Royal Gold, Inc. (NASDAQ:RGLD) Q3 2017 Earnings Conference Call Transcript

Nov 02, 2017 • 09:00 am ET


Royal Gold, Inc. (NASDAQ:RGLD) Q3 2017 Earnings Conference Call Transcript


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Good day, and welcome to Royal Gold's Fiscal 2018 First Quarter Conference Call. All participants' will be in listen-only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask question. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Karli Anderson, VP and IR. Please go ahead.

Karli Anderson

Thank you, operator. Good morning, and welcome to our discussion of Royal Gold's first quarter fiscal year 2018 results. This event is being webcast live, and you'll be able to access a replay of this call on our website.

Participating on the call today are Tony Jensen, President and CEO; Stefan Wenger, CFO and Treasurer; Bill Heissenbuttel, VP, Corporate Development; Mark Isto, VP, Operations; and Bruce Kirchhoff, VP, General Counsel and Secretary. Tony will open with a brief overview of the quarter, followed by Stefan with a financial update. After management completes their opening remarks, we'll open the line for a Q&A session.

This discussion falls under the safe harbor provision of the Private Securities Litigation Reform Act. A discussion of the company's current risks and uncertainties is included in the safe harbor and cautionary statement in today's press release and slide presentation, and is presented in greater detail in our filings with the SEC.

Now I will turn the call over to Tony.

Tony Jensen

Thanks, Karli. Good morning, and thank you for joining the call. I'll begin on slide four with a summary of the quarter. We began fiscal 2018 with strong, steady performance. Royal Gold delivered solid cash flow generation, debt reduction and growth at Rainy River. Volume of 88,000 gold equivalent ounces was consistent with the year ago quarter. Our reported revenue of $112 million reflected a gold price that was down about 4% from a year ago.

We generated $72 million in cash from operations, which was our second highest quarterly cash flow in company history. And earnings of $0.44 per share topped most analysts' estimates principally due to lower expenses during the quarter. Our growing and sustainable dividend continues to be a priority for our board and management team. We've paid out $16 million during the quarter, equivalent to a 22% cash flow yield. And we continue to strengthen the balance sheet.

Over the last three quarters, we paid down $145 million of debt. Currently, all of our cash flow is dedicated to dividends and debt reduction. We already have a strong balance sheet, but it's getting even stronger to prepare for future acquisition opportunities. Today, we have about $900 million of liquidity to pursue new deals, and we have no capital commitments.

In my final summary remark, we congratulate New Gold, which declared commercial production at Rainy River on October 19th. Our management team and board traveled to the site in August, and we had a chance to meet with the construction and operations team and tour the property, just as they were finalizing all things to start operations. We are pleased with their progress and