Netlist Inc revenue dropped on 12.5% and EBITDA Margin dropped on 15.3 pp from -32.8% to -48.1%
02/27/2019 • About Netlist Inc (
$NLST) • By InTwits
Netlist Inc reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -48.1%
- Netlist Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -58.5% for the sames years
- Netlist Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $0m in FY2018, $0m in FY2017, $0m in FY2016, $0m in FY2015, $0m in FY2014
- The company has unprofitable business model: ROIC is -126.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Netlist Inc's Revenue dropped on 12.5%. Annual revenue decline showed slowdown in FY18Q4 - revenue increased on 6.4%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 15.3 pp from -32.8% to -48.1% in FY2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue increased slightly on 1.2 pp from 19.2% to 20.4% in FY2018.
Net Income margin dropped on 16.0 pp from -35.0% to -51.1% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.22% in FY2018. The company's CAPEX/Revenue decreased on 4.3 pp from 4.6% in FY2015 to 0.22% in FY2018. It's average CAPEX/Revenue for the last three years was 0.74%. During the last 5 years CAPEX as a % of Revenue topped in FY2015 at 4.6% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -7.1x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2018. Debt jumped on 19.2% while cash surged on 120%.
Netlist Inc has no short term refinancing risk: cash is higher than short term debt (554.6%).
Management team
Netlist Inc's CEO Chun Ki Hong "Chuck" is a founder and has spent 15 years with the company. Gail M Sasaki is a Netlist Inc's CFO. Gail M Sasaki has spent 11 years at the company.
Financial and operational results
FY ended 12/29/2018
Netlist Inc ($NLST) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 19.195 | 8.012 | 19.655 | 38.322 | 33.529 | -12.5% |
| Gross Profit | 3.964 | 2.097 | 7.396 | 2.456 | 2.301 | -6.3% |
| SG&A | 6.796 | 7.841 | 9.033 | 7.374 | 6.856 | -7.0% |
| EBITDA | -12.923 | -17.032 | -10.747 | -12.574 | -16.118 | |
| Net Income | -15.381 | -20.527 | -11.231 | -13.420 | -17.120 | |
Balance Sheet
|
|---|
| Cash | 11.040 | 19.684 | 9.476 | 6.720 | 14.802 | 120.3% |
| Short Term Debt | 1.952 | 0.013 | 0.827 | 2.024 | 2.669 | 31.9% |
| Long Term Debt | 3.551 | 13.699 | 14.251 | 14.766 | 17.346 | 17.5% |
Cash flow
|
|---|
| Capex | 0.141 | 0.366 | 0.346 | 0.094 | 0.074 | -21.3% |
Ratios
|
|---|
| Revenue growth | -16.7% | -58.3% | 145.3% | 95.0% | -12.5% | |
| EBITDA growth | 54.4% | 31.8% | -36.9% | 17.0% | 28.2% | |
|
|---|
| Gross Margin | 20.7% | 26.2% | 37.6% | 6.4% | 6.9% | 0.5% |
| EBITDA Margin | -67.3% | -212.6% | -54.7% | -32.8% | -48.1% | -15.3% |
| SG&A, % of revenue | 35.4% | 97.9% | 46.0% | 19.2% | 20.4% | 1.2% |
| Net Income Margin | -80.1% | -256.2% | -57.1% | -35.0% | -51.1% | -16.0% |
| CAPEX, % of revenue | 0.7% | 4.6% | 1.8% | 0.2% | 0.2% | -0.0% |
|
|---|
| ROIC | -122.9% | -153.1% | -81.5% | -98.2% | -126.5% | -28.3% |
| ROE | -262.2% | | | | | |
Netlist Inc ($NLST) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 9 | 8 | 7 | 9 | | -5.8% | -26.1% | -20.1% | 6.4% |
| EBITDA | -4 | -3 | -4 | -4 | | | | | |
| Net Income | -5 | -3 | -5 | -4 | | | | | |
Balance Sheet
|
|---|
| Cash | 7 | 7 | 18 | 15 | | -11.0% | 55.3% | 111.9% | 120.3% |
| Short Term Debt | 2 | 2 | 3 | 3 | | 33.3% | 52.6% | 0.2% | 31.9% |
| Long Term Debt | 15 | 15 | 17 | 17 | | 3.6% | 3.5% | 16.7% | 17.5% |
Ratios
|
|---|
