Royal Gold, Inc. (NASDAQ: RGLD) (together with its
subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports
net income attributable to stockholders (“net income”) of $28.1
million, or $0.43 per share, on revenue of $107.0 million in its
fiscal second quarter ended December 31, 2016 (“second quarter”).
Earnings increased significantly compared to the prior year quarter
net income of $15.1 million, or $0.23 per share, on revenue of
$98.1 million.
Second Quarter Highlights as Compared to the Prior Year
Quarter:
- Record operating cash flow of $69.7
million, an increase of 34%
- Revenue of $107.0 million, an increase
of 9%
- Earnings per share of $0.43, an
increase of 87%
- Volume of 87,600 Gold Equivalent Ounces
(“GEOs”1), in line with prior year
- Dividends paid of $15.0 million, an
increase of 5%
- Average gold price of $1,222, an
increase of 10%
“In the second quarter, a higher gold price combined with strong
portfolio contributions to yield our highest operating cash flow in
Company history,” commented Tony Jensen, President and CEO. “Our
investment commitments at Rainy River and Golden Star are now
complete, and Royal Gold has no other required funding commitments.
Our growth profile is among the most compelling in the gold
streaming business, and it is fully bought and paid for.”
Recent Developments
Amended Stream at Mount Milligan
On October 20, 2016, Royal Gold amended its streaming interest
at the Mount Milligan mine, now owned by a subsidiary of
Centerra Gold Inc. (“Centerra”).
Under the terms of the amendment, our 52.25% gold stream at
Mount Milligan has been amended to a 35.0% gold stream and an
18.75% copper stream. We will continue to pay $435 per ounce of
gold delivered and will pay 15.0% of the spot price per metric
tonne of copper delivered. Mount Milligan gold in concentrate that
was in transit prior to October 20, 2016 will be delivered to us
under the current 52.25% stream. Under the terms of both the
original and amended agreements, there is a maximum of five months
between concentrate shipment and final settlement, and the Company
expects to begin receiving gold and copper deliveries reflecting
the amended stream agreement in April 2017.
After transition to the amended stream, Royal Gold expects
that, on the basis of its current stream and royalty portfolio,
approximately 85% of total future net revenue will come from
precious metals and 15% from base metals.
Rainy River Gold and Silver Stream Acquisition
The Company’s final scheduled payment of $75.0 million, as part
of its Rainy River gold and silver stream acquisition, was made in
November 2016. The Company has no further upfront payment
obligations associated with the Rainy River gold and silver
stream.
Wassa and Prestea Gold Stream Acquisition and Amendment
On January 3, 2017, the Company made the final scheduled payment
of $10.0 million. The Company has no further upfront payment
obligations associated with the Wassa and Prestea gold stream.
Second Quarter Overview
Second quarter revenue of $107.0 million included stream revenue
of $74.0 million and royalty revenue of $33.0 million. Stream
segment gold purchases and sales totaled approximately 53,000
ounces. Stream segment silver purchases were approximately 323,000
ounces and silver sales were approximately 543,000 ounces. The
Company had approximately 24,000 gold ounces and 323,000 silver
ounces in inventory at December 31, 2016, as previously
announced, compared to approximately 24,000 ounces of gold and
approximately 544,000 ounces of silver at September 30, 2016.
Second quarter cost of sales was $22.5 million, in line with the
year ago quarter. Cost of sales is specific to our stream
agreements and is the result of Royal Gold’s purchase of gold and
silver for a cash payment.
General and administrative expenses were $7.5 million in the
second quarter, compared to $5.8 million in the year ago quarter.
The increase was primarily related to increased legal and
litigation costs, as well as higher non-cash compensation
charges.
Exploration costs, which are related to our Peak Gold joint
venture in Alaska, totaled $2.5 million in the second quarter,
compared to $1.1 million in the year ago quarter. As of December
31, 2016, Royal Gold had earned a 20.6% interest in the Peak Gold
joint venture.
Interest and other income increased to $7.5 million from $0.4
million a year ago. The increase was due to non-recurring gains on
restructuring of certain stream and royalty interests.
We recognized a second quarter income tax expense of $5.0
million, compared with income tax expense of $4.7 million during
the year ago quarter. This resulted in an effective tax rate of
15.7% in the current period, compared with 25.4% in the quarter
ended December 31, 2015.
