Intel Corp Net Income surged on 119% and EBITDA Margin increased on 4.0 pp from 41.7% to 45.7%
01/24/2019 • About Intel Corp (
$INTC) • By InTwits
Intel Corp reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Intel Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.5%. At the same time it's a lot of higher than industry average of 7.6%.
- The company has highly profitable business model: ROIC is 23.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Intel Corp's Revenue surged on 12.9%. Revenue growth showed slowdown in FY18Q4 - it was 9.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.0 pp from 41.7% to 45.7% in FY2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2016 at 35.2% and was growing since that time.
Gross Margin decreased slightly on 0.56 pp from 62.3% to 61.7% in FY2018. SG&A as a % of Revenue decreased on 2.3 pp from 11.9% to 9.5% in FY2018. SG&A as a % of Revenue stuck to a declining trend at -1.3 pp per annum in FY2014-FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018.
Net Income margin jumped on 14.4 pp from 15.3% to 29.7% in FY2018. During the last 5 years Net Income margin bottomed in FY2017 at 15.3%. The efficient tax rate was 9.7% in FY2018 while the average for the last five years was 26.0%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 21.4% in FY2018. Intel Corp showed CAPEX/Revenue growth of 8.2 pp from 13.2% in FY2015 to 21.4% in FY2018. For the last three years the average CAPEX/Revenue was 18.8%. During FY2014-FY2018 CAPEX as a % of Revenue bottomed in FY2015 at 13.2% and was growing since that time.
Accounts receivable as a % of Revenue increased slightly on 0.55 pp from 8.9% to 9.5% in FY2018. Inventories as a % of Revenue decreased slightly on 0.89 pp from 11.1% to 10.2% in FY2018. Accounts payable as a % of Revenue increased slightly on 1.7 pp from 12.4% to 14.1% in FY2018.
Intel Corp has spent
$190m on M&A in FY2018 which accounts for 0.27% of revenue.
Return on investment
The company operates at high and attractive ROIC (23.2%) and ROE (29.1%). ROIC increased on 4.4 pp from 18.8% to 23.2% in FY2018. ROE jumped on 15.0 pp from 14.0% to 29.1% in FY2018. During the last 5 years ROIC bottomed in FY2016 at 14.8% and was growing since that time. During the last 5 years ROE bottomed in FY2017 at 14.0%.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 0.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from 0.9x to 0.7x in FY2018. Debt decreased slightly on 1.7% while cash dropped on 12.1%.
Intel Corp has good short term financial stability: Interest coverage ratio (ICR) is 49.8x. Intel Corp has no short term refinancing risk: cash is higher than short term debt (239.4%).
Average interest expence charged on company's debt was 1.8% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 7.4x and P/E 10.2x.
The company paid 26.3% of Net Income as dividends in FY2018. Dividends grew on average at 4.7% per annum in the last 5 years).
Management team
CEO total compensation was
$34,757,000 in FY2018 which included
$1,592,000 salary and
$2,500,000 annual bonus.
0.022% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 107,400 employees. The number of employees increased on 4.6%. Average revenue per employee in FY2018 was
$659,665 and it increased on 7.9%.
