Sprott Announces Year Ended 2024 Results

February 26, 2025 07:00 ET | Source: Sprott Inc. TORONTO, Feb. 26, 2025 (GLOBE NEWSWIRE) -- Sprott Inc. (NYSE/TSX: SII) (“Sprott” or the “Company”) today announced its financial results for the year ended December 31, 2024. Management commentary "Sprott’s Assets Under Management (“AUM”) ended the year at $31.5 billion, down 6% from $33.4 billion as at September 30, 2024, but up 10% from $28.7 billion as at December 31, 2023. 2024 was our seventh consecutive year of double-digit AUM growth and, subsequent to year-end, as at February 21, 2025, AUM had further increased to $33.5 billion, up $2 billion, or 6% from December 31, 2024," said Whitney George, Chief Executive Officer of Sprott. "During the year we benefited from strong precious metals prices as well as $698 million in net sales, primarily in our physical trusts and uranium and critical materials ETFs." "The recent turmoil in precious metals markets has highlighted the importance of physical ownership, an area where Sprott offers best-in-class solutions to individual and institutional investors. The realignment of global trade and a focus on energy security will create demand for critical materials produced in “friendly” jurisdictions. We continue to develop new exchange-listed and actively-managed critical materials strategies to capitalize on this powerful long-term trend. We have invested in our sales and marketing capabilities to deliver our clients the highest levels of client service, while building on our position as thought leaders in our core themes. Sprott is well positioned to create value for our clients and shareholders in the months and years ahead," continued Mr. George. Key AUM highlights1 AUM ended the year at $31.5 billion as at December 31, 2024, down 6% from $33.4 billion as at September 30, 2024 but was up 10% from $28.7 billion as at December 31, 2023. Although fourth quarter AUM was negatively impacted by market value depreciation across most of our funds and the termination of certain subadvised fund contracts, 2024 was nevertheless our seventh consecutive year of double-digit AUM growth as we benefited from strong market value appreciation in our precious metals physical trusts and net inflows to our exchange listed products. Key revenue highlights Management fees were $41.4 million for the quarter, up 20% from $34.5 million for the quarter ended December 31, 2023 and $155.3 million on a full-year basis, up 17% from $132.3 million for the year ended December 31, 2023. Carried interest and performance fees were $2.5 million for the quarter, up from $0.5 million for the quarter ended December 31, 2023 and $7.3 million on a full-year basis, up from $0.9 million for the year ended December 31, 2023. Net fees were $38.6 million for the quarter, up 24% from $31 million for the quarter ended December 31, 2023 and $144.6 million on a full-year basis, up 22% from $118.8 million for the year ended December 31, 2023. Our revenue performance in the quarter and on a full-year basis was primarily due to higher average AUM on strong market value appreciation in our precious metals physical trusts and inflows to the majority of our exchange listed products. We also benefited from carried interest and performance fee crystallization in certain funds in our managed equities and private strategies segments.Commission revenues were $0.8 million for the quarter, down 38% from $1.3 million for the quarter ended December 31, 2023 and $5.7 million on a full-year basis, down 31% from $8.3 million for the year ended December 31, 2023. Net commissions were $0.4 million for the quarter, down 47% from $0.7 million for the quarter ended December 31, 2023 and $2.7 million on a full-year basis, down 43% from $4.6 million for the year ended December 31, 2023. Commission revenue was lower in the quarter due to modest ATM activity in our critical materials physical trusts. On a full-year 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 $1.4 million for the quarter, up 4% from the quarter ended December 31, 2023 and $8.9 million on a full-year basis, up 37% from $6.5 million for the year ended December 31, 2023. The increase in the quarter was due to higher income generation in co-investment positions we hold in our LPs managed in our private strategies segment. The increase on a full-year basis was due to higher income earned on streaming syndication activity in the second quarter. Key expense highlights Net compensation expense was $17 million for the quarter, up 11% from $15.3 million for the quarter ended December 31, 2023 and $67.3 million on a full-year basis, up 10% from $61.2 million for the year ended December 31, 2023. The increase in the quarter and on a full-year basis was primarily due to increased Annual Incentive Program ("AIP") accruals on higher net fee generation. Our