Luna Innovations Incorporated reports 38.4% Net Income decline in 2020 while 1.1 pp EBITDA Margin growth from 10.6% to 11.6%
03/11/2021 • About Luna Innovations Incorporated (
$LUNA) • By InTwits
Luna Innovations Incorporated reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Luna Innovations Incorporated is a growth stock: 2020 revenue growth was 17.3%, 5 year revenue CAGR was 13.4% at 2020 ROIC 5.9%
- EBITDA Margin is expanding: 11.6% in 2020 vs. 10.6% in 2019 vs. 2.9% in 2016
- EBITDA Margin is quite volatile: 11.6% in 2020, 10.6% in 2019, 4.9% in 2018, 1.0% in 2017, 2.9% in 2016
- Luna Innovations Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 3.7%
- CAPEX is quite volatile: $1m in 2020, $1m in 2019, $0m in 2018, $1m in 2017, $2m in 2016
- The company has potentially unprofitable business model: ROIC is 5.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.8x 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
Luna Innovations Incorporated's Revenue jumped on 17.3%. Revenue growth showed acceleration in 20Q4 - it increased 33.0% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.1 pp from 10.6% to 11.6% in 2020. EBITDA Margin followed a growing trend at 2.7 pp per annum in 2016-2020.
Gross Margin increased slightly on 1.1 pp from 49.9% to 51.0% in 2020. Gross Margin stuck to a growing trend at 3.6 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 1.1 pp from 34.6% to 33.4% in 2020.
Net Income margin decreased on 3.6 pp from 7.6% to 4.0% in 2020. During the last 5 years Net Income margin topped in 2017 at 44.2% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.82% in 2020. Luna Innovations Incorporated's CAPEX/Revenue decreased on 3.3 pp from 4.1% in 2017 to 0.82% in 2020. For the last three years the average CAPEX/Revenue was 0.83%.
Return on investment
The company operates at low ROIC (5.9%) and ROE (4.6%). ROIC increased slightly on 0.74 pp from 5.2% to 5.9% in 2020. ROE decreased on 3.2 pp from 7.8% to 4.6% in 2020. ROIC followed a growing trend at 3.4 pp per annum in the last 5 years. During the last 5 years ROE topped in 2017 at 34.2% and was declining since that time.
Leverage (Debt)
Debt level is 1.8x Net Debt / EBITDA and 3.4x Debt / EBITDA. Net Debt / EBITDA jumped on 4.7x from -2.9x to 1.8x in 2020. Debt jumped on 878% while cash dropped on 38.6%. During the last 5 years Net Debt/EBITDA bottomed in 2017 at -108.1x and was growing since that time.
Luna Innovations Incorporated has no short term refinancing risk: cash is higher than short term debt (240.5%).
Valuation and dividends
The company's trades at EV/EBITDA 38.8x and P/E 107.9x.
