Cypress Semiconductor Corporation reports 538% Net Income growth in 2018 and 6.7% Revenue growth
01/31/2019 • About Cypress Semiconductor Corporation (
$CY) • By InTwits
Cypress Semiconductor Corporation reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cypress Semiconductor Corporation is a growth stock: FY2018 revenue growth was 6.7%, 5 year revenue CAGR was 28.0% at FY2018 ROIC 5.9%
- EBITDA Margin is quite volatile: 18.0% in FY2018, 14.7% in FY2017, -17.8% in FY2016, -5.1% in FY2015, 9.6% in FY2014
- Cypress Semiconductor Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 4.6%. Average EBITDA Margin for the same period was 4.8%
- Cypress Semiconductor Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $69m in FY2018, $54m in FY2017, $57m in FY2016, $47m in FY2015, $21m in FY2014
- In the last 5 years the company invested considerably less than D&A: $249m vs. $1,102m. In FY2018 this situation was still the same: CAPEX was 69 while D&A was 283
- The company has potentially unprofitable business model: ROIC is 5.9%
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 increased on 6.7%. Revenue growth showed slowdown in FY18Q4 - it was 1.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018. During the last 5 years EBITDA Margin bottomed in FY2016 at -17.8% and was growing since that time.
Gross Margin increased on 3.9 pp from 33.6% to 37.5% in FY2018. During the last 5 years Gross Margin bottomed in FY2016 at 23.8% and was growing since that time. SG&A as a % of Revenue increased slightly on 1.6 pp from 14.6% to 16.2% in FY2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in FY2018. SBC as a % of Revenue followed a declining trend at -0.74 pp per annum in FY2014-FY2018.
Net Income margin surged on 17.8 pp from -3.5% to 14.3% in FY2018. During the last 5 years Net Income margin bottomed in FY2016 at -35.5% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 2.8%. CAPEX/Revenue showed almost no change from FY2015 to FY2018. It's average CAPEX/Revenue for the last three years was 2.7%.
Accounts receivable as a % of Revenue showed almost no change in FY2018. Inventories as a % of Revenue showed almost no change at 11.8% in FY2018. Accounts payable as a % of Revenue showed almost no change in FY2018.
Cypress Semiconductor Corporation has spent
$3m on M&A in FY2018 which accounts for 0.11% of revenue.
Return on investment
The company operates at good ROE (18.0%) while ROIC is low (5.9%). ROIC increased on 3.3 pp from 2.6% to 5.9% in FY2018. ROE jumped on 22.4 pp from -4.4% to 18.0% in FY2018. During the last 5 years ROIC bottomed in FY2016 at -18.4% and was growing since that time. During the last 5 years ROE bottomed in FY2016 at -29.6% and was growing since that time.
Leverage (Debt)
Debt level is 1.3x Net Debt / EBITDA and 2.0x Debt / EBITDA. Net Debt / EBITDA dropped on 1.1x from 2.4x to 1.3x in FY2018. Debt dropped on 10.4% while cash surged on 88.5%.
Cypress Semiconductor Corporation has good short term financial stability: Interest coverage ratio (ICR) is 2.5x. Cypress Semiconductor Corporation has no short term refinancing risk: cash is higher than short term debt (4,115.2%).
Average interest expence paid by the company was 7.4% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 13.4x and P/E 15.2x.
The company paid 44.3% of Net Income as dividends in FY2018. Dividends grew on average at 17.9% per annum in the last 5 years).
Management team
The company's CEO is Hassane El-Khoury. Hassane El-Khoury is a founder and has 3 years tenure with the company. CEO total compensation was
$7,017,882 in FY2018 which included
$676,923 salary and
$500 annual bonus. Cypress Semiconductor Corporation's CFO is Thad Trent. Thad Trent has 5 years tenure at the company.
At the end of financial year the company had 0.52% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 5,846 employees. The number of employees decreased on 4.1%. Average revenue per employee in FY2018 was
$424,879 and it surged on 11.3%.
