Franco-Nevada Corp reports 76.9% Net Income decline and 11.5 pp EBITDA Margin decline from 72.3% to 60.8%
10.03.2016 • About Franco-Nevada Corp (
$FNV) • By InTwits
Franco-Nevada Corp reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Franco-Nevada Corp doesn't have a profitable business model yet: 2015 ROIC is 1.5%
- Franco-Nevada Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 96.0%. At the same time it's a lot of higher than industry average of 27.3%.
- CAPEX is quite volatile: 1,020 in 2015, 892 in 2014, 142 in 2013, 15.9 in 2012, 38.1 in 2011
- The company has potentially unprofitable business model: ROIC is at 1.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Franco-Nevada Corp ($FNV) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 411.2 | 427.0 | 400.9 | 442.4 | 443.6 | 0.3% |
| Gross Profit | 347.9 | 367.8 | 340.7 | 369.5 | 134.2 | -63.7% |
| SG&A | 18.0 | 17.4 | 15.2 | 16.4 | 15.1 | -7.9% |
| EBITDA | 158.6 | 265.1 | 178.9 | 319.8 | 269.8 | -15.6% |
| Net Income | -6.8 | 102.6 | 11.7 | 106.7 | 24.6 | -76.9% |
Balance Sheet
|
|---|
| Cash | 794.1 | 631.7 | 770.0 | 592.5 | 149.2 | -74.8% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 457.3 | |
Cash flow
|
|---|
| Capex | 38.1 | 15.9 | 142.2 | 891.7 | 1,020.4 | 14.4% |
Ratios
|
|---|
| Revenue growth | 81.0% | 3.8% | -6.1% | 10.4% | 0.3% | |
| EBITDA growth | -9.1% | 67.2% | -32.5% | 78.8% | -15.6% | |
| Gross Margin | 84.6% | 86.1% | 85.0% | 83.5% | 30.3% | -53.3% |
| EBITDA Margin | 38.6% | 62.1% | 44.6% | 72.3% | 60.8% | -11.5% |
| Net Income Margin | -1.7% | 24.0% | 2.9% | 24.1% | 5.5% | -18.6% |
| SG&A, % of revenue | 4.4% | 4.1% | 3.8% | 3.7% | 3.4% | -0.3% |
| CAPEX, % of revenue | 9.3% | 3.7% | 35.5% | 201.6% | 230.0% | 28.5% |
| ROIC | 1.2% | 4.6% | 1.6% | 4.9% | 1.5% | -3.4% |
| ROE | -0.3% | 3.4% | 0.4% | 3.4% | 0.7% | -2.6% |
| Net Debt/EBITDA | -5.0x | -2.4x | -4.3x | -1.9x | 1.1x | 3.0x |
Revenue and profitability
The company's Revenue showed almost no change in 2015. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 22.3 pp from -29.7% to -7.4% in 2015.
Gross Margin dropped on 53.3 pp from 83.5% to 30.3% in 2015. SG&A as a % of Revenue showed almost no change in 2015.
Net Income marign dropped on 18.6 pp from 24.1% to 5.5% in 2015.
Capital expenditures (CAPEX) and working capital investments
Franco-Nevada Corp's CAPEX/Revenue was 230% in 2015. The company showed fast CAPEX/Revenue growth of 226 pp from 3.7% in 2012 to 230% in 2015. It's average CAPEX/Revenue for the last three years was 156%.Franco-Nevada Corp maintained rich investment policy and has spent a lot to CAPEX (378% of EBITDA).
Return on investment
The company operates at low ROIC (1.51%) and ROE (0.75%). ROIC decreased on 3.4 pp from 4.9% to 1.5% in 2015. ROE decreased on 2.6 pp from 3.4% to 0.75% in 2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 1.7x. Net Debt / EBITDA jumped on 3.0x from -1.9x to 1.1x in 2015. Debt surged while cash dropped on 74.8% in 2015.
Appendix 1: Peers in Basic Materials
Below we provide Franco-Nevada Corp 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 ($NSU) | | 3.3% | -72.5% | 256.5% | -35.7% |
| |
|---|
| Median (130 companies) | 45.5% | 8.5% | -5.0% | -1.1% | -4.4% |
|---|
| Franco-Nevada Corp ($FNV) | | 3.8% | -6.1% | 10.4% | 0.3% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Nevsun Resources Ltd ($NSU) | 90.3% | 89.9% | 94.8% | 95.5% | 82.3% |
| Labrador Iron Ore Royalty Corp ($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% |
| Silver Wheaton Corp ($SLW) | 88.2% | 86.2% | 80.3% | 49.8% | |
| |
|---|
| Median (133 companies) | 30.1% | 31.5% | 20.7% | 16.8% | 15.3% |
|---|
| Franco-Nevada Corp ($FNV) | 84.6% | 86.1% | 85.0% | 83.5% | 30.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Royal Gold Inc ($RGL) | 86.1% | 88.2% | 88.6% | 84.4% | 65.0% |
| Silver Wheaton Corp ($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% |
| Lucara Diamond Corp ($LUC) | | 7.6% | 57.3% | 57.5% | 60.0% |
| |
|---|
| Median (137 companies) | 22.0% | 18.4% | 11.3% | 9.7% | 6.7% |
|---|
| Franco-Nevada Corp ($FNV) | 38.6% | 62.1% | 44.6% | 72.3% | 60.8% |
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% |
| HudBay Minerals Inc ($HBM) | 27.7% | 77.7% | 199.9% | 175.5% | 55.4% |
| |
|---|
| Median (139 companies) | 24.1% | 26.3% | 25.2% | 16.0% | 13.7% |
|---|
| Franco-Nevada Corp ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | 230.0% |
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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | 24.1% |
| |
|---|
| Median (143 companies) | 7.0% | 4.9% | -0.1% | -0.1% | -3.8% |
|---|
| Franco-Nevada Corp ($FNV) | 1.2% | 4.6% | 1.6% | 4.9% | 1.5% |
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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (94 companies) | -0.0x | 0.3x | 0.9x | 0.9x | 1.3x |
|---|
| Franco-Nevada Corp ($FNV) | -5.0x | -2.4x | -4.3x | -1.9x | 1.1x |
