Coeur Mining (CDE) Q1 2025 Earnings Call May 08, 2025 11:00 AM ET Speaker0 Good day, and welcome to the Core Mining First Quarter twenty twenty five Financial Results Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this conference is being recorded. I would now like to turn the conference over to Mr. Kraft, President and CEO. Please go ahead. Speaker1 Good morning, everyone, and thanks for joining our cal ...

Financial Data and Key Metrics Changes - For Q1 2025, the company reported net income of approximately $19.6 million or $0.14 per diluted share on revenues of approximately $605 million, compared to net income of approximately $22.7 million or $0.14 per diluted share in Q1 2024 on revenues of approximately $606 million [24][25] - Adjusted EBITDA for Q1 2025 was approximately $100 million, down from approximately $118 million in the prior year's first quarter [24][25] - Operating expenses increased by approximately 3% year over year, reflecting higher labor costs and general administrative expenses [25][26] Business Line Data and Key Metrics Changes - Revenues from owned and leased secure service facilities increased by approximately 3% year over year, while revenues from electronic monitoring and supervision services declined by approximately 10% [24][25] - Combined revenues from owned and leased reentry centers, managed only facilities, and non-residential service contracts were largely unchanged compared to the prior year's first quarter [25] Market Data and Key Metrics Changes - Utilization at facilities under contract with ICE is currently at approximately 16,000 beds, the highest level of utilization in over five years, while ICE detention levels are estimated at about 48,000 beds nationwide [10][11] - The company has around 3,000 beds available under contract with the US Marshals Service and approximately 6,500 beds at idle facilities [10][11] Company Strategy and Development Direction - The company is focused on expanding its capabilities to assist the federal government with immigration enforcement priorities, including a $70 million investment to enhance detention capacity and related services [5][32] - The company has reorganized its corporate management structure to strengthen operational oversight in anticipation of expected growth [5][32] - The guidance for 2025 reflects a "tale of two halves," with the first half impacted by higher overhead and operating expenses, while growth is expected to begin in the second half [6][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the anticipated growth opportunities due to increased immigration enforcement and the need for additional detention capacity [5][32] - The company expects to see additional contract awards in the second quarter of 2025, which will likely activate in the second half of the year [10][11] - Management highlighted the importance of the budget reconciliation process in Congress for future funding availability for ICE [19][80] Other Important Information - The company ended Q1 2025 with approximately $1.68 billion in total net debt and expects to reduce net debt by approximately $150 million to $175 million for the full year [19][30] - The company is exploring options for the potential purchase, leasing, or operation of third-party owned facilities to meet federal government needs [13][14] Q&A Session Summary Question: What caused the larger fall in operating income for the electronic monitoring segment? - Management indicated that the decline in profitability was due to a mix shift away from phone services to GPS monitoring devices, impacting margins [39][40] Question: Is the $45 billion funding for ICE detention inclusive of ATD? - Management noted that the focus is on interior enforcement and that as the budget process unfolds, greater utilization of electronic monitoring is expected [41][42][45] Question: What is the current status of ICE detainee numbers? - Management stated that the agency has rapidly increased the number of detainees, and new contracts will help expand capacity [46][48] Question: Will the company consider opportunities in Alabama for new facilities? - Management expressed openness to supporting any governmental client but emphasized the primary focus on federal partners [49][50] Question: What is the status of the Northlake contract? - Management clarified that capital investment for the Northlake facility is included in overall guidance and will be accretive over the contract timeline [72] Question: How does the company view the potential for share buybacks? - Management indicated that share buybacks would be considered once leverage levels are appropriate and after executing current commitments [89][90]

