Resolute Forest Products Inc reports 900% EBITDA growth while 2.7% Revenue decline
02.02.2017 • About Resolute Forest Products Inc (
$RFP) • By InTwits
Resolute Forest Products Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Resolute Forest Products Inc is a company in decline: 2016 revenue growth was -2.7%, 5 years revenue CAGR was -5.7%
- EBITDA Margin is quite volatile: 5.1% in 2016, 0.5% in 2015, 1.6% in 2014, 5.4% in 2013, 4.6% in 2012
- Resolute Forest Products Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.8%. At the same time it's in pair with industry average of 7.1%.
- CAPEX is quite volatile: 925 in 2016, 906 in 2015, 741 in 2014, 715 in 2013, 269 in 2012
- The company has unprofitable business model: ROIC is at -1.7%
- It operates with high leverage: Net Debt/EBITDA is 4.0x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Resolute Forest Products Inc ($RFP) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,503 | 4,461 | 4,258 | 3,645 | 3,545 | -2.7% |
| Gross Profit | 785 | 772 | 775 | 819 | 829 | 1.2% |
| SG&A | 149 | 166 | 155 | 160 | 149 | -6.9% |
| EBITDA | 205 | 241 | 69 | 18 | 180 | 900.0% |
| Net Income | 1 | -639 | -277 | -257 | -81 | |
Balance Sheet
|
|---|
| Cash | 263 | 322 | 337 | 58 | 35 | -39.7% |
| Short Term Debt | 2 | 2 | 1 | 1 | 1 | 0.0% |
| Long Term Debt | 532 | 597 | 596 | 590 | 761 | 29.0% |
Cash flow
|
|---|
| Capex | 169 | 161 | 193 | 185 | 249 | 34.6% |
Ratios
|
|---|
| Revenue growth | -5.3% | -0.9% | -4.6% | -14.4% | -2.7% | |
| EBITDA growth | -51.0% | 17.6% | -71.4% | -73.9% | 900.0% | |
| Gross Margin | 17.4% | 17.3% | 18.2% | 22.5% | 23.4% | 0.9% |
| EBITDA Margin | 4.6% | 5.4% | 1.6% | 0.5% | 5.1% | 4.6% |
| Net Income Margin | 0.0% | -14.3% | -6.5% | -7.1% | -2.3% | 4.8% |
| SG&A, % of revenue | 3.3% | 3.7% | 3.6% | 4.4% | 4.2% | -0.2% |
| CAPEX, % of revenue | 3.8% | 3.6% | 4.5% | 5.1% | 7.0% | 1.9% |
| ROIC | -1.3% | -0.1% | -9.3% | -14.3% | -1.7% | 12.5% |
| ROE | 0.0% | -21.6% | -11.2% | -12.7% | -4.5% | 8.3% |
| Net Debt/EBITDA | 1.3x | 1.1x | 3.8x | 29.6x | 4.0x | -25.6x |
Resolute Forest Products Inc ($RFP) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 877 | 891 | 888 | 889 | -4.7% | -3.8% | -1.9% | -0.6% |
| EBITDA | 52 | 36 | 61 | 31 | 23.8% | -52.6% | -6.2% | |
| Net Income | -8 | -42 | 14 | -45 | | | | |
Balance Sheet
|
|---|
| Cash | 37 | 40 | 55 | 35 | -88.6% | -86.8% | -76.6% | -39.7% |
| Short Term Debt | 1 | 1 | 1 | 1 | 0.0% | 0.0% | 0.0% | 0.0% |
| Long Term Debt | 610 | 610 | 726 | 761 | 2.3% | 2.3% | 21.8% | 29.0% |
Ratios
|
|---|
| Gross Margin | 22.8% | 25.0% | 23.3% | 22.4% | 0.8% | -0.2% | -0.8% | 3.9% |
| EBITDA Margin | 5.9% | 4.0% | 6.9% | 3.5% | 1.4% | -4.2% | -0.3% | 21.9% |
| Net Income Margin | -0.9% | -4.7% | 1.6% | -5.1% | 2.7% | -4.3% | 2.2% | 18.9% |
Revenue and profitability
Resolute Forest Products Inc's Revenue decreased on 2.7%. Annual revenue decline showed slowdown in 16Q4 - revenue decreased slightly on 0.56%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.6 pp from 0.49% to 5.1% in 2016.
Gross Margin increased slightly on 0.92 pp from 22.5% to 23.4% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased on 4.8 pp from -7.1% to -2.3% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Resolute Forest Products Inc had CAPEX/Revenue of 7.0%. The company's CAPEX/Revenue increased on 3.4 pp from 3.6% in 2013 to 7.0% in 2016. For the last three years the average CAPEX/Revenue was 5.5%.Resolute Forest Products Inc has spent a lot to CAPEX (138% of EBITDA) which didn't stop revenue from falling.
Return on investment
The company operates at negative ROIC (-1.73%) and ROE (-4.47%). ROIC jumped on 12.5 pp from -14.3% to -1.7% in 2016. ROE increased on 8.3 pp from -12.7% to -4.5% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 4.0x and Debt / EBITDA is 4.2x. Net Debt / EBITDA dropped on 25.6x from 29.6x to 4.0x in 2016. Debt jumped on 28.9% while cash dropped on 39.7%.
Management team
Richard Garneau is a Resolute Forest Products Inc's CEO. Richard Garneau is a founder and has spent 7 years at the company. Resolute Forest Products Inc's CFO is Jo-Ann Longworth. Jo-Ann Longworth has 7 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below we provide Resolute Forest Products 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 | 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 2.0% | -1.7% | 6.8% |
|---|
| Resolute Forest Products Inc ($RFP) | | -0.9% | -4.6% | -14.4% | -2.7% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.2% | 22.7% | 19.1% | 16.4% | 24.8% |
|---|
| Resolute Forest Products Inc ($RFP) | 17.4% | 17.3% | 18.2% | 22.5% | 23.4% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 18.6% | 11.5% | 10.7% | 7.3% | 24.5% |
|---|
| Resolute Forest Products Inc ($RFP) | 4.6% | 5.4% | 1.6% | 0.5% | 5.1% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 28.1% | 27.4% | 17.8% | 17.2% | 18.3% |
|---|
| Resolute Forest Products Inc ($RFP) | 3.8% | 3.6% | 4.5% | 5.1% | 7.0% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 1.3% | 1.6% | -3.6% | 4.8% |
|---|
| Resolute Forest Products Inc ($RFP) | -1.3% | -0.1% | -9.3% | -14.3% | -1.7% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.7x | 1.1x | 1.5x | 0.6x |
|---|
| Resolute Forest Products Inc ($RFP) | 1.3x | 1.1x | 3.8x | 29.6x | 4.0x |
