Fortress Paper Ltd reports 11.5% revenue growth in 2015 and 12.0 pp EBITDA Margin growth from -8.4% to 3.6%
09.03.2016 • About Fortress Paper Ltd (
$FTP) • By InTwits
Fortress Paper Ltd reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fortress Paper Ltd doesn't have a profitable business model yet: 2015 ROIC is -4.1%
- Fortress Paper Ltd spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2011-2015 is 0.0%. Average EBITDA Margin for the same period was -4.4%0
- Fortress Paper Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.6%. At the same time it's in pair with industry average of 27.2%.
- CAPEX is quite volatile: 11.1 in 2015, 15.1 in 2014, 60.7 in 2013, 133 in 2012, 162 in 2011
- The company has unprofitable business model: ROIC is at -4.1%
- It operates with high leverage: Net Debt/EBITDA is 18.8x while industry average is 2.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fortress Paper Ltd ($FTP) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 308.9 | 314.4 | 207.8 | 275.9 | 307.6 | 11.5% |
| Gross Profit | 26.3 | 10.4 | -14.9 | -4.5 | 56.3 | -1,350.1% |
| SG&A | | | 41.2 | 46.5 | 44.7 | -4.0% |
| EBITDA | 1.4 | -10.2 | -41.3 | -23.2 | 11.0 | -147.5% |
| Net Income | -19.2 | -20.9 | 54.6 | -63.5 | -34.3 | -46.0% |
Balance Sheet
|
|---|
| Cash | 22.9 | 31.5 | 61.9 | 44.9 | 34.0 | -24.4% |
| Short Term Debt | 14.5 | 7.8 | 14.6 | 1.2 | 41.1 | 3,345.4% |
| Long Term Debt | 137.9 | 248.1 | 213.6 | 231.2 | 200.3 | -13.3% |
Cash flow
|
|---|
| Capex | 162.2 | 132.9 | 60.7 | 15.1 | 11.1 | -26.6% |
Ratios
|
|---|
| Revenue growth | 9.8% | 1.8% | -33.9% | 32.8% | 11.5% | |
| EBITDA growth | -85.9% | -828.9% | 304.6% | -43.7% | -147.5% | |
| Gross Margin | 8.5% | 3.3% | -7.2% | -1.6% | 18.3% | 19.9% |
| EBITDA Margin | 0.5% | -3.2% | -19.9% | -8.4% | 3.6% | 12.0% |
| Net Income Margin | -6.2% | -6.6% | 26.3% | -23.0% | -11.2% | 11.9% |
| SG&A, % of revenue | | | 19.8% | 16.9% | 14.5% | -2.3% |
| CAPEX, % of revenue | 52.5% | 42.3% | 29.2% | 5.5% | 3.6% | -1.9% |
| ROIC | -3.9% | -6.6% | -12.0% | -10.2% | -4.1% | 6.2% |
| ROE | -9.1% | -9.1% | 20.5% | -23.7% | -15.3% | 8.4% |
| Net Debt/EBITDA | 92.5x | | | | 18.8x | 18.8x |
Revenue and profitability
The company's Revenue jumped on 11.5% 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 jumped on 19.9 pp from -1.6% to 18.3% in 2015. SG&A as a % of Revenue decreased on 2.3 pp from 16.9% to 14.5% in 2015.
Net Income marign jumped on 11.9 pp from -23.0% to -11.2% in 2015.
Capital expenditures (CAPEX) and working capital investments
Fortress Paper Ltd's CAPEX/Revenue was 3.6% in 2015. CAPEX/Revenue dropped on 38.6 pp from 42.3% in 2012 to 3.6% in 2015. Average CAPEX/Revenue for the last three years was 12.8%.Fortress Paper Ltd has spent a lot to CAPEX (101% of EBITDA) to fuel its growth.
Return on investment
The company operates at negative ROIC (-4.05%) and ROE (-15.29%). ROIC increased on 6.2 pp from -10.2% to -4.1% in 2015. ROE increased on 8.4 pp from -23.7% to -15.3% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 18.8x and Debt / EBITDA is 21.9x. Net Debt / EBITDA surged18.8x from to 18.8x in 2015. Debt increased on 3.9% in 2015 while cash dropped on 24.4% in 2015.
Appendix 1: Peers in Basic Materials
Below we provide Fortress Paper 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% | 42.7% |
| Nevsun Resources Ltd ($NSU) | | 3.3% | -72.5% | 256.5% | -35.7% |
| |
|---|
| Median (130 companies) | 57.8% | 8.5% | -5.0% | -1.1% | -5.1% |
|---|
| Fortress Paper Ltd ($FTP) | | 1.8% | -33.9% | 32.8% | 11.5% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nevsun Resources Ltd ($NSU) | 90.3% | 89.9% | 94.8% | 95.5% | 82.3% |
| Franco-Nevada Corp ($FNV) | 84.6% | 86.1% | 85.0% | 83.5% | |
| Labrador Iron Ore Royalty Corp ($LIF) | 80.2% | 80.2% | 80.2% | 80.2% | 80.3% |
| Lucara Diamond Corp ($LUC) | | 42.5% | 57.4% | 66.7% | 60.9% |
| Royal Gold Inc ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (133 companies) | 31.2% | 32.0% | 21.8% | 17.6% | 15.3% |
|---|
| Fortress Paper Ltd ($FTP) | 8.5% | 3.3% | -7.2% | -1.6% | 18.3% |
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 ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | 38.6% |
| |
|---|
| Median (137 companies) | 23.3% | 18.6% | 11.7% | 9.9% | 6.7% |
|---|
| Fortress Paper Ltd ($FTP) | 0.5% | -3.2% | -19.9% | -8.4% | 3.6% |
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% | 0.5% |
| Franco-Nevada Corp ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | |
| |
|---|
| Median (139 companies) | 23.9% | 26.3% | 25.2% | 16.3% | 13.7% |
|---|
| Fortress Paper Ltd ($FTP) | 52.5% | 42.3% | 29.2% | 5.5% | 3.6% |
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 ($NSU) | 89.8% | 52.2% | 8.8% | 35.0% | 10.4% |
| Dynacor Gold Mines Inc ($DNG) | 45.6% | 62.8% | 50.9% | 31.3% | |
| Canfor Pulp Products Inc ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | 24.1% |
| |
|---|
| Median (143 companies) | 7.0% | 4.9% | 0.1% | 0.6% | -4.4% |
|---|
| Fortress Paper Ltd ($FTP) | -3.9% | -6.6% | -12.0% | -10.2% | -4.1% |
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 | 6.7x |
| 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 (95 companies) | -0.1x | 0.3x | 0.8x | 0.9x | 1.2x |
|---|
