Coherent, Inc. Net Income surged on 19.4% and Revenue jumped on 10.4%
11/06/2018 • About Coherent, Inc. (
$COHR) • By InTwits
Coherent, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Coherent, Inc. is a fast growth stock: FY2018 revenue growth was 10.4%, 5 year revenue CAGR was 18.6% at FY2018 ROIC 21.5%
- EBITDA Margin is expanding: 26.6% in FY2018 vs. 24.9% in FY2017 vs. 14.2% in FY2014
- Coherent, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.0%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $91m in FY2018, $64m in FY2017, $49m in FY2016, $22m in FY2015, $23m in FY2014
- In the last 5 years the company invested considerably less than D&A: $249m vs. $321m
- The company has highly profitable business model: ROIC is 21.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.2x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Coherent, Inc.'s Revenue surged on 10.4%. Revenue growth showed slowdown in FY18Q4 - it was -5.9% YoY. During the last 5 years Revenue growth topped in FY2017 at 101%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 7.3 pp from 32.7% to 25.5% in 2018. EBITDA Margin followed a growing trend at 3.3 pp per annum in FY2014-FY2018.
Gross Margin showed almost no change in FY2018. SG&A as a % of Revenue decreased slightly on 1.5 pp from 16.9% to 15.4% in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018.
Net Income margin increased slightly on 0.98 pp from 12.0% to 13.0% in FY2018. Net Income margin followed a growing trend at 1.4 pp per annum in FY2014-FY2018. The efficient tax rate was 31.6% in FY2018 while the average for the last five years was 29.7%.
Investments (CAPEX, working capital and M&A)
Coherent, Inc.'s CAPEX/Revenue was 4.8% in FY2018. CAPEX/Revenue increased on 2.0 pp from 2.8% in FY2015 to 4.8% in FY2018. It's average CAPEX/Revenue for the last three years was 4.7%.
Accounts receivable as a % of Revenue increased slightly on 0.93 pp from 17.7% to 18.7% in FY2018. Inventories as a % of Revenue increased slightly on 1.5 pp from 24.1% to 25.6% in FY2018. Accounts payable as a % of Revenue decreased slightly on 1.2 pp from 7.8% to 6.6% in FY2018.
Coherent, Inc. has spent
$45m on M&A in FY2018 which accounts for 2.4% of revenue.
Return on investment
The company operates at high and attractive ROIC (21.5%) while ROE is a bit lower (20.0%). ROIC decreased on 2.4 pp from 24.0% to 21.5% in FY2018. ROE showed almost no change in FY2018. ROIC stuck to a growing trend at 3.4 pp per annum in the last 5 years. ROE grew at 3.5 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 0.2x Net Debt / EBITDA and 0.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.1x from 0.4x to 0.2x in FY2018. Debt dropped on 28.3% while cash dropped on 29.9%.
Coherent, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 15.2x. Coherent, Inc. has no short term refinancing risk: cash is higher than short term debt (6,121.7%).
Average interest expence paid by the company was 6.1% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 6.1x and P/E 12.0x.
Management team
Coherent, Inc.'s CEO John R Ambroseo is a founder and has spent 16 years with the company. CEO total compensation was
$9,531,892 in FY2018 which included
$800,010 salary. Kevin S Palatnik is a the company's CFO. Kevin S Palatnik has spent 3 years at the company.
1.5% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 5,418 employees. The number of employees increased on 3.8%. Average revenue per employee in FY2018 was
$351,158 and it increased on 6.3%.
