Franco-Nevada Corp Net Income jumped on 411% in 2016 and Revenue surged on 37.6%
22.03.2017 • About Franco-Nevada Corp (
$FNV) • By InTwits
Franco-Nevada Corp reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Franco-Nevada Corp has high CAPEX intensity: 5 year average CAPEX/Revenue was 118.6%. At the same time it's a lot of higher than industry average of 24.1%.
- CAPEX is quite volatile: 747 in 2016, 1,020 in 2015, 892 in 2014, 142 in 2013, 15.9 in 2012
- The company has potentially unprofitable business model: ROIC is at 4.0%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Franco-Nevada Corp ($FNV) key annual financial indicators
| mln. $ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 427.0 | 400.9 | 442.4 | 443.6 | 610.2 | 37.6% |
| Gross Profit | 367.8 | 340.7 | 369.5 | 134.2 | 230.6 | 71.8% |
| SG&A | 17.4 | 15.2 | 16.4 | 15.1 | 20.7 | 37.1% |
| EBITDA | 265.1 | 178.9 | 319.8 | 269.8 | 429.2 | 59.1% |
| Net Income | 102.6 | 11.7 | 106.7 | 24.6 | 125.8 | 411.4% |
Balance Sheet
|
|---|
| Cash | 631.7 | 770.0 | 592.5 | 149.2 | 253.0 | 69.6% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 457.3 | 0.0 | -100.0% |
Cash flow
|
|---|
| Capex | 15.9 | 142.2 | 891.7 | 1,020.4 | 747.1 | -26.8% |
Ratios
|
|---|
| Revenue growth | 3.8% | -6.1% | 10.4% | 0.3% | 37.6% | |
| EBITDA growth | 67.2% | -32.5% | 78.8% | -15.6% | 59.1% | |
| Gross Margin | 86.1% | 85.0% | 83.5% | 30.3% | 37.8% | 7.5% |
| EBITDA Margin | 62.1% | 44.6% | 72.3% | 60.8% | 70.3% | 9.5% |
| Net Income Margin | 24.0% | 2.9% | 24.1% | 5.5% | 20.6% | 15.1% |
| SG&A, % of revenue | 4.1% | 3.8% | 3.7% | 3.4% | 3.4% | -0.0% |
| CAPEX, % of revenue | 3.7% | 35.5% | 201.6% | 230.0% | 122.4% | -107.6% |
| ROIC | 4.6% | 1.6% | 4.9% | 1.5% | 4.0% | 2.5% |
| ROE | 3.4% | 0.4% | 3.4% | 0.7% | 3.4% | 2.7% |
| Net Debt/EBITDA | -2.4x | -4.3x | -1.9x | 1.1x | -0.6x | -1.7x |
Franco-Nevada Corp ($FNV) key quoterly financial indicators
| mln. $ | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 132 | 151 | 172 | 155 | 20.9% | 37.9% | 65.9% | |
| EBITDA | 102 | 117 | 140 | 68 | 24.1% | 46.5% | 85.2% | |
| Net Income | 30 | 42 | 54 | -5 | 56.3% | 95.8% | 257.9% | |
Balance Sheet
|
|---|
| Cash | 176 | 226 | 278 | 253 | -70.5% | -63.0% | -54.1% | |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | |
Ratios
|
|---|
| Gross Margin | 81.5% | 81.6% | 83.7% | 40.2% | 2.0% | 3.6% | 5.3% | |
| EBITDA Margin | 77.2% | 77.7% | 81.6% | 43.5% | 2.0% | 4.5% | 8.5% | |
| Net Income Margin | 22.7% | 28.0% | 31.6% | -2.9% | 5.1% | 8.3% | 17.0% | |
Revenue and profitability
The company's Revenue jumped on 37.6%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 3.5 pp from 13.0% to 16.5% in FY2016.
Gross Margin increased on 7.5 pp from 30.3% to 37.8% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign surged on 15.1 pp from 5.5% to 20.6% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Franco-Nevada Corp had CAPEX/Revenue of 122%. Franco-Nevada Corp's CAPEX/Revenue surged on 87.0 pp from 35.5% in 2013 to 122% in 2016. For the last three years the average CAPEX/Revenue was 185%.The company has spent a lot to CAPEX (174% of EBITDA) to secure its growth.
Return on investment
The company operates at low ROIC (3.97%) and ROE (3.44%). ROIC increased on 2.5 pp from 1.5% to 4.0% in 2016. ROE increased on 2.7 pp from 0.75% to 3.4% in 2016.
Leverage (Debt)
The company paid down all the debt in 2016. Cash jumped on 69.6%.
Appendix 1: Peers in Basic Materials
Below we provide Franco-Nevada 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 ($OR) | | | | 164.4% | 38.0% |
| |
|---|
| Median (82 companies) | 100.8% | -2.5% | 1.8% | -2.9% | 5.7% |
|---|
| Franco-Nevada Corp ($FNV) | | -6.1% | 10.4% | 0.3% | 37.6% |
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 ($PRU) | 52.5% | 50.9% | 32.0% | 53.7% | 26.3% |
| |
|---|
| Median (94 companies) | 32.1% | 22.1% | 18.2% | 16.4% | 24.7% |
|---|
| Franco-Nevada Corp ($FNV) | 86.1% | 85.0% | 83.5% | 30.3% | 37.8% |
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% |
| 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 ($ASR) | 67.1% | 57.6% | 50.5% | 51.5% | 25.6% |
| |
|---|
| Median (100 companies) | 17.4% | 10.8% | 10.3% | 6.7% | 23.0% |
|---|
| Franco-Nevada Corp ($FNV) | 62.1% | 44.6% | 72.3% | 60.8% | 70.3% |
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 ($SLW) | 75.5% | 286.8% | 22.5% | 279.2% | 90.3% |
| Avino Silver & Gold Mines Ltd ($ASM) | 211.7% | 5.6% | 89.8% | 163.3% | |
| Amerigo Resources Ltd ($ARG) | 13.0% | 9.3% | 9.8% | 99.6% | |
| |
|---|
| Median (100 companies) | 28.1% | 26.5% | 17.5% | 16.6% | 17.5% |
|---|
| Franco-Nevada Corp ($FNV) | 3.7% | 35.5% | 201.6% | 230.0% | 122.4% |
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 ($CFX) | 4.9% | 13.2% | 21.3% | 24.1% | 17.0% |
| |
|---|
| Median (99 companies) | 4.9% | 0.1% | 1.2% | -3.8% | 4.8% |
|---|
| Franco-Nevada Corp ($FNV) | 4.6% | 1.6% | 4.9% | 1.5% | 4.0% |
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 ($CCO) | 2.0x | 2.1x | 2.5x | 1.9x | 5.1x |
| |
|---|
| Median (57 companies) | 0.3x | 0.9x | 1.2x | 1.6x | 0.7x |
|---|
| Franco-Nevada Corp ($FNV) | -2.4x | -4.3x | -1.9x | 1.1x | -0.6x |
