Royal Gold, Inc. (NASDAQ: RGLD) (together with its
subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports
record fiscal year 2017 net income of $102 million, or $1.55 per
basic share, on record revenue of $441 million and record operating
cash flow of $266 million.
Fiscal 2017 Highlights Compared to Fiscal 2016:
- Record revenue of $441 million, an
increase of 23%
- Record net income of $102 million, an
increase of 56%1
- Record cash flow from operations of
$266 million, an increase of 57%
- Record volume of 350,100 Gold
Equivalent Ounces (“GEOs”2), an increase of 14%
- Record dividends paid of $61 million,
an increase of 5%
- Repaid $95 million on revolving credit
facility
- Average gold price of $1,259, an
increase of 8%
The Company reports net income of $20 million, or $0.31 per
share, on revenue of $109 million in its fiscal fourth quarter
ended June 30, 2017. Fourth quarter net income included higher
non-cash compensation costs and mark-to-market adjustments on
warrants and Canadian deferred tax liabilities, as well as higher
exploration and legal costs.
Fiscal Fourth Quarter 2017 Highlights Compared to Prior Year
Quarter:
- Revenue of $109 million, an increase of
16%
- Operating cash flow of $65 million, an
increase of 32%
- Volume of 86,700 GEOs, an increase of
16%
- Dividends paid of $16 million, an
increase of 4%
- Repaid $50 million on revolving credit
facility
- Average gold price of $1,257, in line
with the prior year quarter
“We experienced a step change in our financial results in fiscal
2017 with increased volume from recent transactions,” commented
Tony Jensen, President and CEO. “Our strong cash flow will be
focused on new business, further strengthening the balance sheet
and return to shareholders. Looking forward to the next several
years, we see New Gold’s Rainy River mine, Barrick’s Cortez
Crossroads deposit and Goldcorp’s Pyrite Leach Project at the
Peñasquito mine driving further growth and revenue
diversification.”
Recent Developments
Peak Gold Maiden Resource
The Peak Gold joint venture (“Peak Gold”), of which our Royal
Alaska subsidiary is the manager, completed mineralized
material3 estimate of the deposits located near Tok,
Alaska. The estimate of measured and indicated
resources4 contained within mineralized material assuming a
$1,400 per ounce gold pit shell consists of approximately 1.3
million ounces of gold grading 3.46 grams per tonne (“gpt”), 5.1
million ounces silver grading 14.09 gpt, and 40 million pounds of
copper grading 0.16%. Continuing exploration activity is focused on
adjacent and regional targets.
Expansion of Credit Facility
We entered into a new $1 billion, 5-year revolving credit
facility with a final maturity in June 2022. The new credit
facility replaces Royal Gold’s prior $650 million credit
facility that was set to mature in March 2021. Royal Gold
repaid the $300 million outstanding under the prior credit facility
using a combination of cash on hand of $50 million and
borrowings under the new credit facility of $250 million,
leaving $750 million of availability under the new credit
facility.
Fiscal 2017 Overview
Fiscal 2017 revenue of $441 million included stream revenue of
$314 million and royalty revenue of $127 million. The Company had
inventory of approximately 14,100 ounces of gold and 536,800 ounces
of silver at June 30, 2017, as previously announced, compared to
19,800 ounces of gold and 323,700 ounces of silver at June 30,
2016.
Our total revenue for fiscal 2017 of $441 million increased
when compared with $360 million in fiscal 2016, due to higher
volume across the portfolio with notable increases in gold
production at Andacollo and higher gold and silver production at
Pueblo Viejo.
Fiscal 2017 cost of sales was approximately $87 million,
compared to $71 million in fiscal 2016. The increase is
primarily attributable to an increase in gold production and silver
stream production at Pueblo Viejo. Cost of sales is specific to our
stream agreements and is the result of the purchase of gold, silver
and copper for a cash payment.
General and administrative expenses increased to
$33 million in fiscal 2017, from $32 million in fiscal
2016, primarily due to an increase in legal costs.
Exploration costs, which are specific to exploration and
advancement of Peak Gold, increased to $13 million in fiscal
2017, from $9 million in fiscal 2016. As of June 30, 2017,
Royal Gold has contributed $23 million to the project and obtained
a 29.5% membership interest in Peak Gold.
Depreciation, depletion and amortization expense increased to
$160 million in fiscal 2017, from $141 million in fiscal
2016. The increase was primarily attributable to increased gold
sales and new silver sales from Pueblo Viejo.
