Michael Kress | Nicholas Meyerson | Nguyen Nguyen | Joseph Whiteside

Cleveland Research Company Stock Pitch 2016

Overview & Thesis

Industry Dynamics

Drivers & Growth Opportunities

Valuation
Final Thoughts
Appendix

3
6
8
16
18
19

Investment Thesis
Mobileye N.V. is a technological leader in the area of software algorithms and ADAS chip technology that is
taking advantage of the rapidly growing usage of self-driving features in automobiles, and is positioned well
for future growth due to future AEB regulations.
Mobileye has a number of substantial OEM contracts with companies such as General
Motors, Mitsubishi, Honda, Nissan, and is set to take advantage of the increase in demand for
autonomous features.
The United States Department of Transportation and IIHS recently announced a plan to make
automatic emergency braking a standard on all new vehicles by 2022.
Mobileye has a competitive advantage due to the quality of its product and R&D, and has the
opportunity to increase revenues through many different markets, such as construction
vehicles.

We recommend Mobileye as a Buy with a 12 month price target of $70.00, a 67% upside from the
current share price.

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

Company Overview
Company Description

Company Outlook

Mobileye N.V. provides image sensing and processing

technology for automotive applications.

Mobileye pioneered the use of mono-cameras to enhance

Advanced Driver Assistance Systems (ADAS)

The firm serves customers worldwide.

The firm is continuing to revolutionize ADAS technology,

adding features such as intelligent headlight control, lane
departure warnings, and collision warnings.

Corporate headquarters located in Jerusalem, Israel

347 car models to have Mobileyes EyeQ technology

integrated in 2016.

NYSE: MBLY.

Price Chart

Market Data
Current Price
Market Cap.
Dividends
2015 EPS

Operations
2015 Revenue
Gross Margin
EBITDA Margin
Profit Margin

37.49
8,123M
N/A
0.48

Value
EV/EBITDA
EV/Sales
Price/Book
Price/Earnings
PEG

70

107.14
36.07
15.76
133.67
1.57

2.5

60

50
40

1.5

30

Capital Structure
240.9M
31%
14%
28%

Overview & Thesis

Debt
Cash
Current Ratio
Quick Ratio

20

0
95.8M
6.8
5.5

Industry Dynamics

x 10000000

Key Statistics

0.5

10
0

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

Management Direction
Future Goals

Technological Advancement

Attain full autonomous driving features while retaining the

positives of the human element in vehicle operation

The ability for ADAS systems to have 360 degree sensors,

increasing performance and reducing the risk of collision

Reduce human capital costs that arise from motor vehicle

crashes

Utilize radars and lidars in addition to mono-cameras in order

to improve performance and progress further towards fully
autonomous vehicles

Retain current contracts with large automobile

manufacturers and Tier1 competitors to remain competitive

Strategies

Use low bandwidth mapping technology for vehicles to

integrate GPS technology into autonomous driving

Usage Diversification
Expansion of safety features and ADAS into construction and
industrial vehicles

Using crowdsourcing to power mapping for autonomous

driving, integrate low bandwidth processing (REM) into
GM and Volkswagen vehicles

ADAS systems pursued by insurance companies

improved driver risk analysis

Effectively neutralizes the somewhere/everywhere tradeoff

(Google mapping uses 1gb/km, REM uses 10kb/km; 102x
more efficient)

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

for

Industry Overview
Current Trends

ADAS Adoption

Increasing regulations on fuel efficiency, influence on cruise

control technologies
Consumer data availability due to the use of sensor
technology

Japan

3.0%

United States

4.0%

South Korea

Higher cost of technology in vehicles (~35%) due to

increased demand for autonomous features

Market Share (based on market cap)

