TORONTO, Aug. 09, 2019 (GLOBE NEWSWIRE) -- Sprott Inc. (SII.TO) (“Sprott” or the “Company”) today announced its financial results for the three months ended June 30, 2019.
Financial Overview (3 months results)
- Assets Under Management (“AUM”) were $10.7 billion as at June 30, 2019, up $0.1 billion (1%) from March 31, 2019
- Total net revenues (net of commission expenses, trailer fees and sub-advisor fees, carried interest and performance fee payouts) were $19.3 million, reflecting a decrease of $4.2 million (18%) from the quarter ended June 30, 2018.
- Total expenses (excluding commission expenses, trailer fees and sub-advisor fees, carried interest and performance fee payouts) were $17.7 million, reflecting an increase of $0.7 million (4%) from the quarter ended June 30, 2018.
- Net income was $2.1 million ($0.01 per share), reflecting a decrease of $3.8 million (64%) from the quarter ended June 30, 2018.
- Adjusted Base EBITDA was $9.4 million ($0.04 per share), a decrease of $1.3 million (12%) from the quarter ended June 30, 2018
- Sprott and Tocqueville Asset Management have entered into a definitive agreement regarding the sale of Tocqueville’s gold strategy asset management business to Sprott Asset Management
- The acquisition is expected to close in January 2020 and will add approximately $2.5 billion to Sprott's AUM
- Lead Portfolio Manager John Hathaway and Portfolio Managers Douglas Groh and Ryan McIntyre will join Sprott upon closing of the transaction
"Precious metal prices finally broke out during the second quarter of 2019 and gained further momentum in July with the US Federal Reserve's decision to cut interest rates for the first time since 2008," said Peter Grosskopf, CEO of Sprott. "We believe the macro-economic factors are in place for a new up-cycle in gold, silver, and related equities. With more than 90% of our Assets Under Management ("AUM") concentrated in precious metals investments, Sprott is well-positioned to benefit from rising metals prices and increased client interest in the sector."
"John Hathaway and his team are among the world’s most respected gold equities managers and we have enjoyed an excellent working relationship during the planning and launch of our joint venture over the past year," said Whitney George, President of Sprott. "The acquisition of the Tocqueville gold strategies is a natural extension of that partnership, which will complement our other resource investment and financing businesses, expand our global footprint and allow us to service clients in all major gold markets."
Assets Under Management (3 months results)
|In millions $||AUM |
Mar. 31, 2019
|Other (2)||AUM |
Jun. 30, 2019
|Exchange Listed Products|
|- Physical Trusts||7,481||(80)||313||—||7,714|
(1) Includes net sales, called capital into our lending LPs and uncalled committed capital for lending LPs to the extent that it earns a commitment fee.
(2) Includes new AUM from fund acquisitions, lost AUM from fund divestitures and lost AUM from distributions of principal receipts to clients of our lending LPs.
(3) $1,252 million (US$957 million) of committed capital remains uncalled, of which $301 million (US$230 million) earns a commitment fee (AUM), and $951 million (US$727 million) does not (future AUM).
On August 8, 2019, a dividend of $0.03 per common share was declared for the quarter ended June 30, 2019.
Conference Call and Webcast
A conference call and webcast will be held today, August 9, 2019 at 10:00 am ET to discuss the Company's financial results and the proposed acquisition of the Tocqueville gold strategies. To participate in the call, please dial (855) 458-4215 ten minutes prior to the scheduled start of the call and provide conference ID9281589. A taped replay of the conference call will be available until Friday, August 16, 2019 by calling (855) 859-2056, reference number 9281589. The conference call will be webcast live at www.sprott.com and https://edge.media-server.com/mmc/p/6sccmw23
*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 $)||Jun. 30, 2019||Jun. 30, 2018|
|Net income (loss) for the periods||2,116||5,916|
|Provision (recovery) for income taxes||(454||)||632|
|Depreciation and amortization||1,097||456|
|(Gains) losses on net investments||386||3,050|
|(Gains) losses on foreign exchange||883||(236||)|
|Non-cash stock-based compensation||1,011||1,018|
|Unamortized placement fees||—||(273||)|
|Carried interest and performance fees||—||(685||)|
|Carried interest and performance fee related expenses||—||356|
|Adjusted base EBITDA||9,409||10,686|
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, future metal prices and client interest in the precious metals sector; (ii) the acquisition of the Tocqueville gold strategies asset management business, including that the acquisition will be completed and the timing thereof, the AUM to be added as a result of the acquisition, certain portfolio managers joining Sprott upon the completion of the acquisition and the impact of the acquisition on the Company’s business and strategies; 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, 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 June 30, 2019. There are also risks that are inherent in the nature of a transaction such as the acquisition of the Tocqueville gold strategies asset management business, including: failure to realize anticipated synergies; risks regarding integration; incorrect assessments of the values of the acquired assets; and failure to obtain any required security holder, regulatory, stock exchange and other approvals (or to do so in a timely manner). The anticipated timeline for completion of the acquisition of the Tocqueville gold strategies asset management business may change for a number of reasons, including the inability to secure necessary security holder, regulatory, stock exchange and other approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the acquisition. As a result of the foregoing, readers should not place undue reliance on the forward-looking statements contained in this press release concerning the completion of the acquisition or the timing thereof. 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.
Sprott 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 (SII.TO). For more information, please visit www.sprott.com.
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