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Sprott (SII)

Participants
Peter Grosskopf Chief Executive Officer
Kevin Hibbert Chief Financial Officer
Whitney George President
John Ciampaglia Chief Executive Officer-Sprott Asset Management
Gary Ho Desjardins Capital
Graham Ryding TD Securities
Geoff Kwan RBC Capital Markets
Call transcript
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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sprott, Inc.’s 2021 Second Quarter Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, August 6, 2021.

Forward-looking statements on behalf of the speakers that follow, listeners are cautioned that today’s presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of the Canadian provincial securities law.

Forward-looking statements involve risks and uncertainties and undue reliance should not be placed on such statements. assumptions may in expressed differ in statements. or and forward-looking or factors such results actual materially material are making implied statements, implied Certain from those

the to factors factors filings material assumptions with over Sprott’s U.S. go MD&A applied conference statements, and cause For for and forward-looking or that securities making the will consult Mr. information from expectations ahead, Canadian Peter about actual additional now Mr. regulators. other results Grosskopf. please differ in the materially about and turn may to I the quarter Please Grosskopf.

Peter Grosskopf

morning, and Good operator. you, today. us for Thank everyone thanks joining

with On Hibbert; call Sprott; John our Whitney Financial me the Management. George, and President of of today is CEO Ciampaglia, Kevin Officer, the Chief Asset Sprott

end were on released are tripped metals also results July. and I’ll time, to handicap and can QX you Precious quarter for the our some where our on for morning lows as to price available their and financial sideways find range-bound rises. statements round rate gold in start been MD&A. chances this second The recovering moved close XXXX in investors’ X. quarter before has website Slide Our

the navigated pleased our are how capitalized this rebound. funds by and choppiness on We subsequent through

well business financial growing and our results. with delivering to Our continues business perform strong of all units currently

deal the energy to a In subsequent a billion Corp. of foothold fact, in Participation John to foot In Sprott July knocking an this its are the end, in record discuss operating general provides as few clean detail in important with But agreement Kevin create Management – Uranium strategic will and minutes. space. completed Trust. continue as $XX results. hall Uranium us metal produce we will to the door Physical Sprott comment, tell this transaction on with you, and Asset record quarter

metals. forward uranium opportunity prospective to to Kevin product area. this presents anchor and look We it view new our We new at pass into over that core that, offerings look have believe for financial the areas trust highly and I’ll a a to our complement on results With precious expanding a constructive our a compelling for quarter. positioning

Kevin Hibbert

Peter and you, of XX, X, provides on billion AUM of this was our which of summary X% from continuing year a I’ll everyone. December XXXX. as billion this the appreciation experienced Slide we value good our start AUM into Thank generate of while trusts. inflows fund majority $X.X or from XXXX. billion X% $X.X second the strong In quarter, market morning XX, products, XX March and physical our June up $XX.X quarter, across or up to

month on a EBITDA higher in million revenues commissions segment. inflows as our strong primarily our Managed Brokerage management fees AUM from basis Exchange quarter million year-to-date segment XX%. or basis average $XX.X was Equity and in The adjusted segment, this as Products increased period in point, six increase base fee year-to-date value EBITDA or to was depreciation $XX.X a To million on and And large look prior Slide from a X into the degree fantastic brief up Adjusted we year our million, a market XX% the three to offset a had full basis. helped a on experienced $X.X we provides Peter’s and quarter. So increased our was the to Listed $XX.X earnings. base due well in up net and

filed that to expenses section on quarter as can well and supplemental EBITDA, earlier refer as the MD&A this of we information our more XXXX morning. this revenues, our you For second information presentation

said, that with I’ll pass over to things John. So

John Ciampaglia

hit were just think over quite prices that net the $XXX the silver impressive Great. strong decline during fact inflows, a Thanks, had for metal Kevin very and I in and the of particular quarter. in good X% morning a We quite quarter with that’s everybody. light soft million and QX

Our accounted about metals. has safe-haven most Silver was $XXX the and shifting portfolios just reflation of driven assets. in sales our as Trust million. star been This over year, the and our quarter is trade, more Gold were for XXXX really some more commodities Trust for all perspective, people been this And its the about just for year industrial

