Sprott Inc. (TSX: SII) (“Sprott” or the “Company”) today announced
its financial results for the year ended December 31, 2019.
Financial Overview (12 months
results)
- Assets Under Management (“AUM”)
were $12.1 billion as at December 31, 2019, up $1.5 billion (14%)
from December 31, 2018
- Total net revenues (net of
commission expenses, trailer fees and sub-advisor fees, carried
interest and performance fee payouts) were $84 million, reflecting
a decrease of $12.7 million (13%) from the year ended December 31,
2018. Last year's net revenues contained $4.2 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 $66.8 million,
reflecting an increase of $2.8 million (4%) from the year ended
December 31, 2018
- Net income was $13.5 million ($0.06
per share), reflecting a decrease of $17.8 million from the year
ended December 31, 2018. Last year's net income contained $4.2
million of proceeds from the sale of our non-core diversified
assets
- Adjusted base EBITDA was $38.5
million ($0.16 per share), a decrease of $2 million (5%) from the
year ended December 31, 2018
Significant Events:
- As of February 27, 2020, Sprott's
AUM increased to approximately $15.4 billion due to the acquisition
of Tocqueville Asset Management's gold strategies, stronger
precious metal prices and inflows into the company's
Exchange-Listed Products and Lending funds
- The Company renewed its Normal
Course Issuer Bid on November 15, 2019 and as of December 31, 2019,
had repurchased 740,600 shares for cancellation
"In 2019, stronger precious metals prices
contributed to Sprott’s Assets Under Management (“AUM”) increasing
by 14% to $12.1 billion," said Peter Grosskopf, CEO of Sprott.
"This momentum has carried through into the early months of 2020
and our AUM has now surpassed $15 billion, a new high for the
Company. This growth has been driven by a number of factors,
including the acquisition of the Tocqueville gold strategies,
inflows into our physical trusts and lending strategies, as well as
continued strong performance from gold, silver and their related
equities. With a global platform, an industry-leading investment
team, and the ability to offer clients access to the full spectrum
of precious metal investment strategies, Sprott is well positioned
to benefit from a new uptrend in the sector."
Assets Under Management (12 months
results)
(In millions $) |
AUM Dec. 31, 2018 |
Net Inflows (1) |
MarketValueChanges |
Other (2) |
AUMDec. 31, 2019 |
Exchange Listed
Products |
|
|
|
|
|
|
|
|
|
- Physical Trusts |
7,927 |
(177) |
842 |
— |
8,592 |
|
- ETFs |
237 |
11 |
82 |
— |
330 |
|
|
8,164 |
(166) |
924 |
— |
8,922 |
|
|
|
|
|
|
|
|
|
|
|
Lending |
498 |
858 |
(55) |
(282) |
1,019 |
(3) |
|
|
|
|
|
|
|
|
|
|
Managed
Equities |
|
|
|
|
|
|
|
|
|
- In-house |
538 |
66 |
52 |
— |
656 |
|
- Sub-advised |
505 |
3 |
79 |
— |
587 |
|
|
1,043 |
69 |
131 |
— |
1,243 |
|
|
|
|
|
|
|
|
|
|
|
Other |
873 |
68 |
(43) |
— |
898 |
|
|
|
|
|
|
|
|
|
|
|
Total |
10,578 |
829 |
957 |
(282) |
12,082 |
|
(1) See 'Net Inflows' in the key performance indicators
(non-IFRS financial measures) section of the MD&A
(2) Includes new AUM from fund acquisitions and lost AUM
from fund divestitures and capital distributions of our lending
LPs.
(3) $1.7 billion (US$1.3 billion) of committed capital
remains uncalled, of which $697 million (US$536 million) earns a
commitment fee (AUM), and $980 million (US$754 million) does not
(future AUM).
DividendsOn February 27, 2020, a dividend of
$0.03 per common share was declared for the quarter ended
December 31, 2019.
Conference Call and WebcastA
conference call and webcast will be held today, February 28, 2020
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
ID8819354. A taped replay of the conference call will be
available until Friday, March 6, 2020 by calling (855) 859-2056,
reference number 8819354. The conference call will be webcast live
at www.sprott.com and
https://edge.media-server.com/mmc/p/hwjy6zyh
*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 annual 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, 2019 |
Dec. 31, 2018 |
|
|
|
Net income (loss) for
the periods |
13,532 |
|
31,379 |
|
Adjustments: |
|
|
Interest expense |
1,373 |
|
419 |
|
Provision (recovery) for income taxes |
3,619 |
|
1,278 |
|
Depreciation and amortization |
5,033 |
|
2,199 |
|
EBITDA |
23,557 |
|
35,275 |
|
|
|
|
Other adjustments: |
|
|
(Gains) losses on net investments (1) |
1,401 |
|
5,782 |
|
(Gains) losses on foreign exchange |
1,960 |
|
(2,310 |
) |
Non-cash stock-based compensation |
5,120 |
|
5,199 |
|
Net proceeds from sale transaction |
— |
|
(4,200 |
) |
Unamortized placement fees (2) |
— |
|
(1,093 |
) |
Other expenses(3) |
7,509 |
|
2,746 |
|
Adjusted
EBITDA |
39,547 |
|
41,399 |
|
|
|
|
Other adjustments: |
|
|
Carried interest and performance fees |
(2,391 |
) |
(1,802 |
) |
Carried interest and performance fee related expenses |
1,310 |
|
915 |
|
Adjusted base EBITDA |
38,466 |
|
40,512 |
|
(1) This adjustment removes the income effects
of certain gains or losses on proprietary and long-term investments
to ensure the reporting objectives of our EBITDA metric are
met.
(2) The prior period comparative figures
contained a placement fee amortization adjustment to ensure the
2018 results were comparable to 2017 in light of the 2018 adoption
of IFRS 15
(3) See Other expenses in Note 7 of the annual
financial statements. In addition to the items outlined in Note 7,
Other expenses also includes severance and new hire accruals of
$1.4 million for the 12 months ended (12 months ended December 31,
2018 - $0.5 million)
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) market outlook and
future metal prices; (ii) Sprott’s positioning to benefit from a
new uptrend in gold, silver and related equities; (iii) future
purchases by Sprott of the Shares pursuant to the normal course
issuer bid; and (iv) 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
December 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, 2020; 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, 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, Sprott is dedicated to providing investors with
specialized investment strategies that include Exchange Listed
Products, Lending, Managed Equities and Brokerage. Sprott’s 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
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