Redline Communications Group Inc reports 171% Net Income decline and 9.9 pp EBITDA Margin decline from 7.2% to -2.7%
07.03.2016 • About Redline Communications Group Inc (
$RDL) • By InTwits
Redline Communications Group Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Redline Communications Group Inc is a company in decline: 2015 revenue growth was -17.3%, 5 years revenue CAGR was -11.2%
- The company operates at negative EBITDA Margin: -2.7%
- EBITDA Margin is quite volatile: -2.7% in 2015, 7.2% in 2014, -19.8% in 2013, 5.7% in 2012, 10.9% in 2011
- Redline Communications Group Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's a lot of higher than industry average of 8.5%.
- CAPEX is quite volatile: 0.20 in 2015, 0.40 in 2014, 1.2 in 2013, 0.16 in 2012, 0.58 in 2011
- The company has unprofitable business model: ROIC is at -5.7%
- It operates with high leverage: Net Debt/EBITDA is 17.2x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Redline Communications Group Inc ($RDL) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 58.023 | 49.041 | 31.703 | 36.439 | 30.130 | -17.3% |
| Gross Profit | 33.775 | 27.668 | 19.375 | 20.454 | 16.861 | -17.6% |
| SG&A | | | 18.505 | 14.160 | 13.980 | -1.3% |
| EBITDA | 6.330 | 2.793 | -6.280 | 2.608 | -0.827 | -131.7% |
| Net Income | 4.062 | -9.502 | -4.117 | 2.480 | -1.751 | -170.6% |
Balance Sheet
|
|---|
| Cash | 4.651 | 8.287 | 13.473 | 16.364 | 14.549 | -11.1% |
| Short Term Debt | 6.182 | 7.413 | 4.981 | 4.311 | 3.070 | -28.8% |
| Long Term Debt | 4.263 | 9.458 | 1.208 | 0.357 | 0.084 | -76.4% |
Cash flow
|
|---|
| Capex | 0.584 | 0.157 | 1.227 | 0.404 | 0.197 | -51.1% |
Ratios
|
|---|
| Revenue growth | 6.6% | -15.5% | -35.4% | 14.9% | -17.3% | |
| EBITDA growth | 101.4% | -55.9% | -324.9% | -141.5% | -131.7% | |
| Gross Margin | 58.2% | 56.4% | 61.1% | 56.1% | 56.0% | -0.2% |
| EBITDA Margin | 10.9% | 5.7% | -19.8% | 7.2% | -2.7% | -9.9% |
| Net Income Margin | 7.0% | -19.4% | -13.0% | 6.8% | -5.8% | -12.6% |
| SG&A, % of revenue | | | 58.4% | 38.9% | 46.4% | 7.5% |
| CAPEX, % of revenue | 1.0% | 0.3% | 3.9% | 1.1% | 0.7% | -0.5% |
| ROIC | 470.1% | 14.3% | -26.1% | 7.1% | -5.7% | -12.8% |
| ROE | | | -30.5% | 10.8% | -6.9% | -17.7% |
| Net Debt/EBITDA | 0.9x | 3.1x | | -4.5x | | 4.5x |
Revenue and profitability
The company's Revenue dropped on 17.3% in 2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 9.9 pp from 7.2% to -2.7% in 2015.
Gross Margin showed almost no change in 2015. SG&A as a % of Revenue increased on 7.5 pp from 38.9% to 46.4% in 2015.
Net Income marign dropped on 12.6 pp from 6.8% to -5.8% in 2015.
Capital expenditures (CAPEX) and working capital investments
Redline Communications Group Inc's CAPEX/Revenue was 0.66% in 2015. The company showed almost no change in CAPEX/Revenue from 2012 to 2015. It's average CAPEX/Revenue for the last three years was 1.9%.
Return on investment
The company operates at negative ROIC (-5.72%) and ROE (-6.94%). ROIC dropped on 12.8 pp from 7.1% to -5.7% in 2015. ROE dropped on 17.7 pp from 10.8% to -6.9% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 17.2x and Debt / EBITDA is . Net Debt / EBITDA jumped on 4.5x from -4.5x to in 2015. Debt dropped on 32.4% in 2015 while cash dropped on 11.1% in 2015.
Appendix 1: Peers in Communications
Below you can find Redline Communications Group Inc 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 ($AIM) | | 6.3% | -25.6% | 47.5% | -0.3% |
| |
|---|
| Median (49 companies) | 10.4% | 5.0% | 2.1% | 1.9% | 2.7% |
|---|
| Redline Communications Group Inc ($RDL) | | -15.5% | -35.4% | 14.9% | -17.3% |
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% | 81.1% |
| Sangoma Technologies Corp ($STC) | 74.5% | 68.8% | | 66.9% | 67.2% |
| |
|---|
| Median (40 companies) | 43.2% | 42.8% | 42.5% | 41.8% | 46.4% |
|---|
| Redline Communications Group Inc ($RDL) | 58.2% | 56.4% | 61.1% | 56.1% | 56.0% |
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 ($BCE) | 37.0% | 38.8% | 37.7% | 38.4% | 37.7% |
| |
|---|
| Median (49 companies) | 16.4% | 15.6% | 14.8% | 13.4% | 13.2% |
|---|
| Redline Communications Group Inc ($RDL) | 10.9% | 5.7% | -19.8% | 7.2% | -2.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newfoundland Capital Corp Ltd ($NCC.B) | | 8.7% | 5.5% | 76.8% | 5.9% |
| Axia NetMedia Corp ($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 ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | 22.9% |
| |
|---|
| Median (52 companies) | 4.3% | 2.3% | 3.0% | 2.3% | 2.4% |
|---|
| Redline Communications Group Inc ($RDL) | 1.0% | 0.3% | 3.9% | 1.1% | 0.7% |
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% | 18.8% |
| NeuLion Inc ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | -3.7% |
| |
|---|
| Median (53 companies) | 6.3% | 8.0% | 8.3% | 8.3% | 5.1% |
|---|
| Redline Communications Group Inc ($RDL) | 470.1% | 14.3% | -26.1% | 7.1% | -5.7% |
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 ($MDZ.A) | 7.3x | 12.4x | 112.6x | 4.6x | 5.5x |
| Quebecor Inc ($QBR.B) | 2.0x | 3.7x | 3.9x | 4.2x | |
| Postmedia Network Canada Corp ($PNC.B) | 2.9x | 3.3x | 3.4x | 4.2x | |
| |
|---|
| Median (41 companies) | 1.0x | 1.4x | 1.3x | 1.5x | 1.6x |
|---|
| Redline Communications Group Inc ($RDL) | 0.9x | 3.1x | | -4.5x | |