At December 31, 2016, we had current assets of $136.2 million
compared to current liabilities of $22.3 million, resulting in
working capital of $113.9 million. This compares to current assets
of $164.8 million and current liabilities of $22.7 million at
June 30, 2016, resulting in working capital of $142.1
million. As of December 31, 2016, the Company had $305 million
available and $345 million outstanding under its revolving credit
facility. Working capital, combined with the Company’s undrawn
revolving credit facility, resulted in approximately $418.9 million
of total liquidity at December 31, 2016.
PROPERTY HIGHLIGHTS
A summary of second quarter and historical production can be
found on Tables 1 and 2. Calendar year 2016 production estimates
versus actual production at certain producing properties can be
found on Table 3. Results of our streaming business for the second
quarter, compared to the year ago quarter, can be found on Table 4.
Highlights at certain of the Company’s principal producing and
development properties during the second quarter, compared to the
year ago quarter, are detailed in our Form 10-Q.
CORPORATE PROFILE
Royal Gold is a precious metals stream and royalty company
engaged in the acquisition and management of precious metal
streams, royalties and similar production based interests. The
Company owns interests on 193 properties on six continents,
including interests on 38 producing mines and 22 development stage
projects. Royal Gold is publicly traded on the NASDAQ Global Select
Market under the symbol “RGLD.” The Company’s website is located at
www.royalgold.com.
Note: Management’s conference call reviewing the second
quarter results will be held on Thursday, February 2, 2017,
followed by a conference call that day at noon Eastern Time (10:00
a.m. Mountain Time). The call will be webcast and archived on the
Company’s website for a limited time.
Second Quarter Earnings Call Information:
Dial-In Numbers: 855-209-8260 (U.S.);
toll free 855-669-9657 (Canada); toll free 412-542-4106
(International) Conference Title: Royal Gold Webcast URL:
www.royalgold.com under Investors, Events
& Presentations
Cautionary “Safe Harbor” Statement Under the Private
Securities Litigation Reform Act of 1995: With the exception of
historical matters, the matters discussed in this press release are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from
projections or estimates contained herein. Such forward-looking
statements include statements about our compelling growth profile
and that it is fully paid for, operators’ expectations regarding
future production and returns from our stream and royalty
properties; timing for receipt of gold and copper deliveries from
Mount Milligan under the amended Mount Milligan stream agreement;
estimated percentages of precious and base metals expected from the
Company’s stream and royalty portfolio in the aggregate after
transition to the amended Mount Milligan stream agreement;
operators’ production estimates for calendar year 2016 and
statements about the opportunities for portfolio and investment
growth and diversification and the Company’s ability to pursue such
opportunities. Factors that could cause actual results to differ
materially from the projections include, among others, precious
metals, copper and nickel prices; performance of and production at
the Company's stream and royalty properties, including gold and
copper production at Mount Milligan; the ability of operators of
development properties to finance project construction to
completion and bring projects into production as expected;
operators’ delays in securing or inability to secure necessary
governmental permits; decisions and activities of the operators of
the Company's stream and royalty properties; unanticipated grade,
environmental, geological, seismic, metallurgical, processing,
liquidity or other problems the operators of the mining properties
may encounter; changes in operators’ project parameters as plans
continue to be refined; changes in estimates of reserves and
mineralization by the operators of the Company’s stream and royalty
properties; contests to the Company’s stream and royalty interests
and title and other defects to the Company’s stream and royalty
properties; errors or disputes in calculating stream and royalty
payments, or payments not made in accordance with stream and
royalty agreements; economic and market conditions; risks
associated with conducting business in foreign countries; changes
in laws governing the Company and its stream and royalty properties
or the operators of such properties, and other subsequent events;
as well as other factors described in the Company's Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, and other filings
with the Securities and Exchange Commission. Most of these factors
are beyond the Company’s ability to predict or control. The Company
disclaims any obligation to update any forward-looking statement
made herein. Readers are cautioned not to put undue reliance on
forward-looking statements.
Statement Regarding Third Party Information: Certain
information provided in this press release, including production
estimates for calendar 2016, has been provided to us by the
operators of those properties or is publicly available information
filed by these operators with applicable securities regulatory
bodies, including the Securities and Exchange Commission. Royal
Gold has not verified, and is not in a position to verify, and
expressly disclaims any responsibility for, the accuracy,
completeness or fairness of such third-party information and refers
the reader to the public reports filed by the operators for
information regarding those properties.
