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Press Release

Sprott Announces 2020 First Quarter Results

TORONTO, May 08, 2020 (GLOBE NEWSWIRE) -- Sprott Inc. (TSX: SII) (“Sprott” or the “Company”) today announced its financial results for the three months ended March 31, 2020.

As previously disclosed, all financial figures are now reported in US dollars unless indicated otherwise.

Financial Overview (3 months results)

  • Assets Under Management (“AUM”) were $10.7 billion as at March 31, 2020, up $1.5 billion (16%) from December 31, 2019
  • Total net revenues (net of commission expenses, trailer fees and sub-advisor fees, carried interest and performance fee payouts) were $15 million, reflecting a decrease of $0.2 million (1%) from the 3 months ended March 31, 2019.
  • Total expenses (excluding commission expenses, trailer fees and sub-advisor fees, carried interest and performance fee payouts) were $12 million, reflecting an increase of $0.4 million (3%) from the 3 months ended March 31, 2019
  • Net income was $1.1 million ($0.01 per share), reflecting a decrease of $1.8 million from the 3 months ended March 31, 2019.
  • Adjusted base EBITDA was $8.2 million ($0.03 per share), an increase of $1.3 million (18%) from the 3 months ended March 31, 2019.

Year-to-Date Highlights

  • Subsequent to quarter end, the Company's AUM has increased materially due to strong net sales in its Exchange Listed Products segment, stronger gold and silver prices, and improving investment performance in its Managed Equities segment.
  • As of May 6, 2020, pro-forma AUM was $12.1 billion, an increase of 30% from December 31, 2019 and up 13% from March 31, 2020

"The COVID-19 crisis has become the greatest challenge that we have collectively faced in a generation," said Peter Grosskopf, CEO of Sprott. "The impacts of the virus and the related economic fallout are far reaching and will continue to be felt in the months and years to come. Our thoughts are with those who have been hardest hit."

"As governments have responded with unprecedented levels of fiscal and monetary stimulus, investor demand for precious metals has increased, and gold prices have surged to their highest levels since the global credit crisis," added Mr. Grosskopf. "As at May 6, 2020, our estimated pro-forma AUM has increased by more than 30% since December 31, 2019. This growth was driven largely by $1 billion in new sales in our physical bullion trusts and the acquisition of the Tocqueville gold strategies. All of our core businesses are performing well and the entire Sprott team is focused on capitalizing on this opportunity to deliver outstanding results for our clients and shareholders."

Assets Under Management (3 months results)

(In millions $)AUM
Dec 31, 2019
Net
Inflows (1)
Market
Value
Changes
Other (2)AUM
Mar. 31, 2020
Exchange Listed Products      
- Physical Trusts6,579474(255)6,798  
- ETFs252(9)(56)187  
 6,831465(311)6,985  
       
Managed Equities      
- Precious Metals Strategies601(30)(393)1,7411,919  
- Other350(4)(137)209  
 951(34)(530)1,7412,128  
       
Lending78363(6)(1)839 (3)
       
Other688133(38)783  
       
Total9,253627(885)1,74010,735  

(1) See 'Net Inflows' in the key performance indicators (non-IFRS financial measures) section of this MD&A.
(2) Includes new AUM from fund acquisitions and lost AUM from fund divestitures and capital distributions of our lending LPs.
(3) $1.3 billion of committed capital remains uncalled, of which $506 million earns a commitment fee (AUM), and $748 million does not (future AUM).


Dividends

On May 7, 2020, a dividend of CAD$0.03 per common share was declared for the quarter ended March 31, 2020.

Conference Call and Webcast

A conference call and webcast will be held today, May 8, 2020 at 10:00 am ET to discuss the Company's financial results. To participate in the call, please dial (855) 458-4215 ten minutes prior to the scheduled start of the call and provide conference ID2509439. A taped replay of the conference call will be available until Friday, May 15, 2020 by calling (855) 859-2056, reference number 2509439. The conference call will be webcast live at www.sprott.com and https://edge.media-server.com/mmc/p/t9gfimh8.

*Non-IFRS Financial Measures
This press release includes financial terms (including AUM, investable capital, net revenues, expenses, adjusted base EBITDA and net sales) that the Company utilizes to assess the financial performance of its business that are not measures recognized under International Financial Reporting Standards (“IFRS”). These non-IFRS measures should not be considered alternatives to performance measures determined in accordance with IFRS and may not be comparable to similar measures presented by other issuers. For additional information regarding the Company's use of non-IFRS measures, including the calculation of these measures, please refer to the “Non-IFRS Financial Measures” section of the Company's Management's Discussion and Analysis and its annual financial statements available on the Company's website at www.sprott.com and on SEDAR at www.sedar.com.