Interest and other income increased to $9 million in fiscal 2017
from $4 million in fiscal 2016. The increase was primarily due to a
gain on a former interest, consideration received as part of a
legal settlement and termination of a non-principal royalty.
We recognized income tax expense totaling $26 million in
fiscal 2017 compared with $61 million in fiscal 2016. This resulted
in an effective tax rate of 22% for fiscal 2017 compared with
(279%) in the prior fiscal year. The decrease is primarily related
to tax impacts attributable to our Chilean subsidiary that were
incurred during fiscal 2016.
At June 30, 2017, we had current assets of $140 million
compared to current liabilities of $31 million, resulting in
working capital of $109 million. This compares to current assets of
$168 million and current liabilities of $26 million at
June 30, 2016, resulting in working capital of $142 million.
The decrease in working capital is primarily due to repayments on
the outstanding balance under our credit facility.
During fiscal 2017, liquidity needs were met from
$354 million in revenue net of our streaming payments and our
available cash resources. As of June 30, 2017, the Company had
$750 million available and $250 million outstanding under
its revolving credit facility. Working capital, combined with the
Company’s undrawn revolving credit facility, resulted in $859
million of total liquidity at June 30, 2017.
Fourth Quarter 2017 Overview
Fourth quarter revenue was $109 million compared to $94 million
in the prior year quarter. Stream and royalty revenue totaled $78
million and $31 million, respectively, for the quarter. Revenue
increased due to higher royalty volume principally from Peñasquito,
increased silver sales from Pueblo Viejo and greater gold sales
from Wassa and Prestea. We received the first quarter of copper
deliveries from Mount Milligan, and those copper stream sales more
than offset the reduced percentage of gold sales under our new
streaming agreement.
Fourth quarter cost of sales of $20 million was slightly higher
than $19 million recorded in the prior year quarter, driven by
higher gold and silver sales from Pueblo Viejo.
General and administrative expenses increased to $10 million in
the fourth quarter, compared to $8 million in the prior year
quarter. The increase was primarily related to higher non-cash
stock-based compensation charges and legal costs.
Exploration costs, which are related to Peak Gold, were higher,
totaling $4 million in the fourth quarter, compared to $2 million
in the prior year quarter.
Interest and other expense increased to $11 million from $9
million in the prior year quarter. The increase reflected higher
borrowing costs associated with an increase in LIBOR compared to
the prior year quarter, as well as higher undrawn commitment fees
associated with the additional $350 million of revolver capacity
under the new credit facility.
We recognized fourth quarter income tax expense of $8 million,
compared to $5 million during the prior year quarter. This resulted
in an effective tax rate of 31% compared to 22% in the prior year
quarter. The increase was largely associated with the strengthening
of the Canadian dollar relative to the US dollar, which impacted
the valuation of certain Canadian deferred tax liabilities. As
noted above, the fiscal 2017 effective tax rate was 22%.
PROPERTY HIGHLIGHTS
A summary of fourth quarter and historical production can be
found on Tables 1 and 2. Calendar year 2017 operator production
estimates of certain properties in which we have interests compared
to actual production through June 30, 2017 can be found on Table 3.
Results of our streaming business for the fourth quarter, compared
to the prior year quarter, can be found on Table 4. Highlights at
certain of the Company’s principal producing and development
properties during the fourth quarter, compared to the prior year
quarter, are detailed in our Annual Report on Form 10-K.
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 194 properties on six continents,
including interests on 39 producing mines and 20 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 fourth
quarter results will be held on Thursday, August 10, 2017, 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.
Fourth 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
________________
1
When compared to fiscal 2016 adjusted net
income, a non-GAAP measure. Please see Adjusted Net Income (Loss)
Reconciliation for details.
2 GEOs are calculated as revenue divided by the average gold price
for the same period. GEOs net of stream payments were 71,000 in the
fourth quarter and 280,800 in fiscal year 2017, compared to 59,600
and 247,300 in the prior year quarter and fiscal year,
respectively. 3 The U.S. Securities and Exchange Commission (“SEC”)
does not recognize this term. Mineralized material is that part of
a mineral system that has potential economic significance but
cannot be included in the proven and probable ore reserve estimates
until further drilling and metallurgical work is completed, and
until other economic and technical feasibility factors based upon
such work have been resolved. Investors are cautioned not to assume
that any part or all of the mineral deposits in this category will
ever be converted into reserves. 4 Measured and indicated resources
is not a term recognized by the SEC. Estimates of such resources
are subject to further exploration and development, are subject to
additional risks, and no assurance can be given that they will
eventually convert to future reserves.
