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Barrick Gold Corp reports 123% Net Income growth and 56.1 pp EBITDA Margin growth from -5.8% to 50.3%

15.02.2017 • About Barrick Gold Corp ($ABX) • By InTwits

Barrick Gold Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Barrick Gold Corp is a company in decline: 2016 revenue growth was -5.2%, 5 years revenue CAGR was -9.7%
  • Barrick Gold Corp spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2012-2016 is 0.0%. Average EBITDA Margin for the same period was -4.0%0
  • Barrick Gold Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 29.4%. At the same time it's a lot of higher than industry average of 24.1%.
  • CAPEX is quite volatile: 1,126 in 2016, 1,713 in 2015, 2,432 in 2014, 5,501 in 2013, 6,773 in 2012
  • The company has highly profitable business model: ROIC is at 14.0%
  • It operates with high leverage: Net Debt/EBITDA is 1.3x 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.

Barrick Gold Corp ($ABX) key annual financial indicators

mln. $201220132014201520162016/2015
Gross Profit7,1375,1983,4092,1223,15348.6%
Net Income-538-10,366-2,907-2,838655
Balance Sheet
Short Term Debt1,848179333203143-29.6%
Long Term Debt12,09512,90112,7489,7657,788-20.2%
Cash flow
Revenue growth1.1%-13.0%-18.3%-11.8%-5.2%
EBITDA growth-83.3%-625.7%-96.9%136.4%-928.1%
Gross Margin49.6%41.5%33.3%23.5%36.8%13.3%
EBITDA Margin9.4%-56.6%-2.1%-5.8%50.3%56.1%
Net Income Margin-3.7%-82.7%-28.4%-31.4%7.7%39.1%
SG&A, % of revenue3.5%3.1%3.8%2.6%3.0%0.4%
CAPEX, % of revenue47.1%43.9%23.8%19.0%13.2%-5.8%
Net Debt/EBITDA8.8x1.3x1.3x

Barrick Gold Corp ($ABX) key quoterly financial indicators

mln. $16Q116Q216Q316Q4YoY change
Net Income-83138175425-245.6%
Balance Sheet
Short Term Debt186175153143-37.6%-65.2%-85.4%-29.6%
Long Term Debt8,9408,8258,3867,788-29.1%-30.2%-26.7%-20.2%
Gross Margin31.4%33.6%43.8%37.3%7.5%9.3%19.0%16.3%
EBITDA Margin 43.7% 45.4% 51.4% 59.0%7.8%12.3%31.3%172.0%
Net Income Margin -4.3% 6.9% 7.6% 18.3%-6.8%7.3%19.0%135.5%

Revenue and profitability

Barrick Gold Corp's Revenue decreased on 5.2%. Annual revenue decline showed slowdown in 16Q4 - revenue increased on 3.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 56.1 pp from -5.8% to 50.3% in 2016.

Gross Margin surged on 13.3 pp from 23.5% to 36.8% in 2016. SG&A as a % of Revenue showed almost no change in 2016.

Net Income marign surged on 39.1 pp from -31.4% to 7.7% in 2016.

Capital expenditures (CAPEX) and working capital investments

In 2016 Barrick Gold Corp had CAPEX/Revenue of 13.2%. The company's CAPEX/Revenue dropped on 30.8 pp from 43.9% in 2013 to 13.2% in 2016. It's average level of CAPEX/Revenue for the last three years was 18.6%.

Return on investment

The company operates at good ROIC (14.01%) while ROE is low (8.67%). ROIC surged on 23.7 pp from -9.7% to 14.0% in 2016. ROE surged on 41.2 pp from -32.6% to 8.7% in 2016.

Leverage (Debt)

Company's Net Debt / EBITDA is 1.3x and Debt / EBITDA is 1.8x. Net Debt / EBITDA surged1.3x from to 1.3x in 2016. Debt dropped on 20.4% while cash decreased on 2.7%.

Appendix 1: Peers in Basic Materials

Below we provide Barrick 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 ($OR)164.4%38.0%
Median (82 companies)100.8%-2.5%2.0%-1.7%6.8%
Barrick Gold Corp ($ABX)-13.0%-18.3%-11.8%-5.2%

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 ($PRU)52.5%50.9%32.0%53.7%26.3%
Median (94 companies)32.1%22.1%18.2%16.4%24.7%
Barrick Gold Corp ($ABX)49.6%41.5%33.3%23.5%36.8%

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 ($SSL)74.3%49.9%62.1%56.5%64.6%
Median (100 companies)18.6%11.5%10.7%7.3%23.0%
Barrick Gold Corp ($ABX)9.4%-56.6%-2.1%-5.8%50.3%

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 ($ASM)211.7%5.6%89.8%163.3%
Median (100 companies)27.4%26.5%17.5%16.6%18.3%
Barrick Gold Corp ($ABX)47.1%43.9%23.8%19.0%13.2%

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 ($CFX)4.9%13.2%21.3%24.1%17.0%
Median (99 companies)4.9%1.3%1.6%-3.6%4.0%
Barrick Gold Corp ($ABX)-0.7%-24.6%-6.4%-9.7%14.0%

Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Canam Group Inc ($CAM)4.2x2.6x3.2x1.8x13.9x
Taseko Mines Ltd ($TKO)7.4x5.9x10.2x5.9x11.0x
Methanex Corp ($MX)5.2x0.7x0.9x3.0x5.2x
Copper Mountain Mining Corp ($CUM)3.9x5.0x5.4x30.6x5.1x
Cameco Corp ($CCO)2.0x2.1x2.5x1.9x5.1x
Median (57 companies)0.3x0.8x1.1x1.6x0.6x
Barrick Gold Corp ($ABX)8.8x1.3x