Interlink Electronics, Inc. (LINK) Bundle
Understanding Interlink Electronics, Inc. (LINK) Revenue Streams
Understanding Interlink Electronics, Inc.’s Revenue Streams
Interlink Electronics, Inc. generates revenue through various channels, primarily categorized into product sales across different markets. The main revenue sources include:
- Medical Products
- Industrial Products
- Consumer Products
- Standard Products
Revenue Breakdown by Segment
| Market Segment | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Medical | $572 | $831 | -31.2% |
| Industrial | $833 | $988 | -15.7% |
| Consumer | $80 | $56 | +42.9% |
| Standard | $1,186 | $1,200 | -1.2% |
| Total Revenue | $2,671 | $3,075 | -13.1% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, the total revenue was $8,693,000, which reflects a decrease from $10,402,000 in the same period of 2023, resulting in a year-over-year decline of -16.4%.
Contribution of Different Business Segments to Overall Revenue
| Market Segment | 9M 2024 Revenue (in thousands) | 9M 2023 Revenue (in thousands) | Contribution to Total Revenue (%) | Year-over-Year Change (%) |
|---|---|---|---|---|
| Medical | $3,035 | $3,871 | 34.9% | -21.6% |
| Industrial | $2,019 | $3,173 | 23.2% | -36.4% |
| Consumer | $217 | $350 | 2.5% | -38.0% |
| Standard | $3,422 | $3,008 | 39.4% | +13.8% |
| Total Revenue | $8,693 | $10,402 | 100.0% | -16.4% |
Analysis of Significant Changes in Revenue Streams
In the third quarter of 2024, revenue decreased significantly, primarily due to reduced demand in the medical and industrial markets. The total revenue for Q3 2024 was $2,671,000, down from $3,075,000 in Q3 2023, marking a 13.1% decline. This decline is attributed to lower orders from key customers and delays in order fulfillment, particularly for the membrane printed electronics products from the Calman subsidiary.
In contrast, revenue from consumer products showed a notable increase of 42.9% year-over-year, indicating some resilience in that segment despite overall revenue decline.
A Deep Dive into Interlink Electronics, Inc. (LINK) Profitability
A Deep Dive into Interlink Electronics, Inc. Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $3,633,000 or 42.1% of revenue, compared to $5,107,000 or 49.1% for the same period in 2023, reflecting a decrease of 28.9%.
Operating Profit Margin: The operating loss for the nine months ended September 30, 2024, was $(1,540,000), resulting in an operating margin of (17.7)%. In contrast, the operating income for the nine months ended September 30, 2023, was $141,000, yielding an operating margin of 1.4%.
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was $(1,571,000), with a net profit margin of (18.1)%. For the same period in 2023, the net income was $65,000, resulting in a net profit margin of 0.6%.
Trends in Profitability Over Time
Comparing the three months ended September 30, 2024, to the same period in 2023, gross profit decreased from $1,459,000 (47.4%) to $1,105,000 (41.4%), representing a decline of 24.3%.
Overall, the profitability metrics show a downward trend, with significant losses reported in 2024 compared to positive income in 2023.
Comparison of Profitability Ratios with Industry Averages
Industry averages for similar companies in the electronics sector typically report gross margins around 45%-50%, operating margins near 10%-15%, and net margins of approximately 5%-10%. The metrics for the company indicate below-average performance in all profitability measures, highlighting potential concerns for investors.
Analysis of Operational Efficiency
Operating expenses for the nine months ended September 30, 2024, were $5,203,000, up from $4,966,000 in 2023, representing an increase of 4.8%. Key components included:
- Engineering, research and development expenses were $1,572,000 (18.1% of revenue) in 2024, down from $1,765,000 (17.0%) in 2023, a decrease of 10.9%.
- Selling, general and administrative expenses rose to $3,631,000 (41.8%) in 2024 from $3,201,000 (30.8%) in 2023, an increase of 13.4%.
The increase in SG&A expenses, particularly due to intangible asset amortization from the Calman acquisition, has adversely affected overall profitability.
| Metric | 2024 (9 Months) | 2023 (9 Months) | % Change |
|---|---|---|---|
| Gross Profit | $3,633,000 (42.1%) | $5,107,000 (49.1%) | (28.9)% |
| Operating Income | $(1,540,000) (17.7%) | $141,000 (1.4%) | (1,093.6)% |
| Net Income | $(1,571,000) (18.1%) | $65,000 (0.6%) | (2,520.0)% |
| SG&A Expenses | $3,631,000 (41.8%) | $3,201,000 (30.8%) | 13.4% |
Debt vs. Equity: How Interlink Electronics, Inc. (LINK) Finances Its Growth
Debt vs. Equity: How Interlink Electronics Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Interlink Electronics reported total liabilities of $2.655 million, comprising current liabilities of $1.254 million and long-term liabilities of $1.401 million. The company has no outstanding long-term debt obligations, reflecting a strategy focused on equity financing rather than leveraging debt for growth.