Financial Performance and Key Metrics - In Q1 2025, the company reported an 8% decline in revenue and a 67% reduction in adjusted EBITDA compared to Q1 2024, which was described as disappointing [5][9] - The company ended the quarter with liquidity of $272 million and a net secured debt reduction of $624 million, resulting in a net secured leverage ratio of 2.9 times covenant EBITDA [8][14] Business Segment Performance - In the Cellular Specialty segment, quarterly net sales decreased by $5 million to $201 million, with a 2% sales price increase offset by a 2% decline in sales volume [9][10] - The cellulose commodities segment saw net sales decline by $19 million to $75 million, with operating results improving by $6 million year over year to a loss of $13 million [10][11] - The new biomaterials segment maintained steady net sales at $7 million, with operating income flat at $2 million [11] - Paperboard segment net sales decreased by $4 million to $49 million, reflecting a 4% decrease in sales prices and a 3% decline in sales volumes [12] - High yield pulp segment net sales declined by $3 million to $31 million, with operating losses increasing to $7 million [12][13] Market Dynamics - The company faces significant challenges from tariffs, particularly a 25% tariff imposed by China on US-sourced cellulose commodities, affecting approximately $85 million of annual revenue [7][9] - The company is actively mitigating tariff risks through customer advocacy, market diversification, and operational adjustments [17][20] Strategic Direction and Industry Competition - The company plans to focus on tariff mitigation actions and will likely pause some strategic initiatives, including debt reduction, due to cash flow uncertainties [18][29] - The biomaterials growth strategy remains intact, with expectations for continued investment in US-centric projects [18][29] Management Commentary on Operating Environment and Future Outlook - Management acknowledged the challenging start to 2025 and ongoing uncertainties in the global market but expressed confidence in the resilience of the core business [74][75] - Adjusted EBITDA guidance for 2025 has been lowered to a range of $175 million to $185 million, reflecting various challenges including tariff impacts and production issues [21][22] Other Important Information - The company expects to see a modest improvement in paperboard volumes due to better market access within North America, although prices remain under pressure [27][50] - Corporate costs are projected to increase year over year, primarily due to a non-cash environmental reserve charge and foreign exchange headwinds [28] Q&A Session Summary Question: Conditions in the fluff pulp market with China's retaliatory tariffs - Management indicated that some Chinese customers continue to place orders but do not expect to absorb tariffs long-term, leading to a pivot towards non-tariff markets like India and Africa [31][34] Question: Evolution of volumes following Liberation Day - Management noted that volumes were lower than expected due to pre-orders and that orders resumed in May after a pause in April, with expectations for normalization by Q3 [39][43] Question: Evolution of paperboard guidance for 2025 - Management confirmed that the risk of tariffs on paperboard has reversed, and pricing is expected to decrease by approximately 5% due to increased supply [45][50]

Financial Data and Key Metrics Changes - The company generated $35 million of free cash flow in Q1 2025 and $214 million over the last twelve months [5] - Free cash flow from the mineral rights business was $44 million in Q1 2025, with a decline in prices for metallurgical coal, thermal coal, and soda ash negatively impacting results [6][12] - Net income for the mineral rights segment decreased by $15 million compared to the prior year's first quarter [11] Business Line Data and Key Metrics Changes - The mineral rights segment generated $45 million of net income, $43 million of operating cash flow, and $44 million of free cash flow in Q1 2025, with significant decreases attributed to weaker steel demand [11][12] - The soda ash business saw a net income decrease of $1 million, with both operating and free cash flow down by $11 million compared to the prior year [12] - Cash distributions from Shisha Jam Wyoming dropped to $3 million, an 80% decline from the previous quarter [8] Market Data and Key Metrics Changes - Prices for metallurgical coal, thermal coal, and soda ash have declined significantly, with current prices at or near the cost of production for many producers [5][6] - The soda ash market is experiencing a bear market due to a supply-demand imbalance, with prices expected to remain low for several years [9] Company Strategy and Development Direction - The company is focused on debt reduction, with remaining debt standing at $118 million, and anticipates significant increases in unitholder distributions as debt is paid off [5][6] - The company does not plan to sell any assets and aims to be a long-term holder of its mineral rights [24] - Future acquisitions are not a priority at this time, as the company is focused on completing its deleveraging strategy [26] Management's Comments on Operating Environment and Future Outlook - Management expects weak prices for key commodities to persist, impacting performance in the near term [5][6] - Despite current market headwinds, the outlook for equity holders is considered brighter than in the past decade [47] - The company is monitoring legislative developments but does not foresee any material impact on its business from the current administration [42] Other Important Information - The company paid a distribution of $0.75 per common unit for Q1 2025, with a special distribution of $1.21 per common unit paid in March 2025 [13][14] Q&A Session Summary Question: Anticipation of future dividends - Management does not have an anticipation for dividends one year from now but prioritizes distributions as a cash flow priority [16][17] Question: Prioritization between share buybacks and dividends - The order of cash uses prioritizes liquidity and balance sheet strength, followed by distributions, then unit repurchases, and lastly opportunistic acquisitions [18][19] Question: Opportunities to sell or monetize assets - Management does not plan to sell assets but would consider monetizing if an opportunity arises at a value exceeding intrinsic worth [24] Question: Future mineral rights acquisitions - The company is focused on completing its current strategy and is not actively seeking acquisitions at this time [26] Question: Impact of met coal index pricing on production - Management acknowledges that current prices are at or below marginal costs for many operators, which may lead to idling of production, but no material changes in volumes are expected [34][35] Question: Legislative impacts on the business - Management monitors legislative developments but has not identified any that would materially impact the business [42]

