A World Class Streaming and Royalty Company
RGLD Nasdaq 87.61 +0.10 +0.11% Volume: 34,441 October 19, 2017
Current Gold Price 1286.96 +5.04 +0.39% Volume: October 19, 2017

Royal Gold Reports Record Annual Revenue, Earnings and Cash Flow

08/09/2017

DENVER--(BUSINESS WIRE)-- Royal Gold, Inc. (NASDAQ: RGLD) (together with its subsidiaries, “Royal Gold” or the “Company,” “we” or “our”) reports record fiscal year 2017 net income of $102 million, or $1.55 per basic share, on record revenue of $441 million and record operating cash flow of $266 million.

Fiscal 2017 Highlights Compared to Fiscal 2016:

  • Record revenue of $441 million, an increase of 23%
  • Record net income of $102 million, an increase of 56%1
  • Record cash flow from operations of $266 million, an increase of 57%
  • Record volume of 350,100 Gold Equivalent Ounces (“GEOs”2), an increase of 14%
  • Record dividends paid of $61 million, an increase of 5%
  • Repaid $95 million on revolving credit facility
  • Average gold price of $1,259, an increase of 8%

The Company reports net income of $20 million, or $0.31 per share, on revenue of $109 million in its fiscal fourth quarter ended June 30, 2017. Fourth quarter net income included higher non-cash compensation costs and mark-to-market adjustments on warrants and Canadian deferred tax liabilities, as well as higher exploration and legal costs.

Fiscal Fourth Quarter 2017 Highlights Compared to Prior Year Quarter:

  • Revenue of $109 million, an increase of 16%
  • Operating cash flow of $65 million, an increase of 32%
  • Volume of 86,700 GEOs, an increase of 16%
  • Dividends paid of $16 million, an increase of 4%
  • Repaid $50 million on revolving credit facility
  • Average gold price of $1,257, in line with the prior year quarter

“We experienced a step change in our financial results in fiscal 2017 with increased volume from recent transactions,” commented Tony Jensen, President and CEO. “Our strong cash flow will be focused on new business, further strengthening the balance sheet and return to shareholders. Looking forward to the next several years, we see New Gold’s Rainy River mine, Barrick’s Cortez Crossroads deposit and Goldcorp’s Pyrite Leach Project at the Peñasquito mine driving further growth and revenue diversification.”

Recent Developments

Peak Gold Maiden Resource

The Peak Gold joint venture (“Peak Gold”), of which our Royal Alaska subsidiary is the manager, completed mineralized material3 estimate of the deposits located near Tok, Alaska. The estimate of measured and indicated resources4 contained within mineralized material assuming a $1,400 per ounce gold pit shell consists of approximately 1.3 million ounces of gold grading 3.46 grams per tonne (“gpt”), 5.1 million ounces silver grading 14.09 gpt, and 40 million pounds of copper grading 0.16%. Continuing exploration activity is focused on adjacent and regional targets.

Expansion of Credit Facility

We entered into a new $1 billion, 5-year revolving credit facility with a final maturity in June 2022. The new credit facility replaces Royal Gold’s prior $650 million credit facility that was set to mature in March 2021. Royal Gold repaid the $300 million outstanding under the prior credit facility using a combination of cash on hand of $50 million and borrowings under the new credit facility of $250 million, leaving $750 million of availability under the new credit facility.

Fiscal 2017 Overview

Fiscal 2017 revenue of $441 million included stream revenue of $314 million and royalty revenue of $127 million. The Company had inventory of approximately 14,100 ounces of gold and 536,800 ounces of silver at June 30, 2017, as previously announced, compared to 19,800 ounces of gold and 323,700 ounces of silver at June 30, 2016.

Our total revenue for fiscal 2017 of $441 million increased when compared with $360 million in fiscal 2016, due to higher volume across the portfolio with notable increases in gold production at Andacollo and higher gold and silver production at Pueblo Viejo.

Fiscal 2017 cost of sales was approximately $87 million, compared to $71 million in fiscal 2016. The increase is primarily attributable to an increase in gold production and silver stream production at Pueblo Viejo. Cost of sales is specific to our stream agreements and is the result of the purchase of gold, silver and copper for a cash payment.

General and administrative expenses increased to $33 million in fiscal 2017, from $32 million in fiscal 2016, primarily due to an increase in legal costs.

Exploration costs, which are specific to exploration and advancement of Peak Gold, increased to $13 million in fiscal 2017, from $9 million in fiscal 2016. As of June 30, 2017, Royal Gold has contributed $23 million to the project and obtained a 29.5% membership interest in Peak Gold.

