NVE Corporation reports 7.4% Net Income growth in 2018 and 0.57 pp EBITDA Margin decline from 65.6% to 65.1%
05/02/2018 • About NVE Corporation (
$NVEC) • By InTwits
NVE Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- NVE 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 3.6%
- CAPEX is quite volatile: $1m in FY2018, $1m in FY2017, $0m in FY2016, $0m in FY2015, $0m in FY2014
- The company has highly profitable business model: ROIC is 20.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
NVE Corporation's Revenue increased on 5.4%. Revenue growth showed acceleration in FY18Q4 - it increased 15.3% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 24.8 pp from 20.4% to 45.2% in 2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. SG&A as a % of Revenue followed a declining trend at -1.0 pp per annum in FY2014-FY2018.
Net Income margin increased slightly on 0.87 pp from 45.7% to 46.6% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 2.0%. The company showed small growth in CAPEX/Revenue of 1.4 pp from 0.60% in FY2015 to 2.0% in FY2018. For the last three years the average CAPEX/Revenue was 1.6%. CAPEX as a % of Revenue stuck to a growing trend at 0.40 pp per annum in FY2014-FY2018.
Return on investment
The company operates at high and attractive ROIC (20.7%) while ROE is a bit lower (15.5%). ROIC increased on 2.5 pp from 18.2% to 20.7% in FY2018. ROE increased on 2.0 pp from 13.5% to 15.5% in FY2018.
Leverage (Debt)
The company has no debt. Cash dropped on 42.0%.
Valuation and dividends
The company's trades at EV/EBITDA 19.8x and P/E 28.0x.
Management team
The company's CEO Daniel A Baker is a founder and has spent 18 years with the company. Curt A Reynders is a the company's CFO. Curt A Reynders has spent 13 years at the company.
Financial and operational results
FY ended 03/31/2018
NVE Corporation ($NVEC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 25.935 | 30.584 | 27.717 | 28.326 | 29.864 | 5.4% |
| Gross Profit | 20.215 | 24.564 | 21.100 | 22.248 | 23.589 | 6.0% |
| SG&A | 2.235 | 2.312 | 1.753 | 1.459 | 1.436 | -1.6% |
| EBITDA | 15.238 | 20.186 | 17.137 | 18.593 | 19.430 | 4.5% |
| Net Income | 11.136 | 14.368 | 12.292 | 12.949 | 13.913 | 7.4% |
Balance Sheet
|
|---|
| Cash | 1.262 | 9.437 | 7.535 | 8.199 | 4.755 | -42.0% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.161 | 0.185 | 0.287 | 0.520 | 0.605 | 16.3% |
Ratios
|
|---|
| Revenue growth | -4.1% | 17.9% | -9.4% | 2.2% | 5.4% | |
| EBITDA growth | -3.8% | 32.5% | -15.1% | 8.5% | 4.5% | |
|
|---|
| Gross Margin | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% | 0.4% |
| EBITDA Margin | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% | -0.6% |
| SG&A, % of revenue | 8.6% | 7.6% | 6.3% | 5.1% | 4.8% | -0.3% |
| Net Income Margin | 42.9% | 47.0% | 44.3% | 45.7% | 46.6% | 0.9% |
| CAPEX, % of revenue | 0.6% | 0.6% | 1.0% | 1.8% | 2.0% | 0.2% |
|
|---|
| ROIC | 14.5% | 18.1% | 15.7% | 18.2% | 20.7% | 2.5% |
| ROE | 11.3% | 13.6% | 11.8% | 13.5% | 15.5% | 2.0% |
| Net Debt/EBITDA | -0.1x | -0.5x | -0.4x | -0.4x | -0.2x | 0.2x |
NVE Corporation ($NVEC) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 7 | 7 | 8 | | 13.4% | -4.2% | -1.4% | 15.3% |
| EBITDA | 5 | 5 | 5 | 5 | | 8.7% | -3.1% | -8.4% | 24.0% |
| Net Income | 3 | 3 | 4 | 4 | | 5.3% | -4.4% | 2.5% | 28.2% |
Balance Sheet
|
|---|
| Cash | 4 | 5 | 5 | 5 | | 129.7% | -10.2% | 24.5% | -42.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 76.4% | 80.7% | 77.5% | 81.4% | | -3.0% | 4.5% | -2.4% | 2.6% |
| EBITDA Margin | 62.4% | 64.4% | 65.0% | 68.3% | | -2.7% | 0.7% | -5.0% | 4.8% |
| Net Income Margin | 43.3% | 45.2% | 48.5% | 49.1% | | -3.4% | -0.1% | 1.8% | 5.0% |
Peers in Semiconductors
Below we provide NVE Corporation benchmarking against other companies in Semiconductors 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 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 5.2% | 11.0% | 4.7% |
|---|
| NVE Corporation ($NVEC) | | 17.9% | -9.4% | 2.2% | 5.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| Xilinx, Inc. ($XLNX) | 68.8% | 70.2% | 69.7% | 69.9% | 69.9% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| Broadcom Inc. ($AVGO) | 24.9% | 38.0% | 19.9% | 40.4% | 44.2% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| NVE Corporation ($NVEC) | 0.6% | 0.6% | 1.0% | 1.8% | 2.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| NVE Corporation ($NVEC) | 14.5% | 18.1% | 15.7% | 18.2% | 20.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
| NVE Corporation ($NVEC) | -0.1x | -0.5x | -0.4x | -0.4x | -0.2x |
