Aehr Test Systems reports 56.4% revenue growth in FY2018 and 29.2 pp EBITDA Margin growth from -24.6% to 4.5%
07/19/2018 • About Aehr Test Systems (
$AEHR) • By InTwits
Aehr Test Systems reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Aehr Test Systems is a growth stock: FY2018 revenue growth was 56.4%, 5 year revenue CAGR was 12.4% at FY2018 ROIC 3.8%
- Aehr Test Systems motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -16.4% for the sames years
- Aehr Test Systems has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's a lot of higher than industry average of 6.1%.
- CAPEX is quite volatile: $1m in FY2018, $0m in FY2017, $1m in FY2016, $0m in FY2015, $0m in FY2014
- The company has potentially unprofitable business model: ROIC is 3.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Aehr Test Systems's Revenue surged on 56.4%. Revenue growth showed slowdown in FY18Q4 - it was 8.8% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 29.2 pp from -24.6% to 4.5% in FY2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2015 at -65.5% and was growing since that time.
Gross Margin increased on 6.0 pp from 35.9% to 41.9% in FY2018. During the last 5 years Gross Margin bottomed in FY2016 at 35.5% and was growing since that time. SG&A as a % of Revenue dropped on 12.7 pp from 37.3% to 24.7% in FY2018. During the last 5 years SG&A as a % of Revenue topped in FY2015 at 64.6% and was declining since that time.
Net Income margin surged on 31.7 pp from -29.9% to 1.8% in FY2018. During FY2014-FY2018 Net Income margin bottomed in FY2015 at -66.4% and was growing since that time.
Investments (CAPEX, working capital and M&A)
Aehr Test Systems's CAPEX/Revenue was 1.9% in FY2018. Aehr Test Systems showed small growth in CAPEX/Revenue of 0.76 pp from 1.2% in FY2015 to 1.9% in FY2018. For the last three years the average CAPEX/Revenue was 3.6%.
Return on investment
The company operates at low ROIC (3.8%) and ROE (2.9%). ROIC jumped on 38.7 pp from -34.9% to 3.8% in FY2018. During the last 5 years ROIC bottomed in FY2016 at -90.4% and was growing since that time.
Leverage (Debt)
Debt level is -8.1x Net Debt / EBITDA and 4.6x Debt / EBITDA. Debt didn't change in FY2018 while cash decreased on 5.4%.
Aehr Test Systems has no short term refinancing risk: cash is higher than short term debt (275.7%).
Valuation and dividends
Aehr Test Systems's trades at EV/EBITDA 31.7x and P/E 100.2x.
Financial and operational results
FY ended 05/31/2018
Aehr Test Systems ($AEHR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 19.684 | 10.018 | 14.501 | 18.898 | 29.555 | 56.4% |
| Gross Profit | 10.222 | 3.838 | 5.145 | 6.780 | 12.386 | 82.7% |
| SG&A | 6.323 | 6.470 | 6.975 | 7.052 | 7.290 | 3.4% |
| EBITDA | 0.638 | -6.559 | -5.951 | -4.658 | 1.332 | |
| Net Income | 0.422 | -6.647 | -6.785 | -5.653 | 0.528 | |
Balance Sheet
|
|---|
| Cash | 1.809 | 5.527 | 0.939 | 17.803 | 16.848 | -5.4% |
| Short Term Debt | 0.777 | 0.000 | 0.000 | 0.000 | 6.110 | |
| Long Term Debt | 0.000 | 3.791 | 5.962 | 6.110 | 0.000 | -100.0% |
Cash flow
|
|---|
| Capex | 0.339 | 0.118 | 0.919 | 0.477 | 0.572 | 19.9% |
Ratios
|
|---|
| Revenue growth | 19.4% | -49.1% | 44.7% | 30.3% | 56.4% | |
| EBITDA growth | -121.4% | -1,128.1% | -9.3% | -21.7% | -128.6% | |
|
|---|
| Gross Margin | 51.9% | 38.3% | 35.5% | 35.9% | 41.9% | 6.0% |
| EBITDA Margin | 3.2% | -65.5% | -41.0% | -24.6% | 4.5% | 29.2% |