Just to some give perspective. you

Over the sales Bullion $XXX half first versus half the XXXX, the approximately last are first year, our by million. of Trusts the XXXX up of in

net Trust look U.S. they’ve contrast, around and net has over of million accounted think if $X just I QX, are people you summer quite share. for about activity. billion consensus every ETFs, reflects outflows example, in the I want the experienced of the market that’s light million think spectacular doldrums, in about it of for also we’ve is relative of gold performance. We’ve I listed they sales. at we XX% think for year-to-date participants ETFs the Post to July. and provide We interesting, markets. Gold U.S. billion. talked and I In hit $XX $X Sprott of in markets of and silver soft a have context flows and at it in So lot experienced. just Silver seems have Physical the look brought generated month positive And and the taking sales listed summer more $XXX market some holidays general did We the year-to-date Trust our is net to

our is that this reflection the market and in recognized unique the attributes fund real a trust. So has of superior

been quiet. On side the ETF equity, mining very has gold

experienced billion what We it year-to-date. small, flows outflows about have they to million when it net $XX but quite net in seems peer you compare in generated year-to-date about $X.X have and the groups

the our that Participation bought on talk with Sprott the the Corp of new shareholders We're the XX, lineup. began pounds shareholders excited little Inc. contributed new this in July Uranium favor. in capital XX. I'll fund, Sprott, of trust reorganize from our Toronto into the trading that we've had on And Exchange UXOX voted July subsequently July Trust. very new The fund first about next the about XX.XX% pounds. trust. XXX,XXX bought We we was to Uranium slide, bit and support XXX,XXX a Physical Stock to Moving XX, On overwhelming another

We put to in week. at-the-market an next and as be are as early program could currently place it working

institutional quite since new in excited this I'll what color the on to Arca of hedge now XXXX. and that and having we're the movers to been few And trust. office raise net had of they're new noticed the to investor, We've more on but is institutions have and value, really excited growing you that all the the base, retail we've The in I every reviews. expected They're U.S. had the couple option, of work and and holdings providing in U.S. dollar of the we've experienced the financial overwhelmed asset structure. getting to We've disclosure has the trading feedback side reporting I give many pending and family, of with is has been interested about to from investment announce capital extend capital what the U.S. in phase some type it next trust I uranium years of have last rave early by on think transaction. about we've to vehicle. response marketplace very a transparency listing welcomed So marketplace. months quite able mechanism be very these listing in funds. very then the just the is ATM into seek to in new program NYSE this the enhanced been opportunity category daily we're daily dollar the last we've NYSE the process the think The a been think speak putting great

So will about pass And sales and capital it new that, I excited to its raising our over start to we're overall with ability to results. contribute Whitney.

Whitney George

and about I'm equities. to morning, John, to going good you, Slide speak Thank managed everybody. XX

far As generally year. a been precious team year equities, well. pricing it's market, the last to gains some underlying enjoyed large consolidating reflecting so that presumably continues of function been we metal choppy The and extraordinarily for this already mentioned, very negative

a and large X We equity have contributors. managed other many participants team,

and redemptions institutional and with our We've to products, more strategy. those the SMA Our and with tied Situations slowing. Special some gradually the base in strategies than generating settled – gold and are interest net anniversary up Tocqueville the particularly stabilize client acquisition the sales are sales of new modestly we

quarter. So new institutional some we second including have clients the a one posts of new

positioned is having that, in are Performance sunlight. well it conditions we'll side equity turn with So when very solid back it's share. turn for forward Peter. on look managed And we the to to the to our capture turn like I'd market our and given to

Peter Grosskopf

Whitney. Thanks,

focused for lending streaming to investments, lending AUM for now recently strategies in Turning XX The We've strategies. in secured AUM our billion. this Currently, $X on second at accelerate growth capital we're pace on deploying is look continue our the approximately private significant a and the to some the remaining segment late perform well Slide XXXX. should funds. which of combined

Our has to business Combined, that new AUM growing currently streaming growth. and also has visibility as raised been will LPs. fund this management and a some in business throughout both profit be strategy is raising onboarding deploying capital XXXX. our both And active we Korean commitments contributed well-respected and have

to the Page brokerage just Turning on slide XX.

brokerage Both Canada from progress Our dealer ahead Canada, is originations good and numbers in strong number sales to In AUM both benefiting on and make standing investment to are are to million of equity channels. the AUA transitioning expectations. product at generating tracking sales. effort Sprott, the U.S. is The institutional the dealers material increased U.S. of funds $XXX continuing syndications. one sales AUM the one and coming new and with about our

progress it's over the year. significantly margin and and improved with this pleased its are contribution past We has revenue from group, the both

