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eMagin Corporation CAPEX surged on 125% and Revenue jumped on 10.1%

03/18/2021 • About eMagin Corporation ($EMAN) • By InTwits

eMagin Corporation reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
  • The company operates at negative EBITDA Margin: -10.7%
  • eMagin Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 is 0.0%. Average EBITDA Margin for the same period was -22.8%
  • eMagin Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.9%. At the same time it's a lot of higher than industry average of 3.0%.
  • CAPEX is quite volatile: $3m in 2020, $1m in 2019, $2m in 2018, $1m in 2017, $1m in 2016
  • The company has unprofitable business model: ROIC is -23.8%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

EMagin Corporation's Revenue jumped on 10.1%. Revenue growth showed slowdown in 20Q4 - it was 4.7% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.7 pp from -25.7% to -27.4% in FY2020.

Gross Margin decreased on 3.5 pp from 25.2% to 21.6% in 2020. SG&A as a % of Revenue decreased slightly on 1.4 pp from 27.1% to 25.7% in 2020. SG&A as a % of Revenue declined at -3.9 pp per annum in 2016-2020.

Net Income margin dropped on 22.8 pp from -16.1% to -38.9% in 2020.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 8.5% in 2020. CAPEX/Revenue increased on 2.3 pp from 6.2% in 2017 to 8.5% in 2020. For the last three years the average CAPEX/Revenue was 7.1%.

Return on investment

The company operates at negative ROIC (-23.8%) and ROE (-101.2%). ROIC showed almost no change in 2020. ROE dropped on 65.9 pp from -35.3% to -101% in 2020. During 2016-2020 ROIC bottomed in 2018 at -59.0% and was growing since that time.

Leverage (Debt)

Company's Net Debt / EBITDA is -2.2x and Debt / EBITDA is . Net Debt / EBITDA didn't change in 2020. Debt surged on 119% while cash jumped on 137%.

eMagin Corporation has no short term refinancing risk: cash is higher than short term debt (281.6%).

Management team

Andrew G Sculley is a eMagin Corporation's CEO. Andrew G Sculley has spent 12 years with the company.

Financial and operational results

FY ended 12/31/2020

eMagin Corporation ($EMAN) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit6.4425.1243.9946.7286.365-5.4%
Net Income-8.049-7.783-9.542-4.298-11.448
Balance Sheet
Short Term Debt1.6893.8080.0003.6662.953-19.4%
Long Term Debt0.0000.0000.0003.09111.834282.9%
Cash flow
Revenue growth-14.9%3.0%19.1%1.9%10.1%
EBITDA growth164.2%-0.4%45.2%-73.8%23.7%

Gross Margin30.1%23.3%15.2%25.2%21.6%-3.5%
EBITDA Margin-31.3%-30.2%-36.9%-9.5%-10.7%-1.2%
SG&A, % of revenue39.3%39.4%34.2%27.1%25.7%-1.4%
Net Income Margin-37.6%-35.3%-36.4%-16.1%-38.9%-22.8%
CAPEX, % of revenue6.7%6.2%8.8%4.2%8.5%4.3%


eMagin Corporation ($EMAN) key quoterly financial indicators

mln. $20Q120Q220Q320Q4 YoY change
Revenue7878 10.1%43.6%-7.7%4.7%
EBITDA-1-1-1-1 ---366.0%-233.9%
Net Income-1-3-4-4 ----
Balance Sheet
Cash35108 -9.2%47.0%301.2%136.6%
Short Term Debt3113 -7.1%-25.5%-51.7%-19.4%
Long Term Debt33212 -19.1%-21.8%-24.1%282.9%
Gross Margin21.3%25.7%23.1%16.4% -0.6%21.5%-8.3%-20.0%
EBITDA Margin -9.2% -7.9% -14.8% -10.9% 14.5%31.8%-19.9%-19.4%
Net Income Margin -20.3% -36.8% -48.3% -48.4% 3.2%6.8%-44.3%-45.6%

