Centerra Gold Inc reports 264% Net Income growth and 21.9% Revenue growth
23.02.2017 • About Centerra Gold Inc (
$CG) • By InTwits
Centerra Gold Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 48.9% in 2016, 40.9% in 2015, 32.6% in 2014, 51.8% in 2013, 3.7% in 2012
- Centerra Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 39.5%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 805 in 2016, 1,811 in 2015, 140 in 2014, 2,026 in 2013, 641 in 2012
- The company has business model with low profitability: ROIC is at 8.8%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.9x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Centerra Gold Inc ($CG) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 660.7 | 944.4 | 763.3 | 624.0 | 760.8 | 21.9% |
| Gross Profit | 252.7 | 385.1 | 258.4 | 233.8 | 345.9 | 47.9% |
| SG&A | 48.1 | 54.4 | 59.9 | 54.8 | 42.3 | -22.9% |
| EBITDA | 24.5 | 488.8 | 248.9 | 255.3 | 372.2 | 45.8% |
| Net Income | -143.7 | 157.7 | -44.1 | 41.6 | 151.5 | 264.0% |
Balance Sheet
|
|---|
| Cash | 334.1 | 343.1 | 300.5 | 360.6 | 160.0 | -55.6% |
| Short Term Debt | 74.6 | 75.6 | 76.0 | 76.0 | 72.3 | -4.9% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 422.8 | |
Cash flow
|
|---|
| Capex | 405.1 | 308.7 | 276.3 | 243.8 | 216.6 | -11.1% |
Ratios
|
|---|
| Revenue growth | -35.2% | 42.9% | -19.2% | -18.3% | 21.9% | |
| EBITDA growth | -94.9% | 1,892.1% | -49.1% | 2.6% | 45.8% | |
| Gross Margin | 38.2% | 40.8% | 33.8% | 37.5% | 45.5% | 8.0% |
| EBITDA Margin | 3.7% | 51.8% | 32.6% | 40.9% | 48.9% | 8.0% |
| Net Income Margin | -21.8% | 16.7% | -5.8% | 6.7% | 19.9% | 13.2% |
| SG&A, % of revenue | 7.3% | 5.8% | 7.9% | 8.8% | 5.6% | -3.2% |
| CAPEX, % of revenue | 61.3% | 32.7% | 36.2% | 39.1% | 28.5% | -10.6% |
| ROIC | -8.6% | 11.9% | -2.3% | 3.4% | 8.8% | 5.4% |
| ROE | -9.9% | 11.1% | -3.1% | 3.0% | 9.3% | 6.4% |
| Net Debt/EBITDA | -10.6x | -0.5x | -0.9x | -1.1x | 0.9x | 2.0x |
Centerra Gold Inc ($CG) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 73 | 162 | 220 | 306 | -65.6% | 10.1% | 89.4% | 106.1% |
| EBITDA | 39 | 57 | 136 | 140 | -66.6% | -13.3% | 406.8% | 217.3% |
| Net Income | 18 | 3 | 67 | 64 | -55.6% | -86.7% | | |
Balance Sheet
|
|---|
| Cash | 340 | 245 | 454 | 160 | 27.6% | -2.0% | 52.5% | -55.6% |
| Short Term Debt | 74 | 98 | 98 | 72 | -2.4% | 29.1% | 29.0% | -4.9% |
| Long Term Debt | 0 | 0 | 0 | 423 | | | | |
Ratios
|
|---|
| Gross Margin | 57.1% | 27.4% | 56.2% | 44.5% | 12.0% | -16.7% | 22.6% | 21.5% |
| EBITDA Margin | 53.6% | 35.4% | 61.7% | 45.7% | -1.7% | -9.6% | 38.7% | 16.0% |
| Net Income Margin | 24.7% | 1.8% | 30.4% | 20.8% | 5.5% | -13.1% | 46.0% | 22.8% |
Revenue and profitability
The company's Revenue surged on 21.9%. Revenue growth showed acceleration in 16Q4 - it increased 106.1% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 8.0 pp from 40.9% to 48.9% in 2016.
Gross Margin increased on 8.0 pp from 37.5% to 45.5% in 2016. SG&A as a % of Revenue decreased on 3.2 pp from 8.8% to 5.6% in 2016.
Net Income marign surged on 13.2 pp from 6.7% to 19.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 28.5% in 2016. CAPEX/Revenue decreased on 4.2 pp from 32.7% in 2013 to 28.5% in 2016. It's average level of CAPEX/Revenue for the last three years was 34.6%.Centerra Gold Inc invested a big chunk of EBITDA (58.2%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (8.75%) and ROE (9.34%). ROIC increased on 5.4 pp from 3.4% to 8.8% in 2016. ROE increased on 6.4 pp from 3.0% to 9.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.9x and Debt / EBITDA is 1.3x. Net Debt / EBITDA jumped on 2.0x from -1.1x to 0.9x in 2016. Debt jumped on 551% while cash dropped on 55.6%.
Management team
Centerra Gold Inc's CEO is Scott Graeme Perry. Scott Graeme Perry is a founder and has 3 years tenure at the company. Darren J Millman is a The company's CFO. Darren J Millman has spent 2 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide Centerra Gold 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 2.0% | -1.7% | 5.7% |
|---|
| Centerra Gold Inc ($CG) | | 42.9% | -19.2% | -18.3% | 21.9% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 18.2% | 16.4% | 24.7% |
|---|
| Centerra Gold Inc ($CG) | 38.2% | 40.8% | 33.8% | 37.5% | 45.5% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 18.6% | 10.8% | 10.3% | 6.7% | 23.0% |
|---|
| Centerra Gold Inc ($CG) | 3.7% | 51.8% | 32.6% | 40.9% | 48.9% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 27.4% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| Centerra Gold Inc ($CG) | 61.3% | 32.7% | 36.2% | 39.1% | 28.5% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.6% | -3.8% | 4.0% |
|---|
| Centerra Gold Inc ($CG) | -8.6% | 11.9% | -2.3% | 3.4% | 8.8% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.9x | 1.2x | 1.6x | 0.6x |
|---|
| Centerra Gold Inc ($CG) | -10.6x | -0.5x | -0.9x | -1.1x | 0.9x |
