Sprott Inc. Announces 2014 First Quarter Results
TORONTO, May 14, 2014 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three months ended March 31, 2014.
Q1 2014 Financial Overview
Assets Under Management ("AUM") were $7.7 billion as at March 31, 2014,
compared to $9.1 billion as at March 31, 2013 and $7.0 billion as at
December 31, 2013
Assets Under Administration ("AUA") were $2.7 billion as at March 31,
2014, compared to $3.3 billion as at March 31, 2013 and $2.3 billion as
at December 31, 2013
Management Fees were $19.4 million, reflecting a decrease of $6.6
million (25.4%) from the three months ended March 31, 2013 and an
increase of 8.9% from $17.8 million for the three months ended December
Commission revenue was flat at $1.9 million compared to the three months
ended March 31, 2013 and increased 58% from $1.2 million for the three
months ended December 31, 2013
Invested capital stood at $331.5 million, reflecting a $17.3 million
(5.5%) increase from December 31, 2013
- Returns on invested capital were $9.7 million during the first quarter of 2014
Interest income was $5.4 million, reflecting an increase of $4.6 million
from the three months ended March 31, 2013
- Unrealized and realized gains on proprietary investments and loans were $4.4 million, reflecting an increase of $7.4 million from the three months ended March 31, 2013
Adjusted base EBITDA was $9.1 million, reflecting a decrease of $0.3
million (3.0%) from the three months ended March 31, 2013
Net income was $10.2 million ($0.04 per share), reflecting an increase
of $8.1 million from the three months ended March 31, 2013
Significant events for the three months ended March 31, 2014 and year-to-date 2014:
Named John Wilson Chief Executive Officer of Sprott Asset Management LP
Acquired three real assets focused funds to be managed by Capital
Innovations Ltd., Inc.
"During the first quarter of 2014, our Assets Under Management increased by $700 million to $7.7 billion due largely to strong performance from our mutual and hedge funds," said Peter Grosskopf, Chief Executive Officer of Sprott. "While our natural resource focused strategies led the way, almost all of our funds have delivered positive performance with several posting double digit returns year-to-date. We have also successfully maintained the sales momentum established during the second half of 2013, generating our third consecutive quarter of positive net sales."
"We continue to build our institutional business and, over the past year, we have secured two substantial mandates to manage institutional funds for Asian investors," continued Mr. Grosskopf. "We are also close to completing a first close of our new Resource Lending LP, with subsequent closings to follow later this year."
"With approximately $367 million in available capital, we are well positioned to invest in the continued growth of our business," added Mr. Grosskopf. "We have a disciplined capital allocation plan in place, focused foremost on capital preservation and seeding next generation funds. Our capital book performed well during the first quarter, delivering strong returns on invested capital."
The breakdown of AUM by investment product type on a quarter-over-quarter basis is as follows:
|$ (in millions)||
AUM December 31,
Net Sales /
Net Market Value
AUM March 31,
|Alternative Investment Strategies||765||(92)||38||—||711|
|Fixed Term Limited Partnerships||361||27||30||—||418|
Assets Under Management
AUM at March 31, 2014, decreased by 15.5% to $7.7 billion from $9.1 billion at March 31, 2013. Net sales for the three months ended March 31, 2014 were $0.1 billion. Average AUM for the three months ended March 31, 2014 was $7.6 billion compared with $9.5 billion for the three months ended March 31, 2013, a decrease of 20.4%.
Total revenues for the three months ended March 31, 2014 increased by 19.3% to $32.9 million from $27.6 million for the three months ended March 31, 2013.
For the quarter ended March 31, 2014, Management Fees decreased by 25.4% to $19.4 million from $26.0 million in the quarter ended March 31, 2013, reflecting the decline in average AUM over the period.
Commission revenue was flat at $1.9 million. Commission revenue is generated primarily through private placements by Sprott Global Resource Investments Ltd., and to a lesser extent, Sprott Private Wealth.
Interest income was $5.4 million, reflecting an increase of $4.6 million from the prior period. Interest income earned by the Company is generated primarily by Sprott Resource Lending Corp., which was acquired by the Company on July 23, 2013.
Unrealized and realized gains on proprietary investments and loans were $4.4 million, reflecting an increase of $7.4 million from the prior period. The increase was due to market value appreciation in proprietary investments resulting in net unrealized gains of $6.0 million, partially offset by realized losses of $1.6 million from the sale of certain proprietary investments.
Other income increased by $1.0 million from $0.6 million in the quarter ended March 31, 2013 to $1.6 million in the quarter ended March 31, 2014.
