Royal Gold Reports Record Operating Cash Flow in its Second Quarter 2017
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Royal Gold Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports net income attributable to stockholders (“net income”) of $28.1 million, or $0.43 per share, on revenue of $107.0 million in its fiscal second quarter ended December 31, 2016 (“second quarter”). Earnings increased significantly compared to the prior year quarter net income of $15.1 million, or $0.23 per share, on revenue of $98.1 million.
Second Quarter Highlights as Compared to the Prior Year Quarter:
- Record operating cash flow of $69.7 million, an increase of 34%
- Revenue of $107.0 million, an increase of 9%
- Earnings per share of $0.43, an increase of 87%
- Volume of 87,600 Gold Equivalent Ounces (“GEOs”1), in line with prior year
- Dividends paid of $15.0 million, an increase of 5%
- Average gold price of $1,222, an increase of 10%
“In the second quarter, a higher gold price combined with strong portfolio contributions to yield our highest operating cash flow in Company history,” commented Tony Jensen, President and CEO. “Our investment commitments at Rainy River and Golden Star are now complete, and Royal Gold has no other required funding commitments. Our growth profile is among the most compelling in the gold streaming business, and it is fully bought and paid for.”
Recent Developments
Amended Stream at Mount Milligan
On October 20, 2016, Royal Gold amended its streaming interest at the Mount Milligan mine, now owned by a subsidiary of Centerra Gold Inc. (“Centerra”).
Under the terms of the amendment, our 52.25% gold stream at Mount Milligan has been amended to a 35.0% gold stream and an 18.75% copper stream. We will continue to pay $435 per ounce of gold delivered and will pay 15.0% of the spot price per metric tonne of copper delivered. Mount Milligan gold in concentrate that was in transit prior to October 20, 2016 will be delivered to us under the current 52.25% stream. Under the terms of both the original and amended agreements, there is a maximum of five months between concentrate shipment and final settlement, and the Company expects to begin receiving gold and copper deliveries reflecting the amended stream agreement in April 2017.
After transition to the amended stream, Royal Gold expects that, on the basis of its current stream and royalty portfolio, approximately 85% of total future net revenue will come from precious metals and 15% from base metals.
Rainy River Gold and Silver Stream Acquisition
The Company’s final scheduled payment of $75.0 million, as part of its Rainy River gold and silver stream acquisition, was made in November 2016. The Company has no further upfront payment obligations associated with the Rainy River gold and silver stream.
Wassa and Prestea Gold Stream Acquisition and Amendment
On January 3, 2017, the Company made the final scheduled payment of $10.0 million. The Company has no further upfront payment obligations associated with the Wassa and Prestea gold stream.
Second Quarter Overview
Second quarter revenue of $107.0 million included stream revenue of $74.0 million and royalty revenue of $33.0 million. Stream segment gold purchases and sales totaled approximately 53,000 ounces. Stream segment silver purchases were approximately 323,000 ounces and silver sales were approximately 543,000 ounces. The Company had approximately 24,000 gold ounces and 323,000 silver ounces in inventory at December 31, 2016, as previously announced, compared to approximately 24,000 ounces of gold and approximately 544,000 ounces of silver at September 30, 2016.
Second quarter cost of sales was $22.5 million, in line with the year ago quarter. Cost of sales is specific to our stream agreements and is the result of Royal Gold’s purchase of gold and silver for a cash payment.
General and administrative expenses were $7.5 million in the second quarter, compared to $5.8 million in the year ago quarter. The increase was primarily related to increased legal and litigation costs, as well as higher non-cash compensation charges.
Exploration costs, which are related to our Peak Gold joint venture in Alaska, totaled $2.5 million in the second quarter, compared to $1.1 million in the year ago quarter. As of December 31, 2016, Royal Gold had earned a 20.6% interest in the Peak Gold joint venture.
Interest and other income increased to $7.5 million from $0.4 million a year ago. The increase was due to non-recurring gains on restructuring of certain stream and royalty interests.
We recognized a second quarter income tax expense of $5.0 million, compared with income tax expense of $4.7 million during the year ago quarter. This resulted in an effective tax rate of 15.7% in the current period, compared with 25.4% in the quarter ended December 31, 2015.
