Maxim Integrated Products, Inc. Net Income dropped on 18.2% while EBITDA Margin increased on 2.0 pp from 37.4% to 39.5%
07/26/2018 • About Maxim Integrated Products, Inc. (
$MXIM) • By InTwits
Maxim Integrated Products, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 39.5% in FY2018 vs. 37.4% in FY2017 vs. 27.2% in FY2014
- Maxim Integrated Products, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $66m in FY2018, $51m in FY2017, $69m in FY2016, $76m in FY2015, $133m in FY2014
- In the last 5 years the company invested considerably less than D&A: $395m vs. $1,098m. In FY2018 this situation was still the same: CAPEX was 66 while D&A was 145
- The company has highly profitable business model: ROIC is 22.8%
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 8.0%. Revenue growth showed slowdown in FY18Q4 - it was 5.2% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2015 at -6.0% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018. During the last 5 years EBITDA Margin bottomed in FY2015 at 23.3% and was growing since that time.
Gross Margin increased on 2.6 pp from 63.0% to 65.6% in FY2018. Gross Margin grew at 2.6 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018.
Net Income margin decreased on 6.1 pp from 24.9% to 18.8% in FY2018. The efficient tax rate was 43.3% in FY2018 while the average for the last five years was 25.3%.
Investments (CAPEX, working capital and M&A)
In FY2018 Maxim Integrated Products, Inc. had CAPEX/Revenue of 2.7%. CAPEX/Revenue decreased slightly on 0.63 pp from 3.3% in FY2015 to 2.7% in FY2018. For the last three years the average CAPEX/Revenue was 2.7%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2017 at 2.2%.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue increased slightly on 0.62 pp from 10.8% to 11.4% in FY2018. Accounts payable as a % of Revenue increased slightly on 1.7 pp from 9.1% to 10.8% in FY2018.
Maxim Integrated Products, Inc. has spent
$58m on M&A in FY2018 which accounts for 2.3% of revenue.
Return on investment
The company operates at high and attractive ROIC (22.8%) and ROE (22.6%). ROIC increased on 2.7 pp from 20.1% to 22.8% in FY2018. ROE decreased on 3.9 pp from 26.5% to 22.6% in FY2018. During FY2014-FY2018 ROIC bottomed in FY2015 at 7.0% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 1.5x. Debt showed almost no change in FY2018 while cash dropped on 31.3%.
Maxim Integrated Products, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 16.6x. Maxim Integrated Products, Inc. has no short term refinancing risk: cash is higher than short term debt (309.1%).
Average interest expence charged on company's debt was 3.4% in FY2018.
Valuation and dividends
Maxim Integrated Products, Inc.'s trades at EV/EBITDA 17.7x and P/E 37.1x.
The company paid 93.7% of Net Income as dividends in FY2018. Dividends grew on average at 8.3% per annum in the last 5 years).
Management team
Tunc Doluca is a Maxim Integrated Products, Inc.'s CEO. Tunc Doluca is a founder and has spent 12 years with the company. CEO total compensation was
$8,085,050 in FY2018 which included
$700,000 salary. The company's CFO Bruce Earl Kiddoo has spent 9 years with the company.
At the end of financial year the company had 0.77% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 7,149 employees. The number of employees increased slightly on 1.5%. Average revenue per employee in FY2018 was
$346,911 and it increased on 6.4%.
