National Instruments Corporation reports 196% Net Income growth in 2018 and 0.98 pp EBITDA Margin growth from 16.9% to 17.9%
01/29/2019 • About National Instruments Corporation (
$NATI) • By InTwits
National Instruments Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- National Instruments Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.0%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $62m in FY2018, $50m in FY2017, $42m in FY2016, $23m in FY2015, $19m in FY2014
- In the last 5 years the company invested considerably less than D&A: $188m vs. $360m. In 2018 this situation was still the same: CAPEX was 35 while D&A was 71
- The company has highly profitable business model: ROIC is 14.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
National Instruments Corporation's Revenue increased on 5.4%. Revenue growth showed slowdown in 18Q4 - it was 3.0% YoY. During the last 5 years Revenue growth bottomed in 2015 at -1.5% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.98 pp from 16.9% to 17.9% in 2018. During the last 5 years EBITDA Margin bottomed in 2016 at 15.7% and was growing since that time.
Gross Margin increased slightly on 0.91 pp from 74.5% to 75.4% in 2018. During 2014-2018 Gross Margin bottomed in 2015 at 74.1% and was growing since that time. SG&A as a % of Revenue decreased slightly on 1.7 pp from 45.3% to 43.5% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2016 at 45.6% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.51 pp from 2.3% to 2.8% in 2018. SBC as a % of Revenue followed a growing trend at 0.19 pp per annum in the last 5 years.
Net Income margin increased on 7.3 pp from 4.1% to 11.4% in 2018. During the last 5 years Net Income margin bottomed in 2017 at 4.1%. The efficient tax rate was 12.1% in 2018 while the average for the last five years was 28.3%.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.6%. National Instruments Corporation's CAPEX/Revenue showed almost no change from 2015 to 2018. Average CAPEX/Revenue for the last three years was 2.8%.
Accounts receivable as a % of Revenue decreased slightly on 1.4 pp from 19.3% to 17.9% in 2018. Inventories as a % of Revenue showed almost no change at 14.3% in 2018. Accounts payable as a % of Revenue decreased slightly on 0.65 pp from 15.1% to 14.5% in 2018.
National Instruments Corporation has spent
$6m on M&A in 2018 which accounts for 0.41% of revenue.
Return on investment
The company operates at good ROIC (14.2%) and ROE (13.1%). ROIC increased slightly on 1.7 pp from 12.5% to 14.2% in 2018. ROE increased on 8.4 pp from 4.7% to 13.1% in 2018. During the last 5 years ROIC bottomed in 2016 at 10.3% and was growing since that time. During the last 5 years ROE bottomed in 2017 at 4.7%.
Leverage (Debt)
The company has no debt. Cash dropped on 10.6%.
Valuation and dividends
National Instruments Corporation's trades at EV/EBITDA 23.2x and P/E 38.1x.
The company paid 78.7% of Net Income as dividends in 2018. Dividends grew on average at 9.9% per annum in the last 5 years).
Management team
National Instruments Corporation's CEO is Alexander M Davern "Alex". Alexander M Davern "Alex" is a founder and has 0 years tenure with the company. CEO total compensation was
$3,548,896 in 2018 which included
$725,004 salary.
At the end of financial year the company had 6.5% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 7,263 employees. The number of employees decreased on 2.0%. Average revenue per employee in 2018 was
$187,131 and it increased on 7.6%.