At December 31, 2016, we had current assets of $136.2 million compared to current liabilities of $22.3 million, resulting in working capital of $113.9 million. This compares to current assets of $164.8 million and current liabilities of $22.7 million at June 30, 2016, resulting in working capital of $142.1 million. As of December 31, 2016, the Company had $305 million available and $345 million outstanding under its revolving credit facility. Working capital, combined with the Company’s undrawn revolving credit facility, resulted in approximately $418.9 million of total liquidity at December 31, 2016.
PROPERTY HIGHLIGHTS
A summary of second quarter and historical production can be found on Tables 1 and 2. Calendar year 2016 production estimates versus actual production at certain producing properties can be found on Table 3. Results of our streaming business for the second quarter, compared to the year ago quarter, can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during the second quarter, compared to the year ago quarter, are detailed in our Form 10-Q.
CORPORATE PROFILE
Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production based interests. The Company owns interests on 193 properties on six continents, including interests on 38 producing mines and 22 development stage projects. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol “RGLD.” The Company’s website is located at www.royalgold.com.
Note: Management’s conference call reviewing the second quarter results will be held on Thursday, February 2, 2017, followed by a conference call that day at noon Eastern Time (10:00 a.m. Mountain Time). The call will be webcast and archived on the Company’s website for a limited time.
Second Quarter Earnings Call Information:
Dial-In Numbers: | 855-209-8260 (U.S.); toll free | ||||
855-669-9657 (Canada); toll free | |||||
412-542-4106 (International) | |||||
Conference Title: | Royal Gold | ||||
Webcast URL: | www.royalgold.com under Investors, Events & Presentations | ||||
Cautionary “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: With the exception of historical matters, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. Such forward-looking statements include statements about our compelling growth profile and that it is fully paid for, operators’ expectations regarding future production and returns from our stream and royalty properties; timing for receipt of gold and copper deliveries from Mount Milligan under the amended Mount Milligan stream agreement; estimated percentages of precious and base metals expected from the Company’s stream and royalty portfolio in the aggregate after transition to the amended Mount Milligan stream agreement; operators’ production estimates for calendar year 2016 and statements about the opportunities for portfolio and investment growth and diversification and the Company’s ability to pursue such opportunities. Factors that could cause actual results to differ materially from the projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company's stream and royalty properties, including gold and copper production at Mount Milligan; the ability of operators of development properties to finance project construction to completion and bring projects into production as expected; operators’ delays in securing or inability to secure necessary governmental permits; decisions and activities of the operators of the Company's stream and royalty properties; unanticipated grade, environmental, geological, seismic, metallurgical, processing, liquidity or other problems the operators of the mining properties may encounter; changes in operators’ project parameters as plans continue to be refined; changes in estimates of reserves and mineralization by the operators of the Company’s stream and royalty properties; contests to the Company’s stream and royalty interests and title and other defects to the Company’s stream and royalty properties; errors or disputes in calculating stream and royalty payments, or payments not made in accordance with stream and royalty agreements; economic and market conditions; risks associated with conducting business in foreign countries; changes in laws governing the Company and its stream and royalty properties or the operators of such properties, and other subsequent events; as well as other factors described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Most of these factors are beyond the Company’s ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements.
Statement Regarding Third Party Information: Certain information provided in this press release, including production estimates for calendar 2016, has been provided to us by the operators of those properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the Securities and Exchange Commission. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for, the accuracy, completeness or fairness of such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.
