TELUS Corp Debt surged on 29.0% in 2015 and EBITDA increased slightly on 1.1%
11.02.2016 • About TELUS Corp (
$T) • By InTwits
TELUS Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 34.1% in 2015 vs. 35.1% in 2014 vs. 36.3% in 2011
- TELUS Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.7%. At the same time it's a lot of higher than industry average of 8.1%.
- CAPEX is quite volatile: 4,468 in 2015, 11,398 in 2014, 7,211 in 2013, 6,104 in 2012, 6,201 in 2011
- The company has business model with average profitability: ROIC is at 11.5%
- It operates with high leverage: Net Debt/EBITDA is 2.8x while industry average is 0.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TELUS Corp ($T) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 10,397 | 10,921 | 11,404 | 12,002 | 12,502 | 4.2% |
| Gross Profit | 5,671 | 6,101 | 6,442 | 6,703 | 6,970 | 4.0% |
| EBITDA | 3,778 | 3,859 | 4,018 | 4,216 | 4,262 | 1.1% |
| Net Income | 1,219 | 1,204 | 1,294 | 1,425 | 1,382 | -3.0% |
Balance Sheet
|
|---|
| Cash | 46 | 107 | 336 | 60 | 223 | 271.7% |
| Short Term Debt | 1,470 | 947 | 400 | 355 | 956 | 169.3% |
| Long Term Debt | 5,508 | 5,711 | 7,493 | 9,055 | 11,182 | 23.5% |
Cash flow
|
|---|
| Capex | 1,867 | 1,950 | 2,035 | 2,373 | 2,522 | 6.3% |
Ratios
|
|---|
| Revenue growth | 6.2% | 5.0% | 4.4% | 5.2% | 4.2% | |
| EBITDA growth | 3.5% | 2.1% | 4.1% | 4.9% | 1.1% | |
| Gross Margin | 54.5% | 55.9% | 56.5% | 55.8% | 55.8% | -0.1% |
| EBITDA Margin | 36.3% | 35.3% | 35.2% | 35.1% | 34.1% | -1.0% |
| Net Income Margin | 11.7% | 11.0% | 11.3% | 11.9% | 11.1% | -0.8% |
| CAPEX, % of revenue | 18.0% | 17.9% | 17.8% | 19.8% | 20.2% | 0.4% |
| ROIC | 12.3% | 12.4% | 13.0% | 13.0% | 11.5% | -1.5% |
| ROE | 16.0% | 15.8% | 16.5% | 18.4% | 18.3% | -0.2% |
| Net Debt/EBITDA | 1.8x | 1.7x | 1.9x | 2.2x | 2.8x | 0.6x |
Revenue and profitability
TELUS Corp's Revenue increased on 4.2% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.7 pp from 53.0% to 42.3% in 2015.
Gross Margin showed almost no change in 2015.
Net Income marign decreased slightly on 0.82 pp from 11.9% to 11.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 20.2% in 2015. The company showed CAPEX/Revenue growth of 2.3 pp from 17.9% in 2012 to 20.2% in 2015. It's average CAPEX/Revenue for the last three years was 19.3%.The company invested a large share of EBITDA (59.2%) to CAPEX.
Return on investment
The company operates at good ROE (18.27%) while ROIC is low (11.49%). ROIC decreased slightly on 1.5 pp from 13.0% to 11.5% in 2015. ROE showed almost no change in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.8x and Debt / EBITDA is 2.8x. Net Debt / EBITDA surged on 0.6x from 2.2x to 2.8x in 2015. Debt jumped on 29.0% in 2015 while cash surged on 272% in 2015.
Management team
TELUS Corp's CEO Darren Entwistle is a founder and has spent 18 years at the company.
Appendix 1: Peers in Communications
Below you can find TELUS Corp benchmarking vs. other companies in Communications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
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 ($AIM) | 2.9% | 6.3% | -25.6% | 47.5% | |
| |
|---|
| Median (49 companies) | 10.2% | 2.5% | 1.8% | 1.9% | 2.5% |
|---|
| TELUS Corp ($T) | | 5.0% | 4.4% | 5.2% | 4.2% |
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 ($STC) | 74.5% | 68.8% | | 66.9% | 67.2% |
| |
|---|
| Median (40 companies) | 43.2% | 42.8% | 42.5% | 41.8% | 46.9% |
|---|
| TELUS Corp ($T) | 54.5% | 55.9% | 56.5% | 55.8% | 55.8% |
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 ($BCE) | 37.0% | 38.8% | 37.7% | 38.4% | 37.7% |
| |
|---|
| Median (49 companies) | 14.1% | 13.5% | 14.1% | 11.7% | 18.2% |
|---|
| TELUS Corp ($T) | 36.3% | 35.3% | 35.2% | 35.1% | 34.1% |
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 ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | 22.9% |
| |
|---|
| Median (52 companies) | 4.3% | 2.2% | 3.0% | 2.1% | 2.3% |
|---|
| TELUS Corp ($T) | 18.0% | 17.9% | 17.8% | 19.8% | 20.2% |
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% | 51.4% |
| 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 ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | |
| |
|---|
| Median (53 companies) | 6.3% | 8.0% | 8.2% | 8.0% | 3.8% |
|---|
| TELUS Corp ($T) | 12.3% | 12.4% | 13.0% | 13.0% | 11.5% |
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 ($PNC.B) | 2.9x | 3.3x | 3.4x | 4.2x | |
| |
|---|
| Median (41 companies) | 0.9x | 1.4x | 1.3x | 1.4x | 1.8x |
|---|
| TELUS Corp ($T) | 1.8x | 1.7x | 1.9x | 2.2x | 2.8x |
