Sprott Inc. (NYSE/TSX: SII) (“Sprott” or the “Company”) today
announced its financial results for the three and nine months ended
September 30, 2024.
Management commentary
“Sprott’s Assets Under Management (“AUM”) was
$33.4 billion as at September 30, 2024, up 8% from June 30, 2024
and up 16% from December 31, 2023," said Whitney George, CEO of
Sprott. "This is our third consecutive quarter of record high AUM,
driven by strong gold and silver prices, as well as $589 million in
net sales during the period. Given the strength of these results
and our confidence in Sprott’s future, our Board has declared a
third quarter dividend of $0.30 per share, an increase of 20%.
Further, we now expect to repay the balance of our line of credit
by the end of this month, resulting in a debt-free balance
sheet."
"With Sprott's core positioning in precious
metals and critical materials, we retain our constructive outlook
and believe we are well positioned to navigate volatile market
conditions and continue creating value for our clients and
shareholders," continued Mr. George.
Key AUM highlights1
- AUM was $33.4
billion as at September 30, 2024, up 8% from $31.1 billion as at
June 30, 2024 and up 16% from $28.7 billion as at December 31,
2023. On a three and nine months ended basis, we primarily
benefited from strong market value appreciation in our precious
metals physical trusts. We also benefited from net inflows to our
exchange listed products and the launch of our Physical Copper
Trust in the second quarter.
Key revenue highlights
- Management fees
were $38.7 million in the quarter, up 18% from $32.9 million for
the quarter ended September 30, 2023 and $113.1 million on a
year-to-date basis, up 17% from $97 million for the nine months
ended September 30, 2023. Carried interest and performance fees
were $4.1 million in the quarter, up from $nil for the quarter
ended September 30, 2023 and $4.8 million on a year-to-date basis,
up from $0.4 million for the nine months ended September 30, 2023.
Net fees were $38.9 million in the quarter, up 31% from $29.7
million for the quarter ended September 30, 2023 and $106.1 million
on a year-to-date basis, up 21% from $87.7 million for the nine
months ended September 30, 2023. Our revenue performance on both a
three and nine months ended basis was primarily due to higher
average AUM on strong market value appreciation in our precious
metals physical trusts and continuous inflows to the majority of
our exchange listed products. We also benefited from carried
interest crystallization in a legacy fixed-term exploration LP in
our managed equities segment.
- Commission
revenues were $0.5 million in the quarter, down 8% from the quarter
ended September 30, 2023 and $4.9 million on a year-to-date basis,
down 30% from $7 million for the nine months ended September 30,
2023. Net commissions were $0.2 million in the quarter, down 31%
from $0.4 million for the quarter ended September 30, 2023 and $2.3
million on a year-to-date basis, down 42% from $3.9 million for the
nine months ended September 30, 2023. Commission revenue was lower
in the quarter due to modest ATM activity in our critical materials
physical trusts. On a year-to-date basis, the decline in commission
revenue was due to the sale of our former Canadian broker-dealer in
the second quarter of last year.
- Finance income
was $1.6 million in the quarter, down 12% from $1.8 million for the
quarter ended September 30, 2023 and $7.5 million on a year-to-date
basis, up 46% from $5.1 million for the nine months ended September
30, 2023. The decrease in the quarter was due to lower income
generation in co-investment positions we hold in our LPs managed in
our private strategies segment. The increase on a year-to-date
basis was due to higher income earned on streaming syndication
activity in the second quarter.
Key expense highlights
- Net compensation
expense was $16.9 million in the quarter, up 11% from $15.3 million
for the quarter ended September 30, 2023 and $50.3 million on a
year-to-date basis, up 9% from $46 million for the nine months
ended September 30, 2023. The increase in the quarter and on a
year-to-date basis was primarily due to increased AIP accruals on
higher net fee generation. Our net compensation ratio was 46% in
the quarter (September 30, 2023 - 50%) and 45% on a year-to-date
basis (September 30, 2023 - 50%).
- SG&A expense
was $4.6 million in the quarter, up 21% from $3.8 million for the
quarter ended September 30, 2023 and $13.8 million on a
year-to-date basis, up 10% from $12.6 million for the nine months
ended September 30, 2023. The increase in the quarter and on a
year-to-date basis was due to higher technology and professional
services costs.
