Franco-Nevada(US:FNV)2023-03-16 18:26Financial Data and Key Metrics Changes - Franco-Nevada reported record financial results for 2022, with total revenue of $1.31 billion and adjusted EBITDA of $1.1 billion, both records for the company [19][20] - In Q4 2022, the company generated $320.4 million in revenue and $262.4 million in adjusted EBITDA, achieving an EBITDA margin of 81.9% [19][20] - The cash cost per GEO was $242, slightly down from $245 in 2021, indicating stable cost management [22] Business Line Data and Key Metrics Changes - Total GEOs sold for 2022 reached 729,960, at the high end of the guidance range, but precious metal GEOs were at the lower end with just over 510,000 sold [15][24] - Diversified assets performed strongly, driven by higher energy prices, contributing 219,575 total diversified GEOs [15][19] - Precious metal GEOs in Q4 2022 were 129,642, down 6.6% from the previous year, primarily due to lower contributions from Cobre Panama, Antapaccay, and Guadalupe [16][18] Market Data and Key Metrics Changes - Precious metal prices were lower for both the quarter and the year, impacting the conversion of metals to GEOs, while energy prices reached multi-year highs [18][19] - The average West Texas Intermediate oil price was $82.65 per barrel in Q4, with natural gas prices averaging over $6 per Mcf [19] Company Strategy and Development Direction - The company aims for ongoing growth through mine expansions and new mines, with significant contributions expected from Tocantinzinho, Vale’s Southeastern Iron Ore Systems, and Hardrock in Ontario [9][10] - Franco-Nevada is focusing on precious metal assets, despite exploring opportunities in energy and other commodities [35][70] - The company has no debt and $2.2 billion in available capital, positioning it well for continued growth in uncertain markets [11][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook driven by the global push for electrification and the potential for new gold mines [10] - The company anticipates a lower total GEOs sold in 2023, with guidance of 640,000 to 700,000 GEOs, primarily due to expected lower contributions from Cobre Panama and other assets [24][25] - Management remains confident in the resilience of their business model, emphasizing the importance of diversifying assets to mitigate risks [55][70] Other Important Information - The company announced a 6% increase in its quarterly dividend to $0.34 per share, marking the 16th consecutive annual dividend increase [6] - The renegotiation of the Cobre Panama concession contract was successfully concluded, alleviating concerns about production disruptions [7] Q&A Session Summary Question: Can you provide insights on Cobre Panama's production shifts? - Management indicated that First Quantum has not adjusted their guidance despite a temporary shutdown, expecting to make up for lost production in Q1 and subsequent quarters [32] Question: Is management focusing more on non-gold or energy acquisitions? - Management clarified that the primary focus remains on precious metal assets, with ongoing interest in providing capital to the gold mining industry [35] Question: When is the Southeastern system expected to start contributing? - The expectation is for contributions from Vale's Southeastern system towards the end of 2024, pending production thresholds [40] Question: What is the size range of deals being pursued? - The pipeline includes medium-sized deals, primarily under $400 million, with a mix of primary gold and byproduct financing opportunities [43] Question: How does the company view operator concentration risk? - Management acknowledged the importance of diversification but expressed willingness to invest in significant assets like Cobre Panama if opportunities arise [55][56]