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. Here are the key drivers of the company's long term financial model:
- 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 7.8%.
- 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
Micron Technology, Inc.'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 FY2016-FY2020 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 FY2016-FY2020 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 FY2016-FY2020 Net Income margin topped in FY2018 at 46.5% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 Micron Technology, Inc. had CAPEX/Revenue of 38.4%. CAPEX/Revenue jumped on 15.1 pp from 23.3% in FY2017 to 38.4% in FY2020. It's average level of CAPEX/Revenue for the last three years was 36.5%. The company invested a big chunk of EBITDA (95.0%) to CAPEX which didn't stop revenue from falling.
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 the last 5 years ROIC topped in FY2018 at 42.9% and was declining since that time. During FY2016-FY2020 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 surged 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
Micron Technology, Inc.'s trades at EV/EBITDA 6.5x and P/E 20.9x.
Management team
Micron Technology, Inc.'s CEO is Sanjay Mehrotra. Sanjay Mehrotra has 3 years tenure with the company. Micron Technology, Inc.'s CFO David A Zinsner has spent 2 years with the company.
Financial and operational results
Micron Technology, Inc. ($MU) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 12,399 | 20,322 | 30,391 | 23,406 | 21,435 | -8.4% |
| Gross Profit | 2,505 | 8,436 | 17,891 | 10,702 | 6,552 | -38.8% |
| SG&A | 659 | 743 | 813 | 836 | 881 | 5.4% |
| EBITDA | 3,148 | 9,729 | 19,753 | 12,800 | 8,653 | -32.4% |
| EBIT | 168 | 5,868 | 14,994 | | | |
| Interest expence | 437 | 601 | 342 | | | |
| Tax | 19 | 114 | 168 | | | |
| Net Income | -276 | 5,089 | 14,135 | 6,313 | 2,687 | -57.4% |
| Stock Based Compensation | 191 | 215 | 198 | | | |
Balance Sheet
|
|---|
| Cash | 4,140 | 5,109 | 6,506 | 7,152 | 7,624 | 6.6% |
| Inventory | 2,889 | 3,123 | 3,595 | | | |
| Short Term Debt | 756 | 1,262 | 859 | 1,310 | 270 | -79.4% |
| Long Term Debt | 9,154 | 9,872 | 3,777 | 4,541 | 6,906 | 52.1% |
Cash flow
|
|---|
| Capex | 5,817 | 4,734 | 8,879 | 9,780 | 8,223 | -15.9% |
| Acquisitions | | 2,634 | | | | |
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 Margin | 20.2% | 41.5% | 58.9% | 45.7% | 30.6% | -15.2% |
| EBITDA Margin | 25.4% | 47.9% | 65.0% | 54.7% | 40.4% | -14.3% |
| EBIT Margin | 1.4% | 28.9% | 49.3% | | |
| SG&A, % of revenue | 5.3% | 3.7% | 2.7% | 3.6% | 4.1% | 0.5% |
| SBC, % of revenue | 1.5% | 1.1% | 0.7% | | |
| Net Income Margin | -2.2% | 25.0% | 46.5% | 27.0% | 12.5% | -14.4% |
| CAPEX, % of revenue | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% | -3.4% |
|
|---|
| ROIC | 0.8% | 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/EBITDA | 1.8x | 0.6x | -0.1x | -0.1x | -0.1x | 0.0x |
| Interest expence / Average debt | 4.4% | 5.7% | 4.3% | | | |
People
|
|---|
| Insider ownership | 0.2% | 0.2% | 0.2% | | | |
| Employees | 31,400 | 34,100 | 36,000 | | | |
| Revenue/Employee, th. $ | 395 | 596 | 844 | | | |
Micron Technology, Inc. ($MU) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 5,144 | 4,797 | 5,438 | 6,056 | | - | - | - | - |
| EBITDA | 1,838 | 1,829 | 2,337 | 2,724 | | - | - | - | - |
