Apple Inc. reports 23.1% Net Income growth in 2018 and almost no change in EBITDA Margin of 30.8%
11/01/2018 • About Apple Inc. (
$AAPL) • By InTwits
Apple Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Apple Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 5.3%. At the same time it's in pair with industry average of 5.2%
- The company has highly profitable business model: ROIC is 28.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is -2.8x
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 jumped on 15.9%. Revenue growth showed acceleration in FY18Q4 - it increased 19.6% YoY. EBITDA Margin showed almost no change in FY2018. During the last 5 years EBITDA Margin topped in FY2015 at 35.3% and was declining since that time.
Gross Margin showed almost no change in FY2018. During FY2014-FY2018 Gross Margin topped in FY2015 at 40.1% and was declining since that time. 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. SBC as a % of Revenue followed a growing trend at 0.15 pp per annum in the last 5 years.
Net Income margin increased slightly on 1.3 pp from 21.1% to 22.4% in FY2018. The efficient tax rate was 18.3% in FY2018 while the average for the last five years was 24.0%.
Investments (CAPEX, working capital and M&A)
Apple Inc.'s CAPEX/Revenue was 5.0% in FY2018. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. Average CAPEX/Revenue for the last three years was 5.4%.
Accounts receivable as a % of Revenue increased slightly on 0.93 pp from 7.8% to 8.7% in FY2018. Inventories as a % of Revenue decreased slightly on 0.63 pp from 2.1% to 1.5% in FY2018. Accounts payable as a % of Revenue decreased slightly on 0.65 pp from 34.8% to 34.1% in FY2018.
Apple Inc. has spent
$721m on M&A in FY2018 which accounts for 0.27% of revenue.
Return on investment
The company operates at high and attractive ROIC (28.0%) and ROE (49.4%). ROIC increased on 4.2 pp from 23.8% to 28.0% in FY2018. ROE jumped on 12.5 pp from 36.9% to 49.4% in FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.4x. Net Debt / EBITDA dropped on 0.3x from 1.3x to 1.1x in FY2018. Debt decreased slightly on 1.0% while cash surged on 27.7%. Net Debt/EBITDA grew at 0.2x per annum in the last 5 years.
Apple Inc. has good short term financial stability: Interest coverage ratio (ICR) is 21.9x. Apple Inc. has no short term refinancing risk: cash is higher than short term debt (124.9%).
Average interest expence charged on company's debt was 2.8% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 13.4x and P/E 16.9x.
The company paid 23.0% of Net Income as dividends in FY2018. Dividends grew on average at 4.3% per annum in the last 5 years).
Management team
Apple Inc.'s CEO is Timothy Donald Cook "Tim". Timothy Donald Cook "Tim" has 8 years tenure with the company. CEO total compensation was
$15,682,219 in FY2018 which included
$3,000,000 salary. The company's CFO Luca Maestri has spent 5 years with the company.
The company has 0.068% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 132,000 employees. The number of employees increased on 7.3%. Average revenue per employee in FY2018 was
$2,012,083 and it increased on 8.0%.
Financial and operational results
FY ended 09/29/2018