TABLE 1 | ||||||||||||||||
|
| Three Months Ended | Three Months Ended | |||||||||||||
|
| December 31, 2016 | December 31, 2015 | |||||||||||||
| Reported | Reported | ||||||||||||||
Stream/Royalty | Metal(s) | Revenue | Production1 | Revenue | Production1 | |||||||||||
Stream: | ||||||||||||||||
Mount Milligan | Gold | $ | 31,664 | 25,700 | oz. | $ | 42,294 | 38,700 | oz. | |||||||
Pueblo Viejo | $ | 26,437 | $ | 9,400 | ||||||||||||
Gold | 13,700 | oz. | 8,800 | oz. | ||||||||||||
Silver | 543,300 | oz. | N/A | |||||||||||||
Andacollo | Gold | $ | 10,985 | 9,200 | oz. | $ | 5,718 | 5,200 | oz. | |||||||
Wassa and Prestea | Gold | $ | 4,921 | 4,000 | oz. | $ | 9,776 | 8,800 | oz. | |||||||
Other | Gold | $ | - | N/A | $ | 124 | 100 | oz. | ||||||||
Total stream revenue | $ | 74,007 | $ | 67,312 | ||||||||||||
Royalty: | ||||||||||||||||
Peñasquito | $ | 7,134 | $ | 6,952 | ||||||||||||
Gold | 185,400 | oz. | 195,400 | oz. | ||||||||||||
Silver | 5.0 | Moz. | 6.8 | Moz. | ||||||||||||
Lead | 33.6 | Mlbs. | 41.7 | Mlbs. | ||||||||||||
Zinc | 70.5 | Mlbs. | 98.0 | Mlbs. | ||||||||||||
Cortez | Gold | $ | 1,834 | 14,500 | oz. | $ | 1,175 | 17,000 | oz. | |||||||
Other | Various | $ | 23,986 | N/A | $ | 22,679 | N/A | |||||||||
Total royalty revenue | $ | 32,954 | $ | 30,806 | ||||||||||||
Total Revenue | $ | 106,961 | $ | 98,118 | ||||||||||||
TABLE 1 | ||||||||||||||||
Stream/Royalty | Metal(s) | Six Months Ended | Six Months Ended | |||||||||||||
December 31, 2016 | December 31, 2015 | |||||||||||||||
Revenue | Reported | Reported | ||||||||||||||
Production1 | Revenue | Production1 | ||||||||||||||
Stream: | ||||||||||||||||
Mount Milligan | Gold | $ | 70,050 | 54,600 | oz. | $ | 65,758 | 59,600 | oz. | |||||||
Pueblo Viejo | $ | 47,387 | $ | 9,400 | ||||||||||||
Gold | 24,600 | oz. | 8,800 | oz. | ||||||||||||
Silver | 866,600 | oz. | N/A | |||||||||||||
Andacollo | Gold | $ | 31,154 | 24,400 | oz. | $ | 16,433 | 14,700 | oz. | |||||||
Wassa and Prestea | Gold | $ | 10,920 | 8,600 | oz. | $ | 13,400 | 12,000 | oz. | |||||||
Other | Gold | $ | - | N/A | $ | 177 | 200 | oz. | ||||||||
Total stream revenue | $ | 159,511 | $ | 105,168 | ||||||||||||
Royalty: | ||||||||||||||||
Peñasquito | $ | 12,955 | $ | 14,998 | ||||||||||||
Gold | 285,500 | oz. | 421,900 | oz. | ||||||||||||
Silver | 10.3 | Moz. | 14.1 | Moz. | ||||||||||||
Lead | 66.6 | Mlbs. | 90.8 | Mlbs. | ||||||||||||
Zinc | 143.5 | Mlbs. | 216.7 | Mlbs. | ||||||||||||
Cortez | Gold | $ | 3,874 | 36,300 | oz. | $ | 2,987 | 39,600 | oz. | |||||||
Other | Various | $ | 48,569 | N/A | $ | 49,020 | N/A | |||||||||
Total royalty revenue | $ | 65,398 | $ | 67,005 | ||||||||||||
Total Revenue | $ | 224,909 | $ | 172,173 | ||||||||||||
TABLE 2 | ||||||||||||||||||||||||||
|
|
| Reported Production For The Quarter Ended1 | |||||||||||||||||||||||
Property | Stream/Royalty | Operator | Metal(s) | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | ||||||||||||||||||
Stream: | ||||||||||||||||||||||||||
Mount Milligan2 | 35.00% of payable gold; 18.75% of payable copper | Centerra | Gold | 25,700 | oz. | 28,900 | oz. | 23,800 | oz. | 25,400 | oz. | 38,700 | oz. | |||||||||||||
Pueblo Viejo | 7.5% of gold produced up to 990,000 ounces; 3.75% thereafter | Barrick (60%) | Gold | 13,700 | oz. | 11,000 | oz. | 10,600 | oz. | 11,800 | oz. | 8,800 | oz. | |||||||||||||
75% of payable silver up to 50 million ounces; 37.5% thereafter | Silver | 543,300 | oz. | 323,300 | oz. | 208,900 | oz. | N/A | N/A | |||||||||||||||||
Andacollo | 100% of gold produced | Teck | Gold | 9,200 | oz. | 15,200 | oz. | 13,500 | oz. | 13,500 | oz. | 5,200 | oz. | |||||||||||||
