Sprott Inc. (NYSE/TSX: SII) (“Sprott” or the “Company”) today
announced its financial results for the three months ended June 30,
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 $13.9 billion as at June
30, 2020, up $3.2 billion (29%) from March 31, 2020.
- Total net revenues (net of commission expenses, trailer fees
and sub-advisor fees, carried interest and performance fee payouts)
were $28.3 million, reflecting an increase of $13.4 million (90%)
from the 3 months ended June 30, 2019.
- Total expenses (excluding commission expenses, trailer fees and
sub-advisor fees, carried interest and performance fee payouts)
were $16.2 million, reflecting an increase of $2.5 million (18%)
from the 3 months ended June 30, 2019.
- Net income was $10.5 million ($0.43 per share), reflecting an
increase of $8.9 million from the 3 months ended June 30,
2019.
- Adjusted base EBITDA was $9.2 million ($0.38 per share), an
increase of $2.2 million (31%) from the 3 months ended June 30,
2019.
Subsequent Events
- As at August 4, 2020, AUM was approximately $17 billion, an
increase of 22% from June 30, 2020. The Company's AUM continues to
grow significantly given strong net sales in its Exchange Listed
Products segment, stronger gold and silver prices, and improving
investment performance in its Managed Equities segment.
"During the first half of 2020, governments and
central banks responded to the ongoing COVID-19 pandemic and
ensuing economic crisis with unprecedented fiscal and monetary
stimulus, flooding the financial system with liquidity," said Peter
Grosskopf, CEO of Sprott. "The reaction in precious metals has been
dramatic, with gold setting a new all-time high on July 27,
2020. We believe we are in a powerful bull market for
precious metals, and that the conditions for their outperformance
will continue to intensify."
"Subsequent to the end of the second quarter,
Sprott's AUM continued to grow and, as of August 4, 2020, stood at
approximately $17 billion, up more than 83% from
December 31, 2019," said Mr. Grosskopf. "The increase was driven by
strong market value appreciation across our investment strategies,
robust inflows into our bullion trusts, as well as new capital
deployments in our resource lending business."
Assets Under Management (3 months
results)
(In millions $) |
AUM Mar. 31, 2020 |
Net Inflows (1) |
MarketValueChanges |
Other (2) |
AUMJun. 30, 2020 |
Exchange Listed
Products |
|
|
|
|
|
|
- Physical Trusts |
6,798 |
1,187 |
|
1,196 |
— |
|
9,181 |
|
|
- ETFs |
187 |
28 |
|
113 |
— |
|
328 |
|
|
|
6,985 |
1,215 |
|
1,309 |
— |
|
9,509 |
|
|
|
|
|
|
|
|
|
Managed
Equities |
|
|
|
|
|
|
- Precious Metals
Strategies |
1,919 |
(562 |
) |
922 |
— |
|
2,279 |
|
|
- Other |
209 |
1 |
|
67 |
— |
|
277 |
|
|
|
2,128 |
(561 |
) |
989 |
— |
|
2,556 |
|
|
|
|
|
|
|
|
|
Lending |
839 |
86 |
|
11 |
(43 |
) |
893 |
|
(3) |
|
|
|
|
|
|
|
Other |
783 |
6 |
|
146 |
— |
|
935 |
|
|
|
|
|
|
|
|
|
Total |
10,735 |
746 |
|
2,455 |
(43 |
) |
13,893 |
|
|
(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) $1.2 billion of committed capital remains uncalled, of which
$0.5 billion earns a commitment fee (AUM), and $0.7 billion does
not (future AUM).
Dividends
On August 6, 2020, a dividend of US$0.23 per
common share was declared for the quarter ended June 30,
2020.
Conference Call and Webcast
A conference call and webcast will be held
today, August 7, 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 ID 8064077. A taped replay of the
conference call will be available until Friday, August 14, 2020 by
calling (855) 859-2056, reference number 8064077. The conference
call will be webcast live at www.sprott.com and
https://edge.media-server.com/mmc/p/wnaue4yb
*Non-IFRS Financial Measures
This 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 and on EDGAR at www.sec.gov.
A reconciliation from net income to adjusted
base EBITDA is shown below:
|
3 months ended |
(in
thousands $) |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
|
|
Net income for the
periods |
10,492 |
|
1,581 |
|
Adjustments: |
|
|
Interest expense |
350 |
|
226 |
|
Provision (recovery) for income taxes |
1,645 |
|
(339 |
) |
Depreciation and amortization |
1,049 |
|
819 |
|
EBITDA |
13,536 |
|
2,287 |
|
|
|
|
Other adjustments: |
|
|
(Gains) losses on investments (1) |
(8,142 |
) |
288 |
|
Non-cash stock-based compensation |
559 |
|
756 |
|
Other expenses (2) |
3,251 |
|
3,701 |
|
Adjusted
EBITDA |
9,204 |
|
7,032 |
|
|
|
|
Other adjustments: |
|
|
Carried interest and performance fees |
— |
|
— |
|
Carried interest and performance fee related expenses |
— |
|
— |
|
Adjusted base EBITDA |
9,204 |
|
7,032 |
|
(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
$0.4 million for the 3 months ended (3 months ended June 30 - $0.7
million).
Forward Looking Statements
Certain statements in this press release contain
forward-looking information and forward-looking statements
(collectively referred to herein as the "Forward-Looking
Statements") within the meaning of applicable Canadian and U.S.
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) belief that we are in a powerful bull
market for precious metals, and that the conditions for their
outperformance will continue to intensify; 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
June 30, 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
brokerage 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 June
30, 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
securities laws.
About SprottSprott is an
alternative asset manager and a global leader in precious metal and
real asset 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, Managed Equities, Lending and Brokerage. Sprott’s common
shares are listed on the New York Stock Exchange under the symbol
(NYSE: SII) and Toronto Stock Exchange under the symbol (TSX: SII).
For more information, please visit www.sprott.com.
Investor contact
information:
Glen WilliamsManaging DirectorInvestor and
Institutional Client Relations(416)
943-4394gwilliams@sprott.com
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