17.0%

6.0%

China

5.0%

Japan

10.0%

15.0%

20.0%

40.0%

85.0%
Calsonic

87.0%

China

17.2%

Overview & Thesis

35.0%

88.0%

Germany
35.2%

Gentex

30.0%

89.0%

South Korea

Autoliv

25.0%

87.0%

United States

7.7%

Delphi

28.0%

Willingness to Repurchase

3.3%

Mobileye

23.0%

8.0%
--

15.4%

21.2%

17.0%

5.0%

Germany

Integration between telematics features and insurance

companies to increase good driver incentives

8.0%

91.0%
86.0%

87.0%

88.0%

89.0%

90.0%

91.0%

92.0%

TRW Automotive

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

Autonomous Features
Increasing Affordability

Effects
Autonomous features in vehicles open doors for many
industries to increase revenues

$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
--

Mobile service providers, software firms, financial services,

government

Tier1 Providers

Tier2 Providers

Tier1 Providers are indirect competitors with Tier2 providers

Tier2 providers such as Mobileye supply the core intelligence

that is used to integrate autonomous systems into vehicles

Some Tier1 and Tier2 manufacturers partner together for a

collective benefit

Tier2 competitors: Hella, Busch Ltd, NVIDIA

Tier2 manufacturers experience rapid increases in risk when

market becomes competitive due to the nature of their
business models

Barriers to entry: Mobileye has an advantage from secured

future contracts, early entry (Mobileye systems have been in
vehicles since 2007), and superior R&D

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

Drivers
Powerful Technology
Mobileyes Shield is the most effective ADAS camera system
on the market, designed for large commercial vehicles
Utilizes proprietary algorithms, software, and visual cameras
to reduce risks of collisions
Mobileyes products are the flagship products of the industry,
and through R&D, they stay in a competitive position

Capital Structure

Sustaining Growth

Mobileye is debt free, as it does not carry short-term or longterm debt

120%
100%
80%

Bloomberg lists the likelihood of Mobileyes default on

liabilities as 0.02%

60%
40%
20%

Firm specific risk is higher than most (98.02%), but carries

little to no risk of bankruptcy

Overview & Thesis

Industry Dynamics

0%
2012

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

2013

2014

2015

2016E

Appendix

2017E

2018E

Sustaining Growth
Legal Tailwinds

Future OEM Contracts & Launches

United States Department of Transportation made agreement

with 20+ automobile manufacturers

EyeQ1, EyeQ2, EyeQ3 single camera systems are in

development for launch later this year, each tier will have
additional features

All new vehicles mandated to have automated emergency

braking by 2022

9 innovative new features total

AEB is highly dependent on effective ADAS systems

Contracted with Audi, BMW, Citroen, Ford, GM, & more

OEM

AM
90
80
70
60
50
40
30
20
10
0

450
400
350
300
250
200
150
100
50
0
2011

2012

2013

2014

Overview & Thesis

2015

2016E

2011

2017E

Industry Dynamics

Drivers & Growth

Opportunities

2012

Valuation &
Final Thoughts

2013

2014

Appendix

2015

2016E

2017E

Somewhere/Everywhere Tradeoff
Somewhere

Everywhere

Somewhere with full functionality, tradeoff is a large range

of mapping

Everywhere with partial functionality, tradeoff is quality of

mapping

Problem seen in Google and Baidus autonomous vehicle

technology

Problem seen in general car industry

Low-res (nav) maps u

3D detailed maps, inefficient bandwidth usage (1gb/km)

Mobileye Solution

Solution Launch

Roadside experience management (REM)

Mobileye to launch REM in new Nissan vehicles in 2016

Utilizes crowd-sourcing of real time data for precise

localization

Also working with Volkswagen and GM

Extremely efficient, utilizes only 10kb/km of driving

If crowd-sourced mapping is a success, Mobileye would gain

a further competitive edge in terms of autonomous
technology, and increasing future economic benefits.