Financial and operational results
FY ended 06/30/2018
Maxim Integrated Products, Inc. ($MXIM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 2,454 | 2,307 | 2,195 | 2,296 | 2,480 | 8.0% |
| Gross Profit | 1,385 | 1,272 | 1,244 | 1,446 | 1,626 | 12.4% |
| SG&A | 325 | 308 | 289 | 292 | 323 | 10.8% |
| EBITDA | 667 | 537 | 558 | 859 | 978 | 13.9% |
| EBIT | 422 | 237 | 314 | 695 | 833 | 20.0% |
| Interest expence | 27 | 33 | 33 | 34 | 50 | 46.4% |
| Tax | 54 | 40 | 58 | 108 | 358 | 231.2% |
| Net Income | 355 | 206 | 227 | 572 | 467 | -18.2% |
| Stock Based Compensation | 71 | 75 | 68 | 71 | 79 | 10.6% |
Balance Sheet
|
|---|
| Cash | 1,322 | 1,551 | 2,105 | 2,246 | 1,543 | -31.3% |
| Accounts Receivable | 296 | 279 | 257 | 256 | 280 | 9.2% |
| Inventory | 289 | 288 | 228 | 247 | 282 | 14.2% |
| Accounts Payable | 102 | 88 | 83 | 77 | 93 | 19.6% |
| Short Term Debt | 0 | 1 | 250 | 0 | 499 | |
| Long Term Debt | 1,001 | 988 | 990 | 1,488 | 991 | -33.4% |
Cash flow
|
|---|
| Capex | 133 | 76 | 69 | 51 | 66 | 27.9% |
| Dividends | 294 | 318 | 342 | 374 | 438 | 17.1% |
| Acquisitions | 459 | | | | 58 | |
Ratios
|
|---|
| Revenue growth | 0.5% | -6.0% | -4.9% | 4.6% | 8.0% | |
| EBITDA growth | -16.2% | -19.5% | 4.1% | 53.8% | 13.9% | |
|
|---|
| Gross Margin | 56.4% | 55.1% | 56.7% | 63.0% | 65.6% | 2.6% |
| EBITDA Margin | 27.2% | 23.3% | 25.4% | 37.4% | 39.5% | 2.0% |
| EBIT Margin | 17.2% | 10.3% | 14.3% | 30.3% | 33.6% | 3.3% |
| SG&A, % of revenue | 13.2% | 13.4% | 13.2% | 12.7% | 13.0% | 0.3% |
| SBC, % of revenue | 2.9% | 3.3% | 3.1% | 3.1% | 3.2% | 0.1% |
| Net Income Margin | 14.5% | 8.9% | 10.4% | 24.9% | 18.8% | -6.1% |
| CAPEX, % of revenue | 5.4% | 3.3% | 3.2% | 2.2% | 2.7% | 0.4% |
|
|---|
| ROIC | 12.8% | 7.0% | 9.7% | 20.1% | 22.8% | 2.7% |
| ROE | 14.4% | 8.7% | 10.3% | 26.5% | 22.6% | -3.9% |
| Net Debt/EBITDA | -0.5x | -1.0x | -1.5x | -0.9x | -0.1x | 0.8x |
| Interest expence / Average debt | 2.7% | 3.3% | 2.9% | 2.5% | 3.4% | 0.9% |
People
|
|---|
| Insider ownership | 0.8% | 0.8% | 0.8% | 0.8% | 0.8% | 0.0% |
| Employees | 8,812 | 8,250 | 7,213 | 7,040 | 7,149 | 1.5% |
| Revenue/Employee, th. $ | 278 | 280 | 304 | 326 | 347 | 6.4% |
Maxim Integrated Products, Inc. ($MXIM) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 576 | 623 | 649 | 633 | | 2.5% | 13.0% | 11.6% | 5.2% |
| EBITDA | 222 | 237 | 262 | 258 | | 3.0% | 23.9% | 22.0% | 8.8% |
| Net Income | 155 | -75 | 194 | 194 | | 12.3% | -157.5% | 38.1% | 18.9% |
Balance Sheet
|
|---|
| Cash | 1,577 | 1,632 | 1,630 | 1,543 | | -24.6% | -3.3% | -1.6% | -31.3% |
| Short Term Debt | 0 | 499 | 499 | 499 | | -100.0% | | | |
| Long Term Debt | 1,488 | 990 | 991 | 991 | | 50.2% | -0.1% | -0.1% | -33.4% |
Ratios
|
|---|
| Gross Margin | 64.9% | 65.8% | 65.4% | 66.1% | | 3.4% | 4.1% | 2.2% | 0.7% |
| EBITDA Margin | 38.5% | 38.0% | 40.4% | 40.8% | | 0.2% | 3.3% | 3.5% | 1.4% |
| Net Income Margin | 26.8% | -12.0% | 29.9% | 30.7% | | 2.3% | -35.7% | 5.7% | 3.5% |
Peers in Semiconductors
Below you can find Maxim Integrated Products, 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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 5.2% | 11.0% | 4.7% |
|---|
| Maxim Integrated Products, Inc. ($MXIM) | | -6.0% | -4.9% | 4.6% | 8.0% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| Maxim Integrated Products, Inc. ($MXIM) | 56.4% | 55.1% | 56.7% | 63.0% | 65.6% |
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 ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Maxim Integrated Products, Inc. ($MXIM) | 27.2% | 23.3% | 25.4% | 37.4% | 39.5% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| Maxim Integrated Products, Inc. ($MXIM) | 5.4% | 3.3% | 3.2% | 2.2% | 2.7% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| Maxim Integrated Products, Inc. ($MXIM) | 12.8% | 7.0% | 9.7% | 20.1% | 22.8% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
| Maxim Integrated Products, Inc. ($MXIM) | -0.5x | -1.0x | -1.5x | -0.9x | -0.1x |
