Sierra Wireless Inc reports 79.2% EBITDA growth and 1.9 pp EBITDA Margin growth from 3.1% to 5.0%
04.02.2016 • About Sierra Wireless Inc (
$SW) • By InTwits
Sierra Wireless Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 5.0% in 2015 vs. 3.1% in 2014 vs. -6.6% in 2011
- EBITDA Margin is quite volatile: 5.0% in 2015, 3.1% in 2014, 2.4% in 2013, 1.6% in 2012, -6.6% in 2011
- Sierra Wireless Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.0%. At the same time it's a lot of higher than industry average of 27.4%.
- CAPEX is quite volatile: 1,811 in 2015, 140 in 2014, 2,026 in 2013, 641 in 2012, 141 in 2011
- The company has potentially unprofitable business model: ROIC is at 2.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sierra Wireless Inc ($SW) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 333.2 | 397.3 | 441.9 | 548.5 | 607.8 | 10.8% |
| Gross Profit | 101.7 | 125.3 | 145.6 | 179.0 | 193.9 | 8.3% |
| SG&A | 70.9 | 69.8 | 77.3 | 87.5 | 94.5 | 8.0% |
| EBITDA | -21.9 | 6.4 | 10.6 | 16.9 | 30.3 | 79.2% |
| Net Income | -29.3 | 27.2 | 55.0 | -16.9 | -2.7 | -84.1% |
Balance Sheet
|
|---|
| Cash | 101.4 | 63.6 | 177.4 | 207.1 | 93.9 | -54.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 25.1 | 26.5 | 21.6 | 26.6 | 44.4 | 66.7% |
Cash flow
|
|---|
| Capex | 14.3 | 15.8 | 11.4 | 9.1 | 14.0 | 54.3% |
Ratios
|
|---|
| Revenue growth | -48.8% | 19.3% | 11.2% | 24.1% | 10.8% | |
| EBITDA growth | -188.8% | -129.2% | 66.5% | 59.2% | 79.2% | |
| Gross Margin | 30.5% | 31.5% | 33.0% | 32.6% | 31.9% | -0.7% |
| EBITDA Margin | -6.6% | 1.6% | 2.4% | 3.1% | 5.0% | 1.9% |
| Net Income Margin | -8.8% | 6.8% | 12.5% | -3.1% | -0.4% | 2.6% |
| SG&A, % of revenue | 21.3% | 17.6% | 17.5% | 16.0% | 15.5% | -0.4% |
| CAPEX, % of revenue | 4.3% | 4.0% | 2.6% | 1.7% | 2.3% | 0.6% |
| ROIC | -17.0% | -7.0% | -4.9% | -1.7% | 2.6% | 4.3% |
| ROE | -10.2% | 9.5% | 16.7% | -4.7% | -0.7% | 3.9% |
| Net Debt/EBITDA | | -5.8x | -14.7x | -10.7x | -1.6x | 9.0x |
Revenue and profitability
Sierra Wireless Inc's Revenue surged on 10.8% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.9 pp from 3.1% to 5.0% in 2015.
Gross Margin decreased slightly on 0.73 pp from 32.6% to 31.9% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign increased on 2.6 pp from -3.1% to -0.44% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.3% in 2015. Sierra Wireless Inc's CAPEX/Revenue decreased slightly on 1.7 pp from 4.0% in 2012 to 2.3% in 2015. For the last three years the average CAPEX/Revenue was 2.2%.
Return on investment
The company operates at low but positive ROIC (2.56%) and negative ROE (-0.75%). ROIC increased on 4.3 pp from -1.7% to 2.6% in 2015. ROE increased on 3.9 pp from -4.7% to -0.75% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.6x and Debt / EBITDA is 1.5x. Net Debt / EBITDA jumped on 9.0x from -10.7x to -1.6x in 2015. Debt jumped on 66.7% in 2015 while cash dropped on 54.6% in 2015.
Management team
Jason W Cohenour is a Sierra Wireless Inc's CEO. Jason W Cohenour is a founder and has spent 13 years at the company. David G Mclennan is a The company's CFO. David G Mclennan has spent 14 years at the company.
