AXT Inc CAPEX surged on 89.8% and Revenue increased on 3.8%
02/20/2019 • About AXT Inc (
$AXTI) • By InTwits
AXT Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 16.6% in 2018, 17.3% in 2017, 13.9% in 2016, 0.8% in 2015, 3.3% in 2014
- AXT Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 14.5%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $41m in 2018, $21m in 2017, $3m in 2016, $4m in 2015, $2m in 2014
- The company has potentially unprofitable business model: ROIC is 6.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
AXT Inc's Revenue increased on 3.8%. Revenue growth showed slowdown in 18Q4 - it was -15.6% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 17.3 pp from -3.6% to 13.7% in 2018. EBITDA Margin stuck to a growing trend at 4.3 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.2 pp from 34.9% to 36.2% in 2018. Gross Margin grew at 4.4 pp per annum in 2014-2018. SG&A as a % of Revenue increased slightly on 1.3 pp from 17.2% to 18.6% in 2018.
Net Income margin decreased slightly on 0.86 pp from 10.3% to 9.4% in 2018. Net Income margin followed a growing trend at 3.5 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
AXT Inc's CAPEX/Revenue was 39.6% in 2018. The company showed fast CAPEX/Revenue growth of 34.2 pp from 5.4% in 2015 to 39.6% in 2018. Average CAPEX/Revenue for the last three years was 21.5%. The company maintained rich investment policy and has spent a lot to CAPEX (238% of EBITDA). CAPEX as a % of Revenue stuck to a growing trend at 9.1 pp per annum in 2014-2018.
Return on investment
The company operates at low ROIC (6.3%) and ROE (5.3%). ROIC decreased slightly on 1.4 pp from 7.7% to 6.3% in 2018. ROE decreased slightly on 1.3 pp from 6.6% to 5.3% in 2018. ROIC grew at 2.8 pp per annum in the last 5 years. ROE stuck to a growing trend at 2.1 pp per annum in the last 5 years.
Leverage (Debt)
The company has no debt. Cash dropped on 62.7%.
Valuation and dividends
The company's trades at EV/EBITDA 8.8x and P/E 17.2x.
Management team
AXT Inc's CEO Morris S Young is a founder and has spent 10 years with the company. Gary L Fischer is a AXT Inc's CFO. Gary L Fischer has spent 5 years at the company.
Financial and operational results
FY ended 12/31/2018
AXT Inc ($AXTI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 83.5 | 77.5 | 81.3 | 98.7 | 102.4 | 3.8% |
| Gross Profit | 17.2 | 16.8 | 26.4 | 34.5 | 37.0 | 7.5% |
| SG&A | 15.0 | 16.1 | 13.9 | 17.0 | 19.0 | 11.7% |
| EBITDA | 2.8 | 0.6 | 11.3 | 17.1 | 17.0 | -0.3% |
| Net Income | -1.4 | -2.2 | 5.6 | 10.1 | 9.7 | -4.9% |
Balance Sheet
|
|---|
| Cash | 28.8 | 24.9 | 36.2 | 44.4 | 16.5 | -62.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 1.7 | 1.2 | 0.6 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 2.0 | 4.2 | 2.7 | 21.4 | 40.5 | 89.8% |
Ratios
|
|---|
| Revenue growth | -2.2% | -7.2% | 5.0% | 21.3% | 3.8% | |
| EBITDA growth | -227.1% | -78.6% | 1,797.5% | 51.1% | -0.3% | |
|
|---|
| Gross Margin | 20.6% | 21.7% | 32.4% | 34.9% | 36.2% | 1.2% |
| EBITDA Margin | 3.3% | 0.8% | 13.9% | 17.3% | 16.6% | -0.7% |
| SG&A, % of revenue | 17.9% | 20.7% | 17.1% | 17.2% | 18.6% | 1.3% |
| Net Income Margin | -1.7% | -2.9% | 6.9% | 10.3% | 9.4% | -0.9% |
