Royal Gold Reports First Quarter 2018 Results
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Royal Gold Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports net income of $28.6 million, or $0.44 per share, on revenue of $112.5 million in its fiscal first quarter ended September 30, 2017. Subsequent to our first quarter-end, New Gold declared commercial production at Rainy River.
Fiscal First Quarter Highlights Compared to Prior Year Quarter:
- Revenue of $112 million, a decrease of 5%
- Operating cash flow of $72 million, an increase of 30%
- Volume of 88,000 GEOs,1 in line with the prior year quarter
- Dividends paid of $16 million, an increase of 4%
- Repaid $50 million on revolving credit facility
- Average gold price of $1,278, down 4%
“The first fiscal quarter reflected steady results, strong cash flow generation, debt reduction, and growth that is already bought and paid for,” commented Tony Jensen, President and CEO. “Our gold and silver stream at Rainy River will further complement Royal Gold’s results in the December quarter. We congratulate New Gold on achieving commercial production at Rainy River ahead of schedule, and we are very pleased to add another Canadian property to our portfolio of 40 worldwide producing interests.”
Recent Developments
New Gold’s Rainy River
On October 19, 2017, New Gold announced that its Rainy River mine, located near Fort Frances, Ontario, achieved commercial production approximately two weeks ahead of schedule. In its first 30 days of operation, New Gold reported that Rainy River successfully processed approximately 457,000 tonnes of ore and that both grade and recoveries have been consistent with its commissioning plan. For the period October 1 to October 24, Rainy River processed an average of 18,500 tonnes per day, which is approximately 88% of nameplate capacity.
On September 28, New Gold announced the approval of its Schedule 2 Amendment that was required to complete construction of the main tailing storage facility.
Royal Gold has a streaming interest on 6.5% of the gold (3.25% after delivery of 230,000 ounces) and 60% of the silver (30% after delivery of 3,100,000 ounces) produced at Rainy River. At calendar year-end 2016, New Gold reported reserves of approximately 3.9 million ounces of gold reserves and 10 million ounces of silver reserves at Rainy River.2
First Fiscal Quarter 2018 Overview
First quarter revenue was $112.5 million compared to $118.0 million in the prior year quarter. Stream and royalty revenue totaled $78.8 million and $33.7 million, respectively, for the quarter. Revenue decreased due to a lower gold price and lower gold sales at Mount Milligan and Andacollo, partially offset by higher sales at Wassa and Prestea and new copper sales from Mount Millligan. Copper deliveries from Mount Milligan began in the June 2017 quarter.
First quarter cost of sales of $20.4 million was below the $22.7 million recorded in the prior year quarter, driven by lower gold sales from Andacollo and Mount Milligan.
General and administrative expenses decreased to $6.9 million in the first quarter, compared to $10.5 million in the prior year quarter. The decrease was primarily related to $1.8 million in lower non-cash stock-based compensation charges and a decrease in legal costs of approximately $1.1 million.
Exploration costs, which are related to our Peak Gold Joint Venture, were $3.2 million in the first quarter, which was in line with the prior year quarter.
Interest and other expense of $8.6 million was in line with the prior year quarter of $8.3 million.
We recognized first quarter income tax expense of $7.5 million, compared to $7.2 million during the prior year quarter. This resulted in an effective tax rate of 22.1% compared to 21.1% in the prior year quarter. The increase was primarily related to a re-measurement of Canadian dollar deferred tax liabilities due to foreign exchange rate changes.
At September 30, 2017, we had current assets of $155.8 million compared to current liabilities of $39.7 million, resulting in working capital of $116.1 million. This compares to current assets of $143.6 million and current liabilities of $34.3 million at June 30, 2017, resulting in working capital of $109.3 million.
During the first quarter, liquidity needs were met from our available cash resources and $84.6 million in revenue net of our streaming payments. The Company repaid $50 million of the outstanding revolving credit facility during the quarter resulting in $800 million available and $200 million outstanding under its revolving credit facility as of September 30, 2017. Working capital, combined with the Company’s undrawn revolving credit facility, totals $916 million of liquidity at September 30, 2017.
