SMTC Corporation Debt increased on 5.4% while EBITDA decreased on 3.8%
03/17/2021 • About SMTC Corporation (
$SMTX) • By InTwits
SMTC Corporation reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 5.3% in FY2020, 5.8% in FY2019, 3.8% in FY2018, -2.0% in FY2017, 3.0% in FY2016
- SMTC Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's in pair with industry average of 3.2%
- CAPEX is quite volatile: $2m in FY2020, $4m in FY2019, $4m in FY2018, $1m in FY2017, $2m in FY2016
- The company has business model with low profitability: ROIC is 7.4%
- It operates with high leverage: Net Debt/EBITDA is 4.2x while industry average is 3.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SMTC Corporation's Revenue increased on 3.7%. Revenue growth showed acceleration in FY20Q4 - it increased 12.3% YoY. During FY2016-FY2020 Revenue growth topped in FY2019 at 72.4%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 6.7 pp from 13.4% to 6.7% in FY2020.
Gross Margin increased slightly on 1.3 pp from 9.9% to 11.2% in FY2020. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin increased slightly on 1.5 pp from -1.6% to -0.15% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 0.58%. CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average level of CAPEX/Revenue for the last three years was 1.2%.
Return on investment
The company operates at low but positive ROIC (7.4%) and negative ROE (-1.4%). ROIC increased on 3.1 pp from 4.2% to 7.4% in FY2020. ROE jumped on 14.9 pp from -16.3% to -1.4% in FY2020. During the last 5 years ROIC bottomed in FY2017 at -16.0% and was growing since that time.
Leverage (Debt)
Debt level is 4.2x Net Debt / EBITDA and 4.3x Debt / EBITDA. Net Debt / EBITDA surged on 0.4x from 3.8x to 4.2x in FY2020. Debt increased on 5.4% while cash dropped on 56.1%.
SMTC Corporation has short term refinancing risk: cash is only 1.4% of short term debt.
Management team
SMTC Corporation's CEO is Edward J Smith "Ed". Edward J Smith "Ed" has 3 years tenure with the company. SMTC Corporation's CFO Steven M Waszak "Steve" has spent 3 years with the company.
Financial and operational results
FY ended 01/03/2021
SMTC Corporation ($SMTX) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 167.9 | 139.2 | 216.1 | 372.5 | 386.5 | 3.7% |
| Gross Profit | 15.0 | 10.9 | 21.7 | 37.0 | 43.3 | 16.9% |
| SG&A | 14.0 | 14.0 | 18.2 | 27.0 | 29.6 | 9.5% |
| EBITDA | 5.0 | -2.8 | 8.2 | 21.5 | 20.6 | -3.8% |
| Net Income | -0.2 | -7.8 | -0.4 | -6.0 | -0.6 | |
Balance Sheet
|
|---|
| Cash | 8.5 | 5.5 | 1.6 | 1.4 | 0.6 | -56.1% |
| Short Term Debt | 5.1 | 14.4 | 27.9 | 38.3 | 42.0 | 9.7% |
| Long Term Debt | 8.3 | 6.1 | 66.0 | 45.2 | 46.0 | 1.8% |
Cash flow
|
|---|
| Capex | 2.2 | 1.5 | 4.4 | 3.9 | 2.2 | -42.2% |
Ratios
|
|---|
| Revenue growth | -23.9% | -17.1% | 55.2% | 72.4% | 3.7% | |
| EBITDA growth | -14.9% | -156.4% | -393.6% | 161.6% | -3.8% | |
|
|---|
| Gross Margin | 9.0% | 7.8% | 10.0% | 9.9% | 11.2% | 1.3% |
| EBITDA Margin | 3.0% | -2.0% | 3.8% | 5.8% | 5.3% | -0.4% |
| SG&A, % of revenue | 8.3% | 10.0% | 8.4% | 7.3% | 7.7% | 0.4% |
| Net Income Margin | -0.1% | -5.6% | -0.2% | -1.6% | -0.2% | 1.5% |