TABLE 1Second Quarter Fiscal
2017Revenue and Reported Production for Principal Stream and
Royalty Interests(In thousands, except reported production
in oz. and lbs.)
Three Months Ended Three Months Ended
December 31, 2016 December 31, 2015
Reported Reported
Stream/Royalty
Metal(s)
Revenue
Production1 Revenue
Production1 Stream:
Mount Milligan Gold $ 31,664 25,700 oz. $
42,294 38,700 oz. Pueblo Viejo $ 26,437 $ 9,400 Gold 13,700
oz. 8,800 oz. Silver 543,300 oz. N/A Andacollo Gold $ 10,985 9,200
oz. $ 5,718 5,200 oz. Wassa and Prestea Gold $ 4,921 4,000 oz. $
9,776 8,800 oz. Other Gold $ - N/A $ 124 100 oz.
Total stream
revenue $ 74,007 $ 67,312
Royalty:
Peñasquito $ 7,134 $ 6,952 Gold 185,400 oz.
195,400 oz. Silver 5.0 Moz. 6.8 Moz. Lead 33.6 Mlbs. 41.7 Mlbs.
Zinc 70.5 Mlbs. 98.0 Mlbs. Cortez Gold $ 1,834 14,500 oz. $ 1,175
17,000 oz. Other Various $ 23,986 N/A $ 22,679 N/A
Total royalty
revenue $ 32,954 $ 30,806 Total
Revenue $ 106,961 $ 98,118
TABLE 1Second Quarter Fiscal
2017Revenue and Reported Production for Principal Stream and
Royalty Interests(In thousands, except reported production
in oz. and lbs.)
Stream/Royalty Metal(s) Six Months
Ended Six Months Ended December 31, 2016
December 31, 2015 Revenue
Reported Reported
Production1 Revenue
Production1 Stream:
Mount Milligan Gold $ 70,050 54,600 oz. $
65,758 59,600 oz. Pueblo Viejo $ 47,387 $ 9,400 Gold 24,600
oz. 8,800 oz. Silver 866,600 oz. N/A Andacollo Gold $ 31,154 24,400
oz. $ 16,433 14,700 oz. Wassa and Prestea Gold $ 10,920 8,600 oz. $
13,400 12,000 oz. Other Gold $ - N/A $ 177 200 oz.
Total stream
revenue $ 159,511 $ 105,168
Royalty:
Peñasquito $ 12,955 $ 14,998 Gold 285,500 oz.
421,900 oz. Silver 10.3 Moz. 14.1 Moz. Lead 66.6 Mlbs. 90.8 Mlbs.
Zinc 143.5 Mlbs. 216.7 Mlbs. Cortez Gold $ 3,874 36,300 oz. $ 2,987
39,600 oz. Other Various $ 48,569 N/A $ 49,020 N/A
Total royalty
revenue $ 65,398 $ 67,005 Total
Revenue $ 224,909 $ 172,173
TABLE 2Historical
Production
Reported Production For The Quarter
Ended1
Property
Stream/Royalty
Operator
Metal(s) Dec. 31, 2016 Sep.
30, 2016 Jun. 30, 2016 Mar. 31,
2016 Dec. 31, 2015 Stream:
Mount Milligan2
35.00% of payable gold; 18.75% of payable copper Centerra
Gold 25,700 oz. 28,900 oz.
23,800 oz. 25,400 oz. 38,700
oz. Pueblo Viejo
7.5% of gold produced up to 990,000
ounces; 3.75% thereafter
Barrick (60%) Gold 13,700 oz. 11,000
oz. 10,600 oz. 11,800 oz. 8,800
oz.
75% of payable silver up to 50 million
ounces; 37.5% thereafter
Silver 543,300 oz.
323,300 oz. 208,900 oz. N/A
N/A Andacollo 100% of gold
produced Teck Gold 9,200 oz.
15,200 oz. 13,500 oz. 13,500 oz.
5,200 oz. Wassa and Prestea
9.25% of gold produced up to 240,000
ounces; 5.5% thereafter
Golden Star Gold 4,000 oz. 4,500
oz. 4,600 oz. 3,500 oz.
8,800 oz.
Royalty:
Peñasquito 2.0% NSR Goldcorp
Gold 185,400 oz. 100,100 oz.
41,900 oz. 120,300 oz. 195,400
oz. Silver 5.0 Moz. 5.2 Moz.
2.6 Moz. 4.8 Moz. 6.8
Moz. Lead 33.6 Mlbs. 33.0 Mlbs.
