SMART Global Holdings, Inc. reports 34.3% EBITDA decline in 2020 and 2.8 pp EBITDA Margin decline from 9.8% to 6.9%
10/01/2020 • About SMART Global Holdings, Inc. (
$SGH) • By InTwits
SMART Global Holdings, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 6.9% in FY2020, 9.8% in FY2019, 15.2% in FY2018, 11.4% in FY2017, 7.0% in FY2016
- SMART Global Holdings, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.4%. At the same time it's in pair with industry average of 6.0%
- CAPEX is quite volatile: $1m in FY2020, $1m in FY2019, $0m in FY2018, $2m in FY2017, $0m in FY2016
- The company has business model with low profitability: ROIC is 8.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SMART Global Holdings, Inc.'s Revenue decreased on 7.4%. Annual revenue decline showed slowdown in FY20Q4 - revenue increased on 6.7%. During FY2016-FY2020 Revenue growth topped in FY2018 at 69.3% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 2.8 pp from 9.8% to 6.9% in FY2020. During the last 5 years EBITDA Margin topped in FY2018 at 15.2% and was declining since that time.
Gross Margin showed almost no change in FY2020. During the last 5 years Gross Margin topped in FY2018 at 22.6% and was declining since that time. SG&A as a % of Revenue increased on 2.1 pp from 8.5% to 10.6% in FY2020. During the last 5 years SG&A as a % of Revenue bottomed in FY2018 at 6.6% and was growing since that time.
Net Income margin decreased on 4.3 pp from 4.2% to -0.10% in FY2020. During FY2016-FY2020 Net Income margin topped in FY2018 at 9.3% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.2% in FY2020. CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 2.3%.
Return on investment
The company operates at low but positive ROIC (8.4%) and negative ROE (-0.4%). ROIC dropped on 11.8 pp from 20.3% to 8.4% in FY2020. ROE dropped on 22.7 pp from 22.3% to -0.41% in FY2020. During FY2016-FY2020 ROIC topped in FY2018 at 51.7% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.8x and Debt / EBITDA is 2.8x. Net Debt / EBITDA decreased on 0.1x from 0.9x to 0.8x in FY2020. Debt increased on 4.8% while cash surged on 53.7%. Net Debt/EBITDA followed a declining trend in the last 5 years.
The company has no short term refinancing risk: short term debt is zero.
Management team
SMART Global Holdings, Inc.'s CEO is Mark W Adams. Mark W Adams has 1 month tenure with the company. Jack A Pacheco is a the company's CFO. Jack A Pacheco has spent 2 years at the company.
Financial and operational results
SMART Global Holdings, Inc. ($SGH) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 534 | 761 | 1,289 | 1,212 | 1,122 | -7.4% |
| Gross Profit | 107 | 162 | 292 | 238 | 216 | -8.9% |
| SG&A | 57 | 67 | 85 | 103 | 120 | 15.8% |
| EBITDA | 38 | 87 | 196 | 118 | 78 | -34.3% |
| Net Income | -20 | -8 | 119 | 51 | -1 | -102.2% |
Balance Sheet
|
|---|
| Cash | 59 | 22 | 31 | 98 | 151 | 53.7% |
| Short Term Debt | 17 | 23 | 27 | 24 | 0 | -100.0% |
| Long Term Debt | 226 | 154 | 184 | 182 | 216 | 18.6% |
Cash flow
|
|---|
| Capex | 14 | 19 | 26 | 33 | 24 | -27.4% |
Ratios
|
|---|
| Revenue growth | -16.9% | 42.5% | 69.3% | -6.0% | -7.4% | |
| EBITDA growth | -13.3% | 131.3% | 125.5% | -39.8% | -34.3% | |
|
|---|
| Gross Margin | 20.0% | 21.3% | 22.6% | 19.6% | 19.3% | -0.3% |
| EBITDA Margin | 7.0% | 11.4% | 15.2% | 9.8% | 6.9% | -2.8% |
| SG&A, % of revenue | 10.8% | 8.8% | 6.6% | 8.5% | 10.6% | 2.1% |
| Net Income Margin | -3.7% | -1.0% | 9.3% | 4.2% | -0.1% | -4.3% |
| CAPEX, % of revenue | 2.6% | 2.5% | 2.0% | 2.8% | 2.2% | -0.6% |
|
|---|
| ROIC | 2.5% | 21.5% | 51.7% | 20.3% | 8.4% | -11.8% |
| ROE | | | 88.6% | 22.3% | -0.4% | -22.7% |
| Net Debt/EBITDA | 4.9x | 1.8x | 0.9x | 0.9x | 0.8x | -0.1x |
