Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, welcome to the Royal Gold 2023 First Quarter Conference Call. My name is Felicia, and I'll be your operator today. Please note, there will be a Q&A session on this call. [Operator Instructions].

I will now hand you over to your host, Alistair Baker, Vice President, Investor Relations and Business Development. ahead. go please Alastair,

Alistair Baker

access Good first welcome event quarter and able webcast operator. on this of website. our is our Royal live, to be will Gold's XXXX you replay morning, you, of to call and discussion being a Thank Results. This

Corporate on today Randy Paul and President, Heissenbuttel, Vice and Breeze, Libner, and Treasurer; are Speaking General AG; President Isto, Counsel; Mark Vice Corporation; CEO; the are Royal of President Vice Gold call Shefman, Martin Dan of Executive President questions. and also Bill RG and Development COO of CFO for available Raffield, Operations,

could we call, actual materially differ these future. today's filings our statements press results projections statements. statements, expectations from and SEC. uncertainties our and These will yesterday's During with that including in These statements the risks about are cause make forward-looking release to discussed are to the for subject risks and uncertainties and

income adjusted certain G&A We adjusted expense. will cash adjusted to adjusted directly per are GAAP adjusted per share, refer Reconciliations on and found net net also in cash measures, margin of can our non-GAAP available which net net press adjusted margin income be comparable yesterday's release, measures the to income, income, website. adjusted share, EBITDA including G&A expense and EBITDA, most financial EBITDA

the on After some Bill summary. Paul will up start for with remarks, will the a the the the portfolio, lines financial commentary and session. quarter, a provide review of we'll wrap Q&A with Mark open will formal

the Bill. over to turn now call I'll

Bill Heissenbuttel

X. for joining the Good I'll morning, on call. you and Slide begin thank

fairly us, and our to strong the portfolio of performance quarter year. quiet steady. It a first strong Our a and was was provided for quarter start XXXX

and same After of dividends for our minor a paid last $X.XX increased $XX million $XXX were in We XXXX $XXX share. $X.XX cash per over $X.XX or were which the the Earnings X% both is adjusted share. Revenue for was quarter up year. a per level. period million at were increase earnings adjustment, was million from nicely share, $XX flow the rate million, which per XXXX operating

an XX payment We sector and for million, We metals record for made consecutive dividend we $XXX in the consistent our increases, almost years. increased and have precious revolver of the million. quarter a have liquidity dividend ended on we with $XX of unmatched the

we an update went investor Additionally, those developments into our weeks of at interesting some completed and some additions. we where detail ago have two newer assets on seen and

provided overview discussed ESG We also and an during XXXX on website. of our report, update which our is our that available XXXX guidance

We have emissions advanced data our the report our detail portfolio. on water how tracking use GHG ESG report area, the good some and in we're significantly in and contains like

the evolving It scenario first for so report review an TCFD and the well provide also area, alignment as our analysis guidelines ESG includes is encourage any climate I subject reporting feedback. disclosure as in with portfolio. to us you

I'll the now portfolio. provide comments call the over some Mark to to on turn

Mark Isto

Thanks, Bill.

which comments Slide Overall the is was last strong year. up first quarter very revenue. to give GEOs, for X% volume I'll time a some XX,XXX X, Turning this over from on quarter

segment Cortez Bay contributed revenue Zone. Voisey's royalty were and partially CC prior by Our new from contributions slightly and from Penasquito revenue, strong year quarter. Zone in our at the the Lower $XX offset million Legacy down from

of Chris We the from in royalty revenue and $XXX,XXX in Australia. also King of annual received Red about the revenue quarter our new Hills payment from

about and than X,XXX mid-February, equating quarter. Mount our from Xavantina end to $XXX segment Stream Higher up prior revenue Our was offset lower River Milligan, year March Mount on to revenue the received and each gold million, copper Please shipment of earlier original Milligan forecast. Andacollo. from we from note GEOs that of Rainy Khoemacau, X% contributions more about about compared than in

timing on allowed one The a than results the impact early next. they not our they don't have long-term to quarter. basis, containing these expectation And quarter on original the quarter impact can significant a These while for March in are during X,XXX compares fairly June rather this shipments sold delivery differences be the to unusual GEOs us. how

metal turn like I'd on mine this point moment through a spend to review the Slide of production the and X to to sequence stream sales.