Core Viewpoint - Tyson Foods' stock price experienced a decline of over 7% following the Q2 earnings release and guidance update, which presents a potential investment opportunity as the market reaction appears to be an overreaction to solid guidance reaffirmed at previous levels [1][2]. Financial Performance - Q2 revenue for Tyson Foods was reported at $13.07 billion, remaining relatively flat compared to the previous year, with pricing increases compensating for volume weaknesses in several areas [4]. - Adjusted operating margin improved by 70 basis points, leading to a significant 48% increase in adjusted earnings, which outperformed consensus estimates by 1000 basis points [6]. Dividend and Capital Return - The dividend yield stands at 3.59%, with a payout of $2.00, supported by a sustainable payout ratio, cash flow, and earnings growth outlook [2][3]. - The company has a history of increasing its dividend for over a dozen years, indicating a positive trend in capital return [3]. Debt Management - Tyson Foods has been actively reducing its debt, with a reduction of nearly $0.75 billion in Q2, resulting in a year-to-date decrease of 15% [8]. - The debt-to-equity ratio is below 0.5x, positioning the company favorably against long-term targets [8]. Stock Forecast - The 12-month stock price forecast for Tyson Foods is $61.78, indicating an 11.20% upside potential from the current price of $55.56 [5]. - Analysts predict growth in three segments for Q3, with expectations for sustained growth in the long term [5]. Market Sentiment - Following the Q2 release, Tyson's stock price fell to the low end of the analyst's target range but is expected to rebound towards the higher end by year-end [9]. - The stock is currently rated as a Hold, with sentiment trends showing potential upgrades and a firm consensus target of $61.75 [9].

Financial Data and Key Metrics Changes - The company generated $35 million of free cash flow in Q1 2025 and $214 million over the last twelve months [5] - The current debt stands at $118 million, with expectations of significant increases in unitholder distributions as debt is paid off next year [5][6] - Net income for the mineral rights segment in Q1 2025 was $45 million, with operating cash flow at $43 million and free cash flow at $44 million, showing a decrease compared to the prior year's first quarter [11] Business Line Data and Key Metrics Changes - The mineral rights business generated $44 million of free cash flow in Q1 2025, but net income decreased by $15 million compared to the previous year due to weaker steel demand [6][12] - The soda ash segment saw a significant decline, with cash distributions from Shisha Jam Wyoming dropping 80% to $3 million, attributed to low sales prices and high inventories [7][8] - The corporate and financing segment performance was relatively flat, with slight improvements in operating cash flow and free cash flow due to lower interest payments [13] Market Data and Key Metrics Changes - Prices for metallurgical coal, thermal coal, and soda ash have declined significantly, impacting overall performance [5][6] - The soda ash market is currently experiencing a bear market, with prices trading below production costs for many producers [8][12] - International soda ash pricing has decreased significantly from record highs in 2023, primarily due to weakened demand from the construction and automobile markets [12] Company Strategy and Development Direction - The company is focused on debt reduction and maintaining a solid capital structure, with cash flow priorities including liquidity and balance sheet strength [18] - There is no current plan to sell assets, as the company prefers to be a long-term holder of its mineral rights [23] - The company is monitoring legislative developments but does not anticipate significant impacts on its business from the new administration [40] Management's Comments on Operating Environment and Future Outlook - Management expects weak prices for key commodities to persist, which will continue to affect performance [5][6] - Despite current market headwinds, the outlook for equity holders is considered brighter than in the past decade [44] - The company is optimistic about long-term opportunities in carbon neutral initiatives, despite current market challenges [10] Other Important Information - The company paid a fourth quarter 2024 distribution of $0.75 per common unit and announced a similar distribution for Q1 2025 [13][14] - The company is making small-scale progress in geothermal, solar, and lithium initiatives [10] Q&A Session Summary Question: Anticipation of future dividends - Management does not have an anticipation for dividends one year from now but prioritizes distributions as cash flow allows [16][17] Question: Opportunities for asset monetization - The company does not plan to sell assets but would consider monetizing if opportunities arise at favorable valuations [23] Question: Future of M&A and coal industry sentiment - Management is focused on executing their current strategy and is not actively pursuing acquisitions at this time [24] Question: Volumes in the Illinois Basin and met coal production - The uptick in volumes is expected to persist, but management acknowledges that prices are at or below marginal costs for many operators, which may lead to production reductions [30][32]

