Franco-Nevada(US:FNV)2023-08-09 17:35Financial Data and Key Metrics Changes - In Q2 2023, the company recorded revenue of $329.9 million and adjusted EBITDA of $275.6 million, reflecting a decrease year-over-year due to lower contributions from diversified assets, partially offset by better performance from precious metals [17][20][81] - Adjusted net income was $182.9 million or $0.95 per share, compared to $195.8 million or $1.02 per share in the prior year [20][64] - The cash cost per GEO increased to $280 per GEO from $238 per GEO in Q2 2022 [64] Business Line Data and Key Metrics Changes - Total GEOs sold in Q2 2023 were 168,515, down from the previous year, with precious metal GEOs at 132,033, which was a slight increase from the same quarter last year [83] - Antapaccay and Cobre Panama were key contributors, with Antapaccay selling 19,683 GEOs, significantly higher than just over 10,000 GEOs in Q2 2022, and Cobre Panama selling 36,650 GEOs [84][85] - The energy segment saw a decline in GEOs sold, with 28,683 compared to 50,387 in Q2 2022, due to a sharp fall in oil and gas prices [6][17] Market Data and Key Metrics Changes - WTI averaged $73.78 per barrel in Q2 2023, down 32% year-over-year, while natural gas averaged $2.32 per Mcf, down 69% [6] - The geographic revenue profile showed that 89% of revenue was sourced from the Americas [20] Company Strategy and Development Direction - The company maintains a strong balance sheet with a focus on capital deployment to add assets, while also prioritizing dividends [8][79] - The strategy remains unchanged, with a focus on precious metals but open to opportunities in other commodities, especially during price weaknesses [70][100] Management's Comments on Operating Environment and Future Outlook - Management noted continued volatility in commodity prices, with expectations to meet guidance levels in the second half of the year [39][72] - The company expects to be at the lower end of its guidance range for total GEOs sold due to lower diversified revenues from energy and iron ore [66][72] Other Important Information - The company is debt-free and had $2.3 billion in available capital as of June 30, 2023 [65][79] - The company is actively pursuing royalty financing partnerships, including a collaboration with EMX Royalty Corp for exploration stage companies [77][129] Q&A Session All Questions and Answers Question: How does the decline in diversified commodity prices affect the deal pipeline? - Management indicated that lower commodity prices present opportunities for countercyclical investing, focusing on better entry points for investments [70] Question: What is the strategy for capital utilization given the strong balance sheet? - The company plans to utilize its capital for investments in both precious metals and other commodities, while also considering the current market conditions [71] Question: Can you provide insights on the Pascua-Lama royalty purchase? - The royalty is seen as a long-term investment in a high-quality deposit, with expectations that it will be developed over time [99][100]