______________________________
1 Gold Equivalent Ounces, (“GEOs”) are calculated as revenue divided by the average gold price for the same period. GEOs net of stream payments were 72,000 in the first quarter, compared to 71,300 in the prior year quarter.
2 Cautionary Note to U.S. Investors Concerning Estimates of Proven and Probable Mineral Reserves and Measured and Indicated Mineral Resources: The mineral reserve estimates reported by New Gold were prepared in accordance with Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves. Royal Gold has not reconciled the reserve estimates provided by New Gold with definitions of reserves used by the U.S. Securities and Exchange Commission.
PROPERTY HIGHLIGHTS
A summary of first quarter and historical production reported can be found on Tables 1 and 2. Calendar year 2017 operator production estimates of certain properties in which we have interests compared to actual production through September 30, 2017 can be found on Table 3. Results of our streaming business for the first quarter, compared to the prior year quarter, can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during the first quarter, compared to the prior year quarter, are detailed in our Annual Report on Form 10-K.
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 197 properties on six continents, including interests on 40 producing mines and 23 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 first quarter results will be held on Thursday, November 2, 2017, 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.
First 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 cash flow growth, debt reduction and growth already bought and paid for; Rainy River as a new source of revenue providing further growth and revenue diversification; and operators’ production estimates for calendar year 2017. Net gold and metal reserves attributable to Royal Gold’s stream, royalty and other interests are subject to certain assumptions and, like reserves, do not reflect actual ounces that will be produced. Like any stream, royalty or similar interest on a non-producing or not-yet-in-development project, our interests on development projects are subject to certain risks, such as the ability of the operators to bring the projects into production and operate in accordance with their feasibility studies and mine plans, and the ability of Royal Gold to make accurate assumptions regarding valuation and timing and amount of payments. In addition, many of our interests are subject to risks associated with conducting business in a foreign country, including application of foreign laws to contract and other disputes, foreign environmental laws and enforcement and uncertain political and economic environments. 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 and gold and silver production at Pueblo Viejo; 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 or maintain 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 Company’s stream and royalty 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 deliveries and royalty payments, or deliveries or payments not made in accordance with stream and royalty agreements; economic and market conditions; changes in laws governing the Company and its stream and royalty interests or the operators of the properties subject to such interests, 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 2017, has been provided to us by the operators of the relevant 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 First Quarter Fiscal 2018 Revenue and Reported Production for Principal Stream and Royalty Interests (In thousands, except reported production in oz. and lbs.) | ||||||||||||||||||||
