Monolithic Power Systems, Inc. Net Income surged on 61.4% and Revenue surged on 23.7%
02/12/2019 • About Monolithic Power Systems, Inc. (
$MPWR) • By InTwits
Monolithic Power Systems, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Monolithic Power Systems, Inc. is a fast growth stock: 2018 revenue growth was 23.7%, 5 year revenue CAGR was 19.6% at 2018 ROIC 18.8%
- EBITDA Margin is expanding: 21.8% in 2018 vs. 20.3% in 2017 vs. 17.2% in 2014
- Monolithic Power Systems, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 11.0%. Average EBITDA Margin for the same period was 19.3%
- Monolithic Power Systems, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.1%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $23m in 2018, $66m in 2017, $37m in 2016, $16m in 2015, $10m in 2014
- The company has highly profitable business model: ROIC is 18.8%
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 surged on 23.7%. Revenue growth showed slowdown in 18Q4 - it was 18.6% YoY. During the last 5 years Revenue growth bottomed in 2016 at 16.7% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.3 pp from 51.6% to 35.3% in 2018. EBITDA Margin stuck to a growing trend at 1.3 pp per annum in 2014-2018.
Gross Margin increased slightly on 0.56 pp from 54.8% to 55.4% in 2018. Gross Margin grew at 0.35 pp per annum in 2014-2018. SG&A as a % of Revenue decreased slightly on 1.1 pp from 20.7% to 19.5% in 2018. SG&A as a % of Revenue followed a declining trend at -0.92 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 0.77 pp from 11.2% to 10.4% in 2018.
Net Income margin increased on 4.2 pp from 13.8% to 18.1% in 2018. During the last 5 years Net Income margin bottomed in 2015 at 10.6% and was growing since that time. The efficient tax rate was 11.2% in 2018 while the average for the last five years was 12.9%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.9% in 2018. The company showed small CAPEX/Revenue decline of 0.94 pp from 4.8% in 2015 to 3.9% in 2018. For the last three years the average CAPEX/Revenue was 9.1%. During the last 5 years CAPEX as a % of Revenue topped in 2017 at 14.0%.
Accounts receivable as a % of Revenue increased slightly on 1.4 pp from 8.1% to 9.5% in 2018. Inventories as a % of Revenue increased on 2.3 pp from 21.1% to 23.4% in 2018. Accounts payable as a % of Revenue decreased slightly on 2.0 pp from 10.7% to 8.7% in 2018.
Return on investment
The company operates at good ROIC (18.8%) and ROE (18.1%). ROIC increased on 2.9 pp from 15.9% to 18.8% in 2018. ROE increased on 4.4 pp from 13.7% to 18.1% in 2018. ROIC grew at 2.1 pp per annum in the last 5 years. ROE stuck to a growing trend at 1.9 pp per annum in 2014-2018.
Leverage (Debt)
The company has no debt. Cash surged on 109%.
Valuation and dividends
The company's trades at EV/EBITDA 43.7x and P/E 54.4x.
The company paid 44.6% of Net Income as dividends in 2018. Dividends grew on average at 31.4% per annum in the last 5 years).
Management team
The company's CEO is Michael R Hsing. Michael R Hsing is a founder and has 22 years tenure with the company. CEO total compensation was
$11,715,714 in 2018 which included
$643,846 salary. The company's CFO is Theodore Blegen "Bernie". Theodore Blegen "Bernie" has 3 years tenure at the company.
At the end of financial year the company had 6.9% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 1,700 employees. The number of employees jumped on 13.3%. Average revenue per employee in 2018 was
$342,578 and it increased on 9.1%.
Financial and operational results
FY ended 12/31/2018
Monolithic Power Systems, Inc. ($MPWR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 282.5 | 333.1 | 388.7 | 470.9 | 582.4 | 23.7% |
| Gross Profit | 152.6 | 180.2 | 210.9 | 258.3 | 322.7 | 24.9% |
| SG&A | 66.8 | 72.3 | 83.0 | 97.3 | 113.8 | 17.0% |
| EBITDA | 48.5 | 55.4 | 70.1 | 95.5 | 127.2 | 33.1% |
| EBIT | 35.3 | 41.1 | 54.4 | 77.4 | 113.5 | 46.6% |