Depreciation, depletion and amortization expense increased to $160 million in fiscal 2017, from $141 million in fiscal 2016. The increase was primarily attributable to increased gold sales and new silver sales from Pueblo Viejo.

Interest and other income increased to $9 million in fiscal 2017 from $4 million in fiscal 2016. The increase was primarily due to a gain on a former interest, consideration received as part of a legal settlement and termination of a non-principal royalty.

We recognized income tax expense totaling $26 million in fiscal 2017 compared with $61 million in fiscal 2016. This resulted in an effective tax rate of 22% for fiscal 2017 compared with (279%) in the prior fiscal year. The decrease is primarily related to tax impacts attributable to our Chilean subsidiary that were incurred during fiscal 2016.

At June 30, 2017, we had current assets of $140 million compared to current liabilities of $31 million, resulting in working capital of $109 million. This compares to current assets of $168 million and current liabilities of $26 million at June 30, 2016, resulting in working capital of $142 million. The decrease in working capital is primarily due to repayments on the outstanding balance under our credit facility.

During fiscal 2017, liquidity needs were met from $354 million in revenue net of our streaming payments and our available cash resources. As of June 30, 2017, the Company had $750 million available and $250 million outstanding under its revolving credit facility. Working capital, combined with the Company’s undrawn revolving credit facility, resulted in $859 million of total liquidity at June 30, 2017.

Fourth Quarter 2017 Overview

Fourth quarter revenue was $109 million compared to $94 million in the prior year quarter. Stream and royalty revenue totaled $78 million and $31 million, respectively, for the quarter. Revenue increased due to higher royalty volume principally from Peñasquito, increased silver sales from Pueblo Viejo and greater gold sales from Wassa and Prestea. We received the first quarter of copper deliveries from Mount Milligan, and those copper stream sales more than offset the reduced percentage of gold sales under our new streaming agreement.

Fourth quarter cost of sales of $20 million was slightly higher than $19 million recorded in the prior year quarter, driven by higher gold and silver sales from Pueblo Viejo.

General and administrative expenses increased to $10 million in the fourth quarter, compared to $8 million in the prior year quarter. The increase was primarily related to higher non-cash stock-based compensation charges and legal costs.

Exploration costs, which are related to Peak Gold, were higher, totaling $4 million in the fourth quarter, compared to $2 million in the prior year quarter.

Interest and other expense increased to $11 million from $9 million in the prior year quarter. The increase reflected higher borrowing costs associated with an increase in LIBOR compared to the prior year quarter, as well as higher undrawn commitment fees associated with the additional $350 million of revolver capacity under the new credit facility.

We recognized fourth quarter income tax expense of $8 million, compared to $5 million during the prior year quarter. This resulted in an effective tax rate of 31% compared to 22% in the prior year quarter. The increase was largely associated with the strengthening of the Canadian dollar relative to the US dollar, which impacted the valuation of certain Canadian deferred tax liabilities. As noted above, the fiscal 2017 effective tax rate was 22%.

PROPERTY HIGHLIGHTS

A summary of fourth quarter and historical production can be found on Tables 1 and 2. Calendar year 2017 operator production estimates of certain properties in which we have interests compared to actual production through June 30, 2017 can be found on Table 3. Results of our streaming business for the fourth quarter, compared to the prior year quarter, can be found on Table 4. Highlights at certain of the Company’s principal producing and development properties during the fourth quarter, compared to the prior year quarter, are detailed in our Annual Report on Form 10-K.

CORPORATE PROFILE

Royal Gold is a precious metals stream and royalty company engaged in the acquisition and management of precious metal streams, royalties and similar production based interests. The Company owns interests on 194 properties on six continents, including interests on 39 producing mines and 20 development stage projects. Royal Gold is publicly traded on the NASDAQ Global Select Market under the symbol “RGLD.” The Company’s website is located at www.royalgold.com.

Note: Management’s conference call reviewing the fourth quarter results will be held on Thursday, August 10, 2017, at noon Eastern Time (10:00 a.m. Mountain Time). The call will be webcast and archived on the Company’s website for a limited time.

Fourth Quarter Earnings Call Information:

        Dial-In Numbers:         855-209-8260 (U.S.); toll free
855-669-9657 (Canada); toll free
412-542-4106 (International)
Conference Title: Royal Gold
Webcast URL:

www.royalgold.com under Investors, Events & Presentations

________________

1  

When compared to fiscal 2016 adjusted net income, a non-GAAP measure. Please see Adjusted Net Income (Loss) Reconciliation for details.

