Franco-Nevada Corporation (NYSE:FNV) Q1 2024 Earnings Conference Call May 2, 2024 10:00 AM ET Company Participants Candida Hayden - Senior Analyst-Investor Relations Paul Brink - President and Chief Executive Officer Sandip Rana - Chief Financial Officer Eaun Gray - Senior Vice President-Business Development Jason O'Connell - Senior Vice President Lloyd Hong - Chief Legal Officer & Corporate Secretary Conference Call Participants Brian MacArthur - Raymond James Heiko Ihle - H.C. Wainwright Cosmos Chiu - CIB ...

Financial Performance - Total revenue for Q1 2024 was $256.8 million, a decrease of 7.0% compared to $276.3 million in Q1 2023[4] - Net income for Q1 2024 was $144.5 million, down 7.7% from $156.5 million in Q1 2023[4] - Gross profit for Q1 2024 was $165.0 million, representing a decrease of 6.8% from $177.1 million in Q1 2023[4] - Basic earnings per share for Q1 2024 were $0.75, a decrease from $0.82 in Q1 2023[4] - Revenue for Q1 2024 was $256.8 million, a decrease of 7.1% from $276.3 million in Q1 2023[81] - Revenue from mining segment was $213.0 million, down 6.3% from $227.3 million in the same period last year[81] - Segment gross profit for Q1 2024 was $165.2 million, a decline of 6.0% compared to $177.3 million in Q1 2023[81] - Net income before income taxes for Q1 2024 was $172.0 million, down 6.6% from $184.1 million in Q1 2023[81] - Gold revenue decreased to $160.9 million in Q1 2024 from $172.2 million in Q1 2023, a decline of 6.9%[60] Cash and Assets - Cash and cash equivalents at the end of Q1 2024 were $1,352.0 million, down from $1,421.9 million at the end of 2023[2] - Total assets increased to $6,059.3 million as of March 31, 2024, compared to $5,994.1 million at the end of 2023[2] - Shareholders' equity rose to $5,819.5 million at the end of Q1 2024, up from $5,769.1 million at the end of 2023[2] - Equity investments increased to $249.3 million as of March 31, 2024, compared to $246.4 million as of December 31, 2023[36] - Loans receivable increased to $65.4 million as of March 31, 2024, up from $24.8 million as of December 31, 2023[39] - The Company disposed of equity investments with a cost of $11.6 million for gross proceeds of $7.4 million during the three months ended March 31, 2024[37] Dividends and Income - The company declared dividends of $69.4 million in Q1 2024, compared to $65.4 million in Q1 2023[7] - The company declared dividends of $0.36 per common share in Q1 2024, compared to $0.34 in Q1 2023[77] - The total cash dividends paid in Q1 2024 were $58.9 million, an increase from $57.8 million in Q1 2023[77] - The Company recognized a total of $2.1 million in dividend income from its equity investment in LIORC for Q1 2024, compared to $2.3 million in Q1 2023[58] Costs and Expenses - Total costs of sales for Q1 2024 were $33.6 million, down from $38.2 million in Q1 2023, representing a decrease of 12.1%[61] - General and administrative expenses were $5.7 million in Q1 2024, slightly down from $6.2 million in Q1 2023[62] - Current income tax expense for Q1 2024 was $22.1 million, up from $19.5 million in Q1 2023, an increase of 13.3%[68] Investments and Acquisitions - The company acquired royalty, stream, and working interests totaling $146.9 million in Q1 2024, up from $109.3 million in Q1 2023[6] - The Company acquired a 2.0% gross production royalty on minerals produced on Scottie Resources Corp.'s claims for a purchase price of $5.9 million (C$8.1 million) on April 15, 2024[20] - The Company received $6.5 million (A$10 million) from Fortuna Silver Mines for the buy-back of 0.6% of the Company's initial 1.2% NSR on the Séguéla mine on April 1, 2024[22] - The Company amended its precious metal stream agreement for the Condestable mine in Peru, increasing the Variable Phase 2 Deliveries from 25% to 37.5% and advancing an additional up-front deposit of $10.0 million, totaling $175.0 million[23] - The Company funded a term loan of $42.0 million for the Tocantinzinho gold project on January 29, 2024, and subsequently advanced an additional $33.0 million on April 19, 2024[27][28] Tax and Legal Matters - The Canada Revenue Agency has proposed additional taxes of $16.8 million for 2018 and $30.6 million for 2019, with potential penalties under review[121] - For the 2013-2016 taxation years, the company faces additional taxes of $22.1 million and penalties of $9.0 million related to transfer pricing reassessments[115] - The company has filed formal Notices of Objection against the CRA's reassessments and has posted security for 50% of the reassessed amounts[117] - If reassessed for 2020-2023, the company estimates additional taxes of approximately $237.0 million and penalties of approximately $89.6 million[122] - The ongoing CRA audit poses a risk of additional income taxes, penalties, and interest if the CRA successfully challenges the Company's tax filings, which could materially affect the Company[124] Other Financial Metrics - Finance income increased to $16.0 million in Q1 2024, compared to $10.5 million in Q1 2023, marking a growth of 52.4%[67] - The Company recorded a gain of $2.0 million on changes in the fair value of equity investments at FVTOCI for the three months ended March 31, 2024[38] - The Company has remaining commitments of up to $56.0 million in the Royalty Acquisition Venture as of March 31, 2024[32] - The Company has a $1.0 billion unsecured revolving term credit facility, with no amounts drawn as of March 31, 2024[56] - The Company has long-term commodity purchase commitments extending up to 40 years for various precious metals agreements[95] - Franco-Nevada recognized a full impairment of $1,169.2 million for its Cobre Panama streams due to a Supreme Court ruling in Panama[110] - The company estimates damages of at least $5 billion related to its Cobre Panama arbitration proceedings[111]

