Calix, Inc reports 13.5% revenue decline in 2018 and 11.7 pp EBITDA Margin growth from -13.8% to -2.1%
02/05/2019 • About Calix, Inc (
$CALX) • By InTwits
Calix, Inc reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -2.1%
- Calix, Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -3.8% for the sames years
- Calix, Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 7.4%.
- CAPEX is quite volatile: $1m in 2018, $5m in 2017, $14m in 2016, $5m in 2015, $8m in 2014
- The company has unprofitable business model: ROIC is -10.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Calix, Inc's Revenue dropped on 13.5%. Revenue decline showed acceleration in 18Q4 - it was 16.2% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin surged on 11.7 pp from -13.8% to -2.1% in 2018. During the last 5 years EBITDA Margin bottomed in 2017 at -13.8%.
Gross Margin jumped on 10.8 pp from 33.9% to 44.7% in 2018. SG&A as a % of Revenue increased on 4.7 pp from 24.0% to 28.8% in 2018.
Net Income margin surged on 11.9 pp from -16.3% to -4.4% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Calix, Inc had CAPEX/Revenue of 2.4%. The company's CAPEX/Revenue increased slightly on 0.58 pp from 1.8% in 2015 to 2.4% in 2018. It's average CAPEX/Revenue for the last three years was 2.0%.
Return on investment
The company operates at negative ROIC (-10.3%) and ROE (-13.0%). ROIC surged on 31.6 pp from -42.0% to -10.3% in 2018. ROE jumped on 33.4 pp from -46.4% to -13.0% in 2018. During the last 5 years ROIC bottomed in 2017 at -42.0%. During 2014-2018 ROE bottomed in 2017 at -46.4%.
Leverage (Debt)
Debt level is -1.3x Net Debt / EBITDA and Debt / EBITDA. Debt didn't change in 2018 while cash jumped on 24.8%.
Calix, Inc has no short term refinancing risk: cash is higher than short term debt (165.5%).
Management team
Calix, Inc's CEO is Carl Russo. Carl Russo is a founder and has 9 years tenure with the company. Calix, Inc's CFO is Cory J Sindelar. Cory J Sindelar has 1 year tenure at the company.
Financial and operational results
FY ended 12/31/2018
Calix, Inc ($CALX) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 401.2 | 407.5 | 458.8 | 510.4 | 441.3 | -13.5% |
| Gross Profit | 177.8 | 190.4 | 201.2 | 172.9 | 197.4 | 14.2% |
| SG&A | 107.7 | 117.0 | 125.3 | 122.7 | 126.9 | 3.5% |
| EBITDA | 8.0 | 2.3 | -14.0 | -70.6 | -9.3 | |
| Net Income | -20.8 | -26.3 | -27.4 | -83.0 | -19.3 | |
Balance Sheet
|
|---|
| Cash | 48.8 | 23.6 | 50.4 | 39.8 | 49.6 | 24.8% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 30.0 | 30.0 | 0.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 12.0 | 7.3 | 9.8 | 8.0 | 10.4 | 29.9% |
Ratios
|
|---|
| Revenue growth | 4.9% | 1.6% | 12.6% | 11.2% | -13.5% | |
| EBITDA growth | -22.1% | -71.1% | -705.1% | 404.2% | -86.8% | |
|
|---|
| Gross Margin | 44.3% | 46.7% | 43.9% | 33.9% | 44.7% | 10.8% |
| EBITDA Margin | 2.0% | 0.6% | -3.1% | -13.8% | -2.1% | 11.7% |
| SG&A, % of revenue | 26.8% | 28.7% | 27.3% | 24.0% | 28.8% | 4.7% |
| Net Income Margin | -5.2% | -6.5% | -6.0% | -16.3% | -4.4% | 11.9% |
| CAPEX, % of revenue | 3.0% | 1.8% | 2.1% | 1.6% | 2.4% | 0.8% |
|
|---|
| ROIC | -7.4% | -10.4% | -12.5% | -42.0% | -10.3% | 31.6% |
| ROE | -7.6% | -10.4% | -12.2% | -46.4% | -13.0% | 33.4% |
| Net Debt/EBITDA | -6.1x | -10.2x | | | |
Calix, Inc ($CALX) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 99 | 112 | 115 | 116 | | -15.4% | -11.4% | -11.0% | -16.2% |
| EBITDA | -8 | -1 | 3 | -3 | | | | | |
| Net Income | -12 | -3 | 1 | -6 | | | | | |
Balance Sheet
|
|---|
| Cash | 43 | 48 | 53 | 50 | | 62.0% | 29.2% | -17.4% | 24.8% |
| Short Term Debt | 30 | 30 | 30 | 30 | | | | 0.0% | 0.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 42.3% | 45.5% | 46.1% | 44.7% | | 13.1% | 11.2% | 11.4% | 8.0% |
| EBITDA Margin | -8.5% | -0.5% | 2.5% | -2.6% | | 16.6% | 12.3% | 13.8% | 4.8% |
| Net Income Margin | -11.8% | -2.5% | 0.7% | -4.8% | | 16.6% | 12.6% | 14.6% | 4.5% |
Peers in Communications Equipment
Below we provide Calix, Inc benchmarking against other companies in Communications Equipment 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 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.3% | 5.1% | 3.5% |
|---|
| Calix, Inc ($CALX) | | 1.6% | 12.6% | 11.2% | -13.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.7% | 40.5% |
|---|
| Calix, Inc ($CALX) | 44.3% | 46.7% | 43.9% | 33.9% | 44.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| Calix, Inc ($CALX) | 2.0% | 0.6% | -3.1% | -13.8% | -2.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.3% | 1.9% | 1.9% | 1.6% |
|---|
| Calix, Inc ($CALX) | 3.0% | 1.8% | 2.1% | 1.6% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.2% | 0.7% |
|---|
| Calix, Inc ($CALX) | -7.4% | -10.4% | -12.5% | -42.0% | -10.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (46 companies) | -0.7x | -0.6x | -0.9x | -0.7x | -0.1x |
|---|
