SPROTT ANNOUNCES YEAR ENDED 2023 RESULTS

Mining
Wednesday, February 21st, 2024 4:05 pm EDT

Sprott Inc. has released its financial results for the year ended Dec. 31, 2023.

Management commentary

“In 2023, Sprott’s Assets Under Management (“AUM”) increased by $5.3 billion (23 per cent) to $28.7 billion driven largely by strong uranium prices and inflows to our exchange listed products. Much of this growth came late in the fourth quarter and is already positively contributing to our 2024 performance,” said Whitney George, Chief Executive Officer of Sprott. “The success of our uranium strategies has been a bright spot for Sprott clients and shareholders as they have grown to account for approximately 28 per cent of our total AUM. During the year, we also expanded our critical materials product offerings with the launch of seven new ETFs in this rapidly growing category. Precious metals markets were relatively quiet in 2023, though gold still gained 13 per cent on the year, despite high real interest rates.”

“Looking ahead, we believe we are well positioned to continue creating value for our shareholders in 2024. We have a strong pipeline of new products and a growing reputation as a trusted partner in our areas of specialization. We are welcoming many new clients who have just started to explore opportunities in critical materials and are now joining the loyal clients invested in our precious metals products. Finally, we have a focused team of employee shareholders who are eager to demonstrate the potential of our highly-scalable asset management platform,” added Mr. George.

Key AUM highlights

AUM was $28.7 billion as at Dec. 31, 2023, up $3.3 billion (13 per cent) from September 30, 2023 and up $5.3 billion (23 per cent) from Dec. 31, 2022. On a three and twelve months ended basis, we benefited from strong uranium prices, as well as inflows across the majority of our exchange listed products. We also benefited from capital raises in our private strategies funds.

Key revenue highlights

Management fees were $34.5 million in the quarter, up $6.1 million (21 per cent) from the quarter ended Dec. 31, 2022 and $132.3 million on a full-year basis, up $16.9 million (15 per cent) from the year ended Dec. 31, 2022. Carried interest and performance fees were $0.5 million in the quarter, down $0.7 million (59 per cent) from the quarter ended Dec. 31, 2022 and $0.9 million on a full-year basis, down $2.4 million (73 per cent) from the year ended Dec. 31, 2022. Net fees were $31.5 million in the quarter, up $4.9 million (18 per cent) from the quarter ended Dec. 31, 2022 and $120.7 million on a full-year basis, up $13.7 million (13 per cent) from the year ended Dec. 31, 2022. Our revenue performance was due to higher average AUM across most of our exchange listed products and higher average AUM in our private strategies funds as a result of two new fund launches. On a full-year basis, these increases were partially offset by lower average AUM in our managed equities segment and lower carried interest crystallization in our private strategies segment.

Commission revenues were $1.3 million in the quarter, down $3.7 million (74 per cent) from the quarter ended Dec. 31, 2022 and $8.3 million on a full-year basis, down $22.4 million (73 per cent) from the year ended Dec. 31, 2022. Net commissions were $0.7 million in the quarter, down $2.1 million (75 per cent) from the quarter ended Dec. 31, 2022 and $4.6 million on a full-year basis, down $11.6 million (71 per cent) from the year ended Dec. 31, 2022. Lower commissions were due to lower ATM activity in our physical uranium trust on a full-year basis and the sale of our former Canadian broker-dealer in the second quarter.

Finance income was $1.2 million in the quarter, down $0.2 million (16 per cent) from the quarter ended Dec. 31, 2022 and $4.9 million on a full-year basis, down $0.1 million (3 per cent) from the year ended Dec. 31, 2022. Our results were primarily driven by lower income generation in co-investment positions we hold in LPs managed in our private strategies segment.

Key expense highlights

Net compensation expense was $14.8 million in the quarter, up $2.3 million (18 per cent) from the quarter ended Dec. 31, 2022 and $60.4 million on a full-year basis, up $4.1 million (7 per cent) from the year ended Dec. 31, 2022. The increase in the quarter and on a full-year basis was primarily due to new hires and increased AIP accruals on higher net fee generation.

