Advanced Energy Industries, Inc. ROIC dropped on 14.4 pp from 45.7% to 31.3% in 2018 while Revenue increased on 7.1%
01/15/2019 • About Advanced Energy Industries, Inc. (
$AEIS) • By InTwits
Advanced Energy Industries, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Advanced Energy Industries, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $20m in 2018, $9m in 2017, $7m in 2016, $4m in 2015, $6m in 2014
- In the last 5 years the company invested considerably less than D&A: $46m vs. $61m
- The company has highly profitable business model: ROIC is 31.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Advanced Energy Industries, Inc.'s Revenue increased on 7.1%. Revenue growth showed slowdown in 18Q4 - it was -14.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.9 pp from 18.2% to 22.1% in 2018. During the last 5 years EBITDA Margin topped in 2017 at 31.3%.
Gross Margin decreased on 2.3 pp from 53.1% to 50.9% in 2018. During 2014-2018 Gross Margin topped in 2017 at 53.1%. SG&A as a % of Revenue increased slightly on 1.1 pp from 13.9% to 15.0% in 2018. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 0.52 pp from 1.9% to 1.3% in 2018.
Net Income margin showed almost no change in 2018. The efficient tax rate was 14.6% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.8%. Advanced Energy Industries, Inc.'s CAPEX/Revenue increased slightly on 1.9 pp from 0.97% in 2015 to 2.8% in 2018. For the last three years the average CAPEX/Revenue was 1.9%.
Accounts receivable as a % of Revenue increased slightly on 0.94 pp from 13.0% to 14.0% in 2018. Inventories as a % of Revenue increased slightly on 1.9 pp from 11.7% to 13.6% in 2018. Accounts payable as a % of Revenue decreased on 4.1 pp from 15.3% to 11.2% in 2018.
Advanced Energy Industries, Inc. has spent
$94m on M&A in 2018 which accounts for 13.0% of revenue.
Return on investment
The company operates at high and attractive ROIC (31.3%) and ROE (26.1%). ROIC dropped on 14.4 pp from 45.7% to 31.3% in 2018. ROE decreased on 4.1 pp from 30.2% to 26.1% in 2018. During 2014-2018 ROIC topped in 2017 at 45.7%.
Leverage (Debt)
The company has no debt. Cash dropped on 14.2%.
Valuation and dividends
The company's trades at EV/EBITDA 7.5x and P/E 11.8x.
Management team
Advanced Energy Industries, Inc.'s CEO Yuval Wasserman is a founder and has spent 4 years with the company. CEO total compensation was
$4,316,713 in 2018 which included
$700,000 salary. Paul Oldham is a Advanced Energy Industries, Inc.'s CFO. Paul Oldham has spent 1 year at the company.
1.3% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 2,259 employees. The number of employees jumped on 20.4%. Average revenue per employee in 2018 was
$318,235 and it dropped on 11.0%.
Financial and operational results
FY ended 12/31/2018
Advanced Energy Industries, Inc. ($AEIS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 583.1 | 414.8 | 483.7 | 671.0 | 718.9 | 7.1% |
| Gross Profit | 194.0 | 216.9 | 253.1 | 356.4 | 365.6 | 2.6% |
| SG&A | 83.9 | 66.1 | 77.7 | 93.3 | 108.0 | 15.8% |
| EBITDA | 61.3 | 115.5 | 134.7 | 210.2 | 185.1 | -11.9% |
| EBIT | 40.4 | 106.7 | 126.9 | 200.8 | 171.6 | -14.6% |
| Tax | -7.3 | 22.0 | 11.1 | 62.1 | 25.2 | -59.4% |
| Net Income | 47.0 | -158.5 | 127.5 | 137.9 | 147.0 | 6.6% |
| Stock Based Compensation | 5.0 | 2.8 | 6.3 | 12.5 | 9.7 | -22.7% |
Balance Sheet
|
|---|
| Cash | 125.3 | 158.4 | 282.0 | 407.3 | 349.3 | -14.2% |
| Accounts Receivable | 124.2 | 55.0 | 75.7 | 87.4 | 100.4 | 14.9% |
