Sprott Inc. announces 2010 first quarter results
TORONTO, May 12 /CNW/ - Sprott Inc. (TSX: SII) ("Sprott" or the "Company") today announced its financial results for the three-month period ended March 31, 2010.
Q1 2010 Highlights
- Assets Under Management ("AUM") were $5.2 billion as at March 31,
2010, compared to $4.7 billion as at March 31, 2009 and $4.8 billion
as at December 31, 2009
- Management Fees were $23.2 million, an increase of 2.9% compared with
Q1 2009
- Base EBITDA was $10.3 million, compared with $8.1 million for Q1 2009
- Net income was $5.9 million ($0.04 per share), versus $7.4 million
($0.05 per share) in Q1 2009
- Completed Initial Public Offering of the Sprott 2010 Flow-Through
Limited Partnership
- Launched the Sprott Physical Gold Trust
- Scott Colbourne joined Sprott Asset Management ("SAM") as Senior
Portfolio Manager
Subsequent to the end of Q1 2010
- Appointed John Ciampaglia as Chief Operating Officer of SAM
- Launched the Sprott Private Credit Fund
"During the first quarter of 2010, we continued to focus on broadening our fund lineup through the introduction of innovative new products," said Eric Sprott, CEO of Sprott Inc. "In the first three months of the year, we successfully launched two new funds: the Sprott Physical Gold Trust and the Sprott 2010 Flow-Through Limited Partnership. Together, these funds have increased our AUM by more than $400 million. We are very pleased with the interest the Sprott Physical Gold Trust has generated and it is currently trading at a substantial premium to NAV. We will consider a follow-on offering in the near future to keep pace with investors' appetite for a product fully backed by physical gold. Subsequent to the end of the first quarter, in April 2010, we introduced the Sprott Private Credit Fund, which will be sub-advised by Third Eye Capital Management Inc., a leading investor in privately-managed secured loans."
"We also added to our depth at the senior management level for SAM during the quarter, with the appointment of John Ciampaglia as Chief Operating Officer. John is an accomplished investment industry professional who, in his new role, will focus on both new product development and improving the operational effectiveness of our organization," added Mr. Sprott. "Our investment performance was mixed during the quarter, with the Sprott Energy Fund delivering the best result, posting a return of almost 10%. We are well positioned to potentially return to generating performance fees through the remainder of the year."
Assets Under Management
-------------------------------------------------------------------------
Three months Three months
ended ended
$ millions March 31, March 31,
2010 2009
-------------------------------------------------------------------------
AUM, beginning of quarter 4,774 4,449
-------------------------------------------------------------------------
Net sales (redemptions) 417 (208)
-------------------------------------------------------------------------
Market value appreciation (depreciation)
of portfolios (36) 484
-------------------------------------------------------------------------
AUM, end of quarter 5,155 4,725
-------------------------------------------------------------------------
For the quarter ended March 31, 2010, AUM increased to $5,155 million, compared to $4,725 million at March 31, 2009. During the quarter, the market value of portfolios declined by $36 million, while net sales totaled $417 million, resulting in a $381 million increase in AUM. The majority of the net sales during the quarter came from the launch of two new funds, the Sprott 2010 Flow-Through Limited Partnership and the Sprott Physical Gold Trust, which raised $51 million and $441 million, respectively. Net redemptions of all other funds totaled $75 million for the quarter, with the majority of the redemptions occurring in the Company's public mutual funds and domestic hedge funds.
Income Statement
Total revenue for the quarter ended March 31, 2010 decreased by 5.2% to $25.3 million, from $26.7 million in the first quarter of 2009.
Management fees for the first quarter of 2010 increased slightly to $23.2 million from $22.6 million for the period ended March 31, 2009. The increased management fees reflect the 5.4% increase in average monthly AUM during the quarter.
There were no crystallized performance fees earned during the first quarter of 2010. In the same period the prior year, the Company earned $1.8 million in crystallized performance fees resulting from higher redemptions and strong performance by the funds during the 2009 period.
Losses from proprietary investments (realized and unrealized) totaled $0.9 million for the first quarter of 2010, compared with gains of $2.1 million in the first quarter of 2009.
Other income of $2.9 million includes $2.5 million of commissions earned by SPW LP on the sale of units of Sprott Flow-Through LP and Sprott Physical Gold Trust to SPW LP clients.
Total expenses for the three months ended March 31, 2010 were $16.6 million, an increase of $0.8 million, or 4.7%, from $15.8 million for the first quarter of 2009. The increase is mainly attributable to a $0.6 million increase in compensation and benefits and a $0.5 million increase in trailer fees versus the same period in 2009. The increase in compensation and trailer fees during the quarter was partially offset by a $0.4 million decrease in general and administration costs compared with the prior year period.
