DASAN Zhone Solutions, Inc. reports 160% EBITDA decline in 2020 and 2.0% Revenue decline
02/22/2021 • About DASAN Zhone Solutions, Inc. (
$DZSI) • By InTwits
DASAN Zhone Solutions, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -0.7%
- DASAN Zhone Solutions, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has unprofitable business model: ROIC is -7.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
DASAN Zhone Solutions, Inc.'s Revenue decreased on 2.0%. Annual revenue decline showed slowdown in 20Q4 - revenue surged on 14.3%. During the last 5 years Revenue growth topped in 2017 at 64.4% and was decelerating since that time. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.7 pp from 1.1% to -0.66% in 2020. During the last 5 years EBITDA Margin topped in 2018 at 3.5% and was declining since that time.
Gross Margin showed almost no change in 2020. SG&A as a % of Revenue increased slightly on 1.4 pp from 19.9% to 21.3% in 2020. During the last 5 years SG&A as a % of Revenue bottomed in 2018 at 17.1% and was growing since that time.
Net Income margin decreased on 3.3 pp from -4.4% to -7.7% in 2020. During 2016-2020 Net Income margin topped in 2018 at 0.98% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In 2020 DASAN Zhone Solutions, Inc. had CAPEX/Revenue of 0.76%. The company's CAPEX/Revenue showed almost no change from 2017 to 2020. For the last three years the average CAPEX/Revenue was 0.64%. During the last 5 years CAPEX as a % of Revenue bottomed in 2018 at 0.42% and was growing since that time.
Return on investment
The company operates at negative ROIC (-7.0%) and ROE (-23.1%). ROIC decreased on 5.1 pp from -1.9% to -7.0% in 2020. ROE decreased on 8.4 pp from -14.6% to -23.1% in 2020. During 2016-2020 ROIC topped in 2018 at 6.3% and was declining since that time. During the last 5 years ROE topped in 2018 at 3.7% and was declining since that time.
Leverage (Debt)
Debt level is -2.8x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 9.1x from 9.1x to in 2020. Debt increased on 8.7% while cash jumped on 57.3%.
DASAN Zhone Solutions, Inc. has no short term refinancing risk: cash is higher than short term debt (247.4%).
Management team
The company's CEO Charles D Vogt "Charlie" has spent 7 months with the company. Thomas J Cancro "Tom" is a the company's CFO. Thomas J Cancro "Tom" has spent 1 year at the company.
Financial and operational results
FY ended 12/31/2020
DASAN Zhone Solutions, Inc. ($DZSI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 150.3 | 247.1 | 282.3 | 306.9 | 300.6 | -2.0% |
| Gross Profit | 40.9 | 82.8 | 91.3 | 100.1 | 96.9 | -3.2% |
| SG&A | 27.3 | 44.6 | 48.3 | 61.2 | 64.0 | 4.6% |
| EBITDA | -9.9 | 4.5 | 9.9 | 3.3 | -2.0 | -160.3% |
| Net Income | -15.3 | 1.1 | 2.8 | -13.5 | -23.1 | |
Balance Sheet
|
|---|
| Cash | 17.9 | 17.5 | 27.7 | 28.7 | 45.2 | 57.3% |
| Short Term Debt | 17.6 | 19.8 | 31.8 | 21.7 | 18.3 | -15.7% |
| Long Term Debt | 6.8 | 9.8 | 14.1 | 37.2 | 45.7 | 22.9% |
Cash flow
|
|---|
| Capex | 1.3 | 1.1 | 1.2 | 2.3 | 2.3 | -1.9% |
Ratios
|
|---|
| Revenue growth | 8.0% | 64.4% | 14.3% | 8.7% | -2.0% | |
| EBITDA growth | 527.8% | -146.0% | 117.7% | -66.6% | -160.3% | |
|
|---|
| Gross Margin | 27.2% | 33.5% | 32.3% | 32.6% | 32.2% | -0.4% |
| EBITDA Margin | -6.6% | 1.8% | 3.5% | 1.1% | -0.7% | -1.7% |
| SG&A, % of revenue | 18.2% | 18.1% | 17.1% | 19.9% | 21.3% | 1.4% |
| Net Income Margin | -10.2% | 0.4% | 1.0% | -4.4% | -7.7% | -3.3% |
| CAPEX, % of revenue | 0.9% | 0.4% | 0.4% | 0.8% | 0.8% | 0.0% |
|
|---|
| ROIC | -16.7% | 0.7% | 6.3% | -1.9% | -7.0% | -5.1% |
| ROE | -28.4% | 1.5% | 3.7% | -14.6% | -23.1% | -8.4% |
| Net Debt/EBITDA | | 2.7x | 1.8x | 9.1x | |
DASAN Zhone Solutions, Inc. ($DZSI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 47 | 71 | 94 | 89 | | -35.9% | -15.7% | 31.4% | 14.3% |
| EBITDA | -5 | 4 | 5 | -6 | | -387.3% | -19.5% | - | - |
| Net Income | -9 | -0 | -0 | -14 | | - | -106.5% | - | - |
Balance Sheet
|
|---|
| Cash | 26 | 38 | 31 | 45 | | 26.7% | -32.7% | -34.6% | 57.3% |
| Short Term Debt | 16 | 33 | 28 | 18 | | -44.4% | 2.0% | -27.3% | -15.7% |
| Long Term Debt | 44 | 45 | 44 | 46 | | -9.1% | -5.7% | 25.6% | 22.9% |
Ratios
|
|---|
| Gross Margin | 33.7% | 33.7% | 30.0% | 32.6% | | 0.1% | 0.5% | -1.0% | 0.0% |
| EBITDA Margin | -10.4% | 6.2% | 5.0% | -6.8% | | -12.7% | -0.3% | 7.1% | -3.8% |
| Net Income Margin | -18.5% | -0.2% | -0.1% | -15.8% | | -16.3% | -3.1% | 5.5% | -2.7% |
Peers in Communications Equipment
Below we provide DASAN Zhone Solutions, Inc. benchmarking against other companies in Communications Equipment 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 |
|---|
| 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% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 2.8% | 3.7% | 4.4% |
|---|
| DASAN Zhone Solutions, Inc. ($DZSI) | - | 64.4% | 14.3% | 8.7% | -2.0% |
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. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| DASAN Zhone Solutions, Inc. ($DZSI) | 27.2% | 33.5% | 32.3% | 32.6% | 32.2% |
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. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 5.4% | 5.0% | 9.3% |
|---|
| DASAN Zhone Solutions, Inc. ($DZSI) | -6.6% | 1.8% | 3.5% | 1.1% | -0.7% |
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. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.2% |
|---|
| DASAN Zhone Solutions, Inc. ($DZSI) | 0.9% | 0.4% | 0.4% | 0.8% | 0.8% |
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. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.3% | 1.2% | 2.3% |
|---|
| DASAN Zhone Solutions, Inc. ($DZSI) | -16.7% | 0.7% | 6.3% | -1.9% | -7.0% |
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 |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.9x | -0.8x | -0.3x | -0.4x | -0.4x |
|---|
