Sierra Wireless Inc EBITDA jumped on 55.8% in 2016 and EBITDA Margin increased on 2.7 pp from 5.0% to 7.7%
09.02.2017 • About Sierra Wireless Inc (
$SW) • By InTwits
Sierra Wireless Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 7.7% in 2016 vs. 5.0% in 2015 vs. 1.6% in 2012
- EBITDA Margin is quite volatile: 7.7% in 2016, 5.0% in 2015, 3.1% in 2014, 2.4% in 2013, 1.6% in 2012
- Sierra Wireless Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 805 in 2016, 1,811 in 2015, 140 in 2014, 2,026 in 2013, 641 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sierra Wireless Inc ($SW) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 397.3 | 441.9 | 548.5 | 607.8 | 615.6 | 1.3% |
| Gross Profit | 125.3 | 145.6 | 179.0 | 193.9 | 217.7 | 12.3% |
| SG&A | 69.8 | 77.3 | 87.5 | 94.5 | 105.2 | 11.4% |
| EBITDA | 6.4 | 10.6 | 16.9 | 30.3 | 47.2 | 55.8% |
| Net Income | 27.2 | 55.0 | -16.9 | -2.7 | 15.4 | |
Balance Sheet
|
|---|
| Cash | 63.6 | 177.4 | 207.1 | 93.9 | 102.8 | 9.4% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 26.5 | 21.6 | 26.6 | 44.4 | 32.7 | -26.4% |
Cash flow
|
|---|
| Capex | 15.8 | 11.4 | 9.1 | 14.0 | 17.0 | 21.1% |
Ratios
|
|---|
| Revenue growth | 19.3% | 11.2% | 24.1% | 10.8% | 1.3% | |
| EBITDA growth | -129.2% | 66.5% | 59.2% | 79.2% | 55.8% | |
| Gross Margin | 31.5% | 33.0% | 32.6% | 31.9% | 35.4% | 3.5% |
| EBITDA Margin | 1.6% | 2.4% | 3.1% | 5.0% | 7.7% | 2.7% |
| Net Income Margin | 6.8% | 12.5% | -3.1% | -0.4% | 2.5% | 2.9% |
| SG&A, % of revenue | 17.6% | 17.5% | 16.0% | 15.5% | 17.1% | 1.5% |
| CAPEX, % of revenue | 4.0% | 2.6% | 1.7% | 2.3% | 2.8% | 0.5% |
| ROIC | -7.0% | -4.9% | -1.7% | 2.6% | 5.3% | 2.8% |
| ROE | 9.5% | 16.7% | -4.7% | -0.7% | 4.3% | 5.0% |
| Net Debt/EBITDA | -5.8x | -14.7x | -10.7x | -1.6x | -1.5x | 0.2x |
Sierra Wireless Inc ($SW) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 143 | 156 | 154 | 163 | -5.1% | -1.1% | -0.7% | 12.5% |
| EBITDA | 4 | 10 | 7 | 26 | -43.3% | 18.1% | -28.1% | 416.5% |
| Net Income | 1 | 1 | -2 | 16 | | -82.4% | -153.8% | |
Balance Sheet
|
|---|
| Cash | 86 | 98 | 112 | 103 | -13.5% | 2.0% | 26.8% | 9.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 45 | 47 | 49 | 33 | 63.1% | 27.4% | 24.6% | -26.4% |
Ratios
|
|---|
| Gross Margin | 32.8% | 33.8% | 32.1% | 42.2% | 0.3% | 1.5% | 0.4% | 11.1% |
| EBITDA Margin | 3.0% | 6.5% | 4.2% | 16.1% | -2.0% | 1.1% | -1.6% | 12.6% |
| Net Income Margin | 0.5% | 0.5% | -1.2% | 9.6% | 6.9% | -2.1% | -3.3% | 9.9% |
Revenue and profitability
The company's Revenue increased slightly on 1.3%. Revenue growth showed acceleration in 16Q4 - it increased 12.5% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.7 pp from 5.0% to 7.7% in 2016.
Gross Margin increased on 3.5 pp from 31.9% to 35.4% in 2016. SG&A as a % of Revenue increased slightly on 1.5 pp from 15.5% to 17.1% in 2016.
Net Income marign increased on 2.9 pp from -0.44% to 2.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
Sierra Wireless Inc's CAPEX/Revenue was 2.8% in 2016. The company's CAPEX/Revenue showed almost no change from 2013 to 2016. It's average level of CAPEX/Revenue for the last three years was 2.2%.
Return on investment
The company operates at low ROIC (5.33%) and ROE (4.27%). ROIC increased on 2.8 pp from 2.6% to 5.3% in 2016. ROE increased on 5.0 pp from -0.75% to 4.3% in 2016.
Leverage (Debt)
Debt level is -1.5x Net Debt / EBITDA and 0.7x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from -1.6x to -1.5x in 2016. Debt dropped on 26.4% while cash increased on 9.4%.
Management team
The company's CEO is Jason W Cohenour. Jason W Cohenour is a founder and has 13 years tenure at the company. David G Mclennan is a The company's CFO. David G Mclennan has spent 14 years at the company.
Appendix 1: Peers in Communications
Below we provide Sierra Wireless 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 ($PTS) | | 45.1% | 26.0% | 16.2% | 8.6% |
| |
|---|
| Median (25 companies) | 13.1% | 2.6% | 1.1% | 3.2% | 2.4% |
|---|
| Sierra Wireless Inc ($SW) | | 11.2% | 24.1% | 10.8% | 1.3% |
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 ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| |
|---|
| Median (22 companies) | 46.4% | 43.3% | 49.1% | 48.2% | 44.6% |
|---|
| Sierra Wireless Inc ($SW) | 31.5% | 33.0% | 32.6% | 31.9% | 35.4% |
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 ($ZUM) | 32.6% | 33.8% | 29.3% | 29.1% | 27.1% |
| |
|---|
| Median (29 companies) | 19.1% | 13.7% | 11.0% | 10.4% | 7.8% |
|---|
| Sierra Wireless Inc ($SW) | 1.6% | 2.4% | 3.1% | 5.0% | 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 ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
| |
|---|
| Median (28 companies) | 2.6% | 3.2% | 2.4% | 3.0% | 3.6% |
|---|
| Sierra Wireless Inc ($SW) | 4.0% | 2.6% | 1.7% | 2.3% | 2.8% |
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 ($T) | 12.4% | 13.0% | 13.0% | 11.5% | 9.6% |
| |
|---|
| Median (28 companies) | 9.9% | 8.2% | 7.5% | 2.6% | -0.1% |
|---|
| Sierra Wireless Inc ($SW) | -7.0% | -4.9% | -1.7% | 2.6% | 5.3% |
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 ($NCC.B) | 1.4x | 1.3x | 3.3x | 3.2x | |
| |
|---|
| Median (20 companies) | 1.4x | 1.3x | 1.5x | 1.8x | 1.9x |
|---|
| Sierra Wireless Inc ($SW) | -5.8x | -14.7x | -10.7x | -1.6x | -1.5x |