2 GEOs are calculated as revenue divided by the average gold price for the same period. GEOs net of stream payments were 71,000 in the fourth quarter and 280,800 in fiscal year 2017, compared to 59,600 and 247,300 in the prior year quarter and fiscal year, respectively.
3 The U.S. Securities and Exchange Commission (“SEC”) does not recognize this term. Mineralized material is that part of a mineral system that has potential economic significance but cannot be included in the proven and probable ore reserve estimates until further drilling and metallurgical work is completed, and until other economic and technical feasibility factors based upon such work have been resolved. Investors are cautioned not to assume that any part or all of the mineral deposits in this category will ever be converted into reserves.
4 Measured and indicated resources is not a term recognized by the SEC. Estimates of such resources are subject to further exploration and development, are subject to additional risks, and no assurance can be given that they will eventually convert to future reserves.
 

Cautionary “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: With the exception of historical matters, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. Such forward-looking statements include statements about cash flow growth; Rainy River, Cortez Crossroads and the Peñasquito Pyrite Leach Project as new or expanding sources of revenue providing further growth and revenue diversification, and the expected timing of commissioning of these projects; and operators’ production estimates for calendar year 2017. Net gold and metal reserves attributable to Royal Gold’s stream, royalty and other interests are subject to certain assumptions and, like reserves, do not reflect actual ounces that will be produced. Like any stream, royalty or similar interest on a non-producing or not-yet-in-development project, our interests on development projects are subject to certain risks, such as the ability of the operators to bring the projects into production and operate in accordance with their feasibility studies and mine plans, and the ability of Royal Gold to make accurate assumptions regarding valuation and timing and amount of payments. In addition, many of our interests are subject to risks associated with conducting business in a foreign country, including application of foreign laws to contract and other disputes, foreign environmental laws and enforcement and uncertain political and economic environments. Factors that could cause actual results to differ materially from the projections include, among others, precious metals, copper and nickel prices; performance of and production at the Company's stream and royalty properties, including gold and copper production at Mount Milligan and gold and silver production at Pueblo Viejo; the ability of operators of development properties to finance project construction to completion and bring projects into production as expected; operators’ delays in securing or inability to secure necessary governmental permits; decisions and activities of the operators of the Company's stream and royalty properties; unanticipated grade, environmental, geological, seismic, metallurgical, processing, liquidity or other problems the operators of the Company’s stream and royalty properties may encounter; changes in operators’ project parameters as plans continue to be refined; changes in estimates of reserves and mineralization by the operators of the Company’s stream and royalty properties; contests to the Company’s stream and royalty interests and title and other defects to the Company’s stream and royalty properties; errors or disputes in calculating stream deliveries and royalty payments, or deliveries or payments not made in accordance with stream and royalty agreements; economic and market conditions; changes in laws governing the Company and its stream and royalty interests or the operators of the properties subject to such interests, and other subsequent events; as well as other factors described in the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the Securities and Exchange Commission. Most of these factors are beyond the Company’s ability to predict or control. The Company disclaims any obligation to update any forward-looking statement made herein. Readers are cautioned not to put undue reliance on forward-looking statements.

Statement Regarding Third-Party Information: Certain information provided in this press release, including production estimates for calendar 2017, has been provided to us by the operators of the relevant properties or is publicly available information filed by these operators with applicable securities regulatory bodies, including the Securities and Exchange Commission. Royal Gold has not verified, and is not in a position to verify, and expressly disclaims any responsibility for, the accuracy, completeness or fairness of such third-party information and refers the reader to the public reports filed by the operators for information regarding those properties.

TABLE 1
Fourth Quarter Fiscal 2017
Revenue and Reported Production for Principal Stream and Royalty Interests
(In thousands, except reported production in oz. and lbs.)
   

