Q4 2023 Sprott Inc Earnings Call

February 21, 2024

And answer session and instructions will be provided at that time for you to queue up for questions. As a reminder, this conference is being recorded today February 21, 2024 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 certain material factors or assumptions are implied in making forward looking statements and actual results may differ materially from those.

Expressed or implied in such statements for additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward looking statements. Please consult the MD&A for the quarter and sprouts other filings with the Canadian.

And U S security regulators I will now turn the conference over to Mr. Whitney George. Please go ahead Mr. George.

Thank you.

The rest of this presentation will grow much faster than the disclosures and good morning, everyone and thanks for joining us today on the call with me today is our CFO Kevin.

And John <unk>, the CEO of <unk> broad asset management.

Our 2023 any results were released this morning and are available on our website, where you can also find the financial statements and MD&A.

Starting on slide four.

We are pleased with our performance during 2023 as we grew our AUM by $5 3 billion to $28 7 billion.

This strong AUM growth was driven largely by our strong strong uranium prices and inflows into our exchange listed products.

Okay.

Good morning, ladies and gentlemen, and thank you for standing by welcome to spot X 2023 annual results conference call. At this time all participants are in listen only mode. Following the presentation. We will conduct a question and answer session and instructions will be provided at that time for you to queue up for questions.

On the year, we generated $1 1 billion in net sales.

Much of our AUM growth in 2023 came late in the fourth quarter and is positively impacting our 2020 for performance.

In 2023, we also finished the cleanup of our legacy noncore businesses exiting both our Canadian broker dealer.

Mind you. This conference is being recorded today February 21, 2024 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.

And our Korean operations with this clean up behind US now, we expect to see much less noise in our quarterly results going forward.

We were very active on the product development front in 2023, as we expanded our ETF product suite with seven new ETF launches in the U S and in Europe.

Statements involve risks and uncertainties and undue reliance should not be placed on such statements certain material factors or assumptions are implied in making forward looking statements and actual results may differ materially from those expressed or implied in such statements for additional information about factors that may cause actual.

We also completed successful private strategies capital raises and launched and actively manage the physical commodity strategy.

Finally to meet the needs of our growing client invest and Investor base, we reorganized and expanded our sales and marketing and Investor relations teams and added new talent in each of these key areas with that I'll pass it over to Kevin for a look at our financial results Kevin.

So it's to differ materially from expectations and about material factors or assumptions applied in making forward looking statements. Please consult the MD&A for the quarter and sprouts other filings with the Canadian and U S security regulators I will now turn the conference over to Mr. Whitney George.

Thanks, Whitney and good morning, everyone I'll start on slide <unk>.

Slide five which provides a summary of our historical AUM.

AUM finished the year at $28 7 billion up $3 $3 billion or 13% from September 30 of this year.

Please go ahead Mr. George.

Thank you.

The rest of this presentation will grow much faster than the disclosures good morning, everyone and thanks for joining us today on the call with me today is our CFO, Kevin <unk> and.

And is up $5 3 billion or 23% since the end of 2022.

As Whitney mentioned on both a three and 12 months ended basis, we benefited from strong growth in uranium prices, particularly late in the fourth quarter.

And John <unk>, the CEO of <unk> broad asset management.

Our 2023 any results were released this morning and are available on our website, where you can also find the financial statements and MD&A.

As well as inflows across the majority of our exchange listed products throughout the year.

We also benefited from capital raises in our private strategy spun.

Starting on slide four.

We are pleased with our performance during 2023 as we grew our AUM by $5 3 billion to $28 7 billion.

And with the recent growth of our uranium physical trust in Etfs are a critical materials product offerings now account for 28% of total assets under management.

This strong AUM growth was driven largely by our strong by strong uranium prices and inflows into our exchange listed products.

Slide six provides a brief look at our three and 12 months earnings.

On the year, we generated $1 1 billion in net sales.

Much of our AUM growth in 2023 came late in the fourth quarter and is positively impacting our 2020 for performance.