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

10

Supply Chain
Suppliers

Future Products

Sunny Optical Technology Group, STMicroelectronics

EyeQ1

Lane departure warning, intelligent headlight control

Strong relationship with suppliers; STMicroelectronics and

Mobileye hit the 1,000,000th unit sold back in 2012

EyeQ2 & EyeQ3

Lane keeping and support, traffic sign recognition,
forward collision warning, headway monitoring, fusion
to radar, pedestrian detection warning, video only
adaptive cruise control, low speed automatic braking

Bloomberg reported very low levels of COGS (0.20%)

Mobileye Customers

Revenue & Gross Profit

Audi, BMW, Citroen, Ford, GM, Honda, Hyundai, Jaguar,

Nissan, Volvo are just a few of the major manufacturers that
Mobileye is launching with

300

76.0%
74.0%
72.0%
70.0%
68.0%
66.0%
64.0%
62.0%
60.0%
58.0%

250
200
150

Mobileye also services independent businesses on vehicle

tracking to improve quality control and accountability

100
50
0
2011

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

2012

2013

Appendix

2014

2015

11

Inventory
Rise of Inventory Against Sales Revenue

Issues/Benefits of Rising Inventory

Mobileye tends to update its technology relatively often, so if
inventory is allowed to accumulate too high, there may be
losses due to obsolescence

600.0
500.0
400.0
300.0
200.0
100.0
-2012

2013

2014
Inventory

2015

2016E

With an increasing amount of contracts and increased

consumer demand, a rising inventory will help Mobileye
fulfill sales

2017E

Sales

EyeQ Chip Growth

Ratios

EyeQ Chip volume increased 83% year over year

Return on assets: 9.58%

This increase in sales volume occurred despite an increase in

average selling price

Return on equity: 15.04%

Helped generate a $96 million free cash flow in 2015

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

12

AM
Aftermarket Add-ons

Smartphone Integration
187 million people own a smartphone

Mobileye sells individual mono-cameras that attach to

dashboards for consumers

By integrating some of the features into smartphone apps,

Mobileye is gaining an additional stream of revenue and
possible sustained growth

Incorporates some of the features of the EyeQ (pedestrian

collision warning, lane departure, forward collision warning,
headway monitoring, intelligent high beam, speed limit
indication)

Mobileye 5-Series

The firm can release features for sale through the app store,
which results in a lower COGS and larger operating profits

Growth

Utilizes a single camera

Aftermarket revenues are relatively small compared to OEM

revenues, but growth can be sustained through finding new
sales channels such as the smartphone market

Connects via Bluetooth to smartphones

Enables consumers to experience benefits of Mobileyes

products without buying a new vehicle

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

13

Projections
Revenues

Meeting the Projections

If the automatic emergency braking regulation passes in the
automotive industry, then its long term growth rate is realistic

Mobileyes projections state that the managers believe that it

will experience 40% and 47% growth rates in 2016 and
2017, respectively

However, if a competitor rises and is on par with Mobileye,

the growth rate is unrealistic as increased competition means
that less of the industry growth will go to Mobileye

The firm also estimates its long term growth rate to be 15%,
which is unusually high

Projected Revenues

Projected Net Income

2,500.0

1,600.0

2,164.8

1,438.9

1,400.0

2,000.0

1,200.0

1,500.0

1,000.0

1,250.2

759.0

800.0
1,000.0
500.0

766.7
338.2

600.0

496.7

420.0

400.0
200.0

0.0

121.3

243.0

0.0
2016E

2017E

2018E

Overview & Thesis

2019E

2020E

Industry Dynamics

2016E

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

2017E

2018E

Appendix

2019E

2020E

14

SWOT Analysis
Strengths

Weaknesses
Competitors are partners; if they create quality ADAS
systems themselves, Mobileye would lose revenue
Doesnt own a real barrier against other firms entering

Debt-free capital structure

Flagship ADAS product
Contracts with large automobile companies
No current quality competition
Competitors are also partners

