EMCORE Corporation reports 312% Net Income decline in 2018 and 30.3% Revenue decline
12/04/2018 • About EMCORE Corporation (
$EMKR) • By InTwits
EMCORE Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EMCORE Corporation is a company in decline: FY2018 revenue growth was -30.3%, 5 years revenue CAGR was -12.6%
- The company operates at negative EBITDA Margin: -14.8%
- EMCORE Corporation motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -2.1% for the sames years
- EMCORE Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's in pair with industry average of 7.4%
- CAPEX is quite volatile: $7m in FY2018, $10m in FY2017, $6m in FY2016, $3m in FY2015, $3m in FY2014
- The company has unprofitable business model: ROIC is -15.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.6x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 30.3%. Annual revenue decline showed slowdown in FY18Q4 - revenue dropped on 13.5%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 24.2 pp from 9.4% to -14.8% in FY2018. During the last 5 years EBITDA Margin topped in FY2017 at 9.4%.
Gross Margin dropped on 13.0 pp from 34.6% to 21.6% in FY2018. SG&A as a % of Revenue increased on 6.7 pp from 18.1% to 24.8% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue bottomed in FY2017 at 18.1%.
Net Income margin dropped on 27.1 pp from 6.7% to -20.4% in FY2018. During FY2014-FY2018 Net Income margin topped in FY2015 at 77.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 7.7%. EMCORE Corporation showed CAPEX/Revenue growth of 4.3 pp from 3.4% in FY2015 to 7.7% in FY2018. For the last three years the average CAPEX/Revenue was 7.3%.
Return on investment
The company operates at negative ROIC (-15.3%) and ROE (-15.3%). ROIC dropped on 22.0 pp from 6.7% to -15.3% in FY2018. ROE dropped on 22.6 pp from 7.2% to -15.3% in FY2018. During FY2014-FY2018 ROIC topped in FY2017 at 6.7%.
Leverage (Debt)
The company has no debt. Cash decreased on 7.6%.
Management team
Jeffrey Rittichier "Jeff" is a the company's CEO. Jeffrey Rittichier "Jeff" is a founder and has spent 4 years with the company.
Financial and operational results
FY ended 09/30/2018
EMCORE Corporation ($EMKR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 55.5 | 81.7 | 92.0 | 122.9 | 85.6 | -30.3% |
| Gross Profit | 12.1 | 28.7 | 31.0 | 42.5 | 18.5 | -56.5% |
| SG&A | 23.2 | 24.7 | 20.7 | 22.2 | 21.2 | -4.6% |
| EBITDA | -11.8 | -1.6 | 5.4 | 11.5 | -12.7 | -210.4% |
| Net Income | 4.9 | 63.1 | 8.3 | 8.2 | -17.5 | -311.9% |
Balance Sheet
|
|---|
| Cash | 20.7 | 111.9 | 63.9 | 68.3 | 63.1 | -7.6% |
| Short Term Debt | 26.5 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 3.0 | 2.8 | 5.8 | 9.6 | 6.6 | -31.4% |
Ratios
|
|---|
| Revenue growth | -67.0% | 47.1% | 12.6% | 33.6% | -30.3% | |
| EBITDA growth | -232.6% | -86.7% | -446.8% | 111.2% | -210.4% | |
|
|---|
| Gross Margin | 21.8% | 35.1% | 33.6% | 34.6% | 21.6% | -13.0% |
| EBITDA Margin | -21.3% | -1.9% | 5.9% | 9.4% | -14.8% | -24.2% |
| SG&A, % of revenue | 41.9% | 30.3% | 22.5% | 18.1% | 24.8% | 6.7% |
| Net Income Margin | 8.7% | 77.2% | 9.0% | 6.7% | -20.4% | -27.1% |
| CAPEX, % of revenue | 5.4% | 3.4% | 6.3% | 7.8% | 7.7% | -0.1% |
|
|---|
| ROIC | -15.2% | -3.3% | 2.4% | 6.7% | -15.3% | -22.0% |
| ROE | 4.5% | 50.9% | 6.8% | 7.2% | -15.3% | -22.6% |
| Net Debt/EBITDA | | | -11.7x | -5.9x | |
EMCORE Corporation ($EMKR) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 24 | 19 | 18 | 25 | | -20.3% | -42.9% | -42.8% | -13.5% |
| EBITDA | 0 | -3 | -6 | -4 | | -87.1% | -194.1% | -317.4% | -245.4% |
| Net Income | -0 | -3 | -8 | -6 | | -104.7% | -266.2% | -447.0% | -366.9% |
Balance Sheet
|
|---|
| Cash | 64 | 65 | 65 | 63 | | 3.2% | -4.6% | -1.2% | -7.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 32.9% | 26.6% | 6.8% | 17.5% | | -0.4% | -7.3% | -28.3% | -18.8% |
| EBITDA Margin | 1.6% | -13.6% | -36.4% | -16.2% | | -8.4% | -21.8% | -46.0% | -25.9% |
| Net Income Margin | -0.3% | -16.5% | -47.5% | -23.3% | | -6.2% | -22.2% | -55.3% | -30.9% |
Peers in Communications Equipment
Below you can find EMCORE Corporation benchmarking vs. other companies in Communications 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 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.3% | 5.1% | 3.5% |
|---|
| EMCORE Corporation ($EMKR) | | 47.1% | 12.6% | 33.6% | -30.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| EMCORE Corporation ($EMKR) | 21.8% | 35.1% | 33.6% | 34.6% | 21.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.5% | 6.0% | 5.4% |
|---|
| EMCORE Corporation ($EMKR) | -21.3% | -1.9% | 5.9% | 9.4% | -14.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.2% | 1.9% | 1.8% | 1.6% |
|---|
| EMCORE Corporation ($EMKR) | 5.4% | 3.4% | 6.3% | 7.8% | 7.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.2% | 2.1% | 0.7% |
|---|
| EMCORE Corporation ($EMKR) | -15.2% | -3.3% | 2.4% | 6.7% | -15.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (46 companies) | -0.7x | -0.7x | -0.8x | -0.6x | -0.1x |
|---|