Wassa and Prestea | 9.25% of gold produced up to 240,000 ounces; 5.5% thereafter | Golden Star | Gold | 4,000 | oz. | 4,500 | oz. | 4,600 | oz. | 3,500 | oz. | 8,800 | oz. | |||||||||||||
Royalty: | ||||||||||||||||||||||||||
Peñasquito | 2.0% NSR | Goldcorp | ||||||||||||||||||||||||
Gold | 185,400 | oz. | 100,100 | oz. | 41,900 | oz. | 120,300 | oz. | 195,400 | oz. | ||||||||||||||||
Silver | 5.0 | Moz. | 5.2 | Moz. | 2.6 | Moz. | 4.8 | Moz. | 6.8 | Moz. | ||||||||||||||||
Lead | 33.6 | Mlbs. | 33.0 | Mlbs. | 13.3 | Mlbs. | 30.2 | Mlbs. | 41.7 | Mlbs. | ||||||||||||||||
Zinc | 70.5 | Mlbs. | 73.0 | Mlbs. | 43.2 | Mlbs. | 73.1 | Mlbs. | 98.0 | Mlbs. | ||||||||||||||||
Cortez | GSR1 and GSR2, GSR3, NVR1 | Barrick | Gold | 14,500 | oz. | 21,800 | oz. | 16,100 | oz. | 18,400 | oz. | 17,000 | oz. | |||||||||||||
FOOTNOTES | ||
1 | Reported production relates to the amount of metal sales that are subject to our stream and royalty interests for the stated period, as reported to us by operators of the mines. | |
2 | Reflects the October 20, 2016 amendment to our Mount Milligan streaming agreement. Prior to the amendment, Royal Gold had a 52.25% gold stream. Gold concentrate that is currently in transit will be delivered to us under the 52.25% gold stream. | |
TABLE 3 | |||||||||||||
Calendar 2016 Operators’ Production Estimate1 | Calendar 2016 Operators’ Production Actual2,3 | ||||||||||||
Gold | Silver | Base Metals | Gold | Silver | Base Metals | ||||||||
Stream/Royalty | (oz.) | (oz.) | (lbs.) | (oz.) | (oz.) | (lbs.) | |||||||
Stream: | |||||||||||||
Andacollo4 | 57,600 | - | - | 53,300 | - | - | |||||||
Mount Milligan5 | 240,000-270,000 | - | - | 204,500 | - | - | |||||||
Pueblo Viejo6 | 670,000-700,000 | Not provided | 700,000 | Not provided | - | ||||||||
Wassa and Prestea7 | 180,000-205,000 | 194,100 | |||||||||||
Royalty: | |||||||||||||
Cortez GSR1 | 119,200 | - | - | 67,000 | - | - | |||||||
Cortez GSR2 | 1,300 | - | - | 3,700 | - | - | |||||||
Cortez GSR3 | 120,500 | - | - | 70,700 | - | - | |||||||
Cortez NVR1 | 68,900 | - | - | 41,000 | - | - | |||||||
Peñasquito8 | 520,000-580,000 | 22-24 million | - | 465,000 | N/A | - | |||||||
Lead | 145-155 million | N/A | |||||||||||
Zinc | 375-400 million | N/A | |||||||||||
1 | Production estimates received from our operators are for calendar 2016. There can be no assurance that production estimates received from our operators will be achieved. Please refer to our cautionary language regarding forward-looking statements following this MD&A, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal 2016 10-K for information regarding factors that could affect actual results. | |
2 | Actual production figures shown are from our operators and cover the period January 1, 2016 through December 31, 2016. | |
3 | Actual production figures for Cortez are based on information provided to us by the operators, and actual production figures for Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and Wassa and Prestea are the operators’ publicly reported figures. | |
4 | The estimated and actual production figures shown for Andacollo are contained gold in concentrate. | |
5 | The estimated and actual production figures shown for Mount Milligan are payable gold in concentrate. | |
6 | The estimated and actual production figures shown are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo. | |
7 | The estimated production figure shown is payable gold in doré. | |