| CAPEX, % of revenue | 1.3% | 1.1% | 2.0% | 1.0% | 0.6% | -0.5% |
|
|---|
| ROIC | 2.0% | -16.0% | 4.0% | 4.2% | 7.4% | 3.1% |
| ROE | -0.9% | -34.4% | -1.7% | -16.3% | -1.4% | 14.9% |
| Net Debt/EBITDA | 1.0x | | 11.3x | 3.8x | 4.2x | 0.4x |
SMTC Corporation ($SMTX) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 95 | 90 | 100 | 101 | | -7.3% | -0.6% | 12.3% | 12.3% |
| EBITDA | 6 | 6 | 5 | 1 | | -26.3% | 22.2% | 534.7% | -80.6% |
| Net Income | 1 | 1 | 1 | -4 | | -36.0% | - | - | -456.8% |
Balance Sheet
|
|---|
| Cash | 1 | 0 | 0 | 1 | | -15.2% | -50.9% | -71.9% | -56.1% |
| Short Term Debt | 38 | 38 | 40 | 42 | | 31.8% | 108.7% | 2.4% | 9.7% |
| Long Term Debt | 47 | 47 | 46 | 46 | | -31.3% | -31.8% | 0.4% | 1.8% |
Ratios
|
|---|
| Gross Margin | 10.1% | 11.8% | 11.2% | 11.7% | | 1.7% | 1.9% | 1.1% | 0.1% |
| EBITDA Margin | 6.1% | 6.8% | 5.4% | 1.4% | | -1.6% | 1.3% | 4.5% | -6.7% |
| Net Income Margin | 0.8% | 1.1% | 1.2% | -3.5% | | -0.4% | 3.8% | 7.7% | -4.6% |
Peers in Electronic Manufacturing Services
Below we provide SMTC Corporation 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 ($NLST) | - | 95.0% | -12.5% | -22.1% | 81.0% |
| IEC Electronics Corp. ($IEC) | - | -24.1% | 21.2% | 34.3% | 16.4% |
| eMagin Corporation ($EMAN) | - | 3.0% | 19.1% | 1.9% | 10.1% |
| Jabil Inc. ($JBL) | - | 3.9% | 15.9% | 14.4% | 7.8% |
| Plexus Corp. ($PLXS) | - | -1.1% | 13.7% | 10.1% | 7.1% |
| |
|---|
| Median (13 companies) | 4.6% | 3.0% | 7.1% | 1.9% | -8.7% |
|---|
| SMTC Corporation ($SMTX) | - | -17.1% | 55.2% | 72.4% | 3.7% |
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. ($RFIL) | 28.0% | 30.4% | 34.1% | 28.3% | 26.9% |
| |
|---|
| Median (13 companies) | 22.2% | 15.8% | 15.2% | 15.4% | 17.1% |
|---|
| SMTC Corporation ($SMTX) | 9.0% | 7.8% | 10.0% | 9.9% | 11.2% |
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% |
| IEC Electronics Corp. ($IEC) | 7.4% | 3.8% | 4.3% | 6.6% | 7.5% |
| |
|---|
| Median (12 companies) | 5.4% | 5.0% | 4.8% | 6.1% | 5.9% |
|---|
| SMTC Corporation ($SMTX) | 3.0% | -2.0% | 3.8% | 5.8% | 5.3% |
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. ($JBL) | 5.0% | 3.8% | 4.7% | 4.0% | 3.6% |
| |
|---|
| Median (12 companies) | 2.8% | 3.4% | 2.5% | 1.6% | 3.5% |
|---|
| SMTC Corporation ($SMTX) | 1.3% | 1.1% | 2.0% | 1.0% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| IEC Electronics Corp. ($IEC) | 16.9% | 3.1% | 6.4% | 12.7% | 14.8% |
| Sanmina Corporation ($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 ($CTS) | 18.1% | 9.8% | 14.8% | 11.8% | 9.2% |
| |
|---|
| Median (13 companies) | 6.7% | 5.7% | 6.7% | 11.8% | 4.5% |
|---|
| SMTC Corporation ($SMTX) | 2.0% | -16.0% | 4.0% | 4.2% | 7.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| TE Connectivity Ltd. ($TEL) | 1.4x | 1.3x | 1.1x | 1.1x | 2.7x |
| IEC Electronics Corp. ($IEC) | 2.0x | 5.6x | 4.9x | 3.6x | 2.1x |
| 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. ($PLXS) | -1.2x | -1.5x | -0.7x | 0.3x | -0.0x |
| |
|---|
| Median (10 companies) | -0.0x | 0.2x | -0.2x | 0.1x | -0.1x |
|---|
| SMTC Corporation ($SMTX) | 1.0x | - | 11.3x | 3.8x | 4.2x |
