Espey Mfg. & Electronics Corp. Net Income dropped on 50.3% and EBITDA Margin decreased on 3.2 pp from 8.8% to 5.5%
09/21/2020 • About Espey Mfg. & Electronics Corp. (
$ESP) • By InTwits
Espey Mfg. & Electronics Corp. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 5.5% in FY2020, 8.8% in FY2019, 13.2% in FY2018, 8.7% in FY2017, 17.4% in FY2016
- Espey Mfg. & Electronics Corp. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 1.4%.
- CAPEX is quite volatile: $0m in FY2020, $1m in FY2019, $2m in FY2018, $0m in FY2017, $0m in FY2016
- The company has potentially unprofitable business model: ROIC is 3.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Espey Mfg. & Electronics Corp.'s Revenue dropped on 13.6%. Annual revenue decline showed slowdown in FY20Q4 - revenue increased on 4.3%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 3.2 pp from 8.8% to 5.5% in FY2020.
Gross Margin decreased slightly on 1.7 pp from 19.4% to 17.6% in FY2020. Gross Margin followed a declining trend at -2.0 pp per annum in FY2016-FY2020. SG&A as a % of Revenue increased slightly on 1.8 pp from 12.1% to 13.9% in FY2020.
Net Income margin decreased on 2.7 pp from 6.4% to 3.7% in FY2020.
Investments (CAPEX, working capital and M&A)
Espey Mfg. & Electronics Corp.'s CAPEX/Revenue was 0.68% in FY2020. The company showed small CAPEX/Revenue decline of 0.88 pp from 1.6% in FY2017 to 0.68% in FY2020. It's average level of CAPEX/Revenue for the last three years was 2.8%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2018 at 5.9% and was declining since that time.
Return on investment
The company operates at low ROIC (3.7%) and ROE (3.7%). ROIC decreased on 4.4 pp from 8.1% to 3.7% in FY2020. ROE decreased on 3.5 pp from 7.2% to 3.7% in FY2020.
Leverage (Debt)
The company has no debt. Cash jumped on 269%.
Valuation and dividends
Espey Mfg. & Electronics Corp.'s trades at EV/EBITDA 18.3x and P/E 32.0x.
Management team
Patrick Enright Jr is a Espey Mfg. & Electronics Corp.'s CEO. Patrick Enright Jr has spent 6 years with the company. Espey Mfg. & Electronics Corp.'s CFO David A O'Neil has spent 21 years with the company.
Financial and operational results
FY ended 06/30/2020
Espey Mfg. & Electronics Corp. ($ESP) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 27.471 | 22.521 | 32.518 | 36.478 | 31.526 | -13.6% |
| Gross Profit | 7.372 | 4.715 | 7.662 | 7.063 | 5.559 | -21.3% |
| SG&A | 3.028 | 3.188 | 3.808 | 4.410 | 4.386 | -0.5% |
| EBITDA | 4.778 | 1.962 | 4.284 | 3.194 | 1.741 | -45.5% |
| Net Income | 3.176 | 1.136 | 3.076 | 2.343 | 1.164 | -50.3% |
Balance Sheet
|
|---|
| Cash | 10.032 | 10.058 | 4.299 | 1.463 | 5.402 | 269.3% |
| 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 | 0.284 | 0.352 | 1.923 | 0.608 | 0.214 | -64.8% |
Ratios
|
|---|
| Revenue growth | 2.4% | -18.0% | 44.4% | 12.2% | -13.6% | |
| EBITDA growth | -2.0% | -58.9% | 118.3% | -25.4% | -45.5% | |
|
|---|
| Gross Margin | 26.8% | 20.9% | 23.6% | 19.4% | 17.6% | -1.7% |
| EBITDA Margin | 17.4% | 8.7% | 13.2% | 8.8% | 5.5% | -3.2% |
| SG&A, % of revenue | 11.0% | 14.2% | 11.7% | 12.1% | 13.9% | 1.8% |
| Net Income Margin | 11.6% | 5.0% | 9.5% | 6.4% | 3.7% | -2.7% |
