Workflow
Royal Gold(RGLD) - 2023 Q4 - Earnings Call Transcript
RGLDRoyal Gold(RGLD)2024-02-15 18:24
Filings
Slide

Financial Data and Key Metrics Changes - Revenue for 2023 was 606million,withoperatingcashflowof606 million, with operating cash flow of 416 million and earnings of 239millionor239 million or 3.63 per share [30][31] - For Q4 2023, revenue decreased by 6% to 153million,primarilyduetolowercontributionsfromMountMilligan,PuebloViejo,andPen~asquito[46][72]−AdjustedEBITDAmarginremainedstrongat79153 million, primarily due to lower contributions from Mount Milligan, Pueblo Viejo, and Peñasquito [46][72] - Adjusted EBITDA margin remained strong at 79%, despite inflation pressures affecting operating companies [36] Business Line Data and Key Metrics Changes - Royalty segment revenue for Q4 was 54 million, contributing 36% of total revenue, which is a larger share compared to previous periods [40] - Stream segment revenue decreased to 98million,withlowercontributionsfromMountMilliganandPuebloViejo,partiallyoffsetbyhigherrevenuefromAndacollo,Xavantina,andRainyRiver[65]−Theoverallsalesfortheyearwere315,600GEOs,slightlybelowtheguidanceof320,000to345,000GEOsduetounderperformanceatPen~asquitoandPuebloViejo[64]MarketDataandKeyMetricsChanges−Goldpricesincreasedby1498 million, with lower contributions from Mount Milligan and Pueblo Viejo, partially offset by higher revenue from Andacollo, Xavantina, and Rainy River [65] - The overall sales for the year were 315,600 GEOs, slightly below the guidance of 320,000 to 345,000 GEOs due to underperformance at Peñasquito and Pueblo Viejo [64] Market Data and Key Metrics Changes - Gold prices increased by 14%, silver prices by 10%, and copper prices by 2% during the year [72] - The company maintained a high gold revenue percentage at 80%, the highest among peers in the royalty and streaming sector [72] Company Strategy and Development Direction - The company aims to maintain a disciplined focus on gold, strengthen its balance sheet, and increase capital return, with a commitment to non-dilutive financing for high-quality asset acquisitions [54] - An agreement with Centerra was announced to provide future cost support to the Mount Milligan mine, extending its life to 2035 and potentially beyond [37][63] - The company plans to provide full-year guidance for 2024 early in the second quarter, reflecting lower production at Cortez and smaller organic growth assets [91] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation pressures have eased but still impact operating companies, leading to cost inflation and margin erosion [36] - The company expressed confidence in its strong financial position and liquidity to pursue business development opportunities [91] - Management acknowledged challenges in production guidance due to issues at Nevada Gold Mines, particularly related to accessing grade [92][94] Other Important Information - The company repaid 325 million on its revolving credit facility during the year, reducing the balance to 250millionandincreasingtotalavailableliquiditytoapproximately250 million and increasing total available liquidity to approximately 845 million [31][52] - The effective tax rate for the quarter was 17.5%, slightly lower than the previous year [49] Q&A Session Summary Question: What is the impact of the issues at Cortez on future production? - Management indicated that the overall decrease in production from 2023 to 2024 is expected to be around 40% to 50% due to issues at the Crossroads area [86][94] Question: How does the company plan to account for the Mount Milligan deal? - The company anticipates recognizing cash and deferred gold ounces as receivables, with the need to mark-to-market the receivable through the P&L in subsequent reporting periods [136][144] Question: What is the outlook for M&A opportunities? - Management noted that the current market is seeing smaller opportunities due to high costs of debt, but they remain open to financing partnerships [118][120]