Micron Technology, Inc. reports 55.3% Net Income decline in 2019 and 23.0% Revenue decline
09/26/2019 • About Micron Technology, Inc. (
$MU) • By InTwits
Micron Technology, Inc. reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 54.7% in FY2019, 65.0% in FY2018, 47.9% in FY2017, 25.4% in FY2016, 35.0% in FY2015
- Micron Technology, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 33.2%. At the same time it's a lot of higher than industry average of 7.8%.
- CAPEX is quite volatile: $9,780m in FY2019, $8,879m in FY2018, $4,734m in FY2017, $5,817m in FY2016, $4,021m in FY2015
- The company has highly profitable business model: ROIC is 18.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Micron Technology, Inc.'s Revenue dropped on 23.0%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.3 pp from 65.0% to 54.7% in FY2019.
Gross Margin dropped on 13.1 pp from 58.9% to 45.7% in FY2019. SG&A as a % of Revenue increased slightly on 0.90 pp from 2.7% to 3.6% in FY2019.
Net Income margin dropped on 19.5 pp from 46.5% to 27.0% in FY2019.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 41.8% in FY2019. CAPEX/Revenue decreased on 5.1 pp from 46.9% in FY2016 to 41.8% in FY2019. For the last three years the average CAPEX/Revenue was 31.4%. Battling declining revenue the company invested a large share of EBITDA (76.4%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at good ROIC (18.5%) and ROE (18.5%). ROIC dropped on 24.4 pp from 42.9% to 18.5% in FY2019. ROE dropped on 37.0 pp from 55.5% to 18.5% in FY2019.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 0.5x. Debt surged on 26.2% while cash increased on 9.9%.
Micron Technology, Inc. has no short term refinancing risk: cash is higher than short term debt (546.0%).
Valuation and dividends
Micron Technology, Inc.'s trades at EV/EBITDA 3.6x and P/E 7.6x.
Management team
The company's CEO Sanjay Mehrotra is a founder and has spent 3 years with the company. The company's CFO David A Zinsner has spent 2 years with the company.
Financial and operational results
FY ended 08/29/2019
Micron Technology, Inc. ($MU) key annual financial indicatorsmln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
---|
P&L
|
---|
Revenue | 16,192 | 12,399 | 20,322 | 30,391 | 23,406 | -23.0% |
Gross Profit | 5,215 | 2,505 | 8,436 | 17,891 | 10,702 | -40.2% |
SG&A | 719 | 659 | 743 | 813 | 836 | 2.8% |
EBITDA | 5,665 | 3,148 | 9,729 | 19,753 | 12,800 | -35.2% |
EBIT | 2,998 | 168 | 5,868 | 14,994 | | |
Interest expence | 371 | 437 | 601 | 342 | | |
Tax | 157 | 19 | 114 | 168 | | |
Net Income | 2,899 | -276 | 5,089 | 14,135 | 6,313 | -55.3% |
Stock Based Compensation | 168 | 191 | 215 | 198 | | |
Balance Sheet
|
---|
Cash | 2,287 | 4,140 | 5,109 | 6,506 | 7,152 | 9.9% |
Inventory | 2,340 | 2,889 | 3,123 | 3,595 | | |
Short Term Debt | 1,089 | 756 | 1,262 | 859 | 1,310 | 52.5% |
Long Term Debt | 6,252 | 9,154 | 9,872 | 3,777 | 4,541 | 20.2% |
Cash flow
|
---|
Capex | 4,021 | 5,817 | 4,734 | 8,879 | 9,780 | 10.1% |
Acquisitions | | | 2,634 | | | |
Ratios
|
---|
Revenue growth | -1.0% | -23.4% | 63.9% | 49.5% | -23.0% | |
EBITDA growth | 9.2% | -44.4% | 209.1% | 103.0% | -35.2% | |
|
---|
Gross Margin | 32.2% | 20.2% | 41.5% | 58.9% | 45.7% | -13.1% |
EBITDA Margin | 35.0% | 25.4% | 47.9% | 65.0% | 54.7% | -10.3% |
EBIT Margin | 18.5% | 1.4% | 28.9% | 49.3% | |
SG&A, % of revenue | 4.4% | 5.3% | 3.7% | 2.7% | 3.6% | 0.9% |
SBC, % of revenue | 1.0% | 1.5% | 1.1% | 0.7% | |
Net Income Margin | 17.9% | -2.2% | 25.0% | 46.5% | 27.0% | -19.5% |
CAPEX, % of revenue | 24.8% | 46.9% | 23.3% | 29.2% | 41.8% | 12.6% |
|
---|
ROIC | 15.8% | 0.8% | 21.5% | 42.9% | 18.5% | -24.4% |
ROE | 25.0% | -2.3% | 33.1% | 55.5% | 18.5% | -37.0% |
