IEC Electronics Corp. reports 31.6% EBITDA growth in 2020 and 16.4% Revenue growth
11/20/2020 • About IEC Electronics Corp. (
$IEC) • By InTwits
IEC Electronics Corp. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- IEC Electronics Corp. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.0%
- CAPEX is quite volatile: $6m in FY2020, $2m in FY2019, $4m in FY2018, $4m in FY2017, $3m in FY2016
- The company has highly profitable business model: ROIC is 14.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
IEC Electronics Corp.'s Revenue jumped on 16.4%. Revenue growth showed slowdown in FY20Q4 - it was 5.7% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.1 pp from 27.6% to 28.7% in FY2020. During the last 5 years EBITDA Margin bottomed in FY2017 at 3.8% and was growing since that time.
Gross Margin decreased slightly on 0.59 pp from 13.8% to 13.2% in FY2020. SG&A as a % of Revenue decreased slightly on 1.3 pp from 9.0% to 7.7% in FY2020. SG&A as a % of Revenue followed a declining trend at -0.84 pp per annum in FY2016-FY2020.
Net Income margin increased slightly on 0.67 pp from 3.0% to 3.7% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 3.4%. The company's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 2.7%.
Return on investment
The company operates at good ROIC (14.8%) and ROE (19.2%). ROIC increased on 2.1 pp from 12.7% to 14.8% in FY2020. ROE increased on 2.4 pp from 16.8% to 19.2% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2017 at 3.1% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.1x and Debt / EBITDA is 2.1x. Net Debt / EBITDA dropped on 1.5x from 3.6x to 2.1x in FY2020. Debt dropped on 22.9% while cash surged. During the last 5 years Net Debt/EBITDA topped in FY2017 at 5.6x and was declining since that time.
IEC Electronics Corp. has short term refinancing risk: cash is only 62.8% of short term debt.
Valuation and dividends
IEC Electronics Corp.'s trades at EV/EBITDA 9.5x and P/E 14.9x.
Management team
Jeffrey T Schlarbaum "Jeff" is a IEC Electronics Corp.'s CEO. Jeffrey T Schlarbaum "Jeff" has spent 6 years with the company. The company's CFO is Thomas L Barbato. Thomas L Barbato has 2 years tenure at the company.
Financial and operational results
FY ended 09/30/2020
IEC Electronics Corp. ($IEC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 127.0 | 96.5 | 116.9 | 157.0 | 182.7 | 16.4% |
| Gross Profit | 20.3 | 11.3 | 14.2 | 21.6 | 24.1 | 11.4% |
| SG&A | 14.0 | 10.2 | 11.4 | 14.1 | 14.0 | -0.6% |
| EBITDA | 9.4 | 3.7 | 5.1 | 10.4 | 13.7 | 31.6% |
| Net Income | 4.8 | 0.1 | 10.4 | 4.7 | 6.8 | 42.3% |
Balance Sheet
|
|---|
| Cash | 0.8 | 0.0 | 0.0 | 0.0 | 0.3 | |
| Short Term Debt | 2.9 | 1.2 | 1.8 | 1.7 | 0.5 | -70.9% |
| Long Term Debt | 16.7 | 19.4 | 23.0 | 35.6 | 28.3 | -20.6% |
Cash flow
|
|---|
| Capex | 3.3 | 3.5 | 3.9 | 2.1 | 6.3 | 195.9% |
Ratios
|
|---|
| Revenue growth | 0.0% | -24.1% | 21.2% | 34.3% | 16.4% | |
| EBITDA growth | 327.6% | -61.0% | 38.2% | 105.1% | 31.6% | |
|
|---|
| Gross Margin | 16.0% | 11.7% | 12.1% | 13.8% | 13.2% | -0.6% |
| EBITDA Margin | 7.4% | 3.8% | 4.3% | 6.6% | 7.5% | 0.9% |
| SG&A, % of revenue | 11.1% | 10.6% | 9.8% | 9.0% | 7.7% | -1.3% |
| Net Income Margin | 3.8% | 0.1% | 8.9% | 3.0% | 3.7% | 0.7% |
| CAPEX, % of revenue | 2.6% | 3.7% | 3.4% | 1.3% | 3.4% | 2.1% |
|
|---|
| ROIC | 16.9% | 3.1% | 6.4% | 12.7% | 14.8% | 2.1% |
| ROE | 42.4% | 0.6% | 52.3% | 16.8% | 19.2% | 2.4% |
| Net Debt/EBITDA | 2.0x | 5.6x | 4.9x | 3.6x | 2.1x | -1.5x |
IEC Electronics Corp. ($IEC) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 45 | 44 | 47 | 46 | | 26.2% | 18.4% | 17.5% | 5.7% |
| EBITDA | 3 | 3 | 4 | 4 | | 16.9% | 67.6% | 47.0% | 14.7% |