Adjusted base EBITDA was $18 8 million in the quarter up 4% from the $18 1 million. We earned over the same three month period.

In 2023, we also finished the cleanup of our legacy noncore businesses exiting both our Canadian broker dealer.

In 2022.

On a full year basis adjusted base EBITDA was $71 $9 million up 1% from the $71 million. We earned over the same 12 month period of 2022.

And our Korean operations with this clean up behind US now, we expect to see much less noise in our quarterly results going forward.

We were very active on the product development front in 2023, as we expanded our ETF product suite with seven new ETF launches in the U S and in Europe.

The increased management fees generated from higher average AUM on a full year basis, our ROE is largely in the fourth quarter as rising precious metals in uranium prices benefited our AUM.

We also completed successful private strategies capital raises and launched and actively manage the physical commodity strategy.

However, those results were largely offset.

By Lower Commission income due to the sale of our former Canadian broker dealer during the second quarter of the year.

And weaker at the market origination of our uranium trust throughout 2023.

As Whitney noted with the successful exit of all remaining noncore businesses in the year. The company is now well positioned to reap the full benefits of the 2024 operating environment.

Thanks, Whitney and good morning, everyone I'll start on slide <unk>.

Slide five which provides a summary of our historical AUM.

AUM finished the year at $28 7 billion.

Finally, slide seven provides a few capital management highlights from the past year.

Up $3 $3 billion or 13% from September 30 of this year.

We paid down over half our debt to.

And is up $5 3 billion or 23% since the end of 2022.

Took advantage of market dislocation to buyback shares.

And maintained a strong cash and liquidity profile moving into 2024.

As we mentioned on both a three and 12 months ended basis, we benefited from strong growth in uranium prices, particularly late in the fourth quarter.

For more information on our revenue expenses EBITDA and balance sheet metrics you can refer to the supplemental information section of this presentation as well as our annual MD&A filed earlier this morning, but that said I will pass things over to John.

As well as inflows across the majority of our exchange listed products throughout the year.

We also benefited from capital raises in our private strategies fund.

And with the recent growth of our uranium physical trust in Etfs are critical materials product offerings now account for 28% of total assets under management.

Yeah, Thanks, Kevin and good morning, everybody.

Just on slide eight I thought, we'd zoom out a little bit and take a little bit of a wider longer term perspective on the evolution of our exchange listed products suite.

Slide six provides a brief look at our three and 12 month earnings.

Etfs around the World are now 11 trillion and counting has become a very important category for every asset management firm globally and I'm pleased to share that over the last few years since we made our mutual fund business divestiture in middle of 2017, our exchange listed business.

Adjusted base EBITDA was $18 8 million in the quarter up 4% from the $18 1 million. We earned over the same three month period.

In 2022.

On a full year basis adjusted base EBITDA was $71 $9 million up 1% from the $71 million. We earned over the same 12 month period of 2022.

<unk> grown from $3 6 billion under management to $23 seven as of Middle of February. This has really been driven by three well timed acquisitions.

The increased management fees generated from higher average AUM on a full year basis, our ROE is largely in the fourth quarter as rising precious metals in uranium prices benefited our AUM.

<unk> organic growth strategy, where we have launched a number of funds across multiple geographies exchanges. We are now competing from and we've gone from six different product categories to now 13, and our overall suites grown from 5% to 16 finances. Whitney mentioned, we were active in 2023 with <unk>.

However, those results were largely offset.

By Lower Commission income due to the sale of our former Canadian broker dealer during the second quarter of the year.

Even new ETF launches and in the coming weeks, we have two more that will be coming to market.

And weaker at the market origination of our uranium trust throughout 2023.

Exchange listed products have.

As Whitney noted with the successful exit of all remaining noncore businesses in the year. The company is now well positioned to reap the full benefits of the 2024 operating environment.

Have very far global distribution reach if an investor can access the ticker there essentially a target client for us.