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 cash flow growth; Rainy River,
Cortez Crossroads and the Peñasquito Pyrite Leach Project as new or
expanding sources of revenue providing further growth and revenue
diversification, and the expected timing of commissioning of these
projects; and operators’ production estimates for calendar year
2017. Net gold and metal reserves attributable to Royal Gold’s
stream, royalty and other interests are subject to certain
assumptions and, like reserves, do not reflect actual ounces that
will be produced. Like any stream, royalty or similar interest on a
non-producing or not-yet-in-development project, our interests on
development projects are subject to certain risks, such as the
ability of the operators to bring the projects into production and
operate in accordance with their feasibility studies and mine
plans, and the ability of Royal Gold to make accurate assumptions
regarding valuation and timing and amount of payments. In addition,
many of our interests are subject to risks associated with
conducting business in a foreign country, including application of
foreign laws to contract and other disputes, foreign environmental
laws and enforcement and uncertain political and economic
environments. 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 and gold and silver production
at Pueblo Viejo; 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 Company’s stream and royalty 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 deliveries and
royalty payments, or deliveries or payments not made in accordance
with stream and royalty agreements; economic and market conditions;
changes in laws governing the Company and its stream and royalty
interests or the operators of the properties subject to such
interests, 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 2017, has been provided to us by the
operators of the relevant 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 1 Fourth Quarter Fiscal 2017 Revenue and
Reported Production for Principal Stream and Royalty Interests
(In thousands, except reported production in oz. and lbs.)
Three Months Ended Three
Months Ended June 30, 2017 June 30, 2016
Reported Reported
Stream/Royalty
Metal(s)
Revenue
Production1
Revenue Production1
Stream: Mount Milligan $ 31,575 $ 29,874 Gold
19,800 oz. 23,800 oz. Copper 2.6 Mlbs. N/A Pueblo Viejo2 $ 19,678 $
16,676 Gold 10,500 oz. 10,600 oz. Silver 374,500 oz. 208,900 oz.
Andacollo Gold $ 18,699 14,900 oz. $ 17,080 13,500 oz. Wassa and
Prestea Gold $ 7,952 6,300 oz. $ 5,791 4,600 oz. Other3 Gold $ -
N/A $ - 300 oz.
Total stream revenue $ 77,904
$ 69,421
Royalty:
Peñasquito
$ 6,752 $ 2,552 Gold 133,300 oz. 41,900 oz. Silver 5.6 Moz. 2.6
Moz. Lead 27.4 Mlbs. 13.3 Mlbs. Zinc 85.7 Mlbs. 43.2 Mlbs. Cortez
Gold $ 1,562 16,600 oz. $ 1,267 16,100 oz. Other3 Various $ 22,716
N/A $ 20,889 N/A
Total royalty revenue $
31,030 $ 24,708 Total revenue $
108,934 $ 94,129 TABLE 1
Fiscal Year 2017 Revenue and Reported Production for
Principal Stream and Royalty Interests (In thousands, except
reported production in oz. and lbs.)
Fiscal Year Ended Fiscal Year
Ended June 30, 2017 June 30, 2016
Reported Reported
Stream/Royalty
Metal(s)
Revenue
Production1
Revenue Production1
Stream:
Mount Milligan $ 136,736 $ 125,438
Gold 103,400 oz. 108,800 oz. Copper 2.6 Mlbs. N/A Pueblo
Viejo4 $ 91,589 $ 39,683 Gold 50,700 oz. 31,200 oz Silver 1.6 Moz.
208,900 oz Andacollo Gold $ 60,251 47,800 oz. $ 49,243 41,600 oz
Wassa and Prestea Gold $ 25,435 20,300 oz. $ 23,346 20,100 oz Other
Gold $ - N/A $ 318 300 oz
Total stream revenue $
314,011 $ 238,028
Royalty:
Peñasquito $ 26,687 $ 22,760 Gold 556,300 oz. 584,000 oz.
Silver 20.7 Moz. 21.4 Moz. Lead 125.2 Mlbs. 134.2 Mlbs. Zinc 317.8
Mlbs. 333.0 Mlbs. Cortez Gold $ 6,504 64,200 oz. $ 6,107 74,000 oz.
