Synaptics Incorporated reports 61.3% EBITDA decline in 2018 and 5.4 pp EBITDA Margin decline from 9.1% to 3.7%
08/09/2018 • About Synaptics Incorporated (
$SYNA) • By InTwits
Synaptics Incorporated reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 3.7% in FY2018 vs. 9.1% in FY2017 vs. 9.9% in FY2014
- EBITDA Margin is quite volatile: 3.7% in FY2018, 9.1% in FY2017, 10.8% in FY2016, 16.1% in FY2015, 9.9% in FY2014
- Synaptics Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $1m in 2018, $1m in 2017, $7m in 2016, $7m in 2015, $7m in 2014
- The company has unprofitable business model: ROIC is -5.7%
- It operates with high leverage: Net Debt/EBITDA is 2.5x 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
Synaptics Incorporated's Revenue decreased on 5.1%. Revenue decline showed acceleration in FY18Q4 - it was 8.9% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.71 pp from 2.2% to 2.9% in 2018. During FY2014-FY2018 EBITDA Margin topped in FY2015 at 16.1% and was declining since that time.
Gross Margin decreased slightly on 1.0 pp from 30.5% to 29.4% in FY2018. Gross Margin stuck to a declining trend at -3.7 pp per annum in FY2014-FY2018. SG&A as a % of Revenue increased slightly on 1.4 pp from 8.0% to 9.4% in FY2018.
Net Income margin dropped on 10.5 pp from 2.8% to -7.6% in FY2018. During the last 5 years Net Income margin topped in FY2015 at 6.5% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 Synaptics Incorporated had CAPEX/Revenue of 2.1%. The company's CAPEX/Revenue decreased slightly on 0.96 pp from 3.0% in FY2015 to 2.1% in FY2018. For the last three years the average CAPEX/Revenue was 1.9%. Battling declining revenue Synaptics Incorporated invested a large share of EBITDA (56.0%) to CAPEX but that didn't help at least in this year. During the last 5 years CAPEX as a % of Revenue bottomed in FY2016 at 1.7% and was growing since that time.
Return on investment
The company operates at negative ROIC (-5.7%) and ROE (-16.9%). ROIC dropped on 12.4 pp from 6.7% to -5.7% in FY2018. ROE dropped on 23.6 pp from 6.8% to -16.9% in FY2018. During FY2014-FY2018 ROIC topped in FY2015 at 17.8% and was declining since that time. During FY2014-FY2018 ROE topped in FY2015 at 14.8% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 7.4x. Net Debt / EBITDA jumped on 3.4x from -1.0x to 2.5x in FY2018. Debt jumped on 108% while cash dropped on 18.2%.
The company has no short term refinancing risk: short term debt is zero.
Financial and operational results
FY ended 06/30/2018
Synaptics Incorporated ($SYNA) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 948 | 1,703 | 1,667 | 1,718 | 1,630 | -5.1% |
| Gross Profit | 436 | 579 | 581 | 524 | 480 | -8.3% |
| SG&A | 100 | 128 | 162 | 138 | 154 | 11.9% |
| EBITDA | 94 | 275 | 179 | 157 | 61 | -61.3% |
| Net Income | 47 | 110 | 72 | 49 | -124 | -354.3% |
Balance Sheet
|
|---|
| Cash | 447 | 400 | 352 | 368 | 301 | -18.2% |
| Short Term Debt | 0 | 11 | 19 | 15 | 0 | -100.0% |
| Long Term Debt | 0 | 231 | 217 | 202 | 451 | 123.1% |
Cash flow
|
|---|
| Capex | 39 | 52 | 29 | 31 | 34 | 8.6% |
Ratios
|
|---|
| Revenue growth | 42.8% | 79.7% | -2.1% | 3.1% | -5.1% | |
| EBITDA growth | -15.6% | 191.7% | -34.7% | -12.4% | -61.3% | |
|
|---|
| Gross Margin | 46.0% | 34.0% | 34.9% | 30.5% | 29.4% | -1.0% |
| EBITDA Margin | 9.9% | 16.1% | 10.8% | 9.1% | 3.7% | -5.4% |
| SG&A, % of revenue | 10.6% | 7.5% | 9.7% | 8.0% | 9.4% | 1.4% |
| Net Income Margin | 4.9% | 6.5% | 4.3% | 2.8% | -7.6% | -10.5% |
| CAPEX, % of revenue | 4.1% | 3.0% | 1.7% | 1.8% | 2.1% | 0.3% |
|
|---|
| ROIC | 11.7% | 17.8% | 7.3% | 6.7% | -5.7% | -12.4% |
| ROE | 7.6% | 14.8% | 9.6% | 6.8% | -16.9% | -23.6% |
| Net Debt/EBITDA | -4.8x | -0.6x | -0.7x | -1.0x | 2.5x | 3.4x |
Synaptics Incorporated ($SYNA) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 417 | 430 | 394 | 389 | | 8.1% | -6.7% | -11.3% | -8.9% |
| EBITDA | 15 | 8 | 15 | 24 | | -53.1% | -84.4% | -57.1% | -41.7% |
| Net Income | -27 | -82 | -14 | -2 | | -816.2% | -461.4% | -404.4% | -108.4% |
Balance Sheet
|
|---|
| Cash | 200 | 252 | 283 | 301 | | -33.7% | -27.4% | -13.9% | -18.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | -100.0% | -100.0% |
| Long Term Debt | 438 | 442 | 447 | 451 | | 105.5% | 110.9% | 116.5% | 123.1% |
Ratios
|
|---|
| Gross Margin | 27.4% | 26.8% | 31.2% | 32.8% | | -4.5% | -3.3% | 0.9% | 3.1% |
| EBITDA Margin | 3.5% | 1.9% | 3.8% | 6.0% | | -4.5% | -9.3% | -4.0% | -3.4% |
| Net Income Margin | -6.3% | -19.1% | -3.5% | -0.4% | | -7.3% | -24.1% | -4.5% | -4.6% |
Peers in Semiconductors
Below we provide Synaptics Incorporated 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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 5.2% | 11.0% | 5.0% |
|---|
| Synaptics Incorporated ($SYNA) | | 79.7% | -2.1% | 3.1% | -5.1% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.7% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| Synaptics Incorporated ($SYNA) | 46.0% | 34.0% | 34.9% | 30.5% | 29.4% |
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 ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 10.0% |
|---|
| Synaptics Incorporated ($SYNA) | 9.9% | 16.1% | 10.8% | 9.1% | 3.7% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| Synaptics Incorporated ($SYNA) | 4.1% | 3.0% | 1.7% | 1.8% | 2.1% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 5.2% |
|---|
| Synaptics Incorporated ($SYNA) | 11.7% | 17.8% | 7.3% | 6.7% | -5.7% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.5x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
| Synaptics Incorporated ($SYNA) | -4.8x | -0.6x | -0.7x | -1.0x | 2.5x |