13.3 Mlbs. 30.2 Mlbs. 41.7 Mlbs.
Zinc 70.5
Mlbs. 73.0 Mlbs. 43.2 Mlbs. 73.1
Mlbs. 98.0 Mlbs. Cortez GSR1 and GSR2,
GSR3, NVR1 Barrick Gold 14,500 oz.
21,800 oz. 16,100 oz. 18,400
oz. 17,000 oz.
FOOTNOTESTables 1 and 2
1 Reported production relates to the amount of metal sales
that are subject to our stream and royalty interests for the stated
period, as reported to us by operators of the mines. 2
Reflects the October 20, 2016 amendment to our Mount Milligan
streaming agreement. Prior to the amendment, Royal Gold had a
52.25% gold stream. Gold concentrate that is currently in transit
will be delivered to us under the 52.25% gold stream.
TABLE 3Calendar 2016 Operators’
Production Estimate vs Actual Production
Calendar 2016 Operators’ Production
Estimate1
Calendar 2016 Operators’ Production
Actual2,3
Gold Silver Base Metals
Gold Silver Base Metals
Stream/Royalty (oz.) (oz.)
(lbs.) (oz.) (oz.)
(lbs.) Stream:
Andacollo4
57,600 - - 53,300 - - Mount
Milligan5 240,000-270,000 - - 204,500
- - Pueblo Viejo6 670,000-700,000 Not
provided 700,000 Not provided -
Wassa and Prestea7 180,000-205,000
194,100
Royalty:
Cortez GSR1 119,200 - -
67,000 - - Cortez GSR2 1,300 -
- 3,700 - - Cortez GSR3 120,500
- - 70,700 - - Cortez NVR1
68,900 - - 41,000 - -
Peñasquito8 520,000-580,000 22-24 million -
465,000
N/A - Lead 145-155
million N/A Zinc
375-400 million
N/A 1 Production estimates received from our
operators are for calendar 2016. There can be no assurance that
production estimates received from our operators will be achieved.
Please refer to our cautionary language regarding forward-looking
statements following this MD&A, as well as the Risk Factors
identified in Part I, Item 1A, of our Fiscal 2016 10-K for
information regarding factors that could affect actual results.
2
Actual production figures shown are from
our operators and cover the period January 1, 2016 through December
31, 2016.
3 Actual production figures for Cortez are based on
information provided to us by the operators, and actual production
figures for Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito
(gold) and Wassa and Prestea are the operators’ publicly reported
figures. 4 The estimated and actual production figures shown
for Andacollo are contained gold in concentrate. 5 The
estimated and actual production figures shown for Mount Milligan
are payable gold in concentrate. 6
The estimated and actual production
figures shown are payable gold in doré and represent Barrick’s 60%
interest in Pueblo Viejo.
7 The estimated production figure shown is payable gold in
doré. 8
The estimated gold and silver production
figures reflect payable gold and silver in concentrate and doré,
while the estimated lead and zinc production figures reflect
payable metal in concentrate. Actual calendar year ended
December 31, 2016, information for silver, lead and zinc was not
available from the operator as of the date of this
report. Actual silver, lead and zinc production for the
nine months ended September 30, 2016 was 13.1 million ounces, 79.8
million pounds and 184.6 million pounds, respectively.
TABLE 4Stream Summary
Three Months Ended Three
Months Ended December 31, 2016 December 31, 2015
As of December 31, 2016 As of June 30, 2016 Gold
Stream Purchases (oz.) Sales (oz.)
Purchases (oz.) Sales (oz.) Ounces in
inventory Ounces in inventory Mount Milligan 23,500
25,700 38,700 38,700 6,300 7,500 Pueblo Viejo 15,600 13,700 20,600
8,800 15,600 11,000 Andacollo 9,200 9,200 10,100 5,200 100 - Wassa
and Prestea 4,300 4,000 6,300 8,800 1,600 1,300 Phoenix Gold - -
100 100 - -
Total 52,600 52,600 75,800
61,600 23,600 19,800 Three Months
Ended Three Months Ended December 31, 2016
December 31, 2015 As of December 31, 2016 As of
June 30, 2016 Silver Stream Purchases (oz.)
Sales (oz.) Purchases (oz.) Sales (oz.)