Financial and operational results
FY ended 12/29/2018
Intel Corp ($INTC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 55,870 | 55,355 | 59,387 | 62,761 | 70,848 | 12.9% |
| Gross Profit | 35,609 | 34,679 | 36,233 | 39,098 | 43,737 | 11.9% |
| SG&A | 8,136 | 7,930 | 8,377 | 7,452 | 6,750 | -9.4% |
| EBITDA | 23,896 | 22,713 | 20,923 | 26,179 | 32,401 | 23.8% |
| EBIT | 15,347 | 14,002 | 13,133 | 18,050 | 23,316 | 29.2% |
| Interest expence | 192 | 337 | 733 | 646 | 468 | -27.6% |
| Tax | 4,097 | 2,792 | 2,620 | 10,751 | 2,264 | -78.9% |
| Net Income | 11,704 | 11,420 | 10,316 | 9,601 | 21,053 | 119.3% |
| Stock Based Compensation | 1,026 | 1,305 | 1,444 | 1,358 | 1,546 | 13.8% |
Balance Sheet
|
|---|
| Cash | 2,561 | 15,308 | 5,560 | 3,433 | 3,019 | -12.1% |
| Accounts Receivable | 4,427 | 4,787 | 4,690 | 5,607 | 6,722 | 19.9% |
| Inventory | 4,273 | 5,167 | 5,553 | 6,983 | 7,253 | 3.9% |
| Accounts Payable | 2,748 | 2,063 | 2,475 | 2,928 | 3,824 | 30.6% |
| Short Term Debt | 1,596 | 2,634 | 4,634 | 1,776 | 1,261 | -29.0% |
| Long Term Debt | 12,059 | 20,036 | 20,649 | 25,037 | 25,098 | 0.2% |
Cash flow
|
|---|
| Capex | 10,105 | 7,326 | 9,625 | 11,778 | 15,181 | 28.9% |
| Dividends | 4,409 | 4,556 | 4,925 | 5,072 | 5,541 | 9.2% |
| Acquisitions | 934 | 913 | 15,470 | 14,499 | 190 | -98.7% |
Ratios
|
|---|
| Revenue growth | 6.0% | -0.9% | 7.3% | 5.7% | 12.9% | |
| EBITDA growth | 17.6% | -5.0% | -7.9% | 25.1% | 23.8% | |
|
|---|
| Gross Margin | 63.7% | 62.6% | 61.0% | 62.3% | 61.7% | -0.6% |
| EBITDA Margin | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% | 4.0% |
| EBIT Margin | 27.5% | 25.3% | 22.1% | 28.8% | 32.9% | 4.1% |
| SG&A, % of revenue | 14.6% | 14.3% | 14.1% | 11.9% | 9.5% | -2.3% |
| SBC, % of revenue | 1.8% | 2.4% | 2.4% | 2.2% | 2.2% | 0.0% |
| Net Income Margin | 20.9% | 20.6% | 17.4% | 15.3% | 29.7% | 14.4% |
| CAPEX, % of revenue | 18.1% | 13.2% | 16.2% | 18.8% | 21.4% | 2.7% |
|
|---|
| ROIC | 20.7% | 17.8% | 14.8% | 18.8% | 23.2% | 4.4% |
| ROE | 20.5% | 19.4% | 16.0% | 14.0% | 29.1% | 15.0% |
| Net Debt/EBITDA | 0.5x | 0.3x | 0.9x | 0.9x | 0.7x | -0.2x |
| Interest expence / Average debt | 1.4% | 1.9% | 3.1% | 2.5% | 1.8% | -0.7% |
People
|
|---|
| Insider ownership | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Employees | 106,700 | 107,300 | 106,000 | 102,700 | 107,400 | 4.6% |
| Revenue/Employee, th. $ | 524 | 516 | 560 | 611 | 660 | 7.9% |
Intel Corp ($INTC) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 16,066 | 16,962 | 19,163 | 18,657 | | 8.6% | 14.9% | 18.7% | 9.4% |
| EBITDA | 6,666 | 7,395 | 9,623 | 8,717 | | 19.5% | 26.8% | 33.7% | 15.1% |
| Net Income | 4,454 | 5,006 | 6,398 | 5,195 | | 50.3% | 78.3% | 41.7% | |
Balance Sheet
|
|---|
| Cash | 3,554 | 2,614 | 3,407 | 3,019 | | -28.0% | -77.6% | -62.5% | -12.1% |
| Short Term Debt | 3,842 | 3,510 | 3,051 | 1,261 | | -24.3% | -15.0% | -26.3% | -29.0% |
| Long Term Debt | 24,770 | 24,632 | 24,823 | 25,098 | | 19.8% | -11.6% | -9.7% | 0.2% |
Ratios
|
|---|
| Gross Margin | 60.6% | 61.4% | 64.5% | 60.2% | | -1.3% | -0.2% | 2.2% | -3.0% |
