Electro Scientific Industries, Inc. reports 411% Net Income growth in 2018 and 40.9 pp EBITDA Margin growth from -17.8% to 23.1%
05/08/2018 • About Electro Scientific Industries, Inc. (
$ESIO) • By InTwits
Electro Scientific Industries, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Electro Scientific Industries, Inc. is a growth stock: FY2018 revenue growth was 128%, 5 year revenue CAGR was 11.2% at FY2018 ROIC 31.5%
- Electro Scientific Industries, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $3m in 2018, $4m in 2017, $2m in 2016, $2m in 2015, $1m in 2014
- The company has highly profitable business model: ROIC is 31.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 128%. Revenue growth showed small slowdown in FY18Q4 - it was 127.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.63 pp from 3.1% to 3.7% in 2018.
Gross Margin increased on 5.5 pp from 38.2% to 43.7% in FY2018. Gross Margin followed a growing trend at 2.1 pp per annum in the last 5 years. SG&A as a % of Revenue dropped on 20.1 pp from 32.7% to 12.7% in FY2018.
Net Income margin surged on 54.8 pp from -23.2% to 31.6% in FY2018.
Investments (CAPEX, working capital and M&A)
Electro Scientific Industries, Inc.'s CAPEX/Revenue was 1.3% in FY2018. The company showed decline in CAPEX/Revenue of 2.1 pp from 3.4% in FY2015 to 1.3% in FY2018. For the last three years the average CAPEX/Revenue was 1.9%. CAPEX as a % of Revenue followed a declining trend at -0.66 pp per annum in FY2014-FY2018.
Return on investment
The company operates at high and attractive ROIC (31.5%) and ROE (56.6%). ROIC surged on 54.5 pp from -22.9% to 31.5% in FY2018. ROE surged on 80.4 pp from -23.8% to 56.6% in FY2018.
Leverage (Debt)
Debt level is -0.7x Net Debt / EBITDA and 0.2x Debt / EBITDA. Debt decreased on 5.3% while cash jumped on 35.6%.
Electro Scientific Industries, Inc. has no short term refinancing risk: cash is higher than short term debt (18,240.4%).
Valuation and dividends
Electro Scientific Industries, Inc.'s trades at EV/EBITDA 6.8x and P/E 5.5x.
Financial and operational results
FY ended 03/31/2018
Electro Scientific Industries, Inc. ($ESIO) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 181.2 | 159.1 | 184.4 | 161.0 | 367.9 | 128.5% |
| Gross Profit | 64.0 | 54.7 | 72.7 | 61.5 | 160.8 | 161.7% |
| SG&A | 55.8 | 48.5 | 49.8 | 52.7 | 46.6 | -11.5% |
| EBITDA | -18.2 | -30.4 | -3.7 | -28.6 | 85.1 | |
| Net Income | -38.3 | -43.8 | -12.3 | -37.4 | 116.2 | |
Balance Sheet
|
|---|
| Cash | 68.5 | 51.0 | 42.4 | 56.6 | 76.8 | 35.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.4 | 0.4 | -3.0% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 13.5 | 12.8 | -5.4% |
Cash flow
|
|---|
| Capex | 7.6 | 5.4 | 3.7 | 4.0 | 4.8 | 20.0% |
Ratios
|
|---|
| Revenue growth | -16.4% | -12.2% | 15.9% | -12.7% | 128.5% | |
| EBITDA growth | 3,799.1% | 67.1% | -87.7% | 662.9% | -397.4% | |
|
|---|
| Gross Margin | 35.3% | 34.4% | 39.4% | 38.2% | 43.7% | 5.5% |
| EBITDA Margin | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% | 40.9% |
| SG&A, % of revenue | 30.8% | 30.5% | 27.0% | 32.7% | 12.7% | -20.1% |
| Net Income Margin | -21.2% | -27.5% | -6.6% | -23.2% | 31.6% | 54.8% |
| CAPEX, % of revenue | 4.2% | 3.4% | 2.0% | 2.5% | 1.3% | -1.2% |
|
|---|
| ROIC | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% | 54.5% |
| ROE | -15.7% | -21.9% | -7.1% | -23.8% | 56.6% | 80.4% |
| Net Debt/EBITDA | | | | | -0.7x |
Electro Scientific Industries, Inc. ($ESIO) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 73 | 71 | 111 | 113 | | 52.5% | 139.3% | 228.1% | 127.2% |
| EBITDA | 6 | 6 | 36 | 37 | | 144.4% | | | |
| Net Income | 3 | 4 | 34 | 75 | | | | | |
Balance Sheet
|
|---|
| Cash | 59 | 48 | 62 | 77 | | -5.7% | -8.9% | 38.7% | 35.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | -3.0% |
| Long Term Debt | 13 | 13 | 13 | 13 | | | | | -5.4% |
Ratios
|
|---|
| Gross Margin | 36.3% | 37.4% | 48.0% | 48.3% | | -7.3% | 0.4% | 14.1% | 11.7% |
| EBITDA Margin | 7.7% | 9.1% | 32.2% | 33.0% | | 2.9% | 35.1% | 55.7% | 63.5% |
| Net Income Margin | 4.0% | 6.0% | 30.7% | 66.2% | | 4.2% | 38.6% | 59.3% | 102.1% |
Peers in Electronic Equipment & Instrum
Below you can find Electro Scientific Industries, Inc. benchmarking vs. other companies in Electronic Equipment & Instrum 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| nLIGHT, Inc. ($LASR) | | | | 36.8% | 38.1% |
| |
|---|
| Median (60 companies) | -37.7% | 4.5% | 0.3% | 4.6% | 9.8% |
|---|
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (59 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 41.4% |
|---|
| Electro Scientific Industries, Inc. ($ESIO) | 35.3% | 34.4% | 39.4% | 38.2% | 43.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| Badger Meter, Inc. ($BMI) | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% |
| |
|---|
| Median (59 companies) | 5.5% | 5.2% | 3.4% | 5.1% | 3.1% |
|---|
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (59 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.3% |
|---|
| Electro Scientific Industries, Inc. ($ESIO) | 4.2% | 3.4% | 2.0% | 2.5% | 1.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| Image Sensing Systems, Inc. ($ISNS) | -16.5% | 5.3% | 11.7% | 28.6% | 18.5% |
| |
|---|
| Median (71 companies) | 3.3% | 2.3% | 2.2% | 3.3% | 0.8% |
|---|
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (34 companies) | -0.8x | -0.9x | -0.8x | -0.7x | -0.9x |
|---|
| Electro Scientific Industries, Inc. ($ESIO) | | | | | -0.7x |
