ViaSat, Inc. reports 42.1% EBITDA decline in 2018 while 2.3% Revenue growth
05/24/2018 • About ViaSat, Inc. (
$VSAT) • By InTwits
ViaSat, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 10.3% in FY2018 vs. 18.1% in FY2017 vs. 13.9% in FY2014
- ViaSat, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 3.4%. Average EBITDA Margin for the same period was 16.7%. In FY2018 SBC/Revenue was even higher: 4.3%
- ViaSat, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 28.2%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: $63m in 2018, $31m in 2017, $19m in 2016, $12m in 2015, $13m in 2014
- The company has unprofitable business model: ROIC is -3.6%
- It operates with high leverage: Net Debt/EBITDA is 5.8x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 2.3%. Revenue growth showed acceleration in FY18Q4 - it increased 5.6% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018. During the last 5 years EBITDA Margin topped in FY2015 at 22.0% and was declining since that time.
Gross Margin decreased on 3.0 pp from 32.7% to 29.7% in FY2018. During the last 5 years Gross Margin topped in FY2017 at 32.7%. SG&A as a % of Revenue increased on 2.8 pp from 21.4% to 24.2% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue bottomed in FY2015 at 19.6% and was growing since that time. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.72 pp from 3.6% to 4.3% in FY2018. SBC as a % of Revenue followed a growing trend at 0.43 pp per annum in the last 5 years.
Net Income margin decreased on 5.7 pp from 1.5% to -4.2% in FY2018. During the last 5 years Net Income margin topped in FY2015 at 2.9% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 32.1%. The company's CAPEX/Revenue increased on 5.6 pp from 26.5% in FY2015 to 32.1% in FY2018. It's average CAPEX/Revenue for the last three years was 30.6%. The company maintained rich investment policy and has spent a lot to CAPEX (313% of EBITDA). CAPEX as a % of Revenue followed a growing trend at 2.5 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue increased slightly on 1.8 pp from 10.5% to 12.3% in FY2018. Accounts payable as a % of Revenue increased on 4.5 pp from 9.6% to 14.1% in FY2018.
Return on investment
The company operates at negative ROIC (-3.6%) and ROE (-3.8%). ROIC decreased on 5.3 pp from 1.7% to -3.6% in FY2018. ROE decreased on 5.4 pp from 1.7% to -3.8% in FY2018. During the last 5 years ROIC topped in FY2015 at 5.0% and was declining since that time. During FY2014-FY2018 ROE topped in FY2015 at 4.1% and was declining since that time.
Leverage (Debt)
Debt level is 5.8x Net Debt / EBITDA and 6.3x Debt / EBITDA. Net Debt / EBITDA surged on 3.3x from 2.5x to 5.8x in FY2018. Debt surged on 20.6% while cash dropped on 45.1%.
ViaSat, Inc. has no short term refinancing risk: cash is higher than short term debt (157.7%).
Average interest expence paid by the company was 0.39% in FY2018.
Management team
The company's CEO Mark D Dankberg is a founder and has spent 33 years with the company. The company's CFO is Shawn Duffy. Shawn Duffy has 5 years tenure at the company.
The company has 5.9% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 5,200 employees. The number of employees surged on 20.9%. Average revenue per employee in FY2018 was
$306,659 and it dropped on 15.4%.