8 | The estimated gold and silver production figures reflect payable gold and silver in concentrate and doré, while the estimated lead and zinc production figures reflect payable metal in concentrate. Actual calendar year ended December 31, 2016, information for silver, lead and zinc was not available from the operator as of the date of this report. Actual silver, lead and zinc production for the nine months ended September 30, 2016 was 13.1 million ounces, 79.8 million pounds and 184.6 million pounds, respectively. | |
TABLE 4 | ||||||||||||
Three Months Ended | Three Months Ended | |||||||||||
December 31, 2016 | December 31, 2015 | As of December 31, 2016 | As of June 30, 2016 | |||||||||
Gold Stream | Purchases (oz.) | Sales (oz.) | Purchases (oz.) | Sales (oz.) | Ounces in inventory | Ounces in inventory | ||||||
Mount Milligan | 23,500 | 25,700 | 38,700 | 38,700 | 6,300 | 7,500 | ||||||
Pueblo Viejo | 15,600 | 13,700 | 20,600 | 8,800 | 15,600 | 11,000 | ||||||
Andacollo | 9,200 | 9,200 | 10,100 | 5,200 | 100 | - | ||||||
Wassa and Prestea | 4,300 | 4,000 | 6,300 | 8,800 | 1,600 | 1,300 | ||||||
Phoenix Gold | - | - | 100 | 100 | - | - | ||||||
Total | 52,600 | 52,600 | 75,800 | 61,600 | 23,600 | 19,800 | ||||||
Three Months Ended | Three Months Ended | |||||||||||
December 31, 2016 | December 31, 2015 | As of December 31, 2016 | As of June 30, 2016 | |||||||||
Silver Stream | Purchases (oz.) | Sales (oz.) | Purchases (oz.) | Sales (oz.) | Ounces in inventory | Ounces in inventory | ||||||
Pueblo Viejo | 322,500 | 543,300 | N/A | N/A | 322,900 | 323,700 | ||||||
Six Months Ended | Six Months Ended | |||||||||||
December 31, 2016 | December 31, 2015 | As of December 31, 2016 | As of June 30, 2016 | |||||||||
Gold Stream | Purchases (oz.) | Sales (oz.) | Purchases (oz.) | Sales (oz.) | Ounces in inventory | Ounces in inventory | ||||||
Mount Milligan | 53,400 | 54,600 | 62,400 | 59,600 | 6,300 | 7,500 | ||||||
Pueblo Viejo | 29,200 | 24,600 | 20,600 | 8,800 | 15,600 | 11,000 | ||||||
Andacollo | 24,500 | 24,400 | 19,800 | 14,700 | 100 | - | ||||||
Wassa and Prestea | 8,900 | 8,600 | 12,700 | 12,000 | 1,600 | 1,300 | ||||||
Phoenix Gold | - | - | 200 | 200 | - | - | ||||||
Total | 116,000 | 112,200 | 115,700 | 95,300 | 23,600 | 19,800 | ||||||
Six Months Ended | Six Months Ended | |||||||||||
December 31, 2016 | December 31, 2015 | As of December 31, 2016 | As of June 30, 2016 | |||||||||
Silver Stream | Purchases (oz.) | Sales (oz.) | Purchases (oz.) | Sales (oz.) | Ounces in inventory | Ounces in inventory | ||||||
Pueblo Viejo | 865,800 | 866,600 | N/A | N/A | 322,900 | 323,700 | ||||||
ROYAL GOLD, INC. | ||||||||
December 31, 2016 | June 30, 2016 | |||||||
ASSETS | ||||||||
Cash and equivalents | $ | 83,988 | $ | 116,633 | ||||
Royalty receivables | 23,489 | 17,990 | ||||||
Income tax receivable | 16,821 | 20,043 | ||||||
Stream inventory | 10,179 | 9,489 | ||||||
Prepaid expenses and other | 1,720 | 614 | ||||||
Total current assets | 136,197 | 164,769 | ||||||
Stream and royalty interests, net | 2,961,328 | 2,848,087 | ||||||
Other assets | 62,719 | 53,696 | ||||||
Total assets | $ | 3,160,244 | $ | 3,066,552 | ||||
LIABILITIES | ||||||||
Accounts payable | $ | 2,282 | $ | 4,114 | ||||
Dividends payable | 15,680 | 15,012 | ||||||
Other current liabilities | 4,376 | 3,554 | ||||||
Total current liabilities | 22,338 | 22,680 | ||||||
Debt | 677,429 | 600,685 | ||||||
Deferred tax liabilities | 120,773 | 133,867 | ||||||
Uncertain tax positions | 23,048 | 16,996 | ||||||
Other long-term liabilities | 6,391 | 6,439 | ||||||
Total liabilities | 849,979 | 780,667 | ||||||
Commitments and contingencies | ||||||||
