Versum Materials, Inc. reports 80.3% CAPEX growth in 2018 and 21.8% Revenue growth
11/06/2018 • About Versum Materials, Inc. (
$VSM) • By InTwits
Versum Materials, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Versum Materials, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.5%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: $115m in FY2018, $64m in FY2017, $36m in FY2016, $22m in FY2015, $24m in FY2014
- The company has highly profitable business model: ROIC is 32.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -1.6x
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 surged on 21.8%. Revenue growth showed slowdown in FY18Q4 - it was 19.1% YoY. During the last 5 years Revenue growth bottomed in FY2016 at -3.9% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.4 pp from 10.0% to 7.6% in 2018.
Gross Margin decreased slightly on 0.96 pp from 43.5% to 42.6% in FY2018. During the last 5 years Gross Margin topped in FY2016 at 44.1% and was declining since that time. SG&A as a % of Revenue decreased slightly on 0.73 pp from 11.2% to 10.4% in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue was relatively stable in the last 5 years.
Net Income margin decreased on 2.8 pp from 17.2% to 14.4% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2016 at 21.6% and was declining since that time. The efficient tax rate was 37.6% in FY2018 while the average for the last five years was 24.5%.
Investments (CAPEX, working capital and M&A)
Versum Materials, Inc.'s CAPEX/Revenue was 8.4% in FY2018. CAPEX/Revenue increased on 6.2 pp from 2.2% in FY2015 to 8.4% in FY2018. It's average level of CAPEX/Revenue for the last three years was 5.9%. CAPEX as a % of Revenue followed a growing trend at 1.5 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue increased slightly on 0.54 pp from 12.9% to 13.4% in FY2018. Inventories as a % of Revenue decreased slightly on 1.3 pp from 14.2% to 12.9% in FY2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.4x and Debt / EBITDA is 2.3x. Net Debt / EBITDA dropped on 0.7x from 2.1x to 1.4x in FY2018. Debt showed almost no change in FY2018 while cash surged on 47.3%. During FY2014-FY2018 Net Debt/EBITDA topped in FY2016 at 2.7x and was declining since that time.
Versum Materials, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 7.7x. Versum Materials, Inc. has no short term refinancing risk: cash is higher than short term debt (6,893.1%).
Average interest expence charged on company's debt was 4.9% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 9.8x and P/E 18.0x.
The company paid 12.2% of Net Income as dividends in FY2018.
Management team
The company's CEO Guillermo Novo is a founder and has spent 2 years with the company. CEO total compensation was
$4,809,960 in FY2018 which included
$761,538 salary. Versum Materials, Inc.'s CFO George G Bitto has spent 5 years with the company.
At the end of financial year the company had 0.72% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 2,300 employees. The number of employees increased on 4.5%. Average revenue per employee in FY2018 was
$596,652 and it jumped on 16.5%.
Financial and operational results
FY ended 09/30/2018
Versum Materials, Inc. ($VSM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 943 | 1,009 | 970 | 1,127 | 1,372 | 21.8% |
| Gross Profit | 304 | 393 | 428 | 491 | 584 | 19.1% |
| SG&A | 110 | 110 | 110 | 126 | 143 | 13.8% |
| EBITDA | 221 | 279 | 323 | 347 | 425 | 22.6% |
| EBIT | 161 | 222 | 276 | 301 | 374 | 24.4% |
| Interest expence | 0 | 0 | 0 | 47 | 48 | 1.9% |
| Tax | 32 | 32 | 59 | 53 | 119 | 124.3% |
| Net Income | 124 | 184 | 209 | 193 | 198 | 2.2% |
| Stock Based Compensation | 5 | 5 | 5 | 8 | 10 | 21.7% |
Balance Sheet
|
|---|
| Cash | 50 | 18 | 106 | 271 | 400 | 47.3% |
| Accounts Receivable | 131 | 127 | 130 | 145 | 184 | 26.9% |