Financial and operational results
FY ended 03/31/2018
ViaSat, Inc. ($VSAT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,351 | 1,383 | 1,417 | 1,559 | 1,595 | 2.3% |
| Gross Profit | 360 | 419 | 433 | 510 | 474 | -7.2% |
| SG&A | 282 | 271 | 298 | 333 | 385 | 15.6% |
| EBITDA | 188 | 305 | 283 | 282 | 163 | -42.1% |
| EBIT | 3 | 83 | 41 | 36 | -92 | -352.9% |
| Interest expence | 38 | 31 | 26 | 12 | 4 | -66.7% |
| Tax | -26 | 14 | -4 | 4 | -35 | -1,073.7% |
| Net Income | -9 | 40 | 22 | 24 | -67 | -383.2% |
| Stock Based Compensation | 34 | 39 | 48 | 56 | 69 | 22.9% |
Balance Sheet
|
|---|
| Cash | 58 | 52 | 42 | 130 | 71 | -45.1% |
| Accounts Receivable | 272 | 266 | 287 | 264 | 268 | 1.5% |
| Inventory | 120 | 128 | 145 | 163 | 196 | 20.3% |
| Accounts Payable | 99 | 77 | 96 | 100 | 157 | 57.1% |
| Short Term Debt | 2 | 0 | 0 | 0 | 45 | 15,629.2% |
| Long Term Debt | 690 | 806 | 946 | 848 | 978 | 15.3% |
Cash flow
|
|---|
| Capex | 308 | 366 | 378 | 515 | 512 | -0.6% |
| Acquisitions | 2 | 57 | 4 | 17 | | |
Ratios
|
|---|
| Revenue growth | 20.7% | 2.3% | 2.5% | 10.0% | 2.3% | |
| EBITDA growth | 37.7% | 61.7% | -7.0% | -0.3% | -42.1% | |
|
|---|
| Gross Margin | 26.7% | 30.3% | 30.6% | 32.7% | 29.7% | -3.0% |
| EBITDA Margin | 13.9% | 22.0% | 20.0% | 18.1% | 10.3% | -7.9% |
| EBIT Margin | 0.2% | 6.0% | 2.9% | 2.3% | -5.8% | -8.1% |
| SG&A, % of revenue | 20.8% | 19.6% | 21.0% | 21.4% | 24.2% | 2.8% |
| SBC, % of revenue | 2.5% | 2.8% | 3.4% | 3.6% | 4.3% | 0.7% |
| Net Income Margin | -0.7% | 2.9% | 1.5% | 1.5% | -4.2% | -5.7% |
| CAPEX, % of revenue | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% | -0.9% |
|
|---|
| ROIC | 0.2% | 5.0% | 2.2% | 1.7% | -3.6% | -5.3% |
| ROE | -1.0% | 4.1% | 2.0% | 1.7% | -3.8% | -5.4% |
| Net Debt/EBITDA | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x | 3.3x |
| Interest coverage ratio (ICR) | 0.1x | 2.6x | 1.6x | 3.0x | |
| Interest expence / Average debt | 5.5% | 4.2% | 2.9% | 1.3% | 0.4% | -1.0% |
People
|
|---|
| Insider ownership | 5.9% | 5.9% | 5.9% | 5.9% | 5.9% | 0.0% |
| Employees | 3,100 | 3,400 | 3,800 | 4,300 | 5,200 | 20.9% |
| Revenue/Employee, th. $ | 436 | 407 | 373 | 363 | 307 | -15.4% |
ViaSat, Inc. ($VSAT) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 380 | 393 | 382 | 440 | | 4.7% | -1.5% | 0.3% | 5.6% |
| EBITDA | 46 | 45 | 36 | 36 | | -32.2% | -43.9% | -47.6% | -44.4% |
| Net Income | -9 | -14 | -25 | -20 | | -587.3% | -224.2% | -680.5% | -399.9% |
Balance Sheet
|
|---|
| Cash | 161 | 243 | 162 | 71 | | 239.8% | 373.3% | -43.2% | -45.1% |
| Short Term Debt | 19 | 23 | 46 | 45 | | 6,867.5% | 8,065.5% | 15,956.0% | 15,629.2% |
| Long Term Debt | 831 | 996 | 976 | 978 | | -19.7% | -6.0% | 15.2% | 15.3% |
Ratios
|
|---|
| Gross Margin | 31.5% | 31.5% | 30.9% | 25.5% | | -0.2% | -0.6% | -1.9% | -8.6% |
| EBITDA Margin | 12.1% | 11.5% | 9.5% | 8.2% | | -6.6% | -8.6% | -8.7% | -7.4% |
| Net Income Margin | -2.4% | -3.5% | -6.5% | -4.5% | | -2.9% | -6.2% | -7.6% | -6.1% |
Peers in Communications Equipment
Below we provide ViaSat, Inc. benchmarking against other companies in Communications Equipment 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 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.6% | 5.1% | 3.5% |
|---|
| ViaSat, Inc. ($VSAT) | | 2.3% | 2.5% | 10.0% | 2.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| ViaSat, Inc. ($VSAT) | 26.7% | 30.3% | 30.6% | 32.7% | 29.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.3% | 4.7% | 5.5% | 6.0% | 4.6% |
|---|
| ViaSat, Inc. ($VSAT) | 13.9% | 22.0% | 20.0% | 18.1% | 10.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| Oclaro, Inc. ($OCLR) | 2.2% | 5.3% | 7.3% | 11.7% | 10.6% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.6% |
|---|
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.0% | 2.4% | 2.2% | 0.7% |
|---|
| ViaSat, Inc. ($VSAT) | 0.2% | 5.0% | 2.2% | 1.7% | -3.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| Harmonic Inc. ($HLIT) | -4.7x | -4.1x | | | 3.4x |
| |
|---|
| Median (45 companies) | -0.8x | -0.8x | -0.9x | -0.8x | -0.3x |
|---|
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