Many new funds that were focused on are based on long term secular growth themes related to critical minerals energy transition as well as precious minerals and metals, which we think are.

Finally, slide seven provides a few capital management highlights from the past year.

We paid down over half our debt to.

A cornerstone of every investor portfolio.

Took advantage of market dislocation to buyback shares.

Moving to the next slide I just wanted to highlight the tremendous growth we've seen in our uranium franchise.

And maintained a strong cash and liquidity profile moving into 2024.

Last year, we saw significant growth in assets. The overall assets are now $9 billion AUM, which is growth of $5 3 billion or 143%. This is really important we used the word we don't use the word leadership lightly here, it's really about the scale the breadth of our offerings the choice.

For more information on our revenue expenses EBITDA and balance sheet metrics you can refer to the supplemental information section of this presentation as.

As well as our annual MD&A filed earlier this morning.

That said I will pass things over to John.

Thanks, Kevin and good morning, everybody.

This the markets and the pure play focus that these funds offer the growing liquidity institutional interest.

On slide eight I thought, we zoom out a little bit and take a little bit of a <unk>.

Wider longer term perspective on the evolution of our exchange listed product suite.

<unk> been expanding over the last six months, and particularly and I think we're really well positioned the sprott physically range Trust is now our largest single fund it's brought the sprott uranium miners ETF is the world's largest pure play uranium mining ETF. It also has a European version UCITS form the.

Etfs around the World are now 11 trillion and counting has become a very important category for every asset management firm globally.

Please to share that over the last few years since we made our mutual fund business divestiture in middle of 2017, our exchange listed businesses to grown from $3 6 billion under management to $23 seven as of Middle of February. This has really been driven by three well timed.

The Sprott junior uranium miners ETF recently achieved its first year anniversary with $300 million in assets, which is incredible we are in the process of calling that funding across Europe, which will be available in the coming days.

And that is also the world's first junior uranium mining ETF. We are very focused on this franchise. We think it is just starting another inflection point of the current bull market with many more years to go.

<unk> also a organic growth strategy, where we have launched a number of funds across multiple geographies exchanges. We are now competing from and we've gone from six different product categories to now 13, and our overall suites grown from 5% to 16 fantasy Whitney mentioned.

Let's go onto the next slide.

Recently, the price of uranium has breached the $100 a pound threshold. This is a price we have not seen since 2007. It is really behaving differently than most other commodities, which has suffered.

We were active in 2023 with seven new ETF launches and in the coming weeks, we have two more that will be coming to market.

Based on tightening interest rates and soft economic growth around the world. We thought it was interesting to share. This chart from bank of America that showed the nominal price of uranium over the last.

These exchange listed products.

Have very far global distribution reach if an investor can access a ticker there essentially a target client for us.

Many new funds that were focused on are based on long term secular growth themes related to critical minerals energy transition as well as precious minerals and metals, which we think are a cornerstone of every investor portfolio.

Three bull markets as well as in real terms in today's dollars.

And while people might be excited about uranium hitting $100 and we sure are we think that there is a lot more upside and when you look at the two previous bull markets. In today's dollar terms prices peaked at 170 in the first one and close to $200.

Moving to the next slide I just wanted to highlight the tremendous growth we've seen in our uranium franchise.

Last year, we saw significant growth in assets. The overall assets are now $9 billion AUM, which is growth of $5 3 billion or 143%. This is really important we use the word we don't use the word leadership lightly here, it's really about the scale and breadth of our offerings the choice.

And the last one which was in the 2000 and what's really driving our bullish forecast is around demand, we see very durable demand based on all the builds and progress and planned around the world. We anticipate that annual uranium demand will grow from 180 million pounds per year somewhere in the range of 250, most likely <unk>.

The markets and the pure play focus that these funds offer the growing liquidity institutional interest.

$300 million in the year 2040 uncovered utility requirements range from $1 billion five to $2 3 billion pounds, which is quite staggering going out to 2040.

<unk> been expanding over the last six months, and particularly and I think we're really well positioned.