Opportunities

Threats

Automatic Emergency Brake regulation in the future

Smartphone connectivity
Crowdsourcing mapping method

Overview & Thesis

Industry Dynamics

Tier1 firms developing their own ADAS systems and not

needing Mobileye anymore
Competition arising as growth is too strong not to attract
attention
Fully autonomous vehicles by companies such as Google

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

15

Valuation
Comparables Analysis

Football Field Valuation

EV/EBITDA multiple used to derive an implied share price

Comparables Analysis

45.67

52 Week Market High/Low

Implied share price ranged from $45.67 - $91.50 (17.1%134.6% upside)

91.5

23.57

64.48

Bull Market DCF

83.6

Base Case DCF

58.7

Bear Market DCF

71.1

52.6

DCF Value at 2.5%-4.5% Perpetuity Range

67.7
73.7

0.0

DCF (Perpetuity & Exit EBITDA Multiple)

95.6

47.4

DCF Value at 7.5x-11.5x EBITDA Multiple

153.9

50.0

149.5

100.0

150.0

Sensitivity Analysis
Equity value per share

WACC of 8.2% utilized

W
A
C
C

Perpetuity growth assumed to be 3.5%

EBITDA Exit Multiple calculated as 9.5x

$93.55
10%
9%
8%
7%
6%
5%

2.5%
58.5
68.6
82.3
102.3
133.7
190.5

Long term growth rate (g):

3.0%
3.5%
62.2
66.4
73.7
79.7
89.8
98.9
114.1
129.3
154.7
184.0
236.1
312.1

4.0%
71.3
86.9
110.3
149.5
228.0
464.0

4.5%
77.1
95.7
125.0
177.8
301.4
919.9

10.5x
59.9
62.4
64.9
67.7
70.5
73.5

11.5x
64.6
67.2
70.0
73.0
76.1
79.3

Equity value per share

Exit EBITDA Multiple
W
A
C
C

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

$59.27
10%
9%
8%
7%
6%
5%

7.5x
45.9
47.7
49.7
51.7
53.8
56.1

8.5x
50.6
52.6
54.8
57.0
59.4
61.9

9.5x
55.2
57.5
59.8
62.3
65.0
67.7

Appendix

16

Valuation (cont.)
Perpetuity Growth Method
Perpetuity approach
Unlevered FCF in last forecast period (t)
t+1

FCF
Long term growth rate (g)
Terminal value
Present value of terminal value
Present value of stage 1 cash flows
Enterprise value
Implied TV exit EBITDA multiple

EBITDA Exit Multiple Method

Exit EBITDA multiple approach
Terminal year EBITDA

1,300
1,346
3.5%
28,395
19,537
2,246
21,784
12.5x

Terminal value EBITDA multiple

Terminal value
Present value of terminal value
Present value of stage 1 cash flows
Enterprise value
Implied TV perpetual growth rate

Calculation of WACC

9.5x
16,540
11,380
2,246
13,627
0.4%

Comparables Analysis

Cost of capital assumptions

Cost of debt
Tax rate
Debt and equivalents
Debt as a % of total capital

2.0%
28.5%
0
0%

Risk free rate

Beta
Market risk premium
Equity as % of total capital structure

1.79%
1.29
5.00%
100%

Cost of capital (WACC)

8.2%

Overview & Thesis

1,741

Industry Dynamics

Implied Share Price

Upside

Drivers & Growth

Opportunities

EV/EBITDA
Low
Mean
Median
High
6.8x
10.3x
9.5x
15.9x
$45.67
$63.30
$59.27
$91.50
17.1%
62.3%
51.9%
134.6%

Valuation &
Final Thoughts

Appendix

17

Final Thoughts
Mobileye N.V. is a technological leader in the area of software algorithms and ADAS chip technology that is
taking advantage of the rapidly growing usage of self-driving features in automobiles, and is positioned well
for future growth due to future AEB regulations.
Mobileye has a number of substantial OEM contracts with companies such as General
Motors, Mitsubishi, Honda, Nissan, and is set to take advantage of the increase in demand for
autonomous features.
The United States Department of Transportation and IIHS recently announced a plan to make
automatic emergency braking a standard on all new vehicles by 2022.
Mobileye has a competitive advantage due to the quality of its product and R&D, and has the
opportunity to increase revenues through many different markets, such as construction
vehicles.