Financial and operational results
FY ended 12/31/2020
Luna Innovations Incorporated ($LUNA) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 41.868 | 33.082 | 42.917 | 70.516 | 82.681 | 17.3% |
| Gross Profit | 15.805 | 13.369 | 19.438 | 35.182 | 42.188 | 19.9% |
| SG&A | 14.764 | 12.924 | 14.794 | 24.371 | 27.644 | 13.4% |
| EBITDA | 1.215 | 0.318 | 2.096 | 7.441 | 9.600 | 29.0% |
| Net Income | -2.369 | 14.615 | 11.004 | 5.343 | 3.291 | -38.4% |
Balance Sheet
|
|---|
| Cash | 12.802 | 36.982 | 42.460 | 25.006 | 15.366 | -38.6% |
| Short Term Debt | 1.885 | 1.877 | 0.660 | 1.334 | 6.390 | 379.1% |
| Long Term Debt | 2.535 | 0.674 | 0.069 | 2.011 | 26.309 | 1,207.9% |
Cash flow
|
|---|
| Capex | 1.510 | 1.353 | 0.387 | 0.541 | 0.681 | 26.0% |
Ratios
|
|---|
| Revenue growth | -4.9% | -21.0% | 29.7% | 64.3% | 17.3% | |
| EBITDA growth | -132.0% | -73.8% | 558.2% | 255.0% | 29.0% | |
|
|---|
| Gross Margin | 37.7% | 40.4% | 45.3% | 49.9% | 51.0% | 1.1% |
| EBITDA Margin | 2.9% | 1.0% | 4.9% | 10.6% | 11.6% | 1.1% |
| SG&A, % of revenue | 35.3% | 39.1% | 34.5% | 34.6% | 33.4% | -1.1% |
| Net Income Margin | -5.7% | 44.2% | 25.6% | 7.6% | 4.0% | -3.6% |
| CAPEX, % of revenue | 3.6% | 4.1% | 0.9% | 0.8% | 0.8% | 0.1% |
|
|---|
| ROIC | -6.0% | -4.8% | 1.5% | 5.2% | 5.9% | 0.7% |
| ROE | -6.9% | 34.2% | 19.2% | 7.8% | 4.6% | -3.2% |
| Net Debt/EBITDA | -6.9x | -108.1x | -19.9x | -2.9x | 1.8x | 4.7x |
Luna Innovations Incorporated ($LUNA) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 17 | 19 | 21 | 26 | | 15.6% | 4.3% | 14.5% | 33.0% |
| EBITDA | 1 | 3 | 3 | 2 | | 1,062.9% | 45.5% | 30.4% | -31.2% |
| Net Income | -1 | 1 | 3 | -0 | | -199.1% | 62.9% | 152.2% | -103.0% |
Balance Sheet
|
|---|
| Cash | 26 | 27 | 26 | 15 | | 7.1% | 12.6% | 23.4% | -38.6% |
| Short Term Debt | 1 | 1 | 1 | 6 | | -34.3% | -37.5% | -15.2% | 379.1% |
| Long Term Debt | 2 | 7 | 8 | 26 | | -36.7% | 172.5% | 243.7% | 1,207.9% |
Ratios
|
|---|
| Gross Margin | 48.8% | 51.2% | 52.0% | 51.5% | | 3.2% | 2.1% | 1.6% | -1.8% |
| EBITDA Margin | 8.4% | 15.4% | 15.8% | 7.4% | | 7.6% | 4.4% | 1.9% | -6.9% |
| Net Income Margin | -6.5% | 7.4% | 14.7% | -0.2% | | -14.1% | 2.7% | 8.0% | -11.3% |
Peers in Electronic Equipment & Instruments
Below we provide Luna Innovations Incorporated benchmarking against other companies in Electronic Equipment & Instruments 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Intellicheck, Inc. ($IDN) | - | -6.3% | 23.2% | 72.9% | 40.1% |
| nLIGHT, Inc. ($LASR) | - | 36.8% | 38.1% | -7.7% | 26.1% |
| PAR Technology Corporation ($PAR) | - | 1.3% | -13.5% | -7.0% | 14.2% |
| Cognex Corporation ($CGNX) | - | 44.7% | 5.3% | -10.0% | 11.8% |
| Identiv, Inc. ($INVE) | - | 7.2% | 29.8% | 7.2% | 3.8% |
| |
|---|
| Median (26 companies) | -3.8% | 5.0% | 10.4% | 4.4% | -3.5% |
|---|
