Cogeco Inc reports 41.9% EBITDA decline while 5.5% Revenue growth
02.11.2016 • About Cogeco Inc (
$CGO) • By InTwits
Cogeco Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cogeco Inc doesn't have a profitable business model yet: FY2016 ROIC is 1.1%
- Cogeco Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 21.1%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 99.9 in 2016, 425 in 2015, 658 in 2014, 579 in 2013, 188 in 2012
- The company has potentially unprofitable business model: ROIC is at 1.1%
- It operates with high leverage: Net Debt/EBITDA is 5.1x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Cogeco Inc ($CGO) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,406 | 1,834 | 2,096 | 2,187 | 2,307 | 5.5% |
| EBITDA | 607 | 799 | 908 | 968 | 562 | -41.9% |
| Net Income | 77 | 64 | 68 | 90 | -29 | -132.7% |
Balance Sheet
|
|---|
| Cash | 216 | 44 | 64 | 164 | 68 | -58.4% |
| Short Term Debt | 2 | 28 | 36 | 298 | 27 | -91.0% |
| Long Term Debt | 1,145 | 2,985 | 2,783 | 3,081 | 2,922 | -5.2% |
Cash flow
|
|---|
| Capex | 363 | 392 | 406 | 426 | 447 | 4.9% |
Ratios
|
|---|
| Revenue growth | 11.0% | 30.4% | 14.3% | 4.3% | 5.5% | |
| EBITDA growth | 70.6% | 31.6% | 13.7% | 6.6% | -41.9% | |
| EBITDA Margin | 43.2% | 43.5% | 43.3% | 44.3% | 24.4% | -19.9% |
| Net Income Margin | 5.5% | 3.5% | 3.2% | 4.1% | -1.3% | -5.4% |
| CAPEX, % of revenue | 25.8% | 21.4% | 19.3% | 19.5% | 19.4% | -0.1% |
| ROIC | 12.7% | 10.8% | 9.0% | 9.3% | 1.1% | -8.2% |
| ROE | 20.8% | 15.0% | 13.9% | 16.0% | -5.1% | -21.1% |
| Net Debt/EBITDA | 1.5x | 3.7x | 3.0x | 3.3x | 5.1x | 1.8x |
Cogeco Inc ($CGO) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 583 | 578 | 574 | 572 | 8.3% | 7.7% | 2.9% | 3.2% |
| EBITDA | 253 | 261 | -208 | 257 | 8.2% | 14.5% | -186.4% | -3.1% |
| Net Income | 25 | 33 | -118 | 30 | -5.9% | 124.2% | -621.0% | 17.3% |
Balance Sheet
|
|---|
| Cash | 41 | 62 | 92 | 68 | 150.6% | 248.6% | 23.1% | -58.4% |
| Short Term Debt | 73 | 65 | 39 | 27 | -72.0% | -77.2% | -86.3% | -91.0% |
| Long Term Debt | 3,247 | 3,166 | 3,084 | 2,922 | 19.9% | 13.9% | 12.3% | -5.2% |
Ratios
|
|---|
| EBITDA Margin | 43.4% | 45.1% | -36.3% | 44.9% | -0.0% | 2.7% | -79.6% | -2.9% |
| Net Income Margin | 4.3% | 5.8% | -20.5% | 5.2% | -0.7% | 3.0% | -24.5% | 0.6% |
Revenue and profitability
The company's Revenue increased on 5.5%. Revenue growth showed slow down in FY16Q4 - it was 3.2% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 19.9 pp from 44.3% to 24.4% in FY2016.
Net Income marign decreased on 5.4 pp from 4.1% to -1.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Cogeco Inc had CAPEX/Revenue of 19.4%. The company's CAPEX/Revenue decreased slightly on 2.0 pp from 21.4% in FY2013 to 19.4% in FY2016. It's average CAPEX/Revenue for the last three years was 19.4%.The company invested a large share of EBITDA (79.5%) to CAPEX.
