Qorvo, Inc. CAPEX dropped on 51.2% and Revenue decreased slightly on 1.9%
05/02/2018 • About Qorvo, Inc. (
$QRVO) • By InTwits
Qorvo, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 26.4% in FY2018, 26.1% in FY2017, 26.3% in FY2016, 19.8% in FY2015, 8.9% in FY2014
- Qorvo, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 11.0%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $270m in FY2018, $553m in FY2017, $316m in FY2016, $170m in FY2015, $67m in FY2014
- In the last 5 years the company invested considerably less than D&A: $1,375m vs. $2,385m. In FY2018 this situation was still the same: CAPEX was 270 while D&A was 714
- The company has potentially unprofitable business model: ROIC is 1.2%
- It operates with high leverage: Net Debt/EBITDA is 0.1x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Qorvo, Inc.'s Revenue decreased slightly on 1.9%. Annual revenue decline showed slowdown in FY18Q4 - revenue increased on 3.5%. During FY2014-FY2018 Revenue growth topped in FY2016 at 52.6% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018.
Gross Margin increased slightly on 1.1 pp from 37.4% to 38.6% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. During the last 5 years SG&A as a % of Revenue topped in FY2016 at 20.5% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 0.64 pp from 2.9% to 2.3% in FY2018. During the last 5 years SBC as a % of Revenue topped in FY2016 at 5.3% and was declining since that time.
Net Income margin decreased slightly on 0.81 pp from -0.55% to -1.4% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 9.1%. Qorvo, Inc. showed small CAPEX/Revenue decline of 0.85 pp from 9.9% in FY2015 to 9.1% in FY2018. Average CAPEX/Revenue for the last three years was 13.1%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2017 at 18.2%.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue increased slightly on 1.7 pp from 14.2% to 15.9% in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
Return on investment
The company operates at low but positive ROIC (1.2%) and negative ROE (-0.8%). ROIC showed almost no change in FY2018. ROE showed almost no change in FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.1x and Debt / EBITDA is 1.3x. Net Debt / EBITDA dropped on 0.5x from 0.6x to 0.1x in FY2018. Debt decreased slightly on 0.59% while cash jumped on 69.8%.
Qorvo, Inc. has questionable short term financial stability: Interest coverage ratio (ICR) is only 1.2x. The company has no short term refinancing risk: short term debt is zero.
Average interest expence charged on company's debt was 6.1% in FY2018.
Management team
Qorvo, Inc.'s CEO is Robert A Bruggeworth. Robert A Bruggeworth is a founder and has 5 years tenure with the company. CEO total compensation was
$6,941,777 in FY2018 which included
$802,936 salary. Qorvo, Inc.'s CFO is Mark J Murphy. Mark J Murphy has 3 years tenure at the company.
At the end of financial year the company had 0.56% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 8,300 employees. The number of employees decreased on 3.5%. Average revenue per employee in FY2018 was
$358,257 and it increased slightly on 1.6%.
Financial and operational results
FY ended 03/31/2018
Qorvo, Inc. ($QRVO) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,148 | 1,711 | 2,611 | 3,033 | 2,974 | -1.9% |
| Gross Profit | 405 | 689 | 1,050 | 1,136 | 1,147 | 1.0% |
| SG&A | 151 | 250 | 534 | 546 | 528 | -3.3% |
| EBITDA | 102 | 339 | 687 | 793 | 784 | -1.0% |
| EBIT | 27 | 122 | 12 | 88 | 70 | -20.2% |
| Interest expence | 6 | 1 | 23 | 59 | 60 | 1.1% |