Base EBITDA increased to $10.3 million for the quarter ended March 31, 2010 from $8.1 million in the first quarter of 2009.
Net income for the quarter ended March 31, 2010 was $5.9 million ($0.04 per share) as compared with net income of $7.4 million ($0.05 per share) in the first quarter of 2009.
Dividends
On March 9, 2010, the Board of Directors declared a special eligible dividend of $0.04 per Common Share for the fiscal year ended December 31, 2009, payable on April 5, 2010 to shareholders of record at the close of business on March 19, 2010. A regular dividend of $0.025 per common share was paid to shareholders of record for the fourth quarter of 2009.
In May 2010, subsequent to the end of the first quarter, a dividend of $0.025 per common share was declared for the quarter ended March 31, 2010.
Conference Call and Webcast
A conference call and webcast will be held today, Wednesday, May 12, 2010, at 10:00am ET to discuss the Company's financial results. To access the call, please dial 647-427-7450 or 1-888-231-8191 ten minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Wednesday, May 19, 2010 by calling 416-849-0833 or 1-800-642-1687, reference number 72774332.
Participants will require Windows Media Player(TM) to listen to the webcast.
*Non-GAAP Financial Measures
This press release includes financial terms (including AUM and net sales) that the Company utilizes to assess the financial performance of its business that are not measures recognized under Canadian generally accepted accounting principles (GAAP). These non-GAAP measures should not be considered alternatives to performance measures determined in accordance with GAAP and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-GAAP measures, including the calculation of these measures, please refer to the "Non-GAAP Financial Measures" section of the Company's Management's Discussion and Analysis and its financial statements available on the Company's website at www.sprottinc.com and on SEDAR at www.sedar.com.
Forward-Looking Statements
This release contains "forward-looking statements" which reflect the current expectations of the Company. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements including, without limitation, those listed under the heading "Risk Factors" in the Company's annual information form dated March 24, 2009. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release. Although the forward-looking statements contained in this release are based upon what the Company believes to be reasonable assumptions, the Company cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and the Company does not assume any obligation to update or revise them to reflect new events or circumstances.
About Sprott Inc.
Sprott Inc. is a leading independent asset manager dedicated to achieving superior returns for its clients over the long term. The company currently operates through three distinct business units: Sprott Asset Management LP, Sprott Private Wealth LP and Sprott Consulting LP. Sprott Asset Management is the investment manager of the Sprott family of mutual funds and hedge funds and discretionary managed accounts; Sprott Private Wealth provides wealth management services to high net worth individuals; and Sprott Consulting provides management, administrative and consulting services to other companies, including SRC (TSX: SCP). Sprott Inc. is headquartered in Toronto, Canada, and is listed on the Toronto Stock Exchange under the symbol "SII". For more information on Sprott Inc., please visit www.sprottinc.com.
Summary Balance Sheet
March 31, December 31,
(In $ 000's,) 2010 2009
-------------------------------------------------------------------------
Total Assets 93,702 97,694
Total Liabilities 20,820 21,554
-------------------------------------------------------------------------
Shareholders' Equity 72,882 76,140
-------------------------------------------------------------------------
Summary Income Statement
For the For the
three months three months
ended ended
March 31, March 31,
(In $ 000's, except per share amounts) 2010 2009
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Revenue
Management fees 23,248 22,596
Crystallized performance fees - 1,810
Unrealized and realized gains (losses) on
proprietary investments (897) 2,143
Other income 2,911 107
-------------------------------------------------------------------------
Total revenue 25,262 26,656
-------------------------------------------------------------------------
Expenses
Compensation and benefits 8,267 7,699
Trailer fees 5,070 4,589
General and administration 2,611 3,040
Donations 458 284
Amortization 172 216
-------------------------------------------------------------------------
Total expenses 16,578 15,828
-------------------------------------------------------------------------
Income before income taxes 8,684 10,828
Provision for income taxes 2,759 3,407
-------------------------------------------------------------------------
Net income and comprehensive income
for the period 5,925 7,421
Other expenses(1) 759 790
Provision for income taxes 2,759 3,407
-------------------------------------------------------------------------
EBITDA 9,443 11,618
Unrealized and realized (gains) losses on
proprietary investments 897 (2,143)
Performance fees net of performance fee
related bonus pool(2) - (1,357)
-------------------------------------------------------------------------
Base EBITDA 10,340 8,118
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net Income Per Share - basic .04 .05
-------------------------------------------------------------------------
Net Income Per Share-fully diluted .04 .05
-------------------------------------------------------------------------
(1) Includes amortization of fixed assets, amortization of deferred
sales charges and non-cash stock-based compensation expense.
(2) Performance Fee related bonus pool is equal to 25% of Performance
Fee Revenue.
For further information: Investor contact information: (416) 203-2310 or 1-877-403-2310 or [email protected]
Share this article