Inseego Corp. Net Debt / EBITDA dropped on 55.6x from 82.5x to 26.9x in 2020 while Debt jumped on 16.0%
03/01/2021 • About Inseego Corp. (
$INSG) • By InTwits
Inseego Corp. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Inseego Corp. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 0.0% while average EBITDA Margin was -0.4% for the sames years
- Inseego Corp. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.4%. At the same time it's in pair with industry average of 3.2%
- CAPEX is quite volatile: $6m in 2020, $7m in 2019, $1m in 2018, $2m in 2017, $1m in 2016
- The company has unprofitable business model: ROIC is -18.6%
- It operates with high leverage: Net Debt/EBITDA is 26.9x while industry average is 0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 43.0%. Revenue growth showed acceleration in 20Q4 - it increased 64.5% YoY. During the last 5 years Revenue growth bottomed in 2017 at -10.0% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 8.9 pp from -0.50% to 8.4% in 2020.
Gross Margin showed almost no change in 2020. SG&A as a % of Revenue decreased on 4.4 pp from 25.6% to 21.2% in 2020. SG&A as a % of Revenue stuck to a declining trend at -2.7 pp per annum in 2016-2020.
Net Income margin dropped on 17.2 pp from -18.3% to -35.4% in 2020. During the last 5 years Net Income margin topped in 2018 at -4.0% and was declining since that time.
Investments (CAPEX, working capital and M&A)
Inseego Corp.'s CAPEX/Revenue was 1.8% in 2020. The company showed small growth in CAPEX/Revenue of 1.0 pp from 0.82% in 2017 to 1.8% in 2020. For the last three years the average CAPEX/Revenue was 1.8%. Inseego Corp. has spent a lot to CAPEX (114% of EBITDA) to fuel its growth.
Leverage (Debt)
Debt level is 26.9x Net Debt / EBITDA and 34.9x Debt / EBITDA. Net Debt / EBITDA dropped on 55.6x from 82.5x to 26.9x in 2020. Debt jumped on 16.0% while cash surged on 231%.
Inseego Corp. has no short term refinancing risk: cash is higher than short term debt (2,471.6%).
Management team
The company's CEO Dan Mondor has spent 3 years with the company. Craig L Foster is a Inseego Corp.'s CFO. Craig L Foster has spent 7 months years at the company.
Financial and operational results
FY ended 12/31/2020
Inseego Corp. ($INSG) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 243.6 | 219.3 | 202.5 | 219.5 | 313.8 | 43.0% |
| Gross Profit | 76.3 | 67.3 | 70.6 | 64.0 | 90.8 | 42.0% |
| SG&A | 82.2 | 59.4 | 48.4 | 56.2 | 66.4 | 18.3% |
| EBITDA | -31.0 | -7.9 | 27.7 | 1.7 | 5.0 | 198.0% |
| Net Income | -60.6 | -45.7 | -8.1 | -40.1 | -111.2 | |
Balance Sheet
|
|---|
| Cash | 9.9 | 21.2 | 31.0 | 12.1 | 40.0 | 231.4% |
| Short Term Debt | 3.2 | 3.1 | 1.4 | 1.3 | 1.6 | 25.7% |
| Long Term Debt | 90.9 | 128.8 | 138.1 | 149.6 | 173.4 | 15.9% |
Cash flow
|
|---|
| Capex | 1.4 | 1.8 | 1.3 | 6.6 | 5.7 | -13.4% |
Ratios
|
|---|
| Revenue growth | 10.2% | -10.0% | -7.7% | 8.4% | 43.0% | |
| EBITDA growth | 5.0% | -74.3% | -449.4% | -93.9% | 198.0% | |
|
|---|
| Gross Margin | 31.3% | 30.7% | 34.9% | 29.1% | 28.9% | -0.2% |
| EBITDA Margin | -12.7% | -3.6% | 13.7% | 0.8% | 1.6% | 0.8% |
| SG&A, % of revenue | 33.7% | 27.1% | 23.9% | 25.6% | 21.2% | -4.4% |
| Net Income Margin | -24.9% | -20.9% | -4.0% | -18.3% | -35.4% | -17.2% |
| CAPEX, % of revenue | 0.6% | 0.8% | 0.7% | 3.0% | 1.8% | -1.2% |
|
|---|
| ROIC | -46.2% | -26.6% | 14.5% | -17.6% | -18.6% | -1.0% |
| Net Debt/EBITDA | | | 3.9x | 82.5x | 26.9x | -55.6x |
Inseego Corp. ($INSG) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 57 | 81 | 90 | 86 | | 17.1% | 44.4% | 43.9% | 64.5% |
| EBITDA | -3 | 0 | 4 | 5 | | -298.9% | - | 21.8% | - |
| Net Income | -18 | -75 | -5 | -13 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 31 | 42 | 42 | 40 | | -4.2% | 107.7% | 201.1% | 231.4% |
| Short Term Debt | 48 | 1 | 1 | 2 | | 1,557.1% | -99.1% | -99.0% | 25.7% |
| Long Term Debt | 50 | 182 | 171 | 173 | | -64.9% | 13,825.4% | 13,575.8% | 15.9% |
Ratios
|
|---|
| Gross Margin | 30.3% | 27.3% | 27.9% | 30.7% | | -0.1% | -0.6% | -1.8% | 2.0% |
| EBITDA Margin | -5.2% | 0.3% | 3.9% | 5.7% | | -8.2% | 2.1% | -0.7% | 6.2% |
| Net Income Margin | -32.0% | -92.7% | -6.0% | -14.8% | | -16.6% | -73.5% | 8.0% | 10.1% |
Peers in Communications Equipment
Below you can find Inseego Corp. 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. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| Lantronix, Inc. ($LTRX) | - | 10.2% | 1.9% | 2.9% | 27.7% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 3.5% | 3.7% | 2.1% |
|---|
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
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. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Inseego Corp. ($INSG) | 31.3% | 30.7% | 34.9% | 29.1% | 28.9% |
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. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 4.6% | 5.0% | 9.3% |
|---|
| Inseego Corp. ($INSG) | -12.7% | -3.6% | 13.7% | 0.8% | 1.6% |
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. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.4% | 2.2% |
|---|
| Inseego Corp. ($INSG) | 0.6% | 0.8% | 0.7% | 3.0% | 1.8% |
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. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.4% | 2.2% | 0.3% | 1.2% | 2.3% |
|---|
| Inseego Corp. ($INSG) | -46.2% | -26.6% | 14.5% | -17.6% | -18.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| 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 |
| EchoStar Corporation ($SATS) | 1.5x | 1.7x | 3.3x | 1.4x | 2.5x |
| |
|---|
| Median (24 companies) | -0.9x | -0.7x | -0.3x | -0.4x | -0.5x |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