|
| Three Months Ended | Three Months Ended | |||||||||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||||||||||
| Reported | Reported | ||||||||||||||||||
Stream/Royalty | Metal(s) | Revenue | Production1 | Revenue | Production1 | |||||||||||||||
Stream: | ||||||||||||||||||||
Mount Milligan | $ 31,952 | $ 38,386 | ||||||||||||||||||
Gold | 18,600 | oz. | 28,900 | oz. | ||||||||||||||||
Copper | 2.6 | Mlbs. | N/A | |||||||||||||||||
Pueblo Viejo2 | $ 25,403 | $ 20,950 | ||||||||||||||||||
Gold | 12,900 | oz. | 11,000 | oz. | ||||||||||||||||
Silver | 536,600 | oz. | 323,300 | oz. | ||||||||||||||||
Andacollo | Gold | $ 12,337 | 9,700 | oz. | $ 20,169 | 15,200 | oz. | |||||||||||||
Wassa and Prestea | Gold | $ 9,070 | 7,100 | oz. | $ 5,999 | 4,500 | oz. | |||||||||||||
Total stream revenue | $ 78,762 | $ 85,504 | ||||||||||||||||||
Royalty: | ||||||||||||||||||||
Peñasquito | $ 7,796 | $ 5,821 | ||||||||||||||||||
Gold | 134,000 | oz. | 100,100 | oz. | ||||||||||||||||
Silver | 5.9 | Moz. | 5.2 | Moz. | ||||||||||||||||
Lead | 36.2 | Mlbs. | 33.0 | Mlbs. | ||||||||||||||||
Zinc | 92.4 | Mlbs. | 73.0 | Mlbs. | ||||||||||||||||
Cortez | Gold | $ 2,988 | 29,900 | oz. | $ 2,040 | 21,800 | oz. | |||||||||||||
Other3 | Various | $ 22,930 | N/A | $ 24,582 | N/A | |||||||||||||||
Total royalty revenue | $ 33,714 | $ 32,443 | ||||||||||||||||||
Total revenue | $ 112,476 | $ 117,947 | ||||||||||||||||||
TABLE 2 Historical Production | ||||||||||||||||||||||||||||||||||
|
|
| Reported Production For The Quarter Ended1 | |||||||||||||||||||||||||||||||
Property | Stream/Royalty | Operator | Metal(s) | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | ||||||||||||||||||||||||||
Stream: | ||||||||||||||||||||||||||||||||||
Mount Milligan4 | 35.00% of payable | Centerra | Gold | 18,600 | oz. | 19,800 | oz. | 28,900 | oz. | 25,700 | oz. | 28,900 | oz. | |||||||||||||||||||||
Copper | 2.6 | Mlbs. | 2.6 | Mlbs. | N/A | N/A | N/A | |||||||||||||||||||||||||||
Pueblo Viejo | 7.5% of gold | Barrick (60%) | Gold | 12,900 | oz. | 10,500 | oz. | 15,600 | oz. | 13,700 | oz. | 11,000 | oz. | |||||||||||||||||||||
75% of payable | Silver | 536,600 | oz. | 374,500 | oz. | 322,000 | oz. | 543,300 | oz. | 323,300 | oz. | |||||||||||||||||||||||
Andacollo | 100% of gold | Teck | Gold | 9,700 | oz. | 14,900 | oz. | 8,500 | oz. | 9,200 | oz. | 15,200 | oz. | |||||||||||||||||||||
Wassa and Prestea | 9.25% of gold | Golden Star | Gold | 7,100 | oz. | 6,300 | oz. | 5,400 | oz. | 4,000 | oz. | 4,500 | oz. | |||||||||||||||||||||
Royalty: | ||||||||||||||||||||||||||||||||||
Peñasquito | 2.0% NSR | Goldcorp | ||||||||||||||||||||||||||||||||
Gold | 134,000 | oz. | 133,300 | oz. | 137,500 | oz. | 185,400 | oz. | 100,100 | oz. | ||||||||||||||||||||||||
Silver | 5.9 | Moz. | 5.6 | Moz. | 4.8 | Moz. | 5.0 | Moz. | 5.2 | Moz. | ||||||||||||||||||||||||
Lead | 36.2 | Mlbs. | 27.4 | Mlbs. | 31.3 | Mlbs. | 33.6 | Mlbs. | 33.0 | Mlbs. | ||||||||||||||||||||||||
Zinc | 92.4 | Mlbs. | 85.7 | Mlbs. | 88.5 | Mlbs. | 70.5 | Mlbs. | 73.0 | Mlbs. | ||||||||||||||||||||||||
Cortez | GSR1 and GSR2, | Barrick | Gold | 29,900 | oz. | 16,600 | oz. | 11,300 | oz. | 14,500 | oz. | 21,800 | 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 | The first silver stream deliveries were in March 2016, with the first silver sales made during the June 2016 quarter. | |
3 | Individually, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for the entire period. | |
