Sherritt International Corp Net Debt / EBITDA jumped on 47.5x from 22.4x to 70.0x in 2016 while Revenue dropped on 21.9%
16.02.2017 • About Sherritt International Corp (
$S) • By InTwits
Sherritt International Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sherritt International Corp is a company in decline: 2016 revenue growth was -21.9%, 5 years revenue CAGR was -33.2%
- EBITDA Margin is quite volatile: 10.7% in 2016, 27.0% in 2015, 36.9% in 2014, 33.0% in 2013, 50.7% in 2012
- Sherritt International Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 15.5%. At the same time it's a lot of higher than industry average of 8.8%.
- CAPEX is quite volatile: 23.2 in 2016, 79 in 2015, 80.8 in 2014, 67.5 in 2013, 58.4 in 2012
- The company has unprofitable business model: ROIC is at -1.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 70.0x while industry average is 70.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Sherritt International Corp ($S) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 475.3 | 448.5 | 455.6 | 335.9 | 262.3 | -21.9% |
| Gross Profit | 215.3 | 136.6 | 137.6 | 17.8 | -1.1 | -106.2% |
| SG&A | 65.7 | 77.9 | 63.4 | 46.4 | 54.5 | 17.5% |
| EBITDA | 240.8 | 147.8 | 168.1 | 90.6 | 28.0 | -69.1% |
| Net Income | 33.7 | -660.3 | -290.0 | -2,076.7 | -378.9 | |
Balance Sheet
|
|---|
| Cash | 147.1 | 324.2 | 161.6 | 230.6 | 269.6 | 16.9% |
| Short Term Debt | 0.0 | 365.2 | 1.6 | 91.2 | 43.0 | -52.9% |
| Long Term Debt | 2,039.8 | 2,124.6 | 1,858.3 | 2,171.9 | 2,185.2 | 0.6% |
Cash flow
|
|---|
| Capex | 58.4 | 67.5 | 80.8 | 79.0 | 23.2 | -70.6% |
Ratios
|
|---|
| Revenue growth | -76.0% | -5.6% | 1.6% | -26.3% | -21.9% | |
| EBITDA growth | -62.3% | -38.6% | 13.7% | -46.1% | -69.1% | |
| Gross Margin | 45.3% | 30.5% | 30.2% | 5.3% | -0.4% | -5.7% |
| EBITDA Margin | 50.7% | 33.0% | 36.9% | 27.0% | 10.7% | -16.3% |
| Net Income Margin | 7.1% | -147.2% | -63.7% | -618.2% | -144.5% | 473.8% |
| SG&A, % of revenue | 13.8% | 17.4% | 13.9% | 13.8% | 20.8% | 7.0% |
| CAPEX, % of revenue | 12.3% | 15.1% | 17.7% | 23.5% | 8.8% | -14.7% |
| ROIC | 2.6% | 1.0% | 1.2% | -0.6% | -1.8% | -1.1% |
| ROE | 0.9% | -19.6% | -9.4% | -90.0% | -28.5% | 61.4% |
| Net Debt/EBITDA | 7.9x | 14.7x | 10.1x | 22.4x | 70.0x | 47.5x |
Sherritt International Corp ($S) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 58 | 75 | 59 | 71 | -29.6% | -24.8% | -23.9% | -7.8% |
| EBITDA | 6 | 15 | 0 | 8 | -75.0% | -55.0% | -98.7% | -44.9% |
| Net Income | -48 | -104 | -121 | -107 | | | | |
Balance Sheet
|
|---|
| Cash | 277 | 133 | 211 | 270 | -6.1% | -48.0% | -20.5% | 16.9% |
| Short Term Debt | 46 | 45 | 45 | 43 | 3,725.0% | 3,392.3% | 71.1% | -52.9% |
| Long Term Debt | 2,082 | 2,107 | 2,096 | 2,185 | 6.0% | 6.1% | 0.9% | 0.6% |
Ratios
|
|---|
| Gross Margin | -10.6% | 5.6% | -1.2% | 2.3% | -10.9% | -9.5% | 0.1% | -2.4% |
| EBITDA Margin | 9.4% | 19.6% | 0.5% | 10.6% | -17.1% | -13.2% | -28.5% | -7.1% |
| Net Income Margin | -81.8% | -138.3% | -206.5% | -151.3% | -13.3% | -85.5% | 66.6% | 2,145.8% |
Revenue and profitability
Sherritt International Corp's Revenue dropped on 21.9%. Annual revenue decline showed slowdown in 16Q4 - revenue decreased on 7.8%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.3 pp from 27.0% to 10.7% in 2016.