SMART Global Holdings, Inc. ($SGH) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 272 | 272 | 281 | 297 | | -30.9% | -10.5% | 19.4% | 6.7% |
| EBITDA | 17 | 19 | 21 | 26 | | -68.9% | -34.5% | 45.7% | 26.2% |
| Net Income | 0 | -10 | 1 | 8 | | -99.3% | -176.0% | -57.6% | 33.8% |
Balance Sheet
|
|---|
| Cash | 111 | 142 | 132 | 151 | | 76.9% | 49.1% | 4.6% | 53.7% |
| Short Term Debt | 28 | 7 | 6 | 0 | | 179.0% | -54.6% | -68.7% | -100.0% |
| Long Term Debt | 201 | 216 | 215 | 216 | | 0.1% | 11.0% | 14.3% | 18.6% |
Ratios
|
|---|
| Gross Margin | 20.0% | 18.9% | 19.3% | 19.0% | | -1.6% | 0.1% | 1.0% | 0.2% |
| EBITDA Margin | 6.2% | 7.1% | 7.4% | 8.7% | | -7.6% | -2.6% | 1.3% | 1.3% |
| Net Income Margin | 0.1% | -3.6% | 0.3% | 2.5% | | -7.8% | -7.8% | -0.5% | 0.5% |
Peers in Semiconductors
Below we provide SMART Global Holdings, Inc. benchmarking against other companies in Semiconductors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
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% | - |
| Himax Technologies, Inc. ($HIMX) | 16.1% | -14.7% | 5.6% | -7.2% | - |
| Skyworks Solutions, Inc. ($SWKS) | 0.9% | 11.0% | 5.9% | -12.7% | - |
| Micron Technology, Inc. ($MU) | - | 63.9% | 49.5% | -23.0% | -8.4% |
| |
|---|
| Median (6 companies) | 6.1% | 10.9% | 4.4% | -9.9% | -8.4% |
|---|
| SMART Global Holdings, Inc. ($SGH) | - | 42.5% | 69.3% | -6.0% | -7.4% |
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. ($SWKS) | 50.6% | 50.4% | 50.4% | 47.5% | - |
| Micron Technology, Inc. ($MU) | 20.2% | 41.5% | 58.9% | 45.7% | 30.6% |
| Sequans Communications S.A. ($SQNS) | 43.8% | 43.8% | 39.5% | 40.1% | - |
| |
|---|
| Median (6 companies) | 48.0% | 49.1% | 50.4% | 46.6% | 30.6% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 20.0% | 21.3% | 22.6% | 19.6% | 19.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 25.4% | 47.9% | 65.0% | 54.7% | 40.4% |
| Skyworks Solutions, Inc. ($SWKS) | 41.5% | 41.3% | 41.8% | 39.2% | - |
| QUALCOMM Incorporated ($QCOM) | 33.6% | 18.3% | 10.1% | 37.4% | - |
| Himax Technologies, Inc. ($HIMX) | 9.1% | 3.6% | 3.3% | 0.9% | - |
| O2Micro International Limited ($OIIM) | -7.4% | -7.6% | -10.3% | -4.7% | - |
| |
|---|
| Median (6 companies) | 9.2% | 10.7% | 9.3% | 19.1% | 40.4% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 7.0% | 11.4% | 15.2% | 9.8% | 6.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Micron Technology, Inc. ($MU) | 46.9% | 23.3% | 29.2% | 41.8% | 38.4% |
| Sequans Communications S.A. ($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 ($QCOM) | 2.3% | 3.1% | 3.4% | 3.7% | - |
| |
|---|
| Median (6 companies) | 3.7% | 4.7% | 4.4% | 13.4% | 38.4% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 2.6% | 2.5% | 2.0% | 2.8% | 2.2% |
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% | - |
| Micron Technology, Inc. ($MU) | 0.8% | 21.5% | 42.9% | 18.5% | 6.8% |
| Himax Technologies, Inc. ($HIMX) | 9.4% | 1.3% | 0.6% | -2.9% | - |
| O2Micro International Limited ($OIIM) | -7.0% | -7.9% | -10.4% | -8.0% | - |
| |
|---|
| Median (6 companies) | 1.4% | 3.2% | 2.2% | 7.8% | 6.8% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 2.5% | 21.5% | 51.7% | 20.3% | 8.4% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Himax Technologies, Inc. ($HIMX) | -0.6x | 0.4x | 3.3x | 20.4x | - |
| QUALCOMM Incorporated ($QCOM) | 0.7x | -3.2x | 2.0x | 0.5x | - |
| Micron Technology, Inc. ($MU) | 1.8x | 0.6x | -0.1x | -0.1x | -0.1x |
| Skyworks Solutions, Inc. ($SWKS) | -0.8x | -1.1x | -0.5x | -0.6x | - |
| |
|---|
| Median (4 companies) | -0.0x | 0.4x | 0.3x | 0.2x | -0.1x |
|---|
| SMART Global Holdings, Inc. ($SGH) | 4.9x | 1.8x | 0.9x | 0.9x | 0.8x |
