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Sprott Inc (2)
Symbol SII
Shares Issued 25,934,694
Close 2022-08-02 C$ 47.20
Recent Sedar Documents

Sprott earns $757,000 in Q2

2022-08-02 10:10 ET - News Release

Mr. Whitney George reports

SPROTT ANNOUNCES SECOND QUARTER 2022 RESULTS

Sprott Inc. has released its financial results for the three and six months ended June 30, 2022.

Management commentary

"Assets under management (AUM) were $21.9-billion as at June 30, 2022, down $1.7-billion (7 per cent) from March 31, 2022, and up $1.5-billion (7 per cent) from Dec. 31, 2021. While our AUM was negatively impacted on both a three and six months ended basis by market value depreciation across our fund products, we are pleased to have maintained strong sales momentum, reporting approximately $800-million in net sales during the second quarter and $2.2-billion in net sales for the first half of 2022," said Whitney George, chief executive officer of Sprott.

"Our resilient business model allows us to invest through the cycles irrespective of market conditions. We are actively developing new products in all of our asset management businesses. Notably, we continue to build scale in our ETF [exchange-traded fund] business through the completion of the previously announced acquisition of the North Shore Global Uranium Miners ETF (URNM) and, the recently announced launch of the Sprott ESG Gold ETF, the world's first ETF to exclusively source and refine gold from globally recognized leaders in ESG-based [environmental, social and governance] on special criteria developed by Sprott. Sprott is pleased to have partnered with Agnico Eagle, Yamana Gold and the Royal Canadian Mint on this new initiative," concluded Mr. George.

Financial highlights

Key AUM highlights

AUM was $21.9-billion as at June 30, 2022, down $1.7-billion (7 per cent) from March 31, 2022, and up $1.5-billion (7 per cent) from Dec. 31, 2021. The company's AUM was negatively impacted on both a three months and six months ended basis by market value depreciation across its fund products. However, on a six months ended basis, the company's cumulative market value declines were offset by strong inflows to its physical trusts, private strategies and the onboarding of AUM from the URNM acquisition, which added over $1-billion to the company's AUM in the quarter.

Key revenue highlights

Management fees were $30.6-million in the quarter, up $5.6-million (22 per cent) from the quarter ended June 30, 2021, and $57.8-million on a year-to-date basis, up $10.3-million (22 per cent) from the six months ended June 30, 2021. Carried interest and performance fees were nil in the quarter and $2-million on a year-to-date basis, down $5.9-million (74 per cent) from the six months ended June 30, 2021. Net fees were $28.1-million in the quarter, up $4.9-million (21 per cent) from the quarter ended June 30, 2021, and $53.6-million on a year-to-date basis, up $6.7-million (14 per cent) from the six months ended June 30, 2021. Sprott's revenue performance was primarily due to strong net inflows to the company's exchange-listed products segment (primarily the company's physical uranium and gold trusts) and higher average AUM from the URNM acquisition. Sprott also benefited from inflows to its private strategies segment. These increases were partially offset by lower carried interest crystallization in the company's private strategies segment on a year-to-date basis.

Commission revenues were $6.5-million in the quarter, down $900,000 (12 per cent) from the quarter ended June 30, 2021, and $19.5-million on a year-to-date basis, down $300,000 (2 per cent) from the six months ended June 30, 2021. Net commissions were $3.4-million in the quarter, down $800,000 (20 per cent) from the quarter ended June 30, 2021, and $10.1-million on a year-to-date basis, down $1.1-million (10 per cent) from the six months ended June 30, 2021. Lower commissions were due to weaker mining equity origination activity in the company's brokerage segment, which was partially offset by commissions earned on the purchase of uranium in the company's exchange-listed products segment.

Finance income was $1.2-million in the quarter, up $300,000 (27 per cent) from the quarter ended June 30, 2021, and $2.6-million on a year-to-date basis, up $400,000 (20 per cent) from the six months ended June 30, 2021. The company's results were primarily driven by higher income generation in co-investment positions Sprott holds in limited partnerships managed in its private strategies segment.

Key expense highlights

Net compensation expense was $13.9-million in the quarter, up $3.1-million (29 per cent) from the quarter ended June 30, 2021, and $29.7-million on a year-to-date basis, up $7-million (31 per cent) from the six months ended June 30, 2021. The increase was primarily due to higher long-term incentive plan (LTIP) amortization and higher salaries on new hires that were partially offset by lower annual incentive compensation (AIP).

SG&A (selling, general and administrative expenses) was $4.2-million in the quarter, up $700,000 (21 per cent) from the quarter ended June 30, 2021, and $7.7-million on a year-to-date basis, up $800,000 (12 per cent) from the six months ended June 30, 2021. The increase was mainly due to higher marketing and technology costs.

Earnings summary

Net income was $800,000 (three cents per share) in the quarter, down 93 per cent, or $10.3-million (41 cents per share) from the quarter ended June 30, 2021, and $7.2-million on a year-to-date basis (29 cents per share), down 49 per cent, or $7.1-million (28 cents per share) from the six months ended June 30, 2021.

Adjusted base EBITDA (earnings before interest, taxes, depreciation and amortization) was $17.9-million (71 cents per share) in the quarter, up 19 per cent, or $2.9-million (11 cents per share) from the quarter ended June 30, 2021, and $36.1-million ($1.44 per share) on a year-to-date basis, up 22 per cent, or $6.4-million (25 cents per share) from the six months ended June 30, 2021.

Net income on both a three months and six months ended basis was negatively impacted by net market value depreciation of the company's co-investments as a result of the recent pullback in market valuations across most global asset classes as well as unrealized market value declines on the mark to market of certain digital gold strategies. On a quarterly and year-to-date basis, adjusted base EBITDA benefited from strong net inflows into the company's physical trusts (primarily the company's physical uranium and gold trusts), the URNM acquisition and inflows to the company's private strategies products. These increases were only partially offset by weaker mining equity origination activity in the company's brokerage segment.

Subsequent events

On Aug. 1, 2022, the Sprott board of directors announced a quarterly dividend of 25 cents per share.

Supplemental financial information

Please refer to the June 30, 2022, interim 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 June 30, 2022, and the company's financial performance for the three and six months ended June 30, 2022.

Conference call and webcast

A webcast will be held on Aug. 2, 2022, at 10 a.m. ET, to discuss the company's financial results. To listen to the webcast, please register on-line.

Please note, analysts who cover the company should register on-line to participate in the live question-and-answer session.

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