Earnings summary
- Net income for
the quarter was $12.7 million ($0.50 per share), up 87% from $6.8
million ($0.27 per share) for the quarter ended September 30, 2023
and was $37.6 million ($1.48 per share) on a year-to-date basis, up
17% from $32.1 million ($1.27 per share) for the nine months ended
September 30, 2023. Our earnings benefited from higher management
fees on strong market valuations of our precious metals physical
trusts and good inflows to our exchange listed products. We also
benefited from carried interest crystallization in our managed
equities funds and market value appreciation of our
co-investments.
- Adjusted base
EBITDA was $20.7 million ($0.81 per share) in the quarter, up 16%
from $17.9 million ($0.71 per share) for the quarter ended
September 30, 2023 and $62.8 million ($2.47 per share) on a
year-to-date basis, up 18% from $53.1 million ($2.10 per share) for
the nine months ended September 30, 2023. Adjusted base EBITDA on
both a three and nine months ended basis benefited from higher
management fees on strong market valuations of our precious metals
physical trusts and good inflows to our exchange listed
products.
1 See “non-IFRS financial measures” section in
this press release and schedule 2 and 3 of "Supplemental financial
information"
Subsequent events
-
Subsequent to quarter-end, on November 1, 2024, AUM was $34.2
billion, up 2% from $33.4 billion at September 30, 2024.
-
On November 5, 2024, the Sprott Board of Directors announced a
quarterly dividend of $0.30 per share.
Supplemental financial
information
Please refer to the September 30, 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
September 30, 2024 and the Company's financial performance for
the three and nine months ended September 30, 2024.
Schedule 1 - AUM continuity
3 months
results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions $) |
AUMJun. 30, 2024 |
Net inflows (1) |
Market value changes |
Othernet inflows (1) |
AUM Sep. 30, 2024 |
|
Net management fee rate (2) |
|
|
|
|
|
|
|
|
Exchange listed
products |
|
|
|
|
|
|
|
- Precious metals physical trusts and ETFs |
|
|
|
|
|
|
- Physical Gold Trust |
7,283 |
361 |
|
973 |
|
— |
8,617 |
|
0.35 |
% |
- Physical Silver Trust |
4,994 |
224 |
|
348 |
|
— |
5,566 |
|
0.45 |
% |
- Physical Gold and Silver Trust |
4,710 |
— |
|
515 |
|
— |
5,225 |
|
0.40 |
% |
- Precious Metals ETFs |
355 |
(11 |
) |
60 |
|
— |
404 |
|
0.33 |
% |
- Physical Platinum & Palladium Trust |
143 |
7 |
|
1 |
|
— |
151 |
|
0.50 |
% |
|
17,485 |
581 |
|
1,897 |
|
— |
19,963 |
|
0.39 |
% |
|
|
|
|
|
|
|
|
- Critical materials physical trusts and ETFs |
|
|
|
|
|
|
- Physical Uranium Trust |
5,615 |
23 |
|
(230 |
) |
— |
5,408 |
|
0.32 |
% |
- Critical Materials ETFs |
2,408 |
56 |
|
(157 |
) |
— |
2,307 |
|
0.55 |
% |
- Physical Copper Trust |
98 |
2 |
|
3 |
|
— |
103 |
|
0.32 |
% |
|
8,121 |
81 |
|
(384 |
) |
— |
7,818 |
|
0.38 |
% |
|
|
|
|
|
|
|
|
Total exchange listed products |
25,606 |
662 |
|
1,513 |
|
— |
27,781 |
|
0.39 |
% |
|
|
|
|
|
|
|
|
Managed
equities (3)(4) |
2,962 |
(55 |
) |
369 |
|
— |
3,276 |
|
0.90 |
% |
|
|
|
|
|
|
|
|
Private
strategies (4) |
2,485 |
(18 |
) |
(85 |
) |
— |
2,382 |
|
0.80 |
% |
|
|
|
|
|
|
|
|
Total AUM (5) |
31,053 |
589 |
|
1,797 |
|
— |
33,439 |