We recommend Mobileye as a Buy with a 12 month price target of $70.00, a 67% upside from the
current share price.

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

18

Appendix

19

Income Statement
Mobileye Historical and Projected Financials
Income Statement
($ in millions)

Fiscal Year Ending December 31st

Period

Revenue
OEM
AM
Total Revenue
Cost of Goods Sold
Gross Profit
Gross Margin (%)

2011

2012

2013

2014

2015

2016E

2017E

2018E

2019E

2020E

10

12.5
6.6
19.1
(6.9)
12.2
64%

27.8
12.5
40.3
(12.2)
28.1
70%

63.3
18.0
81.3
(21.1)
60.2
74%

121.8
21.8
143.6
(37.0)
106.6
74%

202.3
38.6
240.9
(61.4)
179.5
75%

284.0
54.2
338.2
(83.7)
254.5
75%

417.1
79.6
496.7
(253.7)
243.0
49%

643.9
122.9
766.7
(560.4)
206.3
27%

1,049.9
200.3
1,250.2
(1,065.2)
185.0
15%

1,818.0
346.9
2,164.8
(1,623.6)
541.2
25%

Operating Income & Expense

Operating Profit
Margin (%)

(22.8)
(10.6)
-55%

(28.4)
(0.3)
-1%

(43.5)
16.7
21%

(119.3)
(12.7)
-9%

(101.7)
77.8
32%

(75.4)
179.1
53%

46.4
289.4
58%

307.5
513.7
67%

736.5
921.5
74%

1,198.0
1,739.2
80%

Interest Expense
Other Gains & Losses
Total Other Gains & Losses

1.5
(2.3)
(0.8)

1.5
0.6
2.1

1.1
1.9
3.0

1.3
(3.3)
(2.0)

2.9
(0.9)
2.0

2.4
(1.1)
1.3

2.7
(1.2)
1.5

3.0
(1.4)
1.6

3.2
(1.5)
1.8

3.5
(1.6)
1.9

Pre-Tax Income
Income Tax

(13.1)
(0.4)

0.3
(0.3)

17.8
2.3

(17.8)
(12.3)

79.8
(11.3)

180.4
(59.1)

290.9
(47.9)

515.3
(95.4)

923.2
(164.2)

1,741.1
(302.2)

Net Income

(13.5)

(0.0)

20.1

(30.1)

68.5

121.3

243.0

420.0

759.0

1,438.9

24.0%

25.0%

25.0%

26.5%

27.0%

Notes
Corporate Tax Rate

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

27.8%

28.5%

Valuation &
Final Thoughts

28.5%

28.5%

28.5%

Appendix

20

Balance Sheet
Mobileye Historical and Projected Financials
Balance Sheet
($ in millions)

Period

2012

2013

2014

2015

2016E

2017E

2018E

2019E

2020E

10

Assets
Current Assets
Cash & Cash Equivalents
ST Investments
Accounts Receivable
Notes Receivable
Inventories
Deferred Tax Assets
Other Current Assets
Total Current Assets
Property, Plant & Equip, Net
LT Marketable Securities
Other Non-Current Assets
Total Assets

