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IEH Corp reports 50.4% Net Income decline in 2020 while 13.2% Revenue growth

10/08/2020 • About IEH Corp ($IEHC) • By InTwits

IEH Corp reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
  • IEH Corp is a growth stock: FY2020 revenue growth was 13.2%, 5 year revenue CAGR was 14.4% at FY2020 ROIC 12.8%
  • IEH Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 18.8%
  • CAPEX is quite volatile: $1m in FY2020, $1m in FY2019, $0m in FY2018, $1m in FY2017, $1m in FY2016
  • The company has highly profitable business model: ROIC is 12.8%
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 13.2%. Revenue growth showed acceleration in FY20Q4 - it increased 26.9% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 14.4 pp from 28.2% to 13.8% in FY2020.

Gross Margin dropped on 10.5 pp from 42.3% to 31.9% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2019 at 42.3%. SG&A as a % of Revenue increased on 4.6 pp from 14.1% to 18.7% in FY2020.

Net Income margin dropped on 10.2 pp from 18.2% to 8.0% in FY2020.

Investments (CAPEX, working capital and M&A)

In FY2020 IEH Corp had CAPEX/Revenue of 3.0%. IEH Corp showed almost no change in CAPEX/Revenue from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 2.5%.

Return on investment

The company operates at good ROIC (12.8%) while ROE is low (10.5%). ROIC dropped on 23.8 pp from 36.6% to 12.8% in FY2020. ROE dropped on 15.8 pp from 26.2% to 10.5% in FY2020.

Leverage (Debt)

Debt level is -1.7x Net Debt / EBITDA and 0.0x Debt / EBITDA. Debt jumped while cash increased on 9.6%.

IEH Corp has no short term refinancing risk: cash is higher than short term debt (6,486.8%).

Valuation and dividends

IEH Corp's trades at EV/EBITDA 5.0x and P/E 11.7x.

Financial and operational results

FY ended 03/31/2020

IEH Corp ($IEHC) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit6.5267.0318.73812.03010.248-14.8%
Net Income1.6901.4742.5665.1612.557-50.4%
Balance Sheet
Short Term Debt0.0000.0000.0000.0000.120
Long Term Debt0.0000.0000.0000.0000.000
Cash flow
Revenue growth18.1%4.0%16.6%21.0%13.2%
EBITDA growth0.2%-5.8%44.4%69.6%-44.7%

Gross Margin33.7%34.9%37.2%42.3%31.9%-10.5%
EBITDA Margin18.0%16.3%20.2%28.2%13.8%-14.4%
SG&A, % of revenue15.7%18.7%17.1%14.1%18.7%4.6%
Net Income Margin8.7%7.3%10.9%18.2%8.0%-10.2%
CAPEX, % of revenue2.6%3.0%1.6%3.0%3.0%0.1%

Net Debt/EBITDA-0.5x-0.4x-0.3x-0.9x-1.7x-0.8x

IEH Corp ($IEHC) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
Revenue8889 -16.3%14.5%40.9%26.9%
EBITDA222-1 -52.3%49.7%40.1%-171.3%
Net Income111-1 -59.7%40.4%7.5%-145.4%
Balance Sheet
Cash6788 177.4%60.6%15.6%9.6%
Short Term Debt0000 ----
Long Term Debt0000 ----
Gross Margin36.3%46.3%37.4%9.9% -11.1%7.6%0.8%-34.3%
EBITDA Margin 21.6% 30.0% 20.0% -15.6% -16.3%7.1%-0.1%-43.3%
Net Income Margin 12.0% 17.6% 10.1% -6.1% -13.0%3.3%-3.1%-23.3%

Peers in Electronic Components

Below we provide IEH Corp 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.