Luna Innovations Incorporated reports 558% EBITDA growth in 2018 and 3.9 pp EBITDA Margin growth from 0.96% to 4.9%
03/04/2019 • About Luna Innovations Incorporated (
$LUNA) • By InTwits
Luna Innovations Incorporated reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Luna Innovations Incorporated is a fast growth stock: 2018 revenue growth was 29.7%, 5 year revenue CAGR was 18.5% at 2018 ROIC 1.5%
- Luna Innovations Incorporated motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -2.2% for the sames years
- Luna Innovations Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $0m in 2018, $1m in 2017, $2m in 2016, $1m in 2015, $0m in 2014
- The company has potentially unprofitable business model: ROIC is 1.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 29.7%. Revenue growth showed slowdown in 18Q4 - it was 2.4% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 10.9 pp from -15.1% to -4.2% in FY2018. EBITDA Margin followed a growing trend at 5.6 pp per annum in the last 5 years.
Gross Margin increased on 4.9 pp from 40.4% to 45.3% in 2018. Gross Margin stuck to a growing trend at 2.0 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 4.6 pp from 39.1% to 34.5% in 2018.
Net Income margin dropped on 18.5 pp from 44.2% to 25.6% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 0.90%. Luna Innovations Incorporated's CAPEX/Revenue decreased slightly on 0.71 pp from 1.6% in 2015 to 0.90% in 2018. It's average level of CAPEX/Revenue for the last three years was 2.9%. During 2014-2018 CAPEX as a % of Revenue topped in 2017 at 4.1%.
Return on investment
The company operates at good ROE (19.2%) while ROIC is low (1.5%). ROIC increased on 6.3 pp from -4.8% to 1.5% in 2018. ROE dropped on 15.0 pp from 34.2% to 19.2% in 2018. ROIC followed a growing trend at 11.6 pp per annum in 2014-2018.
Leverage (Debt)
Debt level is -19.9x Net Debt / EBITDA and 0.3x Debt / EBITDA. Debt dropped on 71.4% while cash surged on 14.8%.
Luna Innovations Incorporated has no short term refinancing risk: cash is higher than short term debt (6,434.3%).
Valuation and dividends
The company's trades at EV/EBITDA 30.3x and P/E 9.6x.
Financial and operational results
FY ended 12/31/2018
Luna Innovations Incorporated ($LUNA) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 21.260 | 44.020 | 41.868 | 33.082 | 42.917 | 29.7% |
| Gross Profit | 7.837 | 16.501 | 15.805 | 13.369 | 19.438 | 45.4% |
| SG&A | 10.254 | 18.481 | 14.764 | 12.924 | 14.794 | 14.5% |
| EBITDA | -3.897 | -3.793 | 1.215 | 0.318 | 2.096 | 558.2% |
| Net Income | 5.995 | 2.317 | -2.369 | 14.615 | 11.004 | -24.7% |
Balance Sheet
|
|---|
| Cash | 14.117 | 17.464 | 12.802 | 36.982 | 42.460 | 14.8% |
| Short Term Debt | 0.696 | 1.865 | 1.885 | 1.877 | 0.660 | -64.8% |
| Long Term Debt | 0.040 | 4.327 | 2.535 | 0.674 | 0.069 | -89.8% |
Cash flow
|
|---|
| Capex | 0.255 | 0.710 | 1.510 | 1.353 | 0.387 | -71.4% |
Ratios
|
|---|
| Revenue growth | 16.0% | 107.1% | -4.9% | -21.0% | 29.7% | |
| EBITDA growth | -45.1% | -2.7% | -132.0% | -73.8% | 558.2% | |
|
|---|
| Gross Margin | 36.9% | 37.5% | 37.7% | 40.4% | 45.3% | 4.9% |
| EBITDA Margin | -18.3% | -8.6% | 2.9% | 1.0% | 4.9% | 3.9% |
| SG&A, % of revenue | 48.2% | 42.0% | 35.3% | 39.1% | 34.5% | -4.6% |
| Net Income Margin | 28.2% | 5.3% | -5.7% | 44.2% | 25.6% | -18.5% |
| CAPEX, % of revenue | 1.2% | 1.6% | 3.6% | 4.1% | 0.9% | -3.2% |
|
|---|
| ROIC | -48.6% | -20.2% | -6.0% | -4.8% | 1.5% | 6.3% |
| ROE | 40.2% | 8.2% | -6.9% | 34.2% | 19.2% | -15.0% |
| Net Debt/EBITDA | | | -6.9x | -108.1x | -19.9x | 88.2x |
Luna Innovations Incorporated ($LUNA) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 12 | 10 | 11 | 14 | | 20.9% | -12.1% | 28.7% | 2.4% |
| EBITDA | 0 | 1 | 1 | 1 | | 132.2% | -46.8% | 155.6% | 131.3% |
| Net Income | 0 | 1 | 9 | 1 | | | | -43.8% | 115.9% |
Balance Sheet
|
|---|
| Cash | 33 | 33 | 47 | 42 | | 176.3% | 223.5% | 22.4% | 14.8% |
| Short Term Debt | 2 | 2 | 1 | 1 | | -5.2% | -17.1% | -40.9% | -64.8% |
| Long Term Debt | 0 | 0 | 0 | 0 | | -85.7% | -96.6% | -92.7% | -89.8% |
Ratios
|
|---|
| Gross Margin | 41.2% | 42.6% | 43.9% | 48.5% | | 2.8% | 4.0% | 3.6% | 8.0% |
| EBITDA Margin | 3.5% | 5.2% | 8.0% | 5.5% | | 1.7% | -3.4% | 4.0% | 3.1% |
| Net Income Margin | 1.2% | 10.8% | 82.8% | 6.9% | | 14.7% | 12.7% | -107.0% | 3.6% |
Peers in Electronic Equipment & Instrum
Below we provide Luna Innovations Incorporated 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. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 1.2% | 4.6% | 9.1% |
|---|
| Luna Innovations Incorporated ($LUNA) | | 107.1% | -4.9% | -21.0% | 29.7% |
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 ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 42.7% | 42.3% | 41.2% | 41.8% | 40.9% |
|---|
| Luna Innovations Incorporated ($LUNA) | 36.9% | 37.5% | 37.7% | 40.4% | 45.3% |
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. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.5% | 5.2% | 3.4% | 5.1% | 3.3% |
|---|
| Luna Innovations Incorporated ($LUNA) | -18.3% | -8.6% | 2.9% | 1.0% | 4.9% |
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 ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.9% | 2.0% | 2.1% | 1.6% | 2.3% |
|---|
| Luna Innovations Incorporated ($LUNA) | 1.2% | 1.6% | 3.6% | 4.1% | 0.9% |
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 ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 2.3% | 2.2% | 3.3% | 0.9% |
|---|
| Luna Innovations Incorporated ($LUNA) | -48.6% | -20.2% | -6.0% | -4.8% | 1.5% |
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 ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.8x | -0.6x | -0.8x |
|---|
| Luna Innovations Incorporated ($LUNA) | | | -6.9x | -108.1x | -19.9x |
