SMTC Corporation Debt surged on 359%
03/14/2019 • About SMTC Corporation (
$SMTX) • By InTwits
SMTC Corporation reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 3.8% in FY2018, -2.0% in FY2017, 3.0% in FY2016, 2.6% in FY2015, 2.2% in FY2014
- SMTC Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.3%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $4m in FY2018, $1m in FY2017, $2m in FY2016, $3m in FY2015, $2m in FY2014
- The company has potentially unprofitable business model: ROIC is 4.0%
- It operates with high leverage: Net Debt/EBITDA is 11.3x while industry average is 3.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 55.2%. Revenue growth showed acceleration in FY18Q4 - it increased 109.2% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.8 pp from -2.0% to 3.8% in FY2018.
Gross Margin increased on 2.2 pp from 7.8% to 10.0% in FY2018. SG&A as a % of Revenue decreased slightly on 1.6 pp from 10.0% to 8.4% in FY2018.
Net Income margin increased on 5.4 pp from -5.6% to -0.21% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 SMTC Corporation had CAPEX/Revenue of 2.0%. The company's CAPEX/Revenue increased slightly on 0.82 pp from 1.2% in FY2015 to 2.0% in FY2018. It's average level of CAPEX/Revenue for the last three years was 1.5%. The company invested a big chunk of EBITDA (53.8%) to CAPEX to fuel its growth.
Return on investment
The company operates at low but positive ROIC (4.0%) and negative ROE (-1.7%). ROIC surged on 20.0 pp from -16.0% to 4.0% in FY2018. ROE surged on 32.7 pp from -34.4% to -1.7% in FY2018.
Leverage (Debt)
Debt level is 11.3x Net Debt / EBITDA and 11.5x Debt / EBITDA. Net Debt / EBITDA surged11.3x from to 11.3x in FY2018. Debt jumped on 359% while cash dropped on 71.1%.
SMTC Corporation has short term refinancing risk: cash is only 5.7% of short term debt.
Management team
The company's CEO is Edward J Smith "Ed". Edward J Smith "Ed" is a founder and has 2 years tenure with the company. SMTC Corporation's CFO is Steven M Waszak "Steve". Steven M Waszak "Steve" has 1 year tenure at the company.
Financial and operational results
FY ended 12/30/2018
SMTC Corporation ($SMTX) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 228.6 | 220.6 | 167.9 | 139.2 | 216.1 | 55.2% |
| Gross Profit | 19.0 | 17.7 | 15.0 | 10.9 | 21.7 | 99.6% |
| SG&A | 17.9 | 15.9 | 14.0 | 14.0 | 18.2 | 30.2% |
| EBITDA | 5.1 | 5.8 | 5.0 | -2.8 | 8.2 | |
| Net Income | -3.9 | -0.0 | -0.2 | -7.8 | -0.4 | |
Balance Sheet
|
|---|
| Cash | 5.4 | 6.1 | 8.5 | 5.5 | 1.6 | -71.1% |
| Short Term Debt | 22.4 | 12.3 | 5.1 | 14.4 | 27.9 | 94.5% |
| Long Term Debt | 0.9 | 4.2 | 8.3 | 6.1 | 66.0 | 983.7% |
Cash flow
|
|---|
| Capex | 2.0 | 2.7 | 2.2 | 1.5 | 4.4 | 199.8% |
Ratios
|
|---|
| Revenue growth | -15.6% | -3.5% | -23.9% | -17.1% | 55.2% | |
| EBITDA growth | -4,108.7% | 15.2% | -14.9% | -156.4% | -393.6% | |
|
|---|
| Gross Margin | 8.3% | 8.0% | 9.0% | 7.8% | 10.0% | 2.2% |
| EBITDA Margin | 2.2% | 2.6% | 3.0% | -2.0% | 3.8% | 5.8% |
| SG&A, % of revenue | 7.8% | 7.2% | 8.3% | 10.0% | 8.4% | -1.6% |
| Net Income Margin | -1.7% | -0.0% | -0.1% | -5.6% | -0.2% | 5.4% |
| CAPEX, % of revenue | 0.9% | 1.2% | 1.3% | 1.1% | 2.0% | 1.0% |
|
|---|
| ROIC | 2.1% | 4.0% | 2.0% | -16.0% | 4.0% | 20.0% |
| ROE | -14.1% | -0.0% | -0.9% | -34.4% | -1.7% | 32.7% |
| Net Debt/EBITDA | 3.5x | 1.8x | 1.0x | | 11.3x |
SMTC Corporation ($SMTX) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 37 | 44 | 54 | 81 | | 11.9% | 34.8% | 56.0% | 109.2% |
| EBITDA | 1 | 1 | 2 | 3 | | 44.1% | | 299.5% | 569.5% |
| Net Income | 0 | -0 | 1 | -1 | | | | | |
Balance Sheet
|
|---|
| Cash | 3 | 2 | 15 | 2 | | -22.1% | -52.4% | 400.5% | -71.1% |
| Short Term Debt | 12 | 14 | 19 | 28 | | 58.2% | 87.1% | 135.3% | 94.5% |
| Long Term Debt | 6 | 5 | 5 | 66 | | -28.3% | -24.1% | -26.2% | 983.7% |
Ratios
|
|---|
| Gross Margin | 10.4% | 9.6% | 9.8% | 10.3% | | -0.3% | 5.3% | 1.1% | 2.7% |
| EBITDA Margin | 3.0% | 2.9% | 4.4% | 4.2% | | 0.7% | 17.1% | 2.7% | 2.9% |
| Net Income Margin | 0.0% | -0.2% | 1.6% | -1.5% | | 1.2% | 18.0% | 3.2% | 0.8% |
Peers in Electronic Manufacturing Servi
Below you can find SMTC Corporation benchmarking vs. other companies in Electronic Manufacturing Servi 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 |
|---|
| 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 ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
| Deswell Industries, Inc. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
| IEC Electronics Corp. ($IEC) | | 5.1% | 0.0% | -24.1% | 21.2% |
| |
|---|
| Median (27 companies) | | 2.8% | 1.7% | 3.0% | 7.1% |
|---|
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
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 ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.7% | 19.4% | 22.2% | 15.8% | 15.2% |
|---|
| SMTC Corporation ($SMTX) | 8.3% | 8.0% | 9.0% | 7.8% | 10.0% |
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. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (27 companies) | 4.8% | 5.8% | 5.4% | 5.0% | 4.8% |
|---|
| SMTC Corporation ($SMTX) | 2.2% | 2.6% | 3.0% | -2.0% | 3.8% |
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 ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.7% | 2.4% | 2.8% | 3.4% | 2.5% |
|---|
| SMTC Corporation ($SMTX) | 0.9% | 1.2% | 1.3% | 1.1% | 2.0% |
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 ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| |
|---|
| Median (29 companies) | 5.0% | 5.3% | 6.7% | 5.7% | 6.7% |
|---|
| SMTC Corporation ($SMTX) | 2.1% | 4.0% | 2.0% | -16.0% | 4.0% |
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 |
| 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 ($NSYS) | 3.8x | 8.2x | 4.6x | 10.9x | 3.8x |
| |
|---|
| Median (22 companies) | -0.5x | -0.9x | -0.0x | 0.2x | -0.2x |
|---|
| SMTC Corporation ($SMTX) | 3.5x | 1.8x | 1.0x | | 11.3x |
