Kirkland Lake Gold Inc Net Income surged on 279% in 2015 and EBITDA Margin jumped on 18.9 pp from 13.6% to 32.5%
09 Jul 2015 • About Kirkland Lake Gold Inc (
$KGI) • By InTwits
Kirkland Lake Gold Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 32.5% in FY2015, 13.6% in FY2014, 16.4% in FY2013, 34.9% in FY2012, 25.6% in FY2011
- Kirkland Lake Gold Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 48.3%. At the same time it's a lot of higher than industry average of 20.6%.
- CAPEX is quite volatile: 165 in 2015, 406 in 2014, 356 in 2013, 166 in 2012, 207 in 2011
- The company has business model with low profitability: ROIC is at 9.2%
- It operates with high leverage: Net Debt/EBITDA is 0.6x while industry average is -60.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Kirkland Lake Gold Inc ($KGI) key annual financial indicators
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 103.3 | 159.8 | 151.7 | 173.3 | 219.9 | 26.9% |
| Gross Profit | 30.7 | 61.5 | 27.7 | 10.5 | 50.1 | 377.0% |
| SG&A | 3.2 | 5.3 | 5.6 | 5.5 | 6.8 | 23.7% |
| EBITDA | 26.4 | 55.7 | 24.8 | 23.5 | 71.4 | 204.0% |
| Net Income | 19.9 | 41.3 | -3.6 | -11.1 | 19.8 | -278.6% |
Balance Sheet
|
|---|
| Cash | 25.9 | 25.0 | 76.8 | 38.9 | 80.3 | 106.5% |
| Short Term Debt | 0.0 | 2.9 | 38.1 | 17.0 | 6.6 | -60.8% |
| Long Term Debt | 0.0 | 5.9 | 117.5 | 119.2 | 115.9 | -2.8% |
Cash flow
|
|---|
| Capex | 56.7 | 71.3 | 110.7 | 82.6 | 47.4 | -42.6% |
Ratios
|
|---|
| Revenue growth | 101.7% | 54.7% | -5.1% | 14.2% | 26.9% | |
| EBITDA growth | -408.8% | 110.9% | -55.5% | -5.3% | 204.0% | |
| Gross Margin | 29.7% | 38.5% | 18.3% | 6.1% | 22.8% | 16.7% |
| EBITDA Margin | 25.6% | 34.9% | 16.4% | 13.6% | 32.5% | 18.9% |
| Net Income Margin | 19.3% | 25.8% | -2.4% | -6.4% | 9.0% | 15.4% |
| SG&A, % of revenue | 3.1% | 3.3% | 3.7% | 3.2% | 3.1% | -0.1% |
| CAPEX, % of revenue | 54.9% | 44.6% | 72.9% | 47.7% | 21.6% | -26.1% |
| ROIC | 11.3% | 19.7% | 1.5% | -0.7% | 9.2% | 9.9% |
| ROE | 12.1% | 19.8% | -1.5% | -4.6% | 7.3% | 11.9% |
| Net Debt/EBITDA | -1.0x | -0.3x | 3.2x | 4.1x | 0.6x | -3.5x |
Revenue and profitability
The company's Revenue surged on 26.9% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 29.8 pp from 68.3% to 38.5% in 2015.
Gross Margin surged on 16.7 pp from 6.1% to 22.8% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign surged on 15.4 pp from -6.4% to 9.0% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 21.6%. The company showed big decline in CAPEX/Revenue of 23.0 pp from 44.6% in FY2012 to 21.6% in FY2015. Average CAPEX/Revenue for the last three years was 47.4%.The company invested a big chunk of EBITDA (66.4%) to CAPEX to fuel its growth.
Return on investment
The company operates at low ROIC (9.22%) and ROE (7.34%). ROIC increased on 9.9 pp from -0.65% to 9.2% in FY2015. ROE jumped on 11.9 pp from -4.6% to 7.3% in FY2015.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.6x and Debt / EBITDA is 1.7x. Net Debt / EBITDA dropped on 3.5x from 4.1x to 0.6x in FY2015. Debt decreased on 10.0% in FY2015 while cash jumped on 107% in FY2015.
Valuation
The company's trades at EV/EBITDA 0.6x and P/E 0.2x while industy averages are 10.5x and 26.1x. Kirkland Lake Gold Inc's EV/(EBITDA-CAPEX) is 1.9x with the industry average at 4.7x.
