New Gold Inc reports 45.6% CAPEX growth while 4.1% Revenue decline
15.02.2017 • About New Gold Inc (
$NGD) • By InTwits
New Gold Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- New Gold Inc doesn't have a profitable business model yet: 2016 ROIC is 0.5%
- EBITDA Margin is quite volatile: 39.6% in 2016, 33.2% in 2015, -17.2% in 2014, 0.5% in 2013, 49.3% in 2012
- New Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 55.7%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 9.2 in 2016, 7.0 in 2015, 10.7 in 2014, 0.018 in 2013, 0.0050 in 2012
- The company has potentially unprofitable business model: ROIC is at 0.5%
- It operates with high leverage: Net Debt/EBITDA is 2.6x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
New Gold Inc ($NGD) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 791.3 | 779.7 | 726.0 | 712.9 | 683.8 | -4.1% |
| EBITDA | 390.1 | 3.6 | -125.1 | 236.7 | 270.5 | 14.3% |
| Net Income | 199.0 | -191.2 | -477.1 | -201.4 | 2.7 | |
Balance Sheet
|
|---|
| Cash | 687.8 | 414.4 | 370.5 | 335.5 | 185.9 | -44.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 847.8 | 862.5 | 874.3 | 787.6 | 889.5 | 12.9% |
Cash flow
|
|---|
| Capex | 516.0 | 289.3 | 279.3 | 389.5 | 567.0 | 45.6% |
Ratios
|
|---|
| Revenue growth | 13.7% | -1.5% | -6.9% | -1.8% | -4.1% | |
| EBITDA growth | 13.4% | -99.1% | -3,575.0% | -289.2% | 14.3% | |
| EBITDA Margin | 49.3% | 0.5% | -17.2% | 33.2% | 39.6% | 6.4% |
| Net Income Margin | 25.1% | -24.5% | -65.7% | -28.3% | 0.4% | 28.6% |
| CAPEX, % of revenue | 65.2% | 37.1% | 38.5% | 54.6% | 82.9% | 28.3% |
| ROIC | 8.7% | -4.7% | -9.4% | -0.1% | 0.5% | 0.6% |
| ROE | 8.0% | -7.1% | -19.1% | -9.2% | 0.1% | 9.3% |
| Net Debt/EBITDA | 0.4x | 124.5x | | 1.9x | 2.6x | 0.7x |
New Gold Inc ($NGD) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 155 | 180 | 179 | 170 | -8.5% | 7.5% | 0.8% | -14.4% |
| EBITDA | 62 | 85 | 85 | 39 | 2.3% | 40.4% | 42.8% | -31.5% |
| Net Income | 27 | -9 | 5 | -20 | | -193.6% | | |
Balance Sheet
|
|---|
| Cash | 298 | 220 | 151 | 186 | -18.5% | -32.8% | -60.7% | -44.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 788 | 786 | 789 | 890 | -10.1% | -10.6% | 0.2% | 12.9% |
Ratios
|
|---|
| EBITDA Margin | 39.8% | 47.3% | 47.6% | 22.6% | 4.2% | 11.1% | 14.0% | -5.6% |
| Net Income Margin | 17.3% | -4.9% | 2.9% | -11.7% | 43.3% | -10.5% | 91.9% | -6.9% |
Revenue and profitability
New Gold Inc's Revenue decreased on 4.1%. Revenue decline showed acceleration in 16Q4 - it was 14.4% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 6.4 pp from 33.2% to 39.6% in 2016.
Net Income marign jumped on 28.6 pp from -28.3% to 0.39% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 New Gold Inc had CAPEX/Revenue of 82.9%. CAPEX/Revenue surged on 45.8 pp from 37.1% in 2013 to 82.9% in 2016. Average CAPEX/Revenue for the last three years was 58.7%.Battling declining revenue the company made large investments to CAPEX (210% of EBITDA) but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (0.47%) and ROE (0.13%). ROIC increased slightly on 0.61 pp from -0.14% to 0.47% in 2016. ROE increased on 9.3 pp from -9.2% to 0.13% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.6x and Debt / EBITDA is 3.3x. Net Debt / EBITDA jumped on 0.7x from 1.9x to 2.6x in 2016. Debt jumped on 12.9% while cash dropped on 44.6%.
Management team
Hannes Portmann is a the company's CEO. Hannes Portmann is a founder and has spent 1 year at the company. New Gold Inc's CFO is Brian W Penny. Brian W Penny has 9 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below you can find New Gold Inc 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 2.0% | -2.8% | 6.8% |
|---|
| New Gold Inc ($NGD) | | -1.5% | -6.9% | -1.8% | -4.1% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (95 companies) | 32.1% | 22.4% | 18.6% | 16.5% | 24.8% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($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) | 17.4% | 11.5% | 10.7% | 6.7% | 23.0% |
|---|
| New Gold Inc ($NGD) | 49.3% | 0.5% | -17.2% | 33.2% | 39.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Largo Resources Ltd ($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) | 27.4% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| New Gold Inc ($NGD) | 65.2% | 37.1% | 38.5% | 54.6% | 82.9% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucara Diamond Corp ($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% | -3.8% | 4.8% |
|---|
| New Gold Inc ($NGD) | 8.7% | -4.7% | -9.4% | -0.1% | 0.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canam Group Inc ($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 |
|---|
| New Gold Inc ($NGD) | 0.4x | 124.5x | | 1.9x | 2.6x |
