Adept Telecom reports 30.9% revenue growth in FY2016 and 0.83 pp EBITDA Margin decline from 20.8% to 20.0%
05 Jul 2016 • About Adept Telecom (
$ADT) • By InTwits
Adept Telecom reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Adept Telecom has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has highly profitable business model: ROIC is at 16.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Adept Telecom ($ADT) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 21.913 | 21.023 | 20.852 | 22.066 | 28.881 | 30.9% |
| Gross Profit | 7.062 | 7.261 | 7.584 | 8.298 | 11.634 | 40.2% |
| SG&A | | | | 5.928 | 8.272 | 39.5% |
| EBITDA | 3.746 | 4.312 | 4.038 | 4.588 | 5.765 | 25.7% |
| Net Income | 0.587 | 0.984 | 1.330 | 1.534 | 1.964 | 28.0% |
Balance Sheet
|
|---|
| Cash | 1.869 | 1.639 | 3.777 | 2.094 | 6.166 | 194.5% |
| Short Term Debt | 1.206 | 3.106 | 1.206 | 0.538 | 0.000 | -100.0% |
| Long Term Debt | 6.001 | 1.803 | 5.533 | 3.095 | 12.148 | 292.5% |
Cash flow
|
|---|
| Capex | 0.097 | 0.040 | 0.063 | 0.052 | 0.532 | 923.1% |
Ratios
|
|---|
| Revenue growth | -7.7% | -4.1% | -0.8% | 5.8% | 30.9% | |
| EBITDA growth | 0.2% | 15.1% | -6.4% | 13.6% | 25.7% | |
| Gross Margin | 32.2% | 34.5% | 36.4% | 37.6% | 40.3% | 2.7% |
| EBITDA Margin | 17.1% | 20.5% | 19.4% | 20.8% | 20.0% | -0.8% |
| Net Income Margin | 2.7% | 4.7% | 6.4% | 7.0% | 6.8% | -0.2% |
| SG&A, % of revenue | | | | 26.9% | 28.6% | 1.8% |
| CAPEX, % of revenue | 0.4% | 0.2% | 0.3% | 0.2% | 1.8% | 1.6% |
| ROIC | 11.6% | 15.5% | 13.2% | 14.3% | 16.4% | 2.1% |
| ROE | 6.7% | 10.5% | 13.0% | 13.4% | 15.4% | 2.1% |
| Net Debt/EBITDA | 1.4x | 0.8x | 0.7x | 0.3x | 1.0x | 0.7x |
Revenue and profitability
Adept Telecom's Revenue jumped on 30.9% in FY2016. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased slightly on 0.83 pp from 20.8% to 20.0% in FY2016.
Gross Margin increased on 2.7 pp from 37.6% to 40.3% in FY2016. SG&A as a % of Revenue increased slightly on 1.8 pp from 26.9% to 28.6% in FY2016.
Net Income marign showed almost no change in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Adept Telecom had CAPEX/Revenue of 1.8%. The company showed small growth in CAPEX/Revenue of 1.7 pp from 0.19% in FY2013 to 1.8% in FY2016. For the last three years the average CAPEX/Revenue was 0.79%.
Return on investment
The company operates at good ROIC (16.39%) and ROE (15.43%). ROIC increased on 2.1 pp from 14.3% to 16.4% in FY2016. ROE increased on 2.1 pp from 13.4% to 15.4% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.0x and Debt / EBITDA is 2.1x. Net Debt / EBITDA jumped on 0.7x from 0.3x to 1.0x in FY2016. Debt surged on 234% in FY2016 while cash jumped on 194% in FY2016.
Valuation
Adept Telecom's trades at EV/EBITDA 10.4x and P/E 27.4x while industy averages are 15.6x and 19.1x.
