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New Gold Inc reports 50.4 pp EBITDA Margin growth from -17.2% to 33.2% in 2015 while 1.8% Revenue decline

17.02.2016 • About New Gold Inc ($NGD) • By InTwits

New Gold Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • New Gold Inc doesn't have a profitable business model yet: 2015 ROIC is -0.1%
  • EBITDA Margin is quite volatile: 33.2% in 2015, -17.2% in 2014, 0.5% in 2013, 49.3% in 2012, 49.4% in 2011
  • New Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 51.0%. At the same time it's a lot of higher than industry average of 28.4%.
  • CAPEX is quite volatile: 7.0 in 2015, 10.7 in 2014, 0.018 in 2013, 0.0050 in 2012, 0 in 2011
  • The company has unprofitable business model: ROIC is at -0.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

New Gold Inc ($NGD) key annual financial indicators

mln. $201120122013201420152015/2014
P&L
Revenue695.9791.3779.7726.0712.9-1.8%
EBITDA344.0390.13.6-125.1236.7-289.2%
Net Income179.0199.0-191.2-477.1-201.4-57.8%
Balance Sheet
Cash309.4687.8414.4370.5335.5-9.4%
Short Term Debt0.00.00.00.00.0
Long Term Debt251.7847.8862.5874.3787.6-9.9%
Cash flow
Capex413.6516.0289.3279.3389.539.5%
Ratios
Revenue growth31.2%13.7%-1.5%-6.9%-1.8%
EBITDA growth53.9%13.4%-99.1%-3,575.0%-289.2%
EBITDA Margin49.4%49.3%0.5%-17.2%33.2%50.4%
Net Income Margin25.7%25.1%-24.5%-65.7%-28.3%37.5%
CAPEX, % of revenue59.4%65.2%37.1%38.5%54.6%16.2%
ROIC11.7%8.7%-4.7%-9.4%-0.1%9.3%
ROE9.4%8.0%-7.1%-19.1%-9.2%9.9%
Net Debt/EBITDA-0.2x0.4x124.5x1.9x1.9x

Revenue and profitability


New Gold Inc's Revenue decreased slightly on 1.8% in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 50.4 pp from -17.2% to 33.2% in 2015.

Net Income marign surged on 37.5 pp from -65.7% to -28.3% in 2015.

Capital expenditures (CAPEX) and working capital investments


In 2015 New Gold Inc had CAPEX/Revenue of 54.6%. The company showed big decline in CAPEX/Revenue of 10.6 pp from 65.2% in 2012 to 54.6% in 2015. It's average CAPEX/Revenue for the last three years was 43.4%.The company has spent a lot to CAPEX (165% of EBITDA) which didn't stop revenue from falling.

Return on investment


The company operates at negative ROIC (-0.14%) and ROE (-9.22%). ROIC increased on 9.3 pp from -9.4% to -0.14% in 2015. ROE increased on 9.9 pp from -19.1% to -9.2% in 2015.

Leverage (Debt)


Debt level is 1.9x Net Debt / EBITDA and 3.3x Debt / EBITDA. Net Debt / EBITDA jumped1.9x from to 1.9x in 2015. Debt decreased on 9.9% in 2015 while cash decreased on 9.4% in 2015.

Appendix 1: Peers in Basic Materials


Below we provide New Gold 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 (130 companies)30.1%8.0%-5.1%-0.8%0.6%
New Gold Inc ($NGD)13.7%-1.5%-6.9%-1.8%


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 (134 companies)30.7%31.8%21.3%17.2%15.6%


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)22.0%18.4%11.7%9.9%6.8%
New Gold Inc ($NGD)49.4%49.3%0.5%-17.2%33.2%


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 (139 companies)23.9%26.3%25.2%16.0%8.5%
New Gold Inc ($NGD)59.4%65.2%37.1%38.5%54.6%


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%24.1%
 
Median (143 companies)5.4%4.9%0.1%0.6%-3.6%
New Gold Inc ($NGD)11.7%8.7%-4.7%-9.4%-0.1%


Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
VMS Ventures Inc ($VMS)86.7x4.7x
Ur-Energy Inc ($URE)55.1x
Katanga Mining Ltd ($KAT)0.4x19.4x3.3x18.8x
HudBay Minerals Inc ($HBM)-2.8x-4.8x2.0x14.0x
Imperial Metals Corp ($III)-0.1x1.5x4.9x12.9x
 
Median (95 companies)-0.0x0.3x0.7x0.9x1.6x