Western Digital Corporation Debt decreased on 6.7% while Revenue increased slightly on 1.0%
08/05/2020 • About Western Digital Corporation (
$WDC) • By InTwits
Western Digital Corporation reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 11.7% in FY2020, 11.5% in FY2019, 27.5% in FY2018, 21.4% in FY2017, 12.5% in FY2016
- Western Digital Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.1%. At the same time it's in pair with industry average of 5.5%
- CAPEX is quite volatile: $0m in 2020, $0m in 2019, $0m in 2018, $0m in 2017, $0m in 2016
- In the last 5 years the company invested considerably less than D&A: $3,520m vs. $5,338m
- The company has potentially unprofitable business model: ROIC is 1.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.5x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 1.0%. Revenue growth showed acceleration in FY20Q4 - it increased 18.0% YoY. EBITDA Margin showed almost no change in FY2020.
Gross Margin showed almost no change in FY2020. During the last 5 years Gross Margin topped in FY2018 at 37.3% and was declining since that time. SG&A as a % of Revenue decreased slightly on 1.1 pp from 7.9% to 6.9% in FY2020.
Net Income margin increased on 3.1 pp from -4.6% to -1.5% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 Western Digital Corporation had CAPEX/Revenue of 3.9%. The company's CAPEX/Revenue increased slightly on 0.84 pp from 3.0% in FY2017 to 3.9% in FY2020. For the last three years the average CAPEX/Revenue was 4.4%.
Return on investment
The company operates at low but positive ROIC (1.7%) and negative ROE (-2.6%). ROIC increased slightly on 1.3 pp from 0.40% to 1.7% in FY2020. ROE increased on 4.5 pp from -7.0% to -2.6% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 5.0x. Net Debt / EBITDA dropped on 0.3x from 3.7x to 3.5x in FY2020. Debt decreased on 6.7% while cash dropped on 11.8%.
Western Digital Corporation has no short term refinancing risk: cash is higher than short term debt (946.6%).
Management team
Western Digital Corporation's CEO David V Goeckeler has spent 1 year with the company. Robert K Eulau "Bob" is a Western Digital Corporation's CFO. Robert K Eulau "Bob" has spent 1 year at the company.
Financial and operational results
FY ended 07/03/2020
Western Digital Corporation ($WDC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 12,994 | 19,093 | 20,647 | 16,569 | 16,736 | 1.0% |
| Gross Profit | 3,435 | 6,072 | 7,705 | 3,752 | 3,781 | 0.8% |
| SG&A | 997 | 1,445 | 1,473 | 1,317 | 1,153 | -12.5% |
| EBITDA | 1,620 | 4,082 | 5,673 | 1,899 | 1,956 | 3.0% |
| EBIT | 466 | 1,954 | 3,617 | | | |
| Interest expence | 266 | 847 | 676 | | | |
| Tax | -89 | 372 | 1,410 | | | |
| Net Income | 242 | 397 | 675 | -754 | -250 | |
| Stock Based Compensation | 191 | 394 | 377 | | | |
Balance Sheet
|
|---|
| Cash | 8,151 | 6,354 | 5,005 | 3,455 | 3,048 | -11.8% |
