Royal Gold Inc (RGLD) Q4 2024 Earnings Call Highlights: Record Revenue and Strategic Growth

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Fri, Feb 14, 2025, 12:19 AM 4 min read

Full Year Revenue: $719 million, up 19% over 2023.
Operating Cash Flow: $530 million, up 27% over 2023.
Net Income: $332 million, up 39% over 2023.
Adjusted Earnings: $346 million or $5.26 per share.
Fourth Quarter Revenue: $203 million, a record high.
Fourth Quarter Net Income: $107 million or $1.63 per share, up 71% over the prior year.
Adjusted EBITDA Margin: Over 81% for the year, almost 84% for the fourth quarter.
Dividends Paid: Over $105 million, with an annual dividend increase to $1.80 per share for 2025.
Debt Status: No debt, with approximately $1.2 billion of available liquidity.
Royalty Revenue: $78 million, up 43% from the prior-year quarter.
Stream Segment Revenue: $125 million, up 27% from last year.
G&A Expense: $8.9 million, down slightly from the prior year.
Interest Expense: Decreased to $1.4 million from $6 million in the prior year.
Operating Cash Flow for the Quarter: $141 million, up 40% over the prior year.
Liquidity: Approximately $1.2 billion, including a fully undrawn $1 billion revolving credit facility.

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Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Royal Gold Inc (NASDAQ:RGLD) achieved record revenue, operating cash flow, and earnings for both the annual and quarterly periods in 2024.
The company reported a 19% increase in revenue, a 27% increase in operating cash flow, and a 39% increase in net income over 2023.
Royal Gold Inc (NASDAQ:RGLD) maintained high margins, with an adjusted margin of over 81% for the year and nearly 84% for the fourth quarter.
The company paid over $105 million in dividends to shareholders and increased its annual dividend to $1.80 per share for 2025, marking the 24th consecutive annual dividend increase.
Royal Gold Inc (NASDAQ:RGLD) ended the year debt-free with approximately $1.2 billion in available liquidity, having fully repaid its revolving credit facility.

Negative Points

Silver sales were slightly lower than the guidance range due to disappointing silver recoveries at Pueblo Viejo.
The company faces challenges in forecasting production levels for projects it does not operate, as seen with unexpected gold delivery timings.
There is uncertainty regarding the timing and impact of the 30-day shutdown at Pueblo Viejo for thickener optimization, which could affect quarterly deliveries and sales.
The Cactus Royalty acquisition, while strategic, does not indicate a shift away from precious metals, potentially causing concern about diversification.
Royal Gold Inc (NASDAQ:RGLD) has not provided long-term guidance for the Cortez royalty, creating uncertainty about future revenue contributions from this complex project.

Q & A Highlights

Q: How should we interpret the growth potential at Cortez given the complex royalty structure? A: William H. Heissenbuttel, President and CEO, explained that the Cortez royalty is complex due to different royalty rates on various parts of the project. While Barrick refers to it as one project, Royal Gold views it differently. The growth potential is dependent on where the ounces come from, and more detailed guidance will be provided in March. Heissenbuttel noted that the prospect of 1 million ounces in 2027 is exciting, especially if it involves Crossroads, which has a higher royalty rate.

Q: How will the 30-day shutdown at Pueblo Viejo for thickener optimization affect deliveries and sales? A: William H. Heissenbuttel explained that deliveries are based on a quarterly cycle, with sales occurring in the following quarter. The impact of the shutdown will depend on its timing. If it spans January and February, March deliveries will be lower, affecting June sales. If it extends into March, June deliveries and September sales will be impacted.

Q: Can you provide more details on the Cactus copper royalty and its impact on Royal Gold's strategy? A: William H. Heissenbuttel stated that the Cactus copper royalty does not indicate a strategic shift away from precious metals. Royal Gold remains focused on precious metals but is open to non-precious metal investments if they present good opportunities. The revenue mix currently stands at 76% gold, 12% silver, and 9% copper, and while they prefer gold, they will consider other opportunities that align with their expertise.

Q: What is the expected timeline for receiving royalties from the Cactus project? A: William H. Heissenbuttel clarified that the first royalty payments from Cactus are expected in year five of operation, based on the assumption of where mining will occur. There are technically two royalties, but they are treated as one for simplicity. The timing is based on when material is expected to be processed, not on a checkerboard royalty basis.

Q: How does Royal Gold plan to allocate its capital given its strong cash flow and liquidity? A: William H. Heissenbuttel mentioned that while they have significant liquidity, the focus remains on acquiring new assets that meet their criteria. They are open to syndication for larger deals but can handle significant transactions independently. If they find themselves over-capitalized due to a lack of suitable opportunities, they will discuss potential actions with their Board.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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