Micron Technology, Inc. reports 178% Net Income growth in 2018 and 49.5% Revenue growth
09/20/2018 • About Micron Technology, Inc. (
$MU) • By InTwits
Micron Technology, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Micron Technology, Inc. is a fast growth stock: FY2018 revenue growth was 49.5%, 5 year revenue CAGR was 27.3% at FY2018 ROIC 42.9%
- EBITDA Margin is quite volatile: 65.0% in FY2018, 47.9% in FY2017, 25.4% in FY2016, 35.0% in FY2015, 31.7% in FY2014
- Micron Technology, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 28.7%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $8,879m in FY2018, $4,734m in FY2017, $5,817m in FY2016, $4,021m in FY2015, $3,107m in FY2014
- The company has highly profitable business model: ROIC is 42.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Micron Technology, Inc.'s Revenue jumped on 49.5%. Revenue growth showed slowdown in FY18Q4 - it was 37.5% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.3 pp from 14.9% to 12.5% in FY2018.
Gross Margin surged on 17.4 pp from 41.5% to 58.9% in FY2018. During FY2014-FY2018 Gross Margin bottomed in FY2016 at 20.2% and was growing since that time. SG&A as a % of Revenue decreased slightly on 0.98 pp from 3.7% to 2.7% in FY2018. During the last 5 years SG&A as a % of Revenue topped in FY2016 at 5.3% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. During the last 5 years SBC as a % of Revenue topped in FY2016 at 1.5% and was declining since that time.
Net Income margin surged on 21.5 pp from 25.0% to 46.5% in FY2018. During the last 5 years Net Income margin bottomed in FY2016 at -2.2% and was growing since that time. The efficient tax rate was 1.2% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 Micron Technology, Inc. had CAPEX/Revenue of 29.2%. The company's CAPEX/Revenue increased on 4.4 pp from 24.8% in FY2015 to 29.2% in FY2018. Average CAPEX/Revenue for the last three years was 33.1%.
Inventories as a % of Revenue decreased on 3.5 pp from 15.4% to 11.8% in FY2018.
Return on investment
The company operates at high and attractive ROIC (42.9%) and ROE (55.5%). ROIC jumped on 21.4 pp from 21.5% to 42.9% in FY2018. ROE jumped on 22.4 pp from 33.1% to 55.5% in FY2018. During FY2014-FY2018 ROIC bottomed in FY2016 at 0.79% and was growing since that time. During FY2014-FY2018 ROE bottomed in FY2016 at -2.3% and was growing since that time.
Leverage (Debt)
Debt level is -0.1x Net Debt / EBITDA and 0.2x Debt / EBITDA. Debt dropped on 58.4% while cash jumped on 27.3%.
Micron Technology, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 43.8x. Micron Technology, Inc. has no short term refinancing risk: cash is higher than short term debt (757.4%).
Average interest expence charged on company's debt was 7.4% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 2.5x and P/E 3.7x.
Management team
Micron Technology, Inc.'s CEO is Sanjay Mehrotra. Sanjay Mehrotra is a founder and has 2 years tenure with the company. CEO total compensation was
$14,241,583 in FY2018 which included
$1,200,000 salary. David A Zinsner is a the company's CFO. David A Zinsner has spent 1 year at the company.
Insider ownership is 0.16%. Insider ownership didn't change in 2018.
At the end of financial year the company had 36,000 employees. The number of employees increased on 5.6%. Average revenue per employee in FY2018 was
$844,194 and it surged on 41.7%.