4 | Reflects the October 20, 2016 amendment to our Mount Milligan streaming agreement. Prior to the amendment, Royal Gold held a 52.25% gold stream. Gold concentrate that was in transit at October 20, 2016 was delivered to us under the 52.25% gold stream. Royal Gold began receiving gold and copper deliveries reflecting the amended stream agreement in April 2017. | |
TABLE 3 Calendar 2017 Operator’s Production Estimate vs Actual Production | |||||||||||||||||||
Calendar 2017 Operator's Production | Calendar 2017 Operator's Production | ||||||||||||||||||
Estimate1 | Actual2,3 | ||||||||||||||||||
Gold | Silver | Base Metals | Gold | Silver | Base Metals | ||||||||||||||
Stream/Royalty | (oz.) | (oz.) | (lbs.) | (oz.) | (oz.) | (lbs.) | |||||||||||||
Stream: | |||||||||||||||||||
Andacollo4 | 61,600 | 40,500 | |||||||||||||||||
Mount Milligan5 | 235,000-255,000 | 55 - 65 million | 164,000 | 41.3 million | |||||||||||||||
Pueblo Viejo6 | 635,000-650,000 | Not provided | 468,000 | Not provided | |||||||||||||||
Wassa and Prestea7 | 255,000-280,000 | 195,800 | |||||||||||||||||
Royalty: | |||||||||||||||||||
Cortez GSR1 | 102,200 | 57,200 | |||||||||||||||||
Cortez GSR2 | 1,600 | 600 | |||||||||||||||||
Cortez GSR3 | 103,800 | 57,800 | |||||||||||||||||
Cortez NVR1 | 63,900 | 29,900 | |||||||||||||||||
Peñasquito8 | 410,000 | Not provided | 393,000 | 16.0 million | |||||||||||||||
Lead | 125 million | 96.8 million | |||||||||||||||||
Zinc | 325 million | 263.2 million |
1 | Production estimates received from our operators are for calendar 2017. 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 and the statement regarding third party information contained in this press release, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal 2016 Form 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, 2017 through September 30, 2017. | |
3 | Actual production figures for Cortez are based on information provided to us by Barrick Gold Corp., and actual production figures for Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and Wassa and Prestea are the publicly reported figures of the operators of those properties. | |
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 and copper in concentrate. | |
6 | The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo. | |
7 | The estimated gold production figures shown for Wassa and Prestea are payable gold in concentrate and doré. | |
8 | The estimated and actual gold production figures shown for Peñasquito are payable gold in concentrate. The operator did not provide estimated silver, lead and zinc production. | |
TABLE 4 Stream Summary | ||||||||||||||||||
Three Months Ended | Three Months Ended | As of | As of | |||||||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | June 30, 2017 | |||||||||||||||
Gold Stream | Purchases (oz.) | Sales (oz.) | Purchases (oz.) | Sales (oz.) | Inventory (oz.) | Inventory (oz.) | ||||||||||||
Mount Milligan | 18,767 | 18,618 | 29,900 | 28,900 | 227 | 100 | ||||||||||||
Pueblo Viejo | 10,482 | 12,889 | 13,700 | 11,000 | 10,482 | 12,900 | ||||||||||||
Andacollo | 13,023 | 9,655 | 15,300 | 15,200 | 3,518 | 100 | ||||||||||||
Wassa and Prestea | 7,351 | 7,073 | 4,500 | 4,500 | 1,213 | 1,000 | ||||||||||||
Total | 49,623 | 48,235 | 63,400 | 59,600 | 15,440 | 14,100 | ||||||||||||
Three Months Ended | Three Months Ended | As of | As of | |||||||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | June 30, 2017 | |||||||||||||||
Silver Stream | Purchases (oz.) | Sales (oz.) | Purchases (oz.) | Sales (oz.) | Inventory (oz.) | Inventory (oz.) | ||||||||||||
Pueblo Viejo | 470,007 | 536,605 | 543,300 | 323,300 | 470,212 | 536,800 | ||||||||||||
Three Months Ended | Three Months Ended | As of | As of | |||||||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | June 30, 2017 | |||||||||||||||
