Richardson Electronics, Ltd. revenue jumped on 19.2% and EBITDA Margin increased on 6.3 pp from -2.2% to 4.1%
07/25/2018 • About Richardson Electronics, Ltd. (
$RELL) • By InTwits
Richardson Electronics, Ltd. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 4.1% in FY2018 vs. -2.2% in FY2017 vs. -2.2% in FY2014
- Richardson Electronics, Ltd. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -1.4% for the sames years
- Richardson Electronics, Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.2%. At the same time it's a lot of higher than industry average of 0.6%.
- CAPEX is quite volatile: $2m in FY2018, $2m in FY2017, $3m in FY2016, $4m in FY2015, $13m in FY2014
- The company has potentially unprofitable business model: ROIC is 2.7%
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 surged on 19.2%. Revenue growth showed acceleration in FY18Q4 - it increased 21.8% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 5.7 pp from 8.5% to 14.2% in FY2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2015 at -4.7% and was growing since that time.
Gross Margin increased slightly on 1.7 pp from 32.1% to 33.7% in FY2018. Gross Margin grew at 1.0 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 4.7 pp from 36.4% to 31.7% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue topped in FY2017 at 36.4%.
Net Income margin increased on 7.4 pp from -5.1% to 2.3% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2017 at -5.1%.
Investments (CAPEX, working capital and M&A)
In FY2018 Richardson Electronics, Ltd. had CAPEX/Revenue of 3.2%. Richardson Electronics, Ltd. showed almost no change in CAPEX/Revenue from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 3.5%. The company invested a big chunk of EBITDA (79.1%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (2.7%) and ROE (2.9%). ROIC increased on 6.9 pp from -4.2% to 2.7% in FY2018. ROE increased on 7.9 pp from -5.1% to 2.9% in FY2018. During FY2014-FY2018 ROIC bottomed in FY2015 at -4.8% and was growing since that time. During FY2014-FY2018 ROE bottomed in FY2017 at -5.1%.
Leverage (Debt)
The company has no debt. Cash increased on 9.3%.
Valuation and dividends
The company's trades at EV/EBITDA 5.0x and P/E 24.5x.
Management team
The company's CEO Edward J Richardson is a founder and has spent 3 years with the company. Robert J Ben "Bob" is a the company's CFO. Robert J Ben "Bob" has spent 2 years at the company.
Financial and operational results
FY ended 06/02/2018
Richardson Electronics, Ltd. ($RELL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 138.0 | 137.0 | 142.0 | 136.9 | 163.2 | 19.2% |
| Gross Profit | 41.0 | 41.1 | 44.8 | 43.9 | 55.1 | 25.5% |
| SG&A | 43.5 | 49.2 | 51.6 | 49.9 | 51.7 | 3.8% |
| EBITDA | -3.1 | -6.4 | -4.2 | -3.0 | 6.6 | |
| Net Income | -0.5 | -5.6 | -6.8 | -6.9 | 3.8 | |
Balance Sheet
|
|---|
| Cash | 102.8 | 74.5 | 60.5 | 55.3 | 60.5 | 9.3% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 2.8 | 4.7 | 4.8 | 5.2 | 5.2 | 0.3% |
Ratios
|
|---|
| Revenue growth | -2.2% | -0.7% | 3.7% | -3.6% | 19.2% | |
| EBITDA growth | -386.4% | 108.5% | -34.6% | -27.6% | -319.1% | |
|
|---|
| Gross Margin | 29.7% | 30.0% | 31.6% | 32.1% | 33.7% | 1.7% |
| EBITDA Margin | -2.2% | -4.7% | -2.9% | -2.2% | 4.1% | 6.3% |
| SG&A, % of revenue | 31.5% | 35.9% | 36.4% | 36.4% | 31.7% | -4.7% |
| Net Income Margin | -0.4% | -4.1% | -4.8% | -5.1% | 2.3% | 7.4% |
| CAPEX, % of revenue | 2.0% | 3.5% | 3.4% | 3.8% | 3.2% | -0.6% |
|
|---|
| ROIC | -2.2% | -4.8% | -4.4% | -4.2% | 2.7% | 6.9% |
| ROE | -0.3% | -3.4% | -4.5% | -5.1% | 2.9% | 7.9% |
| Net Debt/EBITDA | | | | | -9.1x |
Richardson Electronics, Ltd. ($RELL) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 37 | 39 | 42 | 45 | | 10.9% | 15.5% | 28.9% | 21.8% |
