Endeavour Silver Corp reports 70.8 pp EBITDA Margin growth from -49.4% to 21.4% in 2016 while 14.6% Revenue decline
02.03.2017 • About Endeavour Silver Corp (
$EDR) • By InTwits
Endeavour Silver Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Endeavour Silver Corp spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2012-2016 is 0.0%. Average EBITDA Margin for the same period was -5.8%0
- Endeavour Silver Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 23.4%. At the same time it's in pair with industry average of 24.1%.
- CAPEX is quite volatile: 19.6 in 2016, 35.7 in 2015, 41.7 in 2014, 88.5 in 2013, 66.2 in 2012
- The company has highly profitable business model: ROIC is at 15.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Endeavour Silver Corp ($EDR) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 208.1 | 276.8 | 196.9 | 183.6 | 156.8 | -14.6% |
| Gross Profit | 116.3 | 64.6 | 17.3 | 18.4 | 40.9 | 121.9% |
| SG&A | 13.1 | 11.6 | 9.7 | 7.7 | 9.3 | 20.2% |
| EBITDA | 83.6 | -49.0 | -36.8 | -90.7 | 33.5 | |
| Net Income | 42.1 | -89.5 | -74.5 | -149.9 | 3.9 | |
Balance Sheet
|
|---|
| Cash | 18.6 | 35.0 | 31.0 | 20.4 | 72.3 | 254.3% |
| Short Term Debt | 9.0 | 33.0 | 29.0 | 23.2 | 9.0 | -61.2% |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 66.2 | 88.5 | 41.7 | 35.7 | 19.6 | -44.9% |
Ratios
|
|---|
| Revenue growth | 62.6% | 33.0% | -28.9% | -6.8% | -14.6% | |
| EBITDA growth | 29.0% | -158.6% | -24.8% | 146.2% | -136.9% | |
| Gross Margin | 55.9% | 23.4% | 8.8% | 10.0% | 26.1% | 16.1% |
| EBITDA Margin | 40.2% | -17.7% | -18.7% | -49.4% | 21.4% | 70.8% |
| Net Income Margin | 20.2% | -32.3% | -37.8% | -81.7% | 2.5% | 84.2% |
| SG&A, % of revenue | 6.3% | 4.2% | 4.9% | 4.2% | 5.9% | 1.7% |
| CAPEX, % of revenue | 31.8% | 32.0% | 21.2% | 19.4% | 12.5% | -6.9% |
| ROIC | 16.6% | -26.9% | -31.7% | -81.3% | 15.9% | 97.2% |
| ROE | 15.6% | -30.0% | -33.2% | -123.3% | 4.2% | 127.6% |
| Net Debt/EBITDA | -0.1x | | | | -1.9x | -1.9x |
Endeavour Silver Corp ($EDR) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 42 | 45 | 42 | 29 | -18.7% | -6.7% | -1.6% | -31.8% |
| EBITDA | 8 | 12 | 13 | 0 | -50.4% | 7.1% | 43.5% | |
| Net Income | 2 | 2 | 6 | -5 | 34.8% | | | |
Balance Sheet
|
|---|
| Cash | 20 | 57 | 83 | 72 | -22.5% | 78.9% | 264.9% | 254.3% |
| Short Term Debt | 20 | 10 | 10 | 9 | -31.2% | -59.6% | -55.2% | -61.2% |
| Long Term Debt | 0 | 4 | 2 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 15.8% | 30.1% | 36.3% | 19.9% | -2.6% | 14.9% | 30.4% | 21.6% |
| EBITDA Margin | 19.9% | 27.0% | 30.6% | 1.1% | -12.7% | 3.5% | 9.6% | 305.0% |
| Net Income Margin | 4.4% | 3.8% | 13.3% | -18.2% | 1.7% | 5.9% | 46.2% | 306.3% |
Revenue and profitability
The company's Revenue dropped on 14.6%. Revenue decline showed acceleration in 16Q4 - it was 31.8% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin surged on 70.8 pp from -49.4% to 21.4% in 2016.
Gross Margin surged on 16.1 pp from 10.0% to 26.1% in 2016. SG&A as a % of Revenue increased slightly on 1.7 pp from 4.2% to 5.9% in 2016.
Net Income marign jumped on 84.2 pp from -81.7% to 2.5% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 12.5% in 2016. The company's CAPEX/Revenue dropped on 19.5 pp from 32.0% in 2013 to 12.5% in 2016. For the last three years the average CAPEX/Revenue was 17.7%.The company invested a big chunk of EBITDA (58.6%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at good ROIC (15.92%) while ROE is low (4.25%). ROIC jumped on 97.2 pp from -81.3% to 15.9% in 2016. ROE surged on 128 pp from -123% to 4.2% in 2016.
Leverage (Debt)
Debt level is -1.9x Net Debt / EBITDA and 0.3x Debt / EBITDA. Net Debt / EBITDA dropped1.9x from to -1.9x in 2016. Debt dropped on 61.2% while cash jumped on 254%.
Management team
Endeavour Silver Corp's CEO is Bradford James Cooke. Bradford James Cooke is a founder and has 16 years tenure at the company. Endeavour Silver Corp's CFO Daniel Dickson "Dan" has spent 10 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide Endeavour 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 2.0% | -1.7% | 6.8% |
|---|
| Endeavour Silver Corp ($EDR) | | 33.0% | -28.9% | -6.8% | -14.6% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 19.1% | 16.9% | 24.7% |
|---|
| Endeavour Silver Corp ($EDR) | 55.9% | 23.4% | 8.8% | 10.0% | 26.1% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 17.4% | 11.5% | 10.7% | 7.3% | 24.5% |
|---|
| Endeavour Silver Corp ($EDR) | 40.2% | -17.7% | -18.7% | -49.4% | 21.4% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 27.4% | 26.5% | 17.5% | 16.6% | 18.3% |
|---|
| Endeavour Silver Corp ($EDR) | 31.8% | 32.0% | 21.2% | 19.4% | 12.5% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 1.3% | 1.6% | -3.6% | 4.0% |
|---|
| Endeavour Silver Corp ($EDR) | 16.6% | -26.9% | -31.7% | -81.3% | 15.9% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.8x | 1.1x | 1.6x | 0.7x |
|---|
| Endeavour Silver Corp ($EDR) | -0.1x | | | | -1.9x |