(in U.S. dollars unless otherwise noted) TORONTO, April 10, 2024 /PRNewswire/ - Franco-Nevada Corporation ("Franco-Nevada" or the "Company") (TSX: FNV) (NYSE: FNV) announces the publication of its 2024 ESG Report and 2024 Asset Handbook. "We are proud to report on our leading ESG approach, new programs and commitments and to provide a detailed review of our portfolio of assets," said Paul Brink, President & CEO. "We are delighted to have a number of our operating partners participate in the investor day to ...

A month has gone by since the last earnings report for Franco-Nevada (FNV) . Shares have added about 10% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Franco-Nevada due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers. Franco-Nevada Q4 Earnings Top Estimates, Sales Fall ...

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Financial Data and Key Metrics Changes - The company recorded total revenue of $303.3 million for Q4 2023, with adjusted EBITDA of $254.6 million, resulting in an EBITDA margin of 83.9% [17][35] - The total GEOs sold for the year were 607,045, within the guidance range, with precious metals GEOs at 488,109 [38] - A noncash impairment loss of approximately $1.2 billion was recognized due to the halt in production at Cobre Panama, leading to a net loss of $982.5 million or $5.11 per share for the quarter [40][45] Business Line Data and Key Metrics Changes - Precious metal GEOs represented 79% of total GEOs for Q4 2023, while energy GEOs significantly decreased to 25,640 GEOs compared to 47,713 a year ago due to lower energy prices [15][16] - The company expects to benefit from new mines such as Tocantinzinho, Greenstone, and Salares Norte, which will drive organic growth through 2028 [10][21] Market Data and Key Metrics Changes - Gold prices increased by over 14% for Q4 2023 and almost 8% for the year, while palladium prices significantly decreased year-over-year [43] - The company anticipates total GEOs sold in 2024 to be between 480,000 to 540,000, excluding Cobre Panama, with precious metals GEOs expected to be 360,000 to 400,000 [47] Company Strategy and Development Direction - The company aims to maintain a sustainable and progressive dividend, increasing it for the 17th consecutive year, with a focus on capital allocation to responsible operations [9][10] - The strategy includes maintaining a strong balance sheet to capitalize on growth opportunities, especially in a capital-scarce environment [37][122] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business outlook despite challenges at Cobre Panama, highlighting a robust cash flow and no debt [35] - The company is hopeful for a resolution regarding Cobre Panama and a potential restart of production, which would positively impact future deliveries [40][73] Other Important Information - The company has approximately $2.4 billion in total available capital as of December 31, 2023, including a credit facility of $1 billion [52] - Annual costs related to legal proceedings for Cobre Panama are expected to be between $10 million to $15 million [51] Q&A Session Summary Question: What is the long-term guidance considering the step-downs in agreements? - Management indicated that negotiations vary by transaction, and they aim to achieve acceptable returns while considering the timing of deals [53][54] Question: Can you clarify the arbitration claims and their potential value? - The company is pursuing independent arbitrations, with a minimum claim of $5 billion based on damages and market valuation [104][127] Question: What factors influenced the decision to take the impairment on Cobre Panama? - The impairment decision was based on management judgment considering the impact on share price and the halt in production due to political issues [107][108] Question: How does the company view the current market environment for new streams and royalties? - The company sees good opportunities across commodities, with a focus on precious metals, and is actively looking for transactions [138][139]

Franco-Nevada Corporation (FNV) reported adjusted earnings per share (EPS) of 90 cents for the fourth quarter of 2023, up 5% from the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 80 cents.The company generated revenues of $303 million in the reported quarter, marking a year-over-year decline of 5.3%. The downside was due to lower gas, platinum group metals and oil prices, partly offset by higher gold prices. During the December quarter, 78.7% of revenues were sourced from Pr ...