| EBITDA | 1 | 2 | 2 | 3 | | | | | 249.0% |
| Net Income | -0 | 2 | 1 | 2 | | | | | |
Balance Sheet
|
|---|
| Cash | 56 | 54 | 60 | 60 | | -1.8% | 0.6% | 16.5% | 9.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 32.8% | 34.2% | 33.8% | 34.1% | | 2.2% | 1.8% | 0.7% | 2.0% |
| EBITDA Margin | 2.0% | 3.9% | 4.1% | 5.8% | | 6.1% | 9.2% | 6.0% | 3.8% |
| Net Income Margin | -0.3% | 4.3% | 1.3% | 3.8% | | 8.2% | 11.7% | 5.7% | 4.2% |
Peers in Technology Distributors
Below you can find Richardson Electronics, Ltd. benchmarking vs. other companies in Technology Distributors 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 |
|---|
| Tech Data Corporation ($TECD) | | 3.2% | -4.7% | -8.3% | 38.9% |
| EACO Corp ($EACO) | | 4.1% | 5.9% | 5.7% | 23.1% |
| Synnex Corporation ($SNX) | | -3.6% | 5.4% | 21.2% | 17.6% |
| Wayside Technology Group, Inc. ($WSTG) | | 12.1% | 9.4% | -61.6% | 13.0% |
| Arrow Electronics, Inc. ($ARW) | | 2.3% | 0.9% | 13.1% | 11.8% |
| |
|---|
| Median (16 companies) | | 4.5% | 5.3% | 5.7% | 8.3% |
|---|
| Richardson Electronics, Ltd. ($RELL) | | -0.7% | 3.7% | -3.6% | 19.2% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | 25.4% | 31.1% | -10.8% | 39.4% | 44.0% |
| EACO Corp ($EACO) | 27.5% | 29.3% | 29.3% | 28.5% | 28.5% |
| Surge Components Inc ($SPRS) | 24.5% | 25.0% | 25.2% | 25.2% | 25.6% |
| ADDvantage Technologies Group, Inc. ($AEY) | 32.3% | 35.0% | 32.2% | 30.4% | 23.7% |
| ePlus inc. ($PLUS) | 21.7% | 21.4% | 21.8% | 22.5% | 22.8% |
| |
|---|
| Median (16 companies) | 14.2% | 13.5% | 13.8% | 16.5% | 15.6% |
|---|
| Richardson Electronics, Ltd. ($RELL) | 29.7% | 30.0% | 31.6% | 32.1% | 33.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Taitron Components Incorporated ($TAIT) | -8.6% | -3.2% | -39.0% | 13.0% | 19.2% |
| CDW Corporation ($CDW) | 7.3% | 7.5% | 7.7% | 7.6% | 7.7% |
| ePlus inc. ($PLUS) | 7.3% | 7.5% | 7.6% | 7.3% | 7.1% |
| EACO Corp ($EACO) | 4.0% | 4.5% | 4.7% | 4.5% | 5.9% |
| Surge Components Inc ($SPRS) | 2.8% | 3.8% | -1.5% | 1.2% | 4.8% |
| |
|---|
| Median (16 companies) | 3.2% | 3.5% | 3.6% | 3.8% | 4.0% |
|---|
| Richardson Electronics, Ltd. ($RELL) | -2.2% | -4.7% | -2.9% | -2.2% | 4.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| ePlus inc. ($PLUS) | 0.9% | 1.0% | 2.1% | 1.5% | 1.0% |
| EACO Corp ($EACO) | 0.6% | 0.4% | 0.3% | 5.5% | 0.8% |
| Avnet, Inc. ($AVT) | 0.4% | 0.6% | 0.8% | 0.7% | 0.8% |
| PC Connection, Inc. ($CNXN) | 0.3% | 0.5% | 0.4% | 0.4% | 0.8% |
| Synnex Corporation ($SNX) | 0.4% | 0.8% | 0.9% | 0.6% | 0.6% |
| |
|---|
| Median (16 companies) | 0.4% | 0.5% | 0.4% | 0.5% | 0.5% |
|---|
| Richardson Electronics, Ltd. ($RELL) | 2.0% | 3.5% | 3.4% | 3.8% | 3.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Surge Components Inc ($SPRS) | 6.7% | 9.5% | -4.0% | 3.9% | 24.6% |
| CDW Corporation ($CDW) | 16.5% | 17.3% | 18.8% | 20.1% | 23.1% |
| EACO Corp ($EACO) | 19.6% | 21.8% | 22.2% | 16.1% | 21.2% |
| ePlus inc. ($PLUS) | 20.1% | 21.0% | 21.5% | 22.8% | 20.8% |
| Insight Enterprises, Inc. ($NSIT) | 17.0% | 17.4% | 20.7% | 19.3% | 20.0% |
| |
|---|
| Median (17 companies) | 13.6% | 12.1% | 12.5% | 11.5% | 11.8% |
|---|
| Richardson Electronics, Ltd. ($RELL) | -2.2% | -4.8% | -4.4% | -4.2% | 2.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Synnex Corporation ($SNX) | 2.0x | 0.9x | 1.2x | 2.1x | 3.9x |
| Anixter International Inc. ($AXE) | 3.2x | 4.7x | 3.6x | 3.0x | 3.1x |
| ScanSource, Inc. ($SCSC) | -1.4x | -0.9x | 0.2x | 0.6x | 2.5x |
| CDW Corporation ($CDW) | 3.2x | 3.3x | 2.8x | 2.7x | 2.4x |
| Arrow Electronics, Inc. ($ARW) | 1.8x | 2.2x | 2.2x | 2.3x | 2.2x |
| |
|---|
| Median (15 companies) | -0.1x | -0.2x | 0.2x | 1.1x | 1.2x |
|---|
| Richardson Electronics, Ltd. ($RELL) | | | | | -9.1x |
