Sprott earns $5.92-million in Q1 2010/Paid themselves 23 mil
2010-05-12 07:58 ET - News Release
Shares issued 150,000,000
SII Close 2010-05-11 C$ 4.00
Mr. Eric Sprott reports
SPROTT INC. ANNOUNCES 2010 FIRST QUARTER RESULTS
Sprott Inc. has released its financial results for the three-month period ended March 31, 2010.
First quarter 2010 highlights:
Assets under management (AUM) were $5.2-billion as at March 31, 2010, compared with $4.7-billion as at March 31, 2009, and $4.8-billion as at Dec. 31, 2009.
Management fees were $23.2-million, an increase of 2.9 per cent compared with first quarter 2009.
Base EBITDA (earnings before interest, taxes, depreciation and amortization) was $10.3-million, compared with $8.1-million for first quarter 2009.
Net income was $5.9-million (four cents per share), versus $7.4-million (five cents per share) in first quarter 2009.
Sprott completed an initial public offering of the Sprott 2010 Flow-Through Limited Partnership.
Sprott launched the Sprott Physical Gold Trust.
Scott Colbourne joined Sprott Asset Management (SAM) as senior portfolio manager.
Subsequent to the end of first quarter 2010:
Appointed John Ciampaglia as chief operating officer of SAM;
Launched the Sprott Private Credit Fund.
"During the first quarter of 2010, we continued to focus on broadening our fund lineup through the introduction of innovative new products," said Eric Sprott, chief executive officer of Sprott. "In the first three months of the year, we successfully launched two new funds: the Sprott Physical Gold Trust and the Sprott 2010 Flow-Through Limited Partnership. Together, these funds have increased our AUM by more than $400-million. We are very pleased with the interest the Sprott Physical Gold Trust has generated and it is currently trading at a substantial premium to NAV. We will consider a follow-on offering in the near future to keep pace with investors' appetite for a product fully backed by physical gold. Subsequent to the end of the first quarter, in April, 2010, we introduced the Sprott Private Credit Fund, which will be subadvised by Third Eye Capital Management Inc., a leading investor in privately managed secured loans.
"We also added to our depth at the senior management level for SAM during the quarter, with the appointment of John Ciampaglia as chief operating officer. John is an accomplished investment industry professional who, in his new role, will focus on both new product development and improving the operational effectiveness of our organization," added Mr. Sprott. "Our investment performance was mixed during the quarter, with the Sprott Energy Fund delivering the best result, posting a return of almost 10 per cent. We are well positioned to potentially return to generating performance fees through the remainder of the year."
Assets under management
For the quarter ended March 31, 2010, AUM increased to $5,155-million, compared with $4,725-million at March 31, 2009. During the quarter, the market value of portfolios declined by $36-million, while net sales totalled $417-million, resulting in a $381-million increase in AUM. The majority of the net sales during the quarter came from the launch of two new funds, the Sprott 2010 Flow-Through Limited Partnership and the Sprott Physical Gold Trust, which raised $51-million and $441-million, respectively. Net redemptions of all other funds totalled $75-million for the quarter, with the majority of the redemptions occurring in the company's public mutual funds and domestic hedge funds.
Income statement
Total revenue for the quarter ended March 31, 2010, decreased by 5.2 per cent to $25.3-million, from $26.7-million in the first quarter of 2009.
Management fees for the first quarter of 2010 increased slightly to $23.2-million from $22.6-million for the period ended March 31, 2009. The increased management fees reflect the 5.4-per-cent increase in average monthly AUM during the quarter.
There were no crystallized performance fees earned during the first quarter of 2010. In the same period the prior year, the company earned $1.8-million in crystallized performance fees resulting from higher redemptions and strong performance by the funds during the 2009 period.
Losses from proprietary investments (realized and unrealized) totalled $900,000 for the first quarter of 2010, compared with gains of $2.1-million in the first quarter of 2009.
Other income of $2.9-million includes $2.5-million of commissions earned by SPW LP on the sale of units of Sprott Flow-Through LP and Sprott Physical Gold Trust to SPW LP clients.
Total expenses for the three months ended March 31, 2010, were $16.6-million, an increase of $800,000, or 4.7 per cent, from $15.8-million for the first quarter of 2009. The increase is mainly attributable to a $600,000 increase in compensation and benefits, and a $500,000 increase in trailer fees versus the same period in 2009. The increase in compensation and trailer fees during the quarter was partially offset by a $400,000 decrease in general and administration costs compared with the prior year period.
Base EBITDA increased to $10.3-million for the quarter ended March 31, 2010, from $8.1-million in the first quarter of 2009.
Net income for the quarter ended March 31, 2010, was $5.9-million (four cents per share) as compared with net income of $7.4-million (five cents per share) in the first quarter of 2009.
Dividends
As reported in Stockwatch March 9, 2010, the board of directors declared a special eligible dividend of four cents per common share for the fiscal year ended Dec. 31, 2009, payable on April 5, 2010, to shareholders of record at the close of business on March 19, 2010. A regular dividend of 2.5 cents per common share was paid to shareholders of record for the fourth quarter of 2009.
In May, 2010, subsequent to the end of the first quarter, a dividend of 2.5 cents per common share was declared for the quarter ended March 31, 2010.
Conference call and webcast
A conference call and webcast will be held today, Wednesday, May 12, 2010, at 10 a.m. ET to discuss the company's financial results. To access the call, please dial 647-427-7450 or 1-888-231-8191 10 minutes prior to the scheduled start of the call. A taped replay of the conference call will be available until Wednesday, May 19, 2010, by calling 416-849-0833 or 1-800-642-1687, reference 72774332.
INCOME STATEMENT
Three months ended March 31
(in thousands of dollars, except per share amounts)
2010 2009
Revenue
Management fees $23,248 $22,596
Crystallized performance fees - 1,810
Unrealized and realized gains (losses) on
proprietary investments (897) 2,143
Other income 2,911 107
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Total revenue 25,262 26,656
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Expenses
Compensation and benefits 8,267 7,699
Trailer fees 5,070 4,589
General and administration 2,611 3,040
Donations 458 284
Amortization 172 216
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Total expenses 16,578 15,828
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Income before income taxes 8,684 10,828
Provision for income taxes 2,759 3,407
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Net income and comprehensive income
for the period 5,925 7,421
Other expenses(1) 759 790
Provision for income taxes 2,759 3,407
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EBITDA 9,443 11,618
Unrealized and realized (gains) losses on
proprietary investments 897 (2,143)
Performance fees net of performance fee
related bonus pool(2) - (1,357)
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Base EBITDA $10,340 $ 8,118
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Net income per share -- basic 0.04 0.05
Net income per share -- fully diluted 0.04 0.05
(1) Includes amortization of fixed assets, amortization of deferred
sales charges and non-cash stock-based compensation expense.
(2) Performance-fee-related bonus pool is equal to 25 per cent of
performance fee revenue.
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