| CAPEX, % of revenue | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% | 17.9% |
|
|---|
| ROIC | -1.9% | -3.4% | 4.6% | 7.7% | 6.3% | -1.4% |
| ROE | -1.2% | -1.9% | 4.3% | 6.6% | 5.3% | -1.3% |
| Net Debt/EBITDA | -9.7x | -39.9x | -3.2x | -2.6x | -1.0x | 1.6x |
AXT Inc ($AXTI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 24 | 27 | 29 | 22 | | 18.4% | 15.1% | 1.6% | -15.6% |
| EBITDA | 5 | 6 | 6 | 1 | | 99.2% | 66.2% | -12.3% | -83.6% |
| Net Income | 3 | 4 | 4 | -1 | | 332.3% | 102.1% | -10.9% | -133.9% |
Balance Sheet
|
|---|
| Cash | 39 | 30 | 18 | 17 | | -30.7% | -47.4% | -62.5% | -62.7% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | -100.0% | |
Ratios
|
|---|
| Gross Margin | 39.2% | 40.6% | 37.1% | 26.3% | | 8.7% | 9.8% | -2.4% | -10.9% |
| EBITDA Margin | 20.5% | 20.9% | 19.5% | 3.5% | | 8.3% | 6.4% | -3.1% | -14.7% |
| Net Income Margin | 11.8% | 14.4% | 13.8% | -4.8% | | 8.5% | 6.2% | -1.9% | -16.7% |
Peers in Semiconductor Equipment
Below we provide AXT Inc benchmarking against other companies in Semiconductor 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 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -0.5% | 7.8% | 24.7% | 15.5% |
|---|
| AXT Inc ($AXTI) | | -7.2% | 5.0% | 21.3% | 3.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | 99.5% | 99.8% | 99.8% | 98.3% | 96.7% |
| KLA-Tencor Corporation ($KLAC) | 57.9% | 56.8% | 61.0% | 63.0% | 64.1% |
| Teradyne, Inc. ($TER) | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% |
| Nova Measuring Instruments Ltd. ($NVMI) | 52.7% | 51.9% | 45.9% | 59.1% | 57.8% |
| Nanometrics Incorporated ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.6% | 38.9% | 40.0% | 44.0% | 41.2% |
|---|
| AXT Inc ($AXTI) | 20.6% | 21.7% | 32.4% | 34.9% | 36.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 29.2% | 26.4% | 34.4% | 38.3% | 39.6% |
| DAQO New Energy Corp. ($DQ) | 32.9% | 31.6% | 43.3% | 49.1% | 36.1% |
| Xperi Corporation ($XPER) | 66.7% | 67.5% | 47.6% | 23.4% | 34.3% |
| Lam Research Corporation ($LRCX) | 21.1% | 20.3% | 23.2% | 27.6% | 32.0% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 7.0% | 10.3% | 11.4% | 16.0% | 16.2% |
|---|
| AXT Inc ($AXTI) | 3.3% | 0.8% | 13.9% | 17.3% | 16.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 15.0% | 4.0% | 3.6% | 0.0% | 58.8% |
| DAQO New Energy Corp. ($DQ) | 42.2% | 44.7% | 29.5% | 19.8% | 47.4% |
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| PDF Solutions, Inc. ($PDFS) | 4.0% | 4.9% | 10.5% | 10.1% | 15.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.7% | 2.2% | 2.8% | 2.9% |
|---|
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 17.9% | 16.5% | 27.2% | 34.0% | 39.9% |
| Lam Research Corporation ($LRCX) | 10.7% | 10.9% | 11.8% | 18.7% | 33.9% |
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.5% | 6.0% | 7.6% | 13.1% | 12.1% |
|---|
| AXT Inc ($AXTI) | -1.9% | -3.4% | 4.6% | 7.7% | 6.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | -0.3x | -0.1x | 4.2x | 5.0x | 2.6x |
| Ultra Clean Holdings, Inc. ($UCTT) | -1.2x | 1.5x | 0.4x | -0.2x | 2.4x |
| Ichor Holdings ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.0x | -1.2x | -0.7x | -1.0x |
|---|
| AXT Inc ($AXTI) | -9.7x | -39.9x | -3.2x | -2.6x | -1.0x |
