RF Industries, Ltd. Net Income surged on 1,430% and EBITDA Margin surged on 12.8 pp from 3.1% to 15.9%
12/20/2018 • About RF Industries, Ltd. (
$RFIL) • By InTwits
RF Industries, Ltd. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 15.9% in FY2018, 3.1% in FY2017, -12.1% in FY2016, 6.7% in FY2015, 12.4% in FY2014
- RF Industries, Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has highly profitable business model: ROIC is 29.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
RF Industries, Ltd.'s Revenue jumped on 118%. Revenue growth showed slowdown in FY18Q4 - it was -48.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 12.8 pp from 3.1% to 15.9% in FY2018. During the last 5 years EBITDA Margin bottomed in FY2016 at -12.1% and was growing since that time.
Gross Margin increased on 3.7 pp from 30.4% to 34.1% in FY2018. During the last 5 years Gross Margin bottomed in FY2016 at 28.0% and was growing since that time. SG&A as a % of Revenue decreased on 9.7 pp from 25.9% to 16.3% in FY2018.
Net Income margin increased on 10.0 pp from 1.7% to 11.6% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2016 at -13.5% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.53% in FY2018. CAPEX/Revenue showed almost no change from FY2015 to FY2018. For the last three years the average CAPEX/Revenue was 0.85%.
Return on investment
The company operates at high and attractive ROIC (29.2%) and ROE (23.8%). ROIC surged on 28.3 pp from 0.90% to 29.2% in FY2018. ROE surged on 22.0 pp from 1.8% to 23.8% in FY2018. During the last 5 years ROIC bottomed in FY2016 at -18.7% and was growing since that time. During FY2014-FY2018 ROE bottomed in FY2016 at -17.1% and was growing since that time.
Leverage (Debt)
The company has no debt. Cash jumped on 214%.
Valuation and dividends
The company's trades at EV/EBITDA 5.5x and P/E 10.3x.
Management team
The company's CEO is Robert D Dawson. Robert D Dawson is a founder and has 2 years tenure with the company. RF Industries, Ltd.'s CFO is Mark Turfler. Mark Turfler has 5 years tenure at the company.
Financial and operational results
FY ended 10/31/2018
RF Industries, Ltd. ($RFIL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 23.115 | 32.804 | 30.241 | 22.983 | 50.196 | 118.4% |
| Gross Profit | 10.453 | 11.267 | 8.463 | 6.987 | 17.100 | 144.7% |
| SG&A | 7.239 | 9.126 | 9.560 | 5.960 | 8.173 | 37.1% |
| EBITDA | 2.858 | 2.214 | -3.652 | 0.709 | 7.960 | 1,022.7% |
| Net Income | 1.439 | 0.994 | -4.089 | 0.382 | 5.846 | 1,430.4% |
Balance Sheet
|
|---|
| Cash | 14.718 | 7.595 | 5.258 | 5.208 | 16.334 | 213.6% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.148 | 0.204 | 0.384 | 0.171 | 0.266 | 55.6% |
Ratios
|
|---|
| Revenue growth | -36.9% | 41.9% | -7.8% | -24.0% | 118.4% | |
| EBITDA growth | -61.1% | -22.5% | -265.0% | -119.4% | 1,022.7% | |
|
|---|
| Gross Margin | 45.2% | 34.3% | 28.0% | 30.4% | 34.1% | 3.7% |
| EBITDA Margin | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% | 12.8% |
| SG&A, % of revenue | 31.3% | 27.8% | 31.6% | 25.9% | 16.3% | -9.7% |
| Net Income Margin | 6.2% | 3.0% | -13.5% | 1.7% | 11.6% | 10.0% |
| CAPEX, % of revenue | 0.6% | 0.6% | 1.3% | 0.7% | 0.5% | -0.2% |
|
|---|
| ROIC | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% | 28.3% |
| ROE | 5.6% | 3.8% | -17.1% | 1.8% | 23.8% | 22.0% |
| Net Debt/EBITDA | -5.1x | -3.4x | | -7.3x | -2.1x | 5.3x |
RF Industries, Ltd. ($RFIL) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 21 | 14 | 4 | | 20.4% | 168.5% | 77.4% | -48.4% |
| EBITDA | 0 | 4 | 2 | 1 | | | 1,359.6% | 490.2% | 193.3% |
| Net Income | 0 | 3 | 2 | 0 | | | 4,007.7% | 801.6% | 49.3% |
Balance Sheet
|
|---|
| Cash | 6 | 8 | 12 | 16 | | 35.0% | 96.6% | 110.8% | 213.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 30.9% | 37.3% | 32.9% | 38.3% | | 2.9% | 11.7% | 4.5% | 6.8% |
| EBITDA Margin | 6.1% | 19.9% | 17.0% | 16.9% | | 8.2% | 16.3% | 11.9% | 13.9% |
| Net Income Margin | 5.7% | 15.6% | 12.5% | 12.6% | | 8.6% | 14.6% | 10.0% | 8.3% |
Peers in Electronic Manufacturing Servi
Below we provide RF Industries, Ltd. 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 |
|---|
| 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% |
| IEC Electronics Corp. ($IEC) | | 5.1% | 0.0% | -24.1% | 21.2% |
| |
|---|
| Median (27 companies) | | 2.6% | 1.7% | 3.0% | 7.1% |
|---|
| RF Industries, Ltd. ($RFIL) | | 41.9% | -7.8% | -24.0% | 118.4% |
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 ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.5% | 14.8% | 16.7% | 13.8% | 12.1% |
|---|
| RF Industries, Ltd. ($RFIL) | 45.2% | 34.3% | 28.0% | 30.4% | 34.1% |
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% |
| Kemet Corporation ($KEM) | 3.8% | 7.7% | 9.7% | 9.7% | 13.6% |
| |
|---|
| Median (27 companies) | 4.4% | 5.2% | 5.4% | 5.0% | 4.7% |
|---|
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
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 ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.7% | 2.4% | 2.8% | 3.4% | 2.5% |
|---|
| RF Industries, Ltd. ($RFIL) | 0.6% | 0.6% | 1.3% | 0.7% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| 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% |
| CTS Corporation ($CTS) | 11.4% | 5.3% | 18.1% | 9.8% | 14.8% |
| |
|---|
| Median (29 companies) | 4.4% | 5.3% | 6.7% | 5.7% | 6.4% |
|---|
| RF Industries, Ltd. ($RFIL) | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% |
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 ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (22 companies) | 0.2x | -0.2x | 0.2x | 0.5x | 0.5x |
|---|
| RF Industries, Ltd. ($RFIL) | -5.1x | -3.4x | | -7.3x | -2.1x |