Apple Inc. ($AAPL) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 182,795 | 233,715 | 215,639 | 229,234 | 265,595 | 15.9% |
| Gross Profit | 70,537 | 93,626 | 84,263 | 88,186 | 101,839 | 15.5% |
| SG&A | 11,993 | 14,329 | 14,194 | 15,261 | 16,705 | 9.5% |
| EBITDA | 60,449 | 82,487 | 70,529 | 71,501 | 81,801 | 14.4% |
| EBIT | 52,503 | 71,230 | 60,024 | 61,344 | 70,898 | 15.6% |
| Interest expence | 384 | 733 | 1,456 | 2,323 | 3,240 | 39.5% |
| Tax | 13,973 | 19,121 | 15,685 | 15,738 | 13,372 | -15.0% |
| Net Income | 39,510 | 53,394 | 45,687 | 48,351 | 59,531 | 23.1% |
| Stock Based Compensation | 2,863 | 3,586 | 4,210 | 4,840 | 5,340 | 10.3% |
Balance Sheet
|
|---|
| Cash | 13,844 | 21,120 | 20,484 | 20,289 | 25,913 | 27.7% |
| Accounts Receivable | 17,460 | 16,849 | 15,754 | 17,874 | 23,186 | 29.7% |
| Inventory | 2,111 | 2,349 | 2,132 | 4,855 | 3,956 | -18.5% |
| Accounts Payable | 30,196 | 35,490 | 37,294 | 49,049 | 55,888 | 13.9% |
| Short Term Debt | 6,308 | 10,999 | 11,605 | 18,473 | 20,748 | 12.3% |
| Long Term Debt | 28,987 | 53,329 | 75,427 | 97,207 | 93,735 | -3.6% |
Cash flow
|
|---|
| Capex | 9,571 | 11,247 | 12,734 | 12,451 | 13,313 | 6.9% |
| Dividends | 11,126 | 11,561 | 12,150 | 12,769 | 13,712 | 7.4% |
| Acquisitions | 3,765 | 343 | 297 | 329 | 721 | 119.1% |
Ratios
|
|---|
| Revenue growth | 7.0% | 27.9% | -7.7% | 6.3% | 15.9% | |
| EBITDA growth | 8.4% | 36.5% | -14.5% | 1.4% | 14.4% | |
|
|---|
| Gross Margin | 38.6% | 40.1% | 39.1% | 38.5% | 38.3% | -0.1% |
| EBITDA Margin | 33.1% | 35.3% | 32.7% | 31.2% | 30.8% | -0.4% |
| EBIT Margin | 28.7% | 30.5% | 27.8% | 26.8% | 26.7% | -0.1% |
| SG&A, % of revenue | 6.6% | 6.1% | 6.6% | 6.7% | 6.3% | -0.4% |
| SBC, % of revenue | 1.6% | 1.5% | 2.0% | 2.1% | 2.0% | -0.1% |
| Net Income Margin | 21.6% | 22.8% | 21.2% | 21.1% | 22.4% | 1.3% |
| CAPEX, % of revenue | 5.2% | 4.8% | 5.9% | 5.4% | 5.0% | -0.4% |
|
|---|
| ROIC | 40.0% | 41.8% | 27.0% | 23.8% | 28.0% | 4.2% |
| ROE | 33.6% | 46.2% | 36.9% | 36.9% | 49.4% | 12.5% |
| Net Debt/EBITDA | 0.4x | 0.5x | 0.9x | 1.3x | 1.1x | -0.3x |
| Interest expence / Average debt | 1.1% | 1.5% | 1.9% | 2.3% | 2.8% | 0.5% |
People
|
|---|
| Insider ownership | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% | 0.0% |
| Employees | 92,600 | 110,000 | 116,000 | 123,000 | 132,000 | 7.3% |
| Revenue/Employee, th. $ | 1,974 | 2,125 | 1,859 | 1,864 | 2,012 | 8.0% |
Apple Inc. ($AAPL) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 88,293 | 61,137 | 53,265 | 62,900 | | 12.7% | 15.6% | 17.3% | 19.6% |
| EBITDA | 29,019 | 18,633 | 15,277 | 18,872 | | 10.1% | 13.4% | 16.4% | 20.9% |
| Net Income | 20,065 | 13,822 | 11,519 | 14,125 | | 12.2% | 25.3% | 32.1% | 31.8% |
Balance Sheet
|
|---|
| Cash | 27,491 | 45,059 | 31,971 | 25,913 | | 67.9% | 197.3% | 72.2% | 27.7% |
| Short Term Debt | 18,478 | 20,478 | 17,472 | 20,748 | | 32.1% | 46.4% | -5.4% | 12.3% |
| Long Term Debt | 103,922 | 101,362 | 97,128 | 93,735 | | 41.3% | 19.9% | 8.1% | -3.6% |
Ratios
|
|---|
| Gross Margin | 38.4% | 38.3% | 38.3% | 38.3% | | -0.1% | -0.6% | -0.2% | 0.4% |
| EBITDA Margin | 32.9% | 30.5% | 28.7% | 30.0% | | -0.8% | -0.6% | -0.2% | 0.3% |
| Net Income Margin | 22.7% | 22.6% | 21.6% | 22.5% | | -0.1% | 1.8% | 2.4% | 2.1% |
Peers in Technology Hardware, Storage &