15.0
46.0
7.1
0.0
9.3
0.0
3.0
80.4
4.5
0.0
5.2
90.1

72.6
51.7
12.5
0.0
11.4
3.0
4.1
155.3
5.7
0.0
7.3
168.3

339.9
32.9
15.8
0.0
17.6
0.6
11.5
418.3
8.8
0.0
9.3
436.4

152.7
59.4
23.7
0.0
42.7
0.0
14.8
293.3
11.0
261.0
12.3
577.6

221.5
102.4
28.1
0.0
89.0
0.8
19.1
460.8
16.7
313.2
14.4
805.0

475.9
184.5
33.4
0.0
191.7
0.3
23.3
909.1
30.4
375.8
16.7
1,332.1

945.7
326.3
38.7
0.0
369.3
(0.5)
27.6
1,707.0
54.1
451.0
19.0
2,231.2

1,771.7
582.6
44.0
0.0
690.2
(1.9)
31.9
3,118.4
97.0
541.2
21.3
3,778.0

3,298.7
1,068.5
49.3
0.0
1,298.6
(4.6)
36.2
5,746.7
178.3
649.5
23.7
6,598.1

Liabilities
Current Liabilities
Payables & Accruals
Current Debt
Deferred Revenue
Other Current Liabilities
Total Current Liabilities
Longterm Debt
Pension Liabilities
Other Non-Current Liabilities
Total Liabilities

9.3
0.0
0.0
2.0
11.3
0.0
6.1
1.0
18.4

14.4
0.0
1.1
0.4
15.9
0.0
8.3
1.4
25.6

21.8
0.0
1.3
4.4
27.5
0.0
9.4
4.8
41.7

29.9
0.0
0.0
13.3
43.2
0.0
12.0
6.9
62.1

56.1
0.0
1.3
14.5
71.9
0.0
13.7
8.8
94.3

111.7
0.0
1.7
18.3
131.7
0.0
15.5
10.9
158.2

207.9
0.0
2.7
22.1
232.7
0.0
17.4
13.0
263.2

381.8
0.0
4.6
25.9
412.3
0.0
19.3
15.1
446.7

711.3
0.0
8.2
29.7
749.2
0.0
21.2
17.2
787.6

2.2
189.9
(120.8)
0.2
71.5
89.9

2.4
240.6
(100.9)
0.6
142.7
168.3

2.5
523.3
(131.0)
(0.2)
394.6
436.3

2.6
577.2
(62.5)
(1.8)
515.5
577.6

2.8
722.7
58.8
(2.0)
782.2
876.6

2.9
858.6
301.8
(2.7)
1,160.6
1,318.8

3.0
994.6
721.8
(3.4)
1,716.0
1,979.2

3.1
1,130.6
1,480.8
(4.0)
2,610.4
3,057.1

3.3
1,266.5
2,919.6
(4.7)
4,184.7
4,972.4

Stockholders' Equity
Common Stock
Addl Paid In Capital
Retained Earnings
Other Equity
Total Equity
Total Liabilities and Stockholders' Equity

Overview & Thesis

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

21

Statement of Cash Flows

Mobileye Historical and Projected Financials
Statement of Cash Flows
($ in thousands)

2011
Period 1

Cash Flows from Operating Activities

Earnings from Continuing Operations
Adjustments to reconcile net income:
Depreciation
Exchange rate differences
Accrued severance pay
Loss (gain) from marketable securities
Loss (gain) from severance pay fund
Share-based compensation
Changes in asset and liabilities:
Trade accounts receivables, net
Other current assets
Inventories
Other LT assets
Accounts payables and accrued expenses
Employee-related accrued expenses
Other current-liabilities
Long-term liabilities
Net cash provided by operating activities
Cash flows from investing activities
Capital Expenditures
Purchase/Sale of Investments
Purchase of Investments
Sale/Maturity of Investments
Other Use
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities
Issuance of shares, net
Exercise of options
Net cash provided by financing activities
Increase (decrease) in cash and cash equivalents
Exchange rate differences on cash and cash equivalents
Free Cash Flow

Overview & Thesis

Industry Dynamics

2012

2013

2014

2015

2016E

2017E

2018E

2019E

2020E

10

(13,500)

(0)

20,100

(30,084)