| Tax | 0.9 | 7.3 | 4.5 | 17.7 | 13.2 | -25.5% |
| Net Income | 35.5 | 35.2 | 52.7 | 65.2 | 105.3 | 61.4% |
| Stock Based Compensation | 33.4 | 35.6 | 43.5 | 52.6 | 60.6 | 15.2% |
Balance Sheet
|
|---|
| Cash | 126.3 | 90.9 | 112.7 | 82.8 | 172.7 | 108.7% |
| Accounts Receivable | 25.6 | 30.8 | 34.2 | 38.0 | 55.2 | 45.2% |
| Inventory | 40.9 | 63.2 | 71.5 | 99.3 | 136.4 | 37.4% |
| Accounts Payable | 13.1 | 13.5 | 17.4 | 22.8 | 22.7 | -0.6% |
| 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 | 9.5 | 16.0 | 37.1 | 65.8 | 22.5 | -65.8% |
| Dividends | 12.0 | 30.0 | 33.0 | 34.0 | 47.0 | 38.2% |
| Acquisitions | 11.6 | | | | | |
Ratios
|
|---|
| Revenue growth | 18.7% | 17.9% | 16.7% | 21.2% | 23.7% | |
| EBITDA growth | 32.9% | 14.3% | 26.5% | 36.2% | 33.1% | |
|
|---|
| Gross Margin | 54.0% | 54.1% | 54.3% | 54.8% | 55.4% | 0.6% |
| EBITDA Margin | 17.2% | 16.6% | 18.0% | 20.3% | 21.8% | 1.6% |
| EBIT Margin | 12.5% | 12.3% | 14.0% | 16.4% | 19.5% | 3.0% |
| SG&A, % of revenue | 23.6% | 21.7% | 21.4% | 20.7% | 19.5% | -1.1% |
| SBC, % of revenue | 11.8% | 10.7% | 11.2% | 11.2% | 10.4% | -0.8% |
| Net Income Margin | 12.6% | 10.6% | 13.6% | 13.8% | 18.1% | 4.2% |
| CAPEX, % of revenue | 3.4% | 4.8% | 9.5% | 14.0% | 3.9% | -10.1% |
|
|---|
| ROIC | 10.4% | 11.4% | 13.5% | 15.9% | 18.8% | 2.9% |
| ROE | 10.6% | 9.8% | 13.2% | 13.7% | 18.1% | 4.4% |
| Net Debt/EBITDA | -2.6x | -1.6x | -1.6x | -0.9x | -1.4x | -0.5x |
People
|
|---|
| Insider ownership | 6.9% | 6.9% | 6.9% | 6.9% | 6.9% | 0.0% |
| Employees | 1,178 | 1,260 | 1,400 | 1,500 | 1,700 | 13.3% |
| Revenue/Employee, th. $ | 240 | 264 | 278 | 314 | 343 | 9.1% |
Monolithic Power Systems, Inc. ($MPWR) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 129 | 140 | 160 | 153 | | 28.7% | 24.6% | 24.1% | 18.6% |
| EBITDA | 25 | 28 | 37 | 37 | | 39.2% | 45.4% | 30.6% | 23.8% |
| Net Income | 22 | 24 | 32 | 28 | | 51.0% | 61.2% | 33.5% | 129.0% |
Balance Sheet
|
|---|
| Cash | 76 | 83 | 131 | 173 | | -1.1% | 16.8% | 25.5% | 108.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 55.4% | 55.5% | 55.6% | 55.1% | | 0.7% | 0.8% | 0.7% | 0.1% |
| EBITDA Margin | 19.5% | 20.3% | 23.2% | 23.8% | | 1.5% | 2.9% | 1.2% | 1.0% |
| Net Income Margin | 16.9% | 17.3% | 19.7% | 18.0% | | 2.5% | 3.9% | 1.4% | 8.7% |
Peers in Semiconductors
Below you can find Monolithic Power Systems, 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 ($IOTS) | | 4.3% | 1.6% | 27.6% | 48.8% |
| |
|---|
| Median (67 companies) | 54.6% | 8.5% | 4.4% | 10.9% | 4.7% |
|---|
| Monolithic Power Systems, Inc. ($MPWR) | | 17.9% | 16.7% | 21.2% | 23.7% |
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. ($IMI) | 48.3% | 57.4% | 66.5% | 67.5% | 70.3% |
| |
|---|
| Median (65 companies) | 45.3% | 47.0% | 47.2% | 48.6% | 50.4% |
|---|
| Monolithic Power Systems, Inc. ($MPWR) | 54.0% | 54.1% | 54.3% | 54.8% | 55.4% |
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 ($INTC) | 42.8% | 41.0% | 35.2% | 41.7% | 45.7% |
| |
|---|
| Median (66 companies) | 9.6% | 11.3% | 9.2% | 10.7% | 9.8% |
|---|
| Monolithic Power Systems, Inc. ($MPWR) | 17.2% | 16.6% | 18.0% | 20.3% | 21.8% |
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. ($MU) | 19.0% | 24.8% | 46.9% | 23.3% | 29.2% |
| |
|---|
| Median (66 companies) | 3.6% | 4.0% | 3.6% | 4.7% | 4.6% |
|---|
| Monolithic Power Systems, Inc. ($MPWR) | 3.4% | 4.8% | 9.5% | 14.0% | 3.9% |
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 ($NVDA) | 9.2% | 13.3% | 13.1% | 27.3% | 35.3% |
| |
|---|
| Median (73 companies) | 5.0% | 3.8% | 1.4% | 3.2% | 3.0% |
|---|
| Monolithic Power Systems, Inc. ($MPWR) | 10.4% | 11.4% | 13.5% | 15.9% | 18.8% |
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. ($SOL) | 7.0x | 35.0x | 123.6x | 2.3x | 3.3x |
| |
|---|
| Median (45 companies) | -0.5x | -0.2x | 0.4x | 0.4x | 0.3x |
|---|
| Monolithic Power Systems, Inc. ($MPWR) | -2.6x | -1.6x | -1.6x | -0.9x | -1.4x |