Below you can find Apple Inc. benchmarking vs. other companies in Technology Hardware, Storage & 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 |
|---|
| Crossroads Systems Inc ($CRSS) | | -90.6% | -35.5% | -89.5% | 39,959.5% |
| Immersion Corporation ($IMMR) | | 19.8% | -9.9% | -38.7% | 217.0% |
| Veritec Inc ($VRTC) | | -42.2% | -28.0% | -52.2% | 53.1% |
| Boxlight Corporation ($BOXL) | | -88.5% | 503.2% | 26.4% | 47.0% |
| Pure Storage, Inc. ($PSTG) | | 308.2% | 152.4% | 67.9% | 38.6% |
| |
|---|
| Median (30 companies) | -16.9% | -3.3% | -4.3% | 1.5% | 4.3% |
|---|
| Apple Inc. ($AAPL) | | 27.9% | -7.7% | 6.3% | 15.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Immersion Corporation ($IMMR) | 99.1% | 99.3% | 99.7% | 99.4% | 99.8% |
| Pure Storage, Inc. ($PSTG) | 43.5% | 55.5% | 61.9% | 65.9% | 65.5% |
| NetApp, Inc. ($NTAP) | 62.0% | 62.6% | 60.8% | 61.3% | 62.7% |
| Avid Technology, Inc. ($AVID) | 61.4% | 60.9% | 65.0% | 57.8% | 57.9% |
| Datasea Inc ($DTSS) | | | | 39.3% | 54.4% |
| |
|---|
| Median (29 companies) | 35.6% | 35.0% | 38.8% | 39.6% | 38.8% |
|---|
| Apple Inc. ($AAPL) | 38.6% | 40.1% | 39.1% | 38.5% | 38.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Immersion Corporation ($IMMR) | 12.3% | 9.0% | -25.1% | -127.0% | 48.6% |
| Western Digital Corporation ($WDC) | 20.1% | 18.7% | 12.5% | 21.4% | 27.5% |
| NetApp, Inc. ($NTAP) | 16.9% | 16.7% | 11.3% | 15.4% | 22.9% |
| Seagate Technology PLC ($STX) | 19.3% | 21.1% | 11.3% | 16.7% | 20.0% |
| Hewlett Packard Enterprise Company ($HPE) | 11.8% | 10.5% | 25.4% | 12.7% | 14.4% |
| |
|---|
| Median (29 companies) | 7.1% | 6.2% | 3.8% | 3.5% | 7.9% |
|---|
| Apple Inc. ($AAPL) | 33.1% | 35.3% | 32.7% | 31.2% | 30.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hewlett Packard Enterprise Company ($HPE) | 6.6% | 6.4% | 10.8% | 10.9% | 9.6% |
| Pure Storage, Inc. ($PSTG) | 28.7% | 24.2% | 8.9% | 10.4% | 6.3% |
| 3D Systems Corporation ($DDD) | 3.5% | 3.4% | 2.6% | 4.8% | 5.9% |
| Western Digital Corporation ($WDC) | 4.2% | 4.2% | 4.5% | 3.0% | 4.0% |
| Video Display Corp ($VIDE) | 0.5% | 0.5% | 0.9% | 1.5% | 3.9% |
| |
|---|
| Median (29 companies) | 2.6% | 2.9% | 1.7% | 1.8% | 2.2% |
|---|
| Apple Inc. ($AAPL) | 5.2% | 4.8% | 5.9% | 5.4% | 5.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Avid Technology, Inc. ($AVID) | | | | | 252.4% |
| Ionix Technology Inc ($IINX) | | | | 23.9% | 204.5% |
| Immersion Corporation ($IMMR) | 7.6% | 5.8% | -21.5% | -138.9% | 96.8% |
| HP Inc. ($HPQ) | 8.0% | 8.7% | 15.8% | 60.8% | 72.9% |
| NetApp, Inc. ($NTAP) | 12.5% | 14.8% | 7.3% | 14.0% | 28.1% |
| |
|---|
| Median (37 companies) | 5.9% | 5.0% | -2.6% | 0.2% | 2.2% |
|---|
| Apple Inc. ($AAPL) | 40.0% | 41.8% | 27.0% | 23.8% | 28.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CPI Card Group Inc. ($PMTS) | 3.4x | 3.5x | 5.8x | | 12.4x |
| NCR Corporation ($NCR) | 4.9x | 6.6x | 2.7x | 2.3x | 5.2x |
| Avid Technology, Inc. ($AVID) | -0.7x | 3.1x | 1.7x | 5.6x | 4.8x |
| Xerox Corporation ($XRX) | 3.5x | 3.5x | 3.1x | 3.0x | 3.0x |
| Electronics for Imaging, Inc. ($EFII) | -0.2x | 1.4x | 1.3x | 1.6x | 1.7x |
| |
|---|
| Median (19 companies) | -0.4x | 0.4x | 0.1x | 0.2x | 0.2x |
|---|
| Apple Inc. ($AAPL) | 0.4x | 0.5x | 0.9x | 1.3x | 1.1x |