Tax Reassessments and Liabilities - The Company received a Notice of Reassessment for the 2016 taxation year, resulting in additional Federal and provincial income taxes of $3.5 million (C$4.6 million) plus estimated interest and penalties of $1.4 million (C$1.8 million)[1] - The Company's Mexican subsidiary paid a total of $34.1 million (490.3 million Pesos) in cash taxes for taxation years 2013 through 2016 at a 30% tax rate[4] - The 2014 and 2015 Reassessments for the Barbadian subsidiary resulted in additional Federal and provincial income taxes of $5.1 million (C$6.7 million) plus estimated interest and penalties of $3.3 million (C$4.4 million)[5] - The 2016 and 2017 Reassessments for the Barbadian subsidiary resulted in additional Federal and provincial income taxes of $30.1 million (C$39.8 million) plus estimated interest and penalties of $11.2 million (C$14.8 million)[7] - The Company received a Proposal Letter from the CRA proposing to reassess the 2018 and 2019 taxation years, resulting in additional Federal and provincial income taxes of $17.2 million (C$22.7 million) for 2018 and $31.4 million (C$41.5 million) for 2019 plus estimated interest and penalties of $6.5 million (C$8.6 million) for 2018 and $8.5 million (C$11.3 million) for 2019[8] - The Company estimates that it would be subject to additional Canadian tax of approximately $242.8 million (C$321.1 million), transfer pricing penalties of approximately $91.8 million (C$121.4 million), and other penalties of approximately $33.4 million (C$44.2 million) for taxation years 2020 through 2023[9] - The company faces potential tax exposures of up to $242.8 million (C$321.1 million) for 2020-2023 related to transfer pricing reassessments in Barbados[30] - The company received $13.9 million (C$17.7 million) in returned security deposits from the CRA related to transfer pricing reassessments[28] - The Company reached a settlement with the CRA in respect of the Domestic and FAPI Reassessments, resulting in no FAPI in 2012 and 2013 as computed under Canadian tax law[20] - The Company filed formal Notices of Objection in connection with certain Transfer Pricing Reassessments and posted security in the form of cash totaling $18.5 million (C$24.5 million)[13] - Deferred tax liabilities are recognized for taxable temporary differences, calculated at enacted or substantively enacted tax rates[88] - The company evaluates exposure to uncertain tax positions and recognizes provisions based on the probable outcome of assessments[89] - The Company's deferred income tax assets are reassessed at each reporting period based on forecasts of future taxable income and reversals of temporary differences[119] - The Company applied a temporary exception to accounting for deferred taxes related to OECD Pillar Two model rules, effective immediately upon issuance of the amendment[101] Financial Performance and Position - Total assets decreased from $6,626.8 million in 2022 to $5,994.1 million in 2023, primarily due to a reduction in royalty, stream, and working interests from $4,927.5 million to $4,027.1 million[24] - Net loss for 2023 was $466.4 million, compared to a net income of $700.6 million in 2022, driven by impairment losses of $1,173.3 million[26] - Revenue declined from $1,315.7 million in 2022 to $1,219.0 million in 2023, while gross profit decreased from $852.6 million to $766.6 million[26] - Cash and cash equivalents increased by 18.8% from $1,196.5 million in 2022 to $1,421.9 million in 2023[24] - Operating cash flows remained strong at $991.2 million in 2023, slightly down from $999.5 million in 2022[33] - The company invested $520.0 million in acquiring royalty, stream, and working interests in 2023, significantly higher than the $139.6 million invested in 2022[33] - Dividends paid increased to $233.0 million in 2023, up from $197.6 million in 2022[33] - Net income for 2022 was $700.6 million, while the company reported a net loss of $466.4 million in 2023[34] - Total comprehensive income for 2022 was $571.9 million, compared to a total comprehensive loss of $424.3 million in 2023[34] - Dividends declared in 2022 amounted to $245.8 million, increasing to $262.1 million in 2023[34] - The company's total equity decreased from $6,417.6 million at the end of 2022 to $5,769.1 million at the end of 2023[34] - Franco-Nevada's cash and cash equivalents increased to $1,421.9 million in 2023 from $1,196.5 million in 2022, primarily held in interest-bearing