Peers in Electronic Manufacturing Services

Below we provide eMagin Corporation benchmarking against other companies in Electronic Manufacturing Services 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
Netlist Inc ($NLST)-95.0%-12.5%-22.1%81.0%
IEC Electronics Corp. ($IEC)--24.1%21.2%34.3%16.4%
Jabil Inc. ($JBL)-3.9%15.9%14.4%7.8%
Plexus Corp. ($PLXS)--1.1%13.7%10.1%7.1%
SMTC Corporation ($SMTX)--17.1%55.2%72.4%3.7%
Median (13 companies)4.6%2.0%7.1%9.7%-8.7%
eMagin Corporation ($EMAN)-3.0%19.1%1.9%10.1%

Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Neonode Inc. ($NEON)86.9%77.1%89.2%89.7%82.0%
IPG Photonics Corporation ($IPGP)54.9%56.6%54.8%46.1%44.9%
CTS Corporation ($CTS)35.4%33.2%35.1%33.6%32.8%
TE Connectivity Ltd. ($TEL)33.7%34.3%33.9%32.7%30.7%
RF Industries, Ltd. ($RFIL)28.0%30.4%34.1%28.3%26.9%
Median (13 companies)16.7%13.8%12.1%13.8%14.3%
eMagin Corporation ($EMAN)30.1%23.3%15.2%25.2%21.6%

Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
IPG Photonics Corporation ($IPGP)41.8%44.7%40.9%26.8%24.0%
CTS Corporation ($CTS)20.7%14.0%17.8%17.6%18.1%
TE Connectivity Ltd. ($TEL)20.9%20.4%21.4%19.8%11.1%
TTM Technologies, Inc. ($TTMI)14.0%14.6%13.5%15.8%9.7%
IEC Electronics Corp. ($IEC)7.4%3.8%4.3%6.6%7.5%
Median (12 companies)5.4%5.0%4.8%6.1%5.9%
eMagin Corporation ($EMAN)-31.3%-30.2%-36.9%-9.5%-10.7%

Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
IPG Photonics Corporation ($IPGP)12.6%9.0%11.0%10.2%7.3%
TTM Technologies, Inc. ($TTMI)3.4%5.7%5.3%6.7%4.9%
TE Connectivity Ltd. ($TEL)5.3%5.6%6.7%5.6%4.6%
Jabil Inc. ($JBL)5.0%3.8%4.7%4.0%3.6%
CTS Corporation ($CTS)5.2%4.3%6.1%4.6%3.5%
Median (12 companies)2.8%2.7%2.4%1.4%2.6%
eMagin Corporation ($EMAN)6.7%6.2%8.8%4.2%8.5%

Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
IEC Electronics Corp. ($IEC)16.9%3.1%6.4%12.7%14.8%
Sanmina Corporation ($SANM)14.2%13.9%7.0%16.2%13.0%
Plexus Corp. ($PLXS)8.7%10.3%9.6%12.6%12.4%
Jabil Inc. ($JBL)12.3%9.3%12.5%16.1%10.8%
CTS Corporation ($CTS)18.1%9.8%14.8%11.8%9.2%
Median (13 companies)6.7%5.7%6.7%11.8%7.3%
eMagin Corporation ($EMAN)-36.4%-40.0%-59.0%-24.0%-23.8%

Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
SMTC Corporation ($SMTX)1.0x-11.3x3.8x4.2x
TE Connectivity Ltd. ($TEL)1.4x1.3x1.1x1.1x2.7x
IEC Electronics Corp. ($IEC)2.0x5.6x4.9x3.6x2.1x
TTM Technologies, Inc. ($TTMI)2.2x1.5x3.2x3.3x2.0x
Jabil Inc. ($JBL)1.0x0.8x1.0x0.9x1.4x
Median (11 companies)0.2x0.2x0.2x0.3x-0.0x