Aviat Networks, Inc. reports 34.2% EBITDA growth in 2018 and almost no change in Revenue of 243
08/28/2018 • About Aviat Networks, Inc. (
$AVNW) • By InTwits
Aviat Networks, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Aviat Networks, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -4.9% for the sames years
- Aviat Networks, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $7m in FY2018, $4m in FY2017, $2m in FY2016, $4m in FY2015, $9m in FY2014
- The company has potentially unprofitable business model: ROIC is 2.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Aviat Networks, Inc.'s Revenue showed almost no change in FY2018. Revenue growth showed acceleration in FY18Q4 - it increased 10.8% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.68 pp from 2.0% to 2.7% in FY2018. EBITDA Margin followed a growing trend at 3.8 pp per annum in FY2014-FY2018.
Gross Margin increased slightly on 2.0 pp from 31.2% to 33.2% in FY2018. During FY2014-FY2018 Gross Margin bottomed in FY2016 at 23.0% and was growing since that time. SG&A as a % of Revenue showed almost no change in FY2018.
Net Income margin increased slightly on 1.1 pp from -0.34% to 0.76% in FY2018. Net Income margin followed a growing trend at 3.8 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.7% in FY2018. The company's CAPEX/Revenue increased slightly on 1.6 pp from 1.1% in FY2015 to 2.7% in FY2018. Average CAPEX/Revenue for the last three years was 1.7%. The company investments to CAPEX were large: 101% of EBITDA. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2016 at 0.59% and was growing since that time.
Return on investment
The company operates at low ROIC (2.1%) and ROE (3.3%). ROIC increased on 3.6 pp from -1.5% to 2.1% in FY2018. ROE increased on 4.9 pp from -1.5% to 3.3% in FY2018. ROIC grew at 9.7 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is -4.4x Net Debt / EBITDA and 1.4x Debt / EBITDA. Debt didn't change in FY2018 while cash increased on 5.0%.
Aviat Networks, Inc. has no short term refinancing risk: cash is higher than short term debt (415.8%).
Valuation and dividends
Aviat Networks, Inc.'s trades at EV/EBITDA 9.2x and P/E 47.9x.
Management team
Aviat Networks, Inc.'s CEO is Michael Antonio Pangia. Michael Antonio Pangia is a founder and has 8 years tenure with the company.
Financial and operational results
FY ended 06/29/2018
Aviat Networks, Inc. ($AVNW) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 346.0 | 335.9 | 268.7 | 241.9 | 242.5 | 0.3% |
| Gross Profit | 85.1 | 80.7 | 61.7 | 75.5 | 80.5 | 6.7% |
| SG&A | 88.8 | 76.0 | 65.9 | 57.2 | 58.2 | 1.7% |
| EBITDA | -43.2 | -18.3 | -20.8 | 4.9 | 6.5 | 34.2% |
| Net Income | -51.2 | -24.6 | -29.9 | -0.8 | 1.8 | |
Balance Sheet
|
|---|
| Cash | 48.8 | 34.7 | 30.5 | 35.7 | 37.4 | 5.0% |
| Short Term Debt | 6.0 | 9.0 | 9.0 | 9.0 | 9.0 | 0.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 9.4 | 3.7 | 1.6 | 4.0 | 6.6 | 63.2% |
Ratios
|
|---|
| Revenue growth | -26.6% | -2.9% | -20.0% | -10.0% | 0.3% | |
| EBITDA growth | -620.5% | -57.6% | 13.6% | -123.3% | 34.2% | |
|
|---|
| Gross Margin | 24.6% | 24.0% | 23.0% | 31.2% | 33.2% | 2.0% |
| EBITDA Margin | -12.5% | -5.5% | -7.7% | 2.0% | 2.7% | 0.7% |
| SG&A, % of revenue | 25.7% | 22.6% | 24.5% | 23.6% | 24.0% | 0.3% |
| Net Income Margin | -14.8% | -7.3% | -11.1% | -0.3% | 0.8% | 1.1% |
| CAPEX, % of revenue | 2.7% | 1.1% | 0.6% | 1.7% | 2.7% | 1.0% |
|
|---|
| ROIC | -35.2% | -24.2% | -33.8% | -1.5% | 2.1% | 3.6% |
| ROE | -40.6% | -26.4% | -43.7% | -1.5% | 3.3% | 4.9% |
| Net Debt/EBITDA | | | | -5.5x | -4.4x | 1.1x |
Aviat Networks, Inc. ($AVNW) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 56 | 62 | 62 | 63 | | -3.5% | -9.9% | 5.8% | 10.8% |
| EBITDA | 0 | 4 | 0 | 2 | | | 5.6% | -98.2% | 241.3% |
| Net Income | -1 | 5 | -3 | 0 | | | 202.2% | | |
Balance Sheet
|
|---|
| Cash | 39 | 40 | 37 | 37 | | 23.2% | 15.4% | -6.6% | 5.0% |
| Short Term Debt | 9 | 9 | 9 | 9 | | 12.5% | 12.5% | 12.5% | 0.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 30.8% | 35.5% | 29.2% | 37.1% | | 1.0% | 4.7% | -1.0% | 3.0% |
| EBITDA Margin | 0.1% | 6.8% | 0.0% | 3.6% | | 2.3% | 1.0% | -2.5% | 2.4% |
| Net Income Margin | -1.2% | 8.2% | -4.2% | 0.1% | | -0.1% | 5.8% | -3.5% | 2.7% |
Peers in Communications Equipment
Below we provide Aviat Networks, 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. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.6% | 3.5% |
|---|
| Aviat Networks, Inc. ($AVNW) | | -2.9% | -20.0% | -10.0% | 0.3% |
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. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| Aviat Networks, Inc. ($AVNW) | 24.6% | 24.0% | 23.0% | 31.2% | 33.2% |
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. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| Aviat Networks, Inc. ($AVNW) | -12.5% | -5.5% | -7.7% | 2.0% | 2.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| 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 ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.3% | 2.0% | 1.9% | 1.6% |
|---|
| Aviat Networks, Inc. ($AVNW) | 2.7% | 1.1% | 0.6% | 1.7% | 2.7% |
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. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.2% | 0.3% |
|---|
| Aviat Networks, Inc. ($AVNW) | -35.2% | -24.2% | -33.8% | -1.5% | 2.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.7x | -0.7x | -0.9x | -0.6x | 0.2x |
|---|
| Aviat Networks, Inc. ($AVNW) | | | | -5.5x | -4.4x |