deposits[172] - Franco-Nevada's equity investments increased to $246.4 million in 2023 from $224.6 million in 2022, with Labrador Iron Ore Royalty Corporation being the largest holding at $152.7 million[173] - Franco-Nevada's royalty, stream, and working interests carrying value increased to $4,027.1 million in 2023 from $4,927.5 million in 2022, with mining royalties and streams being the largest components[179][180] - Total net book value as of December 31, 2023, is $4,027.1 million, with $2,990.9 million depletable and $1,036.2 million non-depletable[181] - Additions to royalty, stream, and working interests in 2023 totaled $519.6 million, with significant contributions from streams ($250.2 million) and exploration ($110.2 million)[181] - Depletion charges for 2023 amounted to $270.7 million, primarily driven by streams ($169.4 million) and energy ($60.8 million)[181] - Foreign exchange impact in 2023 resulted in a net gain of $27.3 million, with $14.1 million attributed to royalties[181] - Franco-Nevada recognized a gain of $3.7 million from the disposal of a 0.5% NSR royalty interest in the Valentine Gold project[190] - Energy exploration assets written off in 2023 totaled $4.1 million due to abandoned tenements and concessions[189] Royalty, Stream, and Working Interests - The Company completed the acquisition of a royalty portfolio in the Haynesville gas play in Louisiana and Texas for a purchase price of $125.0 million[14] - The Company's royalty, stream, and working interests carrying value was $4,027.1 million as of December 31, 2023[16] - Royalty, stream, and working interests are recorded at cost and capitalized as tangible assets with finite lives[51] - Producing mineral royalty and stream interests are depleted using the units-of-production method over the life of the property[52] - Capitalized costs for energy well equipment are depreciated using a 25% declining balance method[57] - Impairment losses are recognized when an asset's carrying value exceeds its recoverable amount, calculated as the higher of fair value less costs of disposal (FVLCD) and value-in-use (VIU)[59] - The Company's royalty, stream, and working interests are subject to significant judgments and estimates, particularly regarding commodity prices, discount rates, and reserve/resource conversion[107] - Impairment losses of $1,173.3 million were recorded in 2023, primarily related to royalty, stream, and working interests[26] - The Company recognized an impairment loss of $1,169.2 million for the Cobre Panama stream interest due to halted production and political environment[108] - Cobre Panama production halted since November 2023 due to political and legal challenges, leading to a full impairment assessment[184][185][186] - Franco-Nevada has initiated international arbitration proceedings regarding Cobre Panama, with potential for impairment reversal if production resumes[187][188] - Acquired an incremental 1.0% NSR on Skeena's Eskay Creek properties for $41.8 million, increasing total NSR to 2.5%[122] - Advanced $18.7 million to Skeena Resources Ltd. for a convertible debenture with a 7% interest rate, maturing by December 19, 2028[124] - Agreed to acquire a royalty portfolio in the Haynesville gas play for $125.0 million, with $12.5 million advanced as a deposit[125] - Fully funded the $250.0 million Tocantinzinho Stream deposit, with stream deliveries based on gold production: 12.5% until 300,000 ounces, then 7.5%[127] - Acquired an additional 1.0% NSR on Argonaut's Magino gold mine for $28.0 million, increasing total NSR to 3.0%[133] - Acquired a 1.5% NSR on Red Pine Exploration's Wawa gold project for $5.0 million, with an option to acquire an additional 0.5% NSR[135] - Agreed to acquire a sliding-scale gold royalty and fixed-rate copper royalty on Barrick Gold's Pascua-Lama project for $75.0 million[136] - Acquired a 1.5% NSR on Tiernan's Volcan gold project for $15.0 million, with an option to acquire an additional 1.0% NSR[138] - Acquired an incremental 0.1120% NSR on Lundin Mining's Caserones mine for $9.4 million, increasing total NSR to 0.5702%[142] - Acquired an additional 1.5% NSR on Marathon's Valentine Gold project for $45.0 million, increasing total NSR to 3.0%[147] - Franco-Nevada acquired an additional 0.5% NSR on Skeena's Eskay Creek project for $21.0 million (C$28.5 million), with $19.9 million (C$27.0 million) paid on closing and $1.1 million (C$1.5 million) contingent upon certain