Copper Stream | Purchases (tonnes) | Sales (tonnes) | Purchases (tonnes) | Sales (tonnes) | Inventory (tonnes) | Inventory (tonnes) | ||||||||||||
Mount Milligan | 1,169 | 1,169 | N/A | N/A | - | - | ||||||||||||
ROYAL GOLD, INC. Consolidated Balance Sheets As of September 30, (In thousands except share data) | |||||||||
September 30, 2017 | June 30, 2017 | ||||||||
ASSETS | |||||||||
Cash and equivalents | $ | 88,395 | $ | 85,847 | |||||
Royalty receivables | 29,079 | 26,886 | |||||||
Income tax receivable | 26,023 | 22,169 | |||||||
Stream inventory | 7,794 | 7,883 | |||||||
Prepaid expenses and other | 4,488 | 822 | |||||||
Total current assets | 155,779 | 143,607 | |||||||
Stream and royalty interests, net | 2,852,598 | 2,892,256 | |||||||
Other assets | 57,518 | 58,202 | |||||||
Total assets | $ | 3,065,895 | $ | 3,094,065 | |||||
LIABILITIES | |||||||||
Accounts payable | $ | 2,924 | $ | 3,908 | |||||
Dividends payable | 15,708 | 15,682 | |||||||
Income tax payable | 11,686 | 5,651 | |||||||
Foreign withholding taxes payable | 3,462 | 3,425 | |||||||
Other current liabilities | 5,915 | 5,617 | |||||||
Total current liabilities | 39,695 | 34,283 | |||||||
Debt | 539,772 | 586,170 | |||||||
Deferred tax liabilities | 121,731 | 121,330 | |||||||
Uncertain tax positions | 28,120 | 25,627 | |||||||
Other long-term liabilities | 6,391 | 6,391 | |||||||
Total liabilities | 735,709 | 773,801 | |||||||
Commitments and contingencies | |||||||||
EQUITY | |||||||||
Preferred stock, $.01 par value, 10,000,000 shares authorized; and 0 shares issued | - | - | |||||||
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,306,271 and 65,179,527 shares outstanding, respectively | 653 | 652 | |||||||
Additional paid-in capital | 2,184,639 | 2,185,796 | |||||||
Accumulated other comprehensive income | 1,076 | 879 | |||||||
Accumulated earnings | 100,972 | 88,050 | |||||||
Total Royal Gold stockholders’ equity | 2,287,340 | 2,275,377 | |||||||
Non-controlling interests | 42,846 | 44,887 | |||||||
Total equity | 2,330,186 | 2,320,264 | |||||||
Total liabilities and equity | $ | 3,065,895 | $ | 3,094,065 | |||||
ROYAL GOLD, INC. Consolidated Statements of Operations and Comprehensive Income (Loss) (In thousands except for per share data) | ||||||||||||
For The Three Months Ended | ||||||||||||
September 30, | September 30, | |||||||||||
2017 | 2016 | |||||||||||
Revenue | $ | 112,476 | $ | 117,947 | ||||||||
Costs and expenses | ||||||||||||
Cost of sales | 20,419 | 22,662 | ||||||||||
General and administrative | 6,899 | 10,507 | ||||||||||
Production taxes | 543 | 497 | ||||||||||
Exploration costs | 3,203 | 3,288 | ||||||||||
Depreciation, depletion and amortization | 39,692 | 40,102 | ||||||||||
Total costs and expenses | 70,756 | 77,056 | ||||||||||
Operating income | 41,720 | 40,891 | ||||||||||
Interest and other income | 989 | 1,557 | ||||||||||
Interest and other expense | (8,617 | ) | (8,305 | ) | ||||||||
Income before income taxes | 34,092 | 34,143 | ||||||||||
Income tax expense | (7,544 | ) | (7,188 | ) | ||||||||
Net income | 26,548 | 26,955 | ||||||||||
Net loss attributable to non-controlling interests | 2,083 | 2,832 | ||||||||||
Net income attributable to Royal Gold common stockholders | $ | 28,631 | $ | 29,787 | ||||||||
Net income | $ | 26,548 | $ | 26,955 | ||||||||
Adjustments to comprehensive income, net of tax | ||||||||||||
Unrealized change in market value of available-for-sale securities | 197 | - | ||||||||||
Comprehensive income | 26,745 | 26,955 | ||||||||||
Comprehensive loss attributable to non-controlling interests | 2,083 | 2,832 | ||||||||||
