LightPath Technologies, Inc. reports 86.2% Net Income decline in 2018 and 10.3 pp EBITDA Margin decline from 21.9% to 11.6%
09/13/2018 • About LightPath Technologies, Inc. (
$LPTH) • By InTwits
LightPath Technologies, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- LightPath Technologies, Inc. is a fast growth stock: FY2018 revenue growth was 14.7%, 5 year revenue CAGR was 22.5% at FY2018 ROIC 0.90%
- EBITDA Margin is quite volatile: 11.6% in FY2018, 21.9% in FY2017, 16.5% in FY2016, 2.0% in FY2015, 2.5% in FY2014
- LightPath Technologies, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.8%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $3m in FY2018, $2m in FY2017, $1m in FY2016, $1m in FY2015, $2m in FY2014
- The company has potentially unprofitable business model: ROIC is 0.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.5x 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
The company's Revenue surged on 14.7%. Revenue growth showed slowdown in FY18Q4 - it was -10.2% YoY. During the last 5 years Revenue growth topped in FY2017 at 64.2%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 11.3 pp from -10.2% to 1.1% in 2018.
Gross Margin dropped on 13.4 pp from 51.9% to 38.5% in FY2018. SG&A as a % of Revenue decreased on 2.2 pp from 30.5% to 28.3% in FY2018. SG&A as a % of Revenue stuck to a declining trend at -2.7 pp per annum in the last 5 years.
Net Income margin dropped on 23.9 pp from 27.2% to 3.3% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 7.7%. LightPath Technologies, Inc.'s CAPEX/Revenue increased on 2.7 pp from 5.0% in FY2015 to 7.7% in FY2018. It's average level of CAPEX/Revenue for the last three years was 7.4%. LightPath Technologies, Inc. invested a big chunk of EBITDA (66.7%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (0.9%) and ROE (3.3%). ROIC dropped on 14.9 pp from 15.8% to 0.90% in FY2018. ROE dropped on 34.6 pp from 37.9% to 3.3% in FY2018. During the last 5 years ROIC topped in FY2016 at 20.3% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.5x and Debt / EBITDA is 2.0x. Net Debt / EBITDA decreased on 0.026x from 0.5x to 0.5x in FY2018. Debt dropped on 34.9% while cash dropped on 31.9%. Net Debt/EBITDA followed a growing trend at 1.3x per annum in the last 5 years.
LightPath Technologies, Inc. has no short term refinancing risk: cash is higher than short term debt (311.9%).
Valuation and dividends
The company's trades at EV/EBITDA 14.1x and P/E 48.3x.
Financial and operational results
FY ended 06/30/2018
LightPath Technologies, Inc. ($LPTH) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 11.834 | 13.662 | 17.272 | 28.367 | 32.525 | 14.7% |
| Gross Profit | 5.389 | 5.979 | 9.305 | 14.719 | 12.528 | -14.9% |
| SG&A | 4.514 | 5.130 | 6.581 | 8.651 | 9.218 | 6.6% |
| EBITDA | 0.290 | 0.278 | 2.857 | 6.218 | 3.777 | -39.3% |
| Net Income | -0.313 | -0.715 | 1.415 | 7.703 | 1.060 | -86.2% |
Balance Sheet
|
|---|
| Cash | 1.197 | 1.644 | 2.908 | 8.085 | 5.509 | -31.9% |
| Short Term Debt | 0.061 | 0.218 | 0.166 | 1.351 | 1.766 | 30.7% |
| Long Term Debt | 0.116 | 0.310 | 0.179 | 10.069 | 5.670 | -43.7% |
Cash flow
|
|---|
| Capex | 1.982 | 0.689 | 1.131 | 2.223 | 2.518 | 13.2% |
Ratios
|
|---|
| Revenue growth | 0.4% | 15.4% | 26.4% | 64.2% | 14.7% | |
| EBITDA growth | -71.7% | -4.1% | 926.0% | 117.6% | -39.3% | |
|
|---|
| Gross Margin | 45.5% | 43.8% | 53.9% | 51.9% | 38.5% | -13.4% |
| EBITDA Margin | 2.5% | 2.0% | 16.5% | 21.9% | 11.6% | -10.3% |
| SG&A, % of revenue | 38.1% | 37.6% | 38.1% | 30.5% | 28.3% | -2.2% |
| Net Income Margin | -2.6% | -5.2% | 8.2% | 27.2% | 3.3% | -23.9% |
| CAPEX, % of revenue | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% | -0.1% |
|
|---|
| ROIC | -5.8% | -3.2% | 20.3% | 15.8% | 0.9% | -14.9% |
| ROE | -4.9% | -9.4% | 14.9% | 37.9% | 3.3% | -34.6% |
| Net Debt/EBITDA | -3.5x | -4.0x | -0.9x | 0.5x | 0.5x | -0.0x |
LightPath Technologies, Inc. ($LPTH) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 8 | 9 | 8 | | 51.4% | 42.4% | 0.2% | -10.2% |
| EBITDA | 1 | 1 | 1 | 0 | | 53.9% | -19.3% | -45.9% | -78.9% |
| Net Income | 0 | 0 | 1 | -1 | | 54.9% | -61.4% | 1,116.3% | -112.7% |
Balance Sheet
|
|---|
| Cash | 8 | 8 | 6 | 6 | | 124.9% | 36.1% | -6.5% | -31.9% |
| Short Term Debt | 1 | 1 | 2 | 2 | | 711.1% | 79.8% | 56.3% | 30.7% |
| Long Term Debt | 10 | 10 | 6 | 6 | | 6,703.5% | -12.4% | -44.5% | -43.7% |
Ratios
|
|---|
| Gross Margin | 43.4% | 42.0% | 38.7% | 30.1% | | -13.2% | -14.2% | -11.0% | -18.4% |
| EBITDA Margin | 13.0% | 15.5% | 12.7% | 5.2% | | 0.2% | -11.8% | -10.8% | -16.8% |
| Net Income Margin | 2.9% | 5.1% | 14.4% | -10.0% | | 0.1% | -13.6% | 13.2% | -80.6% |
Peers in Electronic Equipment & Instrum
Below you can find LightPath Technologies, 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 ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($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. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 0.3% | 3.6% | 9.1% |
|---|
| LightPath Technologies, Inc. ($LPTH) | | 15.4% | 26.4% | 64.2% | 14.7% |
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 ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 42.0% |
|---|
| LightPath Technologies, Inc. ($LPTH) | 45.5% | 43.8% | 53.9% | 51.9% | 38.5% |
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. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.5% | 5.2% | 3.0% | 3.0% | 3.3% |
|---|
| LightPath Technologies, Inc. ($LPTH) | 2.5% | 2.0% | 16.5% | 21.9% | 11.6% |
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% |
| 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% |
| Microvision, Inc. ($MVIS) | 5.9% | 12.4% | 6.1% | 32.2% | 6.3% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
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 ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 2.3% | 1.8% | 1.8% | 1.3% |
|---|
| LightPath Technologies, Inc. ($LPTH) | -5.8% | -3.2% | 20.3% | 15.8% | 0.9% |
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 ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.7x | -0.7x | -0.8x | -0.8x | -0.9x |
|---|
| LightPath Technologies, Inc. ($LPTH) | -3.5x | -4.0x | -0.9x | 0.5x | 0.5x |