 

 

    Three Months Ended     Three Months Ended
June 30, 2017 June 30, 2016

 

    Reported     Reported

Stream/Royalty

   

Metal(s)

   

Revenue

    Production1     Revenue     Production1
Stream:
Mount Milligan $ 31,575   $ 29,874  
Gold 19,800 oz. 23,800 oz.
Copper 2.6 Mlbs. N/A
Pueblo Viejo2 $ 19,678 $ 16,676
Gold 10,500 oz. 10,600 oz.
Silver 374,500 oz. 208,900 oz.
Andacollo Gold $ 18,699 14,900 oz. $ 17,080 13,500 oz.
Wassa and Prestea Gold $ 7,952 6,300 oz. $ 5,791 4,600 oz.
Other3 Gold $ - N/A $ - 300 oz.
Total stream revenue $ 77,904 $ 69,421
                                       
Royalty:                                      
Peñasquito $ 6,752 $ 2,552
Gold 133,300 oz. 41,900 oz.
Silver 5.6 Moz. 2.6 Moz.
Lead 27.4 Mlbs. 13.3 Mlbs.
Zinc 85.7 Mlbs. 43.2 Mlbs.
Cortez Gold $ 1,562 16,600 oz. $ 1,267 16,100 oz.
Other3 Various $ 22,716 N/A $ 20,889 N/A
Total royalty revenue $ 31,030 $ 24,708
Total revenue $ 108,934 $ 94,129
 
TABLE 1
Fiscal Year 2017
Revenue and Reported Production for Principal Stream and Royalty Interests
(In thousands, except reported production in oz. and lbs.)
   

 

 

    Fiscal Year Ended     Fiscal Year Ended
June 30, 2017 June 30, 2016

 

    Reported     Reported

Stream/Royalty

   

Metal(s)

   

Revenue

    Production1     Revenue     Production1
Stream:                                      
Mount Milligan $ 136,736   $ 125,438  
Gold 103,400 oz. 108,800 oz.
Copper 2.6 Mlbs. N/A
Pueblo Viejo4 $ 91,589 $ 39,683
Gold 50,700 oz. 31,200 oz
Silver 1.6 Moz. 208,900 oz
Andacollo Gold $ 60,251 47,800 oz. $ 49,243 41,600 oz
Wassa and Prestea Gold $ 25,435 20,300 oz. $ 23,346 20,100 oz
Other Gold $ - N/A $ 318 300 oz
Total stream revenue $ 314,011 $ 238,028
                                       
Royalty:                                      
Peñasquito $ 26,687 $ 22,760
Gold 556,300 oz. 584,000 oz.
Silver 20.7 Moz. 21.4 Moz.
Lead 125.2 Mlbs. 134.2 Mlbs.
Zinc 317.8 Mlbs. 333.0 Mlbs.
Cortez Gold $ 6,504 64,200 oz. $ 6,107 74,000 oz.
Other3 Various $ 93,612 N/A $ 92,895 N/A
Total royalty revenue $ 126,803 $ 121,762
Total revenue $ 440,814 $ 359,790
 
TABLE 2
Historical Production
 

 

 

 

 

    Reported Production For The Quarter Ended1

Property

 

Stream/Royalty

 

Operator

  Metal(s)  

Jun. 30,
2017

 

Mar. 31,
2017

 

Dec. 31,
2016

 

Sep. 30,
2016

 

Jun. 30,
2016

Stream:                                                    
Mount Milligan5  

35.00% of payable
gold; 18.75% of
payable copper

  Centerra   Gold   19,800   oz.   28,900   oz.   25,700   oz.   28,900   oz.   23,800   oz.
            Copper   2.6   Mlbs.   N/A       N/A       N/A       N/A    
Pueblo Viejo

7.5% of gold
produced up to
990,000 ounces;
3.75% thereafter

Barrick (60%) Gold   10,500   oz.   15,600   oz.   13,700   oz.   11,000   oz.   10,600   oz.
   

75% of payable
silver up to 50
million ounces;
37.5% thereafter

      Silver   374,500   oz.   322,000   oz.   543,300   oz.   323,300   oz.   208,900   oz.
Andacollo  

100% of gold
produced

  Teck   Gold   14,900   oz.   8,500   oz.   9,200   oz.   15,200   oz.   13,500   oz.
Wassa and Prestea  

9.25% of gold
produced up to
240,000 ounces;
5.5% thereafter

  Golden Star   Gold   6,300   oz.   5,400   oz.   4,000   oz.   4,500   oz.   4,600   oz.
Royalty:                                                    
Peñasquito 2.0% NSR Goldcorp                                          
Gold   133,300   oz.   137,500   oz.   185,400   oz.   100,100   oz.   41,900   oz.
Silver   5.6   Moz.   4.8   Moz.   5.0   Moz.   5.2   Moz.   2.6   Moz.
Lead   27.4   Mlbs.   31.3   Mlbs.   33.6   Mlbs.   33.0   Mlbs.   13.3   Mlbs.
            Zinc   85.7   Mlbs.   88.5   Mlbs.   70.5   Mlbs.   73.0   Mlbs.   43.2   Mlbs.
Cortez  

GSR1 and GSR2,
GSR3, NVR1

  Barrick   Gold   16,600   oz.   11,300   oz.   14,500   oz.   21,800   oz.   16,100   oz.
                 