Other3 Various $ 93,612 N/A $ 92,895 N/A
Total royalty
revenue $ 126,803 $ 121,762
Total revenue $ 440,814 $
359,790 TABLE 2 Historical Production
Reported Production For The Quarter
Ended1
Property
Stream/Royalty
Operator
Metal(s)
Jun. 30,2017
Mar. 31,2017
Dec. 31,2016
Sep. 30,2016
Jun. 30,2016
Stream:
Mount Milligan5
35.00% of payablegold; 18.75% ofpayable
copper
Centerra Gold 19,800 oz. 28,900
oz. 25,700 oz. 28,900 oz.
23,800 oz. Copper
2.6 Mlbs. N/A N/A
N/A N/A Pueblo
Viejo
7.5% of goldproduced up to990,000
ounces;3.75% thereafter
Barrick (60%) Gold 10,500 oz. 15,600
oz. 13,700 oz. 11,000 oz. 10,600
oz.
75% of payablesilver up to 50million
ounces;37.5% thereafter
Silver 374,500 oz.
322,000 oz. 543,300 oz. 323,300
oz. 208,900 oz. Andacollo
100% of goldproduced
Teck Gold 14,900 oz. 8,500
oz. 9,200 oz. 15,200 oz.
13,500 oz. Wassa and Prestea
9.25% of goldproduced up to240,000
ounces;5.5% thereafter
Golden Star Gold 6,300 oz. 5,400
oz. 4,000 oz. 4,500 oz.
4,600 oz.
Royalty:
Peñasquito 2.0% NSR Goldcorp
Gold 133,300 oz. 137,500 oz.
185,400 oz. 100,100 oz. 41,900
oz. Silver 5.6 Moz. 4.8 Moz.
5.0 Moz. 5.2 Moz. 2.6
Moz. Lead 27.4 Mlbs. 31.3 Mlbs.
33.6 Mlbs. 33.0 Mlbs. 13.3 Mlbs.
Zinc 85.7
Mlbs. 88.5 Mlbs. 70.5 Mlbs. 73.0
Mlbs. 43.2 Mlbs. Cortez
GSR1 and GSR2,GSR3, NVR1
Barrick Gold 16,600 oz. 11,300
oz. 14,500 oz. 21,800 oz.
16,100 oz.
FOOTNOTES Tables 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 The first silver
stream deliveries were in March 2016, with the first silver sales
made during the June 2016 quarter. 3 Individually, no stream or
royalty included within the “Other” category contributed greater
than 5% of our total revenue for the entire period. 4 The gold and
silver streams at Pueblo Viejo were acquired during the three
months ended September 30, 2015. The first gold and silver stream
deliveries were in December 2015 and March 2016, respectively. 5
Reflects the October 20, 2016 amendment to our Mount Milligan
streaming agreement. Prior to the amendment, Royal Gold held a
52.25% gold stream. Gold concentrate that was in transit at October
20, 2016 was delivered to us under the 52.25% gold stream. Royal
Gold began receiving gold and copper deliveries reflecting the
amended stream agreement in April 2017.
TABLE
3 Calendar 2017 Operator’s Production Estimate vs Actual
Production
Calendar 2017 Operator's
Production
Calendar 2017 Operator's Production Estimate1
Actual2,3 Gold Silver Base
Metals Gold Silver Base
Metals Stream/Royalty (oz.)
(oz.) (lbs.)
(oz.) (oz.) (lbs.)
Stream:
Andacollo4 61,600
26,800
Mount Milligan5 260,000-290,000
55 - 65 million
102,300 27.7 million Pueblo
Viejo6 625,000-650,000 Not provided
314,000 Not
provided Wassa and Prestea7
255,000-280,000
122,000
Royalty:
Cortez GSR1 102,200
27,700
Cortez GSR2 1,600
200
Cortez GSR3 103,800
27,900
Cortez NVR1
63,900
15,300 Peñasquito8
410,000 Not provided
260,000 10.2 million
Lead
125 million
58.5 million Zinc
325 million
164.8 million 1 Production estimates received from
our operators are for calendar 2017. 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 and the statement regarding third party information
contained in this press release, as well as the Risk Factors
identified in Part I, Item 1A, of our Fiscal 2016 Form 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, 2017 through June 30, 2017. 3 Actual
production figures for Cortez are based on information provided to
us by Barrick Gold Corporation, and actual production figures for
Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and
Wassa and Prestea are the publicly reported figures of the
operators of those properties. 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 and copper in concentrate. 6
The estimated and actual production figures shown for Pueblo Viejo
are payable gold in doré and represent Barrick’s 60% interest in
Pueblo Viejo. 7 The estimated gold production figures shown for
Wassa and Prestea are payable gold in concentrate and doré. 8 The
estimated and actual gold production figures shown for Peñasquito
are payable gold in concentrate. The operator did not provide
estimated silver, lead and zinc production.