Financial and operational results
FY ended 08/30/2018
Micron Technology, Inc. ($MU) key annual financial indicatorsmln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
---|
P&L
|
---|
Revenue | 16,358 | 16,192 | 12,399 | 20,322 | 30,391 | 49.5% |
Gross Profit | 5,437 | 5,215 | 2,505 | 8,436 | 17,891 | 112.1% |
SG&A | 707 | 719 | 659 | 743 | 813 | 9.4% |
EBITDA | 5,190 | 5,665 | 3,148 | 9,729 | 19,753 | 103.0% |
EBIT | 3,087 | 2,998 | 168 | 5,868 | 14,994 | 155.5% |
Interest expence | 352 | 371 | 437 | 601 | 342 | -43.1% |
Tax | 128 | 157 | 19 | 114 | 168 | 47.4% |
Net Income | 3,045 | 2,899 | -276 | 5,089 | 14,135 | 177.8% |
Stock Based Compensation | 115 | 168 | 191 | 215 | 198 | -7.9% |
Balance Sheet
|
---|
Cash | 4,150 | 2,287 | 4,140 | 5,109 | 6,506 | 27.3% |
Inventory | 2,455 | 2,340 | 2,889 | 3,123 | 3,595 | 15.1% |
Short Term Debt | 1,618 | 1,089 | 756 | 1,262 | 859 | -31.9% |
Long Term Debt | 4,893 | 6,252 | 9,154 | 9,872 | 3,777 | -61.7% |
Cash flow
|
---|
Capex | 3,107 | 4,021 | 5,817 | 4,734 | 8,879 | 87.6% |
Acquisitions | | | | 2,634 | | |
Ratios
|
---|
Revenue growth | 80.3% | -1.0% | -23.4% | 63.9% | 49.5% | |
EBITDA growth | 154.4% | 9.2% | -44.4% | 209.1% | 103.0% | |
|
---|
Gross Margin | 33.2% | 32.2% | 20.2% | 41.5% | 58.9% | 17.4% |
EBITDA Margin | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% | 17.1% |
EBIT Margin | 18.9% | 18.5% | 1.4% | 28.9% | 49.3% | 20.5% |
SG&A, % of revenue | 4.3% | 4.4% | 5.3% | 3.7% | 2.7% | -1.0% |
SBC, % of revenue | 0.7% | 1.0% | 1.5% | 1.1% | 0.7% | -0.4% |
Net Income Margin | 18.6% | 17.9% | -2.2% | 25.0% | 46.5% | 21.5% |
CAPEX, % of revenue | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% | 5.9% |
|
---|
ROIC | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% | 21.4% |
ROE | 30.5% | 25.0% | -2.3% | 33.1% | 55.5% | 22.4% |
Net Debt/EBITDA | 0.5x | 0.9x | 1.8x | 0.6x | -0.1x | -0.7x |
Interest expence / Average debt | 5.4% | 5.4% | 5.1% | 5.7% | 7.4% | 1.7% |
People
|
---|
Insider ownership | 0.2% | 0.2% | 0.2% | 0.2% | 0.2% | 0.0% |
Employees | 30,400 | 31,800 | 31,400 | 34,100 | 36,000 | 5.6% |
Revenue/Employee, th. $ | 538 | 509 | 395 | 596 | 844 | 41.7% |
Micron Technology, Inc. ($MU) key quoterly financial indicators
mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
---|
P&L
|
---|
Revenue | 6,803 | 7,351 | 7,797 | 8,440 | | 71.4% | 58.2% | 40.1% | 37.5% |
EBITDA | 4,187 | 4,718 | 5,186 | 5,662 | | 270.5% | 130.5% | 73.8% | 58.7% |
Net Income | 2,678 | 3,309 | 3,823 | 4,325 | | 1,387.8% | 270.1% | 132.1% | 82.6% |
Balance Sheet
|
---|
Cash | 6,008 | 7,828 | 6,808 | 6,506 | | 45.2% | 115.5% | 68.2% | 27.3% |
Short Term Debt | 1,401 | 1,514 | 1,454 | 859 | | 21.3% | 35.5% | 25.2% | -31.9% |
Long Term Debt | 7,644 | 7,802 | 5,890 | 3,777 | | -10.0% | -31.0% | -43.8% | -61.7% |
Ratios
|
---|
Gross Margin | 55.1% | 58.1% | 60.6% | 61.0% | | 29.6% | 21.4% | 13.7% | 10.3% |
EBITDA Margin | 61.5% | 64.2% | 66.5% | 67.1% | | 33.1% | 20.1% | 12.9% | 9.0% |
Net Income Margin | 39.4% | 45.0% | 49.0% | 51.2% | | 34.8% | 25.8% | 19.4% | 12.7% |
Peers in Semiconductors
Below we provide Micron Technology, Inc. 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. ($SGH) | | | -16.9% | 42.5% | 69.3% |
Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
NVIDIA Corporation ($NVDA) | | 13.4% | 7.0% | 37.9% | 40.6% |
|
---|
Median (67 companies) | 54.6% | 9.7% | 5.2% | 10.9% | 4.7% |
---|
Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
|
---|
Median (65 companies) | 46.4% | 47.7% | 48.0% | 49.1% | 50.4% |
---|
Micron Technology, Inc. ($MU) | 33.2% | 32.2% | 20.2% | 41.5% | 58.9% |
Top companies by EBITDA margin, %
Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
---|
NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
NXP Semiconductors N.V. ($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% |
Broadcom Inc. ($AVGO) | 24.9% | 38.0% | 19.9% | 40.4% | 44.2% |
|
---|
Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
---|
Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
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% |
Sequans Communications S.A. ($SQNS) | 0.0% | 16.9% | 11.8% | 13.3% | 22.9% |
|
---|
Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.4% |
---|
Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
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% |
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% |
Skyworks Solutions, Inc. ($SWKS) | 24.8% | 36.4% | 33.7% | 33.1% | 32.3% |
|
---|
Median (73 companies) | 5.0% | 3.8% | 1.7% | 3.2% | 3.0% |
---|
Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
|
---|
Median (45 companies) | -0.6x | -0.3x | -0.0x | 0.4x | 0.3x |
---|
Micron Technology, Inc. ($MU) | 0.5x | 0.9x | 1.8x | 0.6x | -0.1x |