| Net Income | 1 | 2 | 2 | 2 | | 10.9% | 127.3% | 74.6% | 7.4% |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 0 | 0 | | - | - | - | - |
| Short Term Debt | 2 | 2 | 0 | 0 | | -14.5% | -5.5% | -71.4% | -70.9% |
| Long Term Debt | 34 | 35 | 32 | 28 | | 30.8% | 8.6% | -3.3% | -20.6% |
Ratios
|
|---|
| Gross Margin | 11.7% | 12.5% | 14.0% | 14.5% | | -2.6% | 0.2% | 0.1% | -0.1% |
| EBITDA Margin | 6.2% | 7.2% | 8.2% | 8.7% | | -0.5% | 2.1% | 1.6% | 0.7% |
| Net Income Margin | 2.7% | 3.4% | 4.5% | 4.1% | | -0.4% | 1.7% | 1.5% | 0.1% |
Peers in Electronic Manufacturing Services
Below we provide IEC Electronics Corp. benchmarking against other companies in Electronic Manufacturing Services 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Netlist Inc ($NLST) | - | 95.0% | -12.5% | -22.1% | 81.0% |
| eMagin Corporation ($EMAN) | - | 3.0% | 19.1% | 1.9% | 10.1% |
| Jabil Inc. ($JBL) | - | 3.9% | 15.9% | 14.4% | 7.8% |
| Plexus Corp. ($PLXS) | - | -1.1% | 13.7% | 10.1% | 7.1% |
| SMTC Corporation ($SMTX) | - | -17.1% | 55.2% | 72.4% | 3.7% |
| |
|---|
| Median (13 companies) | 4.6% | 3.0% | 7.1% | 1.9% | -8.7% |
|---|
| IEC Electronics Corp. ($IEC) | - | -24.1% | 21.2% | 34.3% | 16.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Neonode Inc. ($NEON) | 86.9% | 77.1% | 89.2% | 89.7% | 82.0% |
| IPG Photonics Corporation ($IPGP) | 54.9% | 56.6% | 54.8% | 46.1% | 44.9% |
| CTS Corporation ($CTS) | 35.4% | 33.2% | 35.1% | 33.6% | 32.8% |
| TE Connectivity Ltd. ($TEL) | 33.7% | 34.3% | 33.9% | 32.7% | 30.7% |
| RF Industries, Ltd. ($RFIL) | 28.0% | 30.4% | 34.1% | 28.3% | 26.9% |
| |
|---|
| Median (13 companies) | 22.2% | 15.8% | 15.2% | 15.4% | 17.1% |
|---|
| IEC Electronics Corp. ($IEC) | 16.0% | 11.7% | 12.1% | 13.8% | 13.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.8% | 44.7% | 40.9% | 26.8% | 24.0% |
| CTS Corporation ($CTS) | 20.7% | 14.0% | 17.8% | 17.6% | 18.1% |
| TE Connectivity Ltd. ($TEL) | 20.9% | 20.4% | 21.4% | 19.8% | 11.1% |
| TTM Technologies, Inc. ($TTMI) | 14.0% | 14.6% | 13.5% | 15.8% | 9.7% |
| Plexus Corp. ($PLXS) | 5.7% | 6.9% | 5.8% | 6.1% | 6.5% |
| |
|---|
| Median (12 companies) | 4.8% | 5.0% | 4.8% | 5.8% | 5.3% |
|---|
| IEC Electronics Corp. ($IEC) | 7.4% | 3.8% | 4.3% | 6.6% | 7.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| eMagin Corporation ($EMAN) | 6.7% | 6.2% | 8.8% | 4.2% | 8.5% |
| IPG Photonics Corporation ($IPGP) | 12.6% | 9.0% | 11.0% | 10.2% | 7.3% |
| TTM Technologies, Inc. ($TTMI) | 3.4% | 5.7% | 5.3% | 6.7% | 4.9% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 5.6% | 6.7% | 5.6% | 4.6% |
| Jabil Inc. ($JBL) | 5.0% | 3.8% | 4.7% | 4.0% | 3.6% |
| |
|---|
| Median (12 companies) | 2.8% | 2.7% | 2.4% | 1.6% | 2.6% |
|---|
| IEC Electronics Corp. ($IEC) | 2.6% | 3.7% | 3.4% | 1.3% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Sanmina Corporation ($SANM) | 14.2% | 13.9% | 7.0% | 16.2% | 13.0% |
| Plexus Corp. ($PLXS) | 8.7% | 10.3% | 9.6% | 12.6% | 12.4% |
| Jabil Inc. ($JBL) | 12.3% | 9.3% | 12.5% | 16.1% | 10.8% |
| CTS Corporation ($CTS) | 18.1% | 9.8% | 14.8% | 11.8% | 9.2% |
| SMTC Corporation ($SMTX) | 2.0% | -16.0% | 4.0% | 4.2% | 7.4% |
| |
|---|
| Median (13 companies) | 6.2% | 5.7% | 6.7% | 10.2% | 4.5% |
|---|
| IEC Electronics Corp. ($IEC) | 16.9% | 3.1% | 6.4% | 12.7% | 14.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SMTC Corporation ($SMTX) | 1.0x | - | 11.3x | 3.8x | 4.2x |
| TE Connectivity Ltd. ($TEL) | 1.4x | 1.3x | 1.1x | 1.1x | 2.7x |
| TTM Technologies, Inc. ($TTMI) | 2.2x | 1.5x | 3.2x | 3.3x | 2.0x |
| Jabil Inc. ($JBL) | 1.0x | 0.8x | 1.0x | 0.9x | 1.4x |
| Plexus Corp. ($PLXS) | -1.2x | -1.5x | -0.7x | 0.3x | -0.0x |
| |
|---|
| Median (10 companies) | -0.0x | -0.1x | -0.2x | 0.1x | -0.1x |
|---|
| IEC Electronics Corp. ($IEC) | 2.0x | 5.6x | 4.9x | 3.6x | 2.1x |