Appendix 1: Peers in Communications
Below we provide Sierra Wireless Inc benchmarking against other companies in Communications 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telehop Communications Inc ($HOP) | -11.7% | -13.1% | -7.8% | 105.7% | |
| Wi2Wi Corp ($YTY) | | | 11.5% | 100.3% | |
| BSM Technologies Inc ($GPS) | | | 39.1% | 55.5% | 2.7% |
| Plaintree Systems Inc ($NPT) | | 14.5% | 9.1% | 50.8% | -7.1% |
| Aimia Inc ($AIM) | 2.9% | 6.3% | -25.6% | 47.5% | |
| |
|---|
| Median (49 companies) | 10.2% | 2.5% | 1.8% | 1.9% | 2.5% |
|---|
| Sierra Wireless Inc ($SW) | | 19.3% | 11.2% | 24.1% | 10.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanted Technologies Corp ($WAN) | 86.6% | 90.5% | 93.2% | 94.3% | 95.6% |
| CounterPath Corp ($CCV) | 74.1% | 80.0% | 85.1% | 80.9% | 81.5% |
| Mediagrif Interactive Technologies Inc ($MDF) | 78.2% | 79.8% | 79.8% | 78.8% | 80.1% |
| NeuLion Inc ($NLN) | 45.2% | 53.6% | 63.8% | 70.2% | |
| Sangoma Technologies Corp ($STC) | 74.5% | 68.8% | | 66.9% | 67.2% |
| |
|---|
| Median (40 companies) | 43.3% | 43.3% | 42.7% | 42.5% | 52.3% |
|---|
| Sierra Wireless Inc ($SW) | 30.5% | 31.5% | 33.0% | 32.6% | 31.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Manitoba Telecom Services Inc ($MBT) | 33.7% | 34.3% | 33.7% | 47.4% | 42.3% |
| Cogeco Cable Inc ($CCA) | 45.8% | 46.0% | 44.9% | 43.8% | 46.2% |
| Cogeco Inc ($CGO) | 28.1% | 43.2% | 43.5% | 43.3% | 44.3% |
| Shaw Communications Inc ($SJR.B) | 43.3% | 42.7% | 43.3% | 42.1% | 44.6% |
| BCE Inc ($BCE) | 37.0% | 38.8% | 37.7% | 38.4% | 37.7% |
| |
|---|
| Median (49 companies) | 16.4% | 15.6% | 14.8% | 13.4% | 18.2% |
|---|
| Sierra Wireless Inc ($SW) | -6.6% | 1.6% | 2.4% | 3.1% | 5.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newfoundland Capital Corp Ltd ($NCC.B) | | 8.7% | 5.5% | 76.8% | |
| Axia NetMedia Corp ($AXX) | 10.7% | 30.8% | 27.2% | 27.0% | |
| UrtheCast Corp ($UR) | | | | 26.5% | |
| TeraGo Inc ($TGO) | 21.6% | 20.9% | 21.5% | 23.1% | |
| Manitoba Telecom Services Inc ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | 22.9% |
| |
|---|
| Median (52 companies) | 4.3% | 2.2% | 3.3% | 2.3% | 2.4% |
|---|
| Sierra Wireless Inc ($SW) | 4.3% | 4.0% | 2.6% | 1.7% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wi2Wi Corp ($YTY) | -28.5% | -166.9% | | 136.7% | |
| Tucows Inc ($TC) | 12.8% | 17.7% | 22.5% | 35.4% | |
| Asian Television Network International Ltd ($SAT) | 102.7% | 34.6% | 23.6% | 23.4% | |
| Points International Ltd ($PTS) | 20.7% | 14.9% | 15.0% | 21.2% | |
| NeuLion Inc ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | |
| |
|---|
| Median (53 companies) | 7.2% | 9.2% | 8.3% | 8.3% | 3.6% |
|---|
| Sierra Wireless Inc ($SW) | -17.0% | -7.0% | -4.9% | -1.7% | 2.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Plaintree Systems Inc ($NPT) | 0.7x | | | 124.2x | 3.9x |
| Advantex Marketing International Inc ($ADX) | | 4.8x | 2.2x | 5.0x | |
| MDC Partners Inc ($MDZ.A) | 7.3x | 12.4x | 112.6x | 4.6x | |
| Quebecor Inc ($QBR.B) | 2.0x | 3.7x | 3.9x | 4.2x | |
| Postmedia Network Canada Corp ($PNC.B) | 2.9x | 3.3x | 3.4x | 4.2x | |
| |
|---|
| Median (41 companies) | 1.0x | 1.4x | 1.3x | 1.5x | 2.0x |
|---|
| Sierra Wireless Inc ($SW) | | -5.8x | -14.7x | -10.7x | -1.6x |
