Exchange: OTC | Sector: Technology | Industry: Hardware Equipment Parts
Q4 2024
Published: Jun 14, 2024
Earnings Highlights
Revenue of $6.93M up 30.8% year-over-year
EPS of $0.18 increased by 132.7% from previous year
Gross margin of 15.3%
Net income of 425.66K
"N/A" - N/A
IEH Corporation (IEHC) QQ4 2024 Results Analysis and Investment Outlook
Executive Summary
IEH Corporation reported a positive Q4 2024 with revenue of $6.93 million and net income of $0.43 million, translating to basic earnings per share of $0.18. The quarter delivered YoY revenue growth of approximately 30.8% and QoQ growth of about 35.6%, supported by a gross margin of 15.3% and a net income margin of 6.15%. However, EBITDA remained modestly negative at about $(0.11) million, largely due to sizable financing costs and an unusual line item labeled other expenses in the period. The presence of a markedly large other expenses figure warrants management clarification to determine recurring versus one-off drivers of profitability.
From a liquidity and balance sheet perspective, IEH presents a solid short-term liquidity profile: cash and cash equivalents of $6.14 million, total assets of ~$26.9 million, and a current ratio of 7.36x. Net debt is negative (approximately $(3.55) million), reflecting available cash relative to a modest debt load of about $2.59 million. Operating cash flow was $1.06 million for the quarter, with free cash flow near $0.84 million, underscoring a cash-generating engine even as revenue remains at a relatively small scale for the company’s niche.
Overall, the QQ4 2024 results show tangible top-line and cash-flow improvements versus prior periods, with a meaningful swing into positive net income despite a challenging financing/other-expense backdrop. The valuation backdrop appears modestly favorable given the cash-rich balance sheet and operating cash flow, but investors should closely monitor the sustainability of the gross margin trajectory, the causes behind the large other-expenses line item, and the company’s ability to scale revenue meaningfully in a competitive hardware interconnects market.
Revenue and profitability
- Revenue: $6.925,954 thousand for Q4 2024; YoY growth ~30.8%; QoQ growth ~35.6% (per incomeMetrics YoY/QoQ)
- Gross Profit: $1.060,341 thousand; gross margin 15.31%
- Operating Income: $(0.3369) million; operating margin −4.86%
- Net Income: $0.4257 million; net margin 6.15%
- EPS: $0.18 (basic and diluted)
EBITDA and cash flow
- EBITDA: $(0.1133) million; EBITDARatio −1.64%
- Operating cash flow: $1.057 million
- Capex: $(0.2180) million
- Free cash flow: $0.839 million
Balance sheet and liquidity
- Cash and cash equivalents: $6.1398 million
- Total assets: $26.913 million
- Total debt: $2.589 million; net debt: $(3.5507) million (net cash position)
- Current ratio: 7.36x; Quick ratio: 4.32x; Cash ratio: 2.13x
- Equity: $21.7995 million; debt to equity ~0.12x
Valuation and efficiency
- Price-to-earnings: 8.39x; Price-to-sales: 2.06x; Price-to-book: 0.66x
- Enterprise value multiple: negative/misleading due to small cap size and net cash; Price-to-cash-flow: 13.51x; Price-to-FCF: 17.02x
- Asset turnover: 0.257x; Inventory turnover: 0.672x; Receivables turnover: 1.133x
Notes on data integrity
- A notably large other expenses figure (about $871 million) is present in the Q4 2024 line items and appears incongruent with the company’s scale. This item warrants management clarification to determine if it represents a truly recurring non-operating charge, a data error, or a one-off event. If clarified, the core operating performance (revenue, gross margin, operating income) would better reflect ongoing profitability. All conclusions herein assume the data as provided, pending management validation.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.93M
30.84%
35.60%
Gross Profit
1.06M
124.94%
158.11%
Operating Income
-336.87K
75.12%
65.24%
Net Income
425.66K
132.36%
145.96%
EPS
0.18
132.73%
146.15%
Key Financial Ratios
currentRatio
7.36
grossProfitMargin
15.3%
operatingProfitMargin
-4.86%
netProfitMargin
6.15%
returnOnAssets
1.58%
returnOnEquity
1.95%
debtEquityRatio
0.12
operatingCashFlowPerShare
$0.44
freeCashFlowPerShare
$0.35
priceToBookRatio
0.66
priceEarningsRatio
8.39
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings-call transcript was provided in the data set. As such, management commentary and verbatim quotes from the QQ4 2024 call are not available for inclusion in this analysis.
N/A
— N/A
N/A
— N/A
Forward Guidance
No explicit forward guidance is contained in the provided data. Investors should monitor: (1) whether the unusual other-expenses line item is a recurring charge or a one-off; (2) management’s commentary on design wins, backlog, and customer diversification in the aerospace/military and industrial sectors; (3) potential leverage improvements if financing costs can be reduced or refinanced; (4) any stated targets for revenue growth, gross margin expansion, and operating discipline given the niche nature of IEH’s interconnects business.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
IEHC Focus
15.31%
-4.86%
1.95%
8.39%
LGL
54.90%
-49.30%
0.35%
61.32%
DSWL
20.70%
4.69%
2.20%
4.27%
MPTI
43.60%
-0.56%
0.37%
330.58%
MPAD
36.90%
10.70%
2.84%
6.74%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
IEH presents a high-variance, small-cap opportunity with meaningful near-term cash generation and a robust liquidity cushion. The QQ4 2024 data show a positive net income while top-line growth is solid (YoY and QoQ), but the interpretation hinges on the uncertain large other-expenses line item and the historically high financing costs observed in the dataset. If management can clarify these items and maintain revenue growth alongside margin stabilization, the stock could offer upside leverage through stronger operating performance and potential multiple expansion given a net-cash balance sheet. Caution is warranted given the scale, limited visibility into recurring profitability, and the potential for one-off distortions to overshadow ongoing cash generation. Key drivers to monitor include clarification of non-operating charges, sustaining revenue growth from aerospace/defense segments, and any progress toward reducing financing costs or extending debt maturities to improve coverage metrics.
Key Investment Factors
Growth Potential
Niche hardware interconnects with aerospace/military and medical applications; potential design wins and new customer acquisitions could drive volume growth; margin expansion possible with scale and procurement efficiencies.
Profitability Risk
Unusual large other-expense line in Q4 2024 data; high financing costs relative to revenue in the historical record; small revenue base and customer concentration risk; cyclicality in defense budgets and government procurement; data integrity concerns from one-off items.
Financial Position
Solid liquidity and conservative balance sheet: $6.14M cash, net cash position of about $(3.56)M after debt; current ratio 7.36x; modest debt load with ample coverage potential; positive operating cash flow and free cash flow support ongoing liquidity.
SWOT Analysis
Strengths
Positive quarterly net income in QQ4 2024
Strong liquidity and cash position
Low leverage with net cash position and healthy capital structure
Positive operating cash flow and free cash flow generation
Weaknesses
Small revenue base and scale
Negative EBITDA and operating margin pressures historically
Unclear impact of large other-expenses line item in QQ4 2024
Potential data integrity concerns affecting profitability interpretation
Opportunities
Exposure to defense/aerospace interconnects market
Potential design wins and expansion into new OEM programs
Cash generation capability could enable strategic investments or acquisitions
Threats
Industry cyclicality and sensitive defense spending
Competition in high-reliability connector markets
Data discrepancies and management guidance gaps could reduce investor confidence