Sprott Inc. (NYSE/TSX: SII) (“Sprott” or the “Company”) today
announced its financial results for the three months ended
September 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 $16.3 billion as at September 30, 2020, up $2.4 billion
(17%) from June 30, 2020.
- Total net revenues (net of
commission expenses, trailer fees and sub-advisor fees, carried
interest and performance fee payouts) were $31.3 million,
reflecting an increase of $14.1 million (82%) from the 3 months
ended September 30, 2019.
- Total expenses (excluding
commission expenses, trailer fees and sub-advisor fees, carried
interest and performance fee payouts) were $21 million, reflecting
an increase of $9.6 million (85%) from the 3 months ended September
30, 2019. The increase was primarily due to:
- Higher salaries from new hires related to the acquisition of
the Tocqueville gold strategies ("the Acquisition") and higher AIP
on increased revenues and earnings across the Company.
- Higher contingent consideration related to the Acquisition as a
result of higher estimated future operating performance of the
acquired assets
- These increases were partially offset by lower LTIP
amortization and SG&A in the quarter.
- Net income was $8.7 million ($0.36
per share), reflecting an increase of $4.4 million from the 3
months ended September 30, 2019.
- Adjusted base EBITDA was $12
million ($0.49 per share), an increase of $4.4 million (58%) from
the 3 months ended September 30, 2019.
Subsequent Events
- On November 12, 2020, the Sprott
Board of Directors announced an 8.7% increase to the Company's
quarterly dividend, effective immediately
"Our assets under management have increased by
76% in 2020, driven by strong precious metals prices, significant
sales in our exchange listed products segment and excellent
performance in our managed equities segment," said Peter Grosskopf,
CEO of Sprott. "As a result of our robust financial
performance and strong capital position, we are pleased to announce
that the Board of Directors has approved an increase of the
quarterly dividend to USD $0.25 per share, effective immediately.
We are confident that our business will support this dividend level
without impacting our ability to fund future growth
initiatives.”
"During the third quarter, Sprott was also added
to the S&P/TSX Composite Index and ranked among the 30
top-performing TSX stocks over a three-year period based on
dividend adjusted share price appreciation, through inclusion in
the TSX30 program,” added Mr. Grosskopf.
Assets Under Management (3 months
results)
(In millions $) |
AUM Jun. 30, 2020 |
Net Inflows (1) |
Market Value Changes |
Other (2) |
AUM Sep. 30, 2020 |
Exchange Listed Products |
|
|
|
|
|
|
- Physical
Trusts |
9,181 |
890 |
1,060 |
— |
11,131 |
|
- ETFs |
328 |
27 |
26 |
— |
381 |
|
|
9,509 |
917 |
1,086 |
— |
11,512 |
|
|
|
|
|
|
|
|
Managed
Equities |
|
|
|
|
|
|
- Precious
Metals Strategies |
2,279 |
(57) |
225 |
— |
2,447 |
|
- Other |
277 |
19 |
16 |
— |
312 |
|
|
2,556 |
(38) |
241 |
— |
2,759 |
|
|
|
|
|
|
|
|
Lending |
893 |
17 |
18 |
(22) |
906 |
(3) |
|
|
|
|
|
|
|
Other |
935 |
— |
147 |
— |
1,082 |
|
|
|
|
|
|
|
|
Total |
13,893 |
896 |
1,492 |
(22) |
16,259 |
|
(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 November 12, 2020, a dividend of US$0.25 per
common share was declared for the quarter ended September 30,
2020.
Conference Call and Webcast
A conference call and webcast will be held
today, November 13, 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 6191323 A taped replay of the
conference call will be available until Friday, November 20, 2020
by calling (855) 859-2056, reference number 6191323. The conference
call will be webcast live at www.sprott.com and
https://edge.media-server.com/mmc/p/6kpdmwn6
*Non-IFRS Financial Measures
This press release includes financial terms
(including AUM, 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 $) |
Sept. 30, 2020 |
Sept. 30, 2019 |
|
|
|
Net income for the periods |
8,704 |
|
4,336 |
|
Adjustments: |
|
|
Interest expense |
320 |
|
297 |
|
Provision (recovery) for income taxes |
1,613 |
|
1,473 |
|
Depreciation and amortization |
992 |
|
893 |
|
EBITDA |
11,629 |
|
6,999 |
|
|
|
|
Other adjustments: |
|
|
(Gains) losses on investments (1) |
(4,408 |
) |
(600 |
) |
Non-cash stock-based compensation |
871 |
|
1,212 |
|
Other expenses (2) |
3,932 |
|
1 |
|
Adjusted
EBITDA |
12,024 |
|
7,612 |
|
|
|
|
Other adjustments: |
|
|
Carried interest and performance fees |
— |
|
— |
|
Carried interest and performance fee related expenses |
— |
|
— |
|
Adjusted base EBITDA |
12,024 |
|
7,612 |
|
(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) In addition to the items outlined in
Note 6, Other expenses also includes severance and new hire
accruals of $0.2 million for the 3 months ended (3 months ended
September 30 - $0.2 million) and excludes income attributable to
non-controlling interests (see Other expenses in Note 6 of the
interim financial statements)
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, including that long-term trends that will
determine precious metals prices remain in place and that we expect
that future monetary and fiscal interventions by central banks are
likely to increase in scale and frequency; (ii) activity in new
product development and the pursuit of new avenues for growth; and
(iii) the declaration, payment and designation of dividends and
confidence that our business will support the dividend level
without impacting our ability to fund future growth
initiatives.
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) the impact of COVID-19; and (v) 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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