Eltek Ltd. revenue increased on 3.6% and EBITDA Margin increased on 2.9 pp from -4.1% to -1.2%
04/17/2019 • About Eltek Ltd. (
$ELTK) • By InTwits
Eltek Ltd. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -1.2%
- EBITDA Margin is quite volatile: -1.2% in 2018, -4.1% in 2017, -0.4% in 2016, 7.8% in 2015, 2.3% in 2014
- Eltek Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 13.3%.
- CAPEX is quite volatile: $1m in 2018, $0m in 2017, $1m in 2016, $1m in 2015, $2m in 2014
- The company has unprofitable business model: ROIC is -19.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.1x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 3.6%. Revenue growth showed slowdown in 18Q4 - it was -13.9% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.9 pp from -4.1% to -1.2% in 2018.
Gross Margin increased on 3.6 pp from 4.1% to 7.7% in 2018. SG&A as a % of Revenue decreased slightly on 0.60 pp from 14.4% to 13.8% in 2018.
Net Income margin increased on 3.8 pp from -11.5% to -7.7% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.8% in 2018. CAPEX/Revenue showed almost no change from 2015 to 2018. It's average level of CAPEX/Revenue for the last three years was 1.5%. During the last 5 years CAPEX as a % of Revenue bottomed in 2017 at 0.84%.
Return on investment
The company operates at negative ROIC (-19.0%) and ROE (-120.1%). ROIC surged on 11.0 pp from -30.0% to -19.0% in 2018. ROE dropped on 45.3 pp from -74.8% to -120% in 2018. ROE declined at -27.8 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.1x and Debt / EBITDA is . Net Debt / EBITDA didn't change in 2018. Debt jumped on 28.6% while cash surged on 11.8%.
Eltek Ltd. has short term refinancing risk: cash is only 10.7% of short term debt.
Financial and operational results
FY ended 12/31/2018
Eltek Ltd. ($ELTK) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 46.626 | 41.350 | 37.065 | 32.754 | 33.939 | 3.6% |
| Gross Profit | 6.022 | 6.548 | 2.817 | 1.327 | 2.597 | 95.7% |
| SG&A | 6.773 | 4.961 | 4.699 | 4.704 | 4.669 | -0.7% |
| EBITDA | 1.070 | 3.228 | -0.143 | -1.348 | -0.423 | |
| Net Income | -2.665 | 1.043 | -3.624 | -3.775 | -2.607 | |
Balance Sheet
|
|---|
| Cash | 1.129 | 1.038 | 1.234 | 0.887 | 0.992 | 11.8% |
| Short Term Debt | 2.722 | 1.275 | 2.868 | 7.063 | 9.274 | 31.3% |
| Long Term Debt | 1.838 | 2.905 | 1.954 | 0.388 | 0.308 | -20.6% |
Cash flow
|
|---|
| Capex | 2.431 | 0.797 | 0.708 | 0.275 | 0.619 | 125.1% |
Ratios
|
|---|
| Revenue growth | -7.2% | -11.3% | -10.4% | -11.6% | 3.6% | |
| EBITDA growth | -64.5% | 201.7% | -104.4% | 842.7% | -68.6% | |
|
|---|
| Gross Margin | 12.9% | 15.8% | 7.6% | 4.1% | 7.7% | 3.6% |
| EBITDA Margin | 2.3% | 7.8% | -0.4% | -4.1% | -1.2% | 2.9% |
| SG&A, % of revenue | 14.5% | 12.0% | 12.7% | 14.4% | 13.8% | -0.6% |
| Net Income Margin | -5.7% | 2.5% | -9.8% | -11.5% | -7.7% | 3.8% |
| CAPEX, % of revenue | 5.2% | 1.9% | 1.9% | 0.8% | 1.8% | 1.0% |
|
|---|
| ROIC | -4.9% | 10.2% | -14.8% | -30.0% | -19.0% | 11.0% |
| ROE | -23.6% | 10.6% | -42.7% | -74.8% | -120.1% | -45.3% |
| Net Debt/EBITDA | 3.2x | 1.0x | | | |
Eltek Ltd. ($ELTK) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 9 | 9 | 9 | 8 | | 5.6% | 15.7% | 10.4% | -13.9% |
| EBITDA | -0 | -0 | 0 | -0 | | | | | |
| Net Income | -1 | -1 | -0 | -1 | | | | | |
Balance Sheet
|
|---|
| Cash | 0 | 1 | 1 | 1 | | -57.7% | 25.1% | 19.7% | 11.8% |
| Short Term Debt | 9 | 10 | 10 | 9 | | 128.7% | 116.1% | 47.2% | 31.3% |
| Long Term Debt | 0 | 0 | 0 | 0 | | -83.0% | -86.9% | -89.2% | -20.6% |