EQUITY | ||||||||
Preferred stock, $.01 par value, authorized 10,000,000 shares authorized; and 0 shares issued | - | - | ||||||
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,168,023 and 65,093,950 shares outstanding, respectively | 652 | 651 | ||||||
Additional paid-in capital | 2,182,521 | 2,179,781 | ||||||
Accumulated other comprehensive income | 822 | - | ||||||
Accumulated earnings | 75,732 | 48,584 | ||||||
Total Royal Gold stockholders’ equity | 2,259,727 | 2,229,016 | ||||||
Non-controlling interests | 50,538 | 56,869 | ||||||
Total equity | 2,310,265 | 2,285,885 | ||||||
Total liabilities and equity | $ | 3,160,244 | $ | 3,066,552 | ||||
ROYAL GOLD, INC. | ||||||||||||||||
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue | $ | 106,961 | $ | 98,118 | $ | 224,909 | $ | 172,173 | ||||||||
Costs and expenses | ||||||||||||||||
Cost of sales | 22,502 | 22,572 | 45,163 | 34,038 | ||||||||||||
General and administrative | 7,538 | 5,841 | 18,045 | 15,352 | ||||||||||||
Production taxes | 445 | 996 | 942 | 2,588 | ||||||||||||
Exploration costs | 2,476 | 1,129 | 5,764 | 4,285 | ||||||||||||
Depreciation, depletion and amortization | 39,519 | 40,407 | 79,621 | 67,555 | ||||||||||||
Total costs and expenses | 72,480 | 70,945 | 149,535 | 123,818 | ||||||||||||
Operating income | 34,481 | 27,173 | 75,374 | 48,355 | ||||||||||||
Interest and other income | 7,488 | 386 | 9,045 | 615 | ||||||||||||
Interest and other expense | (9,823 | ) | (8,899 | ) | (18,128 | ) | (16,076 | ) | ||||||||
Income before income taxes | 32,146 | 18,660 | 66,291 | 32,894 | ||||||||||||
Income tax expense | (5,044 | ) | (4,740 | ) | (12,232 | ) | (63,917 | ) | ||||||||
Net income (loss) | 27,102 | 13,920 | 54,059 | (31,023 | ) | |||||||||||
Net loss attributable to non-controlling interests | 960 | 1,194 | 3,791 | 1,090 | ||||||||||||
Net income (loss) attributable to Royal Gold common stockholders | $ | 28,062 | $ | 15,114 | $ | 57,850 | $ | (29,933 | ) | |||||||
Net income (loss) | $ | 27,102 | $ | 13,920 | $ | 54,059 | $ | (31,023 | ) | |||||||
Adjustments to comprehensive income (loss), net of tax | ||||||||||||||||
Unrealized change in market value of available-for-sale securities | 822 | 2,587 | 822 | 2,138 | ||||||||||||
Comprehensive income (loss) | 27,924 | 16,507 | 54,881 | (28,885 | ) | |||||||||||
Comprehensive loss attributable to non-controlling interests | 960 | 1,194 | 3,791 | 1,090 | ||||||||||||
Comprehensive income (loss) attributable to Royal Gold stockholders | $ | 28,884 | $ | 17,701 | $ | 58,672 | $ | (27,795 | ) | |||||||
Net income (loss) per share available to Royal Gold common stockholders: | ||||||||||||||||
Basic earnings (loss) per share | $ | 0.43 | $ | 0.23 | $ | 0.89 | $ | (0.46 | ) | |||||||
Basic weighted average shares outstanding | 65,149,518 | 65,073,678 | 65,133,102 | 65,061,059 | ||||||||||||
Diluted earnings (loss) per share | $ | 0.43 | $ | 0.23 | $ | 0.88 | $ | (0.46 | ) | |||||||
Diluted weighted average shares outstanding | 65,253,209 | 65,121,744 | 65,264,137 | 65,061,059 | ||||||||||||
Cash dividends declared per common share | $ | 0.24 | $ | 0.23 | $ | 0.47 | $ | 0.45 | ||||||||
ROYAL GOLD, INC. | ||||||||||||||||
For The Three Months Ended | For The Six Months Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | 27,102 | $ | 13,920 | $ | 54,059 | $ | (31,023 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Depreciation, depletion and amortization | 39,519 | 40,407 | 79,621 | 67,555 | ||||||||||||
Amortization of debt discount and issuance costs | 3,400 | 3,243 | 6,751 | 6,440 | ||||||||||||
