Sprott Inc. (TSX: SII) (“Sprott” or the “Company”) today announced
its financial results for the three months ended March 31, 2020.
As previously disclosed, all financial figures
are now reported in US dollars unless indicated otherwise.
Financial Overview (3 months
results)
- Assets Under Management (“AUM”)
were $10.7 billion as at March 31, 2020, up $1.5 billion (16%) from
December 31, 2019
- Total net revenues (net of
commission expenses, trailer fees and sub-advisor fees, carried
interest and performance fee payouts) were $15 million, reflecting
a decrease of $0.2 million (1%) from the 3 months ended March 31,
2019.
- Total expenses (excluding
commission expenses, trailer fees and sub-advisor fees, carried
interest and performance fee payouts) were $12 million, reflecting
an increase of $0.4 million (3%) from the 3 months ended March 31,
2019
- Net income was $1.1 million ($0.01
per share), reflecting a decrease of $1.8 million from the 3 months
ended March 31, 2019.
- Adjusted base EBITDA was $8.2
million ($0.03 per share), an increase of $1.3 million (18%) from
the 3 months ended March 31, 2019.
Year-to-Date Highlights
- Subsequent to quarter end, the
Company's AUM has increased materially due to strong net sales in
its Exchange Listed Products segment, stronger gold and silver
prices, and improving investment performance in its Managed
Equities segment.
- As of May 6, 2020, pro-forma AUM
was $12.1 billion, an increase of 30% from December 31, 2019 and up
13% from March 31, 2020
"The COVID-19 crisis has become the greatest
challenge that we have collectively faced in a generation," said
Peter Grosskopf, CEO of Sprott. "The impacts of the virus and the
related economic fallout are far reaching and will continue to be
felt in the months and years to come. Our thoughts are with those
who have been hardest hit."
"As governments have responded with
unprecedented levels of fiscal and monetary stimulus, investor
demand for precious metals has increased, and gold prices have
surged to their highest levels since the global credit crisis,"
added Mr. Grosskopf. "As at May 6, 2020, our estimated pro-forma
AUM has increased by more than 30% since December 31, 2019. This
growth was driven largely by $1 billion in new sales in our
physical bullion trusts and the acquisition of the Tocqueville gold
strategies. All of our core businesses are performing well and the
entire Sprott team is focused on capitalizing on this opportunity
to deliver outstanding results for our clients and
shareholders."
Assets Under Management (3 months
results)
(In millions $) |
AUM Dec 31, 2019 |
NetInflows (1) |
MarketValueChanges |
Other (2) |
AUMMar. 31, 2020 |
Exchange Listed
Products |
|
|
|
|
|
|
- Physical Trusts |
6,579 |
474 |
(255) |
— |
6,798 |
|
|
- ETFs |
252 |
(9) |
(56) |
— |
187 |
|
|
|
6,831 |
465 |
(311) |
— |
6,985 |
|
|
|
|
|
|
|
|
|
Managed
Equities |
|
|
|
|
|
|
- Precious Metals Strategies |
601 |
(30) |
(393) |
1,741 |
1,919 |
|
|
- Other |
350 |
(4) |
(137) |
— |
209 |
|
|
|
951 |
(34) |
(530) |
1,741 |
2,128 |
|
|
|
|
|
|
|
|
|
Lending |
783 |
63 |
(6) |
(1) |
839 |
|
(3) |
|
|
|
|
|
|
|
Other |
688 |
133 |
(38) |
— |
783 |
|
|
|
|
|
|
|
|
|
Total |
9,253 |
627 |
(885) |
1,740 |
10,735 |
|
|
(1) See 'Net Inflows' in the key performance
indicators (non-IFRS financial measures) section of this
MD&A.(2) Includes new AUM from fund acquisitions and lost AUM
from fund divestitures and capital distributions of our lending
LPs.(3) $1.3 billion of committed capital remains uncalled, of
which $506 million earns a commitment fee (AUM), and $748 million
does not (future AUM).
Dividends
On May 7, 2020, a dividend of CAD$0.03 per
common share was declared for the quarter ended March 31,
2020.
Conference Call and Webcast
A conference call and webcast will be held
today, May 8, 2020 at 10:00 am ET to discuss the Company's
financial results. To participate in the call, please dial (855)
458-4215 ten minutes prior to the scheduled start of the call and
provide conference ID2509439. A taped replay of the conference call
will be available until Friday, May 15, 2020 by calling (855)
859-2056, reference number 2509439. The conference call will be
webcast live at www.sprott.com and
https://edge.media-server.com/mmc/p/t9gfimh8.
*Non-IFRS Financial MeasuresThis press release
includes financial terms (including AUM, investable capital, net
revenues, expenses, adjusted base EBITDA and net sales) that the
Company utilizes to assess the financial performance of its
business that are not measures recognized under International
Financial Reporting Standards (“IFRS”). These non-IFRS measures
should not be considered alternatives to performance measures
determined in accordance with IFRS and may not be comparable to
similar measures presented by other issuers. For additional
information regarding the Company's use of non-IFRS measures,
including the calculation of these measures, please refer to the
“Non-IFRS Financial Measures” section of the Company's Management's
Discussion and Analysis and its annual financial statements
available on the Company's website at www.sprott.com and on
SEDAR at www.sedar.com.
