Sprott Announces 2018 Annual Results
February 28 2019 - 7:00AM
Sprott Inc. (TSX: SII) (“Sprott” or the “Company”) today announced
its financial results for the year ended December 31, 2018.
Financial Overview (12 months
results)
- Assets Under Management (“AUM”) were $10.6 billion as at
December 31, 2018, compared to $7.3 billion as at December 31,
2017.
- Investable capital stood at $202 million as at
December 31, 2018, compared to $293 million as at
December 31, 2017, reflecting a decrease of $91 (31%) million,
due primarily to the purchase of Central Fund of Canada assets in
January of this year.
- Total net revenues (net of commission expenses, trailer fees
and sub-advisor fees, carried interest and performance fee payouts)
were $96.7 million, reflecting a decrease of $25.1 million (21%)
from the year ended December 31, 2017. Last year's net revenues
contained $33.8 million of proceeds from the sale of our non-core
diversified assets.
- Total expenses (excluding commission expenses, trailer fees and
sub-advisor fees, carried interest and performance fee payouts)
were $64 million, reflecting a decrease of $14.5 million (18%) from
the year ended December 31, 2017.
- Net income was $31.4 million ($0.13 per share), reflecting a
decrease of $6.2 million (16%) from the year ended December 31,
2017. Last year's net income contained the proceeds from the sale
of our non-core diversified assets.
- Adjusted Base EBITDA was $40.5 million ($0.16 per share), an
increase of $0.3 million (1%) from the year ended December 31,
2017. Taking into account last year's sale of non-core diversified
assets and loan loss provision reversal, adjusted base EBITDA
increased by $13.7 million (51%) from the year ended December 31,
2017.
"Our AUM increased to $10.6 billion during the fourth quarter of
2018, due largely to the strong performance of gold and silver,
which served their traditional purpose of providing protection
during the general market declines," said Peter Grosskopf, CEO of
Sprott. "We believe precious metals and related equities are now
poised for a multi-year uptrend, as it becomes evident that central
bank tightening cycles have reached their conclusion."
"We continue to invest in our business to position Sprott for
long-term growth," added Mr. Grosskopf. "Recently, we strengthened
our management team with the appointment of Whitney George as
President of Sprott and deepened our mining and portfolio
management expertise with the addition of Dr. Neil Adshead at
Sprott US. In 2019 we are focused on rebuilding our managed
equities business, deploying capital in our Private Lending LPs and
expanding our Exchange Listed Products platform."
Assets Under Management (12 months
results)
|
|
|
|
|
|
|
|
In millions $ |
AUM Dec. 31, 2017 |
Net Sales & Capital Calls |
|
Market Value Change |
Distributions, Acquisitions & Divestitures |
|
AUM Dec. 31, 2018 |
Exchange Listed
Products |
|
|
|
|
|
|
|
- Physical
Trusts |
4,200 |
|
(883 |
) |
(1) |
273 |
|
4,337 |
|
|
7,927 |
|
- ETFs |
434 |
|
(131 |
) |
|
(66 |
) |
— |
|
|
237 |
|
|
4,634 |
|
(1,014 |
) |
|
207 |
|
4,337 |
|
|
8,164 |
|
Alternative Asset
Management |
|
|
|
|
|
|
|
- In-house |
405 |
|
(10 |
) |
|
(49 |
) |
(51 |
) |
|
295 |
|
-
Sub-advised |
710 |
|
(92 |
) |
|
(113 |
) |
— |
|
|
505 |
|
|
1,115 |
|
(102 |
) |
|
(162 |
) |
(51 |
) |
|
800 |
|
Private Resource
Investments |
|
|
|
|
|
|
|
- Managed
Companies |
706 |
|
— |
|
|
(2 |
) |
(98 |
) |
|
606 |
|
- Private
Resource Lending LPs |
252 |
|
320 |
|
|
47 |
|
(121 |
) |
(2) |
498 |
|
- Fixed Term
LPs |
308 |
|
— |
|
|
(65 |
) |
— |
|
|
243 |
|
- Separately
Managed Accounts |
308 |
|
— |
|
|
(41 |
) |
— |
|
|
267 |
|
|
1,574 |
|
320 |
|
|
(61 |
) |
(219 |
) |
|
1,614 |
|
Total |
7,323 |
|
(796 |
) |
|
(16 |
) |
4,067 |
|
|
10,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Total CFCL units acquired on January 16, 2018 were 252
million. For the 12 months ended December 31, 2018, 37 million
units ($616 million or 15%) were redeemed.(2) Distributions of
principal receipts to clients of our lending LPs
DividendsOn February 27, 2019, a dividend of
$0.03 per common share was declared for the quarter ended
December 31, 2018.
Conference Call and Webcast
A conference call and webcast will be held
today, February 28, 2019 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 ID5685692. A taped replay of the
conference call will be available until Thursday, March 7, 2019 by
calling (855) 859-2056, reference number 5685692. The conference
call will be webcast live at www.sprott.com and
https://edge.media-server.com/m6/p/n6u8cxcb
*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 financial statements available on the Company's
website at www.sprottinc.com and on SEDAR at www.sedar.com.
A reconciliation from net income to adjusted
base EBITDA is shown below:
|
|
|
12 months ended |
(in
thousands $) |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
|
|
Net income for
the periods |
31,379 |
|
37,532 |
|
Adjustments: |
|
|
Interest
expense |
419 |
|
201 |
|
Provision
for income taxes |
1,278 |
|
5,774 |
|
Depreciation and amortization |
2,199 |
|
6,427 |
|
EBITDA |
35,275 |
|
49,934 |
|
|
|
|
Other adjustments: |
|
|
Losses on proprietary investments |
5,782 |
|
5,189 |
|
(Gains)
losses on foreign exchange |
(2,310 |
) |
7,412 |
|
Non-cash
stock-based compensation |
5,199 |
|
1,662 |
|
Net
proceeds from Sale Transaction |
(4,200 |
) |
(31,691 |
) |
Unamortized placement fees |
(1,093 |
) |
5,057 |
|
Other expenses |
2,746 |
|
4,788 |
|
Adjusted
EBITDA |
41,399 |
|
42,351 |
|
|
|
|
Other adjustments: |
|
|
Carried
interest and performance fees |
(1,802 |
) |
(4,676 |
) |
Carried interest and performance fee related expenses |
915 |
|
2,489 |
|
Adjusted base EBITDA |
40,512 |
|
40,164 |
|
|
|
|
|
|
Forward Looking
StatementsCertain 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) the outlook for
precious metals and our belief that they are poised for a
multi-year uptrend, as it becomes evident that the Fed’s tightening
cycle is now reaching its conclusion; (iii) continued investment in
our business to position Sprott for continued profitable growth;
(iv) our focus in 2019 on rebuilding our managed equities business
and increasing the scale of our Private Lending and Exchange Listed
Products platforms; and (v) 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: (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 December 31, 2018. 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, 2019; 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 December 31, 2018. 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 and
real asset investments. Through its subsidiaries in Canada,
the US and Asia, the Corporation is dedicated to providing
investors with best-in-class investment strategies that include
Exchange Listed Products, Alternative Asset Management and Private
Resource Investments. The Corporation also operates Merchant
Banking and Brokerage businesses in both Canada and the
US. Sprott is based in Toronto with offices in New
York, Carlsbad and Vancouver and its 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
Source: Sprott Inc.
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