Versum Materials (Versum Materials) Operating Income : $390 Mil (TTM As of Jun. 2019)

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What is Versum Materials Operating Income?

Versum Materials's Operating Income for the three months ended in Jun. 2019 was $94 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jun. 2019 was $390 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Versum Materials's Operating Income for the three months ended in Jun. 2019 was $94 Mil. Versum Materials's Revenue for the three months ended in Jun. 2019 was $324 Mil. Therefore, Versum Materials's Operating Margin % for the quarter that ended in Jun. 2019 was 28.95%.

Versum Materials's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Versum Materials's annualized ROC % for the quarter that ended in Jun. 2019 was 51.95%. Versum Materials's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2019 was -27.59%.

Versum Materials Operating Income Historical Data

The historical data trend for Versum Materials's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Versum Materials Operating Income Chart

Versum Materials Annual Data

Trend

Sep13

Sep14

Sep15

Sep16

Sep17

Sep18

Operating Income

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162.50

243.60

277.10

326.10

394.60

Versum Materials Quarterly Data
	Sep13	Sep14	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19
Operating Income	Get a 7-Day Free Trial														103.00	102.70	96.90	96.40	93.90

Versum Materials Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jun. 2019 adds up the quarterly data reported by the company within the most recent 12 months, which was $390 Mil.

Versum Materials (NYSE:VSM) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Versum Materials's annualized ROC % for the quarter that ended in Jun. 2019 is calculated as:

	ROC % (Q: Jun. 2019 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2019 )	+	Invested Capital (Q: Jun. 2019 ))	/ count )
=	375.6 * ( 1 - -40.36% )	/	( (1006.8	+	1022.7)	/ 2 )
=	527.19216	/	1014.75
=	51.95 %

where

	Invested Capital		(Q: Mar. 2019 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	1567.2	-	158.2	-	( 402.2	-	max(0, 164.3	-	865.8	+	402.2	))
=	1006.8

	Invested Capital		(Q: Jun. 2019 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	1458.7	-	163.8	-	( 272.2	-	max(0, 169.6	-	735.2	+	272.2	))
=	1022.7

Note: The Operating Income data used here is four times the quarterly (Jun. 2019) data.

2. Joel Greenblatt's definition of Return on Capital:

Versum Materials's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2019 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2019 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Mar. 2019		Q: Jun. 2019
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	-190.8	/	( ( (422.3 + max(273.4, 0))	+	(438.7 + max(248.5, 0)) )	/	2 )
=	-190.8	/	( ( 695.7	+	687.2 )	/	2 )
=	-190.8	/	691.45
=	-27.59 %

where Working Capital is:

	Working Capital		(Q: Mar. 2019 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(188.1	+	203.1	+	40.4)	-	(158.2	+	0	+	2.8421709430404E-14)
=	273.4

	Working Capital		(Q: Jun. 2019 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(166.3	+	206.3	+	39.7)	-	(163.8	+	0	+	-2.8421709430404E-14)
=	248.5

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Jun. 2019) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Versum Materials's Operating Margin % for the quarter that ended in Jun. 2019 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2019 )	/	Revenue (Q: Jun. 2019 )
	=	93.9	/	324.3
	=	28.95 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Versum Materials Operating Income Related Terms

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Versum Materials (Versum Materials) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Chemicals » Versum Materials Inc (NYSE:VSM) » Definitions » Operating Income

Comparable Companies

Traded in Other Exchanges

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Address

8555 South River Parkway, Tempe, AZ, USA, 85284

Website

https://www.versummaterials.com

Versum Materials is a leading global provider of electronic materials for the integrated circuit and flat-panel display markets. It supplies specialty chemicals and materials, high-purity specialty gases, proprietary delivery systems, and related services. The semiconductor industry accounts for 85% of sales. Versum generated fiscal 2017 revenue and adjusted EBIT of $1,127 million and $326 million, respectively. Versum employs almost 2,000 and serves 250 customers from its global network of 14 production sites and six R&D facilities.

Executives

Alejandro Daniel Wolff	director	ALBEMARLE CORP., 451 FLORIDA ST, BATON ROUGE LA 70801
Seifi Ghasemi	director	100 OVERLOOK CENTER, PRINCETON NJ 08540
Guillermo Novo	director, officer: President and CEO	AIR PRODUCTS AND CHEMICALS, INC., 7201 HAMILTON BOULEVARD, ALLENTOWN PA 18195
Susan C Schnabel	director	C/O CREDIT SUISSE FIRST BOSTON, 11 MADISON AVE, NEW YORK NY 10010
Yi Hyon Paik	director	ROHM AND HAAS COMPANY, 100 INDEPENDENCE MALL WEST, PHILADELPHIA PA 19106
Jacques M Croisetiere	director	C/O MORTON INTERNATIONAL INC, 100 N RIVERSIDE PLZ, CHICAGO IL 60606