Cabot Microelectronics Corporation EBITDA jumped on 34.9% and EBITDA Margin increased on 4.3 pp from 27.2% to 31.5%
10/24/2018 • About Cabot Microelectronics Corporation (
$CCMP) • By InTwits
Cabot Microelectronics Corporation reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is expanding: 31.5% in FY2018 vs. 27.2% in FY2017 vs. 21.6% in FY2014
- Cabot Microelectronics Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $9m in 2018, $7m in 2017, $3m in 2016, $2m in 2015, $1m in 2014
- In the last 5 years the company invested considerably less than D&A: $87m vs. $116m
- The company has highly profitable business model: ROIC is 22.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Cabot Microelectronics Corporation's Revenue jumped on 16.4%. Revenue growth showed slowdown in FY18Q4 - it was 14.6% YoY. Revenue decline was slowing down on average by 5.7 pp per annum in the last 5 years. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.3 pp from 27.2% to 31.5% in FY2018. EBITDA Margin followed a growing trend at 2.4 pp per annum in the last 5 years.
Gross Margin increased on 3.1 pp from 50.1% to 53.2% in FY2018. SG&A as a % of Revenue showed almost no change in FY2018. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.57 pp from 2.6% to 3.1% in FY2018.
Net Income margin increased slightly on 1.5 pp from 17.1% to 18.6% in FY2018. Net Income margin stuck to a growing trend at 1.7 pp per annum in the last 5 years. The efficient tax rate was 32.0% in FY2018 while the average for the last five years was 24.4%.
Investments (CAPEX, working capital and M&A)
In FY2018 Cabot Microelectronics Corporation had CAPEX/Revenue of 3.6%. CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 4.0%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2017 at 4.2%.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue decreased slightly on 2.0 pp from 14.2% to 12.2% in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
Return on investment
The company operates at high and attractive ROIC (22.7%) while ROE is a bit lower (17.4%). ROIC increased on 6.4 pp from 16.3% to 22.7% in FY2018. ROE increased slightly on 1.6 pp from 15.9% to 17.4% in FY2018. During the last 5 years ROIC bottomed in FY2016 at 12.1% and was growing since that time. During FY2014-FY2018 ROE bottomed in FY2016 at 12.8% and was growing since that time.
Leverage (Debt)
The company paid down all the debt in FY2018. Cash dropped on 11.3%.
Valuation and dividends
Cabot Microelectronics Corporation's trades at EV/EBITDA 11.2x and P/E 22.2x.
The company paid 28.2% of Net Income as dividends in FY2018.
Management team
Cabot Microelectronics Corporation's CEO H Li "David" is a founder and has spent 4 years with the company. CEO total compensation was
$5,481,551 in FY2018 which included
$645,000 salary. The company's CFO is Scott D Beamer. Scott D Beamer has 1 year tenure at the company.
The company has 1.3% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 1,150 employees. The number of employees didn't change in 2018. Average revenue per employee in FY2018 was
$513,150 and it jumped on 16.4%.
Financial and operational results
FY ended 09/30/2018
Cabot Microelectronics Corporation ($CCMP) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 424.7 | 414.1 | 430.4 | 507.2 | 590.1 | 16.4% |
| Gross Profit | 203.1 | 212.2 | 210.2 | 254.1 | 314.1 | 23.6% |
| SG&A | 71.9 | 77.4 | 77.2 | 86.5 | 102.0 | 18.0% |
| EBITDA | 91.7 | 93.8 | 100.5 | 137.9 | 186.0 | 34.9% |
| EBIT | 71.8 | 75.0 | 74.5 | 112.0 | 160.1 | 43.0% |
| Interest expence | 3.4 | 4.5 | 4.7 | | | |
| Tax | 17.8 | 15.1 | 10.6 | 22.4 | 51.7 | 130.5% |
| Net Income | 50.8 | 56.1 | 59.8 | 87.0 | 110.0 | 26.6% |
| Stock Based Compensation | 14.0 | 16.4 | 13.8 | 13.0 | 18.5 | 42.4% |
Balance Sheet
|
|---|
| Cash | 284.2 | 354.2 | 287.5 | 397.9 | 352.9 | -11.3% |
