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Press Release

Sprott Announces 2019 Annual Results

TORONTO, Feb. 28, 2020 (GLOBE NEWSWIRE) -- 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)
Market
Value
Changes
  Other (2)AUM
Dec. 31, 2019
Exchange Listed Products         
  - Physical Trusts7,927(177)842 — 8,592 
  - ETFs23711 82 — 330 
 8,164(166)924 — 8,922 
          
Lending498858 (55)(282)1,019 (3)
          
Managed Equities         
  - In-house53866 52 — 656 
  - Sub-advised50579 — 587 
 1,04369 131 — 1,243 
          
Other87368 (43)— 898 
          
Total10,578829 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).

Dividends
On February 27, 2020, a dividend of $0.03 per common share was declared for the quarter ended December 31, 2019.

Conference Call and Webcast
A 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, 2019Dec. 31, 2018
   
Net income (loss) for the periods13,532 31,379 
Adjustments:  
Interest expense1,373 419 
Provision (recovery) for income taxes3,619 1,278 
Depreciation and amortization5,033 2,199 
EBITDA23,557 35,275 
   
Other adjustments:  
(Gains) losses on net investments (1)1,401 5,782 
(Gains) losses on foreign exchange1,960 (2,310)
Non-cash stock-based compensation5,120 5,199 
Net proceeds from sale transaction (4,200)
Unamortized placement fees (2) (1,093)
Other expenses(3)7,509 2,746 
Adjusted EBITDA39,547 41,399 
   
Other adjustments:  
Carried interest and performance fees(2,391)(1,802)
Carried interest and performance fee related expenses1,310 915 
Adjusted base EBITDA38,466 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 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 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 Sprott
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, 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 Williams
Managing Director
Investor Relations and Corporate Communications
(416) 943-4394
gwilliams@sprott.com 

 

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