Frequency Electronics, Inc. revenue decline accelerated to 21.7% in FY2018 vs. 9.1% a year earliner
07/25/2018 • About Frequency Electronics, Inc. (
$FEIM) • By InTwits
Frequency Electronics, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Frequency Electronics, Inc. is a company in decline: FY2018 revenue growth was -21.7%, 5 years revenue CAGR was -10.6%
- The company operates at negative EBITDA Margin: -25.2%
- Frequency Electronics, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $1m in FY2018, $5m in FY2017, $3m in FY2016, $4m in FY2015, $5m in FY2014
- The company has unprofitable business model: ROIC is -16.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Frequency Electronics, Inc.'s Revenue dropped on 21.7%. Revenue decline showed acceleration in FY18Q4 - it was 37.4% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 15.4 pp from -9.7% to -25.2% in FY2018. EBITDA Margin followed a declining trend at -8.9 pp per annum in FY2014-FY2018.
Gross Margin decreased on 9.2 pp from 22.3% to 13.1% in FY2018. Gross Margin declined at -5.1 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 3.3 pp from 23.6% to 26.9% in FY2018. SG&A as a % of Revenue followed a growing trend at 2.0 pp per annum in FY2014-FY2018.
Net Income margin dropped on 50.8 pp from -9.6% to -60.3% in FY2018. Net Income margin followed a declining trend in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Frequency Electronics, Inc. had CAPEX/Revenue of 3.6%. Frequency Electronics, Inc. showed small CAPEX/Revenue decline of 1.8 pp from 5.4% in FY2015 to 3.6% in FY2018. It's average level of CAPEX/Revenue for the last three years was 6.6%.
Return on investment
The company operates at negative ROIC (-16.2%) and ROE (-31.2%). ROIC decreased on 8.2 pp from -8.0% to -16.2% in FY2018. ROE dropped on 25.9 pp from -5.3% to -31.2% in FY2018. ROIC declined at -5.5 pp per annum in the last 5 years. ROE pursued a declining trend in the last 5 years.
Leverage (Debt)
The company has no debt. Cash jumped on 264%.
Management team
Stanton D Sloane "Stan" is a Frequency Electronics, Inc.'s CEO. Stanton D Sloane "Stan" is a founder and has spent 1 year with the company.
Financial and operational results
FY ended 04/30/2018
Frequency Electronics, Inc. ($FEIM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 71.550 | 76.564 | 55.416 | 50.351 | 39.407 | -21.7% |
| Gross Profit | 24.750 | 23.548 | 19.275 | 11.249 | 5.163 | -54.1% |
| SG&A | 14.064 | 14.207 | 11.379 | 11.898 | 10.608 | -10.8% |
| EBITDA | 7.344 | 6.619 | 4.966 | -4.887 | -9.911 | |
| Net Income | 4.040 | 2.826 | 1.005 | -4.821 | -23.777 | |
Balance Sheet
|
|---|
| Cash | 7.698 | 7.222 | 5.818 | 2.163 | 7.869 | 263.8% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 10.100 | 6.000 | 6.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 5.405 | 4.157 | 3.263 | 5.233 | 1.418 | -72.9% |
Ratios
|
|---|
| Revenue growth | 3.8% | 7.0% | -27.6% | -9.1% | -21.7% | |
| EBITDA growth | 3.6% | -9.9% | -25.0% | -198.4% | 102.8% | |
|
|---|
| Gross Margin | 34.6% | 30.8% | 34.8% | 22.3% | 13.1% | -9.2% |
| EBITDA Margin | 10.3% | 8.6% | 9.0% | -9.7% | -25.2% | -15.4% |
| SG&A, % of revenue | 19.7% | 18.6% | 20.5% | 23.6% | 26.9% | 3.3% |
| Net Income Margin | 5.6% | 3.7% | 1.8% | -9.6% | -60.3% | -50.8% |
| CAPEX, % of revenue | 7.6% | 5.4% | 5.9% | 10.4% | 3.6% | -6.8% |
|
|---|
| ROIC | 5.6% | 3.9% | 2.5% | -8.0% | -16.2% | -8.2% |
| ROE | 4.7% | 3.1% | 1.1% | -5.3% | -31.2% | -25.9% |
| Net Debt/EBITDA | 0.3x | -0.2x | 0.0x | | |
Frequency Electronics, Inc. ($FEIM) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 12 | 9 | 11 | 7 | | -5.4% | -27.7% | -7.1% | -37.4% |
| Net Income | 1 | -1 | -10 | -13 | | | | -3,175.7% | |
Balance Sheet
|
|---|
| Cash | 11 | 11 | 7 | 8 | | 171.7% | 168.3% | 124.6% | 263.8% |
Ratios
|
|---|
| Gross Margin | 37.6% | 23.6% | -27.0% | 17.3% | | 5.2% | -8.3% | -55.7% | 23.2% |
| Net Income Margin | 5.1% | -15.9% | -98.3% | -167.4% | | 10.7% | -7.9% | -101.3% | -138.7% |
Peers in Electronic Equipment & Instrum
Below you can find Frequency Electronics, Inc. benchmarking vs. other companies in Electronic Equipment & Instrum 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 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (60 companies) | -37.7% | 3.5% | 1.2% | 4.6% | 11.0% |
|---|
| Frequency Electronics, Inc. ($FEIM) | | 7.0% | -27.6% | -9.1% | -21.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (59 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 42.6% |
|---|
| Frequency Electronics, Inc. ($FEIM) | 34.6% | 30.8% | 34.8% | 22.3% | 13.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (59 companies) | 5.3% | 3.9% | 3.0% | 5.1% | 3.5% |
|---|
| Frequency Electronics, Inc. ($FEIM) | 10.3% | 8.6% | 9.0% | -9.7% | -25.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (59 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| Frequency Electronics, Inc. ($FEIM) | 7.6% | 5.4% | 5.9% | 10.4% | 3.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (71 companies) | 3.3% | 1.8% | 1.8% | 3.3% | 1.2% |
|---|
| Frequency Electronics, Inc. ($FEIM) | 5.6% | 3.9% | 2.5% | -8.0% | -16.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.7x | -0.8x |
|---|