68,450

121,300

243,000

419,959

759,025

1,438,859

1,030

1,250

1,690

2,551
3,087
1,037
1,139
510
76,853

3,312
(192)
2,670
311
(87)
44,969

3,726
1,951
3,546
133
407
74,199

4,313
881
3,546
776
18
115,008

4,899
1,309
2,889
213
223
166,762

5,486
1,502
2,592
187
33
225,129

6,072
1,497
2,599
402
212
281,411

(2,050)
2,096

(1,760)
(1,015)

(539)
1,675

999

869

3,590

(7,900)
(1,730)
(25,050)
(1,146)
6,232
1,380
7,583
2,052
100,854

(6,914)
(608)
(35,122)
(1,241)
6,341
1,786
8,054
1,059
178,617

(9,765)
(883)
(58,315)
(1,460)
9,365
2,721
13,609
(585)
322,230

(12,723)
(1,283)
(92,038)
(1,777)
13,764
4,081
21,687
(2,586)
525,376

(17,786)
(2,050)
(156,656)
(2,387)
22,191
6,685
37,165
(5,837)
875,279

(26,439)
(3,587)
(286,214)
(3,608)
39,088
11,908
68,198
(11,292)
1,519,107

2,096

(1,015)

1,675

(9,330)

(1,670)

28,190

(3,316)
(2,795)
(6,272)
(969)
6,056
623
4,298
3,410
56,128

(1,650)
900
(32,480)
33,380
(427)
(1,177)

(1,530)
3,220
(37,190)
40,410
(1,090)
600

(2,590)
(4,610)
(24,170)
19,560
(1,740)
(8,940)

(5,380)
14,660
(52,510)
67,170
(1,517)
7,763

(5,070)
(456,210)
(456,377)
167
(1,807)
(463,087)

(4,588)
(185,156)
(177,918)
(7,238)
(2,252)
(191,996)

(6,045)
(170,578)
(156,662)
(13,916)
(3,265)
(179,889)

(8,164)
(121,786)
(107,077)
(14,710)
(4,739)
(134,689)

(12,223)
(85,709)
(69,254)
(16,455)
(7,563)
(105,496)

(20,362)
(48,277)
(30,512)
(17,766)
(13,225)
(81,865)

13,350
100
13,450

0
272
272

2,830
9,750
12,580

196,364
10,151
206,515

0
8,769
8,769

112,015
9,225
121,241

35,092
12,262
47,354

19,473
15,987
35,460

10,453
22,744
33,196

40,288
35,292
75,579

2,943

(798)

31,830

270,406

(353,464)

107,862

189,695

426,148

802,980

1,512,822

(224)
(10,980)

103
(3,190)

280
25,600

(3,087)
50,750

146
95,790

(1,093)
143,393

(1,466)
257,306

(2,544)
358,305

(4,262)
427,189

(7,499)
532,876

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

22

Discounted Cash Flow Analysis

Mobileye Historical and Projected Financials
Discounted Cash Flow Analysis
($ in millions, except for share data)
General Assumptions
Share price as of last close
Latest closing share price date
Latest basic share count
Weighted average cost of capital

$39.01
4/11/2016
216.7M
8%

Free Cash Flow Buildup

Fiscal Year
Fiscal Year End Date
EBITDA
EBIT
Tax rate
EBIAT (NOPAT)

2011
12/31/2011

2012
12/31/2012

(13.1)
(14.1)
24.0%
(10.7)

0.3
(1.0)
25.0%
(0.7)

2013
12/31/2013

2017E
12/31/2017

2018E
12/31/2018

2019E
12/31/2019

2020E
12/31/2020

515.3
510.5
28.5%
365.0

923.2
917.8
28.5%
656.2

1,741.1
1,735.0
28.5%
1,240.5

Depreciation
Exchange rate differences
Accrued severance pay
Loss (gain) from marketable securities
Loss (gain) from severance pay fund
Share-based compensation
Changes in asset and liabilities:
Trade accounts receivables, net
Other current assets
Inventories
Other LT assets
Accounts payables and accrued expenses
Employee-related accrued expenses
Other current-liabilities
Long-term liabilities
Unlevered CFO
Less: Capital expenditures
Less: Purchase of intangible assets
Unlevered FCF
% growth