Non-cash employee stock compensation expense | 2,299 | 1,222 | 6,443 | 5,449 | ||||||||||||
Tax benefit of stock-based compensation exercises | (101 | ) | 97 | (77 | ) | 247 | ||||||||||
Deferred tax benefit | (2,181 | ) | - | (3,211 | ) | (11,767 | ) | |||||||||
Other | (4,485 | ) | - | (4,638 | ) | (390 | ) | |||||||||
Changes in assets and liabilities: | ||||||||||||||||
Royalty receivables | 463 | 1,626 | (5,499 | ) | 14,768 | |||||||||||
Stream inventory | 2,436 | (4,021 | ) | (689 | ) | (6,002 | ) | |||||||||
Income taxes receivable | 4,308 | (2,812 | ) | (12,172 | ) | 3,530 | ||||||||||
Prepaid expenses and other assets | 889 | 4,725 | (835 | ) | 2,043 | |||||||||||
Accounts payable | (3,609 | ) | (5,358 | ) | (1,832 | ) | (2,092 | ) | ||||||||
Uncertain tax positions | (322 | ) | 729 | 6,052 | 806 | |||||||||||
Other liabilities | (55 | ) | (1,673 | ) | 822 | 5,032 | ||||||||||
Net cash provided by operating activities | $ | 69,663 | $ | 52,105 | $ | 124,795 | $ | 54,596 | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Acquisition of stream and royalty interests | (102,735 | ) | (24,103 | ) | (192,818 | ) | (1,324,984 | ) | ||||||||
Andacollo royalty termination | - | - | - | 345,000 | ||||||||||||
Golden Star term loan | - | - | - | (20,000 | ) | |||||||||||
Other | 2,000 | (43 | ) | 1,774 | (271 | ) | ||||||||||
Net cash used in investing activities | $ | (100,735 | ) | $ | (24,146 | ) | $ | (191,044 | ) | $ | (1,000,255 | ) | ||||
Cash flows from financing activities: | ||||||||||||||||
Borrowings from revolving credit facility | - | - | 70,000 | 350,000 | ||||||||||||
Net payments from issuance of common stock | (282 | ) | - | (2,320 | ) | - | ||||||||||
Common stock dividends | (15,023 | ) | (14,358 | ) | (30,035 | ) | (28,699 | ) | ||||||||
Purchase of additional royalty interest from non-controlling interest | (413 | ) | - | (1,438 | ) | - | ||||||||||
Tax expense of stock-based compensation exercises | 101 | (97 | ) | 77 | (247 | ) | ||||||||||
Other | (2,365 | ) | (214 | ) | (2,680 | ) | (644 | ) | ||||||||
Net cash (used in) provided by financing activities | $ | (17,982 | ) | $ | (14,669 | ) | $ | 33,604 | $ | 320,410 | ||||||
Net (decrease) increase in cash and equivalents | (49,054 | ) | 13,290 | (32,645 | ) | (625,249 | ) | |||||||||
Cash and equivalents at beginning of period | 133,042 | 104,310 | 116,633 | 742,849 | ||||||||||||
Cash and equivalents at end of period | $ | 83,988 | $ | 117,600 | $ | 83,988 | $ | 117,600 | ||||||||
SCHEDULE A
Non-GAAP Financial Measures
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Our management uses Adjusted EBITDA and Adjusted Net Income as measures of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; in communications with the board of directors, stockholders, analysts and investors concerning our financial performance; as useful comparisons to the performance of our competitors; and as metrics of certain management incentive compensation calculations. We believe that these measures are used by and are useful to investors and other users of our financial statements in evaluating our operating performance because they provide an additional tool to evaluate our performance without regard to special and non-core items, which can vary substantially from company to company depending upon accounting methods and book value of assets and capital structure. We have provided reconciliations of all non-GAAP measures to their nearest U.S. GAAP measures and have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. Such adjustments are subjective and involve significant management judgment.
