Western Forest Products Inc EBITDA surged on 51.9% in 2016 and Revenue increased on 9.7%
16.02.2017 • About Western Forest Products Inc (
$WEF) • By InTwits
Western Forest Products Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Western Forest Products Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 5.0%. At the same time it's in pair with industry average of 3.1%.
- CAPEX is quite volatile: 337 in 2016, 507 in 2015, 836 in 2014, 933 in 2013, 1,051 in 2012
- The company has highly profitable business model: ROIC is at 25.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Western Forest Products Inc ($WEF) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 925 | 978 | 1,037 | 1,082 | 1,187 | 9.7% |
| Gross Profit | 53 | 130 | 110 | 105 | 138 | 30.9% |
| SG&A | 29 | 33 | 32 | 22 | 27 | 23.9% |
| EBITDA | 62 | 134 | 101 | 109 | 165 | 51.9% |
| Net Income | 28 | 125 | 68 | 74 | 94 | 27.8% |
Balance Sheet
|
|---|
| Cash | 19 | 6 | 2 | 9 | 19 | 102.1% |
| Short Term Debt | 0 | 0 | 7 | 0 | 0 | |
| Long Term Debt | 34 | 89 | 73 | 63 | 34 | -45.6% |
Cash flow
|
|---|
| Capex | 32 | 59 | 50 | 62 | 56 | -9.7% |
Ratios
|
|---|
| Revenue growth | 8.4% | 5.6% | 6.1% | 4.3% | 9.7% | |
| EBITDA growth | 10.8% | 118.4% | -25.2% | 8.0% | 51.9% | |
| Gross Margin | 5.8% | 13.3% | 10.6% | 9.7% | 11.6% | 1.9% |
| EBITDA Margin | 6.6% | 13.7% | 9.7% | 10.0% | 13.9% | 3.9% |
| Net Income Margin | 3.0% | 12.8% | 6.6% | 6.8% | 7.9% | 1.1% |
| SG&A, % of revenue | 3.1% | 3.4% | 3.1% | 2.1% | 2.3% | 0.3% |
| CAPEX, % of revenue | 3.5% | 6.0% | 4.8% | 5.7% | 4.7% | -1.0% |
| ROIC | 9.0% | 25.1% | 15.7% | 16.4% | 25.1% | 8.7% |
| ROE | 8.1% | 33.9% | 17.3% | 17.1% | 19.3% | 2.2% |
| Net Debt/EBITDA | 0.2x | 0.6x | 0.8x | 0.5x | 0.1x | -0.4x |
Western Forest Products Inc ($WEF) key quoterly financial indicators
| mln. CAD | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 270 | 302 | 323 | 293 | 8.5% | 4.4% | 15.9% | 10.3% |
| EBITDA | 33 | 42 | 33 | 58 | 18.4% | 47.7% | 28.9% | 112.2% |
| Net Income | 17 | 24 | 17 | 36 | -37.3% | 24.6% | -1.8% | 266.7% |
Balance Sheet
|
|---|
| Cash | 10 | 7 | 19 | 19 | 73.3% | 51.0% | 24.8% | 102.1% |
| Short Term Debt | 0 | 13 | 0 | 0 | | 428.0% | | |
| Long Term Debt | 58 | 58 | 58 | 34 | -20.2% | -20.2% | -20.2% | -45.6% |
Ratios
|
|---|
| Gross Margin | 12.6% | 13.9% | 10.4% | 9.6% | 1.9% | 4.1% | 0.5% | 1.1% |
| EBITDA Margin | 12.2% | 13.8% | 10.2% | 19.6% | 1.0% | 4.0% | 1.0% | 9.4% |
| Net Income Margin | 6.4% | 7.9% | 5.2% | 12.4% | -4.7% | 1.3% | -0.9% | 8.7% |
Revenue and profitability
The company's Revenue increased on 9.7%. Revenue growth showed acceleration in 16Q4 - it increased 10.3% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 140 pp from -67.4% to 72.5% in 2016.
Gross Margin increased slightly on 1.9 pp from 9.7% to 11.6% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign increased slightly on 1.1 pp from 6.8% to 7.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
Western Forest Products Inc's CAPEX/Revenue was 4.7% in 2016. The company's CAPEX/Revenue decreased slightly on 1.3 pp from 6.0% in 2013 to 4.7% in 2016. It's average CAPEX/Revenue for the last three years was 5.1%.
Return on investment
The company operates at high and attractive ROIC (25.08%) while ROE is a bit lower (19.26%). ROIC increased on 8.7 pp from 16.4% to 25.1% in 2016. ROE increased on 2.2 pp from 17.1% to 19.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.1x and Debt / EBITDA is 0.2x. Net Debt / EBITDA dropped on 0.4x from 0.5x to 0.1x in 2016. Debt dropped on 45.6% while cash jumped on 102%.
Management team
Donald Demens "Don" is a the company's CEO. Donald Demens "Don" is a founder and has spent 5 years at the company. The company's CFO Stephen Williams "Steve" has spent 4 years at the company.
Appendix 1: Peers in Basic Materials
Below you can find Western Forest Products 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% | 1.8% | -2.9% | 5.7% |
|---|
| Western Forest Products Inc ($WEF) | | 5.6% | 6.1% | 4.3% | 9.7% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Nevsun Resources Ltd ($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% |
|---|
| Western Forest Products Inc ($WEF) | 5.8% | 13.3% | 10.6% | 9.7% | 11.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($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% | 10.7% | 6.7% | 24.5% |
|---|
| Western Forest Products Inc ($WEF) | 6.6% | 13.7% | 9.7% | 10.0% | 13.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Largo Resources Ltd ($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% |
|---|
| Western Forest Products Inc ($WEF) | 3.5% | 6.0% | 4.8% | 5.7% | 4.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Lucara Diamond Corp ($LUC) | -2.9% | 41.3% | 54.7% | 39.6% | 58.5% |
| 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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| West Fraser Timber Co Ltd ($WFT) | 6.3% | 15.9% | 16.2% | 9.0% | 16.7% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.2% | -3.8% | 4.0% |
|---|
| Western Forest Products Inc ($WEF) | 9.0% | 25.1% | 15.7% | 16.4% | 25.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Canam Group Inc ($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 |
|---|
| Western Forest Products Inc ($WEF) | 0.2x | 0.6x | 0.8x | 0.5x | 0.1x |