Physically range Trust is now our largest single finance brought the sprott uranium miners ETF is the world's largest pure play uranium mining ETF. It also has a European version UCITS form the.

We've also seen a number of supply challenges with every commodity bull market you would obviously assume a supply response.

And what we've seen over the last six months is two of the world's largest producers of uranium have both signaled some near term and short term production challenges.

The spot junior uranium miners ETF recently achieved its first year anniversary with $300 million in assets, which is incredible we are in the process of calling that funding across Europe, which will be available in the coming days and that is also the world's first junior uranium mining ETF. We are very focused on this franchise we.

And we don't expect any material new uranium mine to be built in the next four to six years.

It's fair to say that geopolitical risks related to uranium and the nuclear fuel cycle remain very high there is a bill that will inevitably get passed in the U S that will ban Russia and enriched.

It is just starting another inflection point of the current bull market with many more years to go.

Uranium importation, which we think will potentially disrupt the market and I'd say our last comment is that uranium prices. We believe are going to be higher for longer. This is really necessary to finance and support all of the new production that we will need over the next 20 plus years.

Let's go onto the next slide.

Recently, the price of uranium has breached $100 a pound threshold. This is a price we have not seen since 2007 is really behaving differently than most other commodities, which has suffered.

Let's go to the next slide just to give you some perspective on sales last year, we had lighter sales for the overall year I think this was really a function of <unk>.

Investors sitting on the sidelines there is six trillion alone U S money market funds collecting 5% cash interest yields and we have not seen a lot of risk capital come back in the market largely based on fed signals.

Three bull markets as well as in real terms in today's dollars and while people might be excited about uranium hitting $100 and we sure are we think that there is a lot more upside and when you look at the two previous bull markets in today's dollars terms prices peaked at 170 in the first one.

Our trust traded at wider discounts than normal in the second half of the year and we did experience some redemptions like many precious metals funds.

And close to $200.

<unk> experienced.

The last one which was in the two thousands what's really driving our bullish forecast is around demand, we see very durable demand based on all the builds and progress and planned around the world. We anticipate that annual uranium demand will grow from 180 million pounds per year somewhere in the range of 250, most likely <unk>.

Looking forward to AUM, obviously AUM is important because it's what drives revenue we saw very good.

AUM growth. Unfortunately, it came very late in the year. So we were not able to capture the full year benefit, but nonetheless, those assets are now on our books and we hope they remain and continue to drive revenues going forward.

$300 million in the year 2040 uncovered utility requirements range from $1 billion five to $2 3 billion pounds, which is quite staggering going out to 2004.

On the next slide we can talk a little bit about flows. This has been very positive in our Etfs. The uranium funds really pulled in a lot of capital last year as interest in the sector has expanded enormously not just from investor type, but also globally.

We've also seen a number of supply challenges with every commodity bull market you would obviously assume a supply response.

Iranian Etfs were really driving a lot of the flows.

What we've seen over the last six months is two of the world's largest producers of uranium have both signaled some near term and short term production challenges.

On slide 14, the ETF product suite AUM grew by 80% last year a lot of that was you R&M our uranium mining ETF again.

And we don't expect any material new uranium mine to be built in the next four to six years.

It's important to have a number of different categories positioned on the shelf. So that when one of these metals comes in Davao, we're well positioned to capture flows.

It's fair to say that geopolitical risks related to uranium and the nuclear fuel cycle remain very high there is a bill that will inevitably get passed in the U S that will ban, Russia, and enrich uranium importation, which we think will potentially disrupt the market and I'd say, our last comment is that uranium.

And with that I will pass it over to Lenny.

Sure.

Thank you John I'm on slide 15.

Talk a little bit about our managed equities franchise.

Performance in our managed equity segment continued to be challenged in 2023 investors have been reluctant to allocate to the mining sector and flows have been absent across.

Prices, we believe are going to be higher for longer this is really necessary to finance and support all the new production that we will need over the next 20 plus years.