A reconciliation from net income to adjusted
base EBITDA is shown below:
|
3 months ended |
(in
thousands $) |
Mar. 31, 2020 |
Mar. 31, 2019 |
|
|
|
Net income for the periods |
1,062 |
|
2,847 |
|
Adjustments: |
|
|
Interest expense |
236 |
|
244 |
|
Provision (recovery) for income taxes |
1,865 |
|
659 |
|
Depreciation and amortization |
988 |
|
829 |
|
EBITDA |
4,151 |
|
4,579 |
|
|
|
|
Other adjustments: |
|
|
(Gains) losses on investments (1) |
4,352 |
|
(55 |
) |
Non-cash stock-based compensation |
98 |
|
1,247 |
|
Other expenses (2) |
(414 |
) |
1,147 |
|
Adjusted
EBITDA |
8,187 |
|
6,918 |
|
|
|
|
Other adjustments: |
|
|
Carried interest and performance fees |
— |
|
— |
|
Carried interest and performance fee related expenses |
— |
|
— |
|
Adjusted base EBITDA |
8,187 |
|
6,918 |
|
(1) This adjustment removes the income effects
of certain gains or losses on short-term investments,
co-investments and digital gold strategies to ensure the reporting
objectives of our EBITDA metric as described above are met.(2) See
Other expenses in Note 6 of the interim financial statements. In
addition to the items outlined in Note 6, Other expenses also
includes severance and new hire accruals of $0.7 million for the 3
months ended (3 months ended March 31, 2019 - $0.1 million).
Forward-Looking Statements
Certain statements in this press release contain
forward-looking information (collectively referred to herein as the
"Forward-Looking Statements") within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify Forward-Looking Statements. In particular, but
without limiting the forgoing, this press release contains
Forward-Looking Statements pertaining to: (i) market outlook and
future metal prices; (ii) Sprott’s focus on capitalizing on the
current opportunity to deliver outstanding results; and (iii) the
declaration, payment and designation of dividends.
Although the Company believes that the
Forward-Looking Statements are reasonable, they are not guarantees
of future results, performance or achievements. A number of factors
or assumptions have been used to develop the Forward-Looking
Statements, including, without limitation: (i) the impact of
increasing competition in each business in which the Company
operates will not be material; (ii) quality management will be
available; (iii) the effects of regulation and tax laws of
governmental agencies will be consistent with the current
environment; and (iv) those assumptions disclosed under the heading
"Significant Accounting Judgments, Estimates and Changes in
Accounting Policies" in the Company’s MD&A for the period ended
March 31, 2020. Actual results, performance or achievements could
vary materially from those expressed or implied by the
Forward-Looking Statements should assumptions underlying the
Forward-Looking Statements prove incorrect or should one or more
risks or other factors materialize, including: (i) difficult market
conditions; (ii) poor investment performance; (iii) failure to
continue to retain and attract quality staff; (iv) employee errors
or misconduct resulting in regulatory sanctions or reputational
harm; (v) performance fee fluctuations; (vi) a business segment or
another counterparty failing to pay its financial obligation; (vii)
failure of the Company to meet its demand for cash or fund
obligations as they come due; (viii) changes in the investment
management industry; (ix) failure to implement effective
information security policies, procedures and capabilities; (x)
lack of investment opportunities; (xi) risks related to regulatory
compliance; (xii) failure to manage risks appropriately; (xiii)
failure to deal appropriately with conflicts of interest; (xiv)
competitive pressures; (xv) corporate growth which may be difficult
to sustain and may place significant demands on existing
administrative, operational and financial resources; (xvi) failure
to comply with privacy laws; (xvii) failure to successfully
implement succession planning; (xviii) foreign exchange risk
relating to the relative value of the U.S. dollar; (xix) litigation
risk; (xx) failure to develop effective business resiliency plans;
(xxi) failure to obtain or maintain sufficient insurance coverage
on favourable economic terms; (xxii) historical financial
information being not necessarily indicative of future performance;
(xxiii) the market price of common shares of the Company may
fluctuate widely and rapidly; (xxiv) risks relating to the
Company’s investment products; (xxv) risks relating to the
Company's proprietary investments; (xxvi) risks relating to the
Company's lending business; (xxvii) risks relating to the Company’s
merchant bank and advisory business; (xxviii) those risks described
under the heading "Risk Factors" in the Company’s annual
information form dated February 27, 2020; and (xxix) those risks
described under the headings "Managing Risk: Financial" and
"Managing Risk: Non-Financial" in the Company’s MD&A for the
period ended March 31, 2020. In addition, the payment of dividends
is not guaranteed and the amount and timing of any dividends
payable by the Company will be at the discretion of the Board of
Directors of the Company and will be established on the basis of
the Company’s earnings, the satisfaction of solvency tests imposed
by applicable corporate law for the declaration and payment of
dividends, and other relevant factors. The Forward-Looking
Statements speak only as of the date hereof, unless otherwise
specifically noted, and the Company does not assume any obligation
to publicly update any Forward-Looking Statements, whether as a
result of new information, future events or otherwise, except as
may be expressly required by applicable Canadian securities
laws.
About SprottSprott is an
alternative asset manager and a global leader in precious metal
investments. Through its subsidiaries in Canada, the US and Asia,
Sprott is dedicated to providing investors with specialized
investment strategies that include Exchange Listed Products,
Lending, Managed Equities and Brokerage. Sprott’s common shares are
listed on the Toronto Stock Exchange under the symbol (TSX:SII).
For more information, please visit www.sprott.com.
Investor contact
information:Glen WilliamsManaging DirectorInvestor
Relations and Corporate Communications(416)
943-4394gwilliams@sprott.com
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