Russel Metals Inc revenue decline decelerated to 17.1% in 2016 vs. 19.6% a year earliner
16.02.2017 • About Russel Metals Inc (
$RUS) • By InTwits
Russel Metals Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 6.0% in 2016, -1.6% in 2015, 6.5% in 2014, 5.6% in 2013, 6.7% in 2012
- Russel Metals Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.0%. At the same time it's a lot of higher than industry average of 33.0%.
- CAPEX is quite volatile: 16.7 in 2016, 38.3 in 2015, 48.2 in 2014, 27.2 in 2013, 33.7 in 2012
- The company has business model with low profitability: ROIC is at 9.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.0x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Russel Metals Inc ($RUS) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,000 | 3,188 | 3,869 | 3,112 | 2,579 | -17.1% |
| Gross Profit | 523 | 563 | 703 | 487 | 502 | 3.0% |
| EBITDA | 201 | 180 | 252 | -51 | 154 | |
| Net Income | 98 | 83 | 124 | -88 | 63 | |
Balance Sheet
|
|---|
| Cash | 115 | 116 | 53 | 143 | 182 | 26.8% |
| Short Term Debt | 17 | 1 | 25 | 95 | 35 | -63.0% |
| Long Term Debt | 454 | 457 | 461 | 295 | 296 | 0.2% |
Cash flow
|
|---|
| Capex | 34 | 27 | 48 | 38 | 17 | -56.4% |
Ratios
|
|---|
| Revenue growth | 11.4% | 6.3% | 21.4% | -19.6% | -17.1% | |
| EBITDA growth | -9.3% | -10.4% | 40.2% | -120.3% | -402.2% | |
| Gross Margin | 17.4% | 17.7% | 18.2% | 15.7% | 19.5% | 3.8% |
| EBITDA Margin | 6.7% | 5.6% | 6.5% | -1.6% | 6.0% | 7.6% |
| Net Income Margin | 3.3% | 2.6% | 3.2% | -2.8% | 2.4% | 5.3% |
| CAPEX, % of revenue | 1.1% | 0.9% | 1.2% | 1.2% | 0.6% | -0.6% |
| ROIC | 14.3% | 10.9% | 15.3% | -6.3% | 9.8% | 16.0% |
| ROE | 11.9% | 9.7% | 13.4% | -9.6% | 7.4% | 17.0% |
| Net Debt/EBITDA | 1.8x | 1.9x | 1.7x | | 1.0x | 1.0x |
Russel Metals Inc ($RUS) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 662 | 624 | 639 | 654 | -26.8% | -18.1% | -17.4% | -2.9% |
| EBITDA | 26 | 39 | 36 | 54 | -43.7% | -2.8% | 30.1% | |
| Net Income | 8 | 16 | 16 | 23 | -57.8% | 0.0% | 24.2% | |
Balance Sheet
|
|---|
| Cash | 141 | 163 | 193 | 182 | 784.9% | 494.2% | 104.2% | 26.8% |
| Short Term Debt | 77 | 94 | 116 | 35 | 135.6% | 273.3% | -36.8% | -63.0% |
| Long Term Debt | 295 | 296 | 296 | 296 | -36.0% | -36.2% | 0.2% | 0.2% |
Ratios
|
|---|
| Gross Margin | 19.2% | 20.8% | 20.0% | 17.9% | 1.7% | 3.3% | 3.5% | 7.8% |
| EBITDA Margin | 3.9% | 6.2% | 5.7% | 8.2% | -1.2% | 1.0% | 2.1% | 32.6% |
| Net Income Margin | 1.2% | 2.6% | 2.5% | 3.5% | -0.9% | 0.5% | 0.8% | 23.6% |
Revenue and profitability
The company's Revenue dropped on 17.1%. Annual revenue decline showed slowdown in 16Q4 - revenue decreased on 2.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.6 pp from -1.6% to 6.0% in 2016.
Gross Margin increased on 3.8 pp from 15.7% to 19.5% in 2016.
Net Income marign increased on 5.3 pp from -2.8% to 2.4% in 2016.
Capital expenditures (CAPEX) and working capital investments
Russel Metals Inc's CAPEX/Revenue was 0.65% in 2016. Russel Metals Inc's CAPEX/Revenue showed almost no change from 2013 to 2016. For the last three years the average CAPEX/Revenue was 1.0%.
Return on investment
The company operates at low ROIC (9.76%) and ROE (7.41%). ROIC jumped on 16.0 pp from -6.3% to 9.8% in 2016. ROE jumped on 17.0 pp from -9.6% to 7.4% in 2016.
Leverage (Debt)
Debt level is 1.0x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA surged1.0x from to 1.0x in 2016. Debt dropped on 15.2% while cash surged on 26.8%.
Management team
The company's CEO is Brian R Hedges. Brian R Hedges is a founder and has 9 years tenure at the company.
Appendix 1: Peers in Basic Materials
Below we provide Russel Metals 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% |
|---|
| Russel Metals Inc ($RUS) | | 6.3% | 21.4% | -19.6% | -17.1% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Nevsun Resources Ltd ($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 (94 companies) | 32.2% | 22.7% | 19.1% | 16.9% | 24.8% |
|---|
| Russel Metals Inc ($RUS) | 17.4% | 17.7% | 18.2% | 15.7% | 19.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($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% | 24.5% |
|---|
| Russel Metals Inc ($RUS) | 6.7% | 5.6% | 6.5% | -1.6% | 6.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Largo Resources Ltd ($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) | 28.1% | 27.4% | 17.8% | 17.2% | 18.3% |
|---|
| Russel Metals Inc ($RUS) | 1.1% | 0.9% | 1.2% | 1.2% | 0.6% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucara Diamond Corp ($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% | -3.6% | 4.0% |
|---|
| Russel Metals Inc ($RUS) | 14.3% | 10.9% | 15.3% | -6.3% | 9.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canam Group Inc ($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 | 1.6x | 0.6x |
|---|
| Russel Metals Inc ($RUS) | 1.8x | 1.9x | 1.7x | | 1.0x |