Net Debt/EBITDA | 0.9x | 1.8x | 0.6x | -0.1x | -0.1x | -0.0x |
Interest expence / Average debt | 5.1% | 5.1% | 5.7% | 4.3% | | |
People
|
---|
Insider ownership | 0.2% | 0.2% | 0.2% | 0.2% | | |
Employees | 31,800 | 31,400 | 34,100 | 36,000 | | |
Revenue/Employee, th. $ | 509 | 395 | 596 | 844 | | |
Peers in Semiconductors
Below you can find Micron Technology, 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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
---|
NanoFlex Power Corp ($OPVS) | | | 72.5% | 354.8% | |
MoSys, Inc. ($MOSY) | -18.4% | 37.2% | 46.8% | 87.7% | |
SMART Global Holdings, Inc. ($SGH) | | -16.9% | 42.5% | 69.3% | |
Adesto Technologies Corporation ($IOTS) | 4.3% | 1.6% | 27.6% | 48.8% | |
NVIDIA Corporation ($NVDA) | 13.4% | 7.0% | 37.9% | 40.6% | |
|
---|
Median (68 companies) | 10.6% | 5.2% | 10.9% | 4.4% | -7.2% |
---|
Micron Technology, Inc. ($MU) | | | 63.9% | 49.5% | -23.0% |
Top companies by Gross margin, %
Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
---|
CEVA, Inc. ($CEVA) | 90.9% | 91.6% | 92.1% | 89.8% | |
NVE Corporation ($NVEC) | 80.3% | 76.1% | 78.5% | 79.0% | |
Rambus, Inc. ($RMBS) | 84.7% | 80.1% | 79.9% | 76.8% | |
Universal Display Corporation ($OLED) | 64.2% | 83.9% | 80.8% | 75.5% | |
Intermolecular, Inc. ($IMI) | 57.4% | 66.5% | 67.5% | 70.3% | |
|
---|
Median (67 companies) | 47.7% | 48.0% | 49.1% | 50.2% | 47.5% |
---|
Micron Technology, Inc. ($MU) | | 20.2% | 41.5% | 58.9% | 45.7% |
Top companies by EBITDA margin, %
Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
---|
NVE Corporation ($NVEC) | 66.0% | 61.8% | 65.6% | 65.1% | |
NXP Semiconductors N.V. ($NXPI) | 41.5% | 21.6% | 46.2% | 49.9% | |
Texas Instruments Incorporated ($TXN) | 42.0% | 43.5% | 46.7% | 48.6% | |
Intel Corp ($INTC) | 41.0% | 35.2% | 41.7% | 45.7% | |
Broadcom Inc. ($AVGO) | 38.0% | 19.9% | 40.4% | 44.2% | |
|
---|
Median (68 companies) | 11.3% | 9.2% | 10.7% | 9.3% | 0.9% |
---|
Micron Technology, Inc. ($MU) | | 25.4% | 47.9% | 65.0% | 54.7% |
Top companies by CAPEX/Revenue, %
Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
---|
Alpha and Omega Semiconductor Limited ($AOSL) | 6.6% | 6.5% | 12.2% | 42.2% | |
Renesola Ltd. ($SOL) | 0.0% | 0.0% | 78.0% | 41.7% | |
First Solar, Inc. ($FSLR) | 4.0% | 7.9% | 17.5% | 33.0% | |
Sigma Designs Inc ($SIGM) | 6.5% | 6.2% | 14.1% | 29.3% | |
Sequans Communications S.A. ($SQNS) | 16.9% | 11.8% | 13.3% | 22.9% | 29.6% |
|
---|
Median (68 companies) | 4.0% | 3.6% | 4.7% | 4.2% | 11.8% |
---|
Micron Technology, Inc. ($MU) | | 46.9% | 23.3% | 29.2% | 41.8% |
Top companies by ROIC, %
Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
---|
SMART Global Holdings, Inc. ($SGH) | | 2.5% | 21.5% | 51.7% | |
Texas Instruments Incorporated ($TXN) | 29.8% | 34.9% | 43.1% | 47.5% | |
Applied Materials Inc ($AMAT) | 15.2% | 19.0% | 31.2% | 36.4% | |
NVIDIA Corporation ($NVDA) | 13.3% | 13.1% | 27.3% | 35.3% | |
Skyworks Solutions, Inc. ($SWKS) | 36.4% | 33.7% | 33.1% | 32.3% | 23.2% |
|
---|
Median (76 companies) | 3.8% | 1.7% | 3.2% | 2.2% | -2.9% |
---|
Micron Technology, Inc. ($MU) | | 0.8% | 21.5% | 42.9% | 18.5% |
Top companies by Net Debt / EBITDA
Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
---|
MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.3x | 3.0x | 7.2x | 98.6x | |
Inphi Corporation ($IPHI) | -6.4x | 4.5x | 33.7x | 32.2x | |
JinkoSolar Holding Company Limited ($JKS) | 3.3x | 4.1x | 11.0x | 8.2x | |
Lattice Semiconductor Corporation ($LSCC) | | 6.5x | 19.0x | 3.9x | |
Renesola Ltd. ($SOL) | 35.0x | 123.6x | 2.3x | 3.3x | |
|
---|
Median (45 companies) | -0.3x | -0.0x | 0.4x | 0.3x | 0.5x |
---|
Micron Technology, Inc. ($MU) | | 1.8x | 0.6x | -0.1x | -0.1x |