Applied Optoelectronics, Inc. reports 45.1% CAPEX decline in 2020 while 22.9% Revenue growth
02/25/2021 • About Applied Optoelectronics, Inc. (
$AAOI) • By InTwits
Applied Optoelectronics, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -9.8%
- EBITDA Margin is quite volatile: -9.8% in 2020, -12.3% in 2019, 7.1% in 2018, 28.1% in 2017, 14.3% in 2016
- Applied Optoelectronics, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.0%. At the same time it's a lot of higher than industry average of 3.7%.
- CAPEX is quite volatile: $16m in 2020, $29m in 2019, $72m in 2018, $67m in 2017, $49m in 2016
- The company has unprofitable business model: ROIC is -11.4%
- It operates with high leverage: Net Debt/EBITDA is 2.3x 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
Applied Optoelectronics, Inc.'s Revenue surged on 22.9%. Revenue growth showed slowdown in 20Q4 - it was 7.5% YoY. 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 2.7 pp from 24.2% to 21.5% in 2020. During the last 5 years Gross Margin topped in 2017 at 43.5% and was declining since that time. SG&A as a % of Revenue decreased on 3.1 pp from 27.0% to 23.9% in 2020. SG&A as a % of Revenue followed a growing trend at 3.9 pp per annum in 2016-2020.
Net Income margin increased on 9.7 pp from -34.6% to -24.9% in 2020. Net Income margin followed a declining trend at -12.8 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In 2020 Applied Optoelectronics, Inc. had CAPEX/Revenue of 6.7%. CAPEX/Revenue dropped on 10.8 pp from 17.5% in 2017 to 6.7% in 2020. It's average CAPEX/Revenue for the last three years was 16.2%.
Return on investment
The company operates at negative ROIC (-11.4%) and ROE (-21.2%). ROIC showed almost no change in 2020. ROE increased slightly on 0.72 pp from -21.9% to -21.2% in 2020. ROE followed a declining trend at -12.2 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is . Net Debt / EBITDA didn't change in 2020. Debt increased on 8.8% while cash dropped on 27.6%.
Applied Optoelectronics, Inc. has short term refinancing risk: cash is only 78.7% of short term debt.
Management team
The company's CEO Chih-Hsiang Lin "Thompson" has spent 24 years with the company. Applied Optoelectronics, Inc.'s CFO is Stefan J Murry. Stefan J Murry has 6 years tenure at the company.
Financial and operational results
FY ended 12/31/2020
Applied Optoelectronics, Inc. ($AAOI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 260.7 | 382.3 | 267.5 | 190.9 | 234.6 | 22.9% |
| Gross Profit | 87.0 | 166.3 | 87.8 | 46.2 | 50.5 | 9.4% |
| SG&A | 32.2 | 44.0 | 48.6 | 51.5 | 56.0 | 8.6% |
| EBITDA | 37.2 | 107.3 | 18.9 | -23.5 | -22.9 | |
| Net Income | 31.2 | 74.0 | -2.1 | -66.0 | -58.5 | |
Balance Sheet
|
|---|
| Cash | 50.2 | 82.9 | 55.6 | 60.0 | 43.4 | -27.6% |
| Short Term Debt | 7.9 | 0.6 | 23.6 | 40.7 | 55.2 | 35.6% |
| Long Term Debt | 35.0 | 49.0 | 60.3 | 101.7 | 99.8 | -1.9% |
Cash flow
|
|---|
| Capex | 49.4 | 67.0 | 71.9 | 28.8 | 15.8 | -45.1% |
Ratios
|
|---|
| Revenue growth | 37.3% | 46.6% | -30.0% | -28.6% | 22.9% | |
| EBITDA growth | 62.7% | 188.5% | -82.4% | -224.2% | -2.6% | |
|
|---|
| Gross Margin | 33.4% | 43.5% | 32.8% | 24.2% | 21.5% | -2.7% |
| EBITDA Margin | 14.3% | 28.1% | 7.1% | -12.3% | -9.8% | 2.6% |
| SG&A, % of revenue | 12.3% | 11.5% | 18.2% | 27.0% | 23.9% | -3.1% |
| Net Income Margin | 12.0% | 19.3% | -0.8% | -34.6% | -24.9% | 9.7% |
| CAPEX, % of revenue | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% | -8.4% |
|
|---|
| ROIC | 9.2% | 26.3% | -2.7% | -11.7% | -11.4% | 0.3% |
| ROE | 15.9% | 26.4% | -0.6% | -21.9% | -21.2% | 0.7% |
| Net Debt/EBITDA | -0.2x | -0.3x | 1.5x | | |
Applied Optoelectronics, Inc. ($AAOI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 40 | 65 | 77 | 52 | | -23.2% | 50.2% | 66.2% | 7.5% |
| EBITDA | -11 | -5 | -0 | -6 | | - | - | - | - |
| Net Income | -17 | -19 | -10 | -13 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 56 | 51 | 47 | 43 | | -25.4% | -36.9% | -33.2% | -27.6% |
| Short Term Debt | 49 | 53 | 59 | 55 | | 99.0% | 134.6% | 181.9% | 35.6% |
| Long Term Debt | 101 | 101 | 100 | 100 | | -1.8% | -12.5% | -14.4% | -1.9% |
Ratios
|
|---|
| Gross Margin | 15.7% | 21.1% | 25.0% | 21.6% | | -7.8% | -3.2% | -0.9% | -1.7% |
| EBITDA Margin | -28.3% | -7.2% | -0.3% | -12.3% | | -17.7% | 10.1% | 9.9% | -0.6% |
| Net Income Margin | -41.5% | -28.5% | -12.6% | -25.7% | | -21.6% | -2.3% | 6.5% | 47.1% |
Peers in Communications Equipment
Below you can find Applied Optoelectronics, 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% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 3.5% | 3.7% | 2.1% |
|---|
| Applied Optoelectronics, Inc. ($AAOI) | - | 46.6% | -30.0% | -28.6% | 22.9% |
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. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.0% | 41.2% | 44.3% | 46.8% |
|---|
| Applied Optoelectronics, Inc. ($AAOI) | 33.4% | 43.5% | 32.8% | 24.2% | 21.5% |
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. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.5% | 6.0% | 4.6% | 5.0% | 9.3% |
|---|
| Applied Optoelectronics, Inc. ($AAOI) | 14.3% | 28.1% | 7.1% | -12.3% | -9.8% |
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% |
| PC-Tel, Inc. ($PCTI) | 2.0% | 2.9% | 3.3% | 2.5% | 5.3% |
| |
|---|
| Median (32 companies) | 1.9% | 1.8% | 1.6% | 2.4% | 2.0% |
|---|
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
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. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.7% | 1.2% | 2.3% |
|---|
| Applied Optoelectronics, Inc. ($AAOI) | 9.2% | 26.3% | -2.7% | -11.7% | -11.4% |
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 | -0.3x | -0.4x |
|---|