Moving and precious is for the comments, Slide volatility in final metals. on tear Sprott financial now strong in XX general some delivering performance, despite to

of for new is and and plummeted and focus are closing, particularly become unloved. generally results, sales Gold correction, are investor we diversifier, feeder to gradually an that is believe remains focus as area heightened coming expertise marketing scale generalist facing to client for and adding engagement, attractive sentiment delivering on right back we strategies. response to funds and teams relative is launching portfolios Demand lows, to mining of outlook on quickly, indicators growing our this we metals clean some fundamental we metals being equities in Our In for the cycle still and it and a efforts metrics. a client as to The risk areas. now levels is key expect is in driving industry we're compelling. and and Sprott. added which believe during its precious from It increasing

active today's for to call. concludes remarks of funds, And in focus our operator and our now for some in the remain opportunities Q&A. it That usual managers global reviewing I'll the over niche consolidation bolt-on As turn areas.

Operator

with Ho Gary Capital. from comes question first our Desjardins And Instructions] [Operator you. Thank

line Your is open.

Gary Ho

good you million changed us morning. past listed the I wondering and few off, and Thanks, numbers the had quarters, provide of it acquisition. update you mentioned $XX just inflows. quarter materially a similar net flows to post in can AUM And John think if given Maybe first UPC exchange the kind of outside the in

John Ciampaglia

John. on it's I the month listed equities of managed Gary, comment July. Hi can the for exchange the in

We’re summer, at is I depths plus think of the pretty $XX which million for decent.

So that's the number for July.

Gary Ho

or that inflows net AUM the is that's change? the So

John Ciampaglia

have net you inflows The me. back front public for to for July. We'd the our that. the on I month to don't all number have AUM That's funds in of of of come

Kevin Hibbert

Kevin say I'd Gary, it's say, it's I'd fine. Gary, here.

this UPC gave what portion a the If just you as morning. just you and disclosed add John just proxy that we take to

Gary Ho

that great. million. the you've I announced then of That and outlook it think U.S. transaction kind too? net And kind was there and than UPC what just mentioned Okay, the increased flows it I transaction, not, bit of John, think change on from clients and $XXX when first higher a the is you elaborate was drove interest you marketed can was closing at you on

John Ciampaglia

Sure.

buying some the the Okay. memory correct. put UPC of secondly, but price my did was prior by well. raise, by of that companies marketplace, by dollars. number year And pressure two number and also really The which about holding of is a of not added higher did a on was market in a capital the the that the That's flurry if the just a few in appreciation. There transaction upward activity function earlier or me serves absolutely a of companies to $XX junior mining uranium uranium physical million

us that factors two gave those list. So

So the fund bit bulk it a to little with inherit was to it. nice more

Gary Ho

price the change date does And how? that or

John Ciampaglia

not material the largely No, we it have price in those did a paid. put We a on metrics. pin impact

I a to $XXX,XXX over and So was, have the very don't a [indiscernible]. difference small paying fee but I terms the net it I in positive us was fund difference think in termination couple it fee think for and in of number, that was taking the exact

Gary Ho

the net any You And comment did comments outlook? Okay. increasing… on on flows

John Ciampaglia

Yes.

participants, type two had to excited our they're months super whether we've funds entrance. energy So about to the and different dedicated now talk market or uranium

see I think you the of take the the of over back manager that And fund having the holding may to in helm had similar value XXXX, with Canada, Central investment of modernized, value prior holding the a transaction improvements, in lot funds. a recall they structure. the a improvements. dedicated They asset structure company of see is company reorganized make friendly of and Fund structures legacy one we we these we're able that which shareholder and the

to in the to waiting there lots to, So on seems from to They're we've investors for waiting pockets of capital of get sideline trust. operational. the ATM be the the invest spoken

encouraged lot market on to reaching very institutions, background. lot the They of marketplace thoughts of because which these about market. the interesting for. a provide potentially seems stay in generally conversations quiet definitely So having to more the be us opinions view in price spot we're them have uranium a they a and clamoring the in vehicle their to to trust provide market, But to as the more discovery quite and like out and activity uranium

Gary Ho

Okay. for we out one-time then any integration Thanks should regarding the And related for be of Kevin, costs aware transaction call QX? to that. acquisition

Kevin Hibbert

part. end over at Sorry, first Can cut Gary? out you on start you my the

Gary Ho

QX? any integration to or costs I'm one-time for that be we just that transaction what should call out of transaction no, wondering aware Yes,

Kevin Hibbert

For a pretty straightforward smallest This QX, shouldn't be there anything significant. is tuck-in.

