Trio-Tech International reports 26.3% EBITDA decline in 2019 and 2.1 pp EBITDA Margin decline from 10.4% to 8.3%
09/23/2019 • About Trio-Tech International (
$TRT) • By InTwits
Trio-Tech International reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Trio-Tech International has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.3%. At the same time it's a lot of higher than industry average of 3.5%.
- CAPEX is quite volatile: $2m in FY2019, $1m in FY2018, $1m in FY2017, $1m in FY2016, $1m in FY2015
- 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 decreased on 7.5%. During FY2015-FY2019 Revenue growth topped in FY2017 at 11.9% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.7 pp from -10.3% to -4.7% in 2019.
Gross Margin decreased on 2.1 pp from 25.1% to 23.0% in FY2019. Gross Margin followed a declining trend at -0.70 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 1.0 pp from 19.1% to 20.1% in FY2019. During the last 5 years SG&A as a % of Revenue bottomed in FY2018 at 19.1%.
Net Income margin increased slightly on 1.1 pp from 2.8% to 3.9% in FY2019. Net Income margin stuck to a growing trend at 0.53 pp per annum in FY2015-FY2019.
Investments (CAPEX, working capital and M&A)
In FY2019 Trio-Tech International had CAPEX/Revenue of 7.2%. Trio-Tech International showed CAPEX/Revenue growth of 2.4 pp from 4.8% in FY2016 to 7.2% in FY2019. It's average level of CAPEX/Revenue for the last three years was 6.2%. Battling declining revenue Trio-Tech International invested a large share of EBITDA (87.6%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (2.7%) and ROE (6.8%). ROIC decreased on 5.1 pp from 7.9% to 2.7% in FY2019. ROE increased slightly on 1.1 pp from 5.6% to 6.8% in FY2019. ROE grew at 0.96 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 1.1x. Debt dropped on 20.1% while cash dropped on 25.6%.
Trio-Tech International has no short term refinancing risk: cash is higher than short term debt (507.6%).
Valuation and dividends
Trio-Tech International's trades at EV/EBITDA 3.0x and P/E 7.0x.
Financial and operational results
FY ended 06/30/2019
Trio-Tech International ($TRT) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 33.932 | 34.454 | 38.538 | 42.361 | 39.198 | -7.5% |
| Gross Profit | 8.925 | 8.769 | 9.462 | 10.638 | 9.001 | -15.4% |
| SG&A | 7.565 | 7.125 | 7.718 | 8.076 | 7.875 | -2.5% |
| EBITDA | 3.447 | 3.298 | 3.325 | 4.402 | 3.244 | -26.3% |
| Net Income | 0.521 | 0.779 | 1.316 | 1.184 | 1.545 | 30.5% |
Balance Sheet
|
|---|
| Cash | 3.711 | 3.807 | 4.772 | 6.539 | 4.863 | -25.6% |
| Short Term Debt | 2.121 | 3.068 | 3.044 | 2.660 | 0.958 | -64.0% |
| Long Term Debt | 2.673 | 2.228 | 2.083 | 1.961 | 2.734 | 39.4% |
Cash flow
|
|---|
| Capex | 2.694 | 1.657 | 2.285 | 2.309 | 2.841 | 23.0% |
Ratios
|
|---|
| Revenue growth | -6.4% | 1.5% | 11.9% | 9.9% | -7.5% | |
| EBITDA growth | 49.7% | -4.3% | 0.8% | 32.4% | -26.3% | |
|
|---|
| Gross Margin | 26.3% | 25.5% | 24.6% | 25.1% | 23.0% | -2.1% |
| EBITDA Margin | 10.2% | 9.6% | 8.6% | 10.4% | 8.3% | -2.1% |
| SG&A, % of revenue | 22.3% | 20.7% | 20.0% | 19.1% | 20.1% | 1.0% |
| Net Income Margin | 1.5% | 2.3% | 3.4% | 2.8% | 3.9% | 1.1% |
| CAPEX, % of revenue | 7.9% | 4.8% | 5.9% | 5.5% | 7.2% | 1.8% |
|
|---|
| ROIC | 4.4% | 5.6% | 5.6% | 7.9% | 2.7% | -5.1% |
| ROE | 2.7% | 4.1% | 6.7% | 5.6% | 6.8% | 1.1% |
