Casa Systems, Inc. EBITDA surged on 653% and EBITDA Margin increased on 8.7 pp from 2.0% to 10.7%
02/18/2021 • About Casa Systems, Inc. (
$CASA) • By InTwits
Casa Systems, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 10.7% in 2020, 2.0% in 2019, 29.8% in 2018, 40.9% in 2017, 38.2% in 2016
- Casa Systems, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's in pair with industry average of 7.3%
- CAPEX is quite volatile: $23m in 2020, $11m in 2019, $15m in 2018, $7m in 2017, $10m in 2016
- The company has potentially unprofitable business model: ROIC is 6.7%
- It operates with high leverage: Net Debt/EBITDA is 3.2x while industry average is 0.1x
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 jumped on 39.3%. Revenue growth showed slowdown in 20Q4 - it was 6.8% YoY. During 2016-2020 Revenue growth bottomed in 2018 at -15.5% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.1 pp from -6.2% to 0.91% in 2020.
Gross Margin decreased on 6.6 pp from 57.6% to 51.0% in 2020. During 2016-2020 Gross Margin topped in 2017 at 73.4% and was declining since that time. SG&A as a % of Revenue decreased on 7.9 pp from 31.3% to 23.4% in 2020. During the last 5 years SG&A as a % of Revenue topped in 2019 at 31.3%.
Net Income margin jumped on 23.4 pp from -17.1% to 6.3% in 2020. During the last 5 years Net Income margin bottomed in 2019 at -17.1%.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 1.3% in 2020. The company's CAPEX/Revenue decreased slightly on 0.68 pp from 2.0% in 2017 to 1.3% in 2020. For the last three years the average CAPEX/Revenue was 2.3%.
Return on investment
The company operates at good ROE (43.2%) while ROIC is low (6.7%). ROIC increased on 9.3 pp from -2.6% to 6.7% in 2020. ROE jumped on 128 pp from -85.0% to 43.2% in 2020. ROIC stuck to a declining trend at -11.5 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 3.2x Net Debt / EBITDA and 6.9x Debt / EBITDA. Net Debt / EBITDA dropped on 28.9x from 32.1x to 3.2x in 2020. Debt decreased slightly on 0.69% while cash jumped on 38.6%.
Casa Systems, Inc. has no short term refinancing risk: cash is higher than short term debt (1,037.9%).
Valuation and dividends
Casa Systems, Inc.'s trades at EV/EBITDA 20.0x and P/E 28.6x.
Management team
Jerry Guo is a Casa Systems, Inc.'s CEO. Jerry Guo has spent 18 years with the company. Scott Bruckner is a the company's CFO. Scott Bruckner has spent 6 months years at the company.
Financial and operational results
FY ended 12/31/2020
Casa Systems, Inc. ($CASA) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 316.1 | 351.6 | 297.1 | 282.3 | 393.2 | 39.3% |
| Gross Profit | 218.3 | 258.1 | 218.0 | 162.5 | 200.6 | 23.4% |
| SG&A | 54.3 | 61.2 | 68.0 | 88.3 | 92.0 | 4.2% |
| EBITDA | 120.8 | 144.0 | 88.4 | 5.6 | 42.2 | 652.9% |
| Net Income | 88.7 | 88.5 | 73.0 | -48.2 | 24.8 | |
Balance Sheet
|
|---|
| Cash | 329.6 | 260.8 | 280.6 | 113.6 | 157.5 | 38.6% |
| Short Term Debt | 2.1 | 2.2 | 2.2 | 8.5 | 15.2 | 78.0% |
| Long Term Debt | 297.6 | 295.5 | 293.3 | 284.8 | 276.1 | -3.0% |
Cash flow
|
|---|
| Capex | 7.4 | 7.0 | 8.0 | 8.6 | 5.2 | -40.0% |
Ratios
|
|---|
| Revenue growth | 16.0% | 11.2% | -15.5% | -5.0% | 39.3% | |
| EBITDA growth | 11.6% | 19.2% | -38.6% | -93.7% | 652.9% | |
|
|---|
| Gross Margin | 69.1% | 73.4% | 73.4% | 57.6% | 51.0% | -6.6% |
| EBITDA Margin | 38.2% | 40.9% | 29.8% | 2.0% | 10.7% | 8.7% |
| SG&A, % of revenue | 17.2% | 17.4% | 22.9% | 31.3% | 23.4% | -7.9% |
| Net Income Margin | 28.0% | 25.2% | 24.6% | -17.1% | 6.3% | 23.4% |
| CAPEX, % of revenue | 2.3% | 2.0% | 2.7% | 3.0% | 1.3% | -1.7% |
|
|---|
| ROIC | 43.2% | 39.7% | 21.9% | -2.6% | 6.7% | 9.3% |
| ROE | | | 116.8% | -85.0% | 43.2% | 128.2% |
| Net Debt/EBITDA | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x | -28.9x |
Casa Systems, Inc. ($CASA) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 84 | 83 | 106 | 121 | | 135.7% | 60.0% | 29.2% | 6.8% |
| EBITDA | 1 | 6 | 14 | 22 | | - | -6.6% | - | 45.7% |
| Net Income | 1 | -3 | 3 | 23 | | - | -334.5% | - | - |
Balance Sheet
|
|---|
| Cash | 135 | 149 | 156 | 157 | | -49.0% | 14.3% | 26.4% | 38.6% |
| Short Term Debt | 8 | 8 | 2 | 15 | | 286.9% | 282.5% | -78.0% | 78.0% |
| Long Term Debt | 284 | 284 | 290 | 276 | | -2.9% | -2.9% | 1.6% | -3.0% |
Ratios
|
|---|
| Gross Margin | 51.0% | 51.7% | 49.7% | 51.6% | | -18.0% | -23.7% | 1.8% | -1.1% |
| EBITDA Margin | 1.5% | 7.0% | 12.8% | 17.9% | | 34.4% | -5.0% | 17.4% | 4.8% |
| Net Income Margin | 1.4% | -3.6% | 3.3% | 19.2% | | 44.6% | -6.1% | 13.7% | 42.0% |
Peers in Communications Equipment
Below you can find Casa Systems, Inc. benchmarking vs. other companies in Communications Equipment 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 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Lantronix, Inc. ($LTRX) | - | 10.2% | 1.9% | 2.9% | 27.7% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 3.5% | 3.7% | 2.1% |
|---|
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| Casa Systems, Inc. ($CASA) | 69.1% | 73.4% | 73.4% | 57.6% | 51.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 5.0% | 8.8% |
|---|
| Casa Systems, Inc. ($CASA) | 38.2% | 40.9% | 29.8% | 2.0% | 10.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.2% |
|---|
| Casa Systems, Inc. ($CASA) | 2.3% | 2.0% | 2.7% | 3.0% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.3% | 1.2% | 1.9% |
|---|
| Casa Systems, Inc. ($CASA) | 43.2% | 39.7% | 21.9% | -2.6% | 6.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| EchoStar Corporation ($SATS) | 1.5x | 1.7x | 3.3x | 1.4x | 2.5x |
| |
|---|
| Median (24 companies) | -0.9x | -0.8x | -0.3x | -0.4x | -0.5x |
|---|
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