Ounces in inventory Ounces in inventory Pueblo Viejo
322,500 543,300 N/A N/A 322,900 323,700
Six
Months Ended Six Months Ended December 31, 2016
December 31, 2015 As of December 31, 2016 As of
June 30, 2016 Gold Stream Purchases (oz.)
Sales (oz.) Purchases (oz.) Sales (oz.)
Ounces in inventory Ounces in inventory Mount
Milligan 53,400 54,600 62,400 59,600 6,300 7,500 Pueblo Viejo
29,200 24,600 20,600 8,800 15,600 11,000 Andacollo 24,500 24,400
19,800 14,700 100 - Wassa and Prestea 8,900 8,600 12,700 12,000
1,600 1,300 Phoenix Gold - - 200 200 - -
Total
116,000 112,200 115,700 95,300
23,600 19,800 Six Months Ended Six
Months Ended December 31, 2016 December 31, 2015
As of December 31, 2016 As of June 30, 2016 Silver
Stream Purchases (oz.) Sales (oz.) Purchases
(oz.) Sales (oz.) Ounces in inventory Ounces
in inventory Pueblo Viejo 865,800 866,600 N/A N/A 322,900
323,700
ROYAL GOLD, INC.Consolidated
Balance SheetsAs of December 31,(Unaudited, in thousands except
share data)
December 31, 2016 June 30, 2016
ASSETS Cash and equivalents $ 83,988 $ 116,633 Royalty
receivables 23,489 17,990 Income tax receivable 16,821 20,043
Stream inventory 10,179 9,489 Prepaid expenses and other
1,720 614 Total current assets 136,197 164,769 Stream
and royalty interests, net 2,961,328 2,848,087 Other assets
62,719 53,696 Total assets $ 3,160,244 $ 3,066,552
LIABILITIES Accounts payable $ 2,282 $ 4,114 Dividends
payable 15,680 15,012 Other current liabilities 4,376
3,554 Total current liabilities 22,338 22,680 Debt 677,429
600,685 Deferred tax liabilities 120,773 133,867 Uncertain tax
positions 23,048 16,996 Other long-term liabilities 6,391
6,439 Total liabilities 849,979 780,667 Commitments
and contingencies
EQUITY
Preferred stock, $.01 par value,
authorized 10,000,000 shares authorized; and 0 shares issued
- -
Common stock, $.01 par value, 200,000,000
shares authorized; and 65,168,023 and 65,093,950 shares
outstanding, respectively
652 651 Additional paid-in capital 2,182,521 2,179,781 Accumulated
other comprehensive income 822 - Accumulated earnings 75,732
48,584 Total Royal Gold stockholders’ equity 2,259,727
2,229,016 Non-controlling interests 50,538 56,869
Total equity 2,310,265 2,285,885 Total liabilities
and equity $ 3,160,244 $ 3,066,552
ROYAL GOLD, INC.Consolidated
Statements of Operations and Comprehensive Income (Loss)(Unaudited,
in thousands except for per share data)
For The Three Months Ended For The Six Months Ended
December 31, December 31, December 31, December 31,
2016 2015 2016
2015 Revenue $ 106,961 $ 98,118 $ 224,909 $ 172,173
Costs and expenses Cost of sales 22,502 22,572 45,163 34,038
General and administrative 7,538 5,841 18,045 15,352 Production
taxes 445 996 942 2,588 Exploration costs 2,476 1,129 5,764 4,285
Depreciation, depletion and amortization 39,519
40,407 79,621 67,555
Total costs and expenses 72,480 70,945
149,535 123,818 Operating income
34,481 27,173 75,374 48,355 Interest and other income 7,488
386 9,045 615 Interest and other expense (9,823 )
(8,899 ) (18,128 ) (16,076 ) Income before income
taxes 32,146 18,660 66,291 32,894 Income tax expense
(5,044 ) (4,740 ) (12,232 ) (63,917 ) Net
income (loss) 27,102 13,920 54,059 (31,023 ) Net loss attributable
to non-controlling interests 960 1,194
3,791 1,090 Net income (loss)
attributable to Royal Gold common stockholders $ 28,062 $
15,114 $ 57,850 $ (29,933 ) Net income (loss)
$ 27,102 $ 13,920 $ 54,059 $ (31,023 ) Adjustments to comprehensive
income (loss), net of tax Unrealized change in market value of
available-for-sale securities 822 2,587
822 2,138 Comprehensive income (loss)
27,924 16,507 54,881 (28,885 ) Comprehensive loss attributable to
non-controlling interests 960 1,194
3,791 1,090 Comprehensive income (loss)
attributable to Royal Gold stockholders $ 28,884 $ 17,701
$ 58,672 $ (27,795 ) Net income (loss) per
share available to Royal Gold common stockholders: Basic
earnings (loss) per share $ 0.43 $ 0.23 $ 0.89
$ (0.46 ) Basic weighted average shares outstanding
65,149,518 65,073,678 65,133,102