Ratios
|
|---|
| Gross Margin | 5.0% | 6.7% | 11.4% | 7.7% | | -0.8% | 4.9% | 11.9% | -0.4% |
| EBITDA Margin | -2.1% | -3.4% | 1.3% | -0.6% | | 0.4% | 4.4% | 6.7% | 0.8% |
| Net Income Margin | -7.5% | -9.7% | -5.4% | -8.1% | | 2.1% | 4.8% | 10.2% | -0.7% |
Peers in Electronic Components
Below we provide Eltek Ltd. benchmarking against other companies in Electronic Components 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 |
|---|
| Superconductor Technologies Inc. ($SCON) | | -61.4% | -46.3% | 240.5% | 248.9% |
| Akoustis Technologies, Inc. ($AKTS) | | | | | 148.3% |
| CPS Technologies Corp. ($CPSH) | | -5.9% | -29.5% | -5.0% | 48.0% |
| Littelfuse, Inc. ($LFUS) | | 1.9% | 21.7% | 15.7% | 40.7% |
| Cavitation Technologies Inc ($CVAT) | | -73.6% | 267.5% | -40.9% | 22.6% |
| |
|---|
| Median (22 companies) | | 0.0% | 2.1% | 8.3% | 16.6% |
|---|
| Eltek Ltd. ($ELTK) | | -11.3% | -10.4% | -11.6% | 3.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cavitation Technologies Inc ($CVAT) | 93.5% | 85.0% | 93.2% | 93.5% | 90.6% |
| Dolby Laboratories ($DLB) | 92.7% | 90.2% | 89.4% | 89.1% | 87.9% |
| Flexpoint Sensor Systems Inc ($FLXT) | 96.7% | 95.2% | 92.7% | 87.9% | 86.1% |
| Airgain, Inc. ($AIRG) | 44.6% | 41.9% | 44.4% | 47.1% | 43.7% |
| II-VI Incorporated ($IIVI) | 33.2% | 36.6% | 37.8% | 40.0% | 39.8% |
| |
|---|
| Median (22 companies) | 33.2% | 36.7% | 33.7% | 38.3% | 37.6% |
|---|
| Eltek Ltd. ($ELTK) | 12.9% | 15.8% | 7.6% | 4.1% | 7.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Corning Incorporated ($GLW) | 32.2% | 27.5% | 27.9% | 27.3% | 25.4% |
| Dolby Laboratories ($DLB) | 34.1% | 29.1% | 30.9% | 30.8% | 25.1% |
| Amphenol Corporation ($APH) | 22.5% | 22.9% | 22.6% | 23.6% | 24.2% |
| Vishay Intertechnology, Inc. ($VSH) | 14.8% | 11.9% | 15.4% | 18.7% | 21.3% |
| IEH Corp ($IEHC) | 18.4% | 21.2% | 18.0% | 16.3% | 20.2% |
| |
|---|
| Median (22 companies) | 9.4% | 12.2% | 14.1% | 11.4% | 12.7% |
|---|
| Eltek Ltd. ($ELTK) | 2.3% | 7.8% | -0.4% | -4.1% | -1.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Akoustis Technologies, Inc. ($AKTS) | | | | 334.0% | 574.7% |
| CBAK Energy Technology, Inc. ($CBAK) | 8.0% | 92.4% | 57.2% | 20.6% | 30.1% |
| Corning Incorporated ($GLW) | 11.1% | 13.7% | 12.0% | 17.8% | 19.9% |
| II-VI Incorporated ($IIVI) | 4.3% | 7.1% | 7.0% | 14.3% | 13.2% |
| Superconductor Technologies Inc. ($SCON) | 586.1% | 57.8% | 0.0% | 34.1% | 12.1% |
| |
|---|
| Median (22 companies) | 3.9% | 3.1% | 3.4% | 5.1% | 4.1% |
|---|
| Eltek Ltd. ($ELTK) | 5.2% | 1.9% | 1.9% | 0.8% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Vishay Intertechnology, Inc. ($VSH) | 8.3% | 4.5% | 9.8% | 18.4% | 27.8% |
| IEH Corp ($IEHC) | 27.7% | 28.2% | 24.2% | 19.2% | 26.1% |
| Amphenol Corporation ($APH) | 19.1% | 18.5% | 18.3% | 19.2% | 21.1% |
| Inrad Optics Inc ($INRD) | -26.7% | -5.2% | -9.2% | -10.4% | 17.7% |
| Littelfuse, Inc. ($LFUS) | 14.3% | 11.1% | 11.7% | 15.8% | 12.1% |
| |
|---|
| Median (22 companies) | 6.9% | 5.8% | 6.4% | 7.0% | 8.4% |
|---|
| Eltek Ltd. ($ELTK) | -4.9% | 10.2% | -14.8% | -30.0% | -19.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Belden Inc ($BDC) | 3.9x | 5.2x | 2.1x | 2.6x | 2.3x |
| Inrad Optics Inc ($INRD) | | 9.9x | | | 1.4x |
| Corning Incorporated ($GLW) | -0.7x | -0.0x | -0.5x | 0.3x | 1.3x |
| Bel Fuse Inc. ($BELFA) | 4.6x | 2.0x | | 1.4x | 1.3x |
| Amphenol Corporation ($APH) | 1.4x | 0.8x | 1.4x | 1.1x | 1.2x |
| |
|---|
| Median (15 companies) | -0.6x | -0.3x | -0.5x | -0.3x | 0.6x |
|---|