| Luna Innovations Incorporated ($LUNA) | - | -21.0% | 29.7% | 64.3% | 17.3% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Intellicheck, Inc. ($IDN) | 80.0% | 85.5% | 91.3% | 87.0% | 86.7% |
| Cognex Corporation ($CGNX) | 75.2% | 75.6% | 74.4% | 73.8% | 74.5% |
| National Instruments Corporation ($NATI) | 74.5% | 74.5% | 75.4% | 75.1% | 71.2% |
| Coda Octopus Group, Inc. ($CODA) | - | 66.4% | - | 65.6% | 63.5% |
| Applied DNA Sciences Inc ($APDN) | 82.2% | 77.3% | 69.1% | 83.7% | 62.7% |
| |
|---|
| Median (26 companies) | 40.7% | 41.7% | 40.4% | 42.2% | 42.9% |
|---|
| Luna Innovations Incorporated ($LUNA) | 37.7% | 40.4% | 45.3% | 49.9% | 51.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Keysight Technologies Inc. ($KEYS) | 18.5% | 14.6% | -0.9% | 23.7% | 27.0% |
| Cognex Corporation ($CGNX) | 31.9% | 36.0% | 30.1% | 24.0% | 25.3% |
| National Instruments Corporation ($NATI) | 15.7% | 16.9% | 17.9% | 20.0% | 22.3% |
| FLIR Systems, Inc. ($FLIR) | 21.3% | 20.0% | 21.7% | 20.6% | 22.0% |
| Badger Meter, Inc. ($BMI) | 18.6% | 20.1% | 18.7% | 21.1% | 21.2% |
| |
|---|
| Median (26 companies) | 3.2% | 5.2% | 3.3% | 13.6% | 9.1% |
|---|
| Luna Innovations Incorporated ($LUNA) | 2.9% | 1.0% | 4.9% | 10.6% | 11.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Know Labs Inc ($KNWN) | 0.4% | 0.0% | 2.3% | 4.4% | 57.5% |
| Applied DNA Sciences Inc ($APDN) | 16.1% | 3.1% | 6.8% | 1.3% | 55.1% |
| nLIGHT, Inc. ($LASR) | 4.0% | 4.0% | 6.1% | 7.7% | 10.9% |
| Vishay Precision Group, Inc. ($VPG) | 4.6% | 2.7% | 4.8% | 3.9% | 8.5% |
| LightPath Technologies, Inc. ($LPTH) | 6.5% | 7.8% | 7.7% | 5.7% | 7.0% |
| |
|---|
| Median (25 companies) | 2.0% | 1.6% | 2.3% | 2.0% | 2.8% |
|---|
| Luna Innovations Incorporated ($LUNA) | 3.6% | 4.1% | 0.9% | 0.8% | 0.8% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Zebra Technologies Corporation ($ZBRA) | 2.2% | 10.2% | 20.8% | 23.2% | 20.0% |
| Badger Meter, Inc. ($BMI) | 16.9% | 18.2% | 17.6% | 18.7% | 18.5% |
| Keysight Technologies Inc. ($KEYS) | 16.9% | 6.8% | -8.0% | 15.6% | 15.1% |
| National Instruments Corporation ($NATI) | 10.3% | 12.5% | 14.2% | 13.9% | 14.8% |
| Cognex Corporation ($CGNX) | 17.7% | 25.6% | 20.1% | 11.9% | 13.9% |
| |
|---|
| Median (26 companies) | 2.2% | 3.7% | 0.9% | 7.9% | 3.4% |
|---|
| Luna Innovations Incorporated ($LUNA) | -6.0% | -4.8% | 1.5% | 5.2% | 5.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Identiv, Inc. ($INVE) | - | - | 2.1x | 1.9x | 9.0x |
| Itron, Inc. ($ITRI) | 1.0x | 2.0x | 12.3x | 3.2x | 7.3x |
| Track Group Inc ($TRCK) | - | - | 12.2x | 5.2x | 3.5x |
| Trimble Inc. ($TRMB) | 1.1x | 1.3x | 3.4x | 2.9x | 2.2x |
| Zebra Technologies Corporation ($ZBRA) | 6.5x | 3.7x | 2.0x | 1.5x | 1.5x |
| |
|---|
| Median (16 companies) | -0.8x | -0.7x | -0.9x | 0.5x | 0.3x |
|---|
| Luna Innovations Incorporated ($LUNA) | -6.9x | -108.1x | -19.9x | -2.9x | 1.8x |