Let's go to the next slide just to give you some perspective on sales last year, we had lighter sales for the overall year I think this was really a function of.

Cross category collectively our managed equity strategies reported modest redemptions in 2023.

Investors sitting on the sidelines there is six trillion dollars alone U S money market funds collecting 5% cash interest yields and we have not seen a lot of risk capital come back in the market largely based on fed signals.

But we are committed to the future of that business.

<unk>.

The equities have decoupled from the basic commodity prices gold and silver primarily.

And have reached historic lows in relative terms.

Our trust traded at wider discounts than normal in the second half of the year and we did experience some.

Slide 16, we've talked a little bit about our private strategies.

Some redemptions like many precious metals funds.

Combined lending and streaming strategies AUM was $2 6 billion as of December 31, 2023. The team is continuing to monitor and harvest investments in our second private lending fund and is actively assessing new investment opportunities for our third lending following number three at our streaming and <unk>.

Have experienced.

Looking forward to AUR, obviously is important because it's what drives revenue we saw very good.

AUM growth. Unfortunately came very late in the year. So we were not able to capture the full year benefit, but nonetheless, those assets are now on our books and we hope they remain and continue to drive revenues going forward.

Royalty funnel.

As I mentioned earlier, we're currently incubating an actively managed physical commodity strategy that we seeded and launched in December.

On the next slide and this can talk a little bit about flows. This has been very positive in our Etfs. The uranium funds really pulled in a lot of capital last year as interest in the sector has expanded enormously not just from investor type, but also globally. The uranium Etfs were really driving a lot of the <unk>.

To summarize on slide 17.

Although it's still early we're pleased that our 2023 momentum has extended into 2024 as of February 16th our AUM has increased by approximately 500 million to $29 2 billion due largely to rising uranium prices, we're continuing to build scale in our critical materials product suite.

<unk>.

On slide 14, the ETF product suite AUM grew by 80% last year a lot of that was you R&M our uranium mining ETF.

It's important to have a number of different categories positioned on the shelf. So that when one of these metals comes in Davao, we're well positioned to capture flows.

Our uranium strategies have delivered remarkable growth and now account for 30% of total AUM we.

We have a strong pipeline of new products and as John mentioned Tomorrow, We will launch our junior uranium miners.

And with that I will pass it over to <unk>.

<unk>.

Usage fund in Europe, and looking ahead, we're very confident long term trends supporting our positioning in precious metals and critical materials are intact.

Thank you John I'm on Slide 15 talk a little bit about our managed equities franchise.

Performance in our managed equity segment continued to be challenged in 2023.

We are just beginning to demonstrate the potential of our highly scalable management platform and we're looking forward to creating value for our clients and shareholders in the years ahead.

Busters have been reluctant to allocate to the mining sector and flows have been absent.

That concludes our prepared remarks today I'd like to turn it over to the operator for Q&A.

Across that category collectively our managed equity strategies reported modest redemptions in 2023.

Certainly ladies and gentlemen, if you do have a question at this time. Please press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue simply press star one again.

But we are committed to the future of that business.

The equities have decoupled from the basic commodity prices gold and silver primarily.

One moment.

And have reached historic lows in relative terms.

One moment for our first question.

Slide 16, we've talked a little bit about our private strategies.

And our first question comes from the line of Graham Ryding from TD Securities. Your question. Please.

Hi, good morning.

There were some flows in the quarter into managed equities.

What are other.

Other line, what asset class or maybe what channels did did that relate to.

Number three at our streaming and royalty funnel.

As I mentioned earlier, we're currently incubating an actively managed physical commodity strategy that we seeded and launched in December.

Hi, Graham on managed equities I wouldn't say anything in particularly I think.

The industry generally is experiencing very slow and steady redemptions from a lot of the different mining products not just actively managed but also passive is a lot of commodity prices have corrected.

To summarize on slide 17.

So I wouldn't attribute it to any one pocket obviously, we have mandates that we managed for people around the world in different forms sub advisory relationship separate accounts.

