TeraGo Inc Debt jumped on 144% in 2015 and Net Debt / EBITDA jumped on 1.0x from 1.4x to 2.4x
17.03.2016 • About TeraGo Inc (
$TGO) • By InTwits
TeraGo Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TeraGo Inc doesn't have a profitable business model yet: 2015 ROIC is -1.5%
- TeraGo Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.4%. At the same time it's a lot of higher than industry average of 6.6%.
- CAPEX is quite volatile: 56.5 in 2015, 62.5 in 2014, 21.4 in 2013, 20.6 in 2012, 6.8 in 2011
- The company has unprofitable business model: ROIC is at -1.5%
- It operates with high leverage: Net Debt/EBITDA is 2.4x while industry average is -0.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TeraGo Inc ($TGO) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 44.923 | 49.168 | 51.426 | 51.229 | 57.720 | 12.7% |
| Gross Profit | 29.179 | 30.911 | 31.792 | 30.648 | 44.561 | 45.4% |
| SG&A | | | 1.388 | | | |
| EBITDA | 10.215 | 14.493 | 16.453 | 11.377 | 13.912 | 22.3% |
| Net Income | 0.214 | 4.857 | 4.309 | -3.927 | -2.810 | -28.4% |
Balance Sheet
|
|---|
| Cash | 3.224 | 1.469 | 2.137 | 2.866 | 13.066 | 355.9% |
| Short Term Debt | 3.557 | 3.943 | 6.288 | 2.301 | 6.123 | 166.1% |
| Long Term Debt | 10.025 | 8.469 | 12.824 | 16.493 | 39.658 | 140.5% |
Cash flow
|
|---|
| Capex | 9.710 | 10.274 | 11.053 | 11.854 | 8.542 | -27.9% |
Ratios
|
|---|
| Revenue growth | 18.9% | 9.4% | 4.6% | -0.4% | 12.7% | |
| EBITDA growth | 89.8% | 41.9% | 13.5% | -30.9% | 22.3% | |
| Gross Margin | 65.0% | 62.9% | 61.8% | 59.8% | 77.2% | 17.4% |
| EBITDA Margin | 22.7% | 29.5% | 32.0% | 22.2% | 24.1% | 1.9% |
| Net Income Margin | 0.5% | 9.9% | 8.4% | -7.7% | -4.9% | 2.8% |
| SG&A, % of revenue | | | 2.7% | | | 0.0% |
| CAPEX, % of revenue | 21.6% | 20.9% | 21.5% | 23.1% | 14.8% | -8.3% |
| ROIC | 3.2% | 8.0% | 7.7% | -3.2% | -1.5% | 1.7% |
| ROE | 0.6% | 13.5% | 10.5% | -9.2% | -6.0% | 3.2% |
| Net Debt/EBITDA | 1.0x | 0.8x | 1.0x | 1.4x | 2.4x | 1.0x |
Revenue and profitability
The company's Revenue jumped on 12.7% in 2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.9 pp from 22.2% to 24.1% in 2015.
Gross Margin surged on 17.4 pp from 59.8% to 77.2% in 2015.
Net Income marign increased on 2.8 pp from -7.7% to -4.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 14.8% in 2015. TeraGo Inc's CAPEX/Revenue decreased on 6.1 pp from 20.9% in 2012 to 14.8% in 2015. Average CAPEX/Revenue for the last three years was 19.8%.TeraGo Inc invested a big chunk of EBITDA (61.4%) to CAPEX to fuel its growth.
Return on investment
The company operates at negative ROIC (-1.53%) and ROE (-6.00%). ROIC increased slightly on 1.7 pp from -3.2% to -1.5% in 2015. ROE increased on 3.2 pp from -9.2% to -6.0% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.4x and Debt / EBITDA is 3.3x. Net Debt / EBITDA jumped on 1.0x from 1.4x to 2.4x in 2015. Debt jumped on 144% in 2015 while cash jumped on 356% in 2015.
