Rogers Communications Inc reports 37.8% Net Income decline while 2.1% Revenue growth
26.01.2017 • About Rogers Communications Inc (
$RCI.A) • By InTwits
Rogers Communications Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 32.5% in 2016 vs. 36.9% in 2015 vs. 37.3% in 2012
- Rogers Communications Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.7%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 1,034 in 2016, 1,714 in 2015, 3,058 in 2014, 3,269 in 2013, 3,449 in 2012
- The company has business model with low profitability: ROIC is at 8.4%
- It operates with high leverage: Net Debt/EBITDA is 3.8x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Rogers Communications Inc ($RCI.A) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 12,486 | 12,706 | 12,850 | 13,414 | 13,702 | 2.1% |
| Gross Profit | 4,757 | 4,909 | 4,982 | 4,977 | 5,031 | 1.1% |
| EBITDA | 4,658 | 4,876 | 4,875 | 4,953 | 4,458 | -10.0% |
| Net Income | 1,693 | 1,669 | 1,341 | 1,342 | 835 | -37.8% |
Balance Sheet
|
|---|
| Cash | 213 | 2,301 | 176 | 11 | 0 | -100.0% |
| Short Term Debt | 348 | 1,827 | 1,812 | 1,810 | 1,755 | -3.0% |
| Long Term Debt | 10,441 | 12,173 | 13,824 | 15,870 | 15,330 | -3.4% |
Cash flow
|
|---|
| Capex | 2,142 | 2,240 | 2,366 | 2,440 | 2,352 | -3.6% |
Ratios
|
|---|
| Revenue growth | 1.1% | 1.8% | 1.1% | 4.4% | 2.1% | |
| EBITDA growth | -0.7% | 4.7% | -0.0% | 1.6% | -10.0% | |
| Gross Margin | 38.1% | 38.6% | 38.8% | 37.1% | 36.7% | -0.4% |
| EBITDA Margin | 37.3% | 38.4% | 37.9% | 36.9% | 32.5% | -4.4% |
| Net Income Margin | 13.6% | 13.1% | 10.4% | 10.0% | 6.1% | -3.9% |
| CAPEX, % of revenue | 17.2% | 17.6% | 18.4% | 18.2% | 17.2% | -1.0% |
| ROIC | 17.8% | 16.1% | 12.3% | 10.7% | 8.4% | -2.2% |
| ROE | 46.1% | 39.6% | 26.4% | 24.1% | 15.3% | -8.8% |
| Net Debt/EBITDA | 2.3x | 2.4x | 3.2x | 3.6x | 3.8x | 0.3x |
Rogers Communications Inc ($RCI.A) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 3,245 | 3,455 | 3,492 | 3,510 | 2.2% | 1.5% | 3.2% | 1.7% |
| EBITDA | 1,066 | 1,323 | 1,327 | 742 | -5.2% | 1.6% | 0.7% | -38.6% |
| Net Income | 248 | 394 | 220 | -9 | -2.7% | 8.5% | -52.6% | -103.0% |
Balance Sheet
|
|---|
| Cash | 0 | 0 | 0 | 0 | | -100.0% | | -100.0% |
| Short Term Debt | 2,354 | 1,970 | 1,957 | 1,755 | 120.2% | -2.5% | 4.0% | -3.0% |
| Long Term Debt | 15,188 | 15,239 | 15,177 | 15,330 | -1.9% | 2.4% | -2.0% | -3.4% |
Ratios
|
|---|
| Gross Margin | 33.6% | 38.6% | 39.1% | 35.4% | -1.5% | -0.3% | -0.2% | 0.4% |
| EBITDA Margin | 32.9% | 38.3% | 38.0% | 21.1% | -2.6% | 0.0% | -0.9% | -13.9% |
| Net Income Margin | 7.6% | 11.4% | 6.3% | -0.3% | -0.4% | 0.7% | -7.4% | -8.9% |
Revenue and profitability
The company's Revenue increased on 2.1%. Revenue growth showed slow down in 16Q4 - it was 1.7% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.4 pp from 36.9% to 32.5% in 2016.
Gross Margin showed almost no change in 2016.
Net Income marign decreased on 3.9 pp from 10.0% to 6.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 17.2%. The company's CAPEX/Revenue showed almost no change from 2013 to 2016. Average CAPEX/Revenue for the last three years was 17.9%.Rogers Communications Inc invested a large share of EBITDA (52.8%) to CAPEX.
Return on investment
The company operates at good ROE (15.31%) while ROIC is low (8.43%). ROIC decreased on 2.2 pp from 10.7% to 8.4% in 2016. ROE decreased on 8.8 pp from 24.1% to 15.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.8x and Debt / EBITDA is 3.8x. Net Debt / EBITDA jumped on 0.3x from 3.6x to 3.8x in 2016. Debt decreased on 3.4% while cash dropped on 100%.
Management team
Alan Douglas Horn is a the company's CEO. Alan Douglas Horn is a founder and has spent 10 years at the company. Rogers Communications Inc's CFO Anthony Staffieri has spent 7 years at the company.
Appendix 1: Peers in Communications
Below we provide Rogers Communications 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 | 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 (25 companies) | 13.1% | 4.4% | 3.1% | 3.2% | 2.4% |
|---|
| Rogers Communications Inc ($RCI.A) | | 1.8% | 1.1% | 4.4% | 2.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($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 (22 companies) | 46.4% | 43.3% | 49.1% | 48.2% | 44.6% |
|---|
| Rogers Communications Inc ($RCI.A) | 38.1% | 38.6% | 38.8% | 37.1% | 36.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($BCE) | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% |
| 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 ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| Newfoundland Capital Corp Ltd ($NCC.B) | 25.9% | 25.1% | 27.4% | 28.2% | |
| |
|---|
| Median (29 companies) | 14.4% | 7.7% | 8.8% | 9.4% | 7.3% |
|---|
| Rogers Communications Inc ($RCI.A) | 37.3% | 38.4% | 37.9% | 36.9% | 32.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($T) | 17.9% | 17.8% | 19.8% | 20.2% | 21.5% |
| 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 ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| UrtheCast Corp ($UR) | | | 26.5% | 14.1% | |
| |
|---|
| Median (28 companies) | 2.6% | 2.8% | 2.2% | 2.2% | 2.9% |
|---|
| Rogers Communications Inc ($RCI.A) | 17.2% | 17.6% | 18.4% | 18.2% | 17.2% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($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 (28 companies) | 8.0% | 7.7% | 7.1% | 2.0% | -0.1% |
|---|
| Rogers Communications Inc ($RCI.A) | 17.8% | 16.1% | 12.3% | 10.7% | 8.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($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 |
| Newfoundland Capital Corp Ltd ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| TELUS Corp ($T) | 1.7x | 1.9x | 2.2x | 2.8x | 3.0x |
| |
|---|
| Median (20 companies) | 1.4x | 1.2x | 1.5x | 1.5x | 1.7x |
|---|
| Rogers Communications Inc ($RCI.A) | 2.3x | 2.4x | 3.2x | 3.6x | 3.8x |