Total expenses were $21.2 million, reflecting a decrease of $2.5 million (10.6%) from the prior period.
Adjusted base EBITDA was $9.1 million, reflecting a decrease of $0.3 million (3.0%) from the prior period.
Net Income was $10.2 million, reflecting an increase of $8.1 million from the prior period.
Basic earnings per share were $0.04, versus $0.01 for the prior period. Diluted earnings per share were $0.04, versus $0.01 for the prior period.
On March 25, 2014, a dividend of $0.03 per common share was declared for the quarter ended December 31, 2013. On May 13, 2014, a dividend of $0.03 per common share was declared for the quarter ended March 31, 2014.
Conference Call and Webcast
A conference call and webcast will be held today, Wednesday, May 14, 2014 at 10:00am ET to discuss the Company's financial results. To participate in the call, please dial 647-427-7450 or 1-888-231-8192 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Wednesday, May 21, 2014 by calling 416-764-8677or 1-888-390-0541, reference number 34524617. The conference call will be webcast live at www.sprottinc.com and www.newswire.ca
*Non-IFRS Financial Measures
This press release includes financial terms (including AUM, AUA, 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 financial statements available on the Company's website at www.sprottinc.com and on SEDAR at www.sedar.com.
Forward-Looking Information and Statements
This news release contains certain forward-looking information and statements (collectively referred to herein as "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 news release contains Forward-Looking Statements pertaining to: (i) building Sprott's institutional business; and (ii) expected completion of a first close of Sprott's new Resource Lending LP, with subsequent closings to follow later this year
Forward-Looking Statements are based on a number of expectations or assumptions, which have been used to develop such information and statements but which may prove to be incorrect, including, but not limited to: (i) future exchange rates will remain consistent with the current environment; (ii) the price of precious metals will increase; (iii) the resource sector will recover; (iv) the impact of increasing competition in each business in which the Company operates will not be material; (v) quality management will be available; (vi) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment; and (vii) those assumptions disclosed under the heading "Critical Accounting Judgments and Estimates" in the Company's Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2014. Although the Company believes the expectations and assumptions reflected in such Forward-Looking Statements are reasonable, undue reliance should not be placed on Forward-Looking Statements because the Company can give no assurance that such expectations and assumptions will prove to be correct. The Forward-Looking Statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors, which may cause actual results or events to differ materially from those anticipated in such Forward-Looking Statements, including, without limitation, (i) difficult market conditions; (ii) changes in the investment management industry; (iii) risks related to regulatory compliance; (iv) failure to deal appropriately with conflicts of interest; (v) failure to continue to retain and attract quality staff; (vi) competitive pressures; (vii) corporate growth may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources; (viii) failure to execute the Company's succession plan; (ix) litigation risk; * employee errors or misconduct could result in regulatory sanctions or reputational harm; (xi) failure to implement effective information security policies, procedures and capabilities; (xii) failure to develop effective business resiliency plans; (xiii) failure to obtain or maintain sufficient insurance coverage on favourable economic terms; (xiv) foreign exchange risk relating to the relative value of the U.S. dollar; (xv) historical financial information is not necessarily indicative of future performance; (xvi) the market price of common shares of the Company may fluctuate widely and rapidly; (xvii) those risks listed under the heading "Risk Factors" in the Company's annual information form dated March 27, 2014; (xviii) those risks disclosed under the heading "Managing Risk" in the Company's MD&A for the three months ended March 31, 2014; and (xix) other risks, which are beyond the control of the Company or its subsidiaries. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the Forward-Looking Statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements contained in this news release. 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 contained in this news release speak only as of the date of this news release, and the Company does not assume any obligation to publicly update or revise any of the included Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
About Sprott Inc.
Sprott Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The Company currently operates primarily through six business units: Sprott Asset Management LP, Sprott Private Wealth LP, Sprott Consulting LP, Sprott Resource Lending Corp., Sprott Toscana and Sprott U.S. Holdings Inc. Sprott Asset Management is the investment manager of the Sprott family of mutual funds and hedge funds and discretionary managed accounts; Sprott Private Wealth provides wealth management services to high net worth individuals; and Sprott Consulting and Sprott Toscana provide management, administrative and consulting services to other companies. Sprott Resource Lending provides lending services to mining and energy sectors. Sprott U.S. Holdings Inc. includes Sprott Global Resource Investments Ltd, Sprott Asset Management USA Inc., and Resource Capital Investments Corporation. Sprott Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com.
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