FOOTNOTES
Tables 1 and 2
 
1 Reported production relates to the amount of metal sales that are subject to our stream and royalty interests for the stated period, as reported to us by operators of the mines.
2 The first silver stream deliveries were in March 2016, with the first silver sales made during the June 2016 quarter.
3 Individually, no stream or royalty included within the “Other” category contributed greater than 5% of our total revenue for the entire period.
4 The gold and silver streams at Pueblo Viejo were acquired during the three months ended September 30, 2015. The first gold and silver stream deliveries were in December 2015 and March 2016, respectively.
5 Reflects the October 20, 2016 amendment to our Mount Milligan streaming agreement. Prior to the amendment, Royal Gold held a 52.25% gold stream. Gold concentrate that was in transit at October 20, 2016 was delivered to us under the 52.25% gold stream. Royal Gold began receiving gold and copper deliveries reflecting the amended stream agreement in April 2017.
 
 
TABLE 3
Calendar 2017 Operator’s Production Estimate vs Actual Production
                   

Calendar 2017 Operator's Production

Calendar 2017 Operator's Production
Estimate1 Actual2,3
Gold Silver Base Metals Gold     Silver Base Metals
Stream/Royalty     (oz.)     (oz.)     (lbs.)     (oz.)     (oz.)     (lbs.)
Stream:                                    
Andacollo4     61,600                 26,800            
Mount Milligan5     260,000-290,000           55 - 65 million     102,300           27.7 million
Pueblo Viejo6     625,000-650,000     Not provided           314,000     Not provided      
Wassa and Prestea7     255,000-280,000                 122,000            
Royalty:                                    
Cortez GSR1     102,200                 27,700            
Cortez GSR2     1,600                 200            
Cortez GSR3     103,800                 27,900            
Cortez NVR1     63,900                 15,300            
Peñasquito8     410,000     Not provided           260,000     10.2 million      
Lead                 125 million                 58.5 million
Zinc                 325 million                 164.8 million
1   Production estimates received from our operators are for calendar 2017. There can be no assurance that production estimates received from our operators will be achieved. Please refer to our cautionary language regarding forward-looking statements and the statement regarding third party information contained in this press release, as well as the Risk Factors identified in Part I, Item 1A, of our Fiscal 2016 Form 10-K for information regarding factors that could affect actual results.
2 Actual production figures shown are from our operators and cover the period January 1, 2017 through June 30, 2017.
3 Actual production figures for Cortez are based on information provided to us by Barrick Gold Corporation, and actual production figures for Andacollo, Mount Milligan, Pueblo Viejo, Peñasquito (gold) and Wassa and Prestea are the publicly reported figures of the operators of those properties.
4 The estimated and actual production figures shown for Andacollo are contained gold in concentrate.
5 The estimated and actual production figures shown for Mount Milligan are payable gold and copper in concentrate.
6 The estimated and actual production figures shown for Pueblo Viejo are payable gold in doré and represent Barrick’s 60% interest in Pueblo Viejo.
7 The estimated gold production figures shown for Wassa and Prestea are payable gold in concentrate and doré.
8 The estimated and actual gold production figures shown for Peñasquito are payable gold in concentrate. The operator did not provide estimated silver, lead and zinc production.
 
 

TABLE 4

Stream Summary
 
  Three Months Ended   Three Months Ended   As of   As of
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Gold Stream Purchases (oz.)   Sales (oz.) Purchases (oz.)   Sales (oz.) Inventory (oz.) Inventory (oz.)
Mount Milligan 19,900 19,800 31,200 23,700 100 7,500
Pueblo Viejo 12,900 10,500 11,000 11,000 12,900 11,000
Andacollo 12,600 14,900 13,500 13,500 100 -
Wassa and Prestea 5,300 6,300 4,400 4,600 1,000 1,300
Total 50,700 51,500 60,100 52,800 14,100 19,800
 
Three Months Ended Three Months Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Silver Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 536,800 374,500 322,800 208,900 536,800 323,700
 
Three Months Ended Three Months Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Copper Stream

Purchases (tonnes)

Sales (tonnes) Purchases (tonnes) Sales (tonnes) Inventory (tonnes) Inventory (tonnes)
Mount Milligan 1,165 1,165 N/A N/A - N/A
 