Core Insights - Elanco Animal Health announced the sale of future tiered royalties and commercial milestones related to XDEMVY for $295 million in cash, aimed at accelerating debt reduction and achieving a net leverage ratio of 3.9x to 4.3x adjusted EBITDA by the end of 2025 [1][3] - The transaction is expected to reduce interest expenses by approximately $10 million, offset by the sale of about $10 million in royalties based on Elanco's initial 2025 guidance [1] Company Overview - Elanco Animal Health is a global leader in animal health, dedicated to innovating and delivering products and services to prevent and treat diseases in farm animals and pets, with a 70-year heritage in the industry [7] - The company is focused on high-impact innovation and aims to enhance its core business sales growth in 2025 [3] Product Development - Lotilaner was exclusively licensed to Tarsus Pharmaceuticals in 2019 for human health applications, and in 2023, XDEMVY became the first lotilaner-based product approved for human use, specifically for treating Demodex blepharitis [2] - Elanco retains rights to all royalty payments on net sales outside the U.S. and any future human applications of lotilaner beyond ophthalmic solutions [4] Strategic Partnerships - The collaboration with Blackstone Life Sciences and Blackstone Credit & Insurance is recognized as a significant investment to support Elanco's goals and the potential impact of XDEMVY on patients [3][9]

Core Insights - Elanco Animal Health announced the sale of future tiered royalties and commercial milestones related to XDEMVY for $295 million in cash, aimed at accelerating debt reduction and achieving a net leverage ratio of 3.9x to 4.3x adjusted EBITDA by the end of 2025 [1][3] - The agreement includes royalties from U.S. net sales of XDEMVY from April 2025 through August 2033, while Elanco retains rights to royalties from sales outside the U.S. and future human applications of lotilaner beyond ophthalmic solutions [4] Company Overview - Elanco is a global leader in animal health, dedicated to innovating products and services for disease prevention and treatment in farm animals and pets, with a 70-year heritage in the industry [7] - The company is focused on high-impact innovation and aims to enhance core business sales growth in 2025, leveraging the cash from the royalty sale to support its deleveraging goals [3] Product Development - Lotilaner was exclusively licensed to Tarsus Pharmaceuticals in 2019 for human health applications, and in 2023, XDEMVY became the first lotilaner-based product approved for human use, specifically for treating Demodex blepharitis [2][4] - The collaboration between Elanco and Tarsus has led to the rapid adoption and commercial success of XDEMVY, addressing a significant health need for patients suffering from a common eyelid disease [3]

