Royal Gold Inc CAPEX jumped on 2,128% in 2016 and Revenue jumped on 29.4%
10.08.2016 • About Royal Gold Inc (
$RGL) • By InTwits
Royal Gold Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Royal Gold Inc doesn't have a profitable business model yet: FY2016 ROIC is 0.2%
- EBITDA Margin is declining: 40.6% in FY2016 vs. 65.0% in FY2015 vs. 88.2% in FY2012
- Royal Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 128.7%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 1,346 in FY2016, 60.4 in FY2015, 80.0 in FY2014, 314 in FY2013, 277 in FY2012
- The company has potentially unprofitable business model: ROIC is at 0.2%
- It operates with high leverage: Net Debt/EBITDA is 3.3x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Royal Gold Inc ($RGL) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 263.1 | 289.2 | 237.2 | 278.0 | 359.8 | 29.4% |
| Gross Profit | 188.1 | 204.2 | 136.7 | 239.1 | 284.8 | 19.1% |
| SG&A | 20.4 | 24.0 | 21.2 | 27.9 | 31.7 | 13.8% |
| EBITDA | 231.9 | 256.2 | 200.1 | 180.7 | 145.9 | -19.3% |
| Net Income | 92.5 | 69.2 | 62.6 | 52.0 | -77.1 | -248.5% |
Balance Sheet
|
|---|
| Cash | 375.5 | 664.0 | 659.5 | 742.8 | 116.6 | -84.3% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 293.2 | 302.3 | 311.9 | 313.9 | 600.7 | 91.4% |
Cash flow
|
|---|
| Capex | 276.7 | 314.3 | 80.0 | 60.4 | 1,346.1 | 2,127.6% |
Ratios
|
|---|
| Revenue growth | 21.5% | 9.9% | -18.0% | 17.2% | 29.4% | |
| EBITDA growth | 24.5% | 10.5% | -21.9% | -9.7% | -19.3% | |
| Gross Margin | 71.5% | 70.6% | 57.6% | 86.0% | 79.2% | -6.8% |
| EBITDA Margin | 88.2% | 88.6% | 84.4% | 65.0% | 40.6% | -24.4% |
| Net Income Margin | 35.2% | 23.9% | 26.4% | 18.7% | -21.4% | -40.1% |
| SG&A, % of revenue | 7.8% | 8.3% | 8.9% | 10.0% | 8.8% | -1.2% |
| CAPEX, % of revenue | 105.2% | 108.7% | 33.7% | 21.7% | 374.1% | 352.4% |
| ROIC | 8.1% | 7.1% | 4.0% | 3.2% | 0.2% | -3.0% |
| ROE | 5.6% | 3.3% | 2.7% | 2.2% | -3.4% | -5.6% |
| Net Debt/EBITDA | -0.4x | -1.4x | -1.7x | -2.4x | 3.3x | 5.7x |
Royal Gold Inc ($RGL) key quoterly financial indicators
| mln. $ | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 74 | 98 | 93 | 94 | 7.3% | 60.1% | 26.1% | 27.9% |
| EBITDA | 48 | 68 | -34 | 64 | -6.6% | 270.2% | -159.5% | 18.8% |
| Net Income | -45 | 15 | -68 | 20 | -341.1% | | -370.5% | 37.9% |
Balance Sheet
|
|---|
| Cash | 104 | 118 | 123 | 117 | -84.9% | -82.6% | -82.8% | -84.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 675 | 677 | 630 | 601 | 114.7% | 113.8% | 97.3% | 91.4% |
Ratios
|
|---|
| Gross Margin | 82.4% | 76.0% | 79.8% | 79.3% | 26.7% | 22.1% | 28.7% | -5.6% |
| EBITDA Margin | 65.3% | 68.9% | -36.3% | 67.9% | -9.7% | 39.1% | -113.1% | -5.2% |
| Net Income Margin | -60.8% | 15.4% | -72.4% | 21.7% | -87.9% | 26.1% | -106.1% | 1.6% |
Revenue and profitability
Royal Gold Inc's Revenue surged on 29.4%. Revenue growth showed slow down in FY16Q4 - it was 27.9% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.8 pp from 16.0% to 21.8% in 2016.
Gross Margin decreased on 6.8 pp from 86.0% to 79.2% in FY2016. SG&A as a % of Revenue decreased slightly on 1.2 pp from 10.0% to 8.8% in FY2016.
Net Income marign dropped on 40.1 pp from 18.7% to -21.4% in FY2016.