conditions[159] - Franco-Nevada acquired a 2% NSR on Argonaut Gold's Magino gold project for $52.5 million, covering both the Magino project and regional exploration properties[161] - Franco-Nevada acquired a 2% NSR on Westhaven Gold's Spences Bridge Gold Belt claims for $6.0 million, with an option for Westhaven to buy-down 0.5% of the NSR for $3.0 million within 5 years[163] - Franco-Nevada acquired a portfolio of seven royalties in Chile, each with a 2% NSR on precious metals and 1% NSR on base metals, for $1.0 million[165] - Franco-Nevada acquired an additional 2% NSR on Equinox Gold's Castle Mountain project for $6.0 million, increasing its effective NSR on the Pacific Clay claims to 4.65%[166][168] - Franco-Nevada acquired an effective 0.4582% NSR on JX Nippon Mining & Metals' Caserones mine for $37.4 million, with royalty payments commencing from January 1, 2022[169] - Franco-Nevada advanced $18.7 million (C$25.0 million) to Skeena as a convertible debenture with a 7% interest rate, maturing on December 19, 2028, or upon project financing completion[176] Revenue Recognition and Financial Instruments - Revenue from stream arrangements is recognized when control over the commodity is transferred to the customer, typically at the delivery date based on spot prices[73] - Revenue from royalty arrangements is measured at the transaction price agreed with the operator, reflecting the gross value of the commodity sold less deductions[79] - Working interest revenue is measured at the transaction price set by reference to monthly market commodity prices, including adjustments for product quality and transportation[80] - Costs of sales for stream agreements include cash payments for gold, silver, or platinum group metals, based on the lesser of a contractual price or the prevailing market price[82] - The company's financial instruments include cash, receivables, accounts payable, accrued liabilities, debt, and investments, initially recognized at fair value[62] - Equity investments are classified as fair value through other comprehensive income (FVTOCI) and measured at fair value, with changes recognized directly in other comprehensive income[64] Share-Based Payments and Equity - The Company's deferred share units (DSUs) are settled in cash, with the fair value marked to the quoted market price of the Company's common shares at each reporting date[94] - The Company's performance-based restricted share units (RSUs) may vest at a performance multiplier ranging from 0% to 150% of the value[93] - The Company uses the Black-Scholes option pricing model to measure the fair value of equity-settled share-based payments[92] - The Company's earnings per share calculations include the effect of potentially dilutive common share equivalents, such as share options and restricted share units[96] Joint Operations and Subsidiaries - Franco-Nevada holds a 49.9% economic interest in The Mineral Resource Company II, LLC (TMRC II), a joint operation with Continental Resources, Inc.[45] - The company funds 80% of contributions to TMRC II, with Continental Resources funding the remaining 20%[45] - The Company's joint arrangement with Continental qualifies as a joint operation, with revenue distributions ranging between 50-75% based on asset performance[117] - Franco-Nevada operates in multiple regions including South America, Central America & Mexico, United States, Canada, Australia, Europe, and Africa[36] - The company's principal subsidiaries are located in Delaware, Barbados, Australia, Texas, and Chile, all with 100% economic interest[41] Internal Controls and Reporting - Internal control over financial reporting was deemed effective as of December 31, 2023, per management and independent audit[193][197] - The Company's segment reporting aligns with internal reporting provided to the CEO, who is responsible for resource allocation and performance assessment[95]

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Franco-Nevada Corp (NYSE:FNV) Q3 2023 Earnings Conference Call November 9, 2023 8:00 AM ET Company Participants Candida Hayden - IR Contact Paul Brink - President and Chief Executive Officer Sandip Rana - Chief Financial Officer Eaun Gray - Senior Vice President of Business Development Conference Call Participants Heiko Ihle - H.C. Wainwright Brian MacArthur - Raymond James Adrian Day - Adrian Day Asset Management Operator Good morning, and welcome to Franco-Nevada Corporation's Third Quarter 2023 Results C ...