Argonaut Gold Inc reports 548% EBITDA decline and 4.6% Revenue decline
16.03.2016 • About Argonaut Gold Inc (
$AR) • By InTwits
Argonaut Gold Inc reported 2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Argonaut Gold Inc doesn't have a profitable business model yet: 2015 ROIC is -36.3%
- EBITDA Margin is declining: -133.8% in 2015 vs. 28.5% in 2014 vs. 53.5% in 2011
- EBITDA Margin is quite volatile: -133.8% in 2015, 28.5% in 2014, 43.3% in 2013, 57.3% in 2012, 53.5% in 2011
- Argonaut Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 35.3%. At the same time it's a lot of higher than industry average of 29.0%.
- CAPEX is quite volatile: 37.0 in 2015, 47.9 in 2014, 99.5 in 2013, 49.6 in 2012, 39.3 in 2011
- The company has unprofitable business model: ROIC is at -36.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.2x while industry average is 2.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Argonaut Gold Inc ($AR) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 104.6 | 187.1 | 165.1 | 166.3 | 158.6 | -4.6% |
| Gross Profit | 50.3 | 95.2 | 59.1 | 22.7 | -13.8 | -160.9% |
| SG&A | 6.9 | 9.5 | 12.5 | 13.0 | 10.5 | -19.5% |
| EBITDA | 55.9 | 107.3 | 71.4 | 47.3 | -212.2 | -548.1% |
| Net Income | 26.3 | 64.9 | 4.6 | -4.2 | -202.7 | 4,738.0% |
Balance Sheet
|
|---|
| Cash | 34.9 | 190.8 | 81.1 | 51.4 | 45.9 | -10.8% |
| Short Term Debt | 6.1 | 0.0 | 6.0 | 3.8 | 4.3 | 12.2% |
| Long Term Debt | 0.0 | 0.0 | 8.1 | 4.2 | 0.9 | -78.3% |
Cash flow
|
|---|
| Capex | 39.3 | 49.6 | 99.5 | 47.9 | 37.0 | -22.9% |
Ratios
|
|---|
| Revenue growth | 102.8% | 78.9% | -11.8% | 0.7% | -4.6% | |
| EBITDA growth | 265.4% | 91.8% | -33.5% | -33.7% | -548.1% | |
| Gross Margin | 48.1% | 50.9% | 35.8% | 13.6% | -8.7% | -22.3% |
| EBITDA Margin | 53.5% | 57.3% | 43.3% | 28.5% | -133.8% | -162.3% |
| Net Income Margin | 25.1% | 34.7% | 2.8% | -2.5% | -127.8% | -125.3% |
| SG&A, % of revenue | 6.6% | 5.1% | 7.6% | 7.8% | 6.6% | -1.2% |
| CAPEX, % of revenue | 37.6% | 26.5% | 60.3% | 28.8% | 23.3% | -5.5% |
| ROIC | 15.7% | 14.0% | 5.1% | 0.8% | -36.3% | -37.1% |
| ROE | 11.4% | 11.4% | 0.6% | -0.5% | -30.6% | -30.0% |
| Net Debt/EBITDA | -0.5x | -1.8x | -0.9x | -0.9x | | 0.9x |
Revenue and profitability
The company's Revenue decreased on 4.6% in 2015. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 56.2 pp from 19.2% to 75.4% in 2015.
Gross Margin dropped on 22.3 pp from 13.6% to -8.7% in 2015. SG&A as a % of Revenue decreased slightly on 1.2 pp from 7.8% to 6.6% in 2015.
Net Income marign dropped on 125 pp from -2.5% to -128% in 2015.
Capital expenditures (CAPEX) and working capital investments
Argonaut Gold Inc's CAPEX/Revenue was 23.3% in 2015. CAPEX/Revenue decreased on 3.2 pp from 26.5% in 2012 to 23.3% in 2015. It's average CAPEX/Revenue for the last three years was 37.5%.
Return on investment
The company operates at negative ROIC (-36.29%) and ROE (-30.56%). ROIC dropped on 37.1 pp from 0.79% to -36.3% in 2015. ROE dropped on 30.0 pp from -0.52% to -30.6% in 2015.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA jumped on 0.9x from -0.9x to in 2015. Debt dropped on 35.2% in 2015 while cash dropped on 10.8% in 2015.
Management team
The company's CEO Peter C Dougherty is a founder and has spent 8 years at the company. The company's CFO is David Ponczoch. David Ponczoch has 5 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below we provide Argonaut 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 |
|---|
| Barkerville Gold Mines Ltd ($BGM) | | 97.4% | -90.6% | -97.6% | 84,715.6% |
| Golden Minerals Co ($AUM) | | 1,320.8% | -59.1% | -97.8% | 3,334.5% |
| Jemi Fibre Corp ($JFI) | | | | -27.3% | 375.3% |
| Osisko Gold Royalties Ltd ($OR) | | | | | 164.4% |
| VMS Ventures Inc ($VMS) | | | | | 139.7% |
| |
|---|
| Median (107 companies) | 42.4% | 8.0% | -5.0% | -1.1% | 0.3% |
|---|
| Argonaut Gold Inc ($AR) | | 78.9% | -11.8% | 0.7% | -4.6% |
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 ($RGL) | 68.9% | 71.5% | 70.6% | 57.6% | 86.0% |
| |
|---|
| Median (133 companies) | 30.1% | 31.5% | 20.7% | 17.6% | 15.5% |
|---|
| Argonaut Gold Inc ($AR) | 48.1% | 50.9% | 35.8% | 13.6% | -8.7% |
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 ($SLW) | 84.8% | 82.6% | 75.3% | 69.6% | 65.8% |
| Sandstorm Gold Ltd ($SSL) | 63.8% | 74.3% | 49.9% | 62.1% | |
| Nevsun Resources Ltd ($NSU) | 81.0% | 76.8% | 54.5% | 60.4% | 38.6% |
| |
|---|
| Median (137 companies) | 22.0% | 18.4% | 11.3% | 9.7% | 6.8% |
|---|
| Argonaut Gold Inc ($AR) | 53.5% | 57.3% | 43.3% | 28.5% | -133.8% |
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% |
| Franco-Nevada Corp ($FNV) | 9.3% | 3.7% | 35.5% | 201.6% | 230.0% |
| |
|---|
| Median (139 companies) | 23.9% | 26.3% | 25.2% | 16.0% | 13.4% |
|---|
| Argonaut Gold Inc ($AR) | 37.6% | 26.5% | 60.3% | 28.8% | 23.3% |
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 ($CFX) | 103.5% | 4.9% | 13.2% | 21.3% | 24.1% |
| |
|---|
| Median (143 companies) | 5.4% | 4.9% | -0.1% | -0.1% | -3.5% |
|---|
| Argonaut Gold Inc ($AR) | 15.7% | 14.0% | 5.1% | 0.8% | -36.3% |
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 ($III) | -0.1x | 1.5x | 4.9x | 12.9x | |
| |
|---|
| Median (94 companies) | -0.0x | 0.3x | 0.9x | 0.9x | 1.3x |
|---|
| Argonaut Gold Inc ($AR) | -0.5x | -1.8x | -0.9x | -0.9x | |
