Sprott Inc. (NYSE/TSX: SII) (“Sprott” or the “Company”) today announced its financial results for the quarter ended March 31, 2024.
Management commentary
“Sprott’s AUM once again reached record highs during the quarter, driven by stronger gold and silver prices late in the period, offset somewhat by what we view as short-term weakness in uranium and related equities. As of March 31, 2024, AUM was $29.4 billion, up $0.6 billion from the end of 2023. Subsequent to quarter end, on May 6, 2024, AUM stood at $31.2 billion,” said Whitney George, CEO of Sprott. “During the quarter, we further expanded our critical materials offerings with the launch of the Sprott Copper Miners ETF. We also added to our growing European product suite by introducing the Sprott Junior Uranium Miners UCITS ETF. We are pleased with the early responses to both.”
“We expect 2024 to be a volatile year for investors as geopolitical conflicts spread, inflation remains stubbornly high and global elections present an uncertain backdrop for investors,” continued Mr. George. “We are very confident that our core themes will continue to perform well for our clients and that our sales and marketing activities will deliver substantial asset growth as the commodities cycle accelerates.”
Key AUM highlights1
- AUM was $29.4 billion as at March 31, 2024, up 2% from $28.7 billion as at December 31, 2023. On a three months ended basis, we benefited from market value appreciation in our precious metals physical trusts and managed equities, partially offset by net out flows in the same fund categories.
Key revenue highlights
- Management fees were $36.4 million in the quarter, up 17% from $31.2 million for the quarter ended March 31, 2023. Carried interest and performance fees were $Nil in the quarter, flat from the quarter ended March 31, 2023. Net fees were $32.7 million in the quarter, up 16% from $28.2 million for the quarter ended March 31, 2023. Our revenue performance was due to higher average AUM across most of our exchange listed products and private strategies funds.
- Commission revenues were $1 million in the quarter, down 78% from $4.8 million for the quarter ended March 31, 2023. Net commissions were $0.5 million in the quarter, down 79% from $2.4 million for the quarter ended March 31, 2023. Lower commissions were primarily due to the sale of our former Canadian broker-dealer in the second quarter of last year.
- Finance income was $1.8 million in the quarter, up 9% from $1.7 million for the quarter ended March 31, 2023. Our results were primarily driven by higher income generation in co-investment positions we hold in LPs managed in our private strategies segment.
Key expense highlights
- Net compensation expense was $16.3 million in the quarter, up 6% from $15.4 million for the quarter ended March 31, 2023. The increase in the quarter was primarily due to increased AIP accruals on higher net fee generation.
- SG&A expense was $4.2 million in the quarter, up 4% from $4 million for the quarter ended March 31, 2023. The slight increase in the quarter was due to higher marketing costs.
Earnings summary
- Net income was $11.6 million ($0.45 per share) in the quarter, up 51% from $7.6 million ($0.30 per share) for the quarter ended March 31, 2023. Net income in the quarter benefited from market value appreciation across most of our exchange listed products and private strategies AUM, partially offset by lower commission income due to the sale of our former Canadian broker-dealer during the second quarter of last year. Our earnings also benefited from no severance and other expenses in the quarter.
Adjusted base EBITDA was $19.8 million ($0.78 per share) in the quarter, up 14% from $17.3 million ($0.68 per share) for the quarter ended March 31, 2023. The increased management fees generated from market value gains in our AUM this quarter was partially offset by lower commission income due to the sale of our former Canadian broker-dealer during the second quarter of last year.
Subsequent events
- Subsequent to quarter-end, on May 6, 2024, AUM was $31.2 billion, up 6% from $29.4 billion at March 31, 2024.
- On May 7, 2024, the Sprott Board of Directors announced a quarterly dividend of $0.25 per share.
1 See “non-IFRS financial measures” section in this press release and schedule 2 and 3 of “Supplemental financial information”
Supplemental financial information
Please refer to the March 31, 2024 quarterly financial statements of the Company and the related management discussion and analysis filed earlier this morning for further details into the Company’s financial position as at March 31, 2024 and the Company’s financial performance for the quarter ended March 31, 2024.
