Kinross Gold Corp reports 482% EBITDA growth and 20.9 pp EBITDA Margin growth from 5.1% to 26.0%
15.02.2017 • About Kinross Gold Corp (
$K) • By InTwits
Kinross Gold Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Kinross Gold Corp doesn't have a profitable business model yet: 2016 ROIC is 0.7%
- EBITDA Margin is expanding: 26.0% in 2016 vs. 5.1% in 2015 vs. -36.2% in 2012
- Kinross Gold Corp spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2012-2016 is 0.0%. Average EBITDA Margin for the same period was -13.6%0
- Kinross Gold Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 26.6%. At the same time it's in pair with industry average of 24.1%.
- CAPEX is quite volatile: 634 in 2016, 610 in 2015, 632 in 2014, 1,262 in 2013, 1,858 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.7%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.0x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kinross Gold Corp ($K) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 4,307 | 3,780 | 3,466 | 3,052 | 3,472 | 13.8% |
| Gross Profit | -1,750 | -2,223 | -631 | -379 | 494 | |
| SG&A | 179 | 177 | 179 | 179 | 144 | -19.9% |
| EBITDA | -1,561 | -1,806 | -153 | 155 | 901 | 482.2% |
| Net Income | -2,505 | -3,743 | -1,167 | -985 | -104 | |
Balance Sheet
|
|---|
| Cash | 1,633 | 735 | 984 | 1,044 | 827 | -20.8% |
| Short Term Debt | 516 | 60 | 60 | 250 | 0 | -100.0% |
| Long Term Debt | 2,116 | 2,060 | 1,998 | 1,732 | 1,733 | 0.1% |
Cash flow
|
|---|
| Capex | 1,858 | 1,262 | 632 | 610 | 634 | 3.9% |
Ratios
|
|---|
| Revenue growth | 12.1% | -12.3% | -8.3% | -11.9% | 13.8% | |
| EBITDA growth | 54.3% | 15.7% | -91.6% | -201.5% | 482.2% | |
| Gross Margin | -40.6% | -58.8% | -18.2% | -12.4% | 14.2% | 26.6% |
| EBITDA Margin | -36.2% | -47.8% | -4.4% | 5.1% | 26.0% | 20.9% |
| Net Income Margin | -58.2% | -99.0% | -33.7% | -32.3% | -3.0% | 29.3% |
| SG&A, % of revenue | 4.2% | 4.7% | 5.2% | 5.9% | 4.1% | -1.7% |
| CAPEX, % of revenue | 43.1% | 33.4% | 18.2% | 20.0% | 18.3% | -1.7% |
| ROIC | -15.8% | -24.1% | -12.9% | -10.9% | 0.7% | 11.6% |
| ROE | -22.5% | -47.2% | -21.5% | -22.5% | -2.6% | 20.0% |
| Net Debt/EBITDA | | | | 6.1x | 1.0x | -5.1x |
Kinross Gold Corp ($K) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 783 | 876 | 910 | 903 | 0.2% | 16.0% | 12.5% | 27.8% |
| EBITDA | 231 | 279 | 184 | 188 | -7.0% | 87.6% | -23.3% | |
| Net Income | -14 | -25 | 3 | -117 | | | | |
Balance Sheet
|
|---|
| Cash | 750 | 968 | 756 | 827 | -25.7% | -6.1% | -26.2% | -20.8% |
| Short Term Debt | 250 | 250 | 0 | 0 | 480.7% | 481.2% | -100.0% | -100.0% |
| Long Term Debt | 1,733 | 1,733 | 1,733 | 1,733 | -12.8% | -12.8% | 0.1% | 0.1% |
Ratios
|
|---|
| Gross Margin | 14.4% | 18.2% | 7.3% | 15.0% | -1.1% | 10.9% | -3.4% | 106.0% |
| EBITDA Margin | 29.6% | 31.9% | 20.2% | 20.8% | -2.3% | 12.2% | -9.4% | 89.1% |
| Net Income Margin | -1.8% | -2.9% | 0.3% | -12.9% | -0.9% | 8.2% | 6.8% | 106.3% |
Revenue and profitability
The company's Revenue surged on 13.8%. Revenue growth showed acceleration in 16Q4 - it increased 27.8% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 7.6 pp from -1.6% to 6.0% in 2016.
Gross Margin jumped on 26.6 pp from -12.4% to 14.2% in 2016. SG&A as a % of Revenue decreased slightly on 1.7 pp from 5.9% to 4.1% in 2016.
Net Income marign jumped on 29.3 pp from -32.3% to -3.0% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Kinross Gold Corp had CAPEX/Revenue of 18.3%. Kinross Gold Corp showed big decline in CAPEX/Revenue of 15.1 pp from 33.4% in 2013 to 18.3% in 2016. It's average CAPEX/Revenue for the last three years was 18.8%.To secure this fast growth the company invested a large share of EBITDA (70.3%) to CAPEX.
Return on investment
The company operates at low but positive ROIC (0.73%) and negative ROE (-2.59%). ROIC jumped on 11.6 pp from -10.9% to 0.73% in 2016. ROE jumped on 20.0 pp from -22.5% to -2.6% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.0x and Debt / EBITDA is 1.9x. Net Debt / EBITDA dropped on 5.1x from 6.1x to 1.0x in 2016. Debt dropped on 12.5% while cash dropped on 20.8%.
Management team
The company's CEO J Paul Rollinson is a founder and has spent 6 years at the company. Tony S Giardini is a The company's CFO. Tony S Giardini has spent 6 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide Kinross 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -2.5% | 2.0% | -1.7% | 5.7% |
|---|
| Kinross Gold Corp ($K) | | -12.3% | -8.3% | -11.9% | 13.8% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.2% | 22.7% | 19.1% | 16.9% | 24.8% |
|---|
| Kinross Gold Corp ($K) | -40.6% | -58.8% | -18.2% | -12.4% | 14.2% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 18.6% | 11.5% | 10.7% | 7.3% | 23.0% |
|---|
| Kinross Gold Corp ($K) | -36.2% | -47.8% | -4.4% | 5.1% | 26.0% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 27.4% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| Kinross Gold Corp ($K) | 43.1% | 33.4% | 18.2% | 20.0% | 18.3% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 1.3% | 1.6% | -3.6% | 4.8% |
|---|
| Kinross Gold Corp ($K) | -15.8% | -24.1% | -12.9% | -10.9% | 0.7% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.8x | 1.1x | 1.5x | 0.6x |
|---|
| Kinross Gold Corp ($K) | | | | 6.1x | 1.0x |