A reconciliation from net income to adjusted base EBITDA is shown below:

 3 months ended
(in thousands $)Mar. 31, 2020Mar. 31, 2019
   
Net income for the periods1,062 2,847 
Adjustments:  
Interest expense236 244 
Provision (recovery) for income taxes1,865 659 
Depreciation and amortization988 829 
EBITDA4,151 4,579 
   
Other adjustments:  
(Gains) losses on investments (1)4,352 (55)
Non-cash stock-based compensation98 1,247 
Other expenses (2)(414)1,147 
Adjusted EBITDA8,187 6,918 
   
Other adjustments:  
Carried interest and performance fees  
Carried interest and performance fee related expenses  
Adjusted base EBITDA8,187 6,918 

(1) This adjustment removes the income effects of certain gains or losses on short-term investments, co-investments and digital gold strategies to ensure the reporting objectives of our EBITDA metric as described above are met.
(2) See Other expenses in Note 6 of the interim financial statements. In addition to the items outlined in Note 6, Other expenses also includes severance and new hire accruals of $0.7 million for the 3 months ended (3 months ended March 31, 2019 - $0.1 million).


Forward-Looking Statements

Certain statements in this press release contain forward-looking information (collectively referred to herein as the "Forward-Looking Statements") within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify Forward-Looking Statements. In particular, but without limiting the forgoing, this press release contains Forward-Looking Statements pertaining to: (i) market outlook and future metal prices; (ii) Sprott’s focus on capitalizing on the current opportunity to deliver outstanding results; and (iii) the declaration, payment and designation of dividends.

Although the Company believes that the Forward-Looking Statements are reasonable, they are not guarantees of future results, performance or achievements. A number of factors or assumptions have been used to develop the Forward-Looking Statements, including, without limitation: (i) the impact of increasing competition in each business in which the Company operates will not be material; (ii) quality management will be available; (iii) the effects of regulation and tax laws of governmental agencies will be consistent with the current environment; and (iv) those assumptions disclosed under the heading "Significant Accounting Judgments, Estimates and Changes in Accounting Policies" in the Company’s MD&A for the period ended March 31, 2020. Actual results, performance or achievements could vary materially from those expressed or implied by the Forward-Looking Statements should assumptions underlying the Forward-Looking Statements prove incorrect or should one or more risks or other factors materialize, including: (i) difficult market conditions; (ii) poor investment performance; (iii) failure to continue to retain and attract quality staff; (iv) employee errors or misconduct resulting in regulatory sanctions or reputational harm; (v) performance fee fluctuations; (vi) a business segment or another counterparty failing to pay its financial obligation; (vii) failure of the Company to meet its demand for cash or fund obligations as they come due; (viii) changes in the investment management industry; (ix) failure to implement effective information security policies, procedures and capabilities; (x) lack of investment opportunities; (xi) risks related to regulatory compliance; (xii) failure to manage risks appropriately; (xiii) failure to deal appropriately with conflicts of interest; (xiv) competitive pressures; (xv) corporate growth which may be difficult to sustain and may place significant demands on existing administrative, operational and financial resources; (xvi) failure to comply with privacy laws; (xvii) failure to successfully implement succession planning; (xviii) foreign exchange risk relating to the relative value of the U.S. dollar; (xix) litigation risk; (xx) failure to develop effective business resiliency plans; (xxi) failure to obtain or maintain sufficient insurance coverage on favourable economic terms; (xxii) historical financial information being not necessarily indicative of future performance; (xxiii) the market price of common shares of the Company may fluctuate widely and rapidly; (xxiv) risks relating to the Company’s investment products; (xxv) risks relating to the Company's proprietary investments; (xxvi) risks relating to the Company's lending business; (xxvii) risks relating to the Company’s merchant bank and advisory business; (xxviii) those risks described under the heading "Risk Factors" in the Company’s annual information form dated February 27, 2020; and (xxix) those risks described under the headings "Managing Risk: Financial" and "Managing Risk: Non-Financial" in the Company’s MD&A for the period ended March 31, 2020. In addition, the payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Company will be at the discretion of the Board of Directors of the Company and will be established on the basis of the Company’s earnings, the satisfaction of solvency tests imposed by applicable corporate law for the declaration and payment of dividends, and other relevant factors. The Forward-Looking Statements speak only as of the date hereof, unless otherwise specifically noted, and the Company does not assume any obligation to publicly update any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable Canadian securities laws.

About Sprott
Sprott is an alternative asset manager and a global leader in precious metal investments. Through its subsidiaries in Canada, the US and Asia, Sprott is dedicated to providing investors with specialized investment strategies that include Exchange Listed Products, Lending, Managed Equities and Brokerage. Sprott’s common shares are listed on the Toronto Stock Exchange under the symbol (TSX:SII). For more information, please visit www.sprott.com.

Investor contact information:
Glen Williams
Managing Director
Investor Relations and Corporate Communications
(416) 943-4394
gwilliams@sprott.com

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