Schedule 1 – AUM continuity
| 3 months results | |||||||
| (In millions $) | AUM Dec. 31, 2023 |
Net inflows (1) |
Market value changes |
Other net inflows (1) |
AUM Mar. 31, 2024 |
Net management fee rate (2) |
|
| Exchange listed products | |||||||
| – Precious metals physical trusts and ETFs | |||||||
| – Physical Gold Trust | 6,532 | (144) | 507 | — | 6,895 | 0.35% | |
| – Physical Gold and Silver Trust | 4,230 | (113) | 284 | — | 4,401 | 0.40% | |
| – Physical Silver Trust | 4,070 | (19) | 191 | — | 4,242 | 0.45% | |
| – Precious Metals ETFs | 339 | (9) | 7 | — | 337 | 0.30% | |
| – Physical Platinum & Palladium Trust | 116 | 5 | (9) | — | 112 | 0.50% | |
| 15,287 | (280) | 980 | — | 15,987 | 0.39% | ||
| – Critical materials physical trust and ETFs | |||||||
| – Physical Uranium Trust | 5,773 | 56 | (203) | — | 5,626 | 0.32% | |
| – Critical Materials ETFs | 2,143 | 49 | 43 | — | 2,235 | 0.58% | |
| 7,916 | 105 | (160) | — | 7,861 | 0.39% | ||
| Total exchange listed products | 23,203 | (175) | 820 | — | 23,848 | 0.39% | |
| Managed equities (3) | 2,890 | (70) | 103 | — | 2,923 | 0.89% | |
| Private strategies | 2,645 | (39) | (8) | — | 2,598 | 0.91% | |
| Total AUM (4) | 28,738 | (284) | 915 | — | 29,369 | 0.49% | |
(1) See “Net inflows” and “Other net inflows” in the key performance indicators and non-IFRS and other financial measures section of the MD&A.
(2) Management fee rate represents the weighted average fees for all funds in the category, net of fund expenses.
(3) Managed equities is made up of primarily precious metal strategies (57%), high net worth managed accounts (34%) and U.S. value strategies (9%).
(4) No performance fees are earned on exchange listed products. Performance fees are earned on certain of our managed equities products and are based on returns above relevant benchmarks. Private strategies LPs earn carried interest calculated as a predetermined net profit over a preferred return.
Schedule 2 – Summary financial information
| (In thousands $) | Q1 2024 |
Q4 2023 |
Q3 2023 |
Q2 2023 |
Q1 2023 |
Q4 2022 |
Q3 2022 |
Q2 2022 |
||||||||
| Summary income statement | ||||||||||||||||
| Management fees (1) | 36,372 | 34,244 | 32,867 | 32,940 | 31,170 | 28,152 | 28,899 | 30,302 | ||||||||
| Fund expenses (2), (3) | (2,234 | ) | (2,200 | ) | (1,740 | ) | (1,871 | ) | (1,795 | ) | (1,470 | ) | (1,466 | ) | (1,607 | ) |
| Direct payouts | (1,461 | ) | (1,283 | ) | (1,472 | ) | (1,342 | ) | (1,187 | ) | (1,114 | ) | (1,121 | ) | (1,272 | ) |
| Carried interest and performance fees | — | 503 | — | 388 | — | 1,219 | — | — | ||||||||
| Carried interest and performance fee payouts – internal | — | (222 | ) | — | (236 | ) | — | (567 | ) | — | — | |||||
| Carried interest and performance fee payouts – external (3) | — | — | — | — | — | (121 | ) | — | — | |||||||
| Net fees | 32,677 | 31,042 | 29,655 | 29,879 | 28,188 | 26,099 | 26,312 | 27,423 | ||||||||
| Commissions | 1,047 | 1,331 | 539 | 1,647 | 4,784 | 5,027 | 6,101 | 6,458 | ||||||||
| Commission expense – internal | (217 | ) | (161 | ) | (88 | ) | (494 | ) | (1,727 | ) | (1,579 | ) | (2,385 | ) | (2,034 | ) |
| Commission expense – external (3) | (312 | ) | (441 | ) | (92 | ) | (27 | ) | (642 | ) | (585 | ) | (476 | ) | (978 | ) |
| Net commissions | 518 | 729 | 359 | 1,126 | 2,415 | 2,863 | 3,240 | 3,446 | ||||||||
| Finance income (2) | 1,810 | 1,391 | 1,795 | 1,650 | 1,655 | 1,738 | 1,274 | 1,351 | ||||||||
| Gain (loss) on investments | 1,809 | 2,808 | (1,441 | ) | (1,950 | ) | 1,958 | (930 | ) | 45 | (7,884 | ) | ||||
| Co-investment income (2) | 274 | 170 | 462 | 1,327 | 93 | 370 | 249 | 87 | ||||||||
| Total net revenues(2) | 37,088 | 36,140 | 30,830 | 32,032 | 34,309 | 30,140 | 31,120 | 24,423 | ||||||||
| Compensation (2) | 17,955 | 17,096 | 16,939 | 21,468 | 19,556 | 17,148 | 19,044 | 18,611 | ||||||||
| Direct payouts | (1,461 | ) | (1,283 | ) | (1,472 | ) | (1,342 | ) | (1,187 | ) | (1,114 | ) | (1,121 | ) | (1,272 | ) |
| Carried interest and performance fee payouts – internal | — | (222 | ) | — | (236 | ) | — | (567 | ) | — | — | |||||
