HudBay Minerals Inc reports 60.7% CAPEX decline while 27.4% Revenue growth
22.02.2017 • About HudBay Minerals Inc (
$HBM) • By InTwits
HudBay Minerals Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 41.5% in 2016, -12.5% in 2015, 10.8% in 2014, 13.7% in 2013, 25.4% in 2012
- HudBay Minerals Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 105.1%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 193 in 2016, 491 in 2015, 807 in 2014, 1,003 in 2013, 546 in 2012
- The company has potentially unprofitable business model: ROIC is at 5.1%
- It operates with high leverage: Net Debt/EBITDA is 2.3x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
HudBay Minerals Inc ($HBM) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 703 | 502 | 460 | 886 | 1,129 | 27.4% |
| Gross Profit | 270 | 152 | 52 | 118 | 223 | 88.3% |
| SG&A | 40 | 39 | 38 | 31 | 38 | 22.1% |
| EBITDA | 178 | 69 | 50 | -111 | 469 | |
| Net Income | -21 | -98 | 59 | -331 | -35 | |
Balance Sheet
|
|---|
| Cash | 1,344 | 594 | 154 | 54 | 147 | 172.7% |
| Short Term Debt | 0 | 0 | 13 | 70 | 16 | -76.4% |
| Long Term Debt | 482 | 733 | 837 | 1,205 | 1,216 | 0.9% |
Cash flow
|
|---|
| Capex | 546 | 1,003 | 807 | 491 | 193 | -60.7% |
Ratios
|
|---|
| Revenue growth | -22.0% | -28.6% | -8.4% | 92.8% | 27.4% | |
| EBITDA growth | -44.2% | -61.6% | -27.7% | -323.6% | -523.2% | |
| Gross Margin | 38.4% | 30.3% | 11.3% | 13.4% | 19.7% | 6.4% |
| EBITDA Margin | 25.4% | 13.7% | 10.8% | -12.5% | 41.5% | 54.1% |
| Net Income Margin | -3.0% | -19.6% | 12.9% | -37.4% | -3.1% | 34.3% |
| SG&A, % of revenue | 5.6% | 7.7% | 8.2% | 3.5% | 3.3% | -0.1% |
| CAPEX, % of revenue | 77.7% | 199.9% | 175.5% | 55.4% | 17.1% | -38.3% |
| ROIC | 4.7% | -0.3% | -1.0% | -10.5% | 5.1% | 15.6% |
| ROE | -1.2% | -6.2% | 3.5% | -18.4% | -2.0% | 16.4% |
| Net Debt/EBITDA | -4.8x | 2.0x | 14.0x | | 2.3x | 2.3x |
HudBay Minerals Inc ($HBM) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 254 | 247 | 311 | 317 | 97.0% | 63.7% | 15.4% | 17.4% |
| EBITDA | 89 | 99 | 143 | 138 | 278.0% | 19,018.9% | 108.2% | |
| Net Income | -16 | -6 | 34 | -47 | | | | |
Balance Sheet
|
|---|
| Cash | 86 | 142 | 118 | 147 | -30.0% | -1.0% | 3.8% | 172.7% |
| Short Term Debt | 16 | 16 | 16 | 16 | -63.5% | -77.4% | -77.4% | -76.4% |
| Long Term Debt | 1,297 | 1,293 | 1,207 | 1,216 | -4.1% | -11.9% | -1.0% | 0.9% |
Ratios
|
|---|
| Gross Margin | 11.0% | 19.6% | 22.0% | 24.7% | 0.9% | 16.5% | 6.4% | 4.4% |
| EBITDA Margin | 35.0% | 40.2% | 45.9% | 43.6% | 16.7% | 39.8% | 20.5% | 121.4% |
| Net Income Margin | -6.2% | -2.3% | 10.8% | -14.9% | 9.2% | 27.0% | 15.2% | 74.3% |
Revenue and profitability
The company's Revenue jumped on 27.4%. Revenue growth showed slow down in 16Q4 - it was 17.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 54.1 pp from -12.5% to 41.5% in 2016.
Gross Margin increased on 6.4 pp from 13.4% to 19.7% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign jumped on 34.3 pp from -37.4% to -3.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
HudBay Minerals Inc's CAPEX/Revenue was 17.1% in 2016. HudBay Minerals Inc's CAPEX/Revenue dropped on 183 pp from 200% in 2013 to 17.1% in 2016. It's average CAPEX/Revenue for the last three years was 82.7%.