net compensation ratio was 44% in the quarter (December 31, 2023 - 47%) and 45% on a full-year basis (December 31, 2023 - 49%).SG&A expense was $4.9 million for the quarter, up 25% from $4 million for the quarter ended December 31, 2023 and $18.8 million on a full-year basis, up 13% from $16.6 million for the year ended December 31, 2023. The increase in the quarter and on a full-year basis was due to higher professional services, marketing and technology costs. Earnings summary Net income for the quarter was $11.7 million ($0.46 per share), up 21% from $9.7 million ($0.38 per share) for the quarter ended December 31, 2023 and was $49.3 million ($1.94 per share) on a full-year basis, up 18% from $41.8 million ($1.66 per share) for the year ended December 31, 2023. Our earnings in the quarter and on a full-year basis benefited from higher average AUM on strong market value appreciation in our precious metals physical trusts and inflows to the majority of our exchange listed products. We also benefited from carried interest and performance fee crystallization in certain funds in our managed equities and private strategies segments.Adjusted base EBITDA was $22.4 million ($0.88 per share) for the quarter, up 19% from $18.8 million ($0.75 per share) for the quarter ended December 31, 2023 and $85.2 million ($3.35 per share) on a full-year basis, up 18% from $71.9 million ($2.85 per share) for the year ended December 31, 2023. Adjusted base EBITDA in the quarter and on a full-year basis benefited from higher average AUM on strong market value appreciation in our precious metals physical trusts and inflows to the majority 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 year-end, as at February 21, 2025, AUM was $33.5 billion, up 6% from $31.5 billion at December 31, 2024.On February 25, 2025, the Sprott Board of Directors announced a quarterly dividend of $0.30 per share. Supplemental financial information Please refer to the December 31, 2024 annual 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 December 31, 2024 and the Company's financial performance for the three and twelve months ended December 31, 2024. Schedule 1 - AUM continuity 3 months results (In millions $)AUMSep. 30, 2024Net inflows (1)Market value changesOthernet inflows (1)AUM Dec. 31, 2024 Net management fee rate (2) Exchange listed products - Precious metals physical trusts and ETFs - Physical Gold Trust8,61735(44)—8,608 0.35%- Physical Silver Trust5,56683(422)—5,227 0.45%- Physical Gold and Silver Trust5,225(69)(143)—5,013 0.40%- Precious Metals ETFs404(10)(40)—354 0.33%- Physical Platinum & Palladium Trust15133(16)—168 0.50% 19,96372(665)—19,370 0.39% - Critical materials physical trusts and ETFs - Physical Uranium Trust5,40845(591)—4,862 0.31%- Critical Materials ETFs2,30727(314)—2,020 0.52%- Physical Copper Trust103(1)(12)—90 0.32% 7,81871(917)—6,972 0.37% Total exchange listed products27,781143(1,582)—26,342 0.39% Managed equities (3)(4)3,276(55)(221)(127)2,873 0.90% Private strategies (4)2,382(35)(27)—2,320 0.83% Total AUM (5)33,43953(1,830)(127)31,535 0.47% 12 months results (In millions $)AUMDec. 31, 2023Net inflows (1)Market value changesOthernet inflows (1)AUM Dec. 31, 2024 Net management fee rate (2) Exchange listed products - Precious metals physical trusts and ETFs - Physical Gold Trust6,5323511,725—8,608 0.35%- Physical Silver Trust4,070339818—5,227 0.45%- Physical Gold and Silver Trust4,230(230)1,013—5,013 0.40%- Precious Metals ETFs339(24)39—354 0.33%- Physical Platinum & Palladium Trust11675(23)—168 0.50% 15,2875113,572—19,370 0.39% - Critical materials physical trusts and ETFs - Physical Uranium Trust5,773311(1,222)—4,862 0.31%- Critical materials ETFs2,143321(444)—2,020 0.52%- Physical Copper Trust—1(21)11090 0.32% 7,916633(1,687)1106,972 0.37% Total exchange listed products23,2031,1441,88511026,342 0.39% Managed equities (3)(4)2,874(222)348(127)2,873 0.90% Private strategies (4)2,661(207)(134)—2,320 0.83% Total AUM (5)28,7387152,099(17)31,535 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) Net 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 (53%), high net worth managed accounts (38%) and U.S. value strategies (9%).(4) Prior period figures have been reclassified to conform with current presentation.