Debt-to-Equity Ratio and Comparison to Industry Standards
Interlink Electronics maintains a debt-to-equity ratio of 0.23, calculated from total liabilities of $2.655 million against total stockholders' equity of $11.466 million. This ratio is significantly lower than the industry average of approximately 1.0, indicating a conservative approach to leverage and a preference for equity funding.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
The company has not engaged in any recent debt issuances. Its credit profile remains stable, with no significant adverse credit ratings reported. Interlink Electronics has maintained a consistent dividend payment on its 8.0% Series A Convertible Preferred Stock, reflecting a commitment to shareholder returns while avoiding additional debt.
How the Company Balances Between Debt Financing and Equity Funding
Interlink Electronics emphasizes equity funding for its operational needs and growth strategies. As of September 30, 2024, the company has 200,000 shares of Series A Convertible Preferred Stock outstanding, with a liquidation preference of $5 million. The monthly cumulative dividends on this preferred stock amount to $0.16667 per share, totaling approximately $33,334 per month. This strategy allows the company to finance growth without incurring substantial debt, thereby minimizing financial risk.
| Financial Metric | Amount (in thousands) |
|---|---|
| Total Liabilities | $2,655 |
| Current Liabilities | $1,254 |
| Long-Term Liabilities | $1,401 |
| Total Stockholders' Equity | $11,466 |
| Debt-to-Equity Ratio | 0.23 |
| Series A Preferred Shares Outstanding | 200,000 |
| Liquidation Preference (Total) | $5,000 |
| Monthly Cumulative Dividend per Share | $0.16667 |
| Total Monthly Dividend Payment | $33.334 |
Assessing Interlink Electronics, Inc. (LINK) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $7,200 | $1,254 | 5.74 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Quick Assets (in thousands) | Current Liabilities (in thousands) | Quick Ratio |
|---|---|---|
| $4,700 | $1,254 | 3.75 |
Working Capital Trends: The working capital as of September 30, 2024, is:
| Working Capital (in thousands) | Change from Previous Period (in thousands) |
|---|---|
| $6,946 | -$1,000 |
Cash Flow Statement Overview:
- Operating Activities: Net cash used in operating activities for the nine months ended September 30, 2024 was ($144,000), compared to $155,000 for the same period in 2023.
- Investing Activities: Net cash used in investing activities was ($107,000) for the nine months ended September 30, 2024, versus ($4,322,000) in 2023.
- Financing Activities: Net cash used in financing activities was ($300,000) in 2024, compared to ($650,000) in 2023.
Liquidity Concerns or Strengths: As of September 30, 2024, the company had:
- Cash and Cash Equivalents: $3.8 million
- Working Capital: $6.5 million
- Total Current Liabilities: $1.25 million
- No Indebtedness
These figures indicate a strong liquidity position, with significant cash reserves and no current debt obligations. However, the decrease in working capital from the previous period raises potential concerns regarding operational cash flow management.
Is Interlink Electronics, Inc. (LINK) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of the company, several key metrics are essential for understanding whether the stock is overvalued or undervalued. The following sections provide a detailed breakdown of valuation ratios, stock price trends, and analyst consensus as of 2024.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for assessing valuation. As of the latest financial data, the company reported a net loss of $1,571,000 for the nine months ended September 30, 2024. With a basic earnings per share of ($0.19) for the same period, the P/E ratio cannot be calculated due to negative earnings. This indicates that the stock may be trading at a premium despite the lack of profitability.
Price-to-Book (P/B) Ratio
The book value per share is calculated from the company’s total equity. As of September 30, 2024, the total stockholders' equity was $11,466,000 with 9,864,000 shares outstanding, resulting in a book value per share of approximately $1.16. If the current stock price is, for example, $2.00, the P/B ratio would be about 1.72, suggesting the stock may be overvalued compared to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The company reported an operating loss for the nine months ended September 30, 2024, with EBITDA being negative. Therefore, the EV/EBITDA ratio is also not applicable, suggesting further caution for investors evaluating the company's value.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly. The stock began the year at approximately $2.50 and has seen a decline, reaching a low of $1.50 in recent months. As of the last trading day, the stock price was around $2.00, indicating a 20% decrease from its opening price.
Dividend Yield and Payout Ratios
The company has a Series A Convertible Preferred Stock with an annual dividend of 8.0%. However, with the common stock currently trading at $2.00, the yield is 0% for common stockholders as no dividends are declared on common shares.
Analyst Consensus on Stock Valuation
Analyst consensus on the stock as of 2024 is mixed. Some analysts rate the stock as a Hold due to the lack of profitability and recent stock performance, while others suggest a Sell rating considering the company's declining revenues and negative earnings.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Negative Earnings) |
| P/B Ratio | 1.72 |
| EV/EBITDA Ratio | N/A (Negative EBITDA) |
| Stock Price (Current) | $2.00 |
| Stock Price (12-Month High) | $2.50 |
| Stock Price (12-Month Low) | $1.50 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold/Sell |
Key Risks Facing Interlink Electronics, Inc. (LINK)
Key Risks Facing Interlink Electronics, Inc.
