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Alberto Abaterusso
Alberto Abaterusso
Articles (857) 

Endeavour Silver Releases 3rd-Quarter Results

Company beat expectations

November 03, 2017 | About:

Endeavour Silver Corp. (NYSE:EXK) reported third-quarter financial results on Nov. 2.

The Canadian silver and gold producer closed the quarter with an EPS of 1 cent or a net profit of $1 million and missed expectations by 1 cent. Endeavour closed the comparable of 2016 with an EPS of 4 cents or a net profit of $5.6 million.

The beat produced a positive surprise of 50%.

Revenue for the quarter in question came in at $39.78 million. At the end of the same quarter of one year ago, Endeavour reported revenue of $42.1 million. Third-quarter revenue represents a 5% decrease on a year-over-year basis.

The miner beat expectations on revenue by $3.34 million.

Endeavour attributed the decline in the net profit and revenue for the third quarter to lower production due to some issues the company experienced with its operations at the Guanacevi mine (Mexico) to higher operating costs because of higher fixed costs spread over a lower volume of produced metal and to an increased amount of funds used by the miner during the quarter as capex.

The decline in the volume of metal produced was also a consequence of a lower throughput which was led by Endeavour’s revised annual plans for the company’s mines.

But thanks to improved performance at all Endeavour’s mines, the result on metal production of the third quarter was higher compared to the one of the previous quarter, and therefore third-quarter revenue, net profit and operating cash flow were higher than second-quarter 2017 while costs – cash operating costs and all-in sustaining costs – were lower.

During the quarter Endeavour generated a cash flow of $4.598 million from its operations, down nearly 72% year over year. The total amount of funds used by the company for investing activities was $10.836 million, a 96.7% increase from the prior-year quarter.

The miner closed the quarter with a lower amount of liquidity in cash on hand and securities compared to the beginning of fiscal 2017: $43.71 million in third-quarter 2017 versus $72.4 million in fourth-quarter 2016.

The balance sheet is also characterized by having a credit facility of $1.5 million among current liabilities that as of Sept. 30 totaled $24.041 million. The total assets amounted to $94.327 million. Endeavour's current ratio is therefore 3.92 as of the third quarter versus an industry median of 2.38.

CEO Bradford Cooke commented on the third-quarter results: “Third-quarter earnings, cash flow and revenues were down from third-quarter 2016 but improved significantly compared to the second quarter. Given that Guanacevi had to deal with new electrical and pump issues due to a lightning strike in July, now partly resolved, we anticipate continued improvement of our operating and financial performance in the fourth quarter.”

The company is developing two new orebodies at Guanacevi, the Milache and Santa Cruz orebody. From these two orebodies the miner expects to commence production sometime in the second half of fiscal 2018.

From the El Compas development project and from the La Plata plant the company aims to initiate the production of the metal before the first quarter of 2018 ends.

Concerning Terronera project, Endeavour says that it received the permits for the mine and the plant while waiting for those permits for dumps and tailings.

Endeavour is trading at $2.18 per share on the New York Stock Exchange with a market capitalization of $277.86 million, a price-book (P/B) ratio of 1.93, a price-earnings (P/E) ratio of 43.60 and an EV to EBITDA ratio of 11.23.

The average analyst foresees Endeavour reaching $4.35 per share within the next 12 trading months. The recommendation rating is 2.3 out of a total of 5.

Disclosure: I have no position in Endeavour.

About the author:

Alberto Abaterusso
Alberto Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds a MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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