Return on investment
The company operates at low but positive ROIC (1.12%) and negative ROE (-5.10%). ROIC decreased on 8.2 pp from 9.3% to 1.1% in FY2016. ROE dropped on 21.1 pp from 16.0% to -5.1% in FY2016.
Leverage (Debt)
Debt level is 5.1x Net Debt / EBITDA and 5.2x Debt / EBITDA. Net Debt / EBITDA jumped on 1.8x from 3.3x to 5.1x in FY2016. Debt dropped on 12.7% while cash dropped on 58.4%.
Appendix 1: Peers in Communications
Below you can find Cogeco 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| AcuityAds Holding Inc ($AT) | | | | 51.6% | 91.4% |
| Shopify Inc ($SH) | | 111.9% | 109.0% | 95.4% | 89.7% |
| Gaming Nation Inc ($FAN) | | | | | 46.6% |
| Tucows Inc ($TC) | | 13.3% | 13.6% | 17.1% | 9.8% |
| Points International Ltd ($PTS) | | 45.1% | 26.0% | 16.2% | 8.6% |
| |
|---|
| Median (26 companies) | 13.1% | 3.5% | 2.1% | 4.2% | 2.3% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($WAN) | 90.5% | 93.2% | 94.3% | 95.6% | |
| NeuLion Inc ($NLN) | 53.6% | 63.8% | 70.2% | 81.1% | 81.6% |
| TeraGo Inc ($TGO) | 62.9% | 61.8% | 59.8% | 77.2% | 77.2% |
| ICTV Brands Inc ($ITV) | 67.4% | 71.9% | 69.6% | 68.1% | |
| Platinum Communications Corp ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (23 companies) | 44.2% | 42.8% | 45.3% | 46.4% | 41.1% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($BCE) | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% |
| Rogers Communications Inc ($RCI.A) | 37.3% | 38.4% | 37.9% | 36.9% | 32.5% |
| Quebecor Inc ($QBR.B) | 27.5% | 36.3% | 35.5% | 34.2% | 35.5% |
| TELUS Corp ($T) | 35.3% | 35.2% | 35.1% | 34.1% | 33.0% |
| ZoomerMedia Ltd ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| |
|---|
| Median (30 companies) | 17.0% | 10.7% | 9.9% | 9.9% | 7.7% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($T) | 17.9% | 17.8% | 19.8% | 20.2% | 21.5% |
| Rogers Communications Inc ($RCI.A) | 17.2% | 17.6% | 18.4% | 18.2% | 17.2% |
| Quebecor Inc ($QBR.B) | 16.7% | 15.4% | 17.9% | 17.5% | 17.6% |
| BCE Inc ($BCE) | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% |
| TeraGo Inc ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (29 companies) | 2.7% | 3.0% | 2.3% | 2.3% | 3.0% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
| BCE Inc ($BCE) | 14.1% | 12.6% | 12.6% | 12.3% | 12.6% |
| Quebecor Inc ($QBR.B) | 7.9% | 9.6% | 8.4% | 8.4% | 10.1% |
| MDC Partners Inc ($MDZ.A) | -3.1% | -6.3% | 14.2% | 13.7% | 10.1% |
| TELUS Corp ($T) | 12.4% | 13.0% | 13.0% | 11.5% | 9.6% |
| |
|---|
| Median (29 companies) | 8.9% | 7.9% | 7.3% | 2.6% | 0.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($IT) | | | | 9.4x | |
| MDC Partners Inc ($MDZ.A) | 12.4x | 112.6x | 4.6x | 5.5x | 9.6x |
| Quebecor Inc ($QBR.B) | 3.7x | 3.9x | 4.2x | 4.8x | 4.3x |
| Rogers Communications Inc ($RCI.A) | 2.3x | 2.4x | 3.2x | 3.6x | 3.8x |
| Newfoundland Capital Corp Ltd ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| |
|---|
| Median (21 companies) | 1.4x | 1.3x | 1.5x | 1.6x | 1.7x |
|---|
