TORONTO, May 7 /CNW/ - Sprott Inc. (TSX:SII) ("Sprott" or the "Company") today announced its financial results for the three months ended March 31, 2009.
Q1 2009 Highlights
- Assets Under Management (AUM) were $4.7 billion as at March 31, 2009,
compared to $6.8 billion as at March 31, 2008 and $4.4 billion as at
December 31, 2008
- Management Fees were $22.6 million, a decrease of $10.2 million, or
31%, over Q1 2008
- Base EBITDA was $8.1 million compared to $16.6 million in the prior
year period
- Net income was $7.4 million ($0.05 per share), versus $16.7 million
($0.12 per share) in Q1 2008
- Declared a first quarter dividend of $0.025 per share on May 6, 2009
- Launched two new funds - the Sprott Gold Bullion Fund and the FNSSC
(1) Multi-Manager Fund
- SAM hosted "Night with the Bears", an event that drew over 1,500
clients, prospects and media
- Planned launch of Sprott Private Wealth LP in the second quarter of
2009
(1) Federation of National Specialty Societies of Canada
"Overall, our Funds performed well in the first quarter of 2009, particularly in January and February, as we were rewarded for our position on the markets and large weighting in precious metals," said Eric Sprott, President and CEO of Sprott Inc. "The rate of redemptions slowed significantly during the quarter, while sales increased. March was the first positive net sales month since August 2008, reflecting strong performance of our Funds, reduced de-leveraging activity from our institutional hedge fund clients and the launch of the Sprott Gold Bullion Fund, which has generated strong early sales. Despite net redemptions for the quarter, AUM increased due to market appreciation of our Funds' investments. We also maintained our quarterly dividend of $0.025 per share."
"Although high market volatility has led to fluctuations in accruals for performance fees, at various times during the first quarter, Funds accounting for nearly 90% of our AUM, excluding Managed Accounts and the Sprott Gold Bullion Fund, had accrued performance fees. We continue to believe Sprott is positioned to earn performance fees in 2009."
Assets Under Management
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$ millions Three months ended Three months ended
March 31, 2009 March 31, 2008
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AUM, beginning of period 4,449 6,215
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Net sales (redemptions) (208) 298
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Market value appreciation
of portfolios 484 287
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AUM, end of period 4,725 6,800
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In the first quarter of 2009, AUM rose to $4.7 billion, compared to $4.4 billion at December 31, 2008. The $0.3 billion increase reflected market appreciation of $0.5 billion less net redemptions of $0.2 billion. The majority of the Company's first quarter redemptions related to offshore hedge funds, which are primarily owned by institutional investors.
Income Statement
In the first quarter of 2009, total revenue decreased by $16.5 million, or 38%, to $26.7 million from $43.1 million in the first quarter of 2008. Total revenue consists of management fees, crystallized performance fees, gains from proprietary investments, and interest and other income.
Management fees declined by $10.2 million, or 31%, to $22.6 million from $32.8 million in the first quarter of 2008, as monthly average AUM decreased by approximately 29% over the same period.
Crystallized performance fees were $1.8 million compared to $0.3 million in the prior year. The $1.5 million increase is due to higher redemptions and strong performance of the Sprott Funds in early 2009.
Gains from proprietary investments totaled $2.1 million compared with $8.1 million in the first quarter of 2008. In anticipation of the initial public offering in May 2008, SAM sold the majority of its proprietary investments during the first half of 2008. Proprietary investments, which are reported on a mark-to-market basis, currently comprise of an investment in Sprott Molybdenum Participation Corporation, investments in various funds managed by SAM, investments purchased pursuant to the liquidation of the Sprott Strategic Gold Master Fund, Ltd and gold bullion.
Other income fell by $1.8 million to $0.1 million compared with the prior year period. In the first quarter of 2008, Sprott earned a foreign exchange gain on the receipt of fees from offshore funds as well as higher early redemption fees. In the first quarter of 2009, foreign exchange fees were nominal and early redemption fees were lower, resulting in a lower amount of other income.
