Streaming and Royalty Firm Posts Q2 FY19 Earnings Beat 'Thanks to the IRS'

Source: Streetwise Reports   02/09/2019

A BMO Capital Markets report reviewed the figures released by this company and explored contributing factors behind them.

In a Feb. 6 research note, analyst Andrew Kaip reported that Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) achieved an earnings per share (EPS) beat in Q2 FY19.

Kaip relayed the company’s EPS at quarter end was $0.36, after having delivered 79,600 ounces of gold equivalent and generating $97.6 million in revenue. Of that total revenue, $67.7 million were from streams, and $29.9 million were from royalties. These figures were in line with BMO and consensus’ forecasted EPS of $0.31.

Yet Royal Gold’s EPS was a beat due to “$6 million positive true-up based on recently issued Treasury and Internal Revenue Service guidance,” Kaip explained.

Kaip noted Royal Gold’s Q2 FY19 operating cash flow was less than expected, at $58.8 million versus $65 million. That resulted from negative working capital adjustments as the company did not outlay a significant amount of capital during the quarter.

At the end of Q2 FY19, Royal Gold had $157 million in cash and cash equivalents, and full access to its $1 billion revolving credit facility.

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Disclosures from BMO Capital Markets, Royal Gold, Feb. 6, 2019

IMPORTANT DISCLOSURES

Analyst’s Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to New Gold within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from New Gold within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Royal Gold and New Gold.
Disclosure 6A: New Gold is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Royal Gold and New Gold are clients (or were clients) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 9B: BMO Capital Markets makes a market in Royal Gold and New Gold in United States.

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( Companies Mentioned: RGLD:NASDAQ; RGL:TSX, )