Dolby Laboratories reports 31.1% CAPEX decline in 2020 and 6.4% Revenue decline
11/12/2020 • About Dolby Laboratories (
$DLB) • By InTwits
Dolby Laboratories reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Dolby Laboratories has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.9%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $20m in FY2020, $64m in FY2019, $36m in FY2018, $25m in FY2017, $26m in FY2016
- The company has business model with low profitability: ROIC is 9.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Dolby Laboratories's Revenue decreased on 6.4%. Revenue decline showed acceleration in FY20Q4 - it was 9.2% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.1 pp from 27.6% to 28.7% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2018 at 25.1% and was growing since that time.
Gross Margin showed almost no change in FY2020. Gross Margin followed a declining trend at -0.60 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 3.6 pp from 44.2% to 47.8% in FY2020.
Net Income margin decreased slightly on 0.64 pp from 20.5% to 19.9% in FY2020.
Investments (CAPEX, working capital and M&A)
Dolby Laboratories's CAPEX/Revenue was 5.7% in FY2020. Dolby Laboratories showed decline in CAPEX/Revenue of 3.5 pp from 9.2% in FY2017 to 5.7% in FY2020. It's average CAPEX/Revenue for the last three years was 6.8%. CAPEX as a % of Revenue declined at -0.97 pp per annum in the last 5 years.
Return on investment
The company operates at low ROIC (9.6%) and ROE (9.8%). ROIC decreased slightly on 1.8 pp from 11.4% to 9.6% in FY2020. ROE decreased slightly on 1.2 pp from 10.9% to 9.8% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.0x and Debt / EBITDA is 0.2x. Debt jumped while cash surged on 34.5%.
Dolby Laboratories has no short term refinancing risk: cash is higher than short term debt (6,774.6%).
Valuation and dividends
The company's trades at EV/EBITDA 13.9x and P/E 24.3x.
Management team
The company's CEO Kevin J Yeaman has spent 11 years with the company. Lewis Chew is a Dolby Laboratories's CFO. Lewis Chew has spent 8 years at the company.
Financial and operational results
FY ended 09/25/2020
Dolby Laboratories ($DLB) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,026 | 1,081 | 1,055 | 1,242 | 1,162 | -6.4% |
| Gross Profit | 917 | 963 | 927 | 1,081 | 1,015 | -6.1% |
| SG&A | 464 | 468 | 507 | 549 | 556 | 1.2% |
| EBITDA | 317 | 333 | 265 | 342 | 333 | -2.6% |
| EBIT | 232 | 249 | 184 | | | |
| Interest expence | 0 | 0 | 0 | | | |
| Tax | 50 | 54 | 154 | | | |
| Net Income | 186 | 202 | 42 | 255 | 231 | -9.3% |
| Stock Based Compensation | 67 | 65 | 71 | | | |
Balance Sheet
|
|---|
| Cash | 516 | 627 | 918 | 797 | 1,072 | 34.5% |
| Accounts Receivable | 76 | 74 | 137 | | | |
| Inventory | 16 | 25 | 26 | | | |
| Accounts Payable | 18 | 14 | 22 | | | |
| Short Term Debt | 0 | 0 | 0 | 0 | 16 | |
| Long Term Debt | 0 | 0 | 0 | 0 | 65 | |
Cash flow
|
|---|
| Capex | 101 | 100 | 73 | 96 | 66 | -31.1% |
| Dividends | 48 | 57 | 66 | | | |
| Acquisitions | | | 23 | | | |
Ratios
|
|---|
| Revenue growth | 5.7% | 5.4% | -2.5% | 17.7% | -6.4% | |
| EBITDA growth | 12.2% | 5.0% | -20.5% | 29.2% | -2.6% | |
|
|---|
| Gross Margin | 89.4% | 89.1% | 87.9% | 87.0% | 87.4% | 0.3% |
| EBITDA Margin | 30.9% | 30.8% | 25.1% | 27.6% | 28.7% | 1.1% |
| EBIT Margin | 22.6% | 23.0% | 17.4% | | |
| SG&A, % of revenue | 45.2% | 43.3% | 48.1% | 44.2% | 47.8% | 3.6% |
| SBC, % of revenue | 6.5% | 6.0% | 6.8% | | |
| Net Income Margin | 18.1% | 18.7% | 4.0% | 20.5% | 19.9% | -0.6% |
| CAPEX, % of revenue | 9.8% | 9.2% | 6.9% | 7.8% | 5.7% | -2.0% |
|
|---|
| ROIC | 12.2% | 12.0% | 8.4% | 11.4% | 9.6% | -1.8% |
| ROE | 9.8% | 9.8% | 1.9% | 10.9% | 9.8% | -1.2% |
| Net Debt/EBITDA | -1.6x | -1.9x | -3.5x | -2.3x | -3.0x | -0.6x |
People
|
|---|
| Insider ownership | 1.8% | 1.8% | 1.8% | | | |
| Employees | 2,030 | 2,122 | 2,151 | | | |
| Revenue/Employee, th. $ | 505 | 510 | 490 | | | |
Dolby Laboratories ($DLB) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 292 | 352 | 247 | 271 | | -3.5% | 4.0% | -18.3% | -9.2% |