65,061,059 Diluted earnings (loss) per share $ 0.43
$ 0.23 $ 0.88 $ (0.46 ) Diluted weighted
average shares outstanding 65,253,209
65,121,744 65,264,137 65,061,059
Cash dividends declared per common share $ 0.24 $ 0.23
$ 0.47 $ 0.45
ROYAL GOLD, INC.Consolidated
Statements of Cash Flows(Unaudited, in thousands)
For The Three Months Ended For The Six Months Ended
December 31, December 31, December 31, December 31,
2016 2015 2016
2015 Cash flows from operating activities: Net income (loss)
$ 27,102 $ 13,920 $ 54,059 $ (31,023 ) Adjustments to reconcile net
income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 39,519 40,407 79,621
67,555 Amortization of debt discount and issuance costs 3,400 3,243
6,751 6,440 Non-cash employee stock compensation expense 2,299
1,222 6,443 5,449 Tax benefit of stock-based compensation exercises
(101 ) 97 (77 ) 247 Deferred tax benefit (2,181 ) - (3,211 )
(11,767 ) Other (4,485 ) - (4,638 ) (390 ) Changes in assets and
liabilities: Royalty receivables 463 1,626 (5,499 ) 14,768 Stream
inventory 2,436 (4,021 ) (689 ) (6,002 ) Income taxes receivable
4,308 (2,812 ) (12,172 ) 3,530 Prepaid expenses and other assets
889 4,725 (835 ) 2,043 Accounts payable (3,609 ) (5,358 ) (1,832 )
(2,092 ) Uncertain tax positions (322 ) 729 6,052 806 Other
liabilities (55 ) (1,673 ) 822
5,032 Net cash provided by operating activities $ 69,663
$ 52,105 $ 124,795 $ 54,596 Cash
flows from investing activities: Acquisition of stream and royalty
interests (102,735 ) (24,103 ) (192,818 ) (1,324,984 ) Andacollo
royalty termination - - - 345,000 Golden Star term loan - - -
(20,000 ) Other 2,000 (43 ) 1,774
(271 ) Net cash used in investing activities $
(100,735 ) $ (24,146 ) $ (191,044 ) $ (1,000,255 ) Cash
flows from financing activities: Borrowings from revolving credit
facility - - 70,000 350,000 Net payments from issuance of common
stock (282 ) - (2,320 ) - Common stock dividends (15,023 ) (14,358
) (30,035 ) (28,699 ) Purchase of additional royalty interest from
non-controlling interest (413 ) - (1,438 ) - Tax expense of
stock-based compensation exercises 101 (97 ) 77 (247 ) Other
(2,365 ) (214 ) (2,680 ) (644 ) Net cash (used
in) provided by financing activities $ (17,982 ) $ (14,669 ) $
33,604 $ 320,410 Net (decrease) increase in cash and
equivalents (49,054 ) 13,290 (32,645 ) (625,249 ) Cash and
equivalents at beginning of period 133,042
104,310 116,633 742,849 Cash and
equivalents at end of period $ 83,988 $ 117,600 $
83,988 $ 117,600
SCHEDULE A
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meaning prescribed by
generally accepted accounting principles (“GAAP”). These measures
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
Our management uses Adjusted EBITDA and Adjusted Net Income as
measures of operating performance to assist in comparing
performance from period to period on a consistent basis; as a
measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations; in
communications with the board of directors, stockholders, analysts
and investors concerning our financial performance; as useful
comparisons to the performance of our competitors; and as metrics
of certain management incentive compensation calculations. We
believe that these measures are used by and are useful to investors
and other users of our financial statements in evaluating our
operating performance because they provide an additional tool to
evaluate our performance without regard to special and non-core
items, which can vary substantially from company to company
depending upon accounting methods and book value of assets and
capital structure. We have provided reconciliations of all non-GAAP
measures to their nearest U.S. GAAP measures and have consistently
applied the adjustments within our reconciliations in arriving at
each non-GAAP measure. We consider these items to be necessary
adjustments for purposes of evaluating our ongoing business
performance and are often considered non-recurring. Such
adjustments are subjective and involve significant management
judgment.