4
2
4
0
0
74
0
(7)
(1)
(35)
(1)
6
2
8
1
184.9
(5)
0
180.3

4
1
4
1
0
115
0
(10)
(1)
(58)
(1)
9
3
14
(1)
284.1
(6)
0
278.1
54%

5
1
3
0
0
167
0
(13)
(1)
(92)
(2)
14
4
22
(3)
470.4
(8)
0
462.2
66%

5
2
3
0
0
225
0
(18)
(2)
(157)
(2)
22
7
37
(6)
772.5
(12)
0
760.2
64%

6
1
3
0
0
281
0
(26)
(4)
(286)
(4)
39
12
68
(11)
1,320.8
(20)
0
1,300.4
71%

Discount factor
PV of unlevered FCF

72%
170.3

172%
242.6

272%
372.6

372%
566.2

472%
894.7

Drivers & Growth

Opportunities

79.8
76.5
27.0%
55.8

2016E
12/31/2016

290.9
286.5
28.5%
204.9

Industry Dynamics

(17.8)
(20.4)
26.5%
(15.0)

2015
12/31/2015

180.4
176.7
27.8%
127.5

Overview & Thesis

17.8
16.1
25.0%
12.1

2014
12/31/2014

Valuation &
Final Thoughts

Appendix

23

Comparables Analysis

ADAS Technology Firms - Auto Parts

(in billions)

Company Name

Exchang
Ticker
e

Share
Price

Delphi
Autoliv
Continental Automotive
Oracle Corp
Ansys, Inc.

DLPH NYSE
ALV
NYSE
CON.DE XETRA
ORCL NASDAQ
ANSS NASDAQ

$72.35
$112.76
$212.61
$40.42
$86.57

% of 52
Enterprise
Market Cap
Week High
Value

1st Quartile
Mean
Median
3rd Quartile

Low
Implied Share Price
Upside

Overview & Thesis

LTM
EBITDA

LTM
Price/Earning
Price/Book EV/EBITDA EV/Sales
Revenue
s

EPS
(TTM)

Estimated
Forward PE
EPS

Profit
Margin

79.9%
85.3%
80.7%
89.3%
88.0%

20.0
9.9
42.5
167.7
7.6

23.6
10.1
45.8
159.4
6.9

2.5
1.1
6.7
15.2
0.4

15.2
9.2
43.3
37.5
0.9

14.3x
21.8x
14.1x
19.5x
31.4x

9.0x
2.8x
3.1x
3.7x
3.5x

9.5x
9.0x
6.8x
10.5x
15.9x

1.6x
1.1x
1.1x
4.3x
7.3x

$5.06
$5.17
$15.13
$2.07
$2.76

$6.04
$6.73
$17.26
$2.44
$3.32

10.3x
15.2x
-14.4x
21.9x

9.6%
5.0%
7.0%
24.6%
26.8%

80.7%
84.6%
85.3%
88.0%

9.9
49.6
20.0
42.5

10.1
49.1
23.6
45.8

1.1
5.2
2.5
6.7

9.2
21.2
15.2
37.5

14.3x
20.2x
19.5x
21.8x

3.1x
4.4x
3.5x
3.7x

9.0x
10.3x
9.5x
10.5x

1.1x
3.0x
1.6x
4.3x

$2.76
$6.04
$5.06
$5.17

$3.32
$7.16
$6.04
$6.73

10.3x
12.4x
14.4x
15.2x

7.0%
14.6%
9.6%
24.6%

EV/EBITDA
Mean
Median
High
6.8x
10.3x
9.5x
15.9x
$45.67
$63.30
$59.27
$91.50
17.1%
62.3%
51.9%
134.6%

Industry Dynamics

Drivers & Growth

Opportunities

Valuation &
Final Thoughts

Appendix

24