TABLE 4
Stream Summary Three Months Ended
Three Months Ended As of As
of June 30, 2017 June 30, 2016 June 30,
2017 June 30, 2016 Gold Stream Purchases
(oz.) Sales (oz.) Purchases (oz.)
Sales (oz.) Inventory (oz.) Inventory (oz.)
Mount Milligan 19,900 19,800 31,200 23,700 100 7,500 Pueblo Viejo
12,900 10,500 11,000 11,000 12,900 11,000 Andacollo 12,600 14,900
13,500 13,500 100 - Wassa and Prestea 5,300 6,300 4,400 4,600 1,000
1,300
Total 50,700 51,500 60,100
52,800 14,100 19,800 Three Months
Ended Three Months Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017
June 30, 2016 Silver Stream Purchases (oz.)
Sales (oz.) Purchases (oz.) Sales (oz.)
Inventory (oz.) Inventory (oz.) Pueblo Viejo 536,800
374,500 322,800 208,900 536,800 323,700
Three Months
Ended Three Months Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017
June 30, 2016 Copper Stream
Purchases (tonnes)
Sales (tonnes) Purchases (tonnes) Sales
(tonnes) Inventory (tonnes) Inventory (tonnes)
Mount Milligan 1,165 1,165 N/A N/A - N/A
Fiscal Year Ended Fiscal Year Ended As
of As of June 30, 2017 June 30, 2016
June 30, 2017 June 30, 2016 Gold Stream
Purchases (oz.) Sales (oz.) Purchases (oz.)
Sales (oz.) Inventory (oz.) Inventory (oz.)
Mount Milligan 96,000 103,400 111,000 108,800 100 7,500 Pueblo
Viejo 52,600 50,700 42,200 31,200 12,900 11,000 Andacollo 47,900
47,800 41,700 41,600 100 - Wassa and Prestea 19,900 20,300 21,400
20,100 1,000 1,300 Phoenix Gold - - 300 300 - -
Total
216,400 222,200 216,600 202,000
14,100 19,800 Fiscal Year Ended
Fiscal Year Ended As of As of June 30,
2017 June 30, 2016 June 30, 2017 June 30,
2016 Silver Stream Purchases (Moz.) Sales
(Moz.) Purchases (oz.) Sales (oz.) Inventory
(oz.) Inventory (oz.) Pueblo Viejo 1.8 1.6 532,600
208,900 536,800 323,700
Fiscal Year Ended Fiscal
Year Ended As of As of June 30, 2017
June 30, 2016 June 30, 2017 June 30, 2016
Copper Stream Purchases (tonnes) Sales
(tonnes) Purchases (tonnes) Sales (tonnes)
Inventory (tonnes) Inventory (tonnes) Mount Milligan
1,165 1,165 N/A N/A - N/A
ROYAL GOLD, INC.
Consolidated Balance Sheets
As of June 30,
(In thousands except share data)
2017
2016 ASSETS Cash and equivalents $ 85,847 $ 116,633
Royalty receivables 23,461 17,990 Income tax receivable 22,169
23,219 Stream inventory 7,883 9,489 Prepaid expenses and other
822 614 Total current assets 140,182 167,945 Stream
and royalty interests, net 2,892,256 2,848,087 Other assets
58,202 53,697 Total assets $ 3,090,640 $ 3,069,729
LIABILITIES Accounts payable $ 3,908 $ 4,114 Dividends
payable 15,682 15,012 Income tax payable 5,651 3,177 Other current
liabilities 5,617 3,554 Total current liabilities
30,858 25,857 Debt 586,170 600,685 Deferred tax liabilities 121,330
133,867 Uncertain tax positions 25,627 16,996 Other long-term
liabilities 6,391 6,439 Total liabilities 770,376
783,844
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 65,179,527 and
65,093,950 shares outstanding, respectively 652 651 Additional
paid-in capital 2,185,796 2,179,781 Accumulated other comprehensive
income 879 - Accumulated earnings 88,050 48,584 Total
Royal Gold stockholders’ equity 2,275,377 2,229,016 Non-controlling
interests 44,887 56,869 Total equity 2,320,264
2,285,885 Total liabilities and equity $ 3,090,640 $
3,069,729
ROYAL GOLD, INC.
