West Fraser Timber Co Ltd reports 59.8% Net Income decline while 6.3% Revenue growth
11.02.2016 • About West Fraser Timber Co Ltd (
$WFT) • By InTwits
West Fraser Timber Co Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- West Fraser Timber Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.7%. At the same time it's in pair with industry average of 46.9%.
- CAPEX is quite volatile: 220 in 2015, 410 in 2014, 338 in 2013, 159 in 2012, 213 in 2011
- The company has business model with low profitability: ROIC is at 9.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
West Fraser Timber Co Ltd ($WFT) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 2,762 | 3,000 | 3,474 | 3,856 | 4,100 | 6.3% |
| Gross Profit | 327 | 451 | 714 | 770 | 599 | -22.2% |
| SG&A | 104 | 115 | 131 | 149 | 153 | 2.7% |
| EBITDA | 226 | 275 | 505 | 576 | 440 | -23.6% |
| Net Income | 73 | 77 | 349 | 259 | 104 | -59.8% |
Balance Sheet
|
|---|
| Cash | 68 | 102 | 162 | 21 | 13 | -38.1% |
| Short Term Debt | 0 | 0 | 319 | 139 | 207 | 48.9% |
| Long Term Debt | 306 | 300 | 9 | 354 | 423 | 19.5% |
Cash flow
|
|---|
| Capex | 213 | 159 | 338 | 410 | 220 | -46.3% |
Ratios
|
|---|
| Revenue growth | -4.3% | 8.6% | 15.8% | 11.0% | 6.3% | |
| EBITDA growth | -50.8% | 21.7% | 83.6% | 14.1% | -23.6% | |
| Gross Margin | 11.8% | 15.0% | 20.6% | 20.0% | 14.6% | -5.4% |
| EBITDA Margin | 8.2% | 9.2% | 14.5% | 14.9% | 10.7% | -4.2% |
| Net Income Margin | 2.6% | 2.6% | 10.0% | 6.7% | 2.5% | -4.2% |
| SG&A, % of revenue | 3.8% | 3.8% | 3.8% | 3.9% | 3.7% | -0.1% |
| CAPEX, % of revenue | 7.7% | 5.3% | 9.7% | 10.6% | 5.4% | -5.3% |
| ROIC | 2.9% | 6.3% | 15.9% | 16.2% | 9.0% | -7.1% |
| ROE | 4.8% | 5.2% | 20.3% | 13.0% | 5.0% | -8.0% |
| Net Debt/EBITDA | 1.1x | 0.7x | 0.3x | 0.8x | 1.4x | 0.6x |
Revenue and profitability
West Fraser Timber Co Ltd's Revenue increased on 6.3% in 2015. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 4.2 pp from 14.9% to 10.7% in 2015.
Gross Margin decreased on 5.4 pp from 20.0% to 14.6% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign decreased on 4.2 pp from 6.7% to 2.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
In 2015 West Fraser Timber Co Ltd had CAPEX/Revenue of 5.4%. CAPEX/Revenue showed almost no change from 2012 to 2015. Average CAPEX/Revenue for the last three years was 8.6%.West Fraser Timber Co Ltd maintained rich investment policy and has spent a big chunk of EBITDA (50%) to CAPEX.
Return on investment
The company operates at low ROIC (9.01%) and ROE (4.98%). ROIC decreased on 7.1 pp from 16.2% to 9.0% in 2015. ROE decreased on 8.0 pp from 13.0% to 5.0% in 2015.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 1.4x Debt / EBITDA. Net Debt / EBITDA jumped on 0.6x from 0.8x to 1.4x in 2015. Debt surged on 27.8% in 2015 while cash dropped on 38.1% in 2015.
Management team
The company's CEO Edward R Seraphim "Ted" is a founder and has spent 5 years at the company. West Fraser Timber Co Ltd's CFO Larry S Hughes has spent 7 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide West Fraser Timber Co Ltd 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 ($NSU) | | 3.3% | -72.5% | 256.5% | |
| |
|---|
| Median (130 companies) | 29.4% | 8.0% | -5.1% | -1.1% | 0.6% |
|---|
| West Fraser Timber Co Ltd ($WFT) | | 8.6% | 15.8% | 11.0% | 6.3% |
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 ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (133 companies) | 31.2% | 32.0% | 21.8% | 16.8% | 16.5% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 11.8% | 15.0% | 20.6% | 20.0% | 14.6% |
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 ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | |
| |
|---|
| Median (137 companies) | 23.3% | 18.6% | 11.3% | 9.7% | 6.7% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 8.2% | 9.2% | 14.5% | 14.9% | 10.7% |
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 ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | |
| |
|---|
| Median (139 companies) | 24.1% | 26.3% | 25.5% | 16.3% | 11.6% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 7.7% | 5.3% | 9.7% | 10.6% | 5.4% |
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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | |
| |
|---|
| Median (143 companies) | 7.0% | 4.9% | -0.1% | -0.1% | -4.7% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 2.9% | 6.3% | 15.9% | 16.2% | 9.0% |
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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (94 companies) | -0.1x | 0.3x | 0.9x | 0.9x | 1.9x |
|---|
| West Fraser Timber Co Ltd ($WFT) | 1.1x | 0.7x | 0.3x | 0.8x | 1.4x |