Total expenses for the quarter were $15.8 million, a decrease of $2.3 million, or 13%, compared with $18.1 million in the prior year. The decrease is mainly attributable to a decrease in trailer fees of $2.5 million, a decrease in compensation and benefits of $0.8 million, partially offset by an $0.8 million increase in general and administrative costs. Although higher year over year, general and administrative costs have decreased by 5% compared to the fourth quarter of 2008.
Net income was $7.4 million ($0.05 per share), compared with net income of $16.7 million ($0.12 per share) for the corresponding period in 2008.
Dividends
On May 6, 2009 the Company declared an eligible dividend of $0.025 per share for the quarter ended March 31, 2009. The dividend will be paid on June 1, 2009 to shareholders of record on May 15, 2009.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, May 7, 2009, at 10:30 am EDT to discuss the Company's financial results. To access the call, please dial 416-644-3423 or 1-800-732-1073. To access the live webcast, please visit www.sprottinc.com or www.newswire.ca. Participants will require Windows Media Player(TM) to listen to the webcast.
Annual General Meeting
Sprott Inc. will be hosting its Annual General Meeting ("AGM") today, Thursday, May 7, 2009 at 4:00 pm, ET. The AGM will be held at the Design Exchange, 234 Bay Street, Toronto, Canada.
Non-GAAP Financial Measures
This press release includes financial terms (including AUM and net sales) that the Company utilizes to assess the financial performance of its business that are not measures recognized under Canadian generally accepted accounting principles (GAAP). These non-GAAP measures should not be considered alternatives to performance measures determined in accordance with GAAP and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-GAAP measures, including the calculation of these measures, please refer to the "Non-GAAP Financial Measures" section of the Company's Management's Discussion and Analysis and its financial statements available on the Company's website at www.sprottinc.com and on SEDAR at www.sedar.com.
Forward-Looking Statements
This release contains "forward-looking statements" which reflect the current expectations of the Company. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements including, without limitation, those listed under the heading "Risk Factors" in the Company's prospectus. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this release. Although the forward-looking statements contained in this release are based upon what the Company and Sprott Asset Management Inc. (SAM) believe to be reasonable assumptions, neither the Company nor SAM can assure investors that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and neither the Company nor SAM assumes any obligation to update or revise them to reflect new events or circumstances.
About Sprott Inc.
Sprott Inc., through its wholly-owned subsidiary Sprott Asset Management Inc., is an independent asset management company dedicated to achieving superior returns for its investors over time. Sprott Asset Management manages assets primarily for high net worth individuals and institutions, and is the investment manager of the Sprott family of funds. For more information about the Company, please visit www.sprottinc.com.
Selected Annual Financial Information
As at March 31
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(In $ 000's) 2009 2008 2007
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Assets Under Management 4,724,653 6,800,601 4,648,224
Balance Sheet Information
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Total Assets 109,172 84,572 163,895
Total Liabilities 47,913 24,732 29,372
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Shareholders' Equity 61,259 59,840 134,523
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Income Statement Information
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Total Revenue 26,656 43,129 39,054
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Net Income 7,421 16,710 18,787
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Net Income Per Share - basic 0.05 0.12 0.14
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Net Income Per Share - fully diluted 0.05 0.12 0.14
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Summary Income Statement
For the three For the three
months ended months ended
March 31, March 31,
2009 2008
$ $
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Revenue
Management fees 22,596 32,763
Crystallized Performance Fees 1,810 305
Unrealized and realized losses
on proprietary investments 2,143 8,150
Other income 107 1,911
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Total revenue 26,656 43,129
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Expenses
Compensation and benefits 7,699 8,496
Trailer fees 4,589 7,108
General and administration 3,040 2,251
Donations 284 325
Amortization 216 (59)
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Total expenses 15,828 18,121
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Income before income taxes 10,827 25,008
Provision for income taxes 3,407 8,298
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Net income and comprehensive income 7,421 16,710
Other expenses(1) 790 (59)
Provision for income taxes 3,407 8,298
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EBITDA 11,618 24,949
Unrealized and realized (gain) loss
on proprietary investments (2,143) (8,150)
Performance fees net of performance
fee related bonus pool(2) (1,357) (229)
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Base EBITDA 8,118 16,570
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(1) Includes interest, amortization and non-cash stock-based compensation
expense.
(2) Performance Fee related bonus pool is equal to 25% of Performance Fee
Revenue.