stream Khoemacau. We that mines Milligan, and have three Mount in Andacollo interest concentrate: produce metal large

Royal up in timing required five shown of of payment to the to contract. the due mining Gold site ship schematic, As to to take months the to concentrates ore to delivering the and the smelter the provisions offtake mine process metal can from

average delivered, steadily steadily We in aim the periods. it counterparty over we metal counterparty. those delivery consistent Once metal where to we next our the period the is with received inventory sell metal next deliveries allows is zero particular over when prices any from from for Selling same that usually we have pricing to receive plan shipment realize counterparty. the to us

works our may approach complications for revenue well, this based it mine forecasting by provided guidance While on cause operators.

our first period. period a in is The the Royal provided won't for guidance impact production Gold counterparties complication by specific same that

between in metal expects example, gold typical and XXX,XXX lag Gold XXX,XXX the the see Royal production fourth ounces to Centerra at Mount of to deliveries is to XX% at XX% the mine containing of with Milligan production five Mount concentrate For that up we quarter. of to Milligan production XXXX gold The months.

receive of second until won't the sometime deliveries complete. quarter the quarter We strong likely of recognize revenue production sales won't metal in those are fourth we So the until from XXXX. deliveries of expected

X,XXX otherwise the case, first sell Mount GEOs the metal from in delivery maximum uncertain. I second mentioned delivery this receive deliveries The in we quarter We can so what happened guidance our in second timing the contractual and forecast. earlier on and That's than we based forecast and this that In to sales with near our sold complication earlier. delivery recognized receive is we expected quarter quarter. revenue that is timing Milligan prepare we

quarter Gold's a from short-term resulting not While be is the next, that to this Royal may us. mean concern revenue for the one long-term variability variable may

from It quarter to necessarily one mean the the not underlying or does weaker asset production next. stronger also at that is

significant more produce metal that on generally are portfolio they for time agreements not and deliveries that our stream limited. between issues timing agreements a where on are produce stream is royalty operations concentrates, operations [Indiscernible] factor and for production, These or sales more

Khoemacau. Milligan associated generally The months to Mount up delivery timing effects with about for X Andacollo are month about and five and for

vary would Our depending delivery month typically but deliveries. the selling process on will one of cadence take following

Slide only provided have mention our million of of KCM body. portion This the X.X occurred the silver ounces of update the at X is X.X since capacity, million reserve million into investor in line nameplate deeper that I'll average million lower is lower but average the comments X so of to and handful at on expect development XXXX. weeks to are life give guidance X.X At mine grade deposit ago, per developments we This fulsome grade, with mining progresses of the where the then. I'll is increase than mine operations commentary as the because year. Zone provided for ore than silver ounces now plan production turn upper the more We during to to a operations. Khoemacau, X has recent continuing two in grade and

expect commissioning commissioning the Viejo, of crusher move current fed complete the They're phase previous Pueblo that first quarter a expectations. infrastructure ramp-up on into and from plant is reported the delayed At quarter. ore working expanded new to the yesterday in Barrick This had through the and plant. their been about

a this no and we is of large notice prior delay, project. had this While complex

included So our it timing XXXX. in to we allowance, sales a which guidance for we felt reduced prudent production, provide reflecting

ounces of Viejo deliveries Pueblo XXX,XXX X,XXX deferred ounce. the including the were silver of balance in additional the approximately an quarter, in remaining resulting ounces, XXX,XXX deferral