(5) No performance fees are earned on exchange listed products. Certain managed equities products earn either performance fees based on returns above relevant benchmarks or earn carried interest calculated as a predetermined net profit over a preferred return. Private strategies LPs primarily earn carried interest calculated as a predetermined net profit over a preferred return. Schedule 2 - Summary financial information (In thousands $)Q4 2024Q3 2024Q2 2024Q1 2024Q4 2023Q3 2023Q2 2023Q1 2023Summary income statement Management fees (1)41,161 38,693 38,065 36,372 34,244 32,867 32,940 31,170 Fund expenses (2), (3)(2,708)(2,385)(2,657)(2,234)(2,200)(1,740)(1,871)(1,795)Direct payouts(1,561)(1,483)(1,408)(1,461)(1,283)(1,472)(1,342)(1,187)Carried interest and performance fees2,511 4,110 698 — 503 — 388 — Carried interest and performance fee payouts - internal(830)— (251)— (222)— (236)— Carried interest and performance fee payouts - external (3)— — — — — — — — Net fees38,573 38,935 34,447 32,677 31,042 29,655 29,879 28,188 Commissions819 498 3,332 1,047 1,331 539 1,647 4,784 Commission expense - internal(146)(147)(380)(217)(161)(88)(494)(1,727)Commission expense - external (3)(290)(103)(1,443)(312)(441)(92)(27)(642)Net commissions383 248 1,509 518 729 359 1,126 2,415 Finance income (2)1,441 1,574 4,084 1,810 1,391 1,795 1,650 1,655 Gain (loss) on investments(3,889)937 1,133 1,809 2,808 (1,441)(1,950)1,958 Co-investment income (2)296 418 416 274 170 462 1,327 93 Total net revenues (2)36,804 42,112 41,589 37,088 36,140 30,830 32,032 34,309 Compensation (2)19,672 18,547 19,225 17,955 17,096 16,939 21,468 19,556 Direct payouts(1,561)(1,483)(1,408)(1,461)(1,283)(1,472)(1,342)(1,187)Carried interest and performance fee payouts - internal(830)— (251)— (222)— (236)— Commission expense - internal(146)(147)(380)(217)(161)(88)(494)(1,727)Severance, new hire accruals and other(166)(58)— — (179)(122)(4,067)(1,257)Net compensation16,969 16,859 17,186 16,277 15,251 15,257 15,329 15,385 Net compensation ratio44%46%44%47%47%50%48%52% Severance, new hire accruals and other166 58 — — 179 122 4,067 1,257 Selling, general and administrative ("SG&A") (2)4,949 4,612 5,040 4,173 3,963 3,817 4,752 4,026 SG&A recoveries from funds (1)(280)(275)(260)(231)(241)(249)(282)(264)Interest expense613 933 715 830 844 882 1,087 1,247 Depreciation and amortization600 502 568 551 658 731 748 706 Foreign exchange (gain) loss (2)(2,706)1,028 122 168 1,295 37 1,440 440 Other (income) and expenses (2)— — (580)— 3,368 4,809 (18,890)1,249 Total expenses20,311 23,717 22,791 21,768 25,317 25,406 8,251 24,046 Net income 11,680 12,697 13,360 11,557 9,664 6,773 17,724 7,638 Net income per share0.46 0.50 0.53 0.45 0.38 0.27 0.70 0.30 Adjusted base EBITDA22,362 20,675 22,375 19,751 18,759 17,854 17,953 17,321 Adjusted base EBITDA per share0.88 0.81 0.88 0.78 0.75 0.71 0.71 0.68 Summary balance sheet Total assets388,798 412,477 406,265 389,784 378,835 375,948 381,519 386,765 Total liabilities65,150 82,198 90,442 82,365 73,130 79,705 83,711 108,106 Total AUM31,535,062 33,439,221 31,053,136 29,369,191 28,737,742 25,398,159 25,141,561 25,377,189 Average AUM33,401,157 31,788,412 31,378,343 29,035,667 27,014,109 25,518,250 25,679,214 23,892,335 (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, consistent with IFRS 15, 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"). Management believes the above changes enable readers to better identify the nature of these revenues and expenses. 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 ended12 months ended (In thousands $)Dec. 31, 2024Dec. 31, 2023Dec. 31, 2024Dec. 31, 2023Net income for the period11,680 9,664 49,294 41,799 Net income margin (1)27%24%28%28%Adjustments: Interest expense613 844 3,091 4,060 Provision for income taxes4,813 1,159 19,712 8,492 Depreciation and amortization600 658 2,221 2,843 EBITDA17,706 12,325 74,318 57,194 Adjustments: (Gain) loss on investments (2)3,889 (2,808)10 (1,375)Stock-based compensation (3)4,988 4,681 18,817 17,128 Foreign exchange (gain) loss (4)(2,706)1,295 (1,388)3,212 Severance, new hire accruals and other (4)166 179 224 5,625 Revaluation of contingent consideration (4)— 2,254 (580)— Costs relating to exit of non-core business (4)— 155 — 5,142 Non-recurring regulatory, professional fees and other (4)— 959 — 3,982 Shares received on recognition of contingent asset (4)— — — (18,588)Carried interest and performance fees(2,511)(503)(7,319)(891)Carried interest and performance fee payouts - internal830 222 1,081 458 Carried interest and performance fee payouts - external— — — — Adjusted base EBITDA22,362 18,759 85,163 71,887 Adjusted base EBITDA margin (5)59%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, February 26, 2025 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/syh6xw97 Please note, analysts who cover the Company should register at: https://register.vevent.com/register/BIe9622ad4a1434ee3beff3bfb7224f1ef 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 ability to capitalize on our constructive outlook in precious metals and critical materials; and (ii) 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 December 31, 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 25, 2025; 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 December 31, 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 Announces Year Ended 2024 Results

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