Royal Gold Inc reports 24.5% CAPEX decline while 17.2% Revenue growth
05.08.2015 • About Royal Gold Inc (
$RGL) • By InTwits
Royal Gold Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Royal Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 79.7%. At the same time it's a lot of higher than industry average of 28.2%.
- CAPEX is quite volatile: 60.4 in FY2015, 80.0 in FY2014, 314 in FY2013, 277 in FY2012, 280 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Royal Gold Inc ($RGL) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 216.5 | 263.1 | 289.2 | 237.2 | 278.0 | 17.2% |
| Gross Profit | 149.1 | 188.1 | 204.2 | 136.7 | 239.1 | 75.0% |
| SG&A | 21.1 | 20.4 | 24.0 | 21.2 | 27.9 | 31.5% |
| EBITDA | 186.3 | 231.9 | 256.2 | 200.1 | 180.7 | -9.7% |
| Net Income | 71.4 | 92.5 | 69.2 | 62.6 | 52.0 | -17.0% |
Balance Sheet
|
|---|
| Cash | 114.2 | 375.5 | 664.0 | 659.5 | 742.8 | 12.6% |
| Short Term Debt | 15.6 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 210.5 | 293.2 | 302.3 | 311.9 | 313.9 | 0.6% |
Cash flow
|
|---|
| Capex | 280.0 | 276.7 | 314.3 | 80.0 | 60.4 | -24.5% |
Ratios
|
|---|
| Revenue growth | 58.5% | 21.5% | 9.9% | -18.0% | 17.2% | |
| EBITDA growth | 96.5% | 24.5% | 10.5% | -21.9% | -9.7% | |
| Gross Margin | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% | 28.4% |
| EBITDA Margin | 86.1% | 88.2% | 88.6% | 84.4% | 65.0% | -19.4% |
| Net Income Margin | 33.0% | 35.2% | 23.9% | 26.4% | 18.7% | -7.7% |
| SG&A, % of revenue | 9.8% | 7.8% | 8.3% | 8.9% | 10.0% | 1.1% |
| CAPEX, % of revenue | 129.4% | 105.2% | 108.7% | 33.7% | 21.7% | -12.0% |
| ROIC | 7.0% | 8.1% | 7.1% | 4.0% | 3.2% | -0.8% |
| ROE | 5.0% | 5.6% | 3.3% | 2.7% | 2.2% | -0.5% |
| Net Debt/EBITDA | 0.6x | -0.4x | -1.4x | -1.7x | -2.4x | -0.6x |
Revenue and profitability
The company's Revenue jumped on 17.2% in FY2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin dropped on 19.4 pp from 84.4% to 65.0% in FY2015.
Gross Margin surged on 28.4 pp from 57.6% to 86.0% in FY2015. SG&A as a % of Revenue increased slightly on 1.1 pp from 8.9% to 10.0% in FY2015.
Net Income marign decreased on 7.7 pp from 26.4% to 18.7% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 21.7%. Royal Gold Inc's CAPEX/Revenue dropped on 83.4 pp from 105% in FY2012 to 21.7% in FY2015. Average CAPEX/Revenue for the last three years was 54.7%.
Return on investment
The company operates at low ROIC (3.22%) and ROE (2.21%). ROIC decreased slightly on 0.82 pp from 4.0% to 3.2% in FY2015. ROE showed almost no change in FY2015.
Leverage (Debt)
Debt level is -2.4x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from -1.7x to -2.4x in FY2015. Debt increased slightly on 0.64% in FY2015 while cash surged on 12.6% in FY2015.