| Commission expense – internal | (217 | ) | (161 | ) | (88 | ) | (494 | ) | (1,727 | ) | (1,579 | ) | (2,385 | ) | (2,034 | ) |
| Severance, new hire accruals and other | — | (179 | ) | (122 | ) | (4,067 | ) | (1,257 | ) | (1,240 | ) | (1,349 | ) | (2,113 | ) | |
| Net compensation | 16,277 | 15,251 | 15,257 | 15,329 | 15,385 | 12,648 | 14,189 | 13,192 | ||||||||
| Severance, new hire accruals and other | — | 179 | 122 | 4,067 | 1,257 | 1,240 | 1,349 | 2,113 | ||||||||
| Selling, general and administrative (“SG&A”) (2) | 4,173 | 3,963 | 3,817 | 4,752 | 4,026 | 3,814 | 4,051 | 3,872 | ||||||||
| SG&A recoveries from funds (1) | (231 | ) | (241 | ) | (249 | ) | (282 | ) | (264 | ) | (253 | ) | (259 | ) | (318 | ) |
| Interest expense | 830 | 844 | 882 | 1,087 | 1,247 | 1,076 | 884 | 483 | ||||||||
| Depreciation and amortization | 551 | 658 | 731 | 748 | 706 | 710 | 710 | 959 | ||||||||
| Foreign exchange (gain) loss (2) | 168 | 1,295 | 37 | 1,440 | 440 | (484 | ) | 3,020 | 1,233 | |||||||
| Other (income) and expenses (2) | — | 3,368 | 4,809 | (18,890 | ) | 1,249 | 1,686 | 3,384 | 470 | |||||||
| Total expenses | 21,768 | 25,317 | 25,406 | 8,251 | 24,046 | 20,437 | 27,328 | 22,004 | ||||||||
| Net income | 11,557 | 9,664 | 6,773 | 17,724 | 7,638 | 7,331 | 3,071 | 757 | ||||||||
| Net income per share | 0.45 | 0.38 | 0.27 | 0.70 | 0.30 | 0.29 | 0.12 | 0.03 | ||||||||
| Adjusted base EBITDA | 19,751 | 18,759 | 17,854 | 17,953 | 17,321 | 18,083 | 16,837 | 17,909 | ||||||||
| Adjusted base EBITDA per share | 0.78 | 0.75 | 0.71 | 0.71 | 0.68 | 0.72 | 0.67 | 0.71 | ||||||||
| Summary balance sheet | ||||||||||||||||
| Total assets | 389,784 | 378,835 | 375,948 | 381,519 | 386,765 | 383,748 | 375,386 | 376,128 | ||||||||
| Total liabilities | 82,365 | 73,130 | 79,705 | 83,711 | 108,106 | 106,477 | 103,972 | 89,264 | ||||||||
| Total AUM | 29,369,191 | 28,737,742 | 25,398,159 | 25,141,561 | 25,377,189 | 23,432,661 | 21,044,252 | 21,944,675 | ||||||||
| Average AUM | 29,035,667 | 27,014,109 | 25,518,250 | 25,679,214 | 23,892,335 | 22,323,075 | 21,420,015 | 23,388,568 | ||||||||
(1) Previously, management fees within the above summary financial information table included SG&A recoveries from funds consistent with IFRS 15. For management reporting purposes, these recoveries are now shown next to their associated expense as management believes this will enable readers to transparently identify the net economics of these recoveries. However, SG&A recoveries from funds are still shown within the “Management fees” line on the consolidated statement of operations. Prior year figures have been reclassified to conform with current presentation.
(2) Current and prior period figures on the consolidated statements of operations include the following adjustments: (1) trading costs incurred in managed accounts are now included within “Fund expenses” (previously included within “SG&A”), (2) interest income earned on cash deposits are now included within “Finance income” (previously included within “Other income”), (3) co-investment income and income attributable to non-controlling interest are now included as part of “Co-investment income” (previously included within “Other income”), (4) expenses attributable to non-controlling interest is now included within “Co-investment income” (previously included within “Other expenses”), (5) the mark-to-market expense of DSU issuances are now included within “Compensation” (previously included within “Other expenses”), (6) foreign exchange (gain) loss is now shown separately (previously included within “Other expenses”); and (7) shares received on a previously unrecorded contingent asset in Q2 2023 are now included within “Other (income) and expenses” (previously included within “Other income”). Prior year figures have been reclassified to conform with current presentation.
(3) These amounts are included in the “Fund expenses” line on the consolidated statements of operations.
Source: Sprott Physical Uranium Trust