Capital expenditures (CAPEX) and working capital investments
Royal Gold Inc's CAPEX/Revenue was 374% in FY2016. CAPEX/Revenue surged on 265 pp from 109% in FY2013 to 374% in FY2016. Average CAPEX/Revenue for the last three years was 143%.Royal Gold Inc has spent a lot to CAPEX (922% of EBITDA) to secure its growth.
Return on investment
The company operates at low but positive ROIC (0.17%) and negative ROE (-3.37%). ROIC decreased on 3.0 pp from 3.2% to 0.17% in FY2016. ROE decreased on 5.6 pp from 2.2% to -3.4% in FY2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.3x and Debt / EBITDA is 4.1x. Net Debt / EBITDA surged on 5.7x from -2.4x to 3.3x in FY2016. Debt surged on 91.4% while cash dropped on 84.3%.
Management team
Tony A Jensen is a the company's CEO. Tony A Jensen is a founder and has spent 12 years at the company. Royal Gold Inc's CFO Stefan L Wenger has spent 12 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Royal 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Avino Silver & Gold Mines Ltd ($ASM) | | 613.6% | 19.9% | -1.1% | 109.1% |
| Trevali Mining Corp ($TV) | | | | 12.9% | 86.4% |
| Geodrill Ltd ($GEO) | | -43.3% | -4.3% | 34.6% | 53.1% |
| Tahoe Resources Inc ($THO) | | | | 48.4% | 50.9% |
| Osisko Gold Royalties Ltd ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (83 companies) | 100.8% | -2.9% | 1.9% | -1.8% | 6.2% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Nevsun Resources Ltd ($NSU) | 89.9% | 94.8% | 95.5% | 82.3% | 79.7% |
| Labrador Iron Ore Royalty Corp ($LIF) | 80.2% | 80.2% | 80.2% | 80.3% | 80.3% |
| Lucara Diamond Corp ($LUC) | 42.5% | 57.4% | 66.7% | 60.9% | 65.6% |
| Trevali Mining Corp ($TV) | | | 49.0% | 59.3% | |
| Perseus Mining Ltd ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (95 companies) | 32.1% | 22.4% | 18.6% | 16.5% | 24.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($LIF) | | | | 72.8% | 73.5% |
| Silver Wheaton Corp ($SLW) | 82.6% | 75.3% | 69.6% | 65.8% | 59.7% |
| Franco-Nevada Corp ($FNV) | 62.1% | 44.6% | 72.3% | 60.8% | 70.3% |
| Lucara Diamond Corp ($LUC) | 7.6% | 57.3% | 57.5% | 60.0% | 62.4% |
| Sandstorm Gold Ltd ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (101 companies) | 18.6% | 11.3% | 10.6% | 7.0% | 23.5% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Largo Resources Ltd ($LGO) | | | | 567.6% | |
| Sandstorm Gold Ltd ($SSL) | 152.1% | 118.8% | 49.4% | 412.7% | 17.3% |
| Silver Wheaton Corp ($SLW) | 75.5% | 286.8% | 22.5% | 279.2% | 90.3% |
| Franco-Nevada Corp ($FNV) | 3.7% | 35.5% | 201.6% | 230.0% | 122.4% |
| Avino Silver & Gold Mines Ltd ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (101 companies) | 27.8% | 26.9% | 17.5% | 16.7% | 17.9% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucara Diamond Corp ($LUC) | -2.9% | 41.3% | 54.7% | 39.6% | 58.5% |
| Western Forest Products Inc ($WEF) | 9.0% | 25.1% | 15.7% | 16.4% | 25.1% |
| Geodrill Ltd ($GEO) | 8.6% | -3.5% | -9.3% | 3.6% | 20.3% |
| Supremex Inc ($SXP) | 14.1% | 18.5% | 16.5% | 23.4% | 19.3% |
| Canfor Pulp Products Inc ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (100 companies) | 4.9% | 0.7% | 1.6% | -3.6% | 4.4% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canam Group Inc ($CAM) | 4.2x | 2.6x | 3.2x | 1.8x | 13.9x |
| Taseko Mines Ltd ($TKO) | 7.4x | 5.9x | 10.2x | 5.9x | 11.0x |
| Methanex Corp ($MX) | 5.2x | 0.7x | 0.9x | 3.0x | 5.2x |
| Copper Mountain Mining Corp ($CUM) | 3.9x | 5.0x | 5.4x | 30.6x | 5.1x |
| Cameco Corp ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (58 companies) | 0.3x | 0.8x | 1.1x | 1.6x | 0.6x |
|---|