| EBITDA Margin | 41.5% | 43.6% | 50.2% | 46.7% | | 3.8% | 4.1% | 5.7% | 2.3% |
| Net Income Margin | 27.7% | 29.5% | 33.4% | 27.8% | | 7.7% | 10.5% | 5.4% | 31.9% |
Peers in Semiconductors
Below we provide Intel Corp benchmarking against other companies in Semiconductors 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 |
|---|
| NanoFlex Power Corp ($OPVS) | | | | 72.5% | 354.8% |
| MoSys, Inc. ($MOSY) | | -18.4% | 37.2% | 46.8% | 87.7% |
| SMART Global Holdings, Inc. ($SGH) | | | -16.9% | 42.5% | 69.3% |
| Micron Technology, Inc. ($MU) | | -1.0% | -23.4% | 63.9% | 49.5% |
| Adesto Technologies Corporation ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 4.4% | 11.0% | 4.7% |
|---|
| Intel Corp ($INTC) | | -0.9% | 7.3% | 5.7% | 12.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| CEVA, Inc. ($CEVA) | 90.2% | 90.9% | 91.6% | 92.1% | 89.8% |
| NVE Corporation ($NVEC) | 77.9% | 80.3% | 76.1% | 78.5% | 79.0% |
| Rambus, Inc. ($RMBS) | 85.9% | 84.7% | 80.1% | 79.9% | 76.8% |
| Universal Display Corporation ($OLED) | 76.0% | 64.2% | 83.9% | 80.8% | 75.5% |
| Intermolecular, Inc. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| Intel Corp ($INTC) | 63.7% | 62.6% | 61.0% | 62.3% | 61.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NVE Corporation ($NVEC) | 58.8% | 66.0% | 61.8% | 65.6% | 65.1% |
| Micron Technology, Inc. ($MU) | 31.7% | 35.0% | 25.4% | 47.9% | 65.0% |
| NXP Semiconductors N.V. ($NXPI) | 25.7% | 41.5% | 21.6% | 46.2% | 49.9% |
| Texas Instruments Incorporated ($TXN) | 39.7% | 42.0% | 43.5% | 46.7% | 48.6% |
| Broadcom Inc. ($AVGO) | 24.9% | 38.0% | 19.9% | 40.4% | 44.2% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Alpha and Omega Semiconductor Limited ($AOSL) | 3.0% | 6.6% | 6.5% | 12.2% | 42.2% |
| Renesola Ltd. ($SOL) | 3.5% | 0.0% | 0.0% | 78.0% | 41.7% |
| First Solar, Inc. ($FSLR) | 7.6% | 4.0% | 7.9% | 17.5% | 33.0% |
| Sigma Designs Inc ($SIGM) | 11.0% | 6.5% | 6.2% | 14.1% | 29.3% |
| Micron Technology, Inc. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.4% |
|---|
| Intel Corp ($INTC) | 18.1% | 13.2% | 16.2% | 18.8% | 21.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| SMART Global Holdings, Inc. ($SGH) | | | 2.5% | 21.5% | 51.7% |
| Texas Instruments Incorporated ($TXN) | 25.1% | 29.8% | 34.9% | 43.1% | 47.5% |
| Micron Technology, Inc. ($MU) | 18.8% | 15.8% | 0.8% | 21.5% | 42.9% |
| Applied Materials Inc ($AMAT) | 15.8% | 15.2% | 19.0% | 31.2% | 36.4% |
| NVIDIA Corporation ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| Intel Corp ($INTC) | 20.7% | 17.8% | 14.8% | 18.8% | 23.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 25.4x | 3.3x | 3.0x | 7.2x | 98.6x |
| Inphi Corporation ($IPHI) | | -6.4x | 4.5x | 33.7x | 32.2x |
| JinkoSolar Holding Company Limited ($JKS) | 4.2x | 3.3x | 4.1x | 11.0x | 8.2x |
| Lattice Semiconductor Corporation ($LSCC) | -1.8x | | 6.5x | 19.0x | 3.9x |
| Renesola Ltd. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.3x | -0.0x | 0.4x | 0.3x |
|---|
| Intel Corp ($INTC) | 0.5x | 0.3x | 0.9x | 0.9x | 0.7x |