Adjusted EBITDA Reconciliation
Adjusted EBITDA is defined by the Company as net income (loss) plus depreciation, depletion and amortization, non-cash charges, income tax expense, interest and other expense, and any impairment of mining assets, less non-controlling interests in operating loss (income) of consolidated subsidiaries, interest and other income, and any royalty portfolio restructuring gains or losses. Other companies may define and calculate this measure differently. Adjusted EBITDA identifies the cash generated in a given period that will be available to fund the Company's future operations, growth opportunities, shareholder dividends and to service the Company's debt obligations. This information differs from measures of performance determined in accordance with U.S. generally accepted accounting principles and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. See the table below for a reconciliation of net income to Adjusted EBITDA.
| |||||||||||||
For The Three Months Ended | For The Six Months Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
(Unaudited, in thousands) | (Unaudited, in thousands) | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Net income (loss) | $ | 27,102 | $ | 13,920 | $ | 54,059 | $ | (31,023 | ) | ||||
Depreciation, depletion and amortization | 39,519 | 40,407 | 79,621 | 67,555 | |||||||||
Non-cash employee stock compensation | 2,299 | 1,222 | 6,443 | 5,449 | |||||||||
Interest and other, net | 2,335 | 8,513 | 9,083 | 15,461 | |||||||||
Income tax expense | 5,044 | 4,740 | 12,232 | 63,917 | |||||||||
Non-controlling interests in operating loss of consolidated subsidiaries | 2,091 | 1,194 | 5,076 | 1,090 | |||||||||
Adjusted EBITDA | $ | 78,390 | $ | 69,996 | $ | 166,514 | $ | 122,449 | |||||
SCHEDULE A
Adjusted Net Income (Loss) Reconciliation
Management of the Company uses adjusted net income (loss) to evaluate the Company’s operating performance, and for planning and forecasting future business operations. The Company believes the use of adjusted net income (loss) allows investors and analysts to understand the results relating to receipt of revenue from its royalty interests and purchase and sale of gold from its streaming interests by excluding certain items that have a disproportionate impact on our results for a particular period. The net income (loss) adjustments are presented net of tax generally at the Company’s statutory effective tax rate. Management’s determination of the components of adjusted net income (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income (loss) attributable to Royal Gold stockholders is reconciled to adjusted net income (loss) as follows:
For The Three Months Ended | For The Six Months Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
(Unaudited, in thousands) | (Unaudited, in thousands) | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) attributable to Royal Gold common stockholders | $ | 28,062 | $ | 15,114 | $ | 57,850 | $ | (29,933 | ) | ||||||
Non-recurring gains on restructuring of certain stream and royalty interests, net of tax | (4,717 | ) | (4,717 | ) | |||||||||||
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation | - | - | - | 56,000 | |||||||||||
Adjusted net income attributable to Royal Gold common stockholders | $ | 23,345 | $ | 15,114 | $ | 53,133 | $ | 26,067 | |||||||
Net income (loss) attributable to Royal Gold common stockholders per basic share | $ | 0.43 | $ | 0.23 | $ | 0.89 | $ | (0.46 | ) | ||||||
Non-recurring gains on restructuring of certain stream and royalty interests, net of tax | (0.07 | ) | (0.07 | ) | |||||||||||
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation | - | - | - | 0.86 | |||||||||||
Adjusted net income attributable to Royal Gold common stockholders per basic share | $ | 0.36 | $ | 0.23 | $ | 0.82 | $ | 0.40 | |||||||
Net income (loss) attributable to Royal Gold common stockholders per diluted share | $ | 0.43 | $ | 0.23 | $ | 0.88 | $ | (0.46 | ) | ||||||
Non-recurring gains on restructuring of certain stream and royalty interests, net of tax | (0.07 | ) | (0.07 | ) | |||||||||||
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation | - | - | - | 0.86 | |||||||||||
Adjusted net income attributable to Royal Gold common stockholders per diluted share | $ | 0.36 | $ | 0.23 | $ | 0.81 | $ | 0.40 | |||||||
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1 GEOs are calculated as revenue divided by the average gold price for the same period. GEOs net of stream payments were 69,100 in the second quarter, compared to 68,300 a year ago.
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Contact
Royal Gold, Inc.
Karli Anderson, 303-575-6517
Vice President Investor Relations