Financial and operational results
FY ended 12/31/2018
National Instruments Corporation ($NATI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,244 | 1,225 | 1,228 | 1,289 | 1,359 | 5.4% |
| Gross Profit | 926 | 908 | 915 | 961 | 1,025 | 6.7% |
| SG&A | 553 | 546 | 560 | 584 | 591 | 1.4% |
| EBITDA | 215 | 211 | 193 | 218 | 244 | 11.5% |
| EBIT | 145 | 137 | 120 | 146 | 173 | 18.6% |
| Tax | 18 | 36 | 32 | 95 | 21 | -77.5% |
| Net Income | 126 | 95 | 83 | 52 | 155 | 195.8% |
| Stock Based Compensation | 25 | 25 | 25 | 29 | 38 | 29.1% |
Balance Sheet
|
|---|
| Cash | 274 | 251 | 285 | 290 | 259 | -10.6% |
| Accounts Receivable | 202 | 216 | 229 | 249 | 243 | -2.4% |
| Inventory | 173 | 185 | 194 | 185 | 194 | 5.2% |
| Accounts Payable | 59 | 51 | 49 | 50 | 48 | -2.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | 0 | |
| Long Term Debt | 0 | 37 | 25 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 45 | 34 | 44 | 30 | 35 | 14.6% |
| Dividends | 76 | 98 | 103 | 110 | 122 | 10.9% |
| Acquisitions | | 126 | 1 | | 6 | |
Ratios
|
|---|
| Revenue growth | 6.1% | -1.5% | 0.2% | 5.0% | 5.4% | |
| EBITDA growth | 29.3% | -2.3% | -8.3% | 13.1% | 11.5% | |
|
|---|
| Gross Margin | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% | 0.9% |
| EBITDA Margin | 17.3% | 17.2% | 15.7% | 16.9% | 17.9% | 1.0% |
| EBIT Margin | 11.7% | 11.2% | 9.7% | 11.3% | 12.7% | 1.4% |
| SG&A, % of revenue | 44.5% | 44.6% | 45.6% | 45.3% | 43.5% | -1.7% |
| SBC, % of revenue | 2.0% | 2.0% | 2.1% | 2.3% | 2.8% | 0.5% |
| Net Income Margin | 10.2% | 7.8% | 6.7% | 4.1% | 11.4% | 7.3% |
| CAPEX, % of revenue | 3.6% | 2.8% | 3.6% | 2.3% | 2.6% | 0.2% |
|
|---|
| ROIC | 13.2% | 11.9% | 10.3% | 12.5% | 14.2% | 1.7% |
| ROE | 11.8% | 8.7% | 7.5% | 4.7% | 13.1% | 8.4% |
| Net Debt/EBITDA | -1.3x | -1.0x | -1.3x | -1.3x | -1.1x | 0.3x |
People
|
|---|
| Insider ownership | 6.5% | 6.5% | 6.5% | 6.5% | 6.5% | 0.0% |
| Employees | 7,084 | 7,441 | 7,522 | 7,412 | 7,263 | -2.0% |
| Revenue/Employee, th. $ | 176 | 165 | 163 | 174 | 187 | 7.6% |
National Instruments Corporation ($NATI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 312 | 341 | 346 | 360 | | 3.9% | 7.0% | 7.9% | 3.0% |
| EBITDA | 46 | 55 | 65 | 79 | | 11.2% | 19.0% | 14.6% | 4.7% |
| Net Income | 24 | 31 | 43 | 57 | | 33.7% | 23.5% | 29.4% | |
Balance Sheet
|
|---|
| Cash | 250 | 218 | 311 | 259 | | -10.3% | -17.3% | 5.8% | -10.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | -100.0% | |
Ratios
|
|---|
| Gross Margin | 76.1% | 75.9% | 74.3% | 75.6% | | 1.6% | 1.8% | 0.4% | 0.0% |
| EBITDA Margin | 14.6% | 16.0% | 18.7% | 21.9% | | 1.0% | 1.6% | 1.1% | 0.4% |
| Net Income Margin | 7.8% | 9.1% | 12.5% | 15.7% | | 1.7% | 1.2% | 2.1% | 22.6% |
Peers in Electronic Equipment & Instrum
Below you can find National Instruments Corporation benchmarking vs. other companies in Electronic Equipment & Instrum 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 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 4.5% | 1.2% | 3.6% | 10.4% |
|---|
| National Instruments Corporation ($NATI) | | -1.5% | 0.2% | 5.0% | 5.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| Ipsidy Inc ($IDTY) | | | | 74.4% | 67.2% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 40.9% |
|---|
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| National Instruments Corporation ($NATI) | 17.3% | 17.2% | 15.7% | 16.9% | 17.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| National Instruments Corporation ($NATI) | 3.6% | 2.8% | 3.6% | 2.3% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.9% |
|---|
| National Instruments Corporation ($NATI) | 13.2% | 11.9% | 10.3% | 12.5% | 14.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.7x | -0.7x | -0.8x | -0.6x | -0.8x |
|---|
| National Instruments Corporation ($NATI) | -1.3x | -1.0x | -1.3x | -1.3x | -1.1x |