The financial health of Interlink Electronics, Inc. is influenced by a variety of internal and external risks that investors should consider. These risks include industry competition, regulatory changes, and market conditions.
Industry Competition
Interlink operates in a highly competitive environment, particularly in the medical, industrial, and consumer markets. Revenues from medical products decreased by $836,000 (down 21.6%) for the nine months ended September 30, 2024 compared to the same period in 2023. Revenues from industrial products fell by $1,154,000 (down 36.4%) during the same timeframe.
Regulatory Changes
The company is subject to various regulations that could impact operations. Changes in laws, particularly regarding environmental standards and product safety, could necessitate costly compliance measures. As of September 30, 2024, the effective tax rate was 4.0%, significantly lower than the 78.0% from the previous year, indicating potential volatility in fiscal obligations.
Market Conditions
Fluctuations in customer demand have been noted as a significant risk. The company faced lower demand from key customers, which affected overall revenues. For the nine months ended September 30, 2024, total net revenues decreased by 16.4%, from $10.4 million to $8.7 million.
Operational Risks
Operational delays have also posed risks. For instance, there were fulfillment delays from a major customer of membrane printed electronics, which contributed to revenue fluctuations. As a result, gross profit decreased by $1,474,000 (down 28.9%) for the nine months ended September 30, 2024.
Financial Risks
The company reported a net loss applicable to common stockholders of $1,871,000 for the nine months ended September 30, 2024, compared to a loss of $235,000 in the prior year. This decline highlights financial instability that could affect investor confidence.
Mitigation Strategies
To address these risks, Interlink has implemented several strategies. The company maintains a cash balance of $3.8 million as of September 30, 2024, which is intended to support ongoing operations. Furthermore, Interlink has a liquidity strategy that includes the potential to repatriate funds from foreign subsidiaries without significant tax implications.
| Risk Factor | Impact | Recent Financial Figures |
|---|---|---|
| Industry Competition | Increased competition affecting market share | Revenues from medical products down $836,000 (21.6%) |
| Regulatory Changes | Compliance costs affecting profitability | Effective tax rate of 4.0% compared to 78.0% |
| Market Conditions | Fluctuating customer demand impacting revenues | Net revenues decreased by 16.4% to $8.7 million |
| Operational Risks | Delays in order fulfillment | Gross profit down $1,474,000 (28.9%) |
| Financial Risks | Increased net losses affecting investor confidence | Net loss of $1,871,000 for the nine months ended September 30, 2024 |
Future Growth Prospects for Interlink Electronics, Inc. (LINK)
Future Growth Prospects for Interlink Electronics, Inc.
Analysis of Key Growth Drivers
The company is exploring various growth opportunities through product innovations, market expansions, and strategic acquisitions. Key product innovations include advancements in membrane printed electronics, which are critical for diverse applications across medical, industrial, and consumer markets.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company reported a net revenue of $8.693 million, down from $10.402 million in the same period of 2023, representing a decline of 16.4%. The gross profit for this period was $3.663 million, with a gross margin of 42.1%. Future revenue projections indicate potential growth driven by a recovery in demand, particularly in the standard product lines, which saw an increase of 13.8% year-over-year.
Strategic Initiatives or Partnerships That May Drive Future Growth
Recent strategic initiatives include the acquisition of Calman Technology Limited in March 2023 for approximately $4.912 million, which is expected to enhance the company’s capabilities in printed electronics. Partnerships with key customers in various sectors will also be pivotal in expanding market reach and enhancing product offerings.
Competitive Advantages That Position the Company for Growth
The company maintains competitive advantages such as a strong intellectual property portfolio and a focus on custom solutions tailored to client needs. The engineering and research and development expenses for the nine months ended September 30, 2024, were $1.572 million, accounting for 18.1% of total revenue. This investment in R&D is essential for fostering innovation and maintaining leadership in technology development.
| Growth Driver | Details | Projected Impact |
|---|---|---|
| Product Innovations | Advancements in membrane printed electronics | Increase in market share in medical and industrial applications |
| Market Expansions | Enhancing distribution networks for standard products | Potential revenue increase from new customer segments |
| Acquisitions | Acquisition of Calman Technology Limited | Enhanced product offerings and capabilities in printed electronics |
| Strategic Partnerships | Collaborations with key industry players | Broader market access and joint development opportunities |
As of September 30, 2024, the company reported cash and cash equivalents of $3.8 million and working capital of $6.5 million, with no indebtedness. This financial stability supports the company's ability to pursue growth initiatives effectively.
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Resources:
- Interlink Electronics, Inc. (LINK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Interlink Electronics, Inc. (LINK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Interlink Electronics, Inc. (LINK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.