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Micron Technology, Inc. Net Income dropped on 57.4% and EBITDA Margin dropped on 14.3 pp from 54.7% to 40.4%

09/29/2020 • About Micron Technology, Inc. ($MU) • By InTwits

Micron Technology, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Micron Technology, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 35.9%. At the same time it's a lot of higher than industry average of 7.3%.
  • CAPEX is quite volatile: $1m in FY2020, $1m in FY2019, $0m in FY2018, $0m in FY2017, $1m in FY2016
  • The company has potentially unprofitable business model: ROIC is 6.8%
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 decreased on 8.4%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 14.3 pp from 54.7% to 40.4% in FY2020. During the last 5 years EBITDA Margin topped in FY2018 at 65.0% and was declining since that time.

Gross Margin dropped on 15.2 pp from 45.7% to 30.6% in FY2020. During FY2016-FY2020 Gross Margin topped in FY2018 at 58.9% and was declining since that time. SG&A as a % of Revenue increased slightly on 0.54 pp from 3.6% to 4.1% in FY2020. During the last 5 years SG&A as a % of Revenue bottomed in FY2018 at 2.7% and was growing since that time.

Net Income margin dropped on 14.4 pp from 27.0% to 12.5% in FY2020. During the last 5 years Net Income margin topped in FY2018 at 46.5% and was declining since that time.

Investments (CAPEX, working capital and M&A)


The company's CAPEX/Revenue was 38.4% in FY2020. CAPEX/Revenue jumped on 15.1 pp from 23.3% in FY2017 to 38.4% in FY2020. For the last three years the average CAPEX/Revenue was 36.5%. Battling declining revenue Micron Technology, Inc. invested a large share of EBITDA (95.0%) to CAPEX but that didn't help at least in this year.

Return on investment


The company operates at low ROIC (6.8%) and ROE (7.2%). ROIC dropped on 11.7 pp from 18.5% to 6.8% in FY2020. ROE dropped on 11.3 pp from 18.5% to 7.2% in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 42.9% and was declining since that time. During the last 5 years ROE topped in FY2018 at 55.5% and was declining since that time.

Leverage (Debt)


Company's Net Debt / EBITDA is -0.1x and Debt / EBITDA is 0.8x. Debt jumped on 22.6% while cash increased on 6.6%.

Micron Technology, Inc. has no short term refinancing risk: cash is higher than short term debt (2,823.7%).

Valuation and dividends


The company's trades at EV/EBITDA 6.5x and P/E 20.9x.

Management team


Sanjay Mehrotra is a the company's CEO. Sanjay Mehrotra has spent 3 years with the company. The company's CFO David A Zinsner has spent 3 years with the company.

Financial and operational results


Micron Technology, Inc. ($MU) key annual financial indicators

mln. $201620172018201920202020/2019
P&L
Revenue12,39920,32230,39123,40621,435-8.4%
Gross Profit2,5058,43617,89110,7026,552-38.8%
SG&A6597438138368815.4%
EBITDA3,1489,72919,75312,8008,653-32.4%
EBIT1685,86814,994
Interest expence437601342
Tax19114168
Net Income-2765,08914,1356,3132,687-57.4%
Stock Based Compensation191215198
Balance Sheet
Cash4,1405,1096,5067,1527,6246.6%
Inventory2,8893,1233,595
Short Term Debt7561,2628591,310270-79.4%
Long Term Debt9,1549,8723,7774,5416,90652.1%
Cash flow
Capex5,8174,7348,8799,7808,223-15.9%
Acquisitions2,634
Ratios
Revenue growth-23.4%63.9%49.5%-23.0%-8.4%
EBITDA growth-44.4%209.1%103.0%-35.2%-32.4%

Gross Margin20.2%41.5%58.9%45.7%30.6%-15.2%
EBITDA Margin25.4%47.9%65.0%54.7%40.4%-14.3%
EBIT Margin1.4%28.9%49.3%
SG&A, % of revenue5.3%3.7%2.7%3.6%4.1%0.5%
SBC, % of revenue1.5%1.1%0.7%
Net Income Margin-2.2%25.0%46.5%27.0%12.5%-14.4%
CAPEX, % of revenue46.9%23.3%29.2%41.8%38.4%-3.4%

ROIC0.8%21.5%42.9%18.5%6.8%-11.7%
ROE-2.3%33.1%55.5%18.5%7.2%-11.3%
Net Debt/EBITDA1.8x0.6x-0.1x-0.1x-0.1x0.0x
Interest expence / Average debt4.4%5.7%4.3%
People
Insider ownership0.2%0.2%0.2%
Employees31,40034,10036,000
Revenue/Employee, th. $395596844