this could variable full while year. don't deliveries performance ramps plant of remain material levels, recovery deferred expect and highly We expanded expect the and we production to silver

flow We don't see issue and a any lasting revenue. continue silver this to cash to have as impact it on expect timing

proven on At at are this million range an to Zone Barrick XXXX. royalty, gross this Legacy be royalty has expect guidance XXX,XXX royalty advised was covered gross for to production the area The XXXX of production Recall, end Zone rate. this the that our equivalent gold which X.X% be from X.X%. at probable to disclosure, Cortez, reserves and Based on And in and from royalties overlapping of production from area X.X CC has ounces XXX,XXX XXXX the approximate ounces. by approximately XXX,XXX approximate will expected an contained Cortez we of remainder to is Barrick's area ounces.

for yesterday their reported year. development this record the stoping this and that be outlook. test until of the They delayed also also decision and delay Goldrush will reported expect XXXX continuation affect second the don't of half Barrick to likely

XX,XXX on from production. Teck Andacollo, Keep a Royal production that XXXX in Gold of advised to in ounces to that this range has concentrate. gold mind XX% fixed at XX,XXX will payability factor deliveries gold include Finally,

I'll now a turn to over Paul review of our the financial call for results.

Paul Libner

Mark. of turn Slide will for and financial X give I overview an the Thanks, to now the quarter. results

ended discussion, XXXX to year be prior quarter comparing will the March XX, this For I quarter. the

interests for million approximately at half XXXX. addition stronger of we acquired $X an of revenue revenue the operating million this interest as as Cortez was quarter, increase $XXX driver performance quarter the during X%. our main The the was Revenue many of of of higher royalty of the well from new second

XX% slightly year by quarter, to followed our the dominant With silver source was copper X%, and respect total at was down revenue to up by price metal of revenue copper at Gold XX% XX%. compared down prices was prior up X% gold making remains silver the and XX%. of and the

expense which the quarter. to and G&A was million X. costs, The noncash also include costs increased compensation increase higher to stock $XX in primarily expense. $X.X employee Slide to Turning due million prior employee-related

have remained to X% mining our of within or inflationary Although costs cash continue low metals on and sector, total G&A have pressures impact revenue. many less an the than

a the prior $XX Mount million declined to depletion per from On $XX decreased were the of reserve this on was quarter the million expense basis, at due to end expense DD&A current which rate per lower result Milligan $XXX a for Pueblo and the the of at in basis the quarter. unit to $XXX Our additions year Viejo, GEO quarter unit XXXX. prior year GEO DD&A The in period. compared rates in

when quarter. partially compared at up due The was expense continued result depletion increased ramp the offset by prior which of silver higher to decrease cells year the the to Khoemacau, was

Interest expense our under end and average at facility in quarter. amounts rate X.X% in million was under due period. credit interest quarter of rates revolving interest first the all prior to borrowings for higher from facility when increased to The the The for the increase prior higher to was period. our outstanding $X.X $XXX,XXX credit the compared the

rate tax million, down effective year quarter a effective $XX over slightly per adjusted adjustment our for prior for compares $X.XX prior per change This a $XX quarter Earnings share. of Tax XX.X%. in equity was in the or the XX.X% of the and the million value period. or of in resulting for million the an expense share. securities, to $X.XX year were fair rate tax were million to $XX earnings an minor After $XX

Adjusted the interest prior year $X.XX year lower share. earnings main in prior the $XX when were earnings this was million to higher per or to quarter contributor expense. quarter the The compared

was Our recently proceeds from the Stream this $XXX of new Cortez prior the quarter received and the segment higher to quarter increase our interest. in from operating received acquired royalty year. was the flow additional cash The $XXX compared strong million at proceeds during million result

a turn summary position now provide our to and the will at the Slide I quarter. of of XX end financial

quarter, on provided million $XXX the quarter. of $XXX million million undrawn drawn of to million revolving we of credit facility facility at combined repaid end revolver capital, the approximately amount us the million. $XXX reduced and capacity, with $XX the total liquidity available the The working the During on $XXX