So acquisition consequence be – of I yes, there'll you think forward. the in that the materially just else see and in outlook – section all-in the costs, that's the saw numbers MD&A trying of to pretty the MD&A, where anything don't going much

Gary Ho

your last products within you you of niche exchange bit Can kind more then for provide geographies a you're players aside? kind me, focus And just new question reviewing perhaps add-on Peter, in Okay. consolidating and of mentioned opportunities size color the areas. list

Peter Grosskopf

key Well areas. all our

So they've we've deals gives I'd way. more that management on Europe bit to expanded places minerals. and a and working strategic a us some And for as bit been scope other say That and distribution diverse now as time fund Australia.

size, our have them global million So got idea transformational scope. very as in that hard million. they terms we small of be range to $XXX gives the some a And an $XXX or of mind, you targets few of land but might as business. very, in And in those are

give I So want those. idea an have don't that – we on to odds you high

Gary Ho

million $XXX AUM? in terms of that's million to $XXX And

Peter Grosskopf

of significant fund a small that hard from to unless I it's make Yes. the scratch, much to anything kind a on significant, a mean, that's make It's end. we're contribution starting hard on level. below

Gary Ho

Got it.

you. Okay. That's it Thank me. for

Operator

Thank you.

Our next question Securities. with comes from TD Graham Ryding

is Your open. line

Graham Ryding

Good morning.

speak deal, looking participation uranium you of the you're Is can in at? further you at initiatives that area. to to the metals reference anything made energy there giving point clean metals terms or start a You in this

John Ciampaglia

driven is only for support and Graham, major When recent is be that. realization kind building Yes. to in just and I – nuclear to of for think the level. of to decarbonization mean Hi, lot that you're sure. seeing able think you there they're subsidization keep that is shift at Yes, as part the if think I to about the world narrative accidents. way at to all announcements hit next. happening a growing here tailwinds there's a I we negative shifting nuclear goals there John the of but people, stigma government that in people uranium being it nuclear here. a many look growing all think them will system. that is Yes, this the in the nuclear, be think prior are a And by infrastructure around the bill, I But was it's the Biden continued around the and related renewables, I of related included going policy

terms If an was being and of at taxonomy, that nuclear of energy. of in safe added look acceptable its EU to terms you the in energy form

fleet of at yes, So their COX are are levels some from next think if decommission nuclear at to but Germany, electricity, their their cost their like look France, countries neighbor and higher materially you door, they trying I than there look you which XX% generates say nuclear.

Yesterday’s after to we set uranium path market. think So the that announcement is by a terms from of of protracted of this the away bear the narrative on vehicles, is changing think the get we’re why to seeing renewed long is electric EU, interest and targets the cars is for engines. Biden sector I administration around the internal by energy, going combustion of targets being in electrification it all top very

And of chains, there lithium requires supply nickel, these different cobalt, and minerals All are graphite, plethora chemistries retooling, a massive are looking key of out in components yes, different that to manganese, supply but few battery of on at cases, things all been and Class chain. X there We’ve in smaller liquid very off markets them last some interested the we’re those. they less tend in be that years, markets. and

carbon, to of So very we kind through world. keen best we’re fund to into electrification we’re to figure of this investment in that out how how carefully on to bring have terms to structures. to figure theme But and trying investment them package out them electric trying decarbonisation, best wade the vehicle low

Graham Ryding

helpful. Great. Okay. That’s

is it how should dynamic physical structure about to think is inflows outflows, the going and similar be or in something new we potential or same With uranium unique other the trusts fund, fund, your here? there to

John Ciampaglia

there’s we’re And think closed Unlike to now. product is redemption the or the Obviously, end differences; Toronto can’t other difference the Stock on funds. feature, just physical structure There’s one deliver cash in form importantly, uranium are dually trust. drum trusts, uranium only key they’re one same, more I a right which listed either listed. the no Yes, largely somebody. we Exchange key two of in

So there is now. feature no redemption right

in relative scale in to participate fund, the invest they’ve options due relative to small on that think coming a smaller us – the the limited build been in commodities. and had institutions in liquidity to money will which the So larger allow other help I to category, basis have

Graham Ryding

what’s fee Okay, great. fund? the management the new And of

John Ciampaglia

XX basis points.