|
0.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9 months
results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions $) |
AUMDec. 31, 2023 |
Net inflows (1) |
Market value changes |
Othernet inflows (1) |
AUM Sep. 30, 2024 |
|
Net management fee rate (2) |
|
|
|
|
|
|
|
|
Exchange listed
products |
|
|
|
|
|
|
|
- Precious metals physical trusts and ETFs |
|
|
|
|
|
|
- Physical Gold Trust |
6,532 |
316 |
|
1,769 |
|
— |
8,617 |
|
0.35 |
% |
- Physical Silver Trust |
4,070 |
256 |
|
1,240 |
|
— |
5,566 |
|
0.45 |
% |
- Physical Gold and Silver Trust |
4,230 |
(161 |
) |
1,156 |
|
— |
5,225 |
|
0.40 |
% |
- Precious Metals ETFs |
339 |
(14 |
) |
79 |
|
— |
404 |
|
0.33 |
% |
- Physical Platinum & Palladium Trust |
116 |
42 |
|
(7 |
) |
— |
151 |
|
0.50 |
% |
|
15,287 |
439 |
|
4,237 |
|
— |
19,963 |
|
0.39 |
% |
|
|
|
|
|
|
|
|
- Critical materials physical trusts and ETFs |
|
|
|
|
|
|
- Physical Uranium Trust |
5,773 |
266 |
|
(631 |
) |
— |
5,408 |
|
0.32 |
% |
- Critical materials ETFs |
2,143 |
294 |
|
(130 |
) |
— |
2,307 |
|
0.55 |
% |
- Physical Copper Trust |
— |
2 |
|
(9 |
) |
110 |
103 |
|
0.32 |
% |
|
7,916 |
562 |
|
(770 |
) |
110 |
7,818 |
|
0.38 |
% |
|
|
|
|
|
|
|
|
Total exchange listed products |
23,203 |
1,001 |
|
3,467 |
|
110 |
27,781 |
|
0.39 |
% |
|
|
|
|
|
|
|
|
Managed
equities (3)(4) |
2,874 |
(167 |
) |
569 |
|
— |
3,276 |
|
0.90 |
% |
|
|
|
|
|
|
|
|
Private
strategies (4) |
2,661 |
(172 |
) |
(107 |
) |
— |
2,382 |
|
0.80 |
% |
|
|
|
|
|
|
|
|
Total AUM (5) |
28,738 |
662 |
|
3,929 |
|
110 |
33,439 |
|
0.47 |
% |
(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 (35%) and U.S.
value strategies (8%). |
(4) Prior period figures have been reclassified to conform with
current presentation. |
(5) 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 primarily earn
carried interest calculated as a predetermined net profit over a
preferred return. |
|
Schedule 2 - Summary financial information
(In thousands $) |
Q3 2024 |
Q2 2024 |
Q1 2024 |
Q42023 |
Q32023 |
Q22023 |
Q12023 |
Q42022 |
Summary income statement |
|
|
|
|
|
|
|
|
Management fees (1) |
38,693 |
|
38,065 |
|
36,372 |
|
34,244 |
|
32,867 |
|
32,940 |
|
31,170 |
|
28,152 |
|
Fund expenses (2), (3) |
(2,385 |
) |
(2,657 |
) |
(2,234 |
) |
(2,200 |
) |
(1,740 |
) |
(1,871 |
) |
(1,795 |
) |
(1,470 |
) |
Direct payouts |
(1,483 |
) |
(1,408 |
) |
(1,461 |
) |
(1,283 |
) |
(1,472 |
) |
(1,342 |
) |
(1,187 |
) |
(1,114 |
) |
Carried interest and
performance fees |
4,110 |
|
698 |
|
— |
|
503 |
|
— |
|
388 |
|
— |
|
1,219 |
|
Carried interest and performance fee payouts - internal |
— |
|
(251 |
) |
— |
|
(222 |
) |
— |
|
(236 |
) |
— |
|
(567 |
) |
Carried interest and performance fee payouts - external (3) |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(121 |
) |
Net fees |
38,935 |
|
34,447 |
|
32,677 |
|
31,042 |
|
29,655 |
|
29,879 |
|
28,188 |
|
26,099 |
|
|
|
|
|
|
|
|
|
|
Commissions |
498 |
|
3,332 |
|
1,047 |
|
1,331 |
|
539 |
|
1,647 |
|
4,784 |
|
5,027 |
|
Commission expense - internal |
(147 |
) |
(380 |
) |
(217 |
) |
(161 |
) |
(88 |
) |
(494 |
) |
(1,727 |
) |
(1,579 |
) |
Commission expense - external (3) |
(103 |
) |
(1,443 |
) |
(312 |
) |
(441 |
) |
(92 |
) |
(27 |
) |
(642 |
) |
(585 |
) |