$XXX balance to allocation, any development amount revolver prices, to with cash Absent allows. by as activity around the we keeping mid-XXXX. expect In flow our we of amount accretive and capital further anticipate repay repaying business approach outstanding million this

exploration this Xavantina. potentially conversion to are payment Ero debt certain financial commitments at outstanding, XXXX. end end, meets we After resources resource successful of after $X.X the advanced subsidiary and conversion Beyond have if Copper payments of of material Shortly a quarter other $X.X payment, up made through million our we a obligated remaining. to fund we the exploration of to targets related to no additional current million Ero

to on Bill comments the quarter, turn comments. for my financial back the now concludes performance will I closing That call and our for

Bill Heissenbuttel

steady for was Paul. Thanks, Gold. Royal This a quiet quarter and

medium assets near well, continued to at interesting portfolio Our performed term. that we in the and should portfolio saw news progress flow in several provide the

announcements particular. good Recent issues regarding on period I timing hope a XXXX the timing expansion Centerra's and are you Goldrush in production expectations XXXX Pueblo of for Mount can the Decision examples of discussion at impact and Record found Milligan time how helpful. expectations in particular Viejo

of after active a in pleased on XXXX, a the remain view in portfolio We However, balance focused think liquidity our with we rebuilding take the positioned longer-term quarter XXXX. and events very sheet are very remain our I we're and and to active year in well performance.

Operator line for I'll open now the questions. that concludes our remarks. prepared

Operator

Thank you. first Josh [Operator Capital Wolfson Markets. Instructions] from comes The from question RBC

Your now go line open. Josh, please is ahead.

Josh Wolfson

Thanks quick very questions much. Two for me.

on outperformed quarter talked is guess if the for so bit or about was as a then and changed based payout royalty what Barrick our wondering through expected. result the implies for first the a one the quarter this expectations high I'm I rest which expectations the this First have improving of the results quarter, and all given just legacy had the Cortez at royalty, weaker performance this of if year, guidance But year. was

Bill Heissenbuttel

Josh, turn might question. the to thanks that for for Mark response. I over one

Mark Isto

that best about on view XX% sure. at year. during the Yeah, on the future guess the is I quarter. we my they I of look as the mean, full guidance guidance midpoint would first delivered the year the the for view

just first the view change for wouldn't guidance strong pulled. in I take quarter they we So as that but our the a of year. be rest would We the would it

Josh Wolfson

soon but it conclusions. Got to a Okay. like maybe perform It sounds bit it. any make did too better,

Mark Isto

with agree I that would statement.

Josh Wolfson

And felt is, issuing? guidance the I company Was a number question but the should the year? typically for of just production have sort Or we there. it. some annual figures comfortable second quarter. team the may provide Mildly for this, optimistic Got missed this stream Okay. with look does production that there at the upcoming

Bill Heissenbuttel

do first from six-month quarter. do for is first don't ago. away sales and moved that of -- what stream guidance we But continued when the yearly couple to we only we used we it we forecast to guidance. in Josh, The February quarterly then Yeah. segment the years went time haven't we the -- a

going guidance to. So stick annual the with to look as

Josh Wolfson

Thank all very much. Those you Okay. are my questions.

Operator

from from Chiu CIBC. The have ahead. we next comes go question Cosmos Please

Your line is now open.

Cosmos Chiu

Paul Mark, question, of anyway. and guess I this Hi, you thanks, Bill, Alistair. you I'll but sort ask answered

You XX,XXX did over GEOs in QX.

fresh, which XXX to XXX. Your is XXXX pretty guidance, still

you differences timing multiply of so were but top I And would end. whatnot, sort the exceed if there's I know and to out QX,

look that So fresh. look it? to know at again, should we again, Like, should guidance how know way, at I the contributed But how is I pretty the we it? ounces either X,XXX QX.

