Technical Communications Corporation reports 244% Net Income decline in 2020 and 26.7 pp EBITDA Margin decline from 9.2% to -17.5%
12/28/2020 • About Technical Communications Corporation (
$TCCO) • By InTwits
Technical Communications Corporation reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Technical Communications Corporation is a company in decline: FY2020 revenue growth was -41.5%, 5 years revenue CAGR was -7.1%
- The company operates at negative EBITDA Margin: -17.5%
- Technical Communications Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 0.0%. Average EBITDA Margin for the same period was -29.3%
- Technical Communications Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has unprofitable business model: ROIC is -42.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Technical Communications Corporation's Revenue dropped on 41.5%. Annual revenue decline showed slowdown in FY20Q4 - revenue dropped on 22.9%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 26.7 pp from 9.2% to -17.5% in FY2020. During FY2016-FY2020 EBITDA Margin topped in FY2019 at 9.2%.
Gross Margin surged on 10.2 pp from 47.8% to 58.0% in FY2020. SG&A as a % of Revenue jumped on 19.9 pp from 34.3% to 54.2% in FY2020. During the last 5 years SG&A as a % of Revenue bottomed in FY2019 at 34.3%.
Net Income margin dropped on 31.2 pp from 9.0% to -22.2% in FY2020. During the last 5 years Net Income margin topped in FY2019 at 9.0%.
Investments (CAPEX, working capital and M&A)
Technical Communications Corporation's CAPEX/Revenue was 0.083% in FY2020. Technical Communications Corporation's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 0.50%.
Return on investment
The company operates at negative ROIC (-42.4%) and ROE (-50.8%). ROIC dropped on 75.4 pp from 32.9% to -42.4% in FY2020. ROE dropped on 84.5 pp from 33.7% to -50.8% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.6x and Debt / EBITDA is . Debt jumped while cash decreased on 5.0%.
Technical Communications Corporation has no short term refinancing risk: cash is higher than short term debt (994.3%).
Financial and operational results
FY ended 09/26/2020
Technical Communications Corporation ($TCCO) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2.523 | 3.725 | 3.685 | 7.024 | 4.108 | -41.5% |
| Gross Profit | 0.509 | 1.807 | 0.972 | 3.358 | 2.385 | -29.0% |
| SG&A | 2.671 | 2.145 | 1.941 | 2.407 | 2.227 | -7.5% |
| EBITDA | -2.830 | -1.823 | -1.441 | 0.646 | -0.718 | -211.2% |
| Net Income | -2.472 | -1.913 | -1.480 | 0.631 | -0.911 | -244.2% |
Balance Sheet
|
|---|
| Cash | 2.589 | 1.284 | 1.982 | 1.593 | 1.514 | -5.0% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.152 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.557 | |
Cash flow
|
|---|
| Capex | 0.031 | 0.004 | 0.044 | 0.016 | 0.003 | -79.1% |
Ratios
|
|---|
| Revenue growth | -57.5% | 47.6% | -1.1% | 90.6% | -41.5% | |
| EBITDA growth | 68.9% | -35.6% | -20.9% | -144.8% | -211.2% | |
|
|---|
| Gross Margin | 20.2% | 48.5% | 26.4% | 47.8% | 58.0% | 10.2% |
| EBITDA Margin | -112.2% | -48.9% | -39.1% | 9.2% | -17.5% | -26.7% |
| SG&A, % of revenue | 105.9% | 57.6% | 52.7% | 34.3% | 54.2% | 19.9% |
| Net Income Margin | -98.0% | -51.4% | -40.2% | 9.0% | -22.2% | -31.2% |
| CAPEX, % of revenue | 1.2% | 0.1% | 1.2% | 0.2% | 0.1% | -0.1% |
|
|---|
| ROIC | -48.5% | -48.5% | -65.5% | 32.9% | -42.4% | -75.4% |
| ROE | -40.2% | -48.2% | -65.0% | 33.7% | -50.8% | -84.5% |
| Net Debt/EBITDA | | | | -2.5x | |
Technical Communications Corporation ($TCCO) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 1 | 1 | 1 | 2 | | -40.1% | -62.5% | -51.5% | -22.9% |
| EBITDA | -0 | -0 | -0 | 0 | | - | -280.0% | - | -55.5% |
| Net Income | -0 | -0 | -0 | 0 | | - | -309.3% | - | -59.9% |
Balance Sheet
|
|---|
| Cash | 1 | 1 | 1 | 2 | | -57.2% | -65.6% | 25.6% | -5.0% |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 1 | 0 | 0 | 1 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 46.4% | 42.7% | 59.3% | 66.6% | | 10.5% | 1.3% | 23.2% | 4.2% |
| EBITDA Margin | -64.8% | -43.5% | -72.5% | 21.8% | | -42.9% | -52.5% | -46.3% | -16.0% |
| Net Income Margin | -72.2% | -50.0% | -80.6% | 19.5% | | -49.9% | -58.9% | -54.2% | -18.0% |
Peers in Communications Equipment
Below you can find Technical Communications Corporation benchmarking vs. other companies in Communications Equipment 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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 3.5% | 3.7% | 4.4% |
|---|
| Technical Communications Corporation ($TCCO) | - | 47.6% | -1.1% | 90.6% | -41.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.0% | 41.2% | 43.2% | 44.9% |
|---|
| Technical Communications Corporation ($TCCO) | 20.2% | 48.5% | 26.4% | 47.8% | 58.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 5.4% | 3.1% | 9.3% |
|---|
| Technical Communications Corporation ($TCCO) | -112.2% | -48.9% | -39.1% | 9.2% | -17.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.2% |
|---|
| Technical Communications Corporation ($TCCO) | 1.2% | 0.1% | 1.2% | 0.2% | 0.1% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.7% | -1.6% | 2.3% |
|---|
| Technical Communications Corporation ($TCCO) | -48.5% | -48.5% | -65.5% | 32.9% | -42.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.9x | -0.7x | -0.1x | -0.1x | -0.4x |
|---|