Net commissions |
248 |
|
1,509 |
|
518 |
|
729 |
|
359 |
|
1,126 |
|
2,415 |
|
2,863 |
|
|
|
|
|
|
|
|
|
|
Finance income (2) |
1,574 |
|
4,084 |
|
1,810 |
|
1,391 |
|
1,795 |
|
1,650 |
|
1,655 |
|
1,738 |
|
Gain (loss) on
investments |
937 |
|
1,133 |
|
1,809 |
|
2,808 |
|
(1,441 |
) |
(1,950 |
) |
1,958 |
|
(930 |
) |
Co-investment income (2) |
418 |
|
416 |
|
274 |
|
170 |
|
462 |
|
1,327 |
|
93 |
|
370 |
|
Total net revenues (2) |
42,112 |
|
41,589 |
|
37,088 |
|
36,140 |
|
30,830 |
|
32,032 |
|
34,309 |
|
30,140 |
|
|
|
|
|
|
|
|
|
|
Compensation (2) |
18,547 |
|
19,225 |
|
17,955 |
|
17,096 |
|
16,939 |
|
21,468 |
|
19,556 |
|
17,148 |
|
Direct payouts |
(1,483 |
) |
(1,408 |
) |
(1,461 |
) |
(1,283 |
) |
(1,472 |
) |
(1,342 |
) |
(1,187 |
) |
(1,114 |
) |
Carried interest and performance fee payouts - internal |
— |
|
(251 |
) |
— |
|
(222 |
) |
— |
|
(236 |
) |
— |
|
(567 |
) |
Commission expense - internal |
(147 |
) |
(380 |
) |
(217 |
) |
(161 |
) |
(88 |
) |
(494 |
) |
(1,727 |
) |
(1,579 |
) |
Severance, new hire accruals and other |
(58 |
) |
— |
|
— |
|
(179 |
) |
(122 |
) |
(4,067 |
) |
(1,257 |
) |
(1,240 |
) |
Net compensation |
16,859 |
|
17,186 |
|
16,277 |
|
15,251 |
|
15,257 |
|
15,329 |
|
15,385 |
|
12,648 |
|
Net
compensation ratio |
46 |
% |
44 |
% |
47 |
% |
47 |
% |
50 |
% |
48 |
% |
52 |
% |
44 |
% |
|
|
|
|
|
|
|
|
|
Severance, new hire accruals
and other |
58 |
|
— |
|
— |
|
179 |
|
122 |
|
4,067 |
|
1,257 |
|
1,240 |
|
Selling, general and
administrative ("SG&A") (2) |
4,612 |
|
5,040 |
|
4,173 |
|
3,963 |
|
3,817 |
|
4,752 |
|
4,026 |
|
3,814 |
|
SG&A recoveries from funds
(1) |
(275 |
) |
(260 |
) |
(231 |
) |
(241 |
) |
(249 |
) |
(282 |
) |
(264 |
) |
(253 |
) |
Interest expense |
933 |
|
715 |
|
830 |
|
844 |
|
882 |
|
1,087 |
|
1,247 |
|
1,076 |
|
Depreciation and
amortization |
502 |
|
568 |
|
551 |
|
658 |
|
731 |
|
748 |
|
706 |
|
710 |
|
Foreign exchange (gain) loss
(2) |
1,028 |
|
122 |
|
168 |
|
1,295 |
|
37 |
|
1,440 |
|
440 |
|
(484 |
) |
Other
(income) and expenses (2) |
— |
|
(580 |
) |
— |
|
3,368 |
|
4,809 |
|
(18,890 |
) |
1,249 |
|
1,686 |
|
Total expenses |
23,717 |
|
22,791 |
|
21,768 |
|
25,317 |
|
25,406 |
|
8,251 |
|
24,046 |
|
20,437 |
|
|
|
|
|
|
|
|
|
|
Net income |
12,697 |
|
13,360 |
|
11,557 |
|
9,664 |
|
6,773 |
|
17,724 |
|
7,638 |
|
7,331 |
|
Net income per share |
0.50 |
|
0.53 |
|
0.45 |
|
0.38 |
|
0.27 |
|
0.70 |
|
0.30 |
|
0.29 |
|
Adjusted base EBITDA |
20,675 |
|
22,375 |
|
19,751 |
|
18,759 |
|
17,854 |
|
17,953 |
|
17,321 |
|
18,083 |
|
Adjusted base EBITDA per share |
0.81 |
|
0.88 |
|
0.78 |
|
0.75 |
|
0.71 |
|
0.71 |
|
0.68 |
|
0.72 |
|
|
|
|
|
|
|
|
|
|
Summary balance sheet |
|
|
|
|
|
|
|
|
Total assets |
412,477 |
|
406,265 |
|
389,784 |
|
378,835 |
|
375,948 |
|
381,519 |
|
386,765 |
|
383,748 |
|
Total liabilities |
82,198 |
|
90,442 |
|
82,365 |
|
73,130 |
|
79,705 |
|
83,711 |
|
108,106 |
|
106,477 |
|
|
|
|
|
|
|
|
|
|
Total AUM |
33,439,221 |
|
31,053,136 |
|
29,369,191 |
|
28,737,742 |
|
25,398,159 |
|
25,141,561 |
|
25,377,189 |
|
23,432,661 |
|
Average AUM |
31,788,412 |
|
31,378,343 |
|
29,035,667 |
|
27,014,109 |
|
25,518,250 |
|
25,679,214 |
|
23,892,335 |
|
22,323,075 |
|
(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.