And it's just been kind of a drip across the.

Our uranium strategies have delivered remarkable growth and now account for 30% of total AUM we.

The whole product suite.

We have a strong pipeline of new products and as John mentioned Tomorrow, We will launch our junior uranium miners.

Okay, so would that be like I'm, saying $212 million.

In the quarter for flows into your other managed equities is that or like institutional type.

Usage fund in Europe, and looking ahead, we're very confident long term trends supporting our positioning in precious metals and critical materials are intact.

Flows, which can be a bit lumpier.

What would that be.

We are just beginning to demonstrate the potential of our highly scalable management platform and we're looking forward to creating value for our clients and shareholders in the years ahead.

We have not had any material instituted institutional.

Outflows there not in a size.

Maybe Kevin did you have a thought yes, Graeme I'll get back to you on that I have to pull the details of it but I think I know what it is but I want to be certain price then get you a reply back.

That concludes our prepared remarks today I'd like to turn it over to the operator for Q&A.

Can I make one comment.

One of our largest products is our.

Our precious metals mining mutual fund run by John Hathaway.

Mutual funds.

One moment.

Most people have forgotten about in favor of Etfs, but there is a natural sort of outflow that occurs annually no matter what the performance just as People's investment objectives move on so.

One moment for our first question.

And our first question comes from the line of Graham Ryding from TD Securities. Your question. Please.

Real benefit that you got is.

When performance is strong.

Hi, good morning.

That adds to AUM as well as attract new capital So barra.

There were some flows in the quarter into managed equities.

Barring any kind of enthusiasm for the mining sector.

Or the other.

Other line, what asset class or maybe what channels did did that relate to.

That's just kind of going to be a natural kind of progression, but we are definitely of the view that things could change and that could change very quickly and very dramatically.

Hi, Graham on managed equities I wouldn't say anything in particularly I think.

Okay understood.

You talked about a pipeline of new products for 2020 for should we be thinking critical minerals or for energy transition materials.

For those or are you looking broader to other asset classes.

Yes, we want to stick to this dramatic it's what we know best I think it's where the world is moving I think people are grossly under physician and critical minerals. If you think about how most institutional investors are gaining exposure to commodities, it's by simply buying the Bloomberg commodity index or the Goldman Sachs commodity.

So I wouldn't attribute it to any one pocket obviously, we have mandates that we managed for people around the world in different forms sub advisory relationship separate accounts.

And it's just been kind of a drip across the.

The whole product suite.

Index, which are basically futures based products that are heavily tilted to oil and gas and yes. Some some minerals in AG, but completely unmet critical things like uranium lithium.

Okay, so would that be like I'm, saying $212 million.

In the quarter for flows into your other managed equity issues that or like institutional type.

Flows, which can be a bit lumpier.

And have very low exposures to other.

What would that be.

Minerals like nickel and cobalt et cetera, so we.

We have not had any material Institute institutional.

We think this fills a gap in the market the world seems to be increasingly focused on.

Outflows there not in a size.

Maybe Kevin did you have a thought yes, Graeme I'll get back to you on that I have to pull the details of it but I think I know what it is but I want to be certain price then get you a reply back.

Metals that are critical for energy transition.

And I think that's where a lot of our expertise as is being integrated into either active or passive strategies.

Can I make one comment.

One of our largest products is our.

Okay great.

Our precious metals mining mutual fund run by John Hathaway.

Great and then should we be thinking like in terms of you are pretty active in streamlining your business in 2023.

Mutual funds.

Most people have forgotten about in favor of Etfs, but there is a natural sort of outflow that occurs annually no matter what the performance just as People's investment objectives move on so the real benefit that you get is when performance is strong.

Are there other areas you're looking at or are you largely done and how should we how do you think about I guess the strategic benefit here on Blake Your managed equities and your private strategies side of your business how that complements your exchange listed side.

I think we're done.

It adds to AUM as well as attract new capital so.