Consolidated Statements of Operations and
Comprehensive Income (Loss)
(In thousands except for per share
data)
For The Three Months Ended
For The Years Ended June 30,
June 30, June 30, June 30,
2017 2016 2017 2016 Revenue $ 108,934 $
94,129 $ 440,814 $ 359,790 Costs and expenses Cost of sales
19,682 19,019 87,265 70,979 General and administrative 9,903 8,305
33,350 31,720 Production taxes 429 432 1,760 3,978 Exploration
costs 4,450 2,466 12,861 8,601 Depreciation, depletion and
amortization 39,851 35,391 159,636 141,108 Impairments of stream
and royalty interests and royalty receivables -
- - 98,588 Total costs
and expenses 74,315 65,613
294,872 354,974 Operating income 34,619
28,516 145,942 4,816 Gain on available-for-sale securities -
1,665 - 2,340 Interest and other income 753 1,582 9,302 3,711
Interest and other expense (10,819 ) (8,656 )
(36,378 ) (32,625 ) Income (loss) before income taxes 24,553
23,107 118,866 (21,758 ) Income tax expense (7,717 )
(5,025 ) (26,441 ) (60,680 ) Net income (loss)
16,836 18,082 92,425 (82,438 ) Net loss attributable to
non-controlling interests 3,184 2,357
9,105 5,289 Net income (loss)
attributable to Royal Gold common stockholders $ 20,020 $
20,439 $ 101,530 $ (77,149 ) Net income (loss)
$ 16,836 $ 18,082 $ 92,425 $ (82,438 ) Adjustments to comprehensive
income (loss), net of tax Unrealized change in market value of
available-for-sale securities 303 1,112 879 5,632 Reclassification
adjustment for gains included in net income -
(1,665 ) - (2,340 ) Comprehensive income (loss) 16,533
17,529 93,304 (79,146 ) Comprehensive loss attributable to
non-controlling interests 3,184 2,357
9,105 5,289 Comprehensive income (loss)
attributable to Royal Gold stockholders $ 19,717 $ 19,886
$ 102,409 $ (73,857 ) Net income (loss) per
share available to Royal Gold common stockholders: Basic earnings
(loss) per share $ 0.31 $ 0.32 $ 1.55 $ (1.18
) Basic weighted average shares outstanding 65,175,663
65,090,772 65,152,782
65,074,455 Diluted earnings (loss) per share $ 0.31 $
0.32 $ 1.55 $ (1.18 ) Diluted weighted average shares
outstanding 65,320,719 65,090,772
65,277,953 65,074,455 Cash dividends
declared per common share $ 0.24 $ 0.23 $ 0.95
$ 0.91
ROYAL GOLD, INC.
Consolidated Statements of Cash Flows
(In thousands)
For The Three Months Ended For
The Years Ended June 30, June 30, June 30,
June 30, 2017 2016 2017 2016 Cash flows from operating
activities: Net income (loss) $ 16,836 $ 18,082 $ 92,425 $ (82,438
) Adjustments to reconcile net income (loss) to net cash provided
by operating activities: Depreciation, depletion and amortization
39,851 35,391 159,636 141,108 Amortization of debt discount and
issuance costs 3,623 4,843 13,825 12,985 Non-cash employee stock
compensation expense 3,224 2,250 9,983 10,039 Impairments of stream
and royalty interests and royalty receivables - - - 98,588 Tax
(benefit) expense of stock-based compensation exercises (937 ) 301
(975 ) 548 Gain on available-for-sale securities - (1,665 ) -
(2,340 ) Deferred tax expense (benefit) 7,822 12,263 1,556 (4,983 )
Other (236 ) - (4,874 ) (390 ) Changes in assets and liabilities:
Royalty receivables (671 ) 2,245 (5,472 ) 17,221 Stream inventory
(1,259 ) (4,088 ) 1,606 (7,203 ) Income tax receivable (2,815 )
(11,783 ) (13,056 ) (14,637 ) Prepaid expenses and other assets
(948 ) (1,783 ) (1,691 ) (153 ) Accounts payable 1,435 684 (206 )
(849 ) Income tax payable (1,227 ) 602 2,475 460 Uncertain tax
positions 1,290 (83 ) 8,631 1,867 Other liabilities (1,004 )
(8,047 ) 2,015 36 Net cash
provided by operating activities $ 64,984 $ 49,212 $
265,878 $ 169,859 Cash flows from investing
