% | 2.6% | -6.1% | | 0.1% | 1.4% | -0.2% | -11.0% |
| Net Income Margin | 0.5% | 1.0% | 0.0% | -6.4% | | 0.3% | 1.0% | 0.1% | -8.3% |
Peers in Electronic Manufacturing Servi
Below we provide SigmaTron International, 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. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
| |
|---|
| Median (27 companies) | | 2.6% | 1.2% | 3.0% | 7.1% |
|---|
| SigmaTron International, Inc. ($SGMA) | | 3.5% | 10.3% | -0.2% | 9.8% |
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 ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.7% | 19.4% | 22.2% | 15.8% | 15.2% |
|---|
| SigmaTron International, Inc. ($SGMA) | 10.3% | 9.6% | 10.1% | 9.9% | 9.6% |
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. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (27 companies) | 4.8% | 5.8% | 5.4% | 5.0% | 4.8% |
|---|
| SigmaTron International, Inc. ($SGMA) | 3.9% | 3.5% | 3.9% | 3.3% | 1.0% |
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 ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.5% | 2.4% | 2.8% | 3.4% | 2.5% |
|---|
| SigmaTron International, Inc. ($SGMA) | 3.8% | 2.4% | 1.2% | 1.4% | 1.3% |
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% |
| 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% |
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| |
|---|
| Median (29 companies) | 5.0% | 5.3% | 6.7% | 5.7% | 6.7% |
|---|
| SigmaTron International, Inc. ($SGMA) | 4.4% | 2.9% | 4.7% | 3.5% | -2.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpine 4 Technologies Ltd ($ALPP) | | | | 34.1x | 65.7x |
| SMTC Corporation ($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 |
| Nortech Systems Incorporated ($NSYS) | 3.8x | 8.2x | 4.6x | 10.9x | 3.8x |
| |
|---|
| Median (22 companies) | -0.5x | -0.9x | -0.0x | -0.1x | -0.2x |
|---|
| SigmaTron International, Inc. ($SGMA) | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x |
