Fortuna Silver Mines Inc reports 168% Net Income decline and 17.5 pp EBITDA Margin decline from 32.9% to 15.4%
14.03.2016 • About Fortuna Silver Mines Inc (
$FVI) • By InTwits
Fortuna Silver Mines Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Fortuna Silver Mines Inc doesn't have a profitable business model yet: 2015 ROIC is -0.6%
- EBITDA Margin is quite volatile: 15.4% in 2015, 32.9% in 2014, 7.8% in 2013, 41.3% in 2012, 43.2% in 2011
- Fortuna Silver Mines Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 40.2%. At the same time it's a lot of higher than industry average of 27.3%.
- CAPEX is quite volatile: 3.5 in FY2015, 1 in FY2014, 2.4 in FY2013, 1.1 in FY2012, 3.8 in FY2011
- The company has unprofitable business model: ROIC is at -0.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Fortuna Silver Mines Inc ($FVI) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 110.0 | 161.0 | 137.4 | 174.0 | 154.7 | -11.1% |
| Gross Profit | 61.0 | 70.7 | 41.8 | 60.3 | 43.6 | -27.6% |
| SG&A | 19.8 | 20.5 | 19.8 | 25.2 | 17.9 | -29.2% |
| EBITDA | 47.5 | 66.5 | 10.7 | 57.3 | 23.9 | -58.3% |
| Net Income | 19.5 | 31.5 | -19.1 | 15.6 | -10.6 | -168.0% |
Balance Sheet
|
|---|
| Cash | 38.7 | 58.7 | 31.7 | 42.9 | 72.2 | 68.5% |
| Short Term Debt | 1.5 | 0.4 | 0.2 | 0.0 | 0.8 | |
| Long Term Debt | 2.8 | 2.3 | 2.3 | 0.0 | 39.5 | |
Cash flow
|
|---|
| Capex | 76.7 | 44.8 | 60.5 | 38.9 | 57.1 | 46.7% |
Ratios
|
|---|
| Revenue growth | 48.5% | 46.4% | -14.7% | 26.6% | -11.1% | |
| EBITDA growth | 38.9% | 40.1% | -84.0% | 436.5% | -58.3% | |
| Gross Margin | 55.4% | 43.9% | 30.4% | 34.6% | 28.2% | -6.4% |
| EBITDA Margin | 43.2% | 41.3% | 7.8% | 32.9% | 15.4% | -17.5% |
| Net Income Margin | 17.8% | 19.5% | -13.9% | 9.0% | -6.9% | -15.8% |
| SG&A, % of revenue | 18.0% | 12.8% | 14.4% | 14.5% | 11.5% | -3.0% |
| CAPEX, % of revenue | 69.7% | 27.8% | 44.0% | 22.4% | 36.9% | 14.5% |
| ROIC | 16.2% | 16.8% | -3.4% | 11.5% | -0.6% | -12.1% |
| ROE | 9.1% | 12.8% | -7.5% | 6.0% | -4.0% | -9.9% |
| Net Debt/EBITDA | -0.7x | -0.8x | -2.7x | -0.7x | -1.3x | -0.6x |
Revenue and profitability
The company's Revenue dropped on 11.1% in 2015. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 17.5 pp from 32.9% to 15.4% in 2015.
Gross Margin decreased on 6.4 pp from 34.6% to 28.2% in 2015. SG&A as a % of Revenue decreased on 3.0 pp from 14.5% to 11.5% in 2015.
Net Income marign dropped on 15.8 pp from 9.0% to -6.9% in 2015.
Capital expenditures (CAPEX) and working capital investments
Fortuna Silver Mines Inc's CAPEX/Revenue was 36.9% in 2015. Fortuna Silver Mines Inc showed CAPEX/Revenue growth of 9.1 pp from 27.8% in 2012 to 36.9% in 2015. Average CAPEX/Revenue for the last three years was 34.4%.The company has spent a lot to CAPEX (239% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-0.57%) and ROE (-3.95%). ROIC dropped on 12.1 pp from 11.5% to -0.57% in 2015. ROE decreased on 9.9 pp from 6.0% to -4.0% in 2015.
Leverage (Debt)
Debt level is -1.3x Net Debt / EBITDA and 1.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.6x from -0.7x to -1.3x in 2015. Debt surged while cash jumped on 68.5% in 2015.
Appendix 1: Peers in Basic Materials
Below we provide Fortuna Silver Mines 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% | 42.7% |
| Nevsun Resources Ltd ($NSU) | | 3.3% | -72.5% | 256.5% | -35.7% |
| |
|---|
| Median (130 companies) | 57.8% | 8.4% | -5.0% | -1.1% | -1.1% |
|---|
| Fortuna Silver Mines Inc ($FVI) | | | -14.7% | 26.6% | -11.1% |
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% | 30.3% |
| 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 ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (133 companies) | 30.7% | 31.5% | 20.7% | 16.8% | 15.5% |
|---|
| Fortuna Silver Mines Inc ($FVI) | | 43.9% | 30.4% | 34.6% | 28.2% |
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% | 60.8% |
| 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 ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | 38.6% |
| |
|---|
| Median (137 companies) | 22.6% | 18.4% | 11.7% | 9.7% | 6.8% |
|---|
| Fortuna Silver Mines Inc ($FVI) | | 41.3% | 7.8% | 32.9% | 15.4% |
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 ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | 230.0% |
| |
|---|
| Median (139 companies) | 24.1% | 26.3% | 25.2% | 16.0% | 13.4% |
|---|
| Fortuna Silver Mines Inc ($FVI) | | 27.8% | 44.0% | 22.4% | 36.9% |
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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | 24.1% |
| |
|---|
| Median (143 companies) | 6.2% | 4.9% | 0.1% | -0.1% | -3.6% |
|---|
| Fortuna Silver Mines Inc ($FVI) | | 16.8% | -3.4% | 11.5% | -0.6% |
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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (94 companies) | -0.1x | 0.3x | 0.9x | 0.9x | 1.3x |
|---|
| Fortuna Silver Mines Inc ($FVI) | | -0.8x | -2.7x | -0.7x | -1.3x |
