First Majestic Silver Corp reports 59.4 pp EBITDA Margin growth from -20.3% to 39.1% in 2016 and 26.7% Revenue growth
22.02.2017 • About First Majestic Silver Corp (
$FR) • By InTwits
First Majestic Silver Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 39.1% in 2016, -20.3% in 2015, -12.6% in 2014, 26.5% in 2013, 53.6% in 2012
- First Majestic Silver Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 39.9%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 62.5 in 2016, 56.9 in 2015, 104 in 2014, 94.4 in 2013, 175 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
First Majestic Silver Corp ($FR) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 247.2 | 251.3 | 245.5 | 219.4 | 278.1 | 26.7% |
| Gross Profit | 167.4 | 92.3 | 90.6 | 83.8 | 128.8 | 53.7% |
| SG&A | 21.8 | 24.9 | 19.4 | 17.0 | 17.7 | 4.4% |
| EBITDA | 132.5 | 66.6 | -31.0 | -44.6 | 108.6 | |
| Net Income | 88.9 | -38.2 | -61.4 | -108.4 | 8.6 | |
Balance Sheet
|
|---|
| Cash | 111.6 | 54.8 | 40.3 | 51.0 | 129.0 | 152.9% |
| Short Term Debt | 15.5 | 33.9 | 37.8 | 44.5 | 18.5 | -58.5% |
| Long Term Debt | 14.2 | 20.3 | 15.5 | 7.4 | 33.7 | 357.6% |
Cash flow
|
|---|
| Capex | 175.1 | 94.4 | 104.3 | 56.9 | 62.5 | 9.7% |
Ratios
|
|---|
| Revenue growth | 0.7% | 1.7% | -2.3% | -10.6% | 26.7% | |
| EBITDA growth | -14.8% | -49.7% | -146.6% | 43.7% | -343.6% | |
| Gross Margin | 67.7% | 36.7% | 36.9% | 38.2% | 46.3% | 8.1% |
| EBITDA Margin | 53.6% | 26.5% | -12.6% | -20.3% | 39.1% | 59.4% |
| Net Income Margin | 36.0% | -15.2% | -25.0% | -49.4% | 3.1% | 52.5% |
| SG&A, % of revenue | 8.8% | 9.9% | 7.9% | 7.7% | 6.4% | -1.4% |
| CAPEX, % of revenue | 70.9% | 37.6% | 42.5% | 25.9% | 22.5% | -3.5% |
| ROIC | 19.1% | 3.1% | -12.7% | -17.6% | 3.9% | 21.5% |
| ROE | 18.8% | -6.6% | -11.3% | -20.4% | 1.5% | 21.8% |
| Net Debt/EBITDA | -0.6x | -0.0x | | | -0.7x | -0.7x |
First Majestic Silver Corp ($FR) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 67 | 66 | 79 | 66 | 21.9% | 21.9% | 77.6% | 0.2% |
| EBITDA | 26 | 25 | 35 | 22 | 47.1% | 59.8% | 220.2% | |
| Net Income | -7 | 6 | 8 | 2 | | | | |
Balance Sheet
|
|---|
| Cash | 62 | 108 | 122 | 129 | 175.8% | 186.7% | 369.2% | 152.9% |
| Short Term Debt | 19 | 21 | 20 | 18 | -51.6% | -40.8% | -35.9% | -58.5% |
| Long Term Debt | 47 | 42 | 38 | 34 | 248.5% | 264.6% | 308.7% | 357.6% |
Ratios
|
|---|
| Gross Margin | 44.0% | 45.1% | 51.6% | 43.6% | 3.2% | 6.6% | 19.9% | 3.4% |
| EBITDA Margin | 39.3% | 38.6% | 43.7% | 33.7% | 6.7% | 9.1% | 19.5% | 169.3% |
| Net Income Margin | -11.2% | 9.2% | 10.2% | 2.7% | -9.2% | 14.0% | 14.2% | 158.7% |
Revenue and profitability
The company's Revenue jumped on 26.7%. Revenue growth showed slow down in 16Q4 - it was 0.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 33.9 pp from -36.7% to -2.8% in 2016.
Gross Margin increased on 8.1 pp from 38.2% to 46.3% in 2016. SG&A as a % of Revenue decreased slightly on 1.4 pp from 7.7% to 6.4% in 2016.
Net Income marign jumped on 52.5 pp from -49.4% to 3.1% in 2016.
Capital expenditures (CAPEX) and working capital investments
First Majestic Silver Corp's CAPEX/Revenue was 22.5% in 2016. CAPEX/Revenue dropped on 15.1 pp from 37.6% in 2013 to 22.5% in 2016. For the last three years the average CAPEX/Revenue was 30.3%.To secure this fast growth the company invested a large share of EBITDA (57.5%) to CAPEX.
Return on investment
The company operates at low ROIC (3.90%) and ROE (1.47%). ROIC jumped on 21.5 pp from -17.6% to 3.9% in 2016. ROE surged on 21.8 pp from -20.4% to 1.5% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.7x and Debt / EBITDA is 0.5x. Net Debt / EBITDA dropped0.7x from to -0.7x in 2016. Debt increased slightly on 0.61% while cash surged on 153%.
Management team
Keith Neumeyer is a the company's CEO. Keith Neumeyer is a founder and has spent 16 years at the company. The company's CFO Raymond L Polman has spent 11 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide First Majestic Silver Corp 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 2.0% | -1.7% | 5.7% |
|---|
| First Majestic Silver Corp ($FR) | | 1.7% | -2.3% | -10.6% | 26.7% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 18.2% | 16.4% | 24.7% |
|---|
| First Majestic Silver Corp ($FR) | 67.7% | 36.7% | 36.9% | 38.2% | 46.3% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 17.4% | 10.8% | 10.7% | 7.3% | 23.0% |
|---|
| First Majestic Silver Corp ($FR) | 53.6% | 26.5% | -12.6% | -20.3% | 39.1% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 27.4% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| First Majestic Silver Corp ($FR) | 70.9% | 37.6% | 42.5% | 25.9% | 22.5% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.6% | -3.6% | 4.8% |
|---|
| First Majestic Silver Corp ($FR) | 19.1% | 3.1% | -12.7% | -17.6% | 3.9% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.9x | 1.1x | 1.6x | 0.7x |
|---|
| First Majestic Silver Corp ($FR) | -0.6x | -0.0x | | | -0.7x |