Core Viewpoint - Voxtur Analytics Corp. reported its financial results for the year ended December 31, 2024, highlighting a focus on operational efficiency and cost management despite a decline in revenue and gross profit [1][3]. Financial Performance - For the three months ended December 31, 2024, revenue was CAD 9,307,000, a decrease from CAD 9,886,000 in the same period of 2023 [2]. - For the year ended December 31, 2024, total revenue was CAD 45,737,000, down from CAD 48,959,000 in 2023 [2]. - Gross profit for the three months ended December 31, 2024, was CAD 5,391,000, compared to CAD 6,073,000 in 2023 [2]. - Gross profit for the year ended December 31, 2024, was CAD 28,889,000, down from CAD 31,527,000 in 2023 [2]. - Gross profit as a percentage of revenue was 58% for the three months ended December 31, 2024, compared to 61% in the same period of 2023 [2]. Operational Improvements - The company reduced cash used in operations by approximately CAD 13.2 million, representing a year-over-year improvement of about 46% [3]. - The company anticipates continued operational improvements into early 2025 as efficiencies take full effect [3]. Strategic Focus - The CEO emphasized the importance of operational efficiency, debt reduction, and strategic execution amid macroeconomic uncertainties [5]. - The company is actively engaged in a strategic review process to evaluate various opportunities for long-term value creation [5][6].

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 was $137 million, driven by strong drilling activity in Canada and steady cash flow from operations in the U.S. and Middle East [4][5] - Revenue for the quarter was $496 million, a decrease of 6% from Q1 2024 [5] - Net earnings were $35 million or $2.52 per share, marking the eleventh consecutive quarter of positive earnings [5] - Funds from operations were $110 million, with cash provided by operations at $63 million [5] - Long-term debt position net of cash was approximately $778 million, with total liquidity around $570 million [11][12] Business Line Data and Key Metrics Changes - In the U.S., drilling activity averaged 30 rigs in Q1, a decrease of four rigs from the previous quarter, with daily operating margins at $8,360, down $7.87 from Q4 [5][6] - In Canada, drilling activity averaged 74 rigs, an increase of one rig from Q1 2024, with daily operating margins at $14,779, a decrease of $858 from the prior year [9] - Internationally, drilling activity averaged eight rigs, with average day rates at $49,419, a decrease of 6% from the prior year [9] Market Data and Key Metrics Changes - U.S. drilling activity is expected to see normalized margins between $7,000 and $8,000 for Q2 [6] - Canadian market remains strong with LNG Canada's first shipments imminent, expected to drive stable Montney gas activity [19] - Internationally, contract awards have slowed, particularly in Saudi Arabia, with one rig suspended [28][92] Company Strategy and Development Direction - The company aims to maintain a strong presence in key regions while managing costs effectively [6][7] - A commitment to reducing debt by $700 million between 2022 and 2027, with a target debt reduction of $100 million for 2025 [12][13] - Focus on free cash flow generation while remaining poised for emerging opportunities [15][31] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding customer sentiment in both the U.S. and Canada, despite macroeconomic uncertainties [15][19] - Customers are closely monitoring oil prices, but drilling plans remain largely unaffected [15][25] - The company is focused on managing margins effectively and is not projecting a significant reduction in pricing [69][71] Other Important Information - Capital expenditures for Q1 were $60 million, with a full-year capital plan reduced from $225 million to $200 million [10] - The company exited the North Dakota market due to competitive pressures and is reallocating resources back to Canada [21] - The company is actively managing its cost structure to drive down operating costs throughout 2025 [8][30] Q&A Session Summary Question: Thoughts on performance model versus day rate model - Management prefers the a la carte style of base rate for rigs, with about a third of U.S. rigs under performance contracts [35][36] Question: Rationale for continuing debt reduction over stock buybacks - The company is committed to deleveraging and maintaining a strong capital structure, targeting a net debt to EBITDA ratio below one [38][40] Question: Impact of capital reduction on free cash flow - The capital reduction is not expected to impact cash flow guidance, as the company is focused on managing all cash outflows tightly [47] Question: Changes in U.S. margins post-restructuring - Margins are expected to improve as more rigs are added, despite some initial noise from rig mobilizations [49][50] Question: Rig mobilization and reactivation costs - Costs for rig mobilization or reactivation typically range from $500,000 to $1,000,000 [57][58] Question: Pricing pressures in Canada - There are ongoing pricing pressures from customers, but management expects to manage margins effectively [68][70] Question: Conversations with producers regarding capital spending - Conversations indicate that low oil prices in the U.S. and Canada could lead to increased uncertainty in capital spending plans [80][82]