activities: Acquisition of stream and royalty interests - (19,853 )
(203,721 ) (1,346,109 ) Andacollo royalty termination - - - 345,000
Golden Star term loan - - - (20,000 ) Proceeds from sale of
available-for-sale securities - 4,972 - 11,905 Other 2,102
(7 ) 3,605 (309 ) Net cash
provided by (used in) provided by investing activities $ 2,102
$ (14,888 ) $ (200,116 ) $ (1,009,513 ) Cash flows
from financing activities: Borrowings from revolving credit
facility - - 70,000 350,000 Repayment of revolving credit facility
(50,000 ) (25,000 ) (95,000 ) (75,000 ) Net payments from issuance
of common stock 192 (179 ) (2,426 ) (353 ) Common stock dividends
(15,681 ) (15,011 ) (61,396 ) (58,720 ) Purchase of additional
royalty interest from non-controlling interest (1,056 ) - (2,518 )
- Debt issuance costs (3,340 ) (62 ) (3,340 ) (1,111 ) Tax expense
(benefit) of stock-based compensation exercises 937 (301 ) 975 (548
) Other (381 ) (1 ) (2,843 ) (830 ) Net
cash (used in) provided by financing activities $ (69,329 ) $
(40,554 ) $ (96,548 ) $ 213,438 Net (decrease) increase in
cash and equivalents (2,243 ) (6,230 ) (30,786 ) (626,216 ) Cash
and equivalents at beginning of period 88,090
122,863 116,633 742,849 Cash and
equivalents at end of period $ 85,847 $ 116,633 $
85,847 $ 116,633
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, 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. GAAP 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 Fiscal Years Ended June 30,
June 30, (Unaudited, in thousands) (Unaudited, in
thousands) 2017 2016 2017
2016 Net income (loss) $ 16,836
$ 18,082 $ 92,425 $ (82,438 ) Depreciation, depletion and
amortization 39,851 35,391 159,636 141,108 Non-cash employee stock
compensation 3,224 2,250 9,983 10,039 Impairment of stream and
royalty interests and royalty receivables - - - 98,588 Interest and
other, net 10,067 5,409 27,075 26,574 Income tax expense 7,717
5,025 26,441 60,680 Non-controlling interests in operating loss of
consolidated subsidiaries 3,422 2,357 10,628 5,289
Adjusted EBITDA $ 81,117 $ 68,514 $ 326,188 $
259,840
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
Fiscal Years Ended June 30, June 30,
(Unaudited, in thousands) (Unaudited, in thousands)
2017 2016 2017
2016 Net income (loss) attributable to Royal Gold
common stockholders $ 20,020 $ 20,439 $ 101,530 $ (77,149 )
Impairments of stream and royalty interests and royalty
receivables, net of tax - - - 86,130 Tax expense on Andacollo
royalty sale and Chilean subsidiary liquidation - -
- 56,000
Adjusted net income attributable
to Royal Gold common stockholders $ 20,020 $ 20,439 $ 101,530 $
64,981
Net income (loss)
attributable to Royal Gold common stockholders per basic share
$ 0.31 $ 0.32 $ 1.55 $ (1.18 ) Impairment of stream and
royalty interests and royalty receivables, net of tax - - - 1.32
Tax expense on Andacollo royalty sale and Chilean subsidiary
liquidation - - - 0.86
Adjusted net income attributable to Royal Gold common
stockholders per basic share $ 0.31 $ 0.32 $ 1.55 $ 1.00
Net income (loss) attributable to Royal Gold common
stockholders per diluted share $ 0.31 $ 0.32 $ 1.55 $ (1.18 )
Impairment of stream and royalty interests and royalty
receivables, net of tax - - - 1.32 Tax expense on Andacollo royalty
sale and Chilean subsidiary liquidation - - -
0.86
Adjusted net income attributable to
Royal Gold common stockholders per diluted share $ 0.31 $ 0.32
$ 1.55 $ 1.00
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170809006188/en/
Royal Gold, Inc.Karli Anderson, 303-575-6517Vice
President Investor Relations
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