What we have now is all on strategy.

Barring any kind of enthusiasm for the mining sector.

We are we think we're experts in the mining industry and we offer a suite of products, where individual investors large institutional investors.

That's just kind of going to be a natural kind of progression.

But we are definitely of the view that things could change and that could change very quickly and very dramatically.

And we're doing it globally so.

Very pleased with the platform now.

Okay understood.

<unk>.

Looking forward to being rewarded for.

Talked about a pipeline of new products for 2020 for should we be thinking critical minerals are.

Those efforts.

The energy transition materials.

Okay.

That's it for me I'll re.

For those or are you looking broader to other asset classes.

<unk>, if there's any more thank you.

Yes.

Yes, we want to stick to this thematic.

Thank you.

And as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone.

What we know best I think it's where the world is moving I think people are grossly under physician and critical minerals. If you think about how most institutional investors are gaining exposure to commodities, it's by simply buying the Bloomberg commodity index or the Goldman Sachs commodity index, which are basically futures based products that are heavily.

Okay.

And.

One moment for.

Our next question.

And our next question is a follow up from Graham Ryding from TD Securities.

Tilted to oil and gas.

Yes, some some minerals in AG, but completely unmet critical things like uranium lithium.

Okay I didn't want to.

The lineup, but I'll keep going.

It was Kevin. This question is for you if there was $5 3 million I think.

And have very low exposure to other <unk>.

And other expenses that were excluded from base EBITDA.

Minerals like nickel and cobalt et cetera, so we.

Realize there's some FX in there, but what were the other main items that would.

We think this fills a gap in the market the world seems to be increasingly focused on.

That would be contributing to that.

$3 million overall.

Metals that are critical for energy transition.

So the vast majority so youre asking about other expense rate.

And I think that's where a lot of our expertise as is being integrated into either active or passive strategies.

Yes.

Excluded from base EBITDA I can see the FX, but theres lots of other stuff that I can see I think it was like $3 $7 million of other stuff in there that I'm not sure what it is.

Okay great.

Great and then should we be thinking like in terms of you are pretty active in streamlining your business in 2023.

Right. So the vast majority of our other expenses would be of the costs associated with the exit of the non core businesses.

Well as anything nonrecurring around professional fees.

Pertaining to those transactions and then new funded startup costs.

Yeah.

Okay perfect.

I think we're done.

Perfect. Thank you.

What we have now is all on strategy.

Thank you.

Once again, if you do have a question at this time, Please press star one one.

We are we think we're experts in the mining industry and we offer a suite of products, where individual investors large institutional investors.

Yeah.

Okay.

And we're doing it globally so.

And I'm not showing any further questions at this time I would like to hand, the program back to Whitney George for any further remarks.

Very pleased with the platform now.

<unk>.

Looking forward to being rewarded for.

Thank you everyone for participating in this call. We appreciate your interest in spot and look forward to speaking to you again after our first quarter results.

Those efforts.

Okay.

That's it for me I'll re.

<unk>, if there's any more thank you.

Personally I would like to extend.

Yes.

Thank you.

Thanks to our committed long term shareholders, who have been supportive of our strategy and some very engaged and active in helping gets to get our story out so with that have a good day, everybody and thanks for thanks for joining us bye bye.

And as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone.

Okay.

And.

One moment for us.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Our next question.

And our next question is a follow up from Graham Ryding from TD Securities.

Okay, I didn't want to hug.

The lineup, but I'll keep going.

It was Kevin. This question is for you if there was $5 3 million I think.

And other expenses that were excluded from base EBITDA I realize there's some FX in there, but what were the other main items that would.

That would be contributing to that.

$5 3 million overall.

So the vast majority so youre asking about other expense rate.

Yes, it was.

Excluded from base EBITDA I can see the FX, but theres lots of other stuff that I can see I think it was like $3 7 million of other stuff in there that I'm not sure what are they.

Right. So the vast majority of our other expenses would be of the cost associated with the exit of the non core businesses.

