Finance Project|Trimatron Robotics|
In this project you will be analyzing the financial status of a company called Trimatron Robotics. Included are five years of financial statements from the company that started in 2012. Frames of Reference The attached case study includes several financial ratios from the broader industrial robotics industry. There is also an industry report attached to this Assignment in Blackboard. Project Overview ï‚· Complete a financial analysis of Trimatron Robotics. This will include the following required components. I want a thorough analysis, but I don’t count words or pages. Required Components of the Project 1. 30% Ratio Analysis (Chapter 5) – Do a comprehensive Ratio Analysis of the target company, including all four types of ratios covered in class. Look at the current state of the company and do a historical trend analysis for the five years of statements you have. Use charts and graphs when it is appropriate. 2. 30% Financial Forecasts (Chapter 6) – Develop cash flow statements to support the income statement and balance sheet information for 2012, 2013, 2014, 2015, and 2016. Then based on past growth and industry trends use reasonable methods to project income statements, balance sheets, and cash flow statements forward for five years. Using the tools in the chapter, do a scenario analysis of expected and/or sustainable growth rates. How does this compare with competitor or industry numbers? Estimate Additional funds needed and/or surplus cash. 3. 10% WACC & EVA (Chapter 7) – Estimate the WACC and EVA for Trimatron Robotics for all of the years in your analysis. What is it like right now? How is it changing over time? Given your projections, how do you expect it to change in the future? 4. 20% Company Value (Chapter 9) – Using the free cash flow or pseudo-dividend method arrive at a value for this company as of year-end 2016. For reference, the company started in 2012. That should help you determine an appropriate discount rate for the company. (Chapter 10) –Using the appropriate multipliers, estimate the value of the company at year end 2016. My research shows appropriate EBITDA multiplier of 4.7 times and an appropriate sales multiplier of 1.75. Estimate what the business would be worth if you just sold the assets. After doing a cash-flow valuation, a comparison valuation, and an asset valuation how much do you think the business could be reasonably sold for? Then estimate what you think the company would be worth in 2020. 5. 10%. Decisions. Given your analysis comment on the viability of this business as either a bridge to retirement or an income source in retirement. By 2020 would you recommend that George sell the business or continue running it? What would the price have to be in 2020 for him to consider selling? *** This is a 300 point assignment. 80% of the points will be awarded based on having reasonable, complete and correctly calculated spread sheets. 10% of the points will be awarded based on your verbal translation of the results and the analysis. I want you to describe what your results mean. 10% of the points will be awarded based on making the presentation look professional. Submit the report to me in through blackboard just as you have submitted other homework. Trimatron Robotics LLC Our History Trimatron Robotics LLC, was founded in 2012 by George Gelato, an automation engineer with over 30 years in the business. A passion for working with his customers, solving problems and making working environments safer served as a foundation for the small startup, which has since grown into a stronger, smarter company capable of providing solutions for the meat processing industry. Trimatron’s collaborative industrial robot arms are right at home in your food production chain. Along the food supply chain – from production, processing and distribution – robot arms can be a great advantage for several application areas. Robot arms from Trimatron update meat processing to the latest level of technology and fulfil the criteria that agriculture and food industry demand while improving the quality of food production: Ideal design of the robot: The outer casing of the robots is specifically designed to reduce the risk of accumulation of dust and debris. ï‚· Robot arms can free up your work force from repetitive or dangerous tasks while working in harsh environments that arise along the food production like heat, cold or unpleasant work. Robot arms from Trimitron can take over dirty, dangerous and dull jobs to reduce repetitive strain and accidental injuries, while freeing up human operators for qualitatively higher tasks. ï‚· Robot arms are consistent workers and improve consistency while reducing waste. During busy seasons, robots from Trimatron can operate around the clock, delivering non-stop productivity to your business. They can be deployed and re-programmed as needed across tasks and applications as often as needed. A robot arm from Trimatron in your production also helps reducing the risk of employee injury due to repetitive tasks. Heavy packaging tasks are no longer a challenge to employees or staffers, as the robots are always powered up and ready to work – with no need to rest. Food Safety While interest in robotics is partially motivated by labor costs, more companies are focused on food safety. Technavio predicts robot use in the meat processing industry will grow by 29% by 2019, driven particularly by demands for clean and contamination-free production areas. According to the CDC, an estimated 48 million Americans (1 in 6) get sick, 128,000 are hospitalized, and 3,000 die of foodborne illness every year. By limiting human contact with food items, robots reduce the risk of contamination leading to foodborne illnesses. Additionally, food recalls damage a company’s reputation while costing millions or more in sales and lost production. The Food Safety Modernization Act (FSMA) has also raised the bar on the sanitary requirements for a lot of these packagers and processors. You have these two major megatrends, labor and FSMA. Companies are trying to solve for both of those simultaneously. It’s an area where automation can really lend a hand.” Packaging While sanitation and clean production areas rank highly among food producers, currently 46% of all robots are used for palletizing. Palletizing robots not only increase output, but perform difficult, repetitive tasks that a human worker couldn’t physically do. Robots help load and unload pallets, cartons, and packages with efficiency — and they work in environments that are dangerous for humans — which is the key to understanding how robots will work alongside humans as technology advances. The shift to automation is most advanced in poultry processing facilities, while globally robotics is also increasing in lamb processing. “It’s challenging to staff processing lines, so many processors recognize how automation alleviates labor demand challenges — and safety concerns can now be a non-factor for some jobs,” Gelato says. All stages of processing “Automation is used with evisceration, de-feathering, all the way to chilling,” Gelato says. “The easy jobs are already automated in poultry. So the ones that aren’t automated are challenging like deboning, manipulating carcass before de-feathering, packaging and presentation.” Meat processing is also full of manually demanding and repetitive jobs. “[These jobs] are better fitted for robots which never tire than humans who suffer from injury or, at the very least, boredom, low job satisfaction and productivity decrease over time”. The use of three-dimensional X-ray sensing to determine the location and attitude of the bone structure, and to program the robot cutters accordingly, is a significant development for automation, says Gelato. “This adds a massive benefit over cutting to a template, and is a significant improvement over any external-only vision processing system,” he says. Industry level financial data are not available for companies developing processing robots in the meat processing industry, but they are available for the broader “industrial robotics” category. In 2016 the following average ratios were reported for the “industrial robotics” industry. Long Term Debt to Total Assets = 16% Interest coverage =5.49 Current Ratio =1.35 Asset Turnover =.97 Net Profit margin =12.93% ROA =9.62% ROE =12.51% George is considering an exit scenario. He was 55 years old when he started the company in 2012. He is considering whether he should try to continue to run the company for the long term or groom it for sale.