 
                 
 
 
Fiscal Year Ended Fiscal Year Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Gold Stream Purchases (oz.) Sales (oz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Mount Milligan 96,000 103,400 111,000 108,800 100 7,500
Pueblo Viejo 52,600 50,700 42,200 31,200 12,900 11,000
Andacollo 47,900 47,800 41,700 41,600 100 -
Wassa and Prestea 19,900 20,300 21,400 20,100 1,000 1,300
Phoenix Gold - - 300 300 - -
Total 216,400 222,200 216,600 202,000 14,100 19,800
 
Fiscal Year Ended Fiscal Year Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Silver Stream Purchases (Moz.) Sales (Moz.) Purchases (oz.) Sales (oz.) Inventory (oz.) Inventory (oz.)
Pueblo Viejo 1.8 1.6 532,600 208,900 536,800 323,700
 
Fiscal Year Ended Fiscal Year Ended As of As of
June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Copper Stream Purchases (tonnes) Sales (tonnes) Purchases (tonnes) Sales (tonnes) Inventory (tonnes) Inventory (tonnes)
Mount Milligan 1,165 1,165 N/A N/A - N/A
 
 
ROYAL GOLD, INC.

Consolidated Balance Sheets

As of June 30,

(In thousands except share data)

 
        2017     2016
ASSETS
Cash and equivalents $ 85,847 $ 116,633
Royalty receivables 23,461 17,990
Income tax receivable 22,169 23,219
Stream inventory 7,883 9,489
Prepaid expenses and other   822   614
Total current assets 140,182 167,945
Stream and royalty interests, net 2,892,256 2,848,087
Other assets   58,202   53,697
Total assets $ 3,090,640 $ 3,069,729
LIABILITIES
Accounts payable $ 3,908 $ 4,114
Dividends payable 15,682 15,012
Income tax payable 5,651 3,177
Other current liabilities   5,617   3,554
Total current liabilities 30,858 25,857
Debt 586,170 600,685
Deferred tax liabilities 121,330 133,867
Uncertain tax positions 25,627 16,996
Other long-term liabilities   6,391   6,439
Total liabilities 770,376 783,844
EQUITY
Preferred stock, $.01 par value, authorized 10,000,000 shares authorized; and 0 shares issued - -
Common stock, $.01 par value, 200,000,000 shares authorized; and 65,179,527 and 65,093,950 shares outstanding, respectively 652 651
Additional paid-in capital 2,185,796 2,179,781
Accumulated other comprehensive income 879 -
Accumulated earnings   88,050   48,584
Total Royal Gold stockholders’ equity 2,275,377 2,229,016
Non-controlling interests   44,887   56,869
Total equity   2,320,264   2,285,885
Total liabilities and equity $ 3,090,640 $ 3,069,729
 
 
ROYAL GOLD, INC.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands except for per share data)

 
    For The Three Months Ended     For The Years Ended
June 30,     June 30, June 30,     June 30,
2017 2016 2017 2016
Revenue $ 108,934 $ 94,129 $ 440,814 $ 359,790
 
Costs and expenses
Cost of sales 19,682 19,019 87,265 70,979
General and administrative 9,903 8,305 33,350 31,720
Production taxes 429 432 1,760 3,978
Exploration costs 4,450 2,466 12,861 8,601
Depreciation, depletion and amortization 39,851 35,391 159,636 141,108
Impairments of stream and royalty interests and royalty receivables   -     -     -     98,588  
Total costs and expenses   74,315     65,613     294,872     354,974  
 
Operating income 34,619 28,516 145,942 4,816
 
Gain on available-for-sale securities - 1,665 - 2,340
Interest and other income 753 1,582 9,302 3,711
Interest and other expense   (10,819 )   (8,656 )   (36,378 )   (32,625 )
Income (loss) before income taxes 24,553 23,107 118,866 (21,758 )
 
Income tax expense   (7,717 )   (5,025 )   (26,441 )   (60,680 )
Net income (loss) 16,836 18,082 92,425 (82,438 )
Net loss attributable to non-controlling interests   3,184     2,357     9,105     5,289  
Net income (loss) attributable to Royal Gold common stockholders $ 20,020   $ 20,439   $ 101,530   $ (77,149 )
 
