Advanced Micro Devices, Inc. reports 1,121% Net Income growth in 2018 and 4.4 pp EBITDA Margin growth from 5.2% to 9.6%
01/29/2019 • About Advanced Micro Devices, Inc. (
$AMD) • By InTwits
Advanced Micro Devices, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 9.6% in FY2018 vs. 5.2% in FY2017 vs. 0.9% in FY2014
- EBITDA Margin is quite volatile: 9.6% in FY2018, 5.2% in FY2017, -5.6% in FY2016, -7.9% in FY2015, 0.9% in FY2014
- Advanced Micro Devices, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 1.8%. Average EBITDA Margin for the same period was 1.5%. In FY2018 SBC/Revenue was even higher: 2.1%
- Advanced Micro Devices, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.1%. At the same time it's in pair with industry average of 7.4%
- CAPEX is quite volatile: $112m in FY2018, $163m in FY2017, $73m in FY2016, $34m in FY2015, $36m in FY2014
- In the last 5 years the company invested considerably less than D&A: $544m vs. $817m
- The company has highly profitable business model: ROIC is 21.6%
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 jumped on 23.3%. Revenue growth showed slowdown in FY18Q4 - it was 5.9% YoY. During FY2014-FY2018 Revenue growth bottomed in FY2015 at -27.5% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 8.3 pp from 23.1% to 31.4% in 2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2015 at -7.9% and was growing since that time.
Gross Margin increased on 3.8 pp from 34.0% to 37.8% in FY2018. During FY2014-FY2018 Gross Margin bottomed in FY2016 at 23.2% and was growing since that time. SG&A as a % of Revenue decreased slightly on 1.1 pp from 9.8% to 8.7% in FY2018. During FY2014-FY2018 SG&A as a % of Revenue topped in FY2015 at 12.1% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue followed a growing trend at 0.16 pp per annum in FY2014-FY2018.
Net Income margin increased on 5.8 pp from -0.63% to 5.2% in FY2018. During the last 5 years Net Income margin bottomed in FY2015 at -16.5% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 2.5%. The company's CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average level of CAPEX/Revenue for the last three years was 2.2%.
Accounts receivable as a % of Revenue surged on 10.4 pp from 8.6% to 19.1% in FY2018. Inventories as a % of Revenue showed almost no change at 13.1% in FY2018. Accounts payable as a % of Revenue increased on 2.0 pp from 11.1% to 13.1% in FY2018.
Return on investment
The company operates at high and attractive ROIC (21.6%) and ROE (36.2%). ROIC jumped on 14.3 pp from 7.3% to 21.6% in FY2018. ROE surged on 42.7 pp from -6.5% to 36.2% in FY2018. During FY2014-FY2018 ROIC bottomed in FY2015 at -23.1% and was growing since that time.
Leverage (Debt)
Debt level is 0.3x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA dropped on 0.5x from 0.8x to 0.3x in FY2018. Debt dropped on 10.4% while cash decreased on 9.0%.
Advanced Micro Devices, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 3.7x. Advanced Micro Devices, Inc. has no short term refinancing risk: cash is higher than short term debt (792.6%).
Average interest expence charged on company's debt was 9.7% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 37.8x and P/E 69.1x.
Management team
Lisa T Su is a the company's CEO. Lisa T Su is a founder and has spent 4 years with the company. CEO total compensation was
$13,356,392 in FY2018 which included
$961,057 salary. Devinder Kumar is a Advanced Micro Devices, Inc.'s CFO. Devinder Kumar has spent 4 years at the company.
0.65% of the company is owned by insiders. Insider ownership didn't change in 2018.
The company has 10,100 employees. The number of employees surged on 13.5%. Average revenue per employee in FY2018 was
$641,089 and it increased on 8.6%.
