Resolute Forest Products Inc Net Debt / EBITDA jumped on 25.8x from 3.8x to 29.6x in 2015 while Revenue dropped on 14.4%
04.02.2016 • About Resolute Forest Products Inc (
$RFP) • By InTwits
Resolute Forest Products Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Resolute Forest Products Inc is a company in decline: 2015 revenue growth was -14.4%, 5 years revenue CAGR was -5.1%
- EBITDA Margin is quite volatile: 0.5% in 2015, 1.6% in 2014, 5.4% in 2013, 4.6% in 2012, 8.8% in 2011
- Resolute Forest Products Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.8%. At the same time it's in pair with industry average of 6.8%.
- CAPEX is quite volatile: 5.8 in FY2015, 7.3 in FY2014, 38.4 in FY2013, 74.8 in FY2012, 33.4 in FY2011
- The company has unprofitable business model: ROIC is at -14.3%
- It operates with high leverage: Net Debt/EBITDA is 29.6x while industry average is 3.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Resolute Forest Products Inc ($RFP) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 4,756 | 4,503 | 4,461 | 4,258 | 3,645 | -14.4% |
| Gross Profit | 946 | 785 | 772 | 775 | 819 | 5.7% |
| SG&A | 158 | 149 | 166 | 155 | 160 | 3.2% |
| EBITDA | 418 | 205 | 241 | 69 | 18 | -73.9% |
| Net Income | 41 | 1 | -639 | -277 | -257 | -7.2% |
Balance Sheet
|
|---|
| Cash | 369 | 263 | 322 | 337 | 58 | -82.8% |
| Short Term Debt | 0 | 2 | 2 | 1 | 1 | 0.0% |
| Long Term Debt | 621 | 532 | 597 | 596 | 590 | -1.0% |
Cash flow
|
|---|
| Capex | 97 | 169 | 161 | 193 | 185 | -4.1% |
Ratios
|
|---|
| Revenue growth | 0.2% | -5.3% | -0.9% | -4.6% | -14.4% | |
| EBITDA growth | 25.5% | -51.0% | 17.6% | -71.4% | -73.9% | |
| Gross Margin | 19.9% | 17.4% | 17.3% | 18.2% | 22.5% | 4.3% |
| EBITDA Margin | 8.8% | 4.6% | 5.4% | 1.6% | 0.5% | -1.1% |
| Net Income Margin | 0.9% | 0.0% | -14.3% | -6.5% | -7.1% | -0.5% |
| SG&A, % of revenue | 3.3% | 3.3% | 3.7% | 3.6% | 4.4% | 0.7% |
| CAPEX, % of revenue | 2.0% | 3.8% | 3.6% | 4.5% | 5.1% | 0.5% |
| ROIC | 7.0% | -1.3% | -0.1% | -9.3% | -14.3% | -5.0% |
| ROE | 1.2% | 0.0% | -21.6% | -11.2% | -12.7% | -1.5% |
| Net Debt/EBITDA | 0.6x | 1.3x | 1.1x | 3.8x | 29.6x | 25.8x |
Revenue and profitability
The company's Revenue dropped on 14.4% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.5 pp from 42.1% to 44.6% in FY2015.
Gross Margin increased on 4.3 pp from 18.2% to 22.5% in 2015. SG&A as a % of Revenue increased slightly on 0.75 pp from 3.6% to 4.4% in 2015.
Net Income marign decreased slightly on 0.55 pp from -6.5% to -7.1% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 the company had CAPEX/Revenue of 5.1%. CAPEX/Revenue increased slightly on 1.3 pp from 3.8% in 2012 to 5.1% in 2015. It's average CAPEX/Revenue for the last three years was 4.4%.Battling declining revenue the company made large investments to CAPEX (1,028% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-14.26%) and ROE (-12.73%). ROIC decreased on 5.0 pp from -9.3% to -14.3% in 2015. ROE decreased slightly on 1.5 pp from -11.2% to -12.7% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 29.6x and Debt / EBITDA is 32.8x. Net Debt / EBITDA jumped on 25.8x from 3.8x to 29.6x in 2015. Debt decreased slightly on 1.0% in 2015 while cash dropped on 82.8% in 2015.
Management team
Resolute Forest Products Inc's CEO Richard Garneau is a founder and has spent 7 years at the company. Jo-Ann Longworth is a The company's CFO. Jo-Ann Longworth has spent 7 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Resolute Forest Products 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 ($NSU) | | 3.3% | -72.5% | 256.5% | |
| |
|---|
| Median (129 companies) | 27.7% | 8.5% | -5.0% | -1.1% | 5.1% |
|---|
| Resolute Forest Products Inc ($RFP) | | -5.3% | -0.9% | -4.6% | -14.4% |
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 ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (132 companies) | 31.2% | 31.8% | 21.9% | 16.2% | 10.6% |
|---|
| Resolute Forest Products Inc ($RFP) | 19.9% | 17.4% | 17.3% | 18.2% | 22.5% |
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 ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | |
| |
|---|
| Median (136 companies) | 23.3% | 18.5% | 11.5% | 9.8% | 6.6% |
|---|
| Resolute Forest Products Inc ($RFP) | 8.8% | 4.6% | 5.4% | 1.6% | 0.5% |
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 ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | |
| |
|---|
| Median (138 companies) | 24.1% | 26.3% | 25.4% | 16.1% | 8.7% |
|---|
| Resolute Forest Products Inc ($RFP) | 2.0% | 3.8% | 3.6% | 4.5% | 5.1% |
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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | |
| |
|---|
| Median (142 companies) | 5.4% | 4.9% | 0.0% | 0.2% | -6.0% |
|---|
| Resolute Forest Products Inc ($RFP) | 7.0% | -1.3% | -0.1% | -9.3% | -14.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| VMS Ventures Inc ($VMS) | | | | 86.7x | 4.7x |
| Ur-Energy Inc ($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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (93 companies) | -0.1x | 0.3x | 0.7x | 0.9x | 1.1x |
|---|
| Resolute Forest Products Inc ($RFP) | 0.6x | 1.3x | 1.1x | 3.8x | 29.6x |
