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. Overall the company's long term financial model is characterised by the following facts:
- 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 7.7%
- 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%
- It operates with high leverage: Net Debt/EBITDA is 0.8x while industry average is 0.3x
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 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. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.9 pp from -6.2% to -1.2% 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 FY2016-FY2020 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 the last 5 years Net Income margin topped in FY2018 at 9.3% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 2.2%. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. For the last three years the average CAPEX/Revenue 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 jumped on 53.7%. Net Debt/EBITDA pursued a declining trend in FY2016-FY2020.
The company has no short term refinancing risk: short term debt is zero.
Management team
The company's CEO is Mark W Adams. Mark W Adams has 6 months tenure with the company. SMART Global Holdings, Inc.'s CFO is Jack A Pacheco. Jack A Pacheco has 3 years tenure 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 |
|---|
| 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 ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 10.9% | 4.4% | -3.0% | 2.8% |
|---|
| SMART Global Holdings, Inc. ($SGH) | - | 42.5% | 69.3% | -6.0% | -7.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| 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. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| |
|---|
| Median (43 companies) | 48.0% | 49.1% | 50.4% | 50.7% | 49.4% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 20.0% | 21.3% | 22.6% | 19.6% | 19.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| 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. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 13.6% | 17.4% |
|---|
| SMART Global Holdings, Inc. ($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% | 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. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (40 companies) | 3.7% | 4.7% | 4.4% | 3.8% | 4.0% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 2.6% | 2.5% | 2.0% | 2.8% | 2.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| 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 ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 2.2% | 2.2% | 5.3% |
|---|
| SMART Global Holdings, Inc. ($SGH) | 2.5% | 21.5% | 51.7% | 20.3% | 8.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| SunPower Corporation ($SPWR) | - | - | - | - | 8.2x |
| MACOM Technology Solutions Holdings, Inc. ($MTSI) | 3.0x | 7.2x | 98.6x | - | 6.6x |
| Rambus, Inc. ($RMBS) | -0.1x | -0.1x | - | - | 5.9x |
| Inphi Corporation ($IPHI) | 4.5x | 33.7x | 32.2x | 4.5x | 3.4x |
| Canadian Solar Inc. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | -0.0x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| SMART Global Holdings, Inc. ($SGH) | 4.9x | 1.8x | 0.9x | 0.9x | 0.8x |