Financial and operational results
FY ended 09/29/2018
Coherent, Inc. ($COHR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 795 | 802 | 857 | 1,723 | 1,903 | 10.4% |
| Gross Profit | 313 | 335 | 381 | 750 | 831 | 10.7% |
| SG&A | 154 | 150 | 169 | 292 | 294 | 0.5% |
| EBITDA | 113 | 134 | 162 | 430 | 506 | 17.8% |
| EBIT | 77 | 101 | 128 | 325 | 393 | 20.7% |
| Interest expence | 0 | 0 | 1 | 34 | 26 | -24.8% |
| Tax | 20 | 23 | 35 | 93 | 114 | 22.3% |
| Net Income | 59 | 76 | 88 | 207 | 247 | 19.4% |
| Stock Based Compensation | 19 | 18 | 20 | 25 | 33 | 32.8% |
Balance Sheet
|
|---|
| Cash | 91 | 131 | 354 | 443 | 310 | -29.9% |
| Accounts Receivable | 137 | 142 | 166 | 306 | 355 | 16.2% |
| Inventory | 170 | 157 | 213 | 415 | 487 | 17.3% |
| Accounts Payable | 33 | 33 | 45 | 76 | 70 | -7.3% |
| Short Term Debt | 0 | 0 | 20 | 5 | 5 | -0.1% |
| Long Term Debt | 0 | 0 | 0 | 589 | 421 | -28.6% |
Cash flow
|
|---|
| Capex | 23 | 22 | 49 | 64 | 91 | 42.3% |
| Acquisitions | | 9 | | 740 | 45 | -93.9% |
Ratios
|
|---|
| Revenue growth | -1.9% | 1.0% | 6.8% | 101.0% | 10.4% | |
| EBITDA growth | -6.6% | 18.3% | 21.0% | 165.3% | 17.8% | |
|
|---|
| Gross Margin | 39.4% | 41.8% | 44.5% | 43.5% | 43.7% | 0.1% |
| EBITDA Margin | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% | 1.7% |
| EBIT Margin | 9.7% | 12.6% | 14.9% | 18.9% | 20.7% | 1.8% |
| SG&A, % of revenue | 19.4% | 18.7% | 19.7% | 16.9% | 15.4% | -1.5% |
| SBC, % of revenue | 2.4% | 2.3% | 2.4% | 1.4% | 1.7% | 0.3% |
| Net Income Margin | 7.4% | 9.5% | 10.2% | 12.0% | 13.0% | 1.0% |
| CAPEX, % of revenue | 2.9% | 2.8% | 5.8% | 3.7% | 4.8% | 1.1% |
|
|---|
| ROIC | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% | -2.4% |
| ROE | 7.5% | 9.5% | 10.3% | 20.0% | 20.0% | -0.0% |
| Net Debt/EBITDA | -0.8x | -1.0x | -2.1x | 0.4x | 0.2x | -0.1x |
| Interest expence / Average debt | | | 13.5% | 11.2% | 6.1% | -5.1% |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 0.0% |
| Employees | 2,519 | 2,586 | 2,787 | 5,218 | 5,418 | 3.8% |
| Revenue/Employee, th. $ | 315 | 310 | 308 | 330 | 351 | 6.3% |
Coherent, Inc. ($COHR) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 478 | 481 | 482 | 462 | | 38.0% | 13.8% | 3.9% | -5.9% |
| EBITDA | 137 | 129 | 129 | 112 | | 116.5% | 30.4% | 1.1% | -20.3% |
| Net Income | 42 | 65 | 67 | 73 | | 37.8% | 56.1% | 9.6% | -0.8% |
Balance Sheet
|
|---|
| Cash | 386 | 309 | 232 | 310 | | 7.1% | -28.6% | -50.8% | -29.9% |
| Short Term Debt | 7 | 7 | 7 | 5 | | -3.6% | 43.8% | 29.0% | -0.1% |
| Long Term Debt | 503 | 450 | 422 | 421 | | -25.7% | -31.9% | -35.3% | -28.6% |
Ratios
|
|---|
| Gross Margin | 45.4% | 44.8% | 43.2% | 41.1% | | 4.6% | 2.3% | -1.4% | -4.1% |
| EBITDA Margin | 28.7% | 26.8% | 26.8% | 24.2% | | 10.4% | 3.4% | -0.7% | -4.4% |
| Net Income Margin | 8.8% | 13.6% | 13.9% | 15.9% | | -0.0% | 3.7% | 0.7% | 0.8% |
Peers in Electronic Equipment & Instrum
Below you can find Coherent, Inc. benchmarking vs. other companies in Electronic Equipment & Instrum 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 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 4.5% | 0.3% | 3.6% | 9.1% |
|---|
| Coherent, Inc. ($COHR) | | 1.0% | 6.8% | 101.0% | 10.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 42.7% | 42.3% | 40.1% | 41.5% | 40.9% |
|---|
| Coherent, Inc. ($COHR) | 39.4% | 41.8% | 44.5% | 43.5% | 43.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| Badger Meter, Inc. ($BMI) | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| Coherent, Inc. ($COHR) | 2.9% | 2.8% | 5.8% | 3.7% | 4.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| Image Sensing Systems, Inc. ($ISNS) | -16.5% | 5.3% | 11.7% | 28.6% | 18.5% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.9% |
|---|
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.7x | -0.7x | -0.8x | -0.8x | -0.9x |
|---|
| Coherent, Inc. ($COHR) | -0.8x | -1.0x | -2.1x | 0.4x | 0.2x |
