Analog Devices, Inc. Net Income dropped on 10.4% and EBITDA Margin showed almost no change
11/24/2020 • About Analog Devices, Inc. (
$ADI) • By InTwits
Analog Devices, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Analog Devices, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $294m in FY2020, $217m in FY2019, $163m in FY2018, $113m in FY2017, $77m in FY2016
- In the last 5 years the company invested considerably less than D&A: $1,027m vs. $1,593m
- The company has business model with low profitability: ROIC is 8.4%
- It operates with high leverage: Net Debt/EBITDA is 1.9x 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 6.5%. Annual revenue decline showed slowdown in FY20Q4 - revenue increased on 5.8%. During FY2016-FY2020 Revenue growth topped in FY2017 at 49.3% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 4.9 pp from 28.6% to 23.7% in FY2020.
Gross Margin decreased slightly on 1.1 pp from 67.0% to 65.9% in FY2020. SG&A as a % of Revenue increased slightly on 0.96 pp from 10.8% to 11.8% in FY2020.
Net Income margin decreased slightly on 0.96 pp from 22.8% to 21.8% in FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 the company had CAPEX/Revenue of 3.0%. The company showed small CAPEX/Revenue decline of 1.0 pp from 4.0% in FY2017 to 3.0% in FY2020. It's average CAPEX/Revenue for the last three years was 3.9%. During FY2016-FY2020 CAPEX as a % of Revenue topped in FY2019 at 4.6%.
Return on investment
The company operates at low ROIC (8.4%) and ROE (10.3%). ROIC decreased slightly on 0.97 pp from 9.4% to 8.4% in FY2020. ROE decreased slightly on 1.6 pp from 11.9% to 10.3% in FY2020.
Leverage (Debt)
Debt level is 1.9x Net Debt / EBITDA and 2.3x Debt / EBITDA. Net Debt / EBITDA decreased on 0.045x from 1.9x to 1.9x in FY2020. Debt showed almost no change in FY2020 while cash jumped on 62.9%. During the last 5 years Net Debt/EBITDA topped in FY2017 at 4.2x and was declining since that time.
Analog Devices, Inc. has no short term refinancing risk: cash is higher than short term debt (2,644.7%).
Valuation and dividends
Analog Devices, Inc.'s trades at EV/EBITDA 23.9x and P/E 42.5x.
Management team
Vincent T Roche is a Analog Devices, Inc.'s CEO. Vincent T Roche has spent 7 years with the company. Analog Devices, Inc.'s CFO is Prashanth Mahendra-Rajah. Prashanth Mahendra-Rajah has 3 years tenure at the company.
Financial and operational results
FY ended 10/31/2020
Analog Devices, Inc. ($ADI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 3,421 | 5,108 | 6,201 | 5,991 | 5,603 | -6.5% |
| Gross Profit | 2,227 | 3,062 | 4,233 | 4,014 | 3,690 | -8.1% |
| SG&A | 461 | 691 | 696 | 648 | 660 | 1.8% |
| EBITDA | 1,238 | 1,639 | 2,681 | 2,522 | 2,355 | -6.6% |
| EBIT | 1,028 | 1,055 | 1,882 | | | |
| Interest expence | 89 | 251 | 254 | | | |
| Tax | 95 | 101 | 143 | | | |
| Net Income | 862 | 727 | 1,495 | 1,363 | 1,221 | -10.4% |
| Stock Based Compensation | 63 | 104 | 151 | | | |
Balance Sheet
|
|---|
| Cash | 921 | 1,048 | 817 | 648 | 1,056 | 62.9% |
| Accounts Receivable | 478 | 689 | 640 | | | |
| Inventory | 377 | 551 | 587 | | | |
| Accounts Payable | 171 | 237 | 261 | | | |
| Short Term Debt | 0 | 300 | 67 | 300 | 40 | -86.7% |
| Long Term Debt | 1,732 | 7,551 | 6,266 | 5,192 | 5,434 | 4.6% |
Cash flow
|
|---|
| Capex | 127 | 204 | 255 | 275 | 166 | -39.8% |
| Dividends | 513 | 602 | 703 | | | |
| Acquisitions | 83 | 9,633 | 53 | | | |
Ratios
|
|---|
| Revenue growth | -0.4% | 49.3% | 21.4% | -3.4% | -6.5% | |