| Tax | 11 | -75 | 26 | 44 | 57 | 30.9% |
| Net Income | 13 | 196 | -29 | -17 | -40 | |
| Stock Based Compensation | 30 | 51 | 139 | 89 | 68 | -23.2% |
Balance Sheet
|
|---|
| Cash | 172 | 300 | 426 | 545 | 926 | 69.8% |
| Accounts Receivable | 137 | 354 | 316 | 358 | 346 | -3.3% |
| Inventory | 126 | 347 | 428 | 430 | 472 | 9.7% |
| Accounts Payable | 80 | 182 | 205 | 216 | 213 | -1.4% |
| Short Term Debt | 87 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 0 | 988 | 989 | 983 | -0.6% |
Cash flow
|
|---|
| Capex | 67 | 170 | 316 | 553 | 270 | -51.2% |
| Acquisitions | | | | 118 | | |
Ratios
|
|---|
| Revenue growth | 19.1% | 49.0% | 52.6% | 16.2% | -1.9% | |
| EBITDA growth | 79.1% | 233.9% | 102.4% | 15.4% | -1.0% | |
|
|---|
| Gross Margin | 35.3% | 40.3% | 40.2% | 37.4% | 38.6% | 1.1% |
| EBITDA Margin | 8.9% | 19.8% | 26.3% | 26.1% | 26.4% | 0.2% |
| EBIT Margin | 2.4% | 7.2% | 0.5% | 2.9% | 2.4% | -0.5% |
| SG&A, % of revenue | 13.2% | 14.6% | 20.5% | 18.0% | 17.7% | -0.2% |
| SBC, % of revenue | 2.6% | 3.0% | 5.3% | 2.9% | 2.3% | -0.6% |
| Net Income Margin | 1.1% | 11.5% | -1.1% | -0.5% | -1.4% | -0.8% |
| CAPEX, % of revenue | 5.8% | 9.9% | 12.1% | 18.2% | 9.1% | -9.2% |
|
|---|
| ROIC | | 3.4% | 0.2% | 1.4% | 1.2% | -0.3% |
| ROE | | 5.7% | -0.5% | -0.3% | -0.8% | -0.5% |
| Net Debt/EBITDA | -0.8x | -0.9x | 0.8x | 0.6x | 0.1x | -0.5x |
| Interest expence / Average debt | 6.9% | | 4.7% | 6.0% | 6.1% | 0.1% |
People
|
|---|
| Insider ownership | 0.6% | 0.6% | 0.6% | 0.6% | 0.6% | 0.0% |
| Employees | | | 7,300 | 8,600 | 8,300 | -3.5% |
| Revenue/Employee, th. $ | | | 358 | 353 | 358 | 1.6% |
Qorvo, Inc. ($QRVO) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 641 | 822 | 846 | 665 | | -8.3% | -5.0% | 2.3% | 3.5% |
| EBITDA | 149 | 229 | 263 | 141 | | -12.9% | 6.2% | 9.7% | -14.8% |
| Net Income | -31 | 36 | -33 | -13 | | | 203.2% | | -122.4% |
Balance Sheet
|
|---|
| Cash | 513 | 575 | 841 | 926 | | 18.4% | 22.5% | 69.7% | 69.8% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 989 | 990 | 1,089 | 983 | | 0.1% | 0.1% | 10.1% | -0.6% |
Ratios
|
|---|
| Gross Margin | 36.9% | 39.1% | 39.8% | 38.0% | | -2.7% | 2.4% | 2.2% | 2.0% |
| EBITDA Margin | 23.3% | 27.9% | 31.1% | 21.2% | | -1.2% | 2.9% | 2.1% | -4.6% |
| Net Income Margin | -4.8% | 4.4% | -3.9% | -1.9% | | -4.0% | 3.0% | 5.6% | -10.6% |
Peers in Semiconductors
Below you can find Qorvo, Inc. benchmarking vs. other companies in Semiconductors industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 4.4% | 10.9% | 5.0% |
|---|
| Qorvo, Inc. ($QRVO) | | 49.0% | 52.6% | 16.2% | -1.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| 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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 46.4% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| Qorvo, Inc. ($QRVO) | 35.3% | 40.3% | 40.2% | 37.4% | 38.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($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 ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.9% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Qorvo, Inc. ($QRVO) | 8.9% | 19.8% | 26.3% | 26.1% | 26.4% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.4% |
|---|
| Qorvo, Inc. ($QRVO) | 5.8% | 9.9% | 12.1% | 18.2% | 9.1% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.3% | 3.8% | 1.7% | 3.2% | 5.2% |
|---|
| Qorvo, Inc. ($QRVO) | | 3.4% | 0.2% | 1.4% | 1.2% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.5x | -0.2x | -0.0x | 0.4x | 0.3x |
|---|
| Qorvo, Inc. ($QRVO) | -0.8x | -0.9x | 0.8x | 0.6x | 0.1x |
