Pan American Silver Corp Net Income jumped on 144% in 2016 and EBITDA Margin surged on 50.3 pp from -9.8% to 40.6%
14.02.2017 • About Pan American Silver Corp (
$PAA) • By InTwits
Pan American Silver Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Pan American Silver Corp motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2012-2016 was 0.0%. On average EBITDA Margin was -6.8% for the sames years0
- Pan American Silver Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 20.4%. At the same time it's in pair with industry average of 24.1%.
- CAPEX is quite volatile: 166 in 2016, 383 in 2015, 685 in 2014, 460 in 2013, 417 in 2012
- The company has highly profitable business model: ROIC is at 12.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Pan American Silver Corp ($PAA) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 928.6 | 824.5 | 751.9 | 674.7 | 774.8 | 14.8% |
| Gross Profit | 408.4 | 267.4 | 8.1 | -32.1 | 198.9 | |
| SG&A | 20.8 | 17.6 | 17.9 | 18.0 | 23.7 | 31.3% |
| EBITDA | 255.7 | -302.7 | -470.5 | -65.9 | 314.4 | |
| Net Income | 78.2 | -445.9 | -545.6 | -226.7 | 100.1 | |
Balance Sheet
|
|---|
| Cash | 346.2 | 249.9 | 146.2 | 134.0 | 180.9 | 35.0% |
| Short Term Debt | 12.5 | 4.4 | 38.8 | 21.8 | 3.6 | -83.7% |
| Long Term Debt | 65.5 | 40.0 | 4.0 | 38.0 | 39.7 | 4.7% |
Cash flow
|
|---|
| Capex | 159.9 | 159.4 | 131.8 | 146.7 | 202.7 | 38.1% |
Ratios
|
|---|
| Revenue growth | 8.6% | -11.2% | -8.8% | -10.3% | 14.8% | |
| EBITDA growth | -43.9% | -218.4% | 55.4% | -86.0% | -577.3% | |
| Gross Margin | 44.0% | 32.4% | 1.1% | -4.8% | 25.7% | 30.4% |
| EBITDA Margin | 27.5% | -36.7% | -62.6% | -9.8% | 40.6% | 50.3% |
| Net Income Margin | 8.4% | -54.1% | -72.6% | -33.6% | 12.9% | 46.5% |
| SG&A, % of revenue | 2.2% | 2.1% | 2.4% | 2.7% | 3.1% | 0.4% |
| CAPEX, % of revenue | 17.2% | 19.3% | 17.5% | 21.7% | 26.2% | 4.4% |
| ROIC | 6.1% | -15.3% | -28.5% | -13.1% | 12.6% | 25.7% |
| ROE | 3.6% | -18.2% | -29.1% | -15.8% | 7.4% | 23.3% |
| Net Debt/EBITDA | -1.0x | | | | -0.4x | -0.4x |
Pan American Silver Corp ($PAA) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 158 | 192 | 234 | 191 | -11.1% | 10.4% | 46.6% | 17.0% |
| EBITDA | 39 | 82 | 119 | 75 | 11.0% | 199.3% | | |
| Net Income | 2 | 34 | 43 | 22 | | | | |
Balance Sheet
|
|---|
| Cash | 120 | 150 | 210 | 181 | 9.5% | -17.9% | 34.9% | 35.0% |
| Short Term Debt | 21 | 19 | 8 | 4 | -66.3% | -68.4% | -86.4% | -83.7% |
| Long Term Debt | 39 | 39 | 39 | 40 | 958.6% | 6,855.9% | 15,771.7% | 4.7% |
Ratios
|
|---|
| Gross Margin | 10.5% | 23.3% | 37.9% | 25.7% | 9.1% | 23.8% | 54.2% | 30.5% |
| EBITDA Margin | 24.4% | 42.6% | 51.0% | 39.2% | 4.9% | 26.9% | 68.0% | 101.2% |
| Net Income Margin | 1.1% | 17.6% | 18.3% | 11.4% | 12.0% | 21.8% | 60.4% | 93.0% |
Revenue and profitability
Pan American Silver Corp's Revenue surged on 14.8%. Revenue growth showed acceleration in 16Q4 - it increased 17.0% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 50.3 pp from -9.8% to 40.6% in 2016.
Gross Margin surged on 30.4 pp from -4.8% to 25.7% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign surged on 46.5 pp from -33.6% to 12.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 26.2%. CAPEX/Revenue increased on 6.8 pp from 19.3% in 2013 to 26.2% in 2016. It's average CAPEX/Revenue for the last three years was 21.8%.Pan American Silver Corp invested a big chunk of EBITDA (64.5%) to CAPEX to fuel its growth.
Return on investment
The company operates at good ROIC (12.60%) while ROE is low (7.43%). ROIC jumped on 25.7 pp from -13.1% to 12.6% in 2016. ROE jumped on 23.3 pp from -15.8% to 7.4% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.4x and Debt / EBITDA is 0.1x. Net Debt / EBITDA dropped0.4x from to -0.4x in 2016. Debt dropped on 27.6% while cash jumped on 35.0%.
Management team
Pan American Silver Corp's CEO Michael Steinmann is a founder and has spent 2 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Pan American Silver Corp 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -2.5% | 2.0% | -1.7% | 5.7% |
|---|
| Pan American Silver Corp ($PAA) | | -11.2% | -8.8% | -10.3% | 14.8% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 19.1% | 16.9% | 24.7% |
|---|
| Pan American Silver Corp ($PAA) | 44.0% | 32.4% | 1.1% | -4.8% | 25.7% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 17.4% | 11.5% | 10.7% | 7.3% | 23.0% |
|---|
| Pan American Silver Corp ($PAA) | 27.5% | -36.7% | -62.6% | -9.8% | 40.6% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 28.1% | 27.4% | 17.8% | 16.6% | 17.5% |
|---|
| Pan American Silver Corp ($PAA) | 17.2% | 19.3% | 17.5% | 21.7% | 26.2% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 1.3% | 1.6% | -3.6% | 4.0% |
|---|
| Pan American Silver Corp ($PAA) | 6.1% | -15.3% | -28.5% | -13.1% | 12.6% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.8x | 1.1x | 1.6x | 0.7x |
|---|
| Pan American Silver Corp ($PAA) | -1.0x | | | | -0.4x |
