TeraGo Inc Debt dropped on 10.9% in 2016 while Revenue increased on 2.4%
23.02.2017 • About TeraGo Inc (
$TGO) • By InTwits
TeraGo Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- TeraGo Inc doesn't have a profitable business model yet: 2016 ROIC is -1.9%
- TeraGo Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 18.7%. At the same time it's a lot of higher than industry average of 6.8%.
- CAPEX is quite volatile: 1.1 in FY2016, 1.1 in FY2015, 0.96 in FY2014, 0.83 in FY2013, 0.23 in FY2012
- The company has unprofitable business model: ROIC is at -1.9%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
TeraGo Inc ($TGO) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 49.168 | 51.426 | 51.229 | 57.720 | 59.086 | 2.4% |
| Gross Profit | 30.911 | 31.792 | 30.648 | 44.561 | 45.609 | 2.4% |
| SG&A | | 1.388 | | | | |
| EBITDA | 14.493 | 16.453 | 11.377 | 13.912 | 13.569 | -2.5% |
| Net Income | 4.857 | 4.309 | -3.927 | -2.810 | -4.314 | |
Balance Sheet
|
|---|
| Cash | 1.469 | 2.137 | 2.866 | 13.066 | 13.034 | -0.2% |
| Short Term Debt | 3.943 | 6.288 | 2.301 | 6.123 | 5.170 | -15.6% |
| Long Term Debt | 8.469 | 12.824 | 16.493 | 39.658 | 35.608 | -10.2% |
Cash flow
|
|---|
| Capex | 10.274 | 11.053 | 11.854 | 8.542 | 7.697 | -9.9% |
Ratios
|
|---|
| Revenue growth | 9.4% | 4.6% | -0.4% | 12.7% | 2.4% | |
| EBITDA growth | 41.9% | 13.5% | -30.9% | 22.3% | -2.5% | |
| Gross Margin | 62.9% | 61.8% | 59.8% | 77.2% | 77.2% | -0.0% |
| EBITDA Margin | 29.5% | 32.0% | 22.2% | 24.1% | 23.0% | -1.1% |
| Net Income Margin | 9.9% | 8.4% | -7.7% | -4.9% | -7.3% | -2.4% |
| SG&A, % of revenue | | 2.7% | | | | 0.0% |
| CAPEX, % of revenue | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% | -1.8% |
| ROIC | 8.0% | 7.7% | -3.2% | -1.5% | -1.9% | -0.3% |
| ROE | 13.5% | 10.5% | -9.2% | -6.0% | -8.6% | -2.6% |
| Net Debt/EBITDA | 0.8x | 1.0x | 1.4x | 2.4x | 2.0x | -0.3x |
TeraGo Inc ($TGO) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 15 | 15 | 15 | 15 | 22.0% | -2.2% | -3.2% | -3.4% |
| EBITDA | 4 | 4 | 1 | 4 | 29.5% | 63.6% | -65.4% | 1.5% |
| Net Income | -1 | -0 | -3 | 0 | | | | |
Balance Sheet
|
|---|
| Cash | 10 | 10 | 12 | 13 | 306.6% | -11.3% | 11.7% | -0.2% |
| Short Term Debt | 5 | 5 | 5 | 5 | -1.4% | -2.1% | -1.9% | -15.6% |
| Long Term Debt | 39 | 38 | 37 | 36 | -11.9% | -11.4% | -11.8% | -10.2% |
Ratios
|
|---|
| Gross Margin | 76.8% | 77.3% | 77.5% | 77.2% | -2.1% | 0.7% | 1.2% | -0.1% |
| EBITDA Margin | 24.6% | 27.2% | 10.1% | 30.0% | 1.4% | 11.0% | -18.1% | 1.4% |
| Net Income Margin | -5.5% | -2.7% | -23.4% | 2.4% | -5.4% | 11.7% | -20.5% | 3.7% |
Revenue and profitability
TeraGo Inc's Revenue increased on 2.4%. Revenue growth showed slow down in 16Q4 - it was -3.4% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.8 pp from 5.9% to 7.7% in FY2016.
Gross Margin showed almost no change in 2016.
Net Income marign decreased on 2.4 pp from -4.9% to -7.3% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 13.0% in 2016. The company's CAPEX/Revenue decreased on 8.5 pp from 21.5% in 2013 to 13.0% in 2016. Average CAPEX/Revenue for the last three years was 17.0%.The company maintained rich investment policy and has spent a big chunk of EBITDA (56.7%) to CAPEX.
Return on investment
The company operates at negative ROIC (-1.88%) and ROE (-8.55%). ROIC showed almost no change in 2016. ROE decreased on 2.6 pp from -6.0% to -8.6% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 3.0x. Net Debt / EBITDA dropped on 0.3x from 2.4x to 2.0x in 2016. Debt dropped on 10.9% while cash showed almost no change in 2016.
Appendix 1: Peers in Communications
Below you can find TeraGo 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% | 2.6% | 3.1% | 3.2% | 2.1% |
|---|
| TeraGo Inc ($TGO) | | 4.6% | -0.4% | 12.7% | 2.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Wanted Technologies Corp ($WAN) | 90.5% | 93.2% | 94.3% | 95.6% | |
| NeuLion Inc ($NLN) | 53.6% | 63.8% | 70.2% | 81.1% | 81.6% |
| ICTV Brands Inc ($ITV) | 67.4% | 71.9% | 69.6% | 68.1% | |
| Platinum Communications Corp ($PCS) | 67.4% | 67.1% | 60.2% | 60.5% | |
| Redline Communications Group Inc ($RDL) | 56.4% | 61.1% | 56.1% | 56.0% | 55.3% |
| |
|---|
| Median (22 companies) | 43.5% | 41.2% | 43.6% | 43.5% | 40.1% |
|---|
| TeraGo Inc ($TGO) | 62.9% | 61.8% | 59.8% | 77.2% | 77.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BCE Inc ($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) | 14.4% | 7.7% | 8.8% | 9.4% | 7.3% |
|---|
| TeraGo Inc ($TGO) | 29.5% | 32.0% | 22.2% | 24.1% | 23.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TELUS Corp ($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 ($BCE) | 17.6% | 17.5% | 17.7% | 16.9% | 17.4% |
| UrtheCast Corp ($UR) | | | 26.5% | 14.1% | |
| |
|---|
| Median (28 companies) | 2.6% | 2.8% | 2.2% | 2.2% | 2.9% |
|---|
| TeraGo Inc ($TGO) | 20.9% | 21.5% | 23.1% | 14.8% | 13.0% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tucows Inc ($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 (28 companies) | 9.9% | 8.2% | 7.5% | 3.1% | 2.2% |
|---|
| TeraGo Inc ($TGO) | 8.0% | 7.7% | -3.2% | -1.5% | -1.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Intertain Group Ltd/The ($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 | 1.5x | 1.7x |
|---|
| TeraGo Inc ($TGO) | 0.8x | 1.0x | 1.4x | 2.4x | 2.0x |