Management team
The company's CEO is Tony A Jensen. Tony A Jensen is a founder and has 12 years tenure at the company. Royal Gold Inc's CFO is Stefan L Wenger. Stefan L Wenger has 12 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below you can find Royal Gold Inc benchmarking vs. other companies in Basic Materials 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Northern Sun Mining Corp ($NSC) | -93.3% | 315.4% | -99.4% | 8,924.9% | |
| Turquoise Hill Resources Ltd ($TRQ) | | | -34.0% | 3,268.9% | -5.8% |
| Asian Mineral Resources Ltd ($ASN) | | | | 859.1% | |
| Ur-Energy Inc ($URE) | | | | 285.4% | |
| Nevsun Resources Ltd ($NSU) | | 3.3% | -72.5% | 256.5% | |
| |
|---|
| Median (129 companies) | 27.7% | 8.0% | -5.0% | -1.1% | 19.4% |
|---|
| Royal Gold Inc ($RGL) | | 21.5% | 9.9% | -18.0% | 17.2% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nevsun Resources Ltd ($NSU) | 90.3% | 89.9% | 94.8% | 95.5% | |
| Franco-Nevada Corp ($FNV) | 84.6% | 86.1% | 85.0% | 83.5% | |
| Labrador Iron Ore Royalty Corp ($LIF) | 80.2% | 80.2% | 80.2% | 80.2% | |
| Lucara Diamond Corp ($LUC) | | 42.5% | 57.4% | 66.7% | |
| Silver Wheaton Corp ($SLW) | 88.2% | 86.2% | 80.3% | 49.8% | |
| |
|---|
| Median (132 companies) | 30.1% | 31.4% | 21.3% | 16.2% | 24.1% |
|---|
| Royal Gold Inc ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Franco-Nevada Corp ($FNV) | 38.6% | 62.1% | 44.6% | 72.3% | |
| Silver Wheaton Corp ($SLW) | 84.8% | 82.6% | 75.3% | 69.6% | |
| Sandstorm Gold Ltd ($SSL) | 63.8% | 74.3% | 49.9% | 62.1% | |
| Nevsun Resources Ltd ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | |
| Lucara Diamond Corp ($LUC) | | 7.6% | 57.3% | 57.5% | |
| |
|---|
| Median (136 companies) | 22.0% | 18.2% | 10.8% | 9.6% | 4.0% |
|---|
| Royal Gold Inc ($RGL) | 86.1% | 88.2% | 88.6% | 84.4% | 65.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Barkerville Gold Mines Ltd ($BGM) | 123.7% | 38.5% | 49.9% | 7,166.9% | 3.2% |
| Marlin Gold Mining Ltd ($MLN) | | | | 508.8% | |
| Imperial Metals Corp ($III) | 28.2% | 69.2% | 185.7% | 280.2% | |
| Golden Minerals Co ($AUM) | 462.4% | 36.9% | 16.8% | 212.8% | |
| Franco-Nevada Corp ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | |
| |
|---|
| Median (138 companies) | 23.9% | 26.2% | 25.1% | 16.0% | 8.7% |
|---|
| Royal Gold Inc ($RGL) | 129.4% | 105.2% | 108.7% | 33.7% | 21.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Lucara Diamond Corp ($LUC) | -7.1% | -2.9% | 41.3% | 54.7% | |
| CanAf Group Inc ($CAF) | 74.9% | 37.0% | 65.2% | 37.6% | |
| Nevsun Resources Ltd ($NSU) | 89.8% | 52.2% | 8.8% | 35.0% | |
| Dynacor Gold Mines Inc ($DNG) | 45.6% | 62.8% | 50.9% | 31.3% | |
| Canfor Pulp Products Inc ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | |
| |
|---|
| Median (142 companies) | 5.4% | 4.8% | -0.1% | -0.3% | -4.7% |
|---|
| Royal Gold Inc ($RGL) | 7.0% | 8.1% | 7.1% | 4.0% | 3.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| VMS Ventures Inc ($VMS) | | | | 86.7x | |
| Ur-Energy Inc ($URE) | | | | 55.1x | |
| Katanga Mining Ltd ($KAT) | 0.4x | 19.4x | 3.3x | 18.8x | |
| HudBay Minerals Inc ($HBM) | -2.8x | -4.8x | 2.0x | 14.0x | |
| Imperial Metals Corp ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (93 companies) | -0.1x | 0.3x | 0.8x | 0.9x | 0.5x |
|---|
| Royal Gold Inc ($RGL) | 0.6x | -0.4x | -1.4x | -1.7x | -2.4x |