| SG&A, % of revenue | 32.1% | 64.6% | 48.1% | 37.3% | 24.7% | -12.7% |
| Net Income Margin | 2.1% | -66.4% | -46.8% | -29.9% | 1.8% | 31.7% |
| CAPEX, % of revenue | 1.7% | 1.2% | 6.3% | 2.5% | 1.9% | -0.6% |
|
|---|
| ROIC | 7.1% | -82.5% | -90.4% | -34.9% | 3.8% | 38.7% |
| ROE | 7.0% | -114.4% | | | 2.9% | |
| Net Debt/EBITDA | -1.6x | | | | -8.1x |
Aehr Test Systems ($AEHR) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 7 | 8 | 7 | 7 | | 31.1% | 87.9% | 175.8% | 8.8% |
| EBITDA | 0 | 0 | 0 | 0 | | | | | |
| Net Income | 0 | 0 | 0 | 0 | | | | | |
Balance Sheet
|
|---|
| Cash | 14 | 10 | 9 | 17 | | 497.5% | 93.2% | 345.2% | -5.4% |
| Short Term Debt | 0 | 0 | 0 | 6 | | | | | |
| Long Term Debt | 6 | 6 | 6 | 0 | | 1.7% | 1.0% | 0.2% | -100.0% |
Ratios
|
|---|
| Gross Margin | 41.9% | 39.5% | 43.0% | 43.5% | | 0.4% | 4.8% | 24.2% | 4.5% |
| EBITDA Margin | 3.7% | 3.6% | 5.6% | 5.0% | | 13.2% | 32.6% | 95.3% | 13.0% |
| Net Income Margin | 0.1% | 0.8% | 3.6% | 2.6% | | 14.3% | 35.2% | 102.5% | 14.5% |
Peers in Semiconductor Equipment
Below you can find Aehr Test Systems benchmarking vs. other companies in Semiconductor Equipment 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 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| Lam Research Corporation ($LRCX) | | 14.2% | 11.9% | 36.1% | 38.2% |
| |
|---|
| Median (37 companies) | | -0.5% | 6.5% | 24.2% | 14.0% |
|---|
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | 99.5% | 99.8% | 99.8% | 98.3% | 96.7% |
| KLA-Tencor Corporation ($KLAC) | 57.9% | 56.8% | 61.0% | 63.0% | 64.1% |
| Teradyne, Inc. ($TER) | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% |
| Nova Measuring Instruments Ltd. ($NVMI) | 52.7% | 51.9% | 45.9% | 59.1% | 57.8% |
| Nanometrics Incorporated ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.4% | 38.9% | 40.0% | 44.0% | 40.2% |
|---|
| Aehr Test Systems ($AEHR) | 51.9% | 38.3% | 35.5% | 35.9% | 41.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 29.2% | 26.4% | 34.4% | 38.3% | 39.6% |
| DAQO New Energy Corp. ($DQ) | 32.9% | 31.6% | 43.3% | 49.1% | 36.1% |
| Xperi Corporation ($XPER) | 66.7% | 67.5% | 47.6% | 23.4% | 34.3% |
| Lam Research Corporation ($LRCX) | 21.1% | 20.3% | 23.2% | 27.6% | 32.0% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 7.0% | 10.3% | 12.1% | 16.2% | 16.6% |
|---|
| Aehr Test Systems ($AEHR) | 3.2% | -65.5% | -41.0% | -24.6% | 4.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 15.0% | 4.0% | 3.6% | 0.0% | 58.8% |
| DAQO New Energy Corp. ($DQ) | 42.2% | 44.7% | 29.5% | 19.8% | 47.4% |
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.3% | 2.9% | 2.2% | 3.2% | 3.0% |
|---|
| Aehr Test Systems ($AEHR) | 1.7% | 1.2% | 6.3% | 2.5% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 17.9% | 16.5% | 27.2% | 34.0% | 39.9% |
| Lam Research Corporation ($LRCX) | 10.7% | 10.9% | 11.8% | 18.7% | 33.9% |
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.4% | 6.0% | 7.6% | 13.1% | 12.1% |
|---|
| Aehr Test Systems ($AEHR) | 7.1% | -82.5% | -90.4% | -34.9% | 3.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | -0.3x | -0.1x | 4.2x | 5.0x | 2.6x |
| Ultra Clean Holdings, Inc. ($UCTT) | -1.2x | 1.5x | 0.4x | -0.2x | 2.4x |
| Ichor Holdings ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.3x | -1.3x | -0.7x | -1.0x |
|---|
| Aehr Test Systems ($AEHR) | -1.6x | | | | -8.1x |
