Franco-Nevada(US:FNV)2024-05-02 18:13Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $256.8 million, a decrease of 7% year-over-year, while adjusted EBITDA was $216.1 million with a margin of 84.2% [43][86] - Adjusted net income was $146 million, down from $152.2 million in Q1 2023, resulting in an adjusted EPS of $0.76, a decline of 3.8% [28] - Cash costs per GEO were $2.73, compared to $2.63 in Q1 2023, with margins approximately $1,800 per ounce [44] Business Line Data and Key Metrics Changes - Precious metal GEOs represented approximately 76% of total GEOs sold, with a total of 122,897 GEOs sold in Q1 2024, down from 145,331 in the same period last year [42][99] - The Vale Royalty contributed to an increase in GEOs due to higher-than-anticipated royalty payments reflecting increased iron ore sales [27] - Energy GEOs were significantly lower at $2,182 compared to $25,952 a year ago, impacted by weaker natural gas prices [98] Market Data and Key Metrics Changes - Gold and silver prices increased year-over-year, while platinum and palladium prices decreased significantly, affecting the conversion of PGM revenues to GEOs [98] - The average gold price was higher by $183 per ounce in Q1 2024 compared to Q1 2023, contributing to improved margins despite lower GEOs sold [44] Company Strategy and Development Direction - The company aims to continue adding to its portfolio without significant overhead, with a focus on acquiring assets rather than share buybacks [29][74] - Management is optimistic about the potential for larger transactions in the current M&A environment, particularly in the copper sector [63] - The company is exploring opportunities in lithium and other non-gold transactions while maintaining a primary focus on gold [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed hope for constructive dialogue with the new government in Panama following the upcoming elections, which could impact the Cobre Panama project [25][70] - The company anticipates a stronger second half of the year due to new mines coming online, including Greenstone and Salar Norte [10][11] - Management believes that the current environment is favorable for raising capital through precious metal streams due to elevated gold prices [52] Other Important Information - The effective tax rate is expected to be around 15% until new legislation is enacted, with a potential adjustment of about $47 million when it is [49] - The company has $2.3 billion in available capital and no debt, positioning it well for future opportunities [84][100] Q&A Session All Questions and Answers Question: How should we think of the royalty from Hemlo? - Management indicated that the royalty was lower than expected in Q1 due to higher costs and will likely be similar to last year [7] Question: What is the outlook for mine waste solutions? - Management confirmed that they expect to reach the cap in Q4 this year, with potential for early achievement depending on the next two quarters [8] Question: Are there any updates on the Cobre Panama arbitration? - The company has filed a notice of intent to initiate arbitration, with hopes for constructive dialogue with the new government post-election [76]