Silver Wheaton Corp Net Income surged on 220% in 2016 while EBITDA Margin decreased on 6.1 pp from 65.8% to 59.7%
21.03.2017 • About Silver Wheaton Corp (
$SLW) • By InTwits
Silver Wheaton Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is declining: 59.7% in 2016 vs. 65.8% in 2015 vs. 82.6% in 2012
- Silver Wheaton Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 150.9%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 805 in 2016, 1,811 in 2015, 140 in 2014, 2,026 in 2013, 641 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.8%
- It operates with high leverage: Net Debt/EBITDA is 2.0x while industry average is 0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Silver Wheaton Corp ($SLW) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 849.6 | 706.5 | 620.2 | 648.7 | 891.6 | 37.4% |
| Gross Profit | 732.1 | 567.1 | 308.9 | 259.9 | 328.4 | 26.4% |
| SG&A | 24.4 | 26.9 | 29.7 | 26.1 | 29.4 | 12.7% |
| EBITDA | 701.5 | 532.1 | 431.5 | 426.9 | 532.6 | 24.8% |
| Net Income | 586.0 | 375.5 | 199.8 | -162.0 | 195.1 | |
Balance Sheet
|
|---|
| Cash | 778.2 | 95.8 | 308.1 | 103.3 | 124.3 | 20.3% |
| Short Term Debt | 28.6 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 21.5 | 998.1 | 998.5 | 1,466.0 | 1,193.0 | -18.6% |
Cash flow
|
|---|
| Capex | 641.4 | 2,026.0 | 139.5 | 1,811.5 | 805.1 | -55.6% |
Ratios
|
|---|
| Revenue growth | 16.4% | -16.8% | -12.2% | 4.6% | 37.4% | |
| EBITDA growth | 13.4% | -24.2% | -18.9% | -1.1% | 24.8% | |
| Gross Margin | 86.2% | 80.3% | 49.8% | 40.1% | 36.8% | -3.2% |
| EBITDA Margin | 82.6% | 75.3% | 69.6% | 65.8% | 59.7% | -6.1% |
| Net Income Margin | 69.0% | 53.2% | 32.2% | -25.0% | 21.9% | 46.9% |
| SG&A, % of revenue | 2.9% | 3.8% | 4.8% | 4.0% | 3.3% | -0.7% |
| CAPEX, % of revenue | 75.5% | 286.8% | 22.5% | 279.2% | 90.3% | -188.9% |
| ROIC | 20.4% | 10.3% | 6.0% | 4.4% | 3.8% | -0.6% |
| ROE | 20.3% | 11.6% | 5.7% | -4.2% | 4.3% | 8.5% |
| Net Debt/EBITDA | -1.0x | 1.7x | 1.6x | 3.2x | 2.0x | -1.2x |
Silver Wheaton Corp ($SLW) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 188 | 212 | 233 | 258 | 43.7% | 29.1% | 52.2% | 28.9% |
| EBITDA | 120 | 142 | 163 | 107 | 36.7% | 30.8% | 63.9% | -18.1% |
| Net Income | 41 | 60 | 83 | 11 | -17.1% | 12.2% | | |
Balance Sheet
|
|---|
| Cash | 87 | 124 | 126 | 124 | -1.4% | 73.2% | 55.9% | 20.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 1,371 | 706 | 1,345 | 1,193 | 71.4% | -1.3% | 107.9% | -18.6% |
Ratios
|
|---|
| Gross Margin | 31.7% | 36.3% | 42.2% | 36.1% | -17.3% | -2.2% | 2.2% | 0.5% |
| EBITDA Margin | 64.1% | 67.1% | 70.0% | 41.3% | -3.3% | 0.9% | 5.0% | -23.8% |
| Net Income Margin | 21.9% | 28.4% | 35.6% | 4.2% | -16.0% | -4.3% | 98.2% | 88.6% |
Revenue and profitability
The company's Revenue jumped on 37.4%. Revenue growth showed slow down in 16Q4 - it was 28.9% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 38.1 pp from 69.7% to 108% in 2016.
Gross Margin decreased on 3.2 pp from 40.1% to 36.8% in 2016. SG&A as a % of Revenue decreased slightly on 0.72 pp from 4.0% to 3.3% in 2016.
Net Income marign surged on 46.9 pp from -25.0% to 21.9% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Silver Wheaton Corp had CAPEX/Revenue of 90.3%. CAPEX/Revenue dropped on 196 pp from 287% in 2013 to 90.3% in 2016. For the last three years the average CAPEX/Revenue was 131%.Silver Wheaton Corp has spent a lot to CAPEX (151% of EBITDA) to fuel its growth.
Return on investment
The company operates at low ROIC (3.80%) and ROE (4.29%). ROIC decreased slightly on 0.65 pp from 4.4% to 3.8% in 2016. ROE increased on 8.5 pp from -4.2% to 4.3% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 2.0x and Debt / EBITDA is 2.2x. Net Debt / EBITDA dropped on 1.2x from 3.2x to 2.0x in 2016. Debt dropped on 18.6% while cash surged on 20.3%.
Management team
Randy V J Smallwood is a the company's CEO. Randy V J Smallwood is a founder and has spent 7 years at the company. Gary D Brown is a Silver Wheaton Corp's CFO. Gary D Brown has spent 10 years at the company.
Appendix 1: Peers in Basic Materials
Below we provide Silver Wheaton 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -2.5% | 2.0% | -2.9% | 5.7% |
|---|
| Silver Wheaton Corp ($SLW) | | -16.8% | -12.2% | 4.6% | 37.4% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 18.2% | 16.4% | 24.7% |
|---|
| Silver Wheaton Corp ($SLW) | 86.2% | 80.3% | 49.8% | 40.1% | 36.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Labrador Iron Ore Royalty Corp ($LIF) | | | | 72.8% | 73.5% |
| Franco-Nevada Corp ($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% |
| Alacer Gold Corp ($ASR) | 67.1% | 57.6% | 50.5% | 51.5% | 25.6% |
| |
|---|
| Median (100 companies) | 17.4% | 10.8% | 10.3% | 6.7% | 23.0% |
|---|
| Silver Wheaton Corp ($SLW) | 82.6% | 75.3% | 69.6% | 65.8% | 59.7% |
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% |
| 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% | |
| Amerigo Resources Ltd ($ARG) | 13.0% | 9.3% | 9.8% | 99.6% | |
| |
|---|
| Median (100 companies) | 27.4% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| Silver Wheaton Corp ($SLW) | 75.5% | 286.8% | 22.5% | 279.2% | 90.3% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.2% | -3.8% | 4.8% |
|---|
| Silver Wheaton Corp ($SLW) | 20.4% | 10.3% | 6.0% | 4.4% | 3.8% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.7x | 1.1x | 1.5x | 0.6x |
|---|
| Silver Wheaton Corp ($SLW) | -1.0x | 1.7x | 1.6x | 3.2x | 2.0x |
