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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. 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. $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
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. ($HIMX)-0.6x0.4x3.3x20.4x-
SMART Global Holdings, Inc. ($SGH)4.9x1.8x0.9x0.9x0.8x
QUALCOMM Incorporated ($QCOM)0.7x-3.2x2.0x0.5x-
Skyworks Solutions, Inc. ($SWKS)-0.8x-1.1x-0.5x-0.6x-
 
Median (4 companies)-0.0x0.4x0.3x0.7x0.8x
Micron Technology, Inc. ($MU)1.8x0.6x-0.1x-0.1x-0.1x