Appendix 1: Peers in Communications
Below we provide TeraGo 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 |
|---|
| Intertain Group Ltd/The ($IT) | | | | | 842.9% |
| DragonWave Inc ($DWI) | | -61.3% | 171.3% | -27.3% | 75.3% |
| Blackline Safety Corp ($BLN) | | 37.1% | 9.4% | 45.1% | 73.8% |
| NeuLion Inc ($NLN) | | -1.7% | 20.8% | 17.9% | 69.4% |
| TVA Group Inc ($TVA.B) | | 1.7% | -1.8% | -1.2% | 34.3% |
| |
|---|
| Median (42 companies) | 10.2% | 2.5% | 1.8% | 3.1% | 3.2% |
|---|
| TeraGo Inc ($TGO) | | 9.4% | 4.6% | -0.4% | 12.7% |
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% |
| NeuLion Inc ($NLN) | 45.2% | 53.6% | 63.8% | 70.2% | 81.1% |
| Mediagrif Interactive Technologies Inc ($MDF) | 78.2% | 79.8% | 79.8% | 78.8% | 80.1% |
| Sangoma Technologies Corp ($STC) | 74.5% | 68.8% | | 66.9% | 67.2% |
| |
|---|
| Median (32 companies) | 43.2% | 42.8% | 42.5% | 41.8% | 48.3% |
|---|
| TeraGo Inc ($TGO) | 65.0% | 62.9% | 61.8% | 59.8% | 77.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Cogeco Cable Inc ($CCA) | 45.8% | 46.0% | 44.9% | 43.8% | 46.2% |
| Shaw Communications Inc ($SJR.B) | 43.3% | 42.7% | 43.3% | 42.1% | 44.6% |
| Cogeco Inc ($CGO) | 28.1% | 43.2% | 43.5% | 43.3% | 44.3% |
| Manitoba Telecom Services Inc ($MBT) | 33.7% | 34.3% | 33.7% | 47.4% | 42.3% |
| Mediagrif Interactive Technologies Inc ($MDF) | 32.0% | 32.5% | 41.3% | 37.2% | 39.0% |
| |
|---|
| Median (41 companies) | 14.1% | 13.5% | 14.1% | 11.7% | 15.0% |
|---|
| TeraGo Inc ($TGO) | 22.7% | 29.5% | 32.0% | 22.2% | 24.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newfoundland Capital Corp Ltd ($NCC.B) | | 8.7% | 5.5% | 76.8% | 5.9% |
| Axia NetMedia Corp ($AXX) | 10.7% | 30.8% | 27.2% | 27.0% | 36.2% |
| UrtheCast Corp ($UR) | | | | 26.5% | |
| Manitoba Telecom Services Inc ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | 22.9% |
| Cogeco Cable Inc ($CCA) | 24.6% | 28.1% | 23.0% | 20.6% | 20.7% |
| |
|---|
| Median (52 companies) | 4.3% | 2.2% | 3.0% | 2.1% | 2.3% |
|---|
| TeraGo Inc ($TGO) | 21.6% | 20.9% | 21.5% | 23.1% | 14.8% |
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 ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | -3.7% |
| |
|---|
| Median (53 companies) | 7.2% | 9.2% | 8.3% | 8.3% | 6.5% |
|---|
| TeraGo Inc ($TGO) | 3.2% | 8.0% | 7.7% | -3.2% | -1.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Intertain Group Ltd/The ($IT) | | | | | 9.4x |
| MDC Partners Inc ($MDZ.A) | 7.3x | 12.4x | 112.6x | 4.6x | 5.5x |
| Quebecor Inc ($QBR.B) | 2.0x | 3.7x | 3.9x | 4.2x | 4.8x |
| Plaintree Systems Inc ($NPT) | 0.7x | | | 124.2x | 3.9x |
| Rogers Communications Inc ($RCI.A) | 2.2x | 2.3x | 2.4x | 3.2x | 3.6x |
| |
|---|
| Median (33 companies) | 0.9x | 1.4x | 1.3x | 1.5x | 1.4x |
|---|
| TeraGo Inc ($TGO) | 1.0x | 0.8x | 1.0x | 1.4x | 2.4x |
