Shaw Communications Inc reports 42.5% Net Income growth and 8.9% Revenue growth
02.11.2016 • About Shaw Communications Inc (
$SJR.B) • By InTwits
Shaw Communications Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Shaw Communications Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.1%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 1,745 in 2016, 1,811 in 2015, 1,412 in 2014, 880 in 2013, 584 in 2012
- The company has business model with low profitability: ROIC is at 8.7%
- It operates with high leverage: Net Debt/EBITDA is 2.5x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Shaw Communications Inc ($SJR.B) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,998 | 5,142 | 5,241 | 4,486 | 4,884 | 8.9% |
| Gross Profit | 2,127 | 2,220 | 2,262 | 2,037 | 2,114 | 3.8% |
| EBITDA | 2,132 | 2,224 | 2,207 | 2,002 | 2,096 | 4.7% |
| Net Income | 728 | 746 | 857 | 856 | 1,220 | 42.5% |
Balance Sheet
|
|---|
| Cash | 427 | 422 | 637 | 398 | 405 | 1.8% |
| Short Term Debt | 451 | 998 | 0 | 608 | 412 | -32.2% |
| Long Term Debt | 4,812 | 3,868 | 4,690 | 5,061 | 5,200 | 2.7% |
Cash flow
|
|---|
| Capex | 908 | 934 | 1,032 | 995 | 1,088 | 9.3% |
Ratios
|
|---|
| Revenue growth | 5.4% | 2.9% | 1.9% | -14.4% | 8.9% | |
| EBITDA growth | 3.7% | 4.3% | -0.8% | -9.3% | 4.7% | |
| Gross Margin | 42.6% | 43.2% | 43.2% | 45.4% | 43.3% | -2.1% |
| EBITDA Margin | 42.7% | 43.3% | 42.1% | 44.6% | 42.9% | -1.7% |
| Net Income Margin | 14.6% | 14.5% | 16.4% | 19.1% | 25.0% | 5.9% |
| CAPEX, % of revenue | 18.2% | 18.2% | 19.7% | 22.2% | 22.3% | 0.1% |
| ROIC | 12.7% | 12.9% | 13.3% | 9.6% | 8.7% | -0.8% |
| ROE | 21.7% | 19.9% | 20.3% | 17.7% | 21.7% | 4.0% |
| Net Debt/EBITDA | 2.3x | 2.0x | 1.8x | 2.6x | 2.5x | -0.1x |
Shaw Communications Inc ($SJR.B) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,143 | 1,151 | 1,283 | 1,306 | -17.7% | 3.0% | 13.0% | 15.5% |
| EBITDA | 509 | 502 | 535 | 549 | -16.1% | 8.7% | 1.5% | 5.0% |
| Net Income | 210 | 164 | 704 | 154 | -4.1% | -2.4% | 236.8% | -43.4% |
Balance Sheet
|
|---|
| Cash | 283 | 357 | 324 | 405 | 1,079.2% | 162.5% | 14.9% | 1.8% |
| Short Term Debt | 608 | 303 | 407 | 412 | 8,585.7% | -1.3% | -32.9% | -32.2% |
| Long Term Debt | 5,075 | 5,656 | 5,193 | 5,200 | -8.4% | 7.4% | 3.7% | 2.7% |
Ratios
|
|---|
| Gross Margin | 44.4% | 43.6% | 43.3% | 42.0% | 0.8% | -0.9% | -3.2% | -4.4% |
| EBITDA Margin | 44.5% | 43.6% | 41.7% | 42.0% | 0.8% | 2.3% | -4.7% | -4.2% |
| Net Income Margin | 18.4% | 14.2% | 54.9% | 11.8% | 2.6% | -0.8% | 36.5% | -12.3% |
Revenue and profitability
The company's Revenue increased on 8.9%. Revenue growth showed acceleration in FY16Q4 - it increased 15.5% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 6.9 pp from 20.4% to 27.3% in 2016.
Gross Margin decreased on 2.1 pp from 45.4% to 43.3% in FY2016.
Net Income marign increased on 5.9 pp from 19.1% to 25.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Shaw Communications Inc's CAPEX/Revenue was 22.3% in FY2016. Shaw Communications Inc's CAPEX/Revenue increased on 4.1 pp from 18.2% in FY2013 to 22.3% in FY2016. For the last three years the average CAPEX/Revenue was 21.4%.Shaw Communications Inc maintained rich investment policy and has spent a big chunk of EBITDA (51.9%) to CAPEX.
Return on investment
The company operates at good ROE (21.71%) while ROIC is low (8.75%). ROIC decreased slightly on 0.82 pp from 9.6% to 8.7% in FY2016. ROE increased on 4.0 pp from 17.7% to 21.7% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.5x and Debt / EBITDA is 2.7x. Net Debt / EBITDA dropped on 0.1x from 2.6x to 2.5x in FY2016. Debt decreased slightly on 1.0% while cash increased slightly on 1.8%.
Management team
Bradley S Shaw "Brad" is a Shaw Communications Inc's CEO. Bradley S Shaw "Brad" is a founder and has spent 8 years at the company. The company's CFO is Vito Culmone. Vito Culmone has 3 years tenure at the company.
Appendix 1: Peers in Communications
Below you can find Shaw Communications 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 |
|---|
