Inseego Corp. reports 17.3 pp EBITDA Margin growth from -3.6% to 13.7% in 2018 in 2018 while 7.7% Revenue decline
03/07/2019 • About Inseego Corp. (
$INSG) • By InTwits
Inseego Corp. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Inseego Corp. is a company in decline: 2018 revenue growth was -7.7%, 5 years revenue CAGR was -9.6%
- EBITDA Margin is expanding: 13.7% in 2018 vs. -3.6% in 2017 vs. -15.2% in 2014
- Inseego Corp. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -6.4% for the sames years
- Inseego Corp. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.8%.
- The company has highly profitable business model: ROIC is 14.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.9x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Inseego Corp.'s Revenue decreased on 7.7%. Annual revenue decline showed slowdown in 18Q4 - revenue surged on 20.4%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 17.3 pp from -3.6% to 13.7% in 2018. EBITDA Margin stuck to a growing trend at 6.8 pp per annum in 2014-2018.
Gross Margin increased on 4.2 pp from 30.7% to 34.9% in 2018. Gross Margin stuck to a growing trend at 3.4 pp per annum in 2014-2018. SG&A as a % of Revenue decreased on 3.2 pp from 27.1% to 23.9% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2016 at 33.7% and was declining since that time.
Net Income margin jumped on 16.9 pp from -20.9% to -4.0% in 2018. During the last 5 years Net Income margin bottomed in 2016 at -24.9% and was growing since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.66% in 2018. Inseego Corp.'s CAPEX/Revenue showed almost no change from 2015 to 2018. It's average CAPEX/Revenue for the last three years was 0.69%.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.9x and Debt / EBITDA is 5.0x. Net Debt / EBITDA surged3.9x from to 3.9x in 2018. Debt increased on 5.8% while cash jumped on 46.3%.
Inseego Corp. has no short term refinancing risk: cash is higher than short term debt (2,196.5%).
Financial and operational results
FY ended 12/31/2018
Inseego Corp. ($INSG) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 185.2 | 220.9 | 243.6 | 219.3 | 202.5 | -7.7% |
| Gross Profit | 37.0 | 59.0 | 76.3 | 67.3 | 70.6 | 4.8% |
| SG&A | 29.2 | 55.4 | 82.2 | 59.4 | 48.4 | -18.6% |
| EBITDA | -28.2 | -29.5 | -31.0 | -7.9 | 27.7 | |
| Net Income | -39.2 | -52.3 | -60.6 | -45.7 | -8.1 | |
Balance Sheet
|
|---|
| Cash | 17.9 | 12.6 | 9.9 | 21.2 | 31.0 | 46.3% |
| Short Term Debt | 0.0 | 3.3 | 3.2 | 3.1 | 1.4 | -54.1% |
| Long Term Debt | 5.2 | 82.5 | 90.9 | 128.8 | 138.1 | 7.2% |
Cash flow
|
|---|
| Capex | 1.8 | 2.0 | 1.4 | 1.8 | 1.3 | -25.2% |
Ratios
|
|---|
| Revenue growth | -44.7% | 19.3% | 10.2% | -10.0% | -7.7% | |
| EBITDA growth | -17.8% | 4.6% | 5.0% | -74.3% | -449.4% | |
|
|---|
| Gross Margin | 20.0% | 26.7% | 31.3% | 30.7% | 34.9% | 4.2% |
| EBITDA Margin | -15.2% | -13.3% | -12.7% | -3.6% | 13.7% | 17.3% |
| SG&A, % of revenue | 15.8% | 25.1% | 33.7% | 27.1% | 23.9% | -3.2% |
| Net Income Margin | -21.2% | -23.7% | -24.9% | -20.9% | -4.0% | 16.9% |
| CAPEX, % of revenue | 0.9% | 0.9% | 0.6% | 0.8% | 0.7% | -0.2% |
|
|---|
| ROIC | -82.9% | -49.5% | -46.2% | -26.6% | 14.5% | 41.1% |
| ROE | -105.1% | -171.5% | | | | |
| Net Debt/EBITDA | | | | | 3.9x |
Inseego Corp. ($INSG) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 47 | 49 | 51 | 56 | | -15.6% | -18.1% | -11.9% | 20.4% |
| EBITDA | 1 | 3 | 20 | 4 | | | | | 0.5% |
| Net Income | -8 | -7 | 11 | -4 | | | | | |
Balance Sheet
|
|---|
| Cash | 16 | 19 | 32 | 31 | | 152.3% | 112.7% | 61.1% | 46.3% |
| Short Term Debt | 3 | 3 | 2 | 1 | | -5.9% | -88.1% | -46.4% | -54.1% |
| Long Term Debt | 131 | 134 | 136 | 138 | | 42.1% | 45.3% | 7.3% | 7.2% |
Ratios
|
|---|
| Gross Margin | 33.3% | 36.0% | 34.8% | 35.3% | | 4.0% | 7.2% | 6.3% | -2.4% |
| EBITDA Margin | 2.8% | 5.3% | 39.2% | 7.1% | | 15.3% | 8.7% | 44.3% | -1.4% |
| Net Income Margin | -17.2% | -13.6% | 21.4% | -7.5% | | 11.8% | 6.5% | 45.4% | 0.7% |
Peers in Communications Equipment
Below we provide Inseego Corp. benchmarking against other companies in Communications Equipment 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 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | -0.4% | 7.3% | 5.6% | 3.5% |
|---|
| Inseego Corp. ($INSG) | | 19.3% | 10.2% | -10.0% | -7.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| Inseego Corp. ($INSG) | 20.0% | 26.7% | 31.3% | 30.7% | 34.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 4.6% |
|---|
| Inseego Corp. ($INSG) | -15.2% | -13.3% | -12.7% | -3.6% | 13.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 2.0% | 1.9% | 1.7% |
|---|
| Inseego Corp. ($INSG) | 0.9% | 0.9% | 0.6% | 0.8% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.3% | 2.4% | 2.2% | 0.3% |
|---|
| Inseego Corp. ($INSG) | -82.9% | -49.5% | -46.2% | -26.6% | 14.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| Harmonic Inc. ($HLIT) | -4.7x | -4.1x | | | 3.4x |
| |
|---|
| Median (45 companies) | -0.7x | -0.7x | -0.9x | -0.7x | -0.3x |
|---|
| Inseego Corp. ($INSG) | | | | | 3.9x |