| Gross Margin | 4.3% | 5.7% | 8.1% | 9.5% | | -2.9% | 0.1% | 0.1% | 4.7% |
| EBITDA Margin | -50.3% | -38.1% | -60.8% | -45.1% | | -17.1% | -6.2% | -28.7% | -10.7% |
| Net Income Margin | -52.6% | -40.6% | -64.5% | -48.6% | | -17.2% | -6.8% | -30.1% | -11.7% |
Peers in Electronic Manufacturing Servi
Below we provide Netlist Inc benchmarking against other companies in Electronic Manufacturing Servi 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | | 41.9% | -7.8% | -24.0% | 118.4% |
| Alpine 4 Technologies Ltd ($ALPP) | | | 35,893.8% | 5.8% | 71.5% |
| Kemet Corporation ($KEM) | | -1.3% | -10.7% | 3.1% | 58.4% |
| SMTC Corporation ($SMTX) | | -3.5% | -23.9% | -17.1% | 55.2% |
| Deswell Industries, Inc. ($DSWL) | | -7.0% | 17.1% | -0.1% | 36.3% |
| |
|---|
| Median (27 companies) | | 2.8% | 1.2% | 1.9% | 9.8% |
|---|
| Netlist Inc ($NLST) | | -58.3% | 145.3% | 95.0% | -12.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Neonode Inc. ($NEON) | 68.2% | 66.0% | 86.9% | 77.1% | 89.2% |
| Andrea Electronics Corp ($ANDR) | 83.8% | 99.1% | 88.5% | 96.2% | 70.4% |
| Data I/O Corporation ($DAIO) | 53.9% | 52.4% | 55.0% | 58.9% | 59.4% |
| IPG Photonics Corporation ($IPGP) | 54.1% | 54.6% | 54.9% | 56.6% | 54.8% |
| CTS Corporation ($CTS) | 32.2% | 33.2% | 35.4% | 33.2% | 35.1% |
| |
|---|
| Median (27 companies) | 14.5% | 14.8% | 16.7% | 15.8% | 15.2% |
|---|
| Netlist Inc ($NLST) | 20.7% | 26.2% | 37.6% | 6.4% | 6.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| IPG Photonics Corporation ($IPGP) | 41.5% | 42.4% | 41.8% | 44.7% | 40.9% |
| TE Connectivity Ltd. ($TEL) | 19.7% | 19.3% | 20.9% | 20.4% | 21.4% |
| CTS Corporation ($CTS) | 14.7% | 9.0% | 20.7% | 14.0% | 17.8% |
| Methode Electronics, Inc. ($MEI) | 12.6% | 15.4% | 16.5% | 16.5% | 16.1% |
| RF Industries, Ltd. ($RFIL) | 12.4% | 6.7% | -12.1% | 3.1% | 15.9% |
| |
|---|
| Median (27 companies) | 4.8% | 5.8% | 5.4% | 5.0% | 4.8% |
|---|
| Netlist Inc ($NLST) | -67.3% | -212.6% | -54.7% | -32.8% | -48.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Maxwell Technologies, Inc. ($MXWL) | 3.7% | 2.5% | 4.9% | 6.6% | 11.3% |
| IPG Photonics Corporation ($IPGP) | 11.5% | 7.8% | 12.6% | 9.0% | 11.0% |
| eMagin Corporation ($EMAN) | 5.8% | 4.7% | 6.7% | 6.2% | 8.8% |
| TE Connectivity Ltd. ($TEL) | 5.3% | 4.9% | 5.3% | 5.6% | 6.7% |
| CTS Corporation ($CTS) | 3.2% | 2.5% | 5.2% | 4.3% | 6.1% |
| |
|---|
| Median (27 companies) | 2.7% | 2.4% | 2.8% | 3.4% | 2.5% |
|---|
| Netlist Inc ($NLST) | 0.7% | 4.6% | 1.8% | 0.2% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| RF Industries, Ltd. ($RFIL) | 8.5% | 4.6% | -18.7% | 0.9% | 29.2% |
| IPG Photonics Corporation ($IPGP) | 27.0% | 27.8% | 25.1% | 29.9% | 22.9% |
| Methode Electronics, Inc. ($MEI) | 19.7% | 26.1% | 22.7% | 20.8% | 19.2% |
| TE Connectivity Ltd. ($TEL) | 17.3% | 15.1% | 15.9% | 16.2% | 18.4% |
| Kemet Corporation ($KEM) | -2.8% | 3.8% | 6.2% | 6.9% | 16.9% |
| |
|---|
| Median (29 companies) | 5.0% | 5.3% | 6.7% | 5.7% | 6.7% |
|---|
| Netlist Inc ($NLST) | -122.9% | -153.1% | -81.5% | -98.2% | -126.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpine 4 Technologies Ltd ($ALPP) | | | | 34.1x | 65.7x |
| SigmaTron International, Inc. ($SGMA) | 2.7x | 4.1x | 2.4x | 3.4x | 16.0x |
| SMTC Corporation ($SMTX) | 3.5x | 1.8x | 1.0x | | 11.3x |
| IEC Electronics Corp. ($IEC) | 7.1x | 14.0x | 2.0x | 5.6x | 4.9x |
| Key Tronic Corporation ($KTCC) | 0.2x | 3.4x | 2.6x | 2.5x | 3.9x |
| |
|---|
| Median (23 companies) | -0.2x | -0.6x | 0.2x | 0.2x | 0.2x |
|---|