SG&A was $4.2 million in the quarter, up $0.1 million (3 per cent) from the quarter ended Dec. 31, 2022 and $17.5 million on a full-year basis, up $1.5 million (9 per cent) from the year ended Dec. 31, 2022. The increase in the quarter and on a full-year basis was due to higher marketing and technology costs.

Earnings summary

Net income was $9.7 million ($0.38 per share) in the quarter, up 32 per cent from $7.3 million ($0.29 per share) for the quarter ended Dec. 31, 2022. On a full-year basis, net income was $41.8 million ($1.66 per share), up 137 per cent from $17.6 million ($0.70 per share) for the year ended Dec. 31, 2022. Net income in the quarter benefited from higher average AUM across most of our exchange listed products and private strategies. On a full-year basis we benefited from higher average AUM as noted previously, but also from the second quarter realization of an unrecorded contingent asset relating to a prior period acquisition.

Adjusted base EBITDA was $18.8 million ($0.75 per share) in the quarter, up 4 per cent from $18.1 million ($0.72 per share) for the quarter ended Dec. 31, 2022. On a full-year basis, adjusted base EBITDA was $71.9 million ($2.85 per share), up 1 per cent from $71 million ($2.83 per share) for the year ended Dec. 31, 2022. The increased management fees generated from higher average AUM on a full-year basis were largely offset by lower commission income due to the sale of our former Canadian broker-dealer during the second quarter of the year.

Subsequent events

On February 20, 2024, the Sprott Board of Directors announced a quarterly dividend of $0.25 per share. Subsequent to year-end, we continue to benefit from our late 2023 asset growth as well as ongoing strength in uranium prices. As at February 16, 2024, AUM was $29.2 billion, up 2 per cent from $28.7 billion at Dec. 31, 2023.

Supplemental financial information

Please refer to the Dec. 31, 2023 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 Dec. 31, 2023 and the Company’s financial performance for the year ended Dec. 31, 2023.

Conference Call and Webcast

A webcast will be held today, February 21, 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/4ntitdgh

Please note, analysts who cover the Company should register at:

https://register.vevent.com/register/BI9f44c0f3a1534a898c9479a79580cf87

Normal Course Issuer Bid

Sprott Inc. (“Sprott” or the “Company”) (NYSE/TSX: SII) is pleased to also announce today that the Toronto Stock Exchange (“TSX”) has approved the Company’s notice of intention to make a normal course issuer bid (“NCIB”). Pursuant to the terms of the NCIB, Sprott may purchase its own common shares for cancellation through the facilities of the TSX, alternative Canadian trading systems and/or the New York Stock Exchange, in each case in accordance with the applicable requirements, and as otherwise permitted under applicable securities laws. The maximum number of common shares which may be purchased by Sprott during the NCIB will not exceed 646,576 common shares being approximately 2.5 per cent of 25,863,041 (representing the number of issued and outstanding common shares as of February 19, 2024). The average daily trading volume (the “ADTV”) of the common shares on the TSX for the six-month period ended January 31, 2024 was 28,455. Under the rules of the TSX, Sprott is entitled to repurchase during the same trading day on the TSX up to 25 per cent of the ADTV of the common shares, being 7,113 common shares, except where such purchases are made in accordance with the “block purchase” exemption under applicable TSX policy. Sprott will effect purchases at varying times commencing on March 4, 2024 and ending on March 3, 2025.

In addition to providing shareholders liquidity, Sprott believes that the common shares have been trading in a price range which does not adequately reflect the value of such shares in relation to Sprott’s business and its future prospects.

Under its current NCIB that commenced on March 3, 2023 and will terminate on March 2, 2024, Sprott previously sought and received approval from the TSX to repurchase up to 648,908 common shares. Pursuant to its current NCIB, Sprott has purchased an aggregate of 122,953 common shares through the facilities of the TSX and the NYSE. 18,915 common shares were purchased on the TSX at a weighted-average price of C$45.54 per common share for total cash consideration of CAD$861,389.10, and 104,038 common shares were purchased on the NYSE at a weighted-average price of US$32.63 per common share for total cash consideration of US$3,394,759.94. Sprott did not repurchase the maximum allowance under the current NCIB due to a combination of factors.

We seek Safe Harbor.