Tembec Inc Net Debt / EBITDA jumped on 5.5x from 4.2x to 9.7x in 2015 while Revenue decreased on 4.9%
19.11.2015 • About Tembec Inc (
$TMB) • By InTwits
Tembec Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Tembec Inc is a company in decline: FY2015 revenue growth was -4.9%, 5 years revenue CAGR was -5.5%
- EBITDA Margin is quite volatile: 5.2% in FY2015, 8.4% in FY2014, 4.4% in FY2013, 0.8% in FY2012, 5.5% in FY2011
- Tembec Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.7%. At the same time it's a lot of higher than industry average of 4.9%.
- CAPEX is quite volatile: 66 in FY2015, 158 in FY2014, 127 in FY2013, 108 in FY2012, 65 in FY2011
- The company has potentially unprofitable business model: ROIC is at 3.9%
- It operates with high leverage: Net Debt/EBITDA is 9.7x while industry average is 3.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tembec Inc ($TMB) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,743 | 1,666 | 1,534 | 1,491 | 1,418 | -4.9% |
| Gross Profit | 124 | 91 | 130 | 122 | 126 | 3.3% |
| SG&A | 72 | 74 | 72 | 66 | 59 | -10.6% |
| EBITDA | 95 | 14 | 68 | 125 | 74 | -40.8% |
| Net Income | -5 | -82 | -39 | 9 | -150 | -1,766.7% |
Balance Sheet
|
|---|
| Cash | 105 | 92 | 73 | 39 | 21 | -46.2% |
| Short Term Debt | 24 | 84 | 73 | 104 | 125 | 20.2% |
| Long Term Debt | 271 | 323 | 369 | 455 | 613 | 34.7% |
Cash flow
|
|---|
| Capex | 65 | 108 | 127 | 158 | 66 | -58.2% |
Ratios
|
|---|
| Revenue growth | -7.1% | -4.4% | -7.9% | -2.8% | -4.9% | |
| EBITDA growth | -20.8% | -85.3% | 385.7% | 83.8% | -40.8% | |
| Gross Margin | 7.1% | 5.5% | 8.5% | 8.2% | 8.9% | 0.7% |
| EBITDA Margin | 5.5% | 0.8% | 4.4% | 8.4% | 5.2% | -3.2% |
| Net Income Margin | -0.3% | -4.9% | -2.5% | 0.6% | -10.6% | -11.2% |
| SG&A, % of revenue | 4.1% | 4.4% | 4.7% | 4.4% | 4.2% | -0.3% |
| CAPEX, % of revenue | 3.7% | 6.5% | 8.3% | 10.6% | 4.7% | -5.9% |
| ROIC | 8.2% | -6.2% | 4.8% | 12.2% | 3.9% | -8.3% |
| ROE | -1.7% | -49.0% | -24.3% | 4.1% | -103.4% | -107.6% |
| Net Debt/EBITDA | 2.0x | 22.5x | 5.4x | 4.2x | 9.7x | 5.5x |
Revenue and profitability
Tembec Inc's Revenue decreased on 4.9% in FY2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.57 pp from 7.2% to 7.8% in 2015.
Gross Margin increased slightly on 0.70 pp from 8.2% to 8.9% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign dropped on 11.2 pp from 0.60% to -10.6% in FY2015.
Capital expenditures (CAPEX) and working capital investments
Tembec Inc's CAPEX/Revenue was 4.7% in FY2015. CAPEX/Revenue decreased slightly on 1.8 pp from 6.5% in FY2012 to 4.7% in FY2015. For the last three years the average CAPEX/Revenue was 7.8%.The company invested a big chunk of EBITDA (89.2%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low but positive ROIC (3.93%) and negative ROE (-103.45%). ROIC decreased on 8.3 pp from 12.2% to 3.9% in FY2015. ROE dropped on 108 pp from 4.1% to -103% in FY2015.
Leverage (Debt)
Debt level is 9.7x Net Debt / EBITDA and 10.0x Debt / EBITDA. Net Debt / EBITDA surged on 5.5x from 4.2x to 9.7x in FY2015. Debt jumped on 32.0% in FY2015 while cash dropped on 46.2% in FY2015.
Management team
Tembec Inc's CEO James M Lopez "Jim" is a founder and has spent 12 years at the company. The company's CFO Michel J Dumas has spent 21 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide Tembec 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 | 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 ($NSU) | | 3.3% | -72.5% | 256.5% | |
| |
|---|
| Median (129 companies) | 27.7% | 8.5% | -4.8% | -1.1% | 10.2% |
|---|
| Tembec Inc ($TMB) | | -4.4% | -7.9% | -2.8% | -4.9% |
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% | |
| Royal Gold Inc ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (132 companies) | 31.2% | 31.8% | 21.9% | 17.2% | 16.1% |
|---|
| Tembec Inc ($TMB) | 7.1% | 5.5% | 8.5% | 8.2% | 8.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Royal Gold Inc ($RGL) | 86.1% | 88.2% | 88.6% | 84.4% | 65.0% |
| Franco-Nevada Corp ($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 ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | |
| |
|---|
| Median (136 companies) | 23.3% | 18.5% | 11.5% | 9.8% | 3.2% |
|---|
| Tembec Inc ($TMB) | 5.5% | 0.8% | 4.4% | 8.4% | 5.2% |
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 ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | |
| |
|---|
| Median (138 companies) | 24.1% | 26.3% | 25.4% | 16.1% | 10.2% |
|---|
| Tembec Inc ($TMB) | 3.7% | 6.5% | 8.3% | 10.6% | 4.7% |
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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | |
| |
|---|
| Median (142 companies) | 5.4% | 4.9% | -0.1% | -0.3% | -7.1% |
|---|
| Tembec Inc ($TMB) | 8.2% | -6.2% | 4.8% | 12.2% | 3.9% |
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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (93 companies) | -0.1x | 0.3x | 0.7x | 0.9x | -0.6x |
|---|
| Tembec Inc ($TMB) | 2.0x | 22.5x | 5.4x | 4.2x | 9.7x |
