Franco-Nevada(US:FNV)2020-05-07 21:12Financial Data and Key Metrics Changes - The company reported a net loss of $98.8 million for Q1 2020 due to impairments on energy assets, with a non-cash impairment of $207.4 million after-tax recorded [11][12] - Adjusted EBITDA for Q1 was $192.7 million, a 37% increase year-over-year, while adjusted net income was $109.2 million, a 67% increase compared to Q1 2019 [19][18] - Revenue from gold equivalent ounces (GEOs) sold increased by 10.6% year-over-year, totaling 134,941 GEOs in Q1 2020 compared to 122,049 GEOs in Q1 2019 [13][16] Business Line Data and Key Metrics Changes - Revenue from energy assets increased year-over-year from $20.8 million to $26.5 million, but was lower than Q4 2019 due to decreased oil prices [17] - The main contributor to the increase in GEOs sold was Cobre Panama, which delivered approximately 25,000 GEOs during the quarter [14] - Hemlo contributed $11.6 million in revenue for Q1 2020, benefiting from rising commodity prices [15] Market Data and Key Metrics Changes - 89% of quarterly revenue was generated by gold and gold equivalents, with gold accounting for 69%, silver 9%, and PGMs 9% [20] - Revenue was sourced 87% from the Americas, with Latin America being the largest contributor [20] Company Strategy and Development Direction - The company is focusing on cost management, with G&A expenses remaining stable while revenues have significantly increased since its IPO [22][23] - The company is exploring opportunities in both precious and non-precious metals, particularly in base metals, as producers look to monetize precious metals [25][54] Management's Comments on Operating Environment and Future Outlook - Management noted that temporary closures at Cobre Panama and Antamina are due to COVID-19, but other assets have continued to operate normally [7][8] - The company remains optimistic about future transactions despite the challenges posed by COVID-19, with a healthy pipeline of opportunities [24][25] Other Important Information - The Board declared a quarterly dividend of $0.26 per share, marking a 4% increase from the previous dividend [9] - The company is debt-free and has $1.5 billion in liquidity, positioning it well for future growth [23] Q&A Session Summary Question: Can you talk about the deal pipeline in the current commodity environment? - Management noted that base metals producers are looking to monetize precious metals, and they are actively finding creative ways to conduct due diligence during COVID-19 [25] Question: What assumptions were made for gas assets during the impairment analysis? - The company conducted impairment analysis across all energy assets, with stable production levels in gas assets preventing impairments [29][30] Question: What is the expected revenue from Hemlo going forward? - Hemlo is expected to generate between $5 million to $10 million per quarter in NPI revenue, depending on capital spending [40] Question: How does the company view future acquisitions in the oil and gas sector? - The company is open to attractive acquisitions in the oil and gas sector, but is cautious due to current market conditions [47] Question: What is the status of the Lot 9 issue related to Cobre Panama? - The issue is still ongoing, and resolution is expected to take more time due to the current environment [72]