DSP Group, Inc. revenue decreased on 5.9% and EBITDA Margin decreased slightly on 0.97 pp from -1.0% to -2.0%
02/04/2019 • About DSP Group, Inc. (
$DSPG) • By InTwits
DSP Group, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- DSP Group, Inc. is a company in decline: 2018 revenue growth was -5.9%, 5 years revenue CAGR was -4.9%
- The company operates at negative EBITDA Margin: -2.0%
- EBITDA Margin is quite volatile: -2.0% in 2018, -1.0% in 2017, 5.3% in 2016, 2.3% in 2015, 1.7% in 2014
- DSP Group, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.1%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $1m in 2018, $1m in 2017, $2m in 2016, $2m in 2015, $1m in 2014
- The company has unprofitable business model: ROIC is -3.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
DSP Group, Inc.'s Revenue decreased on 5.9%. Revenue decline showed acceleration in 18Q4 - it was 16.6% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.3 pp from 3.6% to 5.8% in 2018. During the last 5 years EBITDA Margin topped in 2016 at 5.3% and was declining since that time.
Gross Margin increased on 2.7 pp from 46.2% to 48.9% in 2018. Gross Margin followed a growing trend at 2.3 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 2.2 pp from 19.3% to 21.5% in 2018. SG&A as a % of Revenue stuck to a growing trend at 1.6 pp per annum in the last 5 years.
Net Income margin increased slightly on 0.74 pp from -2.4% to -1.7% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.0% in 2018. The company showed small CAPEX/Revenue decline of 0.59 pp from 1.6% in 2015 to 1.0% in 2018. Average CAPEX/Revenue for the last three years was 1.1%.
Return on investment
The company operates at negative ROIC (-3.9%) and ROE (-1.4%). ROIC decreased slightly on 0.69 pp from -3.2% to -3.9% in 2018. ROE increased slightly on 0.70 pp from -2.1% to -1.4% in 2018. During the last 5 years ROIC topped in 2016 at 2.9% and was declining since that time.
Leverage (Debt)
The company has no debt. Cash dropped on 43.0%.
Management team
Ofer Elyakim is a DSP Group, Inc.'s CEO. Ofer Elyakim is a founder and has spent 10 years with the company. DSP Group, Inc.'s CFO is Dror Levy. Dror Levy has 13 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
DSP Group, Inc. ($DSPG) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 143.0 | 144.3 | 137.9 | 124.8 | 117.4 | -5.9% |
| Gross Profit | 57.0 | 59.9 | 60.8 | 57.7 | 57.4 | -0.4% |
| SG&A | 22.4 | 22.0 | 22.9 | 24.1 | 25.3 | 4.9% |
| EBITDA | 2.4 | 3.4 | 7.3 | -1.3 | -2.3 | |
| Net Income | 3.6 | 1.6 | 4.8 | -3.0 | -2.0 | |
Balance Sheet
|
|---|
| Cash | 20.5 | 13.7 | 17.8 | 21.3 | 12.1 | -43.0% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.3 | 2.3 | 2.1 | 0.8 | 1.2 | 40.9% |
Ratios
|
|---|
| Revenue growth | -5.3% | 0.9% | -4.4% | -9.5% | -5.9% | |
| EBITDA growth | -35.2% | 38.6% | 118.9% | -117.5% | 82.9% | |
|
|---|
| Gross Margin | 39.9% | 41.5% | 44.1% | 46.2% | 48.9% | 2.7% |
| EBITDA Margin | 1.7% | 2.3% | 5.3% | -1.0% | -2.0% | -1.0% |
| SG&A, % of revenue | 15.7% | 15.2% | 16.6% | 19.3% | 21.5% | 2.2% |
| Net Income Margin | 2.5% | 1.1% | 3.5% | -2.4% | -1.7% | 0.7% |
| CAPEX, % of revenue | 0.9% | 1.6% | 1.5% | 0.7% | 1.0% | 0.3% |
|
|---|
| ROIC | -0.3% | 0.5% | 2.9% | -3.2% | -3.9% | -0.7% |
| ROE | 2.5% | 1.1% | 3.3% | -2.1% | -1.4% | 0.7% |
| Net Debt/EBITDA | -8.5x | -4.1x | -2.4x | | |
DSP Group, Inc. ($DSPG) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 28 | 31 | 33 | 26 | | 0.6% | -2.1% | -4.8% | -16.6% |
| Net Income | -2 | -0 | 0 | -0 | | | | -29.9% | |
Balance Sheet
|
|---|
| Cash | 16 | 16 | 11 | 12 | | -9.2% | -9.6% | -22.7% | -43.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 48.8% | 49.1% | 50.0% | 47.5% | | 4.9% | 2.8% | 3.3% | -0.3% |
| Net Income Margin | -6.2% | -0.9% | 1.2% | -1.2% | | 4.0% | 0.9% | -0.4% | -0.8% |
Peers in Semiconductors
Below you can find DSP Group, Inc. benchmarking vs. other companies in Semiconductors 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 |
|---|
| 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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 9.7% | 5.2% | 11.0% | 5.0% |
|---|
| DSP Group, Inc. ($DSPG) | | 0.9% | -4.4% | -9.5% | -5.9% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 46.4% | 47.7% | 48.0% | 49.1% | 51.0% |
|---|
| DSP Group, Inc. ($DSPG) | 39.9% | 41.5% | 44.1% | 46.2% | 48.9% |
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 ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.9% | 11.5% | 9.2% | 10.7% | 10.0% |
|---|
| DSP Group, Inc. ($DSPG) | 1.7% | 2.3% | 5.3% | -1.0% | -2.0% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.7% | 4.7% | 4.6% |
|---|
| DSP Group, Inc. ($DSPG) | 0.9% | 1.6% | 1.5% | 0.7% | 1.0% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.7% | 3.8% | 1.4% | 3.2% | 5.2% |
|---|
| DSP Group, Inc. ($DSPG) | -0.3% | 0.5% | 2.9% | -3.2% | -3.9% |
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 (46 companies) | -0.5x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
