Primero Mining Corp reports 32.1% CAPEX decline and 24.8% Revenue decline
15.03.2017 • About Primero Mining Corp (
$P) • By InTwits
Primero Mining Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Primero Mining Corp doesn't have a profitable business model yet: 2016 ROIC is -36.3%
- The company operates at negative EBITDA Margin: -88.6%
- Primero Mining Corp motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2012-2016 was 0.0%. On average EBITDA Margin was -14.5% for the sames years0
- Primero Mining Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 32.7%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 67.7 in 2016, 99.7 in 2015, 112 in 2014, 71.5 in 2013, 39.7 in 2012
- The company has unprofitable business model: ROIC is at -36.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Primero Mining Corp ($P) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 182.9 | 200.3 | 274.6 | 291.3 | 219.2 | -24.8% |
| Gross Profit | 79.4 | 76.0 | 52.7 | 50.5 | 0.6 | -98.9% |
| SG&A | 30.0 | 24.5 | 36.8 | 20.0 | 14.8 | -26.2% |
| EBITDA | 77.4 | 87.3 | -132.3 | -7.9 | -194.1 | |
| Net Income | 49.6 | -4.3 | -224.4 | -106.9 | -234.4 | |
Balance Sheet
|
|---|
| Cash | 139.2 | 110.7 | 27.4 | 45.6 | 19.9 | -56.4% |
| Short Term Debt | 12.8 | 5.0 | 5.6 | 52.4 | 50.8 | -3.0% |
| Long Term Debt | 27.2 | 22.2 | 89.8 | 62.7 | 52.9 | -15.7% |
Cash flow
|
|---|
| Capex | 39.7 | 71.5 | 112.3 | 99.7 | 67.7 | -32.1% |
Ratios
|
|---|
| Revenue growth | 16.9% | 9.5% | 37.1% | 6.1% | -24.8% | |
| EBITDA growth | 6.3% | 12.8% | -251.4% | -94.0% | 2,366.4% | |
| Gross Margin | 43.4% | 37.9% | 19.2% | 17.3% | 0.3% | -17.1% |
| EBITDA Margin | 42.3% | 43.6% | -48.2% | -2.7% | -88.6% | -85.8% |
| Net Income Margin | 27.1% | -2.1% | -81.7% | -36.7% | -107.0% | -70.3% |
| SG&A, % of revenue | 16.4% | 12.2% | 13.4% | 6.9% | 6.8% | -0.1% |
| CAPEX, % of revenue | 21.7% | 35.7% | 40.9% | 34.2% | 30.9% | -3.4% |
| ROIC | 8.4% | 7.7% | -24.0% | -9.9% | -36.3% | -26.5% |
| ROE | 9.4% | -0.7% | -31.8% | -15.3% | -42.2% | -26.9% |
| Net Debt/EBITDA | -1.3x | -1.0x | | | | 0.0x |
Primero Mining Corp ($P) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 51 | 59 | 57 | 52 | -31.1% | -11.8% | -28.0% | -26.9% |
| EBITDA | 4 | 12 | 8 | -218 | -80.4% | -47.4% | -75.7% | |
| Net Income | -13 | -19 | -12 | -190 | -467.5% | | | |
Balance Sheet
|
|---|
| Cash | 22 | 54 | 31 | 20 | -61.7% | 36.8% | -27.7% | -56.4% |
| Short Term Debt | 4 | 53 | 52 | 51 | -91.7% | 1.3% | -0.6% | -3.0% |
| Long Term Debt | 111 | 64 | 62 | 53 | 56.6% | -12.6% | -1.8% | -15.7% |
Ratios
|
|---|
| Gross Margin | -11.5% | 34.3% | -0.1% | 3.5% | -27.1% | -11.6% | -22.6% | -10.7% |
| EBITDA Margin | 8.7% | 20.4% | 13.2% | -418.0% | -21.9% | -13.8% | -25.8% | -300.0% |
| Net Income Margin | -26.1% | -32.7% | -20.6% | -364.3% | -30.9% | -22.7% | -13.8% | -226.5% |
Revenue and profitability
The company's Revenue dropped on 24.8%. Revenue decline showed acceleration in 16Q4 - it was 26.9% YoY. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 85.8 pp from -2.7% to -88.6% in 2016.
Gross Margin dropped on 17.1 pp from 17.3% to 0.26% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign dropped on 70.3 pp from -36.7% to -107% in 2016.
Capital expenditures (CAPEX) and working capital investments
Primero Mining Corp's CAPEX/Revenue was 30.9% in 2016. CAPEX/Revenue decreased on 4.8 pp from 35.7% in 2013 to 30.9% in 2016. Average CAPEX/Revenue for the last three years was 35.3%.
Return on investment
The company operates at negative ROIC (-36.32%) and ROE (-42.24%). ROIC dropped on 26.5 pp from -9.9% to -36.3% in 2016. ROE dropped on 26.9 pp from -15.3% to -42.2% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is -10.2x and Debt / EBITDA is . Net Debt / EBITDA didn't change in 2016. Debt decreased on 9.9% while cash dropped on 56.4%.
Appendix 1: Peers in Basic Materials
Below we provide Primero Mining 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -3.8% | 1.8% | -2.9% | 6.8% |
|---|
| Primero Mining Corp ($P) | | 9.5% | 37.1% | 6.1% | -24.8% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 18.2% | 16.4% | 24.8% |
|---|
| Primero Mining Corp ($P) | 43.4% | 37.9% | 19.2% | 17.3% | 0.3% |
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 ($SSL) | 74.3% | 49.9% | 62.1% | 56.5% | 64.6% |
| |
|---|
| Median (100 companies) | 17.4% | 10.8% | 10.7% | 7.3% | 24.5% |
|---|
| Primero Mining Corp ($P) | 42.3% | 43.6% | -48.2% | -2.7% | -88.6% |
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 ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| |
|---|
| Median (100 companies) | 28.1% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| Primero Mining Corp ($P) | 21.7% | 35.7% | 40.9% | 34.2% | 30.9% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.6% | -3.6% | 4.8% |
|---|
| Primero Mining Corp ($P) | 8.4% | 7.7% | -24.0% | -9.9% | -36.3% |
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 (58 companies) | 0.3x | 0.9x | 1.1x | 1.6x | 0.6x |
|---|