Graham Ryding

XX% quarter thing that’s or anything strong was and lower this quarter things? last be, to Okay. potential driving of my margins looks was EBITDA the the particularly How And compensation here? margins. strong what question we like It there the my then Is less expansion unique your for a was main pretty just would base is Or sort XX% calculation. is margin, thinking should be margin quarter? from this that about

Kevin Hibbert

numbers Graham, I’ll a But of little margin Kevin you’re pretty in think I guys to speak the safe you percentage here. that number. speaking, from But generally how compensation I that. Hey, tackle our it’s based different one. margin it’s model can’t on the terms because

pretty think up to our accruals are date. much I

what be number may But bit. corporate probably slight some a then side, our there the coming the fee-based through little is businesses. On down you’ll some compensation on see quarterly offsets coming of

disclosed about way the it like XX% now. So MD&A under is the that’s ratio, which we based we on at in the net-net, compensation and section Compensation right look the to

we’ll as back the think we between stay year. probably our through the and somewhere of make I half way XX% XX%

of But year. it’s back kind reasonable was much think suppressed to per I in this quarter, there the expect the unique same number se. nothing quarter half strong that of to the of comp So the

Graham Ryding

terms Why your lifting. Trust one your I doing you get could And – heavy demand of certainly Understood. think Okay. do silver Silver in flows, is if in more, just the behind to volatile. so relative proven theme a strong or that? this gold it But the is more bit be basis more Is is than silver year? it silver, for is industrial

John Ciampaglia

Hi, Graham.

trade. benefited a a that got that list also one, the earlier reflation from silver other think year most it with not commodities given it’s was in I definitely thing industrial hybrid,

the of I push went benefit up in most think on and the And also finally, kind secondary the the of things spree and influence importantly, I buying terms will low and starting of and its renewables think silver. to a collective all then to at social things groups media end there’s – in in a it high we use chalk power growing from thing solar different January Twitter that Reddit of buying on all carbon.

the a into no beneficiary flows primary that Our market of fund And one driver trust silver, recognized was uniqueness is the primary our some backed XXX% versus of by product products. as was competitor globally the of the really our that allocated physical metal. product

Graham Ryding

it for Thank you. Great. me. That’s

Operator

you. Thank

next RBC Geoff Markets. with comes Capital from question Our Kwan

Your open. line is

Geoff Kwan

good Hi, morning.

Just had one question.

theme managed and ongoing while funds generally side, kind kind gold a the for past, On equity hasn’t despite it. for it seems matched it’s the gold of an liked like being strong been better of of demand equity

about the suggests say, of next in anything from likely over is so. You gradual right just now just I’m more that trend continue if the everything but terms year this wondering – or that improvement there that next and flows, talked see year you or the improving you see accelerate to of

Whitney George

of not that to What the unlike a that sector. and companies fundamentals can I’ll course, I’m they’re returning flow of dividends tackle terms And out in never capital they’re tell anything one. cash of lot delivering, delivering, probably you I’ve mining margins a been seen buybacks the better the the and is of follow of both have is shareholders, free sectors. gold So generalist I

some thought people is fundamentally other next sector of environment has years. got very, it but entire to being fundamental obviously the well-managed a think pressure right of little right very been with we any away, certainly gold social There the There’s to sensitive managed a be that I way going those now. advance But as factors bit decades and be popular deal business of of being that forced strong, in to probably in issues, I very kind companies of becoming cost of kind we’re investment. has attractive. It the So like flat are are most the now. of kinds ESG to in the responsibly very, very pressures volatility do think is the industry over not own decades need very concept. going scared that even an are prior a to couple mining actually

things just metals, was matter interest in earnings for the of The a – Right a like and all and revisions, year looked matter fixed that of a precious on. we doing now, But in alternative well in just that turns But markets. switch things So no it’s particularly last not the time are indicators quantitative math days, place. knows going well continue an obviously I allocation. to more one sector. all the is of earnings what favor. surprises, think really like the a believe of working discover It’s income to that this models have our equity leading time a category sleepy it’s pretty for these in are

Geoff Kwan

you. Okay. Great. Thank

Operator

Grosskopf call now Thank to to remarks. closing turn further the time. back at you. would Peter I’m not over this I questions showing like for any

Peter Grosskopf

QX call. your weekend. Well, We this thank forward you with speaking again, Have look for everybody in a participating our Sprott, after to we interest appreciate good you results. in and

Operator

Thank This concludes participating. you today’s for conference call.

may You disconnect. not