| Inventory | 130 | 124 | 127 | 160 | 177 | 10.4% |
| Short Term Debt | 1 | 0 | 6 | 6 | 6 | 0.0% |
| Long Term Debt | 4 | 0 | 980 | 977 | 974 | -0.3% |
Cash flow
|
|---|
| Capex | 24 | 22 | 36 | 64 | 115 | 80.3% |
| Dividends | | | | 11 | 24 | 118.2% |
| Acquisitions | | | | 13 | | |
Ratios
|
|---|
| Revenue growth | 10.5% | 7.1% | -3.9% | 16.2% | 21.8% | |
| EBITDA growth | 2,022.1% | 26.4% | 15.8% | 7.3% | 22.6% | |
|
|---|
| Gross Margin | 32.2% | 38.9% | 44.1% | 43.5% | 42.6% | -1.0% |
| EBITDA Margin | 23.4% | 27.6% | 33.3% | 30.8% | 31.0% | 0.2% |
| EBIT Margin | 17.1% | 22.0% | 28.5% | 26.7% | 27.3% | 0.6% |
| SG&A, % of revenue | 11.6% | 10.9% | 11.3% | 11.2% | 10.4% | -0.7% |
| SBC, % of revenue | 0.5% | 0.5% | 0.5% | 0.7% | 0.7% | -0.0% |
| Net Income Margin | 13.1% | 18.2% | 21.6% | 17.2% | 14.4% | -2.8% |
| CAPEX, % of revenue | 2.6% | 2.2% | 3.7% | 5.7% | 8.4% | 2.7% |
|
|---|
| ROIC | | 26.2% | 32.4% | 30.0% | 32.1% | 2.1% |
| ROE | | 23.8% | | | | |
| Net Debt/EBITDA | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x | -0.7x |
| Interest expence / Average debt | 5.9% | | 0.1% | 4.8% | 4.9% | 0.1% |
People
|
|---|
| Insider ownership | 0.7% | 0.7% | 0.7% | 0.7% | 0.7% | 0.0% |
| Employees | | | 1,900 | 2,200 | 2,300 | 4.5% |
| Revenue/Employee, th. $ | | | 511 | 512 | 597 | 16.5% |
Versum Materials, Inc. ($VSM) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 331 | 341 | 350 | 351 | | 22.2% | 25.8% | 20.4% | 19.1% |
| EBITDA | 101 | 102 | 110 | 112 | | 12.1% | 26.1% | 20.1% | 33.1% |
| Net Income | 19 | 62 | 63 | 54 | | -63.2% | 37.2% | 20.1% | 19.5% |
Balance Sheet
|
|---|
| Cash | 278 | 254 | 290 | 400 | | 55.7% | 44.7% | 23.5% | 47.3% |
| Short Term Debt | 6 | 6 | 6 | 6 | | 0.0% | -20.5% | 0.0% | 0.0% |
| Long Term Debt | 977 | 976 | 975 | 974 | | -0.2% | -0.3% | -0.3% | -0.3% |
Ratios
|
|---|
| Gross Margin | 42.2% | 42.5% | 42.7% | 42.9% | | -2.1% | -0.4% | -2.4% | 1.0% |
| EBITDA Margin | 30.5% | 29.9% | 31.5% | 32.0% | | -2.7% | 0.1% | -0.1% | 3.4% |
| Net Income Margin | 5.7% | 18.1% | 18.1% | 15.4% | | -13.1% | 1.5% | -0.0% | 0.1% |
Peers in Semiconductor Equipment
Below you can find Versum Materials, Inc. benchmarking vs. other companies in Semiconductor Equipment 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 |
|---|
| 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. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -2.0% | 7.8% | 24.7% | 14.0% |
|---|
| Versum Materials, Inc. ($VSM) | | 7.1% | -3.9% | 16.2% | 21.8% |
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 ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.6% | 38.3% | 37.3% | 43.7% | 40.2% |
|---|
| Versum Materials, Inc. ($VSM) | 32.2% | 38.9% | 44.1% | 43.5% | 42.6% |
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% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 6.8% | 9.8% | 11.4% | 16.0% | 16.2% |
|---|
| Versum Materials, Inc. ($VSM) | 23.4% | 27.6% | 33.3% | 30.8% | 31.0% |
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. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.9% | 2.2% | 2.8% | 2.9% |
|---|
| Versum Materials, Inc. ($VSM) | 2.6% | 2.2% | 3.7% | 5.7% | 8.4% |
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% |
| 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% |
| SCI Engineered Materials Inc ($SCIA) | -3.6% | -2.3% | -19.5% | 1.6% | 26.6% |
| |
|---|
| Median (39 companies) | 3.5% | 5.2% | 6.9% | 12.2% | 11.2% |
|---|
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
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 ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| Entegris, Inc. ($ENTG) | 3.6x | 1.4x | 0.7x | 0.1x | 1.1x |
| |
|---|
| Median (31 companies) | -1.2x | -1.3x | -1.3x | -0.7x | -1.0x |
|---|
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