| Accounts Receivable | 1,461 | 1,948 | 2,197 | | | |
| Inventory | 2,129 | 2,341 | 2,944 | | | |
| Accounts Payable | 1,888 | 2,144 | 2,265 | | | |
| Short Term Debt | 3,334 | 233 | 179 | 276 | 322 | 16.7% |
| Long Term Debt | 13,660 | 12,918 | 10,993 | 10,246 | 9,498 | -7.3% |
Cash flow
|
|---|
| Capex | 584 | 578 | 835 | 876 | 647 | -26.1% |
| Dividends | 464 | 574 | 593 | | | |
| Acquisitions | 9,835 | | 100 | | | |
Ratios
|
|---|
| Revenue growth | -10.8% | 46.9% | 8.1% | -19.8% | 1.0% | |
| EBITDA growth | -40.6% | 152.0% | 39.0% | -66.5% | 3.0% | |
|
|---|
| Gross Margin | 26.4% | 31.8% | 37.3% | 22.6% | 22.6% | -0.1% |
| EBITDA Margin | 12.5% | 21.4% | 27.5% | 11.5% | 11.7% | 0.2% |
| EBIT Margin | 3.6% | 10.2% | 17.5% | | |
| SG&A, % of revenue | 7.7% | 7.6% | 7.1% | 7.9% | 6.9% | -1.1% |
| SBC, % of revenue | 1.5% | 2.1% | 1.8% | | |
| Net Income Margin | 1.9% | 2.1% | 3.3% | -4.6% | -1.5% | 3.1% |
| CAPEX, % of revenue | 4.5% | 3.0% | 4.0% | 5.3% | 3.9% | -1.4% |
|
|---|
| ROIC | 2.3% | 7.4% | 15.3% | 0.4% | 1.7% | 1.3% |
| ROE | 2.4% | 3.5% | 5.9% | -7.0% | -2.6% | 4.5% |
| Net Debt/EBITDA | 5.5x | 1.7x | 1.1x | 3.7x | 3.5x | -0.3x |
| Interest coverage ratio (ICR) | 1.8x | 2.3x | 5.4x | | |
| Interest expence / Average debt | 1.6% | 5.6% | 5.6% | | | |
People
|
|---|
| Insider ownership | 0.5% | 0.5% | 0.5% | | | |
| Employees | 72,878 | 67,600 | 71,600 | | | |
| Revenue/Employee, th. $ | 178 | 282 | 288 | | | |
Western Digital Corporation ($WDC) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4,040 | 4,234 | 4,175 | 4,287 | | -19.6% | 0.0% | 13.6% | 18.0% |
| EBITDA | 289 | 467 | 549 | 651 | | -75.2% | -27.9% | 998.0% | 1,760.0% |
| Net Income | -276 | -139 | 17 | 148 | | -154.0% | - | - | - |
Balance Sheet
|
|---|
| Cash | 3,248 | 3,137 | 2,943 | 3,048 | | -30.1% | -21.8% | -20.1% | -11.8% |
| Short Term Debt | 291 | 327 | 320 | 322 | | 36.6% | 34.0% | 15.9% | 16.7% |
| Long Term Debt | 10,178 | 9,764 | 9,557 | 9,498 | | -6.9% | -5.8% | -7.3% | -7.3% |
Ratios
|
|---|
| Gross Margin | 18.8% | 22.1% | 24.1% | 25.3% | | -14.3% | -2.6% | 8.3% | 12.5% |
| EBITDA Margin | 7.2% | 11.0% | 13.1% | 15.2% | | -16.0% | -4.3% | 11.8% | 14.2% |
| Net Income Margin | -6.8% | -3.3% | 0.4% | 3.5% | | -17.0% | 8.2% | 16.2% | 8.9% |
Peers in Technology Hardware, Storage & Peripherals
Below you can find Western Digital Corporation benchmarking vs. other companies in Technology Hardware, Storage & Peripherals 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Ionix Technology Inc ($IINX) | - | 246.0% | -5.8% | 92.3% | 66.8% |
| Veritec Inc ($VRTC) | - | -52.2% | 53.1% | -38.5% | 42.9% |
| Pure Storage, Inc. ($PSTG) | - | 67.9% | 38.6% | 32.7% | 20.9% |
| USA Technologies, Inc. ($USAT) | - | 34.5% | - | - | 12.9% |
| CPI Card Group Inc. ($PMTS) | - | -17.4% | 0.4% | 8.7% | 12.3% |