Micron Technology, Inc. ($MU) key quoterly financial indicators

mln. $FY20Q1FY20Q2FY20Q3FY20Q4 YoY change
P&L
Revenue5,1444,7975,4386,056 ----
EBITDA1,8381,8292,3372,724 ----
Net Income491405803988 ----
Balance Sheet
Cash6,9697,1188,2677,624 ----
Short Term Debt462287384270 ----
Long Term Debt5,6995,7366,8966,906 ----
Ratios
Gross Margin26.6%28.2%32.4%34.1% ----
EBITDA Margin 35.7% 38.1% 43.0% 45.0% ----
Net Income Margin 9.5% 8.4% 14.8% 16.3% ----

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 FY2016 FY2017 FY2018 FY2019 FY2020
Inphi Corporation ($IPHI)-30.8%-15.4%24.2%86.8%
Sequans Communications S.A. ($SQNS)-5.9%-16.6%-23.3%65.0%
MaxLinear, Inc ($MXL)-8.4%-8.4%-17.6%50.9%
Advanced Micro Devices, Inc. ($AMD)-21.6%23.3%4.0%45.0%
Kopin Corporation ($KOPN)-23.0%-12.1%20.7%35.9%
 
Median (43 companies)1.2%10.9%4.4%-3.0%2.8%
Micron Technology, Inc. ($MU)-63.9%49.5%-23.0%-8.4%


Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
CEVA, Inc. ($CEVA)91.6%92.1%89.8%88.4%89.3%
Universal Display Corporation ($OLED)83.9%80.8%75.5%78.5%80.1%
Rambus, Inc. ($RMBS)80.1%79.9%76.8%77.1%75.0%
Analog Devices, Inc. ($ADI)65.1%59.9%68.3%67.0%65.9%
MoSys, Inc. ($MOSY)49.0%46.9%61.8%61.0%65.7%
 
Median (43 companies)48.0%49.1%50.2%50.7%49.4%
Micron Technology, Inc. ($MU)20.2%41.5%58.9%45.7%30.6%


Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Texas Instruments Incorporated ($TXN)43.5%46.7%48.6%47.5%47.6%
Intel Corp ($INTC)35.2%41.7%45.7%45.9%46.7%
Broadcom Inc. ($AVGO)19.9%40.4%44.2%40.9%46.2%
Universal Display Corporation ($OLED)44.8%51.6%35.3%48.0%45.9%
Analog Devices, Inc. ($ADI)36.2%32.1%43.2%42.1%42.0%
 
Median (41 companies)9.2%10.7%9.3%12.9%17.3%
Micron Technology, Inc. ($MU)25.4%47.9%65.0%54.7%40.4%


Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Sequans Communications S.A. ($SQNS)11.8%13.3%22.9%29.6%27.1%
Intel Corp ($INTC)16.2%18.8%21.4%22.5%18.6%
First Solar, Inc. ($FSLR)7.9%17.5%33.0%21.8%15.4%
Power Integrations, Inc. ($POWI)3.1%7.5%5.9%5.7%14.5%
Rambus, Inc. ($RMBS)2.5%2.4%4.7%2.9%12.2%
 
Median (40 companies)3.6%4.7%4.2%3.7%3.6%
Micron Technology, Inc. ($MU)46.9%23.3%29.2%41.8%38.4%


Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Texas Instruments Incorporated ($TXN)34.9%43.1%47.5%39.7%38.2%
Applied Materials Inc ($AMAT)19.0%31.2%36.4%27.7%32.1%
Advanced Micro Devices, Inc. ($AMD)-21.7%7.3%21.6%21.5%31.8%
QUALCOMM Incorporated ($QCOM)15.8%5.7%2.2%38.0%28.1%
NVIDIA Corporation ($NVDA)13.1%27.3%35.3%36.9%22.7%
 
Median (45 companies)1.7%3.2%2.2%2.2%5.3%
Micron Technology, Inc. ($MU)0.8%21.5%42.9%18.5%6.8%


Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
SunPower Corporation ($SPWR)----8.2x
MACOM Technology Solutions Holdings, Inc. ($MTSI)3.0x7.2x98.6x-6.6x
Rambus, Inc. ($RMBS)-0.1x-0.1x--5.9x
Inphi Corporation ($IPHI)4.5x33.7x32.2x4.5x3.4x
Canadian Solar Inc. ($CSIQ)11.3x6.8x2.7x3.4x3.3x
 
Median (31 companies)-0.0x0.4x0.3x0.5x0.5x
Micron Technology, Inc. ($MU)1.8x0.6x-0.1x-0.1x-0.1x