| EBITDA | 74 | 132 | 64 | 57 | | -16.4% | 6.5% | 13.9% | -22.4% |
| Net Income | 49 | 88 | 67 | 27 | | -50.4% | 20.5% | 70.0% | -38.9% |
Balance Sheet
|
|---|
| Cash | 741 | 725 | 855 | 1,072 | | -6.2% | -0.2% | 19.3% | 34.5% |
| Short Term Debt | 16 | 17 | 16 | 16 | | - | - | - | - |
| Long Term Debt | 58 | 64 | 65 | 65 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 87.2% | 89.5% | 87.9% | 84.3% | | -0.0% | 0.3% | 1.0% | -0.3% |
| EBITDA Margin | 25.4% | 37.4% | 26.0% | 21.0% | | -3.9% | 0.9% | 7.3% | -3.6% |
| Net Income Margin | 16.7% | 25.2% | 27.3% | 9.9% | | -15.8% | 3.4% | 14.2% | -4.8% |
Peers in Electronic Components
Below we provide Dolby Laboratories benchmarking against other companies in Electronic Components 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 |
|---|
| Cavitation Technologies Inc ($CVAT) | - | -40.9% | 22.6% | -16.3% | 52.6% |
| IEH Corp ($IEHC) | - | 4.0% | 16.6% | 21.0% | 13.2% |
| Amphenol Corporation ($APH) | - | 11.5% | 17.0% | 0.3% | 4.5% |
| Corning Incorporated ($GLW) | - | 7.7% | 11.6% | 1.9% | -1.7% |
| CPS Technologies Corp. ($CPSH) | - | -5.0% | 48.0% | -0.5% | -2.8% |
| |
|---|
| Median (12 companies) | -10.4% | 8.3% | 16.6% | -4.3% | -4.6% |
|---|
| Dolby Laboratories ($DLB) | - | 5.4% | -2.5% | 17.7% | -6.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Cavitation Technologies Inc ($CVAT) | 93.2% | 93.5% | 90.6% | 93.7% | 97.6% |
| Airgain, Inc. ($AIRG) | 44.4% | 47.1% | 43.7% | 45.4% | 46.6% |
| Rogers Corporation ($ROG) | 38.0% | 38.8% | 35.4% | 35.0% | 36.4% |
| Belden Inc ($BDC) | 41.6% | 39.1% | 39.0% | 37.2% | 35.6% |
| Knowles Corporation ($KN) | 38.2% | 38.5% | 39.0% | 38.4% | 35.5% |
| |
|---|
| Median (12 companies) | 33.7% | 34.9% | 36.3% | 35.5% | 33.3% |
|---|
| Dolby Laboratories ($DLB) | 89.4% | 89.1% | 87.9% | 87.0% | 87.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Amphenol Corporation ($APH) | 22.6% | 23.6% | 24.2% | 24.7% | 22.6% |
| Littelfuse, Inc. ($LFUS) | 17.4% | 23.0% | 19.1% | 19.5% | 18.5% |
| Corning Incorporated ($GLW) | 27.9% | 27.3% | 25.4% | 25.7% | 18.0% |
| Rogers Corporation ($ROG) | 18.5% | 21.3% | 18.5% | 18.1% | 17.7% |
| Vishay Intertechnology, Inc. ($VSH) | 15.4% | 18.7% | 21.3% | 16.8% | 16.0% |
| |
|---|
| Median (12 companies) | 13.6% | 8.7% | 9.3% | 16.9% | 14.4% |
|---|
| Dolby Laboratories ($DLB) | 30.9% | 30.8% | 25.1% | 27.6% | 28.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Corning Incorporated ($GLW) | 12.0% | 17.8% | 19.9% | 17.2% | 12.2% |
| Rogers Corporation ($ROG) | 2.8% | 3.3% | 5.4% | 5.7% | 5.0% |
| Vishay Intertechnology, Inc. ($VSH) | 5.8% | 6.6% | 7.6% | 5.9% | 4.9% |
| Belden Inc ($BDC) | 2.3% | 2.7% | 3.8% | 5.2% | 4.8% |
| Knowles Corporation ($KN) | 4.5% | 6.9% | 9.7% | 4.8% | 4.2% |
| |
|---|
| Median (12 companies) | 3.0% | 4.2% | 3.8% | 4.5% | 3.6% |
|---|
| Dolby Laboratories ($DLB) | 9.8% | 9.2% | 6.9% | 7.8% | 5.7% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Amphenol Corporation ($APH) | 18.3% | 19.2% | 21.1% | 19.4% | 18.0% |
| CPS Technologies Corp. ($CPSH) | -10.8% | -19.4% | -11.9% | -9.3% | 13.8% |
| IEH Corp ($IEHC) | 24.2% | 19.2% | 26.1% | 36.6% | 12.8% |
| Vishay Intertechnology, Inc. ($VSH) | 9.8% | 18.4% | 27.8% | 13.2% | 9.9% |
| Littelfuse, Inc. ($LFUS) | 11.7% | 15.8% | 12.1% | 8.5% | 6.9% |
| |
|---|
| Median (12 companies) | 4.7% | 6.0% | 7.8% | 7.9% | 6.4% |
|---|
| Dolby Laboratories ($DLB) | 12.2% | 12.0% | 8.4% | 11.4% | 9.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Belden Inc ($BDC) | 2.1x | 2.6x | 2.3x | 3.1x | 4.6x |
| Corning Incorporated ($GLW) | -0.5x | 0.3x | 1.3x | 2.1x | 2.6x |
| Amphenol Corporation ($APH) | 1.4x | 1.1x | 1.2x | 1.4x | 1.1x |
| Bel Fuse Inc. ($BELFA) | - | 1.4x | 1.3x | 3.7x | 1.1x |
| Knowles Corporation ($KN) | 2.0x | 1.0x | 0.7x | 0.9x | 0.6x |
| |
|---|
| Median (11 companies) | -0.4x | -0.0x | 0.7x | 0.9x | 0.1x |
|---|
| Dolby Laboratories ($DLB) | -1.6x | -1.9x | -3.5x | -2.3x | -3.0x |