| Accounts Receivable | 60.7 | 49.4 | 62.8 | 64.8 | 75.9 | 17.1% |
| Inventory | 65.0 | 70.7 | 72.1 | 71.9 | 71.9 | 0.1% |
| Accounts Payable | 15.3 | 15.4 | 16.8 | 17.6 | 18.2 | 3.1% |
| Short Term Debt | 8.8 | 8.8 | 7.7 | 10.9 | 0.0 | -100.0% |
| Long Term Debt | 164.1 | 155.3 | 147.0 | 133.0 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 12.6 | 13.8 | 17.7 | 21.2 | 21.3 | 0.6% |
| Dividends | | | 9.0 | 19.0 | 31.0 | 63.2% |
| Acquisitions | | | 127.0 | | | |
Ratios
|
|---|
| Revenue growth | -2.0% | -2.5% | 3.9% | 17.8% | 16.4% | |
| EBITDA growth | -5.3% | 2.2% | 7.2% | 37.2% | 34.9% | |
|
|---|
| Gross Margin | 47.8% | 51.3% | 48.8% | 50.1% | 53.2% | 3.1% |
| EBITDA Margin | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% | 4.3% |
| EBIT Margin | 16.9% | 18.1% | 17.3% | 22.1% | 27.1% | 5.1% |
| SG&A, % of revenue | 16.9% | 18.7% | 17.9% | 17.1% | 17.3% | 0.2% |
| SBC, % of revenue | 3.3% | 4.0% | 3.2% | 2.6% | 3.1% | 0.6% |
| Net Income Margin | 12.0% | 13.6% | 13.9% | 17.1% | 18.6% | 1.5% |
| CAPEX, % of revenue | 3.0% | 3.3% | 4.1% | 4.2% | 3.6% | -0.6% |
|
|---|
| ROIC | 14.2% | 13.4% | 12.1% | 16.3% | 22.7% | 6.4% |
| ROE | 14.5% | 13.9% | 12.8% | 15.9% | 17.4% | 1.6% |
| Net Debt/EBITDA | -1.2x | -2.0x | -1.3x | -1.8x | -1.9x | -0.1x |
| Interest expence / Average debt | 2.0% | 2.7% | 3.0% | | | |
People
|
|---|
| Insider ownership | 1.3% | 1.3% | 1.3% | 1.3% | 1.3% | 0.0% |
| Employees | 1,054 | 1,111 | 1,145 | 1,150 | 1,150 | 0.0% |
| Revenue/Employee, th. $ | 403 | 373 | 376 | 441 | 513 | 16.4% |
Cabot Microelectronics Corporation ($CCMP) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 140 | 143 | 150 | 157 | | 13.6% | 20.0% | 17.6% | 14.6% |
| EBITDA | 44 | 44 | 48 | 50 | | 25.5% | 43.4% | 45.5% | 27.6% |
| Net Income | -3 | 30 | 35 | 48 | | -113.9% | 62.7% | 76.4% | 81.9% |
Balance Sheet
|
|---|
| Cash | 377 | 461 | 186 | 353 | | 23.4% | 34.3% | -48.9% | -11.3% |
| Short Term Debt | 16 | 13 | 0 | 0 | | 50.0% | 33.3% | -100.0% | -100.0% |
| Long Term Debt | 124 | 124 | 0 | 0 | | -13.5% | -11.5% | -100.0% | -100.0% |
Ratios
|
|---|
| Gross Margin | 52.9% | 52.5% | 53.6% | 53.8% | | 3.0% | 2.1% | 4.8% | 2.6% |
| EBITDA Margin | 31.2% | 30.6% | 32.1% | 32.1% | | 3.0% | 5.0% | 6.2% | 3.3% |
| Net Income Margin | -2.2% | 20.8% | 23.4% | 30.8% | | -20.2% | 5.5% | 7.8% | 11.4% |
Peers in Semiconductor Equipment
Below we provide Cabot Microelectronics Corporation benchmarking against other companies in Semiconductor 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 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -0.5% | 7.8% | 24.7% | 14.0% |
|---|
| Cabot Microelectronics Corporation ($CCMP) | | -2.5% | 3.9% | 17.8% | 16.4% |
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 ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.4% | 38.3% | 37.3% | 43.2% | 40.2% |
|---|
| Cabot Microelectronics Corporation ($CCMP) | 47.8% | 51.3% | 48.8% | 50.1% | 53.2% |
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% |
| Versum Materials, Inc. ($VSM) | 23.4% | 27.6% | 33.3% | 30.8% | 31.0% |
| |
|---|
| Median (37 companies) | 6.8% | 9.8% | 11.4% | 16.0% | 16.2% |
|---|
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
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. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.7% | 2.2% | 2.8% | 2.9% |
|---|
| Cabot Microelectronics Corporation ($CCMP) | 3.0% | 3.3% | 4.1% | 4.2% | 3.6% |
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. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.4% | 5.2% | 6.9% | 12.2% | 11.2% |
|---|
| Cabot Microelectronics Corporation ($CCMP) | 14.2% | 13.4% | 12.1% | 16.3% | 22.7% |
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. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.0x | -1.2x | -0.7x | -1.0x |
|---|
| Cabot Microelectronics Corporation ($CCMP) | -1.2x | -2.0x | -1.3x | -1.8x | -1.9x |