Appendix 1: Peers in Fixed Line Telecommunications
Below we provide Adept Telecom benchmarking against other companies in Fixed Line Telecommunications 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 |
|---|
| Telefonica Sa ($TDE) | -0.8% | -8.5% | -23.8% | 26.4% | |
| Alternative Networks ($AN.) | -2.1% | -0.4% | 17.5% | 9.2% | |
| Verizon Communications Inc ($VZC) | 4.5% | 4.1% | 5.4% | 3.6% | |
| Telecom Egypt ($TEEG) | 1.6% | 11.0% | 9.2% | 0.2% | |
| O2 Czech Republic As ($O2CZ) | -3.5% | -5.2% | -22.0% | 0.0% | |
| |
|---|
| Median (12 companies) | -0.5% | -1.6% | -1.6% | -0.5% | 5.9% |
|---|
| Adept Telecom ($ADT) | | -4.1% | -0.8% | 5.8% | 30.9% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kt Corp ($KTCD) | 75.5% | 76.0% | 77.9% | 77.9% | |
| Verizon Communications Inc ($VZC) | 60.1% | 62.8% | 60.7% | 60.1% | |
| Telecom Egypt ($TEEG) | 41.4% | 41.9% | 44.2% | 41.6% | |
| Alternative Networks ($AN.) | 39.0% | 39.2% | 41.2% | 41.3% | |
| |
|---|
| Median (4 companies) | 57.3% | 59.9% | 44.2% | 50.8% | |
|---|
| Adept Telecom ($ADT) | 32.2% | 34.5% | 36.4% | 37.6% | 40.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 46.0% | 42.4% | 37.6% | 39.2% | |
| Verizon Communications Inc ($VZC) | 25.6% | 40.3% | 28.4% | 37.3% | |
| BT Group ($BT.A) | 31.2% | 32.0% | 31.9% | 33.5% | 33.4% |
| Rostelekom ($RKMD) | 39.7% | 39.0% | 33.0% | 33.4% | |
| Koninklijke Kpn Nv ($0O8F) | 35.9% | 34.1% | 39.1% | 33.2% | |
| |
|---|
| Median (12 companies) | 34.0% | 33.1% | 31.9% | 30.6% | 33.4% |
|---|
| Adept Telecom ($ADT) | 17.1% | 20.5% | 19.4% | 20.8% | 20.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 21.9% | 27.5% | 25.3% | 26.5% | |
| Telecom Egypt ($TEEG) | 5.1% | 6.8% | 13.0% | 21.4% | |
| Rostelekom ($RKMD) | 31.7% | 23.6% | 19.3% | 21.1% | |
| Telefonica Sa ($TDE) | 15.2% | 17.0% | 19.1% | 18.7% | |
| Orange Polska Sa ($OPLD) | 16.6% | 16.9% | 17.6% | 16.9% | |
| |
|---|
| Median (12 companies) | 13.6% | 13.8% | 13.0% | 15.7% | 13.0% |
|---|
| Adept Telecom ($ADT) | 0.4% | 0.2% | 0.3% | 0.2% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BT Group ($BT.A) | 23.6% | 27.0% | 34.7% | 37.5% | 21.6% |
| Alternative Networks ($AN.) | 35.2% | 33.7% | 28.5% | 20.2% | |
| Verizon Communications Inc ($VZC) | 8.0% | 16.7% | 10.1% | 19.3% | |
| O2 Czech Republic As ($O2CZ) | 11.8% | 11.7% | 7.2% | 14.5% | |
| Rostelekom ($RKMD) | 11.2% | 9.7% | 8.7% | 8.2% | |
| |
|---|
| Median (12 companies) | 9.6% | 8.5% | 7.7% | 6.7% | 21.6% |
|---|
| Adept Telecom ($ADT) | 11.6% | 15.5% | 13.2% | 14.3% | 16.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Telefonica Sa ($TDE) | 2.5x | 2.5x | 3.6x | 4.2x | |
| Koninklijke Kpn Nv ($0O8F) | 3.8x | 3.4x | 3.0x | 3.6x | |
| Verizon Communications Inc ($VZC) | 1.7x | 0.8x | 2.8x | 2.1x | |
| Ooredoo Qsc ($ORDS) | 1.6x | 1.7x | 2.0x | 2.0x | |
| Rostelekom ($RKMD) | 1.7x | 1.8x | 1.8x | 1.8x | |
| |
|---|
| Median (12 companies) | 1.7x | 1.3x | 1.6x | 1.4x | 2.2x |
|---|
| Adept Telecom ($ADT) | 1.4x | 0.8x | 0.7x | 0.3x | 1.0x |
