ROYAL GOLD INC Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Performance: 2024 was an excellent year with revenue of $719 million, operating cash flow of $530 million, and net income of $332 million, up 19%, 27%, and 39% respectively from 2023. Adjusted EBITDA margin was over 81% for the year and nearly 84% in the fourth quarter. Paid over $105 million in dividends and raised the annual dividend to $1.80 per share for 2025. Completely repaid the revolving credit facility and ended 2024 with no debt and approximately $1.2 billion of available liquidity.
• New Assets and Projects: Added revenue from MarRosa, Manchow, and Cote gold mines; acquired the Cactus Royalty; provided updates on Barrick's Cortez complex (including Goldrush and Fourmile projects) and Pueblo Viejo; Comacchio expansion study ongoing; Mount Milligan PEA expected midyear.
• Financials: Q4 2024 revenue was a record $203 million, up 33% from prior year. G&A expense was $8.9 million, down slightly; DD&A expense decreased to $34 million; net income was $170 million, up 71% from prior year; operating cash flow was $141 million, up 40% from prior year.

Segment Performance

• Gold: Dominated revenue in 2024, accounting for approximately 76% of total revenue. In the fourth quarter, strong contributions came from higher revenue from Penasquito and Cortez royalties and an earlier gold delivery from Endicallia.
• Copper: Acquired a 2.5% royalty on the Cactus copper project in Arizona in late December 2024.
• Silver: Silver sales were slightly lower than the guidance range in 2024 primarily due to lower deliveries and sales from Pointe Lo Viejo, but Barrick is working on improving silver recovery with projects like cooling tower upgrades.

Guidance

• Full-year 2025 guidance to be provided in mid to late March, expected to be similar to 2024 ranges.
• Q1 2025 stream segment sales are expected to range between 40,000 to 45,000 GEOs. Formal guidance for full-year 2025 will include metal sales, depletion expense, and effective tax rate.

Risks

• Uncertain global geopolitical and macroeconomic outlook could bias gold price to the upside, but also poses risks.
• Silver recovery at Pointe Lo Viejo has been disappointing for several quarters.
• Drought conditions in Andacollo remain a production risk for copper production.

Question and Answer

• Q: On Cortez royalty growth and silver recovery at Pueblo Viejo A: Bill Heissenbuttel discussed the complexity of Cortez royalty and Martin Raffield explained Barrick's efforts to improve silver recovery at Pueblo Viejo, including cooling tower upgrades to enhance lime boil efficiency for better silver recovery.
• Q: On Cactus royalty details A: Bill Heissenbuttel and Dan Breeze explained the Cactus copper royalty acquisition, production timing assumptions (first payments expected in year five), and awaited pre-feasibility study results for the project.
• Q: On deal pipeline and capital allocation A: Bill Heissenbuttel and Dan Breeze mentioned openness to syndication, deal range in $100 to $300 million, and plans to deploy capital into new assets meeting criteria, with no strategic shift to non-precious metals.
• Q: On guidance and metal ranges A: Bill Heissenbuttel stated that guidance for 2025 will be provided by individual metals similar to 2024, focusing on metal-specific sales rather than GEO numbers to avoid distortion from volatile metal prices.