| CAPEX, % of revenue | 1.0% | 1.6% | 5.9% | 1.7% | 0.7% | -1.0% |
|
|---|
| ROIC | 13.7% | 4.7% | 11.8% | 8.1% | 3.7% | -4.4% |
| ROE | 10.0% | 3.5% | 9.4% | 7.2% | 3.7% | -3.5% |
| Net Debt/EBITDA | -2.1x | -5.1x | -1.0x | -0.5x | -3.1x | -2.6x |
Espey Mfg. & Electronics Corp. ($ESP) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6 | 7 | 6 | 12 | | -28.9% | -0.2% | -32.8% | 4.3% |
| EBITDA | 0 | 0 | -0 | 1 | | 83.4% | 5.7% | -100.3% | -22.2% |
| Net Income | 0 | 0 | -0 | 1 | | 32.6% | 5.1% | -111.2% | -16.1% |
Balance Sheet
|
|---|
| Cash | 5 | 6 | 4 | 5 | | -26.5% | 84.5% | 195.0% | 269.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 19.2% | 20.3% | 14.7% | 16.8% | | 7.3% | -0.4% | -8.6% | -3.9% |
| EBITDA Margin | 3.3% | 5.1% | -0.1% | 9.7% | | 2.0% | 0.3% | -13.3% | -3.3% |
| Net Income Margin | 1.4% | 3.1% | -1.7% | 7.9% | | 0.6% | 0.2% | -11.7% | -1.9% |
Peers in Electrical Components & Equipment
Below we provide Espey Mfg. & Electronics Corp. benchmarking against other companies in Electrical Components & Equipment 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Flux Power Holdings Inc ($FLUX) | - | 61.6% | 356.5% | 126.3% | 80.8% |
| Acuity Brands Inc ($AYI) | - | 6.5% | 5.0% | -0.2% | -9.4% |
| |
|---|
| Median (2 companies) | - | 34.1% | 180.8% | 63.0% | 35.7% |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | - | -18.0% | 44.4% | 12.2% | -13.6% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Acuity Brands Inc ($AYI) | 43.6% | 42.3% | 40.4% | 40.3% | 42.2% |
| Flux Power Holdings Inc ($FLUX) | -96.8% | -79.8% | -19.3% | 5.9% | 13.0% |
| |
|---|
| Median (2 companies) | -26.6% | -18.8% | 10.5% | 23.1% | 27.6% |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 26.8% | 20.9% | 23.6% | 19.4% | 17.6% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Acuity Brands Inc ($AYI) | 16.3% | 17.2% | 14.7% | 15.0% | 13.7% |
| Flux Power Holdings Inc ($FLUX) | -732.1% | -458.5% | -149.5% | -119.9% | -73.7% |
| |
|---|
| Median (2 companies) | -357.9% | -220.7% | -67.4% | -52.4% | -30.0% |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 17.4% | 8.7% | 13.2% | 8.8% | 5.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Flux Power Holdings Inc ($FLUX) | 0.9% | 5.9% | 2.1% | 3.0% | 1.9% |
| Acuity Brands Inc ($AYI) | 2.5% | 1.9% | 1.2% | 1.4% | 1.7% |
| |
|---|
| Median (2 companies) | 1.7% | 3.9% | 1.6% | 2.2% | 1.8% |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 1.0% | 1.6% | 5.9% | 1.7% | 0.7% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Acuity Brands Inc ($AYI) | 24.8% | 25.0% | 21.5% | 20.4% | 14.5% |
| Flux Power Holdings Inc ($FLUX) | - | -1,762.0% | -283.6% | -333.9% | -553.1% |
| |
|---|
| Median (2 companies) | 24.8% | -868.5% | -131.1% | -156.7% | -269.3% |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | 13.7% | 4.7% | 11.8% | 8.1% | 3.7% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Acuity Brands Inc ($AYI) | -0.1x | 0.1x | 0.4x | -0.2x | -0.4x |
| |
|---|
| Median (1 company) | -0.1x | 0.1x | 0.4x | -0.2x | -0.4x |
|---|
| Espey Mfg. & Electronics Corp. ($ESP) | -2.1x | -5.1x | -1.0x | -0.5x | -3.1x |
