ADTRAN, Inc. EBITDA dropped on 156% and EBITDA Margin dropped on 13.5 pp from 8.0% to -5.6%
01/23/2019 • About ADTRAN, Inc. (
$ADTN) • By InTwits
ADTRAN, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- ADTRAN, Inc. is a company in decline: 2018 revenue growth was -20.6%, 5 years revenue CAGR was -3.8%
- EBITDA Margin is quite volatile: -5.6% in 2018, 8.0% in 2017, 7.7% in 2016, 4.6% in 2015, 9.8% in 2014
- ADTRAN, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $8m in 2018, $15m in 2017, $21m in 2016, $12m in 2015, $11m in 2014
- The company has unprofitable business model: ROIC is -9.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 20.6%. Annual revenue decline showed slowdown in 18Q4 - revenue jumped on 10.4%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 13.5 pp from 8.0% to -5.6% in 2018.
Gross Margin decreased on 7.1 pp from 45.5% to 38.5% in 2018. SG&A as a % of Revenue increased on 3.2 pp from 20.3% to 23.5% in 2018.
Net Income margin decreased on 7.2 pp from 3.6% to -3.7% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 1.5%. The company showed almost no change in CAPEX/Revenue from 2015 to 2018. For the last three years the average CAPEX/Revenue was 2.4%. During the last 5 years CAPEX as a % of Revenue topped in 2016 at 3.4% and was declining since that time.
Return on investment
The company operates at negative ROIC (-9.4%) and ROE (-4.1%). ROIC dropped on 17.0 pp from 7.6% to -9.4% in 2018. ROE decreased on 9.0 pp from 4.9% to -4.1% in 2018.
Leverage (Debt)
Debt level is -1.8x Net Debt / EBITDA and Debt / EBITDA. Debt decreased on 3.9% while cash jumped on 22.1%.
The company has no short term refinancing risk: short term debt is zero.
Management team
Thomas R Stanton "Tom" is a the company's CEO. Thomas R Stanton "Tom" is a founder and has spent 13 years with the company.
Financial and operational results
FY ended 12/31/2018
ADTRAN, Inc. ($ADTN) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 630.0 | 600.1 | 636.8 | 666.9 | 529.3 | -20.6% |
| Gross Profit | 311.3 | 266.9 | 291.3 | 303.6 | 203.6 | -33.0% |
| SG&A | 132.0 | 123.5 | 131.8 | 135.6 | 124.4 | -8.2% |
| EBITDA | 62.0 | 27.7 | 49.1 | 53.1 | -29.5 | -155.6% |
| Net Income | 44.6 | 18.6 | 35.2 | 23.8 | -19.3 | -181.1% |
Balance Sheet
|
|---|
| Cash | 73.4 | 84.6 | 79.9 | 86.4 | 105.5 | 22.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 28.8 | 27.9 | 26.8 | 25.6 | 24.6 | -3.9% |
Cash flow
|
|---|
| Capex | 11.3 | 11.8 | 21.4 | 14.7 | 8.1 | -44.9% |
Ratios
|
|---|
| Revenue growth | -1.8% | -4.8% | 6.1% | 4.7% | -20.6% | |
| EBITDA growth | -1.8% | -55.3% | 77.3% | 8.0% | -155.6% | |
|
|---|
| Gross Margin | 49.4% | 44.5% | 45.8% | 45.5% | 38.5% | -7.1% |
| EBITDA Margin | 9.8% | 4.6% | 7.7% | 8.0% | -5.6% | -13.5% |
| SG&A, % of revenue | 20.9% | 20.6% | 20.7% | 20.3% | 23.5% | 3.2% |
| Net Income Margin | 7.1% | 3.1% | 5.5% | 3.6% | -3.7% | -7.2% |
| CAPEX, % of revenue | 1.8% | 2.0% | 3.4% | 2.2% | 1.5% | -0.7% |
|
|---|
| ROIC | 7.7% | 2.5% | 7.3% | 7.6% | -9.4% | -17.0% |
| ROE | 7.7% | 3.6% | 7.3% | 4.9% | -4.1% | -9.0% |
| Net Debt/EBITDA | -0.7x | -2.0x | -1.1x | -1.1x | |
ADTRAN, Inc. ($ADTN) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 121 | 128 | 140 | 140 | | -29.1% | -30.7% | -24.2% | 10.4% |
| EBITDA | -23 | -9 | 2 | 0 | | -304.3% | -143.4% | -91.1% | |
| Net Income | -11 | -8 | 8 | -8 | | -262.6% | -161.8% | -52.3% | |
Balance Sheet
|
|---|
| Cash | 83 | 100 | 94 | 106 | | 13.9% | 13.0% | -26.6% | 22.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 26 | 26 | 26 | 25 | | -4.5% | -4.5% | -4.5% | -3.9% |
Ratios
|
|---|
| Gross Margin | 32.9% | 39.0% | 41.6% | 39.5% | | -10.4% | -6.8% | -5.1% | -6.8% |
| EBITDA Margin | -19.1% | -7.0% | 1.6% | 0.1% | | -25.7% | -18.1% | -12.0% | 3.0% |
| Net Income Margin | -9.0% | -6.0% | 5.4% | -6.0% | | -12.9% | -12.7% | -3.2% | 2.7% |
Peers in Communications Equipment
Below we provide ADTRAN, Inc. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
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. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.6% | 3.5% |
|---|
| ADTRAN, Inc. ($ADTN) | | -4.8% | 6.1% | 4.7% | -20.6% |
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. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 41.2% |
|---|
| ADTRAN, Inc. ($ADTN) | 49.4% | 44.5% | 45.8% | 45.5% | 38.5% |
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. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.3% | 6.1% | 5.5% | 6.0% | 5.4% |
|---|
| ADTRAN, Inc. ($ADTN) | 9.8% | 4.6% | 7.7% | 8.0% | -5.6% |
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 ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 1.9% | 1.8% | 1.7% |
|---|
| ADTRAN, Inc. ($ADTN) | 1.8% | 2.0% | 3.4% | 2.2% | 1.5% |
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. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 1.2% | 2.0% | 2.2% | 2.1% | 0.7% |
|---|
| ADTRAN, Inc. ($ADTN) | 7.7% | 2.5% | 7.3% | 7.6% | -9.4% |
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) | -0.8x | -0.6x | -0.8x | -0.6x | -0.1x |
|---|