Appendix 1: Peers in Mining
Below we provide Kirkland Lake Gold Inc benchmarking against other companies in Mining 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 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Patagonia Gold ($PGD) | | | | 234.6% | |
| Zccm Investments Hldgs ($ZCC) | | -30.1% | 102.1% | 92.4% | |
| Rambler Metals & Mining ($RMM) | | -65.4% | 2,744.1% | 79.2% | |
| Shanta Gold ($SHG) | | | | 74.1% | |
| Mwana Africa ($MWA) | 45.8% | 86.0% | 34.2% | 30.5% | |
| |
|---|
| Median (28 companies) | 34.7% | 3.2% | -2.6% | -5.0% | -34.0% |
|---|
| Kirkland Lake Gold Inc ($KGI) | | 54.7% | -5.1% | 14.2% | 26.9% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zccm Investments Hldgs ($ZCC) | 68.4% | 51.8% | 71.4% | 85.6% | |
| Rambler Metals & Mining ($RMM) | 50.2% | 44.7% | 39.6% | 52.2% | |
| Mwana Africa ($MWA) | 32.4% | 42.9% | 45.9% | 46.6% | |
| Kaz Minerals ($KAZ) | 54.6% | 39.7% | 41.1% | 46.1% | |
| Polyus Gold Intl Ltd ($PGIL) | 50.5% | 51.1% | 40.2% | 46.1% | |
| |
|---|
| Median (27 companies) | 41.5% | 39.1% | 19.8% | 22.7% | 27.0% |
|---|
| Kirkland Lake Gold Inc ($KGI) | 29.7% | 38.5% | 18.3% | 6.1% | 22.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Zccm Investments Hldgs ($ZCC) | 138.5% | 146.8% | 75.2% | 88.7% | |
| Polyus Gold Intl Ltd ($PGIL) | 43.6% | 51.1% | 18.7% | 45.9% | |
| Rambler Metals & Mining ($RMM) | -26.1% | -194.4% | 29.6% | 45.1% | |
| Antofagasta ($ANTO) | | 50.0% | 45.0% | 42.6% | 25.9% |
| Nord Gold Nv ($NORD) | 47.9% | 33.0% | 0.8% | 40.2% | |
| |
|---|
| Median (30 companies) | 29.0% | 25.0% | 18.0% | 18.9% | 25.9% |
|---|
| Kirkland Lake Gold Inc ($KGI) | 25.6% | 34.9% | 16.4% | 13.6% | 32.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Kaz Minerals ($KAZ) | 19.8% | 36.6% | 136.5% | 168.8% | |
| Goldbridges Global Resources ($GBGR) | 40.3% | 26.9% | 17.6% | 73.9% | |
| Griffin Mining ($GFM) | 12.2% | 10.8% | 10.4% | 51.2% | |
| Serabi Gold ($SRB) | 3,151.4% | | | 44.5% | |
| Antofagasta ($ANTO) | | 13.0% | 22.5% | 32.0% | 30.9% |
| |
|---|
| Median (30 companies) | 16.3% | 19.8% | 17.2% | 10.2% | 30.9% |
|---|
| Kirkland Lake Gold Inc ($KGI) | 54.9% | 44.6% | 72.9% | 47.7% | 21.6% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Polyus Gold Intl Ltd ($PGIL) | 23.0% | 27.0% | 4.3% | 19.2% | |
| Mwana Africa ($MWA) | -39.7% | 0.1% | 12.6% | 18.3% | |
| Caledonia Mining Corp ($CMCL) | 61.7% | 37.6% | 34.9% | 18.1% | |
| Rambler Metals & Mining ($RMM) | -1.5% | -2.6% | 3.3% | 16.7% | |
| Shanta Gold ($SHG) | -39.2% | -14.0% | -2.4% | 15.8% | |
| |
|---|
| Median (31 companies) | 7.2% | 4.4% | 2.8% | 2.3% | 2.6% |
|---|
| Kirkland Lake Gold Inc ($KGI) | 11.3% | 19.7% | 1.5% | -0.7% | 9.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Minera Irl Ltd ($MIRL) | -0.0x | 1.0x | 4.2x | 10.0x | |
| Kaz Minerals ($KAZ) | 0.6x | 2.4x | 2.9x | 5.5x | |
| Anglo Asian Mining ($AAZ) | 0.1x | 0.7x | 2.6x | 5.2x | |
| Glencore ($GLEN) | 6.0x | 7.3x | 6.2x | 4.6x | |
| Griffin Mining ($GFM) | -2.1x | 0.8x | 1.4x | 4.0x | |
| |
|---|
| Median (23 companies) | 0.1x | 0.8x | 1.4x | 0.6x | 2.2x |
|---|
| Kirkland Lake Gold Inc ($KGI) | -1.0x | -0.3x | 3.2x | 4.1x | 0.6x |
