Sherritt International Corp Net Debt / EBITDA surged on 12.3x from 10.1x to 22.4x in 2015 and Debt surged on 21.7%
10.02.2016 • About Sherritt International Corp (
$S) • By InTwits
Sherritt International Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sherritt International Corp is a company in decline: 2015 revenue growth was -26.3%, 5 years revenue CAGR was -27.4%
- Sherritt International Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.0%. At the same time it's a lot of higher than industry average of 10.0%.
- CAPEX is quite volatile: 277 in 2015, 266 in 2014, 472 in 2013, 215 in 2012, 71.2 in 2011
- The company has unprofitable business model: ROIC is at -0.6%
- It operates with high leverage: Net Debt/EBITDA is 22.4x while industry average is 7.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sherritt International Corp ($S) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,978 | 475 | 449 | 456 | 336 | -26.3% |
| Gross Profit | 497 | 215 | 137 | 138 | 18 | -87.1% |
| SG&A | 82 | 66 | 78 | 63 | 46 | -26.8% |
| EBITDA | 638 | 241 | 148 | 168 | 91 | -46.1% |
| Net Income | 197 | 34 | -660 | -290 | -2,077 | 616.1% |
Balance Sheet
|
|---|
| Cash | 175 | 147 | 324 | 162 | 231 | 42.7% |
| Short Term Debt | 57 | 0 | 365 | 2 | 91 | 5,600.0% |
| Long Term Debt | 1,688 | 2,040 | 2,125 | 1,858 | 2,172 | 16.9% |
Cash flow
|
|---|
| Capex | 126 | 58 | 68 | 81 | 79 | -2.2% |
Ratios
|
|---|
| Revenue growth | 18.4% | -76.0% | -5.6% | 1.6% | -26.3% | |
| EBITDA growth | 18.9% | -62.3% | -38.6% | 13.7% | -46.1% | |
| Gross Margin | 25.1% | 45.3% | 30.5% | 30.2% | 5.3% | -24.9% |
| EBITDA Margin | 32.3% | 50.7% | 33.0% | 36.9% | 27.0% | -9.9% |
| Net Income Margin | 10.0% | 7.1% | -147.2% | -63.7% | -618.2% | -554.6% |
| SG&A, % of revenue | 4.2% | 13.8% | 17.4% | 13.9% | 13.8% | -0.1% |
| CAPEX, % of revenue | 6.4% | 12.3% | 15.1% | 17.7% | 23.5% | 5.8% |
| ROIC | 7.5% | 2.6% | 1.0% | 1.2% | -0.6% | -1.9% |
| ROE | 5.4% | 0.9% | -19.6% | -9.4% | -90.0% | -80.6% |
| Net Debt/EBITDA | 2.5x | 7.9x | 14.7x | 10.1x | 22.4x | 12.3x |
Revenue and profitability
The company's Revenue dropped on 26.3% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 34.3 pp from -78.0% to -43.7% in 2015.
Gross Margin dropped on 24.9 pp from 30.2% to 5.3% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign dropped on 555 pp from -63.7% to -618% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 Sherritt International Corp had CAPEX/Revenue of 23.5%. CAPEX/Revenue jumped on 11.2 pp from 12.3% in 2012 to 23.5% in 2015. Average CAPEX/Revenue for the last three years was 18.8%.Battling declining revenue Sherritt International Corp invested a large share of EBITDA (87.2%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-0.64%) and ROE (-89.98%). ROIC decreased slightly on 1.9 pp from 1.2% to -0.64% in 2015. ROE dropped on 80.6 pp from -9.4% to -90.0% in 2015.
Leverage (Debt)
Debt level is 22.4x Net Debt / EBITDA and 25.0x Debt / EBITDA. Net Debt / EBITDA surged on 12.3x from 10.1x to 22.4x in 2015. Debt jumped on 21.7% in 2015 while cash jumped on 42.7% in 2015.
Management team
David V Pathe is a Sherritt International Corp's CEO. David V Pathe is a founder and has spent 6 years at the company.
Appendix 1: Peers in Diversified
Below we provide Sherritt International Corp benchmarking against other companies in Diversified 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Tellza Communications Inc ($TEL) | -15.5% | -14.8% | 51.1% | 56.1% | |
| WesternOne Inc ($WEQ) | 127.2% | 99.0% | 34.3% | 27.9% | |
| TWC Enterprises Ltd ($TWC) | 5.2% | -0.5% | -0.7% | -0.3% | |
| |
|---|
| Median (3 companies) | 5.2% | -0.5% | 34.3% | 27.9% | |
|---|
| Sherritt International Corp ($S) | | -76.0% | -5.6% | 1.6% | -26.3% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TWC Enterprises Ltd ($TWC) | 79.0% | 79.5% | 79.3% | 78.0% | |
| WesternOne Inc ($WEQ) | 38.7% | 29.2% | 25.5% | 20.9% | |
| Tellza Communications Inc ($TEL) | 6.8% | | 5.5% | 3.8% | |
| |
|---|
| Median (3 companies) | 38.7% | 54.4% | 25.5% | 20.9% | |
|---|
| Sherritt International Corp ($S) | 25.1% | 45.3% | 30.5% | 30.2% | 5.3% |
Top companies by EBITDA margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TWC Enterprises Ltd ($TWC) | 27.8% | 29.6% | 29.3% | 26.5% | |
| WesternOne Inc ($WEQ) | 19.8% | 19.5% | 17.0% | 11.7% | |
| Tellza Communications Inc ($TEL) | 2.0% | | 2.5% | 1.2% | |
| |
|---|
| Median (3 companies) | 19.8% | 24.6% | 17.0% | 11.7% | |
|---|
| Sherritt International Corp ($S) | 32.3% | 50.7% | 33.0% | 36.9% | 27.0% |
Top companies by CAPEX/Revenue, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| WesternOne Inc ($WEQ) | 17.4% | 16.4% | 10.8% | 10.4% | |
| TWC Enterprises Ltd ($TWC) | 7.0% | 11.0% | 7.3% | 5.6% | |
| Tellza Communications Inc ($TEL) | 0.1% | | 0.6% | 0.3% | |
| |
|---|
| Median (3 companies) | 7.0% | 13.7% | 7.3% | 5.6% | |
|---|
| Sherritt International Corp ($S) | 6.4% | 12.3% | 15.1% | 17.7% | 23.5% |
Top companies by ROIC, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| WesternOne Inc ($WEQ) | 5.7% | 12.1% | 12.1% | 7.8% | |
| Tellza Communications Inc ($TEL) | 7.3% | | | 7.6% | |
| TWC Enterprises Ltd ($TWC) | 6.4% | 7.0% | 6.7% | 5.2% | |
| |
|---|
| Median (3 companies) | 6.4% | 9.6% | 9.4% | 7.6% | |
|---|
| Sherritt International Corp ($S) | 7.5% | 2.6% | 1.0% | 1.2% | -0.6% |
Top companies by Net Debt / EBITDA
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| TWC Enterprises Ltd ($TWC) | 5.7x | 5.5x | 5.5x | 6.3x | |
| WesternOne Inc ($WEQ) | 7.5x | 3.8x | 3.9x | 4.1x | |
| Tellza Communications Inc ($TEL) | 0.4x | | -0.8x | -2.2x | |
| |
|---|
| Median (3 companies) | 5.7x | 4.7x | 3.9x | 4.1x | |
|---|
| Sherritt International Corp ($S) | 2.5x | 7.9x | 14.7x | 10.1x | 22.4x |
