STR Holdings Inc reports 227% CAPEX growth in 2018 while 19.7% Revenue decline
03/27/2019 • About STR Holdings Inc (
$STRI) • By InTwits
STR Holdings Inc reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- STR Holdings Inc is a company in decline: 2018 revenue growth was -19.7%, 5 years revenue CAGR was -19.3%
- The company operates at negative EBITDA Margin: -64.4%
- STR Holdings Inc spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -46.9%
- STR Holdings Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 12.7%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $4m in 2018, $1m in 2017, $0m in 2016, $2m in 2015, $3m in 2014
- The company has unprofitable business model: ROIC is -27.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 19.7%. Revenue decline showed acceleration in 18Q4 - it was 36.0% YoY. During the last 5 years Revenue growth bottomed in 2017 at -32.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.8 pp from -48.9% to -39.1% in FY2018.
Gross Margin increased on 4.1 pp from -10.2% to -6.1% in 2018. SG&A as a % of Revenue increased on 6.9 pp from 44.8% to 51.7% in 2018. SG&A as a % of Revenue grew at 4.9 pp per annum in 2014-2018.
Net Income margin dropped on 15.3 pp from -37.7% to -52.9% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 STR Holdings Inc had CAPEX/Revenue of 36.6%. The company's CAPEX/Revenue surged on 28.5 pp from 8.1% in 2015 to 36.6% in 2018. Average CAPEX/Revenue for the last three years was 15.8%.
Return on investment
The company operates at negative ROIC (-27.8%) and ROE (-23.1%). ROIC decreased on 5.6 pp from -22.2% to -27.8% in 2018. ROE decreased on 5.9 pp from -17.2% to -23.1% in 2018.
Leverage (Debt)
The company has no debt. Cash dropped on 58.2%.
Financial and operational results
FY ended 12/31/2018
STR Holdings Inc ($STRI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 39.288 | 29.783 | 20.112 | 13.540 | 10.879 | -19.7% |
| Gross Profit | -5.234 | -1.824 | -2.015 | -1.375 | -0.660 | |
| SG&A | 12.832 | 10.186 | 7.058 | 6.067 | 5.628 | -7.2% |
| EBITDA | -17.631 | -11.131 | -10.929 | -6.549 | -7.003 | |
| Net Income | -23.617 | -9.463 | -15.870 | -5.101 | -5.760 | |
Balance Sheet
|
|---|
| Cash | 16.552 | 7.703 | 12.379 | 13.499 | 5.639 | -58.2% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 3.115 | 2.408 | 0.329 | 1.220 | 3.984 | 226.6% |
Ratios
|
|---|
| Revenue growth | 23.3% | -24.2% | -32.5% | -32.7% | -19.7% | |
| EBITDA growth | -24.0% | -36.9% | -1.8% | -40.1% | 6.9% | |
|
|---|
| Gross Margin | -13.3% | -6.1% | -10.0% | -10.2% | -6.1% | 4.1% |
| EBITDA Margin | -44.9% | -37.4% | -54.3% | -48.4% | -64.4% | -16.0% |
| SG&A, % of revenue | 32.7% | 34.2% | 35.1% | 44.8% | 51.7% | 6.9% |
| Net Income Margin | -60.1% | -31.8% | -78.9% | -37.7% | -52.9% | -15.3% |
| CAPEX, % of revenue | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% | 27.6% |
|
|---|
| ROIC | -22.5% | -23.9% | -30.2% | -22.2% | -27.8% | -5.6% |
| ROE | -27.9% | -18.0% | -40.4% | -17.2% | -23.1% | -5.9% |
STR Holdings Inc ($STRI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4 | 3 | 3 | 2 | | 0.9% | -17.7% | -27.9% | -36.0% |
| EBITDA | -0 | -3 | -2 | -2 | | | -3,801.4% | | |
| Net Income | 0 | -3 | -1 | -2 | | | | | |
Balance Sheet
|
|---|
| Cash | 13 | 12 | 11 | 6 | | 16.2% | -12.6% | -20.8% | -58.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 34.7% | -38.8% | -18.0% | -25.4% | | 48.1% | -17.9% | -22.0% | -13.7% |
| EBITDA Margin | -9.2% | -104.5% | -86.8% | -87.7% | | 52.4% | -106.8% | -86.8% | -46.8% |
| Net Income Margin | 8.5% | -122.2% | -51.2% | -82.2% | | 90.6% | -112.9% | -25.5% | -55.5% |
Peers in Semiconductor Equipment
Below we provide STR Holdings 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. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
| |
|---|
| Median (37 companies) | | -0.5% | 7.8% | 24.7% | 15.5% |
|---|
| STR Holdings Inc ($STRI) | | -24.2% | -32.5% | -32.7% | -19.7% |
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 ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.6% | 38.9% | 40.0% | 44.0% | 41.2% |
|---|
| STR Holdings Inc ($STRI) | -13.3% | -6.1% | -10.0% | -10.2% | -6.1% |
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 ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 7.0% | 10.3% | 12.1% | 16.2% | 16.6% |
|---|
| STR Holdings Inc ($STRI) | -44.9% | -37.4% | -54.3% | -48.4% | -64.4% |
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% |
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| PDF Solutions, Inc. ($PDFS) | 4.0% | 4.9% | 10.5% | 10.1% | 15.3% |
| |
|---|
| Median (37 companies) | 2.2% | 2.7% | 2.6% | 2.8% | 2.9% |
|---|
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
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. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
| |
|---|
| Median (39 companies) | 3.5% | 6.0% | 7.6% | 13.1% | 12.1% |
|---|
| STR Holdings Inc ($STRI) | -22.5% | -23.9% | -30.2% | -22.2% | -27.8% |
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 (32 companies) | -1.2x | -1.3x | -1.3x | -0.7x | -1.0x |
|---|