| Inventory | 95.1 | 52.6 | 55.8 | 78.5 | 98.0 | 24.9% |
| Accounts Payable | 53.0 | 27.2 | 46.3 | 48.2 | 39.6 | -17.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 6.1 | 4.0 | 6.8 | 9.0 | 20.3 | 124.8% |
| Acquisitions | 57.1 | 0.1 | | 17.3 | 93.8 | 440.5% |
Ratios
|
|---|
| Revenue growth | 6.6% | -28.9% | 16.6% | 38.7% | 7.1% | |
| EBITDA growth | 83.1% | 88.3% | 16.6% | 56.1% | -11.9% | |
|
|---|
| Gross Margin | 33.3% | 52.3% | 52.3% | 53.1% | 50.9% | -2.3% |
| EBITDA Margin | 10.5% | 27.8% | 27.8% | 31.3% | 25.8% | -5.6% |
| EBIT Margin | 6.9% | 25.7% | 26.2% | 29.9% | 23.9% | -6.1% |
| SG&A, % of revenue | 14.4% | 15.9% | 16.1% | 13.9% | 15.0% | 1.1% |
| SBC, % of revenue | 0.9% | 0.7% | 1.3% | 1.9% | 1.3% | -0.5% |
| Net Income Margin | 8.1% | -38.2% | 26.3% | 20.5% | 20.5% | -0.1% |
| CAPEX, % of revenue | 1.0% | 1.0% | 1.4% | 1.3% | 2.8% | 1.5% |
|
|---|
| ROIC | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% | -14.4% |
| ROE | 10.0% | -42.9% | 38.9% | 30.2% | 26.1% | -4.1% |
| Net Debt/EBITDA | -2.0x | -1.4x | -2.1x | -1.9x | -1.9x | 0.1x |
People
|
|---|
| Insider ownership | 1.3% | 1.3% | 1.3% | 1.3% | 1.3% | 0.0% |
| Employees | 1,656 | 1,382 | 1,558 | 1,876 | 2,259 | 20.4% |
| Revenue/Employee, th. $ | 352 | 300 | 310 | 358 | 318 | -11.0% |
Advanced Energy Industries, Inc. ($AEIS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 196 | 196 | 173 | 154 | | 31.0% | 18.2% | -2.0% | -14.0% |
| EBITDA | 59 | 59 | 43 | 24 | | 30.3% | 18.2% | -19.9% | -61.0% |
| Net Income | 47 | 46 | 35 | 19 | | 23.9% | 0.7% | -58.5% | |
Balance Sheet
|
|---|
| Cash | 414 | 433 | 339 | 349 | | 30.2% | 20.6% | -7.6% | -14.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 53.0% | 51.6% | 49.4% | 48.8% | | 0.2% | -0.9% | -2.8% | -6.0% |
| EBITDA Margin | 30.1% | 30.1% | 25.1% | 15.4% | | -0.2% | -0.0% | -5.6% | -18.5% |
| Net Income Margin | 23.8% | 23.6% | 20.1% | 12.6% | | -1.4% | -4.1% | -27.4% | 29.1% |
Peers in Semiconductor Equipment
Below you can find Advanced Energy Industries, 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. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -0.5% | 6.5% | 24.2% | 15.5% |
|---|
| Advanced Energy Industries, Inc. ($AEIS) | | -28.9% | 16.6% | 38.7% | 7.1% |
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 ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.6% | 38.3% | 37.3% | 43.2% | 40.2% |
|---|
| Advanced Energy Industries, Inc. ($AEIS) | 33.3% | 52.3% | 52.3% | 53.1% | 50.9% |
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 ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 6.8% | 9.8% | 11.4% | 16.0% | 16.2% |
|---|
| Advanced Energy Industries, Inc. ($AEIS) | 10.5% | 27.8% | 27.8% | 31.3% | 25.8% |
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. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.3% | 2.9% | 2.6% | 3.2% | 3.0% |
|---|
| Advanced Energy Industries, Inc. ($AEIS) | 1.0% | 1.0% | 1.4% | 1.3% | 2.8% |
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. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| SCI Engineered Materials Inc ($SCIA) | -3.6% | -2.3% | -19.5% | 1.6% | 26.6% |
| |
|---|
| Median (39 companies) | 3.4% | 5.2% | 6.9% | 12.2% | 11.2% |
|---|
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
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. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.0x | -1.2x | -0.7x | -1.0x |
|---|
| Advanced Energy Industries, Inc. ($AEIS) | -2.0x | -1.4x | -2.1x | -1.9x | -1.9x |
