Inrad Optics Inc Net Income surged on 204% and EBITDA Margin jumped on 11.3 pp from -1.3% to 10.0%
04/01/2019 • About Inrad Optics Inc (
$INRD) • By InTwits
Inrad Optics Inc reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Inrad Optics Inc spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -0.3%
- Inrad Optics Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $0m in 2018, $0m in 2017, $0m in 2016, $0m in 2015, $0m in 2014
- The company has highly profitable business model: ROIC is 17.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -0.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Inrad Optics Inc's Revenue surged on 16.5%. Revenue growth showed slowdown in 18Q4 - it was 4.5% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 11.3 pp from -1.3% to 10.0% in 2018.
Gross Margin increased on 7.5 pp from 19.5% to 27.0% in 2018. SG&A as a % of Revenue decreased on 5.1 pp from 24.5% to 19.4% in 2018. SG&A as a % of Revenue followed a declining trend at -2.3 pp per annum in the last 5 years.
Net Income margin jumped on 13.1 pp from -6.9% to 6.2% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Inrad Optics Inc had CAPEX/Revenue of 1.4%. CAPEX/Revenue increased slightly on 1.1 pp from 0.29% in 2015 to 1.4% in 2018. It's average CAPEX/Revenue for the last three years was 1.3%. During 2014-2018 CAPEX as a % of Revenue bottomed in 2015 at 0.29% and was growing since that time.
Return on investment
The company operates at high and attractive ROE (33.2%) while ROIC is a bit lower (17.7%). ROIC surged on 28.0 pp from -10.4% to 17.7% in 2018. ROE jumped on 68.5 pp from -35.3% to 33.2% in 2018.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 2.4x Debt / EBITDA. Net Debt / EBITDA surged1.4x from to 1.4x in 2018. Debt showed almost no change in 2018 while cash surged on 48.2%.
Inrad Optics Inc has no short term refinancing risk: cash is higher than short term debt (9,147.8%).
Valuation and dividends
Inrad Optics Inc's trades at EV/EBITDA 20.1x and P/E 30.4x.
Financial and operational results
FY ended 12/31/2018
Inrad Optics Inc ($INRD) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 9.726 | 10.492 | 9.767 | 9.859 | 11.489 | 16.5% |
| Gross Profit | 1.046 | 2.235 | 1.954 | 1.923 | 3.101 | 61.3% |
| SG&A | 3.041 | 2.543 | 2.451 | 2.417 | 2.234 | -7.6% |
| EBITDA | -1.379 | 0.240 | -0.050 | -0.129 | 1.146 | |
| Net Income | -2.515 | -0.479 | -0.605 | -0.683 | 0.707 | |
Balance Sheet
|
|---|
| Cash | 1.003 | 0.674 | 0.973 | 0.800 | 1.186 | 48.2% |
| Short Term Debt | 0.164 | 0.171 | 0.108 | 0.012 | 0.013 | 3.8% |
| Long Term Debt | 3.049 | 2.879 | 2.771 | 2.758 | 2.745 | -0.5% |
Cash flow
|
|---|
| Capex | 0.410 | 0.030 | 0.114 | 0.121 | 0.155 | 28.0% |
Ratios
|
|---|
| Revenue growth | -13.4% | 7.9% | -6.9% | 0.9% | 16.5% | |
| EBITDA growth | 130.7% | -117.4% | -121.0% | 156.0% | -987.5% | |
|
|---|
| Gross Margin | 10.8% | 21.3% | 20.0% | 19.5% | 27.0% | 7.5% |
| EBITDA Margin | -14.2% | 2.3% | -0.5% | -1.3% | 10.0% | 11.3% |
| SG&A, % of revenue | 31.3% | 24.2% | 25.1% | 24.5% | 19.4% | -5.1% |
| Net Income Margin | -25.9% | -4.6% | -6.2% | -6.9% | 6.2% | 13.1% |
| CAPEX, % of revenue | 4.2% | 0.3% | 1.2% | 1.2% | 1.4% | 0.1% |
|
|---|
| ROIC | -26.7% | -5.2% | -9.2% | -10.4% | 17.7% | 28.0% |
| ROE | -60.2% | -17.1% | -25.2% | -35.3% | 33.2% | 68.5% |
| Net Debt/EBITDA | | 9.9x | | | 1.4x |
Inrad Optics Inc ($INRD) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 3 | 3 | 3 | 3 | | 52.6% | 4.5% | 10.2% | 4.5% |
| EBITDA | 0 | 0 | 0 | 0 | | | | 428.7% | 544.0% |
| Net Income | 0 | 0 | 0 | 0 | | | | | |
Balance Sheet
|
|---|
| Cash | 0 | 1 | 1 | 1 | | -35.7% | 12.7% | 57.0% | 48.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -81.3% | -50.9% | 8.6% | 3.8% |