| EBITDA growth | 17.6% | 32.4% | 63.5% | -5.9% | -6.6% | |
|
|---|
| Gross Margin | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% | -1.1% |
| EBITDA Margin | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% | -0.1% |
| EBIT Margin | 30.0% | 20.7% | 30.3% | | |
| SG&A, % of revenue | 13.5% | 13.5% | 11.2% | 10.8% | 11.8% | 1.0% |
| SBC, % of revenue | 1.9% | 2.0% | 2.4% | | |
| Net Income Margin | 25.2% | 14.2% | 24.1% | 22.8% | 21.8% | -1.0% |
| CAPEX, % of revenue | 3.7% | 4.0% | 4.1% | 4.6% | 3.0% | -1.6% |
|
|---|
| ROIC | 15.7% | 7.9% | 9.9% | 9.4% | 8.4% | -1.0% |
| ROE | 16.8% | 9.5% | 14.1% | 11.9% | 10.3% | -1.6% |
| Net Debt/EBITDA | 0.7x | 4.2x | 2.1x | 1.9x | 1.9x | -0.0x |
| Interest expence / Average debt | 5.1% | 5.2% | 3.6% | | | |
People
|
|---|
| Insider ownership | 0.3% | 0.3% | 0.3% | | | |
| Employees | 10,000 | 15,300 | 15,800 | | | |
| Revenue/Employee, th. $ | 342 | 334 | 392 | | | |
Analog Devices, Inc. ($ADI) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,304 | 1,317 | 1,456 | 1,526 | | -15.4% | -13.7% | -1.6% | 5.8% |
| EBITDA | 488 | 559 | 632 | 676 | | -25.6% | -16.7% | -2.8% | 24.4% |
| Net Income | 204 | 268 | 363 | 387 | | -42.6% | -27.2% | 0.1% | 39.2% |
Balance Sheet
|
|---|
| Cash | 654 | 785 | 1,090 | 1,056 | | 8.0% | 10.0% | 78.1% | 62.9% |
| Short Term Debt | 783 | 486 | 487 | 40 | | - | 29.8% | 18.3% | -86.7% |
| Long Term Debt | 5,011 | 5,422 | 5,426 | 5,434 | | -19.6% | -3.4% | 2.8% | 4.6% |
Ratios
|
|---|
| Gross Margin | 65.1% | 64.3% | 66.8% | 67.0% | | -2.4% | -3.5% | -0.6% | 1.7% |
| EBITDA Margin | 37.4% | 42.4% | 43.4% | 44.3% | | -5.2% | -1.5% | -0.5% | 6.6% |
| Net Income Margin | 15.6% | 20.3% | 24.9% | 25.3% | | -7.4% | -3.8% | 0.4% | 6.1% |
Peers in Semiconductors
Below we provide Analog Devices, 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 ($KOPN) | - | 23.0% | -12.1% | 20.7% | 35.9% |
| |
|---|
| Median (43 companies) | 1.2% | 10.9% | 4.4% | -3.0% | 2.8% |
|---|
| Analog Devices, Inc. ($ADI) | - | 49.3% | 21.4% | -3.4% | -6.5% |
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. ($RMBS) | 80.1% | 79.9% | 76.8% | 77.1% | 75.0% |
| MoSys, Inc. ($MOSY) | 49.0% | 46.9% | 61.8% | 61.0% | 65.7% |
| Texas Instruments Incorporated ($TXN) | 61.8% | 64.3% | 65.1% | 63.7% | 64.1% |
| |
|---|
| Median (43 companies) | 47.2% | 48.6% | 50.2% | 50.4% | 49.2% |
|---|
| Analog Devices, Inc. ($ADI) | 65.1% | 59.9% | 68.3% | 67.0% | 65.9% |
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% |
| Micron Technology, Inc. ($MU) | 25.4% | 47.9% | 65.0% | 54.7% | 40.4% |
| |
|---|
| Median (41 companies) | 9.2% | 10.7% | 9.3% | 12.9% | 17.3% |
|---|
| Analog Devices, Inc. ($ADI) | 36.2% | 32.1% | 43.2% | 42.1% | 42.0% |
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. ($POWI) | 3.1% | 7.5% | 5.9% | 5.7% | 14.5% |
| |
|---|
| Median (40 companies) | 3.6% | 4.7% | 4.4% | 3.7% | 4.0% |
|---|
| Analog Devices, Inc. ($ADI) | 3.7% | 4.0% | 4.1% | 4.6% | 3.0% |
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 ($NVDA) | 13.1% | 27.3% | 35.3% | 36.9% | 22.7% |
| |
|---|
| Median (45 companies) | 1.4% | 3.2% | 2.2% | 2.2% | 5.3% |
|---|
| Analog Devices, Inc. ($ADI) | 15.7% | 7.9% | 9.9% | 9.4% | 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. ($CSIQ) | 11.3x | 6.8x | 2.7x | 3.4x | 3.3x |
| |
|---|
| Median (31 companies) | -0.0x | 0.4x | 0.3x | 0.5x | 0.1x |
|---|
| Analog Devices, Inc. ($ADI) | 0.7x | 4.2x | 2.1x | 1.9x | 1.9x |
