Mesa Laboratories, Inc. reports 126% Net Income decline in 2018 and 14.6 pp EBITDA Margin decline from 26.7% to 12.1%
06/05/2018 • About Mesa Laboratories, Inc. (
$MLAB) • By InTwits
Mesa Laboratories, Inc. reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is declining: 12.1% in FY2018 vs. 26.7% in FY2017 vs. 29.6% in FY2014
- Mesa Laboratories, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $3m in FY2018, $12m in FY2017, $8m in FY2016, $3m in FY2015, $1m in FY2014
- The company has potentially unprofitable business model: ROIC is 1.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.5x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Mesa Laboratories, Inc.'s Revenue increased on 2.7%. Revenue growth showed acceleration in FY18Q4 - it increased 10.6% YoY. During the last 5 years Revenue growth topped in FY2015 at 35.3% and was decelerating since that time. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 14.6 pp from 26.7% to 12.1% in FY2018. During the last 5 years EBITDA Margin topped in FY2015 at 30.2% and was declining since that time.
Gross Margin showed almost no change in FY2018. During the last 5 years Gross Margin topped in FY2015 at 60.8% and was declining since that time. SG&A as a % of Revenue increased slightly on 1.5 pp from 35.0% to 36.5% in FY2018.
Net Income margin dropped on 15.0 pp from 11.9% to -3.1% in FY2018. Net Income margin followed a declining trend in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.9% in FY2018. CAPEX/Revenue decreased slightly on 1.1 pp from 4.0% in FY2015 to 2.9% in FY2018. It's average CAPEX/Revenue for the last three years was 8.1%. During FY2014-FY2018 CAPEX as a % of Revenue topped in FY2017 at 12.4%.
Return on investment
The company operates at low but positive ROIC (1.4%) and negative ROE (-3.0%). ROIC decreased on 9.7 pp from 11.1% to 1.4% in FY2018. ROE dropped on 15.3 pp from 12.3% to -3.0% in FY2018. ROIC stuck to a declining trend at -3.7 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is 4.0x. Net Debt / EBITDA jumped on 1.5x from 2.0x to 3.5x in FY2018. Debt dropped on 15.6% while cash decreased on 6.0%. Net Debt/EBITDA grew at 0.6x per annum in the last 5 years.
Mesa Laboratories, Inc. has no short term refinancing risk: cash is higher than short term debt (336.6%).
Management team
Mesa Laboratories, Inc.'s CEO Gary Owens is a founder and has spent 1 year with the company. Mesa Laboratories, Inc.'s CFO is John V Sakys. John V Sakys has 6 years tenure at the company.
Financial and operational results
FY ended 03/31/2018
Mesa Laboratories, Inc. ($MLAB) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 52.724 | 71.330 | 84.659 | 93.665 | 96.179 | 2.7% |
| Gross Profit | 31.688 | 43.392 | 51.413 | 53.239 | 54.619 | 2.6% |
| SG&A | 17.583 | 24.234 | 31.118 | 32.769 | 35.078 | 7.0% |
| EBITDA | 15.629 | 21.520 | 23.497 | 25.050 | 11.654 | -53.5% |
| Net Income | 9.000 | 9.583 | 11.169 | 11.183 | -2.962 | -126.5% |
Balance Sheet
|
|---|
| Cash | 5.575 | 2.034 | 5.695 | 5.820 | 5.469 | -6.0% |
| Short Term Debt | 0.000 | 3.000 | 3.000 | 1.125 | 1.625 | 44.4% |
| Long Term Debt | 16.500 | 23.250 | 42.250 | 53.675 | 44.635 | -16.8% |
Cash flow
|
|---|
| Capex | 1.041 | 2.828 | 7.729 | 11.605 | 2.799 | -75.9% |
Ratios
|
|---|
| Revenue growth | 13.5% | 35.3% | 18.7% | 10.6% | 2.7% | |
| EBITDA growth | -5.5% | 37.7% | 9.2% | 6.6% | -53.5% | |
|
|---|
| Gross Margin | 60.1% | 60.8% | 60.7% | 56.8% | 56.8% | -0.1% |
| EBITDA Margin | 29.6% | 30.2% | 27.8% | 26.7% | 12.1% | -14.6% |
| SG&A, % of revenue | 33.3% | 34.0% | 36.8% | 35.0% | 36.5% | 1.5% |
| Net Income Margin | 17.1% | 13.4% | 13.2% | 11.9% | -3.1% | -15.0% |
| CAPEX, % of revenue | 2.0% | 4.0% | 9.1% | 12.4% | 2.9% | -9.5% |
|
|---|
| ROIC | 17.0% | 17.0% | 13.4% | 11.1% | 1.4% | -9.7% |
| ROE | 15.4% | 13.9% | 14.1% | 12.3% | -3.0% | -15.3% |
| Net Debt/EBITDA | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x | 1.5x |
Mesa Laboratories, Inc. ($MLAB) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 23 | 23 | 24 | 27 | | 7.4% | -6.0% | -0.7% | 10.6% |
| EBITDA | 4 | 6 | -8 | 9 | | -10.2% | -5.6% | -216.0% | 22.3% |
| Net Income | 2 | 2 | -11 | 4 | | -21.4% | -0.2% | -440.9% | 16.8% |
Balance Sheet
|
|---|
| Cash | 3 | 10 | 6 | 5 | | -35.8% | 102.5% | 8.1% | -6.0% |
| Short Term Debt | 1 | 1 | 2 | 2 | | -58.3% | -54.2% | -50.0% | 44.4% |
| Long Term Debt | 49 | 50 | 55 | 45 | | 14.7% | 1.4% | 9.2% | -16.8% |
Ratios
|
|---|
| Gross Margin | 55.9% | 57.7% | 53.6% | 59.6% | | -1.0% | 1.4% | -3.2% | 2.2% |
| EBITDA Margin | 18.8% | 25.7% | -32.3% | 34.0% | | -3.7% | 0.1% | -59.9% | 3.2% |
| Net Income Margin | 6.7% | 10.3% | -46.8% | 15.8% | | -2.5% | 0.6% | -60.5% | 0.8% |
Peers in Electronic Equipment & Instrum
Below we provide Mesa Laboratories, Inc. benchmarking against other companies in Electronic Equipment & Instrum 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (60 companies) | -37.7% | 3.5% | 0.3% | 3.6% | 11.0% |
|---|
| Mesa Laboratories, Inc. ($MLAB) | | 35.3% | 18.7% | 10.6% | 2.7% |
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 ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (59 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 41.4% |
|---|
| Mesa Laboratories, Inc. ($MLAB) | 60.1% | 60.8% | 60.7% | 56.8% | 56.8% |
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. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (59 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.1% |
|---|
| Mesa Laboratories, Inc. ($MLAB) | 29.6% | 30.2% | 27.8% | 26.7% | 12.1% |
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 ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (59 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| Mesa Laboratories, Inc. ($MLAB) | 2.0% | 4.0% | 9.1% | 12.4% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| 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 ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (71 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.8% |
|---|
| Mesa Laboratories, Inc. ($MLAB) | 17.0% | 17.0% | 13.4% | 11.1% | 1.4% |
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 |
| 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 |
| OSI Systems, Inc. ($OSIS) | -0.0x | -0.2x | 0.3x | 1.7x | 2.2x |
| |
|---|
| Median (34 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