Net income (loss) $ 16,836 $ 18,082 $ 92,425 $ (82,438 )
Adjustments to comprehensive income (loss), net of tax
Unrealized change in market value of available-for-sale securities 303 1,112 879 5,632
Reclassification adjustment for gains included in net income   -     (1,665 ) -   (2,340 )
Comprehensive income (loss) 16,533 17,529 93,304 (79,146 )
Comprehensive loss attributable to non-controlling interests   3,184     2,357     9,105     5,289  
Comprehensive income (loss) attributable to Royal Gold stockholders $ 19,717   $ 19,886   $ 102,409   $ (73,857 )
 
Net income (loss) per share available to Royal Gold common stockholders:
Basic earnings (loss) per share $ 0.31   $ 0.32   $ 1.55   $ (1.18 )
Basic weighted average shares outstanding   65,175,663     65,090,772     65,152,782     65,074,455  
Diluted earnings (loss) per share $ 0.31   $ 0.32   $ 1.55   $ (1.18 )
Diluted weighted average shares outstanding   65,320,719     65,090,772     65,277,953     65,074,455  
Cash dividends declared per common share $ 0.24   $ 0.23   $ 0.95   $ 0.91  
 
 
ROYAL GOLD, INC.

Consolidated Statements of Cash Flows

(In thousands)

 
    For The Three Months Ended     For The Years Ended
June 30,     June 30, June 30,     June 30,
2017 2016 2017 2016
Cash flows from operating activities:
Net income (loss) $ 16,836 $ 18,082 $ 92,425 $ (82,438 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 39,851 35,391 159,636 141,108
Amortization of debt discount and issuance costs 3,623 4,843 13,825 12,985
Non-cash employee stock compensation expense 3,224 2,250 9,983 10,039
Impairments of stream and royalty interests and royalty receivables - - - 98,588
Tax (benefit) expense of stock-based compensation exercises (937 ) 301 (975 ) 548
Gain on available-for-sale securities - (1,665 ) - (2,340 )
Deferred tax expense (benefit) 7,822 12,263 1,556 (4,983 )
Other (236 ) - (4,874 ) (390 )
Changes in assets and liabilities:
Royalty receivables (671 ) 2,245 (5,472 ) 17,221
Stream inventory (1,259 ) (4,088 ) 1,606 (7,203 )
Income tax receivable (2,815 ) (11,783 ) (13,056 ) (14,637 )
Prepaid expenses and other assets (948 ) (1,783 ) (1,691 ) (153 )
Accounts payable 1,435 684 (206 ) (849 )
Income tax payable (1,227 ) 602 2,475 460
Uncertain tax positions 1,290 (83 ) 8,631 1,867
Other liabilities   (1,004 )   (8,047 )   2,015     36  
Net cash provided by operating activities $ 64,984   $ 49,212   $ 265,878   $ 169,859  
 
Cash flows from investing activities:
Acquisition of stream and royalty interests - (19,853 ) (203,721 ) (1,346,109 )
Andacollo royalty termination - - - 345,000
Golden Star term loan - - - (20,000 )
Proceeds from sale of available-for-sale securities - 4,972 - 11,905
Other   2,102     (7 )   3,605     (309 )
Net cash provided by (used in) provided by investing activities $ 2,102   $ (14,888 ) $ (200,116 ) $ (1,009,513 )
 
Cash flows from financing activities:
Borrowings from revolving credit facility - - 70,000 350,000
Repayment of revolving credit facility (50,000 ) (25,000 ) (95,000 ) (75,000 )
Net payments from issuance of common stock 192 (179 ) (2,426 ) (353 )
Common stock dividends (15,681 ) (15,011 ) (61,396 ) (58,720 )
Purchase of additional royalty interest from non-controlling interest (1,056 ) - (2,518 ) -
Debt issuance costs (3,340 ) (62 ) (3,340 ) (1,111 )
Tax expense (benefit) of stock-based compensation exercises 937 (301 ) 975 (548 )
Other   (381 )   (1 )   (2,843 )   (830 )
Net cash (used in) provided by financing activities $ (69,329 ) $ (40,554 ) $ (96,548 ) $ 213,438  
Net (decrease) increase in cash and equivalents (2,243 ) (6,230 ) (30,786 ) (626,216 )
Cash and equivalents at beginning of period   88,090     122,863     116,633     742,849  
Cash and equivalents at end of period $ 85,847   $ 116,633   $ 85,847   $ 116,633  
 
 

