Liquidmetal Technologies, Inc. :LQMT-US: Earnings Analysis: Q3, 2016 By the Numbers : November 28, 2016

Liquidmetal Technologies, Inc. reports financial results for the quarter ended September 30, 2016.

We analyze the earnings along side the following peers of Liquidmetal Technologies, Inc. – Materion Corporation, Ferroglobe PLC and Haynes International, Inc. (MTRN-US, GSM-US and HAYN-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 0.15 million, Net Earnings of USD -3.80 million.
  • Gross margins widened from -345.24% to -7.14% compared to the same period last year, operating (EBITDA) margins now -1,372.73% from -5,078.57%.
  • Year-on-year change in operating cash flow of -2.97% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline largely a result of non-operational activity, pretax margins improved from -2,928.57% to -2,468.83%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-09-30 2016-06-30 2016-03-31 2015-12-31 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 0.15 0.03 0.17 0.02 0.04
Revenue Growth (%YOY) 266.67 -12.82 546.15 -90.67 -56.7
Earnings (mil) -3.8 -0.82 -9.18 -1.52 -1.23
Earnings Growth (%YOY) -209.45 60.54 -270.3 -272.14 -20.87
Net Margin (%) -2467.53 -2417.65 -5461.9 -8444.44 -2923.81
EPS -0.01 -0 -0.02 -0 -0
Return on Equity (%) -350.43 -81.63 -1038.01 -122.21 -88.22
Return on Assets (%) -152.74 -26.57 -351.07 -74.7 -53.16

Access our Ratings and Scores for Liquidmetal Technologies, Inc.

Market Share Versus Profits

Revenues History
Earnings History

LQMT-US‘s change in revenue this period compared to the same period last year of 266.67% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that LQMT-US is holding onto its market share. Also, for comparison purposes, revenues changed by 352.94% and earnings by -362.29% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from -345.24% to -7.14%, while operating margins improved from -5,078.57% to -1,372.73% over this period. For comparison, gross margins were -355.88% and EBITDA margins -6,544.12% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

LQMT-US‘s improvement in gross margin has been accompanied by an improvement in its balance sheet as well. This suggests that gross margin improvements are likely from operating decisions and not accounting gimmicks. Its working capital days have declined to 3,152.20 days from 12,292.58 days for the same period last year.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

LQMT-US‘s change in operating cash flow of -2.97% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings decline is largely a result of non-operational activity. As a matter of fact, the company showed increases in operating (EBIT) and pretax margins. EBIT margins improved from -5,395.24% to -1,453.25% and pretax margins widened from -2,928.57% to -2,468.83%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Liquidmetal Technologies, Inc.

Company Profile

Liquidmetal Technologies, Inc. engages in the research, development and commercialization of amorphous metals. The company designs, develops and sells products and components from bulk amorphous alloys to customers in various industrial applications which include medical, military, consumer, industrial and sporting goods products. Liquidmetal Technologies was founded in 1987 and is headquartered in Rancho Santa Margarita, CA.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of LQMT-US.