BCE Inc Net Income jumped on 13.2% in 2016 and EBITDA Margin increased on 2.2 pp from 37.7% to 39.8%
02.02.2017 • About BCE Inc (
$BCE) • By InTwits
BCE Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- BCE Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.4%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 1,073 in 2016, 2,994 in 2015, 5,290 in 2014, 6,297 in 2013, 5,478 in 2012
- The company has highly profitable business model: ROIC is at 12.6%
- It operates with high leverage: Net Debt/EBITDA is 2.4x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
BCE Inc ($BCE) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 19,978 | 20,400 | 21,042 | 21,514 | 21,719 | 1.0% |
| Gross Profit | 7,888 | 8,089 | 8,303 | 8,685 | 8,935 | 2.9% |
| EBITDA | 7,755 | 7,683 | 8,087 | 8,105 | 8,653 | 6.8% |
| Net Income | 2,595 | 2,106 | 2,500 | 2,678 | 3,031 | 13.2% |
Balance Sheet
|
|---|
| Cash | 129 | 335 | 566 | 613 | 853 | 39.2% |
| Short Term Debt | 2,136 | 2,571 | 3,743 | 4,895 | 4,887 | -0.2% |
| Long Term Debt | 13,886 | 16,341 | 16,355 | 15,390 | 16,572 | 7.7% |
Cash flow
|
|---|
| Capex | 3,515 | 3,571 | 3,717 | 3,626 | 3,771 | 4.0% |
Ratios
|
|---|
| Revenue growth | 2.5% | 2.1% | 3.1% | 2.2% | 1.0% | |
| EBITDA growth | 7.4% | -0.9% | 5.3% | 0.2% | 6.8% | |
| Gross Margin | 39.5% | 39.7% | 39.5% | 40.4% | 41.1% | 0.8% |
| EBITDA Margin | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% | 2.2% |
| Net Income Margin | 13.0% | 10.3% | 11.9% | 12.4% | 14.0% | 1.5% |
| CAPEX, % of revenue | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% | 0.5% |
| ROIC | 14.1% | 12.6% | 12.6% | 12.3% | 12.6% | 0.4% |
| ROE | 23.2% | 17.9% | 21.0% | 21.1% | 21.8% | 0.7% |
| Net Debt/EBITDA | 2.0x | 2.4x | 2.4x | 2.4x | 2.4x | -0.0x |
BCE Inc ($BCE) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 5,270 | 5,340 | 5,407 | 5,702 | 0.6% | 0.3% | 1.2% | 1.8% |
| EBITDA | 2,121 | 2,211 | 2,211 | 2,110 | 13.4% | 1.7% | 3.3% | 9.8% |
| Net Income | 744 | 813 | 784 | 690 | 30.5% | 1.9% | 0.9% | 29.5% |
Balance Sheet
|
|---|
| Cash | 423 | 615 | 1,393 | 853 | -62.4% | 263.9% | 124.0% | 39.2% |
| Short Term Debt | 4,516 | 4,532 | 4,991 | 4,887 | -4.2% | -10.4% | -22.2% | -0.2% |
| Long Term Debt | 15,837 | 15,817 | 16,505 | 16,572 | -4.7% | 2.4% | 14.3% | 7.7% |
Ratios
|
|---|
| Gross Margin | 41.0% | 42.5% | 41.4% | 38.2% | 1.1% | 1.2% | -29.0% | 0.0% |
| EBITDA Margin | 40.2% | 41.4% | 40.9% | 37.0% | 4.6% | 0.6% | 0.8% | 2.7% |
| Net Income Margin | 14.1% | 15.2% | 14.5% | 12.1% | 3.2% | 0.2% | -0.0% | 2.6% |
Revenue and profitability
BCE Inc's Revenue increased slightly on 0.95%. Revenue growth showed acceleration in 16Q4 - it increased 1.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.5 pp from 5.1% to 6.7% in FY2016.
Gross Margin increased slightly on 0.77 pp from 40.4% to 41.1% in 2016.
Net Income marign increased slightly on 1.5 pp from 12.4% to 14.0% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 BCE Inc had CAPEX/Revenue of 17.4%. The company showed almost no change in CAPEX/Revenue from 2013 to 2016. Average CAPEX/Revenue for the last three years was 17.3%.
Return on investment
The company operates at high and attractive ROE (21.80%) while ROIC is a bit lower (12.65%). ROIC showed almost no change in 2016. ROE increased slightly on 0.71 pp from 21.1% to 21.8% in 2016.
Leverage (Debt)
Debt level is 2.4x Net Debt / EBITDA and 2.5x Debt / EBITDA. Net Debt / EBITDA decreased on 0.046x from 2.4x to 2.4x in 2016. Debt increased on 5.8% while cash jumped on 39.2%.
Management team
George A Cope is a the company's CEO. George A Cope has spent 10 years at the company. BCE Inc's CFO is Glen Leblanc. Glen Leblanc has 3 years tenure at the company.
Appendix 1: Peers in Communications
Below you can find BCE 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 (25 companies) | 13.1% | 4.4% | 1.1% | 4.3% | 2.4% |
|---|
| BCE Inc ($BCE) | | 2.1% | 3.1% | 2.2% | 1.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($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% | 43.6% |
|---|
| BCE Inc ($BCE) | 39.5% | 39.7% | 39.5% | 40.4% | 41.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Rogers Communications Inc ($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 ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| Newfoundland Capital Corp Ltd ($NCC.B) | 25.9% | 25.1% | 27.4% | 28.2% | |
| |
|---|
| Median (29 companies) | 14.4% | 7.7% | 8.8% | 9.4% | 7.3% |
|---|
| BCE Inc ($BCE) | 38.8% | 37.7% | 38.4% | 37.7% | 39.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($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% |
| 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% |
|---|
| BCE Inc ($BCE) | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($TC) | 17.7% | 22.5% | 35.4% | 51.4% | 58.4% |
| 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 ($T) | 12.4% | 13.0% | 13.0% | 11.5% | 9.6% |
| Rogers Communications Inc ($RCI.A) | 17.8% | 16.1% | 12.3% | 10.7% | 8.4% |
| |
|---|
| Median (28 companies) | 8.0% | 7.7% | 7.1% | 2.0% | -0.1% |
|---|
| BCE Inc ($BCE) | 14.1% | 12.6% | 12.6% | 12.3% | 12.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($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 (20 companies) | 1.4x | 1.2x | 1.5x | 1.5x | 1.7x |
|---|
| BCE Inc ($BCE) | 2.0x | 2.4x | 2.4x | 2.4x | 2.4x |
