West Fraser Timber Co Ltd Net Income surged on 213% in 2016 and EBITDA Margin increased on 4.5 pp from 10.7% to 15.3%
16.02.2017 • About West Fraser Timber Co Ltd (
$WFT) • By InTwits
West Fraser Timber Co Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- West Fraser Timber Co Ltd is a growth stock: 2016 revenue growth was 8.5%, 5 year revenue CAGR was 10.0% at 2016 ROIC 16.7%
- West Fraser Timber Co Ltd has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.4%. At the same time it's a lot of higher than industry average of 33.0%.
- CAPEX is quite volatile: 273 in 2016, 220 in 2015, 410 in 2014, 338 in 2013, 159 in 2012
- The company has highly profitable business model: ROIC is at 16.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
West Fraser Timber Co Ltd ($WFT) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 3,000 | 3,474 | 3,856 | 4,100 | 4,450 | 8.5% |
| Gross Profit | 451 | 714 | 770 | 599 | 850 | 41.9% |
| SG&A | 115 | 131 | 149 | 153 | 176 | 15.0% |
| EBITDA | 275 | 505 | 576 | 440 | 679 | 54.3% |
| Net Income | 77 | 349 | 259 | 104 | 326 | 213.5% |
Balance Sheet
|
|---|
| Cash | 102 | 162 | 21 | 13 | 50 | 284.6% |
| Short Term Debt | 0 | 319 | 139 | 207 | 15 | -92.8% |
| Long Term Debt | 300 | 9 | 354 | 423 | 413 | -2.4% |
Cash flow
|
|---|
| Capex | 159 | 338 | 410 | 220 | 273 | 24.1% |
Ratios
|
|---|
| Revenue growth | 8.6% | 15.8% | 11.0% | 6.3% | 8.5% | |
| EBITDA growth | 21.7% | 83.6% | 14.1% | -23.6% | 54.3% | |
| Gross Margin | 15.0% | 20.6% | 20.0% | 14.6% | 19.1% | 4.5% |
| EBITDA Margin | 9.2% | 14.5% | 14.9% | 10.7% | 15.3% | 4.5% |
| Net Income Margin | 2.6% | 10.0% | 6.7% | 2.5% | 7.3% | 4.8% |
| SG&A, % of revenue | 3.8% | 3.8% | 3.9% | 3.7% | 4.0% | 0.2% |
| CAPEX, % of revenue | 5.3% | 9.7% | 10.6% | 5.4% | 6.1% | 0.8% |
| ROIC | 6.3% | 15.9% | 16.2% | 9.0% | 16.7% | 7.7% |
| ROE | 5.2% | 20.3% | 13.0% | 5.0% | 14.9% | 9.9% |
| Net Debt/EBITDA | 0.7x | 0.3x | 0.8x | 1.4x | 0.6x | -0.8x |
West Fraser Timber Co Ltd ($WFT) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,077 | 1,111 | 1,155 | 1,107 | 6.2% | 8.0% | 10.6% | 9.3% |
| EBITDA | 128 | 168 | 206 | 177 | -25.6% | 166.7% | 50.4% | 160.3% |
| Net Income | 42 | 98 | 107 | 79 | -14.3% | 600.0% | 91.1% | |
Balance Sheet
|
|---|
| Cash | 19 | 27 | 52 | 50 | 58.3% | -10.0% | 147.6% | 284.6% |
| Short Term Debt | 336 | 180 | 82 | 15 | 110.0% | 350.0% | 39.0% | -92.8% |
| Long Term Debt | 395 | 395 | 403 | 413 | 2.3% | 3.7% | -1.0% | -2.4% |
Ratios
|
|---|
| Gross Margin | 15.7% | 16.2% | 22.3% | 22.0% | -5.3% | 4.4% | 10.5% | 8.0% |
| EBITDA Margin | 11.9% | 15.1% | 17.8% | 16.0% | -5.1% | 9.0% | 4.7% | 9.3% |
| Net Income Margin | 3.9% | 8.8% | 9.3% | 7.1% | -0.9% | 7.5% | 3.9% | 8.6% |
Revenue and profitability
The company's Revenue increased on 8.5%. Revenue growth showed acceleration in 16Q4 - it increased 9.3% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 9.0 pp from 38.7% to 47.7% in 2016.
Gross Margin increased on 4.5 pp from 14.6% to 19.1% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased on 4.8 pp from 2.5% to 7.3% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 the company had CAPEX/Revenue of 6.1%. The company showed decline in CAPEX/Revenue of 3.6 pp from 9.7% in 2013 to 6.1% in 2016. It's average CAPEX/Revenue for the last three years was 7.4%.
Return on investment
The company operates at good ROIC (16.74%) and ROE (14.86%). ROIC increased on 7.7 pp from 9.0% to 16.7% in 2016. ROE increased on 9.9 pp from 5.0% to 14.9% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 0.6x. Net Debt / EBITDA dropped on 0.8x from 1.4x to 0.6x in 2016. Debt dropped on 32.1% while cash surged on 285%.
Management team
Edward R Seraphim "Ted" is a West Fraser Timber Co Ltd's CEO. Edward R Seraphim "Ted" is a founder and has spent 5 years at the company. Larry S Hughes is a The company's CFO. Larry S Hughes has spent 7 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find West Fraser Timber Co Ltd 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% | 1.8% | -2.9% | 5.7% |
|---|
| West Fraser Timber Co Ltd ($WFT) | | 15.8% | 11.0% | 6.3% | 8.5% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Nevsun Resources Ltd ($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% | 18.2% | 16.9% | 24.8% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 15.0% | 20.6% | 20.0% | 14.6% | 19.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($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% | 10.8% | 10.3% | 6.7% | 24.5% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 9.2% | 14.5% | 14.9% | 10.7% | 15.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Largo Resources Ltd ($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) | 28.1% | 27.4% | 17.8% | 17.2% | 18.3% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 5.3% | 9.7% | 10.6% | 5.4% | 6.1% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucara Diamond Corp ($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% | -3.8% | 4.0% |
|---|
| West Fraser Timber Co Ltd ($WFT) | 6.3% | 15.9% | 16.2% | 9.0% | 16.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canam Group Inc ($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 | 0.9x | 1.2x | 1.6x | 0.7x |
|---|
| West Fraser Timber Co Ltd ($WFT) | 0.7x | 0.3x | 0.8x | 1.4x | 0.6x |
