Centerra Gold Inc reports 194% Net Income growth while 18.3% Revenue decline
24.02.2016 • About Centerra Gold Inc (
$CG) • By InTwits
Centerra Gold Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Centerra Gold Inc is a company in decline: 2015 revenue growth was -18.3%, 5 years revenue CAGR was -6.0%
- EBITDA Margin is quite volatile: 40.9% in 2015, 32.6% in 2014, 51.8% in 2013, 3.7% in 2012, 47.1% in 2011
- Centerra Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 37.3%. At the same time it's a lot of higher than industry average of 27.4%.
- CAPEX is quite volatile: 1,811 in 2015, 140 in 2014, 2,026 in 2013, 641 in 2012, 141 in 2011
- The company has potentially unprofitable business model: ROIC is at 3.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Centerra Gold Inc ($CG) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 1,020 | 661 | 944 | 763 | 624 | -18.3% |
| Gross Profit | 638 | 253 | 385 | 258 | 234 | -9.5% |
| SG&A | 66 | 48 | 54 | 60 | 55 | -8.5% |
| EBITDA | 480 | 25 | 489 | 249 | 255 | 2.6% |
| Net Income | 371 | -144 | 158 | -44 | 42 | -194.4% |
Balance Sheet
|
|---|
| Cash | 196 | 334 | 343 | 301 | 361 | 20.0% |
| Short Term Debt | 0 | 75 | 76 | 76 | 76 | 0.0% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 175 | 405 | 309 | 276 | 244 | -11.8% |
Ratios
|
|---|
| Revenue growth | 20.1% | -35.2% | 42.9% | -19.2% | -18.3% | |
| EBITDA growth | 29.8% | -94.9% | 1,892.1% | -49.1% | 2.6% | |
| Gross Margin | 62.5% | 38.2% | 40.8% | 33.8% | 37.5% | 3.6% |
| EBITDA Margin | 47.1% | 3.7% | 51.8% | 32.6% | 40.9% | 8.3% |
| Net Income Margin | 36.3% | -21.8% | 16.7% | -5.8% | 6.7% | 12.5% |
| SG&A, % of revenue | 6.5% | 7.3% | 5.8% | 7.9% | 8.8% | 0.9% |
| CAPEX, % of revenue | 17.2% | 61.3% | 32.7% | 36.2% | 39.1% | 2.9% |
| ROIC | 27.0% | -8.6% | 11.9% | -2.3% | 3.4% | 5.7% |
| ROE | 26.5% | -9.9% | 11.1% | -3.1% | 3.0% | 6.0% |
| Net Debt/EBITDA | -0.4x | -10.6x | -0.5x | -0.9x | -1.1x | -0.2x |
Revenue and profitability
The company's Revenue dropped on 18.3% in 2015. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 8.3 pp from 32.6% to 40.9% in 2015.
Gross Margin increased on 3.6 pp from 33.8% to 37.5% in 2015. SG&A as a % of Revenue increased slightly on 0.94 pp from 7.9% to 8.8% in 2015.
Net Income marign surged on 12.5 pp from -5.8% to 6.7% in 2015.
Capital expenditures (CAPEX) and working capital investments
Centerra Gold Inc's CAPEX/Revenue was 39.1% in 2015. The company's CAPEX/Revenue dropped on 22.2 pp from 61.3% in 2012 to 39.1% in 2015. It's average CAPEX/Revenue for the last three years was 36.0%.Battling declining revenue the company invested a large share of EBITDA (95.5%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (3.36%) and ROE (2.95%). ROIC increased on 5.7 pp from -2.3% to 3.4% in 2015. ROE increased on 6.0 pp from -3.1% to 3.0% in 2015.
Leverage (Debt)
Debt level is -1.1x Net Debt / EBITDA and 0.3x Debt / EBITDA. Net Debt / EBITDA dropped on 0.2x from -0.9x to -1.1x in 2015. Debt didn't change in 2015 while cash jumped on 20.0% in 2015.
Management team
Scott Graeme Perry is a Centerra Gold Inc's CEO. Scott Graeme Perry is a founder and has spent 3 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Centerra Gold 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 ($NSU) | | 3.3% | -72.5% | 256.5% | |
| |
|---|
| Median (130 companies) | 37.0% | 8.5% | -5.1% | -0.8% | -4.0% |
|---|
| Centerra Gold Inc ($CG) | | -35.2% | 42.9% | -19.2% | -18.3% |
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% | 60.9% |
| Royal Gold Inc ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (133 companies) | 30.1% | 31.5% | 20.7% | 16.8% | 15.4% |
|---|
| Centerra Gold Inc ($CG) | 62.5% | 38.2% | 40.8% | 33.8% | 37.5% |
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 ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | |
| |
|---|
| Median (137 companies) | 22.0% | 18.6% | 11.3% | 9.7% | 7.2% |
|---|
| Centerra Gold Inc ($CG) | 47.1% | 3.7% | 51.8% | 32.6% | 40.9% |
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 ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | |
| |
|---|
| Median (139 companies) | 24.1% | 26.3% | 25.2% | 16.0% | 12.5% |
|---|
| Centerra Gold Inc ($CG) | 17.2% | 61.3% | 32.7% | 36.2% | 39.1% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Lucara Diamond Corp ($LUC) | -7.1% | -2.9% | 41.3% | 54.7% | 39.6% |
| CanAf Group Inc ($CAF) | 74.9% | 37.0% | 65.2% | 37.6% | 13.8% |
| 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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | 24.1% |
| |
|---|
| Median (143 companies) | 5.4% | 4.9% | -0.1% | 0.6% | -3.4% |
|---|
| Centerra Gold Inc ($CG) | 27.0% | -8.6% | 11.9% | -2.3% | 3.4% |
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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (94 companies) | -0.0x | 0.3x | 0.9x | 0.9x | 1.5x |
|---|
| Centerra Gold Inc ($CG) | -0.4x | -10.6x | -0.5x | -0.9x | -1.1x |