Schedule 3 - EBITDA reconciliation
|
3 months ended |
9 months ended |
|
|
|
|
|
(in
thousands $) |
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Net income for the period |
12,697 |
|
6,773 |
|
37,614 |
|
32,135 |
|
Net income margin (1) |
27 |
% |
20 |
% |
28 |
% |
29 |
% |
Adjustments: |
|
|
|
|
Interest expense |
933 |
|
882 |
|
2,478 |
|
3,216 |
|
Provision for income taxes |
5,698 |
|
(1,349 |
) |
14,899 |
|
7,333 |
|
Depreciation and amortization |
502 |
|
731 |
|
1,621 |
|
2,185 |
|
EBITDA |
19,830 |
|
7,037 |
|
56,612 |
|
44,869 |
|
Adjustments: |
|
|
|
|
(Gain) loss on investments (2) |
(937 |
) |
1,441 |
|
(3,879 |
) |
1,433 |
|
Stock-based compensation (3) |
4,806 |
|
4,408 |
|
13,829 |
|
12,447 |
|
Foreign exchange (gain) loss (4) |
1,028 |
|
37 |
|
1,318 |
|
1,917 |
|
Severance, new hire accruals and other (4) |
58 |
|
122 |
|
58 |
|
5,446 |
|
Revaluation of contingent consideration (4) |
— |
|
— |
|
(580 |
) |
(2,254 |
) |
Costs relating to exit of non-core business (4) |
— |
|
3,615 |
|
— |
|
4,987 |
|
Non-recurring regulatory, professional fees and other (4) |
— |
|
1,194 |
|
— |
|
3,023 |
|
Shares received on recognition of contingent asset (4) |
— |
|
— |
|
— |
|
(18,588 |
) |
Carried interest and performance fees |
(4,110 |
) |
— |
|
(4,808 |
) |
(388 |
) |
Carried interest and performance fee payouts - internal |
— |
|
— |
|
251 |
|
236 |
|
Carried interest and performance fee payouts - external |
— |
|
— |
|
— |
|
— |
|
Adjusted base EBITDA |
20,675 |
|
17,854 |
|
62,801 |
|
53,128 |
|
Adjusted base EBITDA margin (5) |
58 |
% |
56 |
% |
58 |
% |
57 |
% |
(1) Calculated as IFRS net income divided by
IFRS total revenue.
(2) This adjustment removes the income effects
of certain gains or losses on short-term investments,
co-investments, and digital gold strategies to ensure the reporting
objectives of our EBITDA metric as described below are met.
(3) In prior years, the mark-to-market expense
of DSU issuances were included with "other (income) and expenses".
In the current period, these costs are included as part of "stock
based compensation". Prior year figures have been reclassified to
conform with current presentation.
(4) Foreign exchange (gain) and loss, severance,
new hire accruals and other; revaluation of contingent
consideration; costs relating to exit of non-core business;
non-recurring regulatory, professional fees and other; and shares
received on recognition of contingent asset were previously
included with "other (income) and expenses" and are now shown
separately in the reconciliation of adjusted base EBITDA above.
Prior year figures have been reclassified to conform with current
presentation.
(5) Prior year figures have been restated to
remove the adjustment of depreciation and amortization.
