Digital Ally, Inc. reports 22.5% revenue decline in 2018 and 16.9 pp EBITDA Margin decline from -72.1% to -89.1%
03/29/2019 • About Digital Ally, Inc. (
$DGLY) • By InTwits
Digital Ally, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Digital Ally, Inc. is a company in decline: 2018 revenue growth was -22.5%, 5 years revenue CAGR was -8.7%
- The company operates at negative EBITDA Margin: -89.1%
- Digital Ally, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -52.4% for the sames years
- Digital Ally, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's in pair with industry average of 5.2%
- CAPEX is quite volatile: $0m in 2018, $0m in 2017, $0m in 2016, $0m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -543.4%
- It operates with high leverage: Net Debt/EBITDA is 12.4x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 22.5%. Annual revenue decline showed slowdown in 18Q4 - revenue dropped on 17.4%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.9 pp from -72.1% to -89.1% in 2018. EBITDA Margin declined at -18.9 pp per annum in the last 5 years.
Gross Margin increased on 3.9 pp from 31.2% to 35.1% in 2018. During 2014-2018 Gross Margin bottomed in 2017 at 31.2%. SG&A as a % of Revenue surged on 21.3 pp from 74.4% to 95.7% in 2018. SG&A as a % of Revenue followed a growing trend at 10.5 pp per annum in 2014-2018.
Net Income margin dropped on 53.6 pp from -84.1% to -138% in 2018. Net Income margin declined at -19.4 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 0.38%. CAPEX/Revenue decreased slightly on 1.7 pp from 2.1% in 2015 to 0.38% in 2018. Average CAPEX/Revenue for the last three years was 1.5%.
Leverage (Debt)
The company paid down all the debt in 2018. Cash jumped on 6,478%.
Financial and operational results
FY ended 12/31/2018
Digital Ally, Inc. ($DGLY) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 17.444 | 20.030 | 16.574 | 14.578 | 11.291 | -22.5% |
| Gross Profit | 9.923 | 8.349 | 5.301 | 4.545 | 3.962 | -12.8% |
| SG&A | 9.072 | 11.367 | 13.009 | 10.843 | 10.801 | -0.4% |
| EBITDA | -2.283 | -7.074 | -11.912 | -10.518 | -10.056 | |
| Net Income | -9.163 | -12.038 | -12.711 | -12.253 | -15.545 | |
Balance Sheet
|
|---|
| Cash | 3.050 | 6.924 | 3.883 | 0.055 | 3.599 | 6,477.7% |
| Short Term Debt | 4.526 | 0.035 | 0.033 | 4.280 | 0.000 | -100.0% |
| Long Term Debt | 1.258 | 0.041 | 4.008 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.434 | 0.423 | 0.341 | 0.323 | 0.043 | -86.8% |
Ratios
|
|---|
| Revenue growth | -2.1% | 14.8% | -17.3% | -12.0% | -22.5% | |
| EBITDA growth | 41.6% | 209.8% | 68.4% | -11.7% | -4.4% | |
|
|---|
| Gross Margin | 56.9% | 41.7% | 32.0% | 31.2% | 35.1% | 3.9% |
| EBITDA Margin | -13.1% | -35.3% | -71.9% | -72.1% | -89.1% | -16.9% |
| SG&A, % of revenue | 52.0% | 56.7% | 78.5% | 74.4% | 95.7% | 21.3% |
| Net Income Margin | -52.5% | -60.1% | -76.7% | -84.1% | -137.7% | -53.6% |
| CAPEX, % of revenue | 2.5% | 2.1% | 2.1% | 2.2% | 0.4% | -1.8% |
|
|---|
| ROIC | -26.6% | -49.1% | -81.1% | -131.0% | -543.4% | -412.4% |
| ROE | -137.6% | -96.2% | -95.9% | -284.3% | | |
Digital Ally, Inc. ($DGLY) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 4 | 3 | 2 | | -52.7% | 2.2% | -3.5% | -17.4% |
| EBITDA | -2 | -1 | -2 | -5 | | | | | |
| Net Income | -3 | -3 | -5 | -5 | | | | | |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 8 | 4 | | -81.2% | -42.8% | 2,300.3% | 6,477.7% |
| Short Term Debt | 4 | 6 | 0 | 0 | | 7.4% | 28.5% | -100.0% | -100.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 44.9% | 45.4% | 40.9% | 2.4% | | 1.4% | 11.8% | 7.1% | -0.6% |
| EBITDA Margin | -73.9% | -36.7% | -62.2% | -215.8% | | -42.5% | 30.0% | 36.2% | -90.2% |
| Net Income Margin | -104.7% | -83.1% | -162.1% | -224.0% | | -65.9% | -16.4% | -45.0% | -71.1% |
Peers in Electronic Equipment & Instrum
Below you can find Digital Ally, 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. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 1.2% | 4.6% | 10.4% |
|---|
| Digital Ally, Inc. ($DGLY) | | 14.8% | -17.3% | -12.0% | -22.5% |
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 ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 41.7% | 42.3% | 41.2% | 41.8% | 42.0% |
|---|
| Digital Ally, Inc. ($DGLY) | 56.9% | 41.7% | 32.0% | 31.2% | 35.1% |
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. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.5% | 5.2% | 3.4% | 5.1% | 4.2% |
|---|
| Digital Ally, Inc. ($DGLY) | -13.1% | -35.3% | -71.9% | -72.1% | -89.1% |
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 ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.3% |
|---|
| Digital Ally, Inc. ($DGLY) | 2.5% | 2.1% | 2.1% | 2.2% | 0.4% |
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 ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 2.3% | 2.2% | 3.3% | 1.3% |
|---|
| Digital Ally, Inc. ($DGLY) | -26.6% | -49.1% | -81.1% | -131.0% | -543.4% |
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 |
| 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 (36 companies) | -0.8x | -0.9x | -0.8x | -0.7x | -0.9x |
|---|