| |
|---|
| Median (20 companies) | 1.4% | 1.5% | 4.3% | -2.0% | -10.2% |
|---|
| Western Digital Corporation ($WDC) | - | 46.9% | 8.1% | -19.8% | 1.0% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Immersion Corporation ($IMMR) | 99.7% | 99.4% | 99.8% | 99.5% | 99.4% |
| Datasea Inc ($DTSS) | - | 39.3% | 54.4% | - | 89.7% |
| Pure Storage, Inc. ($PSTG) | 61.9% | 65.9% | 65.5% | 66.4% | 69.0% |
| Avid Technology, Inc. ($AVID) | 65.0% | 57.8% | 57.9% | 60.5% | 63.3% |
| Socket Mobile, Inc. ($SCKT) | 50.2% | 53.5% | 51.4% | 52.5% | 53.1% |
| |
|---|
| Median (21 companies) | 39.3% | 39.6% | 38.8% | 35.1% | 38.2% |
|---|
| Western Digital Corporation ($WDC) | 26.4% | 31.8% | 37.3% | 22.6% | 22.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Apple Inc. ($AAPL) | 32.7% | 31.2% | 30.8% | 29.4% | 28.7% |
| CPI Card Group Inc. ($PMTS) | 14.9% | -0.0% | 9.0% | 15.2% | 17.9% |
| Immersion Corporation ($IMMR) | -25.1% | -127.0% | 48.6% | -50.4% | 17.4% |
| Avid Technology, Inc. ($AVID) | 17.5% | 6.6% | 8.4% | 13.5% | 13.6% |
| NCR Corporation ($NCR) | 14.4% | 16.0% | 8.1% | 15.6% | 11.4% |
| |
|---|
| Median (19 companies) | 3.8% | 3.5% | 7.9% | 7.7% | 7.6% |
|---|
| Western Digital Corporation ($WDC) | 12.5% | 21.4% | 27.5% | 11.5% | 11.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Datasea Inc ($DTSS) | - | 0.0% | 0.0% | - | 20.9% |
| Hewlett Packard Enterprise Company ($HPE) | 10.8% | 10.9% | 9.6% | 9.8% | 8.8% |
| Pure Storage, Inc. ($PSTG) | 8.9% | 10.4% | 6.3% | 7.4% | 5.3% |
| Stratasys, Ltd. ($SSYS) | 6.7% | 3.3% | 3.5% | 3.5% | 5.2% |
| Intevac, Inc. ($IVAC) | 4.2% | 3.9% | 3.4% | 3.8% | 2.7% |
| |
|---|
| Median (19 companies) | 1.7% | 1.8% | 2.2% | 1.7% | 1.7% |
|---|
| Western Digital Corporation ($WDC) | 4.5% | 3.0% | 4.0% | 5.3% | 3.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| HP Inc. ($HPQ) | 15.8% | 60.8% | 72.9% | 116.0% | 109.2% |
| Apple Inc. ($AAPL) | 27.0% | 23.8% | 28.0% | 29.5% | 33.0% |
| Avid Technology, Inc. ($AVID) | - | - | 252.4% | 42.1% | 30.0% |
| CPI Card Group Inc. ($PMTS) | 12.8% | -9.3% | 2.7% | 15.4% | 20.5% |
| NCR Corporation ($NCR) | 13.9% | 16.3% | 4.6% | 14.3% | 5.5% |
| |
|---|
| Median (21 companies) | -2.6% | 0.2% | 2.2% | 4.2% | 2.6% |
|---|
| Western Digital Corporation ($WDC) | 2.3% | 7.4% | 15.3% | 0.4% | 1.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Diebold Nixdorf Incorporated ($DBD) | - | 8.3x | - | 6.6x | 7.3x |
| CPI Card Group Inc. ($PMTS) | 5.8x | - | 12.4x | 7.2x | 5.2x |
| Hewlett Packard Enterprise Company ($HPE) | 0.4x | 1.2x | 1.6x | 2.6x | 5.2x |
| NCR Corporation ($NCR) | 2.7x | 2.3x | 5.2x | 3.3x | 4.8x |
| Avid Technology, Inc. ($AVID) | 1.7x | 5.6x | 4.8x | 3.5x | 3.3x |
| |
|---|
| Median (11 companies) | 0.1x | 0.2x | 0.2x | 1.3x | 2.7x |
|---|
| Western Digital Corporation ($WDC) | 5.5x | 1.7x | 1.1x | 3.7x | 3.5x |