Bill Heissenbuttel

Cosmos, what just what don't Yeah. caution did. guess just I we I annualize just you would

you the the with two We X,XXX expect And say, We comfortable As was GEOs. remain gave noted quarter. it. in we guidance them ago. weeks you first actually didn't the

in them We then they expected second the and arrived early. quarter

eye So again, on number. I'd an keep longer-term the

Cosmos Chiu

But two start you be potentially When weeks this Maybe start? different only Again, old. is process sort and of way. ask guidance? your does when would updating a to viewing that

Bill Heissenbuttel

time come felt And part these okay, adjust or we the point. It's to one we to going analysis. quarterly the if at of other the don't at meetings. range, My every we some August be it's of need view to is it say, we meeting, look the

it's needed a make you let So we adjustment. and to an quarterly on regularly know basis, we'd reviewed if

Cosmos Chiu

question. my Of bit, follow-up course. Maybe a Josh's a little on buddy, gears switching

of whatever. Cortez, CC. for lot Legacy simplistic zones Clearly, thanks, different and behind of guidance, team, very a terms and In and of it giving that's Alistair, of terms there's again in us once and more X.X% X.X%

actually so stage. terms guess how I Based in understand how from your have is sort to reconciling what I'm what had trying your is like like -- Again, -- you so as And coming to get expected? early I you reconciling of perspective, on that that's information, through? just what what's know, of expectations? far to more far you it

Bill Heissenbuttel

one Idaho it's we at royalty, have the quarters Yeah. and it, full Tinto royalty, of of really. mean, Cosmos, only got looking two only had Rio quarters. I we the had quarter

want little these is make you've in and adjust might numbers But or it describe things? how seen we a there the would us early to So be Mark, to the the that reconcile. anything X.X X.X

Mark Isto

so. I don't think

always the to guidance, now. on gross present I way think we've And royalty we been Legacy accurate historically, the the tried public. it's call it -- Zone, very a provide it a to as to

So that's why it. we continue to do

happy So I'm and very convey we that with how how approach we try it to information.

Cosmos Chiu

hear. to Good

Mark Isto

maybe And --

Bill Heissenbuttel

through issue we I us life easier you want and GSRX, is think to to GSRX, some say, go with NVRX see make GSRX, don't I if production would would we certainly don't how NVRXC, We're with consider describe falling, we -- reclassifying and would I it. NVRX your But sorry, NVRX. just trying where really it.

Cosmos Chiu

details. that's give better, any you me as I if a simplify you give Don't should agree. I think you as just number, better. But me even Even more can much can.

here. And question last then one

of that environment. In great of there? rate to at we how kind as terms to continue Or it? look today's balance balancing pay and Is you're plan your quick repaying as it sheet, the potential your in with interest debt, in higher opportunities out do just it especially see again, out of terms back possible

Bill Heissenbuttel

trump let a Well, not the going to good investment under we're repayments revolver opportunity.

of we before this to that. goals reduce anything -- top to our But in certainly as zero of strategic we else. back take correct opportunity, quickly don't to possible have the if We you're not consider a the up, back balance saying good development it the doing goal to pay as would So opportunity. is in we the a absence and is do we see business

Cosmos Chiu

Thank and guys, Bill for my you, taking thanks questions. Great. And team.

Bill Heissenbuttel

Thanks, Cosmos.

Operator

team. management remarks. the any to If back hand I'll line. phone the they on questions closing other want No

Bill Heissenbuttel

us look Royal and your forward progress quarterly the next our for on you to call. We today. our good Yeah. interest you to Gold, certainly Great. time day. we a taking updating appreciate Thank to Have join everyone during in

Operator

conclude everyone. call. you, Thank does This today's

You may lines. now disconnect your

Royal Gold (RGLD) 4 May 232023 Q1 Earnings call transcript