Conference Call and Webcast
A webcast will be held today, November 6, 2024
at 10:00 am ET to discuss the Company's financial results.
To listen to the webcast, please register
at: https://edge.media-server.com/mmc/p/7nbc4pms
Please note, analysts who cover the Company should
register
at: https://register.vevent.com/register/BIecf4c3c925374bf19a6ce5051f64dd6d
This press release includes financial terms
(including AUM, net commissions, net fees, expenses, adjusted base
EBITDA, adjusted base EBITDA margin and net compensation) 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. Non-IFRS financial
measures do not have a standardized meaning prescribed by IFRS and
are therefore unlikely to be comparable to similar measures
presented by other issuers. Our key performance indicators and
non-IFRS and other financial measures are discussed below. For
quantitative reconciliations of non-IFRS financial measures to
their most directly comparable IFRS financial measures please see
schedule 2 and schedule 3 of the "Supplemental financial
information" section of this press release.
Net fees
Management fees, net of fund expenses and direct
payouts, and carried interest and performance fees, net of carried
interest and performance fee payouts (internal and external), are
key revenue indicators as they represent the net revenue
contribution after directly associated costs that we generate from
our AUM.
Net commissions
Commissions, net of commission expenses
(internal and external), arise primarily from purchases and sales
of critical materials in our exchange listed products segment and
transaction-based service offerings by our broker dealers.
Net compensation & net compensation
ratio
Net compensation excludes commission expenses
paid to employees, other direct payouts to employees, carried
interest and performance fee payouts to employees, which are all
presented net of their related revenues in this MD&A, and
severance, new hire accruals and other which are non-recurring. Net
compensation ratio is calculated as net compensation divided by net
revenues.
EBITDA, adjusted base EBITDA and adjusted base
EBITDA margin
EBITDA in its most basic form is defined as
earnings before interest expense, income taxes, depreciation and
amortization. EBITDA (or adjustments thereto) is a measure commonly
used in the investment industry by management, investors and
investment analysts in understanding and comparing results by
factoring out the impact of different financing methods, capital
structures, amortization techniques and income tax rates between
companies in the same industry. While other companies, investors or
investment analysts may not utilize the same method of calculating
EBITDA (or adjustments thereto), the Company believes its adjusted
base EBITDA metric results in a better comparison of the Company's
underlying operations against its peers and a better indicator of
recurring results from operations as compared to other non-IFRS
financial measures. Adjusted base EBITDA margins are a key
indicator of a company’s profitability on a per dollar of revenue
basis, and as such, is commonly used in the financial services
sector by analysts, investors and management.
Forward Looking Statements
Certain statements in this press release contain
forward-looking information and forward-looking statements
(collectively referred to herein as the "Forward-Looking
Statements") within the meaning of applicable Canadian and U.S.
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) our constructive
outlook in precious metals and critical materials; (ii) our
expectation to repay the balance of our line of credit by the end
of this month, resulting in a debt-free balance sheet at that time;
and (iii) the declaration, payment and designation of dividends and
confidence that our business will support the dividend level
without impacting our ability to fund future growth
initiatives.
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: (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; (iv) the impact of public health
outbreaks; and (v) those assumptions disclosed under the heading
"Critical Accounting Estimates, Judgments and Changes in Accounting
Policies" in the Company’s MD&A for the period ended September
30, 2024. 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 favorable 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 private strategies business; (xxvii) those risks
described under the heading "Risk Factors" in the Company’s annual
information form dated February 20, 2024; and (xxviii) those risks
described under the headings "Managing Financial Risks" and
"Managing Non-Financial Risks" in the Company’s MD&A for the
period ended September 30, 2024. 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 securities laws.
About Sprott
Sprott is a global asset manager focused on
precious metals and critical materials investments. We are
specialists. We believe our in-depth knowledge, experience and
relationships separate us from the generalists. Our investment
strategies include Exchange Listed Products, Managed Equities and
Private Strategies. Sprott has offices in Toronto, New York,
Connecticut and California and the company’s common shares are
listed on the New York Stock Exchange and the Toronto Stock
Exchange under the symbol (SII). For more information, please visit
www.sprott.com.
Investor contact
information:
Glen WilliamsManaging PartnerInvestor and
Institutional Client Relations(416)
943-4394gwilliams@sprott.com
Sprott (NYSE:SII)
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