Return on investment
The company operates at low but positive ROIC (5.15%) and negative ROE (-1.98%). ROIC surged on 15.6 pp from -10.5% to 5.1% in 2016. ROE jumped on 16.4 pp from -18.4% to -2.0% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.3x and Debt / EBITDA is 2.6x. Net Debt / EBITDA jumped2.3x from to 2.3x in 2016. Debt decreased on 3.4% while cash surged on 173%.
Management team
The company's CEO Alan T C Hair is a founder and has spent 2 years at the company. The company's CFO is David Stewart Bryson. David Stewart Bryson has 9 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below we provide HudBay Minerals Inc benchmarking against other companies in Basic Materials 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 |
|---|
| Avino Silver & Gold Mines Ltd ($ASM) | | 613.6% | 19.9% | -1.1% | 109.1% |
| Trevali Mining Corp ($TV) | | | | 12.9% | 86.4% |
| Geodrill Ltd ($GEO) | | -43.3% | -4.3% | 34.6% | 53.1% |
| Tahoe Resources Inc ($THO) | | | | 48.4% | 50.9% |
| Osisko Gold Royalties Ltd ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -2.5% | 2.0% | -2.9% | 5.7% |
|---|
| HudBay Minerals Inc ($HBM) | | -28.6% | -8.4% | 92.8% | 27.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Nevsun Resources Ltd ($NSU) | 89.9% | 94.8% | 95.5% | 82.3% | 79.7% |
| Labrador Iron Ore Royalty Corp ($LIF) | 80.2% | 80.2% | 80.2% | 80.3% | 80.3% |
| Lucara Diamond Corp ($LUC) | 42.5% | 57.4% | 66.7% | 60.9% | 65.6% |
| Trevali Mining Corp ($TV) | | | 49.0% | 59.3% | |
| Perseus Mining Ltd ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 19.1% | 16.9% | 24.8% |
|---|
| HudBay Minerals Inc ($HBM) | 38.4% | 30.3% | 11.3% | 13.4% | 19.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($LIF) | | | | 72.8% | 73.5% |
| Silver Wheaton Corp ($SLW) | 82.6% | 75.3% | 69.6% | 65.8% | 59.7% |
| Franco-Nevada Corp ($FNV) | 62.1% | 44.6% | 72.3% | 60.8% | 70.3% |
| Lucara Diamond Corp ($LUC) | 7.6% | 57.3% | 57.5% | 60.0% | 62.4% |
| Sandstorm Gold Ltd ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 17.4% | 10.8% | 10.3% | 7.3% | 23.0% |
|---|
| HudBay Minerals Inc ($HBM) | 25.4% | 13.7% | 10.8% | -12.5% | 41.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Largo Resources Ltd ($LGO) | | | | 567.6% | |
| Sandstorm Gold Ltd ($SSL) | 152.1% | 118.8% | 49.4% | 412.7% | 17.3% |
| Silver Wheaton Corp ($SLW) | 75.5% | 286.8% | 22.5% | 279.2% | 90.3% |
| Franco-Nevada Corp ($FNV) | 3.7% | 35.5% | 201.6% | 230.0% | 122.4% |
| Avino Silver & Gold Mines Ltd ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 27.4% | 26.5% | 17.5% | 16.6% | 18.3% |
|---|
| HudBay Minerals Inc ($HBM) | 77.7% | 199.9% | 175.5% | 55.4% | 17.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucara Diamond Corp ($LUC) | -2.9% | 41.3% | 54.7% | 39.6% | 58.5% |
| Western Forest Products Inc ($WEF) | 9.0% | 25.1% | 15.7% | 16.4% | 25.1% |
| Geodrill Ltd ($GEO) | 8.6% | -3.5% | -9.3% | 3.6% | 20.3% |
| Supremex Inc ($SXP) | 14.1% | 18.5% | 16.5% | 23.4% | 19.3% |
| Canfor Pulp Products Inc ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 1.3% | 1.6% | -3.6% | 4.0% |
|---|
| HudBay Minerals Inc ($HBM) | 4.7% | -0.3% | -1.0% | -10.5% | 5.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canam Group Inc ($CAM) | 4.2x | 2.6x | 3.2x | 1.8x | 13.9x |
| Taseko Mines Ltd ($TKO) | 7.4x | 5.9x | 10.2x | 5.9x | 11.0x |
| Methanex Corp ($MX) | 5.2x | 0.7x | 0.9x | 3.0x | 5.2x |
| Copper Mountain Mining Corp ($CUM) | 3.9x | 5.0x | 5.4x | 30.6x | 5.1x |
| Cameco Corp ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.7x | 1.1x | 1.6x | 0.6x |
|---|
| HudBay Minerals Inc ($HBM) | -4.8x | 2.0x | 14.0x | | 2.3x |