| Long Term Debt | 3 | 3 | 3 | 3 | | -0.5% | -0.5% | -0.5% | -0.5% |
Ratios
|
|---|
| Gross Margin | 25.7% | 21.2% | 33.2% | 27.9% | | 12.4% | 4.1% | 8.0% | 6.5% |
| EBITDA Margin | 11.5% | 4.5% | 14.9% | 8.5% | | 18.4% | 8.1% | 11.8% | 7.2% |
| Net Income Margin | 8.0% | 0.5% | 11.0% | 4.5% | | 21.5% | 9.6% | 12.6% | 9.0% |
Peers in Electronic Components
Below we provide Inrad Optics Inc benchmarking against other companies in Electronic Components 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 |
|---|
| Superconductor Technologies Inc. ($SCON) | | -61.4% | -46.3% | 240.5% | 248.9% |
| Akoustis Technologies, Inc. ($AKTS) | | | | | 148.3% |
| CPS Technologies Corp. ($CPSH) | | -5.9% | -29.5% | -5.0% | 48.0% |
| Littelfuse, Inc. ($LFUS) | | 1.9% | 21.7% | 15.7% | 40.7% |
| Cavitation Technologies Inc ($CVAT) | | -73.6% | 267.5% | -40.9% | 22.6% |
| |
|---|
| Median (22 companies) | | -5.9% | 2.1% | 8.3% | 14.1% |
|---|
| Inrad Optics Inc ($INRD) | | 7.9% | -6.9% | 0.9% | 16.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cavitation Technologies Inc ($CVAT) | 93.5% | 85.0% | 93.2% | 93.5% | 90.6% |
| Dolby Laboratories ($DLB) | 92.7% | 90.2% | 89.4% | 89.1% | 87.9% |
| Flexpoint Sensor Systems Inc ($FLXT) | 96.7% | 95.2% | 92.7% | 87.9% | 86.1% |
| Airgain, Inc. ($AIRG) | 44.6% | 41.9% | 44.4% | 47.1% | 43.7% |
| II-VI Incorporated ($IIVI) | 33.2% | 36.6% | 37.8% | 40.0% | 39.8% |
| |
|---|
| Median (22 companies) | 33.2% | 36.7% | 33.7% | 38.3% | 37.6% |
|---|
| Inrad Optics Inc ($INRD) | 10.8% | 21.3% | 20.0% | 19.5% | 27.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Corning Incorporated ($GLW) | 32.2% | 27.5% | 27.9% | 27.3% | 25.4% |
| Dolby Laboratories ($DLB) | 34.1% | 29.1% | 30.9% | 30.8% | 25.1% |
| Amphenol Corporation ($APH) | 22.5% | 22.9% | 22.6% | 23.6% | 24.2% |
| Vishay Intertechnology, Inc. ($VSH) | 14.8% | 11.9% | 15.4% | 18.7% | 21.3% |
| IEH Corp ($IEHC) | 18.4% | 21.2% | 18.0% | 16.3% | 20.2% |
| |
|---|
| Median (22 companies) | 9.4% | 12.2% | 14.1% | 11.4% | 12.0% |
|---|
| Inrad Optics Inc ($INRD) | -14.2% | 2.3% | -0.5% | -1.3% | 10.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Akoustis Technologies, Inc. ($AKTS) | | | | 334.0% | 574.7% |
| CBAK Energy Technology, Inc. ($CBAK) | 8.0% | 92.4% | 57.2% | 20.6% | 30.1% |
| Corning Incorporated ($GLW) | 11.1% | 13.7% | 12.0% | 17.8% | 19.9% |
| II-VI Incorporated ($IIVI) | 4.3% | 7.1% | 7.0% | 14.3% | 13.2% |
| Superconductor Technologies Inc. ($SCON) | 586.1% | 57.8% | 0.0% | 34.1% | 12.1% |
| |
|---|
| Median (22 companies) | 3.9% | 3.1% | 3.4% | 5.1% | 4.1% |
|---|
| Inrad Optics Inc ($INRD) | 4.2% | 0.3% | 1.2% | 1.2% | 1.4% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Vishay Intertechnology, Inc. ($VSH) | 8.3% | 4.5% | 9.8% | 18.4% | 27.8% |
| IEH Corp ($IEHC) | 27.7% | 28.2% | 24.2% | 19.2% | 26.1% |
| Amphenol Corporation ($APH) | 19.1% | 18.5% | 18.3% | 19.2% | 21.1% |
| Littelfuse, Inc. ($LFUS) | 14.3% | 11.1% | 11.7% | 15.8% | 12.1% |
| Rogers Corporation ($ROG) | 13.1% | 11.0% | 10.1% | 14.5% | 11.3% |
| |
|---|
| Median (22 companies) | 6.9% | 6.1% | 6.4% | 7.0% | 7.8% |
|---|
| Inrad Optics Inc ($INRD) | -26.7% | -5.2% | -9.2% | -10.4% | 17.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Belden Inc ($BDC) | 3.9x | 5.2x | 2.1x | 2.6x | 2.3x |
| Corning Incorporated ($GLW) | -0.7x | -0.0x | -0.5x | 0.3x | 1.3x |
| Bel Fuse Inc. ($BELFA) | 4.6x | 2.0x | | 1.4x | 1.3x |
| Amphenol Corporation ($APH) | 1.4x | 0.8x | 1.4x | 1.1x | 1.2x |
| II-VI Incorporated ($IIVI) | 0.7x | 0.0x | 0.1x | 0.5x | 0.9x |
| |
|---|
| Median (14 companies) | -0.6x | -0.3x | -0.5x | -0.3x | 0.5x |
|---|
| Inrad Optics Inc ($INRD) | | 9.9x | | | 1.4x |