| Net Debt/EBITDA | 0.3x | 0.5x | 0.1x | -0.4x | -0.4x | 0.1x |
Peers in Semiconductor Equipment
Below you can find Trio-Tech International benchmarking vs. other companies in Semiconductor Equipment 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Atomera Incorporated ($ATOM) | | | | 123.6% | |
| ACM Research, Inc. ($ACMR) | | -12.3% | 33.4% | 104.5% | |
| SCI Engineered Materials Inc ($SCIA) | -13.0% | -32.1% | 24.4% | 67.0% | |
| Aehr Test Systems ($AEHR) | -49.1% | 44.7% | 30.3% | 56.4% | |
| SolarEdge Technologies, Inc. ($SEDG) | 144.0% | 50.7% | 23.9% | 54.4% | |
| |
|---|
| Median (37 companies) | -0.5% | 7.8% | 24.7% | 15.5% | 12.4% |
|---|
| Trio-Tech International ($TRT) | | | 11.9% | 9.9% | -7.5% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Xperi Corporation ($XPER) | 99.8% | 99.8% | 98.3% | 96.7% | |
| KLA-Tencor Corporation ($KLAC) | 56.8% | 61.0% | 63.0% | 64.1% | |
| Teradyne, Inc. ($TER) | 55.8% | 54.7% | 57.2% | 58.1% | |
| Nova Measuring Instruments Ltd. ($NVMI) | 51.9% | 45.9% | 59.1% | 57.8% | |
| Nanometrics Incorporated ($NANO) | 47.9% | 51.6% | 52.9% | 56.7% | |
| |
|---|
| Median (38 companies) | 38.9% | 40.0% | 44.0% | 41.2% | 35.6% |
|---|
| Trio-Tech International ($TRT) | | 25.5% | 24.6% | 25.1% | 23.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| KLA-Tencor Corporation ($KLAC) | 26.4% | 34.4% | 38.3% | 39.6% | |
| DAQO New Energy Corp. ($DQ) | 31.6% | 43.3% | 49.1% | 36.1% | 27.1% |
| Xperi Corporation ($XPER) | 67.5% | 47.6% | 23.4% | 34.3% | |
| Lam Research Corporation ($LRCX) | 20.3% | 23.2% | 27.6% | 32.0% | |
| Cabot Microelectronics Corporation ($CCMP) | 22.6% | 23.4% | 27.2% | 31.5% | |
| |
|---|
| Median (37 companies) | 9.9% | 12.1% | 16.2% | 16.6% | 22.6% |
|---|
| Trio-Tech International ($TRT) | | 9.6% | 8.6% | 10.4% | 8.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 4.0% | 3.6% | 0.0% | 58.8% | |
| DAQO New Energy Corp. ($DQ) | 44.7% | 29.5% | 19.8% | 47.4% | 79.7% |
| AXT Inc ($AXTI) | 5.4% | 3.4% | 21.6% | 39.6% | |
| STR Holdings Inc ($STRI) | 8.1% | 1.6% | 9.0% | 36.6% | |
| Photronics, Inc. ($PLAB) | 19.8% | 10.4% | 20.4% | 17.3% | |
| |
|---|
| Median (37 companies) | 2.7% | 2.2% | 2.8% | 2.9% | 40.3% |
|---|
| Trio-Tech International ($TRT) | | 4.8% | 5.9% | 5.5% | 7.2% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| KLA-Tencor Corporation ($KLAC) | 16.5% | 27.2% | 34.0% | 39.9% | |
| Lam Research Corporation ($LRCX) | 10.9% | 11.8% | 18.7% | 33.9% | |
| Versum Materials, Inc. ($VSM) | 26.2% | 32.4% | 30.0% | 32.1% | |
| Advanced Energy Industries, Inc. ($AEIS) | 30.2% | 41.2% | 45.7% | 31.3% | |
| SolarEdge Technologies, Inc. ($SEDG) | 33.6% | 31.2% | 26.5% | 28.6% | |
| |
|---|
| Median (39 companies) | 6.0% | 7.6% | 13.1% | 12.1% | 12.0% |
|---|
| Trio-Tech International ($TRT) | | 5.6% | 5.6% | 7.9% | 2.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Xperi Corporation ($XPER) | -0.1x | 4.2x | 5.0x | 2.6x | |
| Ultra Clean Holdings, Inc. ($UCTT) | 1.5x | 0.4x | -0.2x | 2.4x | |
| Ichor Holdings ($ICHR) | 1.7x | -0.4x | 2.0x | 1.8x | |
| Versum Materials, Inc. ($VSM) | -0.1x | 2.7x | 2.1x | 1.4x | |
| DAQO New Energy Corp. ($DQ) | 4.3x | 2.3x | 0.9x | 1.2x | 3.5x |
| |
|---|
| Median (31 companies) | -1.3x | -1.3x | -0.7x | -1.0x | 1.0x |
|---|
| Trio-Tech International ($TRT) | | 0.5x | 0.1x | -0.4x | -0.4x |