SCHEDULE A

Non-GAAP Financial Measures

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meaning prescribed by generally accepted accounting principles (“GAAP”). These measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Our management uses Adjusted EBITDA and Adjusted Net Income as measures of operating performance to assist in comparing performance from period to period on a consistent basis; as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; in communications with the board of directors, stockholders, analysts and investors concerning our financial performance; as useful comparisons to the performance of our competitors; and as metrics of certain management incentive compensation calculations. We believe that these measures are used by and are useful to investors and other users of our financial statements in evaluating our operating performance because they provide an additional tool to evaluate our performance without regard to special and non-core items, which can vary substantially from company to company depending upon accounting methods, book value of assets and capital structure. We have provided reconciliations of all non-GAAP measures to their nearest U.S. GAAP measures and have consistently applied the adjustments within our reconciliations in arriving at each non-GAAP measure. We consider these items to be necessary adjustments for purposes of evaluating our ongoing business performance and are often considered non-recurring. Such adjustments are subjective and involve significant management judgment.

Adjusted EBITDA Reconciliation

Adjusted EBITDA is defined by the Company as net income (loss) plus depreciation, depletion and amortization, non-cash charges, income tax expense, interest and other expense, and any impairment of mining assets, less non-controlling interests in operating loss (income) of consolidated subsidiaries, interest and other income, and any royalty portfolio restructuring gains or losses. Other companies may define and calculate this measure differently. Adjusted EBITDA identifies the cash generated in a given period that will be available to fund the Company's future operations, growth opportunities, shareholder dividends and to service the Company's debt obligations. This information differs from measures of performance determined in accordance with U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance determined in accordance with U.S. GAAP. See the table below for a reconciliation of net income to Adjusted EBITDA.

            For The Three Months Ended     Fiscal Years Ended
June 30, June 30,
(Unaudited, in thousands) (Unaudited, in thousands)
2017     2016 2017     2016
 
Net income (loss) $ 16,836 $ 18,082 $ 92,425 $ (82,438 )
Depreciation, depletion and amortization 39,851 35,391 159,636 141,108
Non-cash employee stock compensation 3,224 2,250 9,983 10,039
Impairment of stream and royalty interests and royalty receivables - - - 98,588
Interest and other, net 10,067 5,409 27,075 26,574
Income tax expense 7,717 5,025 26,441 60,680
Non-controlling interests in operating loss of consolidated subsidiaries 3,422 2,357 10,628 5,289
       
Adjusted EBITDA $ 81,117 $ 68,514 $ 326,188 $ 259,840  
 

Adjusted Net Income (Loss) Reconciliation

Management of the Company uses adjusted net income (loss) to evaluate the Company’s operating performance, and for planning and forecasting future business operations. The Company believes the use of adjusted net income (loss) allows investors and analysts to understand the results relating to receipt of revenue from its royalty interests and purchase and sale of gold from its streaming interests by excluding certain items that have a disproportionate impact on our results for a particular period. The net income (loss) adjustments are presented net of tax generally at the Company’s statutory effective tax rate. Management’s determination of the components of adjusted net income (loss) are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts. Net income (loss) attributable to Royal Gold stockholders is reconciled to adjusted net income (loss) as follows:

    For The Three Months Ended     Fiscal Years Ended
June 30, June 30,
(Unaudited, in thousands) (Unaudited, in thousands)
2017     2016 2017     2016
 
Net income (loss) attributable to Royal Gold common stockholders $ 20,020 $ 20,439 $ 101,530 $ (77,149 )
 
Impairments of stream and royalty interests and royalty receivables, net of tax - - - 86,130
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation   -   -   -   56,000  
Adjusted net income attributable to Royal Gold common stockholders $ 20,020 $ 20,439 $ 101,530 $ 64,981
                         
 
Net income (loss) attributable to Royal Gold common stockholders per basic share $ 0.31 $ 0.32 $ 1.55 $ (1.18 )
 
Impairment of stream and royalty interests and royalty receivables, net of tax - - - 1.32
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation   -   -   -   0.86  
Adjusted net income attributable to Royal Gold common stockholders per basic share $ 0.31 $ 0.32 $ 1.55 $ 1.00  
 
Net income (loss) attributable to Royal Gold common stockholders per diluted share $ 0.31 $ 0.32 $ 1.55 $ (1.18 )
 
Impairment of stream and royalty interests and royalty receivables, net of tax - - - 1.32
Tax expense on Andacollo royalty sale and Chilean subsidiary liquidation   -   -   -   0.86  
 
Adjusted net income attributable to Royal Gold common stockholders per diluted share $ 0.31 $ 0.32 $ 1.55 $ 1.00  

Source: Royal Gold, Inc.

Royal Gold, Inc.

Karli Anderson, 303-575-6517

Vice President Investor Relations

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