Financial and operational results
FY ended 12/29/2018
Advanced Micro Devices, Inc. ($AMD) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 5,506 | 3,991 | 4,319 | 5,253 | 6,475 | 23.3% |
| Gross Profit | 1,839 | 1,080 | 1,003 | 1,787 | 2,447 | 36.9% |
| SG&A | 604 | 482 | 466 | 516 | 562 | 8.9% |
| EBITDA | 48 | -314 | -240 | 271 | 621 | 129.2% |
| EBIT | -155 | -481 | -373 | 127 | 451 | 255.1% |
| Interest expence | 177 | 160 | 156 | 126 | 121 | -4.0% |
| Tax | 5 | 14 | 39 | 18 | -9 | -150.0% |
| Net Income | -403 | -660 | -498 | -33 | 337 | |
| Stock Based Compensation | 81 | 63 | 86 | 97 | 137 | 41.2% |
Balance Sheet
|
|---|
| Cash | 805 | 785 | 1,264 | 1,185 | 1,078 | -9.0% |
| Accounts Receivable | 818 | 533 | 311 | 454 | 1,235 | 172.0% |
| Inventory | 685 | 678 | 751 | 694 | 845 | 21.8% |
| Accounts Payable | 415 | 279 | 440 | 384 | 528 | 37.5% |
| Short Term Debt | 177 | 230 | 0 | 70 | 136 | 94.3% |
| Long Term Debt | 2,035 | 2,007 | 1,435 | 1,325 | 1,114 | -15.9% |
Cash flow
|
|---|
| Capex | 95 | 96 | 77 | 113 | 163 | 44.2% |
Ratios
|
|---|
| Revenue growth | 3.9% | -27.5% | 8.2% | 21.6% | 23.3% | |
| EBITDA growth | -85.8% | -754.2% | -23.6% | -212.9% | 129.2% | |
|
|---|
| Gross Margin | 33.4% | 27.1% | 23.2% | 34.0% | 37.8% | 3.8% |
| EBITDA Margin | 0.9% | -7.9% | -5.6% | 5.2% | 9.6% | 4.4% |
| EBIT Margin | -2.8% | -12.1% | -8.6% | 2.4% | 7.0% | 4.5% |
| SG&A, % of revenue | 11.0% | 12.1% | 10.8% | 9.8% | 8.7% | -1.1% |
| SBC, % of revenue | 1.5% | 1.6% | 2.0% | 1.8% | 2.1% | 0.3% |
| Net Income Margin | -7.3% | -16.5% | -11.5% | -0.6% | 5.2% | 5.8% |
| CAPEX, % of revenue | 1.7% | 2.4% | 1.8% | 2.2% | 2.5% | 0.4% |
|
|---|
| ROIC | -6.2% | -23.1% | -21.7% | 7.3% | 21.6% | 14.3% |
| ROE | -110.3% | | | -6.5% | 36.2% | 42.7% |
| Net Debt/EBITDA | 29.3x | | | 0.8x | 0.3x | -0.5x |
| Interest coverage ratio (ICR) | | | | 1.0x | 3.7x | 2.7x |
| Interest expence / Average debt | 8.0% | 7.2% | 8.5% | 8.9% | 9.7% | 0.8% |
People
|
|---|
| Insider ownership | 0.6% | 0.6% | 0.6% | 0.6% | 0.6% | 0.0% |
| Employees | | 9,100 | 8,900 | 8,900 | 10,100 | 13.5% |
| Revenue/Employee, th. $ | | 439 | 485 | 590 | 641 | 8.6% |
Advanced Micro Devices, Inc. ($AMD) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,647 | 1,756 | 1,653 | 1,419 | | 39.8% | 52.6% | 4.4% | 5.9% |
| EBITDA | 164 | 195 | 191 | 71 | | 264.4% | 473.5% | 23.2% | 91.9% |
| Net Income | 81 | 116 | 102 | 38 | | | | 67.2% | |
Balance Sheet
|
|---|
| Cash | 1,045 | 948 | 1,046 | 1,078 | | 44.7% | 24.7% | 19.0% | -9.0% |
| Short Term Debt | 223 | 223 | 136 | 136 | | | 431.0% | 94.3% | 94.3% |
| Long Term Debt | 1,165 | 1,170 | 1,167 | 1,114 | | -17.3% | -14.9% | -13.9% | -15.9% |
Ratios
|
|---|
| Gross Margin | 36.2% | 37.1% | 40.0% | 37.8% | | 4.2% | 3.6% | 3.9% | 4.1% |
| EBITDA Margin | 10.0% | 11.1% | 11.6% | 5.0% | | 6.1% | 8.2% | 1.8% | 2.2% |
| Net Income Margin | 4.9% | 6.6% | 6.2% | 2.7% | | 7.7% | 10.3% | 2.3% | 4.1% |
Peers in Semiconductors
Below we provide Advanced Micro Devices, Inc. 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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 4.4% | 10.9% | 4.7% |
|---|
| Advanced Micro Devices, Inc. ($AMD) | | -27.5% | 8.2% | 21.6% | 23.3% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 46.4% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| Advanced Micro Devices, Inc. ($AMD) | 33.4% | 27.1% | 23.2% | 34.0% | 37.8% |
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% |
| Intel Corp ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.9% | 11.5% | 9.2% | 10.7% | 10.0% |
|---|
| Advanced Micro Devices, Inc. ($AMD) | 0.9% | -7.9% | -5.6% | 5.2% | 9.6% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| Advanced Micro Devices, Inc. ($AMD) | 1.7% | 2.4% | 1.8% | 2.2% | 2.5% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.7% | 3.8% | 1.7% | 3.2% | 3.0% |
|---|
| Advanced Micro Devices, Inc. ($AMD) | -6.2% | -23.1% | -21.7% | 7.3% | 21.6% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.2x | 0.2x | 0.4x | 0.3x |
|---|
| Advanced Micro Devices, Inc. ($AMD) | 29.3x | | | 0.8x | 0.3x |
