Agrium Inc reports 40.1% Net Income decline and 1.8 pp EBITDA Margin decline from 14.4% to 12.6%
09.02.2017 • About Agrium Inc (
$AGU) • By InTwits
Agrium Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Agrium Inc is a company in decline: 2016 revenue growth was -7.6%, 5 years revenue CAGR was -2.5%
- Agrium Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.9%. At the same time it's a lot of higher than industry average of 7.1%.
- CAPEX is quite volatile: 724 in 2016, 1,188 in 2015, 2,021 in 2014, 1,755 in 2013, 1,225 in 2012
- The company has business model with average profitability: ROIC is at 10.0%
- It operates with high leverage: Net Debt/EBITDA is 2.7x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Agrium Inc ($AGU) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 16,024 | 15,727 | 16,042 | 14,795 | 13,665 | -7.6% |
| Gross Profit | 4,308 | 3,773 | 3,552 | 3,888 | 3,395 | -12.7% |
| SG&A | 2,125 | 2,205 | 2,397 | 2,189 | 2,156 | -1.5% |
| EBITDA | 2,596 | 2,040 | 1,705 | 2,128 | 1,716 | -19.4% |
| Net Income | 1,494 | 1,062 | 714 | 988 | 592 | -40.1% |
Balance Sheet
|
|---|
| Cash | 658 | 801 | 848 | 515 | 412 | -20.0% |
| Short Term Debt | 1,832 | 822 | 1,538 | 843 | 714 | -15.3% |
| Long Term Debt | 2,069 | 3,066 | 3,559 | 4,513 | 4,398 | -2.5% |
Cash flow
|
|---|
| Capex | 1,225 | 1,755 | 2,021 | 1,188 | 724 | -39.1% |
Ratios
|
|---|
| Revenue growth | 3.6% | -1.9% | 2.0% | -7.8% | -7.6% | |
| EBITDA growth | -4.1% | -21.4% | -16.4% | 24.8% | -19.4% | |
| Gross Margin | 26.9% | 24.0% | 22.1% | 26.3% | 24.8% | -1.4% |
| EBITDA Margin | 16.2% | 13.0% | 10.6% | 14.4% | 12.6% | -1.8% |
| Net Income Margin | 9.3% | 6.8% | 4.5% | 6.7% | 4.3% | -2.3% |
| SG&A, % of revenue | 13.3% | 14.0% | 14.9% | 14.8% | 15.8% | 1.0% |
| CAPEX, % of revenue | 7.6% | 11.2% | 12.6% | 8.0% | 5.3% | -2.7% |
| ROIC | 20.7% | 13.8% | 9.9% | 13.7% | 10.0% | -3.7% |
| ROE | 22.4% | 15.5% | 10.6% | 15.6% | 9.7% | -5.9% |
| Net Debt/EBITDA | 1.2x | 1.5x | 2.5x | 2.3x | 2.7x | 0.5x |
Agrium Inc ($AGU) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 2,725 | 6,415 | 2,245 | 2,280 | -5.1% | -8.3% | -11.1% | -5.3% |
| EBITDA | 195 | 1,021 | 189 | 311 | 27.5% | -12.7% | -41.7% | -35.3% |
| Net Income | 2 | 564 | -41 | 67 | -83.3% | -16.3% | -140.6% | -66.7% |
Balance Sheet
|
|---|
| Cash | 276 | 307 | 311 | 412 | -64.6% | -52.6% | -58.7% | -20.0% |
| Short Term Debt | 737 | 1,176 | 1,850 | 714 | 177.1% | 72.4% | 3.2% | -15.3% |
| Long Term Debt | 4,415 | 4,412 | 4,400 | 4,398 | -2.6% | -2.7% | -2.6% | -2.5% |
Ratios
|
|---|
| Gross Margin | 20.3% | 23.8% | 25.3% | 32.8% | -0.0% | -0.7% | -2.3% | -4.6% |
| EBITDA Margin | 7.2% | 15.9% | 8.4% | 13.6% | 1.8% | -0.8% | -4.4% | -6.3% |
| Net Income Margin | 0.1% | 8.8% | -1.8% | 2.9% | -0.3% | -0.8% | -5.8% | -5.4% |
Revenue and profitability
Agrium Inc's Revenue decreased on 7.6%. Annual revenue decline showed slowdown in 16Q4 - revenue decreased on 5.3%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.8 pp from 14.4% to 12.6% in 2016.
Gross Margin decreased slightly on 1.4 pp from 26.3% to 24.8% in 2016. SG&A as a % of Revenue increased slightly on 0.98 pp from 14.8% to 15.8% in 2016.
Net Income marign decreased on 2.3 pp from 6.7% to 4.3% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 5.3%. Agrium Inc showed decline in CAPEX/Revenue of 5.9 pp from 11.2% in 2013 to 5.3% in 2016. Average CAPEX/Revenue for the last three years was 8.6%.
Return on investment
The company operates at low ROIC (10.03%) and ROE (9.73%). ROIC decreased on 3.7 pp from 13.7% to 10.0% in 2016. ROE decreased on 5.9 pp from 15.6% to 9.7% in 2016.
Leverage (Debt)
Debt level is 2.7x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA surged on 0.5x from 2.3x to 2.7x in 2016. Debt decreased on 4.6% while cash dropped on 20%.
Management team
Charles V Magro "Chuck" is a the company's CEO. Charles V Magro "Chuck" is a founder and has spent 4 years at the company. Agrium Inc's CFO is Steven James Douglas "Steve". Steven James Douglas "Steve" has 4 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below we provide Agrium 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 1.8% | -1.7% | 6.8% |
|---|
| Agrium Inc ($AGU) | | -1.9% | 2.0% | -7.8% | -7.6% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.2% | 22.1% | 18.2% | 16.4% | 24.7% |
|---|
| Agrium Inc ($AGU) | 26.9% | 24.0% | 22.1% | 26.3% | 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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 18.6% | 10.8% | 10.4% | 6.7% | 24.5% |
|---|
| Agrium Inc ($AGU) | 16.2% | 13.0% | 10.6% | 14.4% | 12.6% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 28.1% | 27.4% | 17.8% | 17.2% | 18.3% |
|---|
| Agrium Inc ($AGU) | 7.6% | 11.2% | 12.6% | 8.0% | 5.3% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.2% | -3.8% | 4.0% |
|---|
| Agrium Inc ($AGU) | 20.7% | 13.8% | 9.9% | 13.7% | 10.0% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.7x | 1.1x | 1.5x | 0.6x |
|---|
| Agrium Inc ($AGU) | 1.2x | 1.5x | 2.5x | 2.3x | 2.7x |
