Great Panther Silver Ltd. :GPL-US: Earnings Analysis: Q2, 2017 By the Numbers : September 20, 2017

Great Panther Silver Ltd. reports financial results for the quarter ended June 30, 2017.

We analyze the earnings along side the following peers of Great Panther Silver Ltd. – First Majestic Silver Corp., Silvercorp Metals Inc., MAG Silver Corp., Endeavour Silver Corp., Pan American Silver Corp., SSR Mining Inc, Alexco Resource Corp. and Hecla Mining Company (AG-US, SVM-US, MAG-US, EXK-US, PAAS-US, SSRM-US, AXU-US and HL-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 15.73 million, Net Earnings of USD 0.83 million.
  • Gross margins narrowed from 37.23% to 13.21% compared to the same period last year, operating (EBITDA) margins now 6.67% from 36.69%.
  • Year-on-year change in operating cash flow of 13.60% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings growth due to contribution of one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-06-30 2017-03-31 2016-12-31 2016-09-30 2016-06-30
Relevant Numbers (Quarterly)
Revenues (mil) 15.73 12.37 12.52 15.63 19.84
Revenue Growth (%YOY) -20.71 -7.91 -2.57 21.82 27.18
Earnings (mil) 0.83 3.04 -1.5 2.13 -1.35
Earnings Growth (%YOY) 161.79 193.62 58.84 183.24 64.89
Net Margin (%) 5.3 24.57 -11.97 13.63 -6.8
EPS 0 0.02 -0.01 0.01 -0.01
Return on Equity (%) 1.01 3.83 -1.93 3.38 -3.08
Return on Assets (%) 3.12 13.41 -6.68 11.45 -9.86

Access our Ratings and Scores for Great Panther Silver Ltd.

Market Share Versus Profits

Revenues History
Earnings History

GPL-US’s change in revenue this period compared to the same period last year of -20.71% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that GPL-US is holding onto its market share. Also, for comparison purposes, revenues changed by 27.16% and earnings by -72.60% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 13.21% to 37.23% for the same period last year, while operating margins (EBITDA margins) went from 6.67% to 36.69% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

GPL-US’s decline in gross margins has not produced any significant offsetting improvement in its working capital . This leads Capital Cube to conclude that the decline in gross margins are likely from operating issues and not trade-offs with the balance sheet. Working capital days are currently 382.47 days, compared to last year’s level of 150.27 days.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

GPL-US’s change in operating cash flow of 13.60% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s operating (EBIT) margins contracted from 30.42% to 1.02%. In spite of this, the company’s earnings rose. This was influenced primarily by one-time items, which improved pretax margins from -2.53% to 6.42%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Great Panther Silver Ltd.

Company Profile

Great Panther Silver Ltd. is a primary silver mining and exploration company. Its projects include El Horcon and Santa Rosa. The company is focused on mining of precious metals from its two wholly-owned operating mines in Mexico, Topia and Guanajuato. The Topia mine produces silver, gold, lead and zinc. It is located in the Sierra Madre Mountains in the state of Durango in northern Mexico. The Guanajuato mine produce silver and gold. Great Panther Silver was founded by Robert Alexander Archer on November 30, 1965 and is headquartered in Vancouver, Canada.

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