| Net Income | 491 | 405 | 803 | 988 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 6,969 | 7,118 | 8,267 | 7,624 | | - | - | - | - |
| Short Term Debt | 462 | 287 | 384 | 270 | | - | - | - | - |
| Long Term Debt | 5,699 | 5,736 | 6,896 | 6,906 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 26.6% | 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 |
|---|
| QUALCOMM Incorporated ($QCOM) | -6.8% | -5.4% | 2.0% | 6.8% | - |
| O2Micro International Limited ($OIIM) | 3.1% | 6.4% | 4.2% | -2.8% | - |
| SMART Global Holdings, Inc. ($SGH) | - | 42.5% | 69.3% | -6.0% | -7.4% |
| Himax Technologies, Inc. ($HIMX) | 16.1% | -14.7% | 5.6% | -7.2% | - |
| Skyworks Solutions, Inc. ($SWKS) | 0.9% | 11.0% | 5.9% | -12.7% | - |
| |
|---|
| Median (6 companies) | 6.1% | 10.9% | 4.4% | -6.6% | -7.4% |
|---|
| Micron Technology, Inc. ($MU) | - | 63.9% | 49.5% | -23.0% | -8.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| QUALCOMM Incorporated ($QCOM) | 58.6% | 56.1% | 54.9% | 64.6% | - |
| O2Micro International Limited ($OIIM) | 51.7% | 51.1% | 51.0% | 52.5% | - |
| Skyworks Solutions, Inc. ($SWKS) | 50.6% | 50.4% | 50.4% | 47.5% | - |
| Sequans Communications S.A. ($SQNS) | 43.8% | 43.8% | 39.5% | 40.1% | - |
| Himax Technologies, Inc. ($HIMX) | 24.2% | 24.4% | 23.3% | 20.5% | - |
| |
|---|
| Median (6 companies) | 48.0% | 49.1% | 50.2% | 43.8% | 19.3% |
|---|
| Micron Technology, Inc. ($MU) | 20.2% | 41.5% | 58.9% | 45.7% | 30.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Skyworks Solutions, Inc. ($SWKS) | 41.5% | 41.3% | 41.8% | 39.2% | - |
| QUALCOMM Incorporated ($QCOM) | 33.6% | 18.3% | 10.1% | 37.4% | - |
| SMART Global Holdings, Inc. ($SGH) | 7.0% | 11.4% | 15.2% | 9.8% | 6.9% |
| Himax Technologies, Inc. ($HIMX) | 9.1% | 3.6% | 3.3% | 0.9% | - |
| O2Micro International Limited ($OIIM) | -7.4% | -7.6% | -10.3% | -4.7% | - |
| |
|---|
| Median (6 companies) | 9.2% | 10.7% | 9.3% | 5.3% | 6.9% |
|---|
| Micron Technology, Inc. ($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. ($SQNS) | 11.8% | 13.3% | 22.9% | 29.6% | - |
| Himax Technologies, Inc. ($HIMX) | 1.0% | 5.8% | 10.5% | 14.9% | - |
| Skyworks Solutions, Inc. ($SWKS) | 5.8% | 8.3% | 10.9% | 11.8% | - |
| QUALCOMM Incorporated ($QCOM) | 2.3% | 3.1% | 3.4% | 3.7% | - |
| SMART Global Holdings, Inc. ($SGH) | 2.6% | 2.5% | 2.0% | 2.8% | 2.2% |
| |
|---|
| Median (6 companies) | 3.6% | 4.7% | 4.2% | 7.7% | 2.2% |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| QUALCOMM Incorporated ($QCOM) | 15.8% | 5.7% | 2.2% | 38.0% | - |
| Skyworks Solutions, Inc. ($SWKS) | 33.7% | 33.1% | 32.3% | 23.2% | - |
| SMART Global Holdings, Inc. ($SGH) | 2.5% | 21.5% | 51.7% | 20.3% | 8.4% |
| Himax Technologies, Inc. ($HIMX) | 9.4% | 1.3% | 0.6% | -2.9% | - |
| O2Micro International Limited ($OIIM) | -7.0% | -7.9% | -10.4% | -8.0% | - |
| |
|---|
| Median (6 companies) | 1.7% | 3.2% | 2.2% | 8.7% | 8.4% |
|---|
| Micron Technology, Inc. ($MU) | 0.8% | 21.5% | 42.9% | 18.5% | 6.8% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Himax Technologies, Inc. ($HIMX) | -0.6x | 0.4x | 3.3x | 20.4x | - |
| SMART Global Holdings, Inc. ($SGH) | 4.9x | 1.8x | 0.9x | 0.9x | 0.8x |
| QUALCOMM Incorporated ($QCOM) | 0.7x | -3.2x | 2.0x | 0.5x | - |
| Skyworks Solutions, Inc. ($SWKS) | -0.8x | -1.1x | -0.5x | -0.6x | - |
| |
|---|
| Median (4 companies) | -0.0x | 0.4x | 0.3x | 0.7x | 0.8x |
|---|
| Micron Technology, Inc. ($MU) | 1.8x | 0.6x | -0.1x | -0.1x | -0.1x |
