Nevsun Resources Ltd Net Income dropped on 50.2% in 2016 while EBITDA Margin jumped on 11.6 pp from 38.6% to 50.2%
23.02.2017 • About Nevsun Resources Ltd (
$NSU) • By InTwits
Nevsun Resources Ltd reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Nevsun Resources Ltd is a company in decline: 2016 revenue growth was -35.4%, 5 years revenue CAGR was -15.9%
- Nevsun Resources Ltd has high CAPEX intensity: 5 year average CAPEX/Revenue was 30.7%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 42.9 in 2016, 85.4 in 2015, 55.1 in 2014, 133 in 2013, 86.5 in 2012
- The company has business model with low profitability: ROIC is at 7.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Nevsun Resources Ltd ($NSU) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 566.0 | 155.7 | 555.0 | 356.9 | 230.7 | -35.4% |
| Gross Profit | 509.1 | 147.6 | 529.9 | 293.6 | 183.9 | -37.4% |
| EBITDA | 434.7 | 84.8 | 335.5 | 137.8 | 115.8 | -16.0% |
| Net Income | 145.3 | 12.9 | 93.4 | 22.8 | 11.4 | -50.2% |
Balance Sheet
|
|---|
| Cash | 396.4 | 302.7 | 442.4 | 434.3 | 199.3 | -54.1% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 86.5 | 133.4 | 55.1 | 85.4 | 42.9 | -49.8% |
Ratios
|
|---|
| Revenue growth | 3.3% | -72.5% | 256.5% | -35.7% | -35.4% | |
| EBITDA growth | -2.0% | -80.5% | 295.4% | -58.9% | -16.0% | |
| Gross Margin | 89.9% | 94.8% | 95.5% | 82.3% | 79.7% | -2.5% |
| EBITDA Margin | 76.8% | 54.5% | 60.4% | 38.6% | 50.2% | 11.6% |
| Net Income Margin | 25.7% | 8.3% | 16.8% | 6.4% | 4.9% | -1.5% |
| CAPEX, % of revenue | 15.3% | 85.7% | 9.9% | 23.9% | 18.6% | -5.3% |
| ROIC | 52.2% | 8.8% | 35.0% | 10.4% | 7.7% | -2.6% |
| ROE | 26.0% | 2.1% | 14.5% | 3.4% | 1.4% | -2.0% |
| Net Debt/EBITDA | -0.9x | -3.6x | -1.3x | -3.2x | -1.7x | 1.4x |
Nevsun Resources Ltd ($NSU) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 92 | 79 | 23 | 36 | -21.1% | -24.1% | -67.3% | -44.7% |
| EBITDA | 47 | 47 | 18 | 3 | -14.1% | -6.6% | 15.5% | -80.5% |
| Net Income | 8 | 10 | 2 | -7 | -40.4% | 1.7% | 14.8% | |
Balance Sheet
|
|---|
| Cash | 438 | 240 | 218 | 199 | -1.0% | -46.8% | -49.9% | -54.1% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 80.5% | 80.2% | 87.0% | 72.2% | -4.9% | -3.7% | 7.3% | -4.7% |
| EBITDA Margin | 51.0% | 59.7% | 79.7% | 8.9% | 4.1% | 11.2% | 57.1% | -16.4% |
| Net Income Margin | 8.1% | 12.1% | 7.3% | -20.5% | -2.6% | 3.1% | 5.2% | -19.5% |
Revenue and profitability
Nevsun Resources Ltd's Revenue dropped on 35.4%. Revenue decline showed acceleration in 16Q4 - it was 44.7% YoY. Revenue decline happened at the same time with EBITDA margin expansion. EBITDA Margin jumped on 11.6 pp from 38.6% to 50.2% in 2016.
Gross Margin decreased on 2.5 pp from 82.3% to 79.7% in 2016.
Net Income marign decreased slightly on 1.5 pp from 6.4% to 4.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 18.6% in 2016. Nevsun Resources Ltd's CAPEX/Revenue dropped on 67.1 pp from 85.7% in 2013 to 18.6% in 2016. For the last three years the average CAPEX/Revenue was 17.5%.
Return on investment
The company operates at low ROIC (7.72%) and ROE (1.42%). ROIC decreased on 2.6 pp from 10.4% to 7.7% in 2016. ROE decreased slightly on 2.0 pp from 3.4% to 1.4% in 2016.
Leverage (Debt)
The company has no debt. Cash dropped on 54.1%.
Management team
Clifford T Davis "Cliff" is a the company's CEO. Clifford T Davis "Cliff" is a founder and has spent 10 years at the company. Thomas S Whelan "Tom" is a The company's CFO. Thomas S Whelan "Tom" has spent 4 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide Nevsun Resources Ltd 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -2.5% | 1.8% | -1.7% | 6.8% |
|---|
| Nevsun Resources Ltd ($NSU) | | -72.5% | 256.5% | -35.7% | -35.4% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| 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% |
| Banro Corp ($BAA) | 48.1% | 39.8% | 44.9% | 52.2% | |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 18.2% | 16.4% | 24.7% |
|---|
| Nevsun Resources Ltd ($NSU) | 89.9% | 94.8% | 95.5% | 82.3% | 79.7% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 17.4% | 10.8% | 10.3% | 6.7% | 23.0% |
|---|
| Nevsun Resources Ltd ($NSU) | 76.8% | 54.5% | 60.4% | 38.6% | 50.2% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 28.1% | 26.5% | 17.8% | 16.6% | 17.5% |
|---|
| Nevsun Resources Ltd ($NSU) | 15.3% | 85.7% | 9.9% | 23.9% | 18.6% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.2% | -3.8% | 4.0% |
|---|
| Nevsun Resources Ltd ($NSU) | 52.2% | 8.8% | 35.0% | 10.4% | 7.7% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.9x | 1.2x | 1.6x | 0.7x |
|---|
| Nevsun Resources Ltd ($NSU) | -0.9x | -3.6x | -1.3x | -3.2x | -1.7x |