Financial and operational results
FY ended 12/30/2018
Cypress Semiconductor Corporation ($CY) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 725 | 1,608 | 1,923 | 2,328 | 2,484 | 6.7% |
| Gross Profit | 364 | 404 | 458 | 782 | 931 | 19.1% |
| SG&A | 171 | 320 | 720 | 341 | 403 | 18.2% |
| EBITDA | 70 | -82 | -343 | 343 | 447 | 30.4% |
| EBIT | 23 | -323 | -609 | 78 | 164 | 110.6% |
| Interest expence | 6 | 16 | 55 | 80 | 65 | -18.6% |
| Tax | -1 | 17 | 3 | 11 | -316 | -2,928.9% |
| Net Income | 18 | -365 | -683 | -81 | 355 | |
| Stock Based Compensation | 50 | 84 | 99 | 92 | 96 | 4.8% |
Balance Sheet
|
|---|
| Cash | 104 | 227 | 120 | 152 | 286 | 88.5% |
| Accounts Receivable | 76 | 293 | 333 | 296 | 324 | 9.6% |
| Inventory | 88 | 244 | 288 | 272 | 292 | 7.3% |
| Accounts Payable | 43 | 143 | 241 | 213 | 211 | -1.1% |
| Short Term Debt | 3 | 15 | 30 | 27 | 7 | -74.6% |
| Long Term Debt | 234 | 674 | 1,195 | 957 | 874 | -8.6% |
Cash flow
|
|---|
| Capex | 21 | 47 | 57 | 54 | 69 | 26.9% |
| Dividends | 69 | 128 | 141 | 145 | 157 | 8.3% |
| Acquisitions | | 105 | 550 | | 3 | |
Ratios
|
|---|
| Revenue growth | 0.4% | 121.6% | 19.6% | 21.0% | 6.7% | |
| EBITDA growth | -810.1% | -217.4% | 319.4% | -200.1% | 30.4% | |
|
|---|
| Gross Margin | 50.1% | 25.1% | 23.8% | 33.6% | 37.5% | 3.9% |
| EBITDA Margin | 9.6% | -5.1% | -17.8% | 14.7% | 18.0% | 3.3% |
| EBIT Margin | 3.2% | -20.1% | -31.7% | 3.4% | 6.6% | 3.3% |
| SG&A, % of revenue | 23.5% | 19.9% | 37.4% | 14.6% | 16.2% | 1.6% |
| SBC, % of revenue | 6.9% | 5.2% | 5.1% | 3.9% | 3.9% | -0.1% |
| Net Income Margin | 2.5% | -22.7% | -35.5% | -3.5% | 14.3% | 17.8% |
| CAPEX, % of revenue | 2.9% | 2.9% | 3.0% | 2.3% | 2.8% | 0.4% |
|
|---|
| ROIC | 5.3% | -16.6% | -18.4% | 2.6% | 5.9% | 3.3% |
| ROE | 9.2% | -24.9% | -29.6% | -4.4% | 18.0% | 22.4% |
| Net Debt/EBITDA | 1.9x | | | 2.4x | 1.3x | -1.1x |
| Interest coverage ratio (ICR) | 4.0x | | | 1.0x | 2.5x | 1.5x |
| Interest expence / Average debt | 2.4% | 3.5% | 5.8% | 7.3% | 7.4% | 0.2% |
People
|
|---|
| Insider ownership | 0.5% | 0.5% | 0.5% | 0.5% | 0.5% | 0.0% |
| Employees | 3,350 | 6,279 | 6,546 | 6,099 | 5,846 | -4.1% |
| Revenue/Employee, th. $ | 217 | 256 | 294 | 382 | 425 | 11.3% |
Cypress Semiconductor Corporation ($CY) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 582 | 624 | 673 | 604 | | 9.5% | 5.1% | 11.3% | 1.2% |
| EBITDA | 107 | 121 | 147 | 73 | | 119.9% | 60.8% | 38.2% | -34.1% |
| Net Income | 9 | 28 | 51 | 267 | | | | 289.5% | |
Balance Sheet
|
|---|
| Cash | 107 | 113 | 205 | 286 | | -12.1% | 3.6% | 55.6% | 88.5% |
| Short Term Debt | 27 | 7 | 7 | 7 | | -9.1% | -77.6% | -74.7% | -74.6% |
| Long Term Debt | 921 | 884 | 871 | 874 | | -21.4% | -24.4% | -21.1% | -8.6% |
Ratios
|
|---|
| Gross Margin | 36.5% | 37.5% | 38.6% | 37.3% | | -0.9% | 5.1% | 3.9% | 0.0% |
| EBITDA Margin | 18.4% | 19.3% | 21.8% | 12.0% | | 9.2% | 6.7% | 4.2% | -6.4% |
| Net Income Margin | 1.6% | 4.4% | 7.5% | 44.2% | | 10.2% | 7.3% | 5.4% | 49.9% |
Peers in Semiconductors
Below we provide Cypress Semiconductor Corporation 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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 4.4% | 10.9% | 4.7% |
|---|
| Cypress Semiconductor Corporation ($CY) | | 121.6% | 19.6% | 21.0% | 6.7% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| Cypress Semiconductor Corporation ($CY) | 50.1% | 25.1% | 23.8% | 33.6% | 37.5% |
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 ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.9% | 11.5% | 9.2% | 10.7% | 9.8% |
|---|
| Cypress Semiconductor Corporation ($CY) | 9.6% | -5.1% | -17.8% | 14.7% | 18.0% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| Cypress Semiconductor Corporation ($CY) | 2.9% | 2.9% | 3.0% | 2.3% | 2.8% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.3% | 3.8% | 1.7% | 3.2% | 3.0% |
|---|
| Cypress Semiconductor Corporation ($CY) | 5.3% | -16.6% | -18.4% | 2.6% | 5.9% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.6x | -0.2x | 0.2x | 0.4x | 0.3x |
|---|
| Cypress Semiconductor Corporation ($CY) | 1.9x | | | 2.4x | 1.3x |