Comprehensive income attributable to Royal Gold stockholders | $ | 28,828 | $ | 29,787 | ||||||||
Net income per share available to Royal Gold common stockholders: | ||||||||||||
Basic earnings per share | $ | 0.44 | $ | 0.46 | ||||||||
Basic weighted average shares outstanding | 65,235,496 | 65,116,686 | ||||||||||
Diluted earnings per share | $ | 0.44 | $ | 0.46 | ||||||||
Diluted weighted average shares outstanding | 65,404,680 | 65,280,904 | ||||||||||
Cash dividends declared per common share | $ | 0.24 | $ | 0.23 | ||||||||
ROYAL GOLD, INC. Consolidated Statements of Cash Flows (In thousands) | ||||||||||
For The Three Months Ended | ||||||||||
September 30, | September 30, | |||||||||
2017 | 2016 | |||||||||
Cash flows from operating activities: | ||||||||||
Net income | $ | 26,548 | $ | 26,955 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation, depletion and amortization | 39,692 | 40,102 | ||||||||
Amortization of debt discount and issuance costs | 3,679 | 3,351 | ||||||||
Non-cash employee stock compensation expense | 2,373 | 4,144 | ||||||||
Deferred tax expense (benefit) | (727 | ) | (1,030 | ) | ||||||
Other | (223 | ) | (153 | ) | ||||||
Changes in assets and liabilities: | ||||||||||
Royalty receivables | (2,193 | ) | (7,048 | ) | ||||||
Stream inventory | 89 | (3,125 | ) | |||||||
Income tax receivable | (3,854 | ) | (3,215 | ) | ||||||
Prepaid expenses and other assets | (1,654 | ) | (1,724 | ) | ||||||
Accounts payable | (985 | ) | 1,777 | |||||||
Income tax payable | 6,035 | (13,264 | ) | |||||||
Foreign withholding taxes payable | 37 | 1,086 | ||||||||
Uncertain tax positions | 2,493 | 6,374 | ||||||||
Other liabilities | 299 | 878 | ||||||||
Net cash provided by operating activities | $ | 71,609 | $ | 55,108 | ||||||
Cash flows from investing activities: | ||||||||||
Acquisition of stream and royalty interests | (5 | ) | (90,083 | ) | ||||||
Other | 100 | (226 | ) | |||||||
Net cash provided by (used in) provided by investing activities | $ | 95 | $ | (90,309 | ) | |||||
Cash flows from financing activities: | ||||||||||
Borrowings from revolving credit facility | - | 70,000 | ||||||||
Repayment of revolving credit facility | (50,000 | ) | - | |||||||
Net payments from issuance of common stock | (3,529 | ) | (2,038 | ) | ||||||
Common stock dividends | (15,682 | ) | (15,012 | ) | ||||||
Purchase of additional royalty interest from non-controlling interest | - | (1,025 | ) | |||||||
Other | 55 | (315 | ) | |||||||
Net cash (used in) provided by financing activities | $ | (69,156 | ) | $ | 51,610 | |||||
Net increase in cash and equivalents | 2,548 | 16,409 | ||||||||
Cash and equivalents at beginning of period | 85,847 | 116,633 | ||||||||
Cash and equivalents at end of period | $ | 88,395 | $ | 133,042 | ||||||
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 as a measure 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, 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. GAAP 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 | |||||||
September 30, | |||||||
(Unaudited, in thousands) | |||||||
2017 | 2016 | ||||||
Net income | $ 26,548 | $ 26,955 | |||||
Depreciation, depletion and amortization | 39,692 | 40,102 | |||||
Non-cash employee stock compensation | 2,373 | 4,144 | |||||
Interest and other, net | 7,628 | 6,748 | |||||
Income tax expense | 7,544 | 7,188 | |||||
Non-controlling interests in operating loss of consolidated subsidiaries | 2,083 | 2,984 | |||||
Adjusted EBITDA | $ 85,868 | $ 88,121 | |||||
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Contact
Royal Gold
Karli Anderson, 303-575-6517
Vice President Investor Relations