Sprott Announces 2019 First Quarter Results
May 10 2019 - 7:00AM
Sprott Inc. (TSX: SII) (“Sprott” or the “Company”) today announced
its financial results for the three months ended March 31, 2019.
Financial Overview (3 months
results)
- Assets Under Management (“AUM”) were $10.6 billion as at March
31, 2019, down slightly from December 31, 2018
- Investable capital stood at $203 million as at March 31,
2019, up $1 million (1%) from December 31, 2018
- Total net revenues (net of commission expenses, trailer fees
and sub-advisor fees, carried interest and performance fee payouts)
were $19.4 million, reflecting a decrease of $7.8 million (29%)
from the quarter ended March 31, 2018. Last year's net revenues
contained $4.2 million of proceeds from the sale of our non-core
client assets as well as $0.6 million of net performance fees.
- Total expenses (excluding commission expenses, trailer fees and
sub-advisor fees, carried interest and performance fee payouts)
were $14.7 million, reflecting a decrease of $1.6 million (10%)
from the quarter ended March 31, 2018.
- Net income was $3.8 million ($0.02 per share), reflecting a
decrease of $9.9 million (72%) from the quarter ended March 31,
2018. Last year's net income contained $4.2 million of proceeds
from the sale of our non-core private wealth business as well as
$0.6 million of net performance fees.
- Adjusted Base EBITDA was $9.2 million ($0.04 per share), a
decrease of $0.8 million (8%) from the quarter ended March 31,
2018.
"Precious metal prices have come under pressure
recently, as global central banks have abandoned their short-lived
programs to increase interest rates," said Peter Grosskopf, CEO of
Sprott. "With highly-correlated markets moving in lockstep to
all-time highs, we continue to believe an allocation to gold will
protect our clients from the inevitable consequences of
unsustainable global debt levels and we have positioned our
portfolios accordingly."
"Our AUM was relatively flat in the first
quarter of 2019 at $10.6 billion, as the addition of new AUM in our
lending business was offset by declines in our exchange-listed
products business line," added Mr. Grosskopf. "We continue to focus
on driving growth in our core businesses by expanding our global
client base and exploring in-market acquisitions."
Assets Under Management (3 months
results)
In millions $ |
AUMDec. 31, 2018 |
Net Sales& Capital Calls |
MarketValue Change |
Distributions, Acquisitions& Divestitures |
AUMMar. 31, 2019 |
Exchange Listed
Products |
|
|
|
|
|
- Physical Trusts |
7,927 |
|
(260 |
) |
(186 |
) |
— |
|
7,481 |
|
- ETFs |
237 |
|
17 |
|
15 |
|
— |
|
269 |
|
|
8,164 |
|
(243 |
) |
(171 |
) |
— |
|
7,750 |
|
|
|
|
|
|
|
Lending |
498 |
|
264 |
|
(16 |
) |
(15 |
) (1) |
731 |
|
|
|
|
|
|
|
Managed
Equities |
|
|
|
|
|
- In-house |
295 |
|
27 |
|
31 |
|
— |
|
353 |
|
- Sub-advised |
505 |
|
19 |
|
(1 |
) |
— |
|
523 |
|
- Fixed Term LPs |
243 |
|
— |
|
(2 |
) |
— |
|
241 |
|
|
1,043 |
|
46 |
|
28 |
|
— |
|
1,117 |
|
|
|
|
|
|
|
Other |
873 |
|
72 |
|
26 |
|
— |
|
971 |
|
|
|
|
|
|
|
Total |
10,578 |
|
139 |
|
(133 |
) |
(15 |
) |
10,569 |
|
(1) Distributions of principal receipts to clients of our
lending LPs
Dividends
On May 9, 2019, a dividend of $0.03 per common
share was declared for the quarter ended March 31, 2019.
Conference Call and Webcast
A conference call and webcast will be held
today, May 10, 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 ID7398085. A taped replay of the
conference call will be available until Friday, May 17, 2019 by
calling (855) 859-2056, reference number 7398085. The conference
call will be webcast live at www.sprott.com and
https://edge.media-server.com/m6/p/bhpbpvnm
*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:
|
3 months ended |
(in
thousands $) |
Mar. 31, 2019 |
Mar. 31, 2018 |
|
|
|
Net income (loss) for the periods |
3,784 |
|
13,657 |
|
Adjustments: |
|
|
Interest expense |
324 |
|
66 |
|
Provision (recovery) for income taxes |
877 |
|
(2,772 |
) |
Depreciation and amortization |
1,101 |
|
688 |
|
EBITDA |
6,086 |
|
11,639 |
|
|
|
|
Other adjustments: |
|
|
(Gains) losses on proprietary investments |
(73 |
) |
1,879 |
|
(Gains) losses on foreign exchange |
1,025 |
|
(857 |
) |
Non-cash stock-based compensation |
1,658 |
|
1,418 |
|
Net proceeds from Sale Transaction |
— |
|
(4,200 |
) |
Unamortized placement fees |
— |
|
(268 |
) |
Other expenses |
488 |
|
974 |
|
Adjusted
EBITDA |
9,184 |
|
10,585 |
|
|
|
|
Other adjustments: |
|
|
Carried interest and performance fees |
— |
|
(1,117 |
) |
Carried interest and performance fee related expenses |
— |
|
559 |
|
Adjusted base EBITDA |
9,184 |
|
10,027 |
|
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
our belief that an allocation to gold will protect our clients from
the inevitable consequences of unsustainable global debt levels;
(ii) continued focus on driving growth in our core businesses by
expanding our global client base and exploring the acquisition of
complementary products and management teams; 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: (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, 2019. 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 March 31, 2019. 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, Lending, Managed Equities and Brokerage.
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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