Majestic Gold Corp CAPEX surged on 637% in 2016 and Revenue surged on 32.7%
27.01.2017 • About Majestic Gold Corp (
$MJS) • By InTwits
Majestic Gold Corp reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Majestic Gold Corp doesn't have a profitable business model yet: FY2016 ROIC is -2.6%
- Majestic Gold Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.7%. At the same time it's in pair with industry average of 24.1%.
- CAPEX is quite volatile: 3.5 in FY2016, 0.48 in FY2015, 2.2 in FY2014, 0.86 in FY2013, 35.2 in FY2012
- The company has unprofitable business model: ROIC is at -2.6%
- It operates with high leverage: Net Debt/EBITDA is 10.2x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Majestic Gold Corp ($MJS) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 31.909 | 26.816 | 25.784 | 27.761 | 36.852 | 32.7% |
| Gross Profit | 11.917 | 6.470 | 0.183 | -2.242 | 2.308 | |
| SG&A | | | | 4.099 | 4.025 | -1.8% |
| EBITDA | 5.868 | 0.001 | -3.132 | -2.988 | 1.386 | |
| Net Income | -2.325 | -5.531 | -6.831 | -5.966 | -3.863 | |
Balance Sheet
|
|---|
| Cash | 24.567 | 16.850 | 9.877 | 9.354 | 11.854 | 26.7% |
| Short Term Debt | 13.100 | 16.350 | 15.805 | 27.713 | 25.940 | -6.4% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 35.213 | 0.863 | 2.208 | 0.476 | 3.508 | 637.2% |
Ratios
|
|---|
| Revenue growth | 203.6% | -16.0% | -3.8% | 7.7% | 32.7% | |
| EBITDA growth | -168.6% | -100.0% | -304,888.1% | -4.6% | -146.4% | |
| Gross Margin | 37.3% | 24.1% | 0.7% | -8.1% | 6.3% | 14.3% |
| EBITDA Margin | 18.4% | 0.0% | -12.1% | -10.8% | 3.8% | 14.5% |
| Net Income Margin | -7.3% | -20.6% | -26.5% | -21.5% | -10.5% | 11.0% |
| SG&A, % of revenue | | | | 14.8% | 10.9% | -3.8% |
| CAPEX, % of revenue | 110.4% | 3.2% | 8.6% | 1.7% | 9.5% | 7.8% |
| ROIC | 5.4% | -1.9% | -6.1% | -6.1% | -2.6% | 3.5% |
| ROE | -4.1% | -8.1% | -11.0% | -9.7% | -6.6% | 3.1% |
| Net Debt/EBITDA | -2.0x | -486.6x | | | 10.2x | 10.2x |
Majestic Gold Corp ($MJS) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 6 | 14 | 9 | 8 | -12.2% | 96.1% | 153.6% | -13.9% |
| EBITDA | 0 | -1 | 1 | 1 | | -449.7% | | |
| Net Income | -1 | -2 | -0 | -1 | | | | |
Balance Sheet
|
|---|
| Cash | 7 | 13 | 13 | 12 | -24.9% | 3.7% | 51.5% | 26.7% |
| Short Term Debt | 29 | 26 | 24 | 26 | 49.3% | 1.9% | -1.6% | -6.4% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | -2.2% | 4.6% | 13.6% | 7.2% | -0.8% | 0.6% | 29.2% | 28.6% |
| EBITDA Margin | 3.7% | -4.6% | 13.4% | 7.5% | 6.0% | -7.2% | 27.3% | 36.0% |
| Net Income Margin | -12.5% | -13.9% | -4.6% | -9.6% | 1.2% | -4.7% | 27.8% | 25.1% |
Revenue and profitability
The company's Revenue jumped on 32.7%. Revenue growth showed slow down in FY16Q4 - it was -13.9% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 14.5 pp from -10.8% to 3.8% in FY2016.
Gross Margin jumped on 14.3 pp from -8.1% to 6.3% in FY2016. SG&A as a % of Revenue decreased on 3.8 pp from 14.8% to 10.9% in FY2016.
Net Income marign surged on 11.0 pp from -21.5% to -10.5% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 9.5% in FY2016. The company showed CAPEX/Revenue growth of 6.3 pp from 3.2% in FY2013 to 9.5% in FY2016. It's average level of CAPEX/Revenue for the last three years was 6.6%.The company has spent a lot to CAPEX (253% of EBITDA) to fuel its growth.
Return on investment
The company operates at negative ROIC (-2.61%) and ROE (-6.57%). ROIC increased on 3.5 pp from -6.1% to -2.6% in FY2016. ROE increased on 3.1 pp from -9.7% to -6.6% in FY2016.
Leverage (Debt)
Debt level is 10.2x Net Debt / EBITDA and 18.7x Debt / EBITDA. Net Debt / EBITDA surged10.2x from to 10.2x in FY2016. Debt decreased on 6.4% while cash jumped on 26.7%.
Appendix 1: Peers in Basic Materials
Below we provide Majestic Gold 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 | 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 |
|---|
