Tembec Inc reports 105% EBITDA growth and 4.9 pp EBITDA Margin growth from 5.2% to 10.1%
17.11.2016 • About Tembec Inc (
$TMB) • By InTwits
Tembec Inc reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 10.1% in FY2016, 5.2% in FY2015, 8.4% in FY2014, 4.4% in FY2013, 0.8% in FY2012
- Tembec Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.5%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 40 in FY2016, 66 in FY2015, 158 in FY2014, 127 in FY2013, 108 in FY2012
- The company has highly profitable business model: ROIC is at 12.6%
- It operates with high leverage: Net Debt/EBITDA is 4.4x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Tembec Inc ($TMB) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 1,666 | 1,534 | 1,491 | 1,418 | 1,499 | 5.7% |
| Gross Profit | 91 | 130 | 122 | 126 | 209 | 65.9% |
| SG&A | 74 | 72 | 66 | 59 | 62 | 5.1% |
| EBITDA | 14 | 68 | 125 | 74 | 152 | 105.4% |
| Net Income | -82 | -39 | 9 | -150 | 20 | |
Balance Sheet
|
|---|
| Cash | 92 | 73 | 39 | 21 | 44 | 109.5% |
| Short Term Debt | 84 | 73 | 104 | 125 | 29 | -76.8% |
| Long Term Debt | 323 | 369 | 455 | 613 | 679 | 10.8% |
Cash flow
|
|---|
| Capex | 108 | 127 | 158 | 66 | 40 | -39.4% |
Ratios
|
|---|
| Revenue growth | -4.4% | -7.9% | -2.8% | -4.9% | 5.7% | |
| EBITDA growth | -85.3% | 385.7% | 83.8% | -40.8% | 105.4% | |
| Gross Margin | 5.5% | 8.5% | 8.2% | 8.9% | 13.9% | 5.1% |
| EBITDA Margin | 0.8% | 4.4% | 8.4% | 5.2% | 10.1% | 4.9% |
| Net Income Margin | -4.9% | -2.5% | 0.6% | -10.6% | 1.3% | 11.9% |
| SG&A, % of revenue | 4.4% | 4.7% | 4.4% | 4.2% | 4.1% | -0.0% |
| CAPEX, % of revenue | 6.5% | 8.3% | 10.6% | 4.7% | 2.7% | -2.0% |
| ROIC | -6.2% | 4.8% | 12.2% | 3.9% | 12.6% | 8.7% |
| ROE | -49.0% | -24.3% | 4.1% | -103.4% | 30.8% | 134.2% |
| Net Debt/EBITDA | 22.5x | 5.4x | 4.2x | 9.7x | 4.4x | -5.3x |
Tembec Inc ($TMB) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 354 | 380 | 376 | 389 | 6.6% | 9.2% | 3.0% | 4.3% |
| EBITDA | 28 | 36 | 31 | 57 | 64.7% | 80.0% | 3,000.0% | 58.3% |
| Net Income | -28 | 27 | 9 | 12 | | | | |
Balance Sheet
|
|---|
| Cash | 33 | 36 | 44 | 44 | 10.0% | 44.0% | 175.0% | 109.5% |
| Short Term Debt | 83 | 93 | 49 | 29 | -10.8% | -10.6% | -53.8% | -76.8% |
| Long Term Debt | 711 | 685 | 689 | 679 | 28.1% | 15.3% | 19.0% | 10.8% |
Ratios
|
|---|
| Gross Margin | 12.1% | 13.7% | 11.4% | 18.3% | 1.9% | 5.6% | 7.6% | 4.8% |
| EBITDA Margin | 7.9% | 9.5% | 8.2% | 14.7% | 2.8% | 3.7% | 8.0% | 5.0% |
| Net Income Margin | -7.9% | 7.1% | 2.4% | 3.1% | 10.8% | 18.6% | 6.8% | 11.7% |
Revenue and profitability
Tembec Inc's Revenue increased on 5.7%. Revenue growth showed slow down in FY16Q4 - it was 4.3% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 4.9 pp from 5.2% to 10.1% in FY2016.
Gross Margin increased on 5.1 pp from 8.9% to 13.9% in FY2016. SG&A as a % of Revenue showed almost no change in FY2016.
Net Income marign surged on 11.9 pp from -10.6% to 1.3% in FY2016.
Capital expenditures (CAPEX) and working capital investments
In FY2016 Tembec Inc had CAPEX/Revenue of 2.7%. CAPEX/Revenue decreased on 5.6 pp from 8.3% in FY2013 to 2.7% in FY2016. For the last three years the average CAPEX/Revenue was 6.0%.
Return on investment
The company operates at high and attractive ROE (30.77%) while ROIC is a bit lower (12.61%). ROIC increased on 8.7 pp from 3.9% to 12.6% in FY2016. ROE jumped on 134 pp from -103% to 30.8% in FY2016.
Leverage (Debt)
Debt level is 4.4x Net Debt / EBITDA and 4.7x Debt / EBITDA. Net Debt / EBITDA dropped on 5.3x from 9.7x to 4.4x in FY2016. Debt decreased on 4.1% while cash jumped on 110%.
Management team
James M Lopez "Jim" is a Tembec Inc's CEO. James M Lopez "Jim" is a founder and has spent 12 years at the company. The company's CFO Michel J Dumas has spent 21 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Tembec 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 |
|---|