Gross Margin decreased on 5.7 pp from 5.3% to -0.42% in 2016. SG&A as a % of Revenue increased on 7.0 pp from 13.8% to 20.8% in 2016.
Net Income marign jumped on 474 pp from -618% to -144% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 8.8% in 2016. CAPEX/Revenue decreased on 6.2 pp from 15.1% in 2013 to 8.8% in 2016. Average CAPEX/Revenue for the last three years was 16.7%.Battling declining revenue Sherritt International Corp invested a large share of EBITDA (82.9%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-1.77%) and ROE (-28.54%). ROIC decreased slightly on 1.1 pp from -0.64% to -1.8% in 2016. ROE jumped on 61.4 pp from -90.0% to -28.5% in 2016.
Leverage (Debt)
Debt level is 70.0x Net Debt / EBITDA and 79.6x Debt / EBITDA. Net Debt / EBITDA jumped on 47.5x from 22.4x to 70.0x in 2016. Debt decreased slightly on 1.5% while cash jumped on 16.9%.
Management team
The company's CEO David V Pathe is a founder and has spent 6 years at the company. Andrew Snowden is a Sherritt International Corp's CFO. Andrew Snowden has spent 1 year at the company.
Appendix 1: Peers in Diversified
Below you can find Sherritt International Corp benchmarking vs. other companies in Diversified 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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tellza Communications Inc ($TEL) | | 51.1% | 56.1% | 26.0% | |
| TWC Enterprises Ltd ($TWC) | | -0.7% | -0.3% | 6.7% | -4.2% |
| |
|---|
| Median (2 companies) | | 25.2% | 27.9% | 16.4% | -4.2% |
|---|
| Sherritt International Corp ($S) | | -5.6% | 1.6% | -26.3% | -21.9% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TWC Enterprises Ltd ($TWC) | 79.5% | 79.3% | 78.0% | 89.2% | |
| Tellza Communications Inc ($TEL) | | 5.5% | 3.8% | 3.0% | |
| |
|---|
| Median (2 companies) | 79.5% | 42.4% | 40.9% | 46.1% | |
|---|
| Sherritt International Corp ($S) | 45.3% | 30.5% | 30.2% | 5.3% | -0.4% |
Top companies by EBITDA margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TWC Enterprises Ltd ($TWC) | 29.6% | 29.3% | 26.5% | 27.9% | |
| Tellza Communications Inc ($TEL) | | 2.5% | 1.2% | 0.9% | |
| |
|---|
| Median (2 companies) | 29.6% | 15.9% | 13.9% | 14.4% | |
|---|
| Sherritt International Corp ($S) | 50.7% | 33.0% | 36.9% | 27.0% | 10.7% |
Top companies by CAPEX/Revenue, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TWC Enterprises Ltd ($TWC) | 11.0% | 7.3% | 5.6% | 5.3% | |
| Tellza Communications Inc ($TEL) | | 0.6% | 0.3% | 0.3% | |
| |
|---|
| Median (2 companies) | 11.0% | 3.9% | 3.0% | 2.8% | |
|---|
| Sherritt International Corp ($S) | 12.3% | 15.1% | 17.7% | 23.5% | 8.8% |
Top companies by ROIC, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tellza Communications Inc ($TEL) | | | 7.6% | 7.8% | |
| TWC Enterprises Ltd ($TWC) | 7.0% | 6.7% | 5.2% | 5.9% | |
| |
|---|
| Median (2 companies) | 7.0% | 6.7% | 6.4% | 6.9% | |
|---|
| Sherritt International Corp ($S) | 2.6% | 1.0% | 1.2% | -0.6% | -1.8% |
Top companies by Net Debt / EBITDA
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| TWC Enterprises Ltd ($TWC) | 5.5x | 5.5x | 6.3x | 5.5x | |
| Tellza Communications Inc ($TEL) | | -0.8x | -2.2x | -0.5x | |
| |
|---|
| Median (2 companies) | 5.5x | 2.4x | 2.0x | 2.5x | |
|---|
| Sherritt International Corp ($S) | 7.9x | 14.7x | 10.1x | 22.4x | 70.0x |
