Lantronix, Inc. EBITDA jumped on 203% and Revenue increased slightly on 1.9%
08/22/2018 • About Lantronix, Inc. (
$LTRX) • By InTwits
Lantronix, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 2.7% in FY2018 vs. 0.9% in FY2017 vs. 0.2% in FY2014
- Lantronix, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 is 0.0%. Average EBITDA Margin for the same period was -0.6%
- Lantronix, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $0m in FY2018, $0m in FY2017, $1m in FY2016, $1m in FY2015, $1m in FY2014
- The company has potentially unprofitable business model: ROIC is 3.5%
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 increased slightly on 1.9%. Revenue growth showed acceleration in FY18Q4 - it increased 9.0% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 9.2 pp from 14.3% to 5.1% in 2018. During FY2014-FY2018 EBITDA Margin bottomed in FY2015 at -4.2% and was growing since that time.
Gross Margin increased on 2.9 pp from 52.7% to 55.7% in FY2018. During the last 5 years Gross Margin bottomed in FY2015 at 47.3% and was growing since that time. SG&A as a % of Revenue increased slightly on 0.87 pp from 35.3% to 36.2% in FY2018.
Net Income margin increased on 2.1 pp from -0.62% to 1.5% in FY2018. During the last 5 years Net Income margin bottomed in FY2015 at -6.5% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2018 Lantronix, Inc. had CAPEX/Revenue of 0.50%. The company showed small CAPEX/Revenue decline of 0.84 pp from 1.3% in FY2015 to 0.50% in FY2018. For the last three years the average CAPEX/Revenue was 0.81%. During the last 5 years CAPEX as a % of Revenue topped in FY2016 at 1.4% and was declining since that time.
Return on investment
The company operates at low ROIC (3.5%) and ROE (3.1%). ROIC increased on 4.4 pp from -0.89% to 3.5% in FY2018. ROE increased on 4.4 pp from -1.4% to 3.1% in FY2018. During the last 5 years ROIC bottomed in FY2015 at -13.1% and was growing since that time. During the last 5 years ROE bottomed in FY2015 at -14.3% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -7.6x and Debt / EBITDA is 0.0x. Debt dropped on 50.8% while cash surged on 18.5%.
Lantronix, Inc. has no short term refinancing risk: cash is higher than short term debt (17,396.4%).
Valuation and dividends
Lantronix, Inc.'s trades at EV/EBITDA 70.4x and P/E 142.9x.
Management team
The company's CFO Jeremy R Whitaker has spent 3 years with the company.
Financial and operational results
FY ended 06/30/2018
Lantronix, Inc. ($LTRX) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 44.546 | 42.946 | 40.592 | 44.730 | 45.580 | 1.9% |
| Gross Profit | 22.285 | 20.298 | 19.378 | 23.580 | 25.368 | 7.6% |
| SG&A | 16.355 | 16.041 | 14.396 | 15.803 | 16.499 | 4.4% |
| EBITDA | 0.079 | -1.788 | -1.169 | 0.411 | 1.246 | 203.2% |
| Net Income | -0.933 | -2.771 | -1.962 | -0.277 | 0.680 | |
Balance Sheet
|
|---|
| Cash | 6.264 | 4.989 | 5.962 | 8.073 | 9.568 | 18.5% |
| Short Term Debt | 0.047 | 0.700 | 0.064 | 0.061 | 0.055 | -9.8% |
| Long Term Debt | 0.007 | 0.152 | 0.116 | 0.059 | 0.004 | -93.2% |
Cash flow
|
|---|
| Capex | 0.595 | 0.577 | 0.570 | 0.236 | 0.229 | -3.0% |
Ratios
|
|---|
| Revenue growth | -4.5% | -3.6% | -5.5% | 10.2% | 1.9% | |
| EBITDA growth | -104.4% | -2,363.3% | -34.6% | -135.2% | 203.2% | |
|
|---|
| Gross Margin | 50.0% | 47.3% | 47.7% | 52.7% | 55.7% | 2.9% |
| EBITDA Margin | 0.2% | -4.2% | -2.9% | 0.9% | 2.7% | 1.8% |
| SG&A, % of revenue | 36.7% | 37.4% | 35.5% | 35.3% | 36.2% | 0.9% |
| Net Income Margin | -2.1% | -6.5% | -4.8% | -0.6% | 1.5% | 2.1% |
| CAPEX, % of revenue | 1.3% | 1.3% | 1.4% | 0.5% | 0.5% | -0.0% |
|
|---|
| ROIC | -3.9% | -13.1% | -9.6% | -0.9% | 3.5% | 4.4% |
| ROE | -4.7% | -14.3% | -10.2% | -1.4% | 3.1% | 4.4% |
| Net Debt/EBITDA | -78.6x | | | -19.4x | -7.6x | 11.7x |
Lantronix, Inc. ($LTRX) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 11 | 11 | 12 | 12 | | -3.1% | 1.0% | 0.7% | 9.0% |
| EBITDA | -0 | 0 | 0 | 1 | | -875.0% | 71.7% | 5,333.3% | 637.0% |
| Net Income | -1 | 0 | 0 | 1 | | | 448.8% | | |
Balance Sheet
|
|---|
| Cash | 8 | 8 | 9 | 10 | | 34.9% | 25.8% | 21.2% | 18.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | -9.8% |
| Long Term Debt | 0 | 0 | 0 | 0 | | -56.9% | -67.8% | -84.5% | -93.2% |
Ratios
|
|---|
| Gross Margin | 52.7% | 55.7% | 56.8% | 57.1% | | 0.6% | 3.9% | 1.2% | 5.8% |
| EBITDA Margin | -4.7% | 3.3% | 4.2% | 7.3% | | -5.3% | 1.4% | 4.1% | 6.2% |
| Net Income Margin | -6.0% | 2.0% | 3.0% | 6.2% | | -5.1% | 1.6% | 4.4% | 6.7% |
Peers in Communications Equipment
Below we provide Lantronix, Inc. benchmarking against other companies in Communications Equipment 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 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.1% | 3.5% |
|---|
| Lantronix, Inc. ($LTRX) | | -3.6% | -5.5% | 10.2% | 1.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Lantronix, Inc. ($LTRX) | 50.0% | 47.3% | 47.7% | 52.7% | 55.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| Lantronix, Inc. ($LTRX) | 0.2% | -4.2% | -2.9% | 0.9% | 2.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 2.0% | 1.9% | 1.7% |
|---|
| Lantronix, Inc. ($LTRX) | 1.3% | 1.3% | 1.4% | 0.5% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.2% | 0.3% |
|---|
| Lantronix, Inc. ($LTRX) | -3.9% | -13.1% | -9.6% | -0.9% | 3.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.7x | -0.7x | -0.9x | -0.6x | 0.2x |
|---|
| Lantronix, Inc. ($LTRX) | -78.6x | | | -19.4x | -7.6x |