Adjusted EBITDA Reconciliation
Adjusted EBITDA is defined by the Company as net income (loss)
plus depreciation, depletion and amortization, non-cash charges,
income tax expense, interest and other expense, and any impairment
of mining assets, less non-controlling interests in operating loss
(income) of consolidated subsidiaries, interest and other income,
and any royalty portfolio restructuring gains or losses. Other
companies may define and calculate this measure differently.
Adjusted EBITDA identifies the cash generated in a given period
that will be available to fund the Company's future operations,
growth opportunities, shareholder dividends and to service the
Company's debt obligations. This information differs from measures
of performance determined in accordance with U.S. generally
accepted accounting principles and should not be considered in
isolation or as a substitute for measures of performance determined
in accordance with U.S. GAAP. See the table below for a
reconciliation of net income to Adjusted EBITDA.
For The Three Months Ended
For The Six Months Ended December 31, December
31, (Unaudited, in thousands) (Unaudited, in
thousands) 2016 2015 2016 2015
Net income (loss) $ 27,102 $ 13,920 $ 54,059 $
(31,023 ) Depreciation, depletion and amortization 39,519 40,407
79,621 67,555 Non-cash employee stock compensation 2,299 1,222
6,443 5,449 Interest and other, net 2,335 8,513 9,083 15,461 Income
tax expense 5,044 4,740 12,232 63,917 Non-controlling interests in
operating loss of consolidated subsidiaries 2,091
1,194 5,076 1,090
Adjusted EBITDA $
78,390 $ 69,996 $ 166,514 $ 122,449
SCHEDULE A
Adjusted Net Income (Loss)
Reconciliation
Management of the Company uses adjusted net income (loss) to
evaluate the Company’s operating performance, and for planning and
forecasting future business operations. The Company believes the
use of adjusted net income (loss) allows investors and analysts to
understand the results relating to receipt of revenue from its
royalty interests and purchase and sale of gold from its streaming
interests by excluding certain items that have a disproportionate
impact on our results for a particular period. The net income
(loss) adjustments are presented net of tax generally at the
Company’s statutory effective tax rate. Management’s determination
of the components of adjusted net income (loss) are evaluated
periodically and based, in part, on a review of non-GAAP financial
measures used by mining industry analysts. Net income (loss)
attributable to Royal Gold stockholders is reconciled to adjusted
net income (loss) as follows:
For The Three Months Ended For The Six
Months Ended December 31, December 31,
(Unaudited, in thousands) (Unaudited, in thousands)
2016 2015 2016 2015
Net income (loss) attributable to Royal Gold common
stockholders $ 28,062 $ 15,114 $ 57,850 $ (29,933 )
Non-recurring gains on restructuring of certain stream and royalty
interests, net of tax (4,717 ) (4,717 ) Tax expense on Andacollo
royalty sale and Chilean subsidiary liquidation -
- - 56,000
Adjusted
net income attributable to Royal Gold common stockholders $
23,345 $ 15,114 $ 53,133 $ 26,067
Net income
(loss) attributable to Royal Gold common stockholders per basic
share $ 0.43 $ 0.23 $ 0.89 $ (0.46 ) Non-recurring gains
on restructuring of certain stream and royalty interests, net of
tax (0.07 ) (0.07 ) Tax expense on Andacollo royalty sale and
Chilean subsidiary liquidation - - -
0.86
Adjusted net income
attributable to Royal Gold common stockholders per basic share
$ 0.36 $ 0.23 $ 0.82 $ 0.40
Net
income (loss) attributable to Royal Gold common stockholders per
diluted share $ 0.43 $ 0.23 $ 0.88 $ (0.46 )
Non-recurring gains on restructuring of certain stream and royalty
interests, net of tax (0.07 ) (0.07 ) Tax expense on Andacollo
royalty sale and Chilean subsidiary liquidation -
- - 0.86
Adjusted net
income attributable to Royal Gold common stockholders per diluted
share $ 0.36 $ 0.23 $ 0.81 $ 0.40
_______________________________
1 GEOs are calculated as revenue divided by the average gold
price for the same period. GEOs net of stream payments were 69,100
in the second quarter, compared to 68,300 a year ago.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170201006264/en/
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
Royal Gold (NASDAQ:RGLD)
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