As well as anything nonrecurring around professional fees.

Pertaining to those transactions and then new fund startup costs.

Okay.

Perfect. Thank you.

Thank you.

Again, if you do have a question at this time, Please press star one one.

Yeah.

Okay.

And I'm not showing any further questions at this time I'd like to hand, the program back to Whitney George for any further remarks.

Thank you everyone for participating in this call. We appreciate your interest in spot and look forward to speaking to you again after our first quarter results.

Personally I would like to extend.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

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Good morning, ladies and gentlemen, thank you for standing by welcome to <unk> 2023 annual results Conference call. At this time all participants are in a listen only mode. Following the presentation. We will conduct a question and answer session and instructions will be provided at that time for you to queue up.

For questions Adam.

A reminder, this conference is being recorded today February 21, 2024 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 Canadian Provincial Securities Law forward looking.

Our results to differ materially from expectations and about material factors or assumptions applied in making forward looking statements. Please consult the MD&A for the quarter and sprouts other filings with the Canadian and U S security regulators.

Now I'll turn the conference over to Mr. Whitney George Please go ahead Mr. George.

Thank you.

The rest of this presentation will grow much faster than the disclosures good morning, everyone and thanks for joining us today on the call with me today is our CFO Kevin and.

And John <unk>, the CEO of <unk> broad asset management. Our 2023 any results were released this morning and are available on our website, where you can also find the financial statements and MD&A.

Starting on slide four.

We're pleased with our performance during 2023 as we grew our AUM by $5 3 billion to $28 7 billion.

This strong AUM growth was driven largely by our strong strong uranium prices and inflows into our exchange listed products.

On the year, we generated $1 1 billion in net sales.

Much of our AUM growth in 2023 came late in the fourth quarter and is positively impacting our 2020 for performance. In 2023. We also finished the cleanup of our legacy noncore businesses exiting both our Canadian broker dealer.

And our Korean operations with this clean up behind US now, we expect to see much less noise in our quarterly results going forward.

We were very active on the product development front in 2023, as we expanded our ETF product suite with seven new ETF launches in the U S and in Europe.

We also completed successful private strategies capital raises and launched an actively managed physical commodities strategy.

Thanks, Whitney and good morning, everyone I'll start on slide <unk>.

Slide five which provides a summary of our historical AUM.

AUM finished the year at $28 7 billion up $3 $3 billion or 13% from September 30 of this year.

And is up $5 $3 billion or 23% since the end of 2022.

As Whitney mentioned on both a three and 12 months ended basis, we benefited from strong growth in uranium prices, particularly late in the fourth quarter.

As well as inflows across the majority of our exchange listed products throughout the year.

We also benefited from capital raises in our private strategy spun.

And with the recent growth of our uranium physical trust in Etfs are a critical materials product offerings now account for 28% of total assets under management.

Slide six provides a brief look at our three and 12 months earnings.

Adjusted base EBITDA was $18 8 million in the quarter up 4% from the $18 1 million. We earned over the same three month period.

In 2022.

On a full year basis adjusted base EBITDA was $71 $9 million up 1% from the $71 million. We earned over the same 12 month period of 2022.

The increased management fees generated from higher average AUM on a full year basis, our ROE is largely in the fourth quarter as rising precious metals in uranium prices benefited our AUM.

However, those results were largely offset.

By Lower Commission income due to the sale of our former Canadian broker dealer during the second quarter of the year.

And weaker at the market origination of our uranium trust throughout 2023.

As Whitney noted with the successful exit of all remaining noncore businesses in the year. The company is now well positioned to reap the full benefits of the 2024 operating environment.

Finally, slide seven provides a few capital management highlights from the past year.

We paid down over half our debt.

Took advantage of market dislocation to buyback shares.

And maintained a strong cash and liquidity profile moving into 2024.

Yes, Thanks, Kevin and good morning, everybody.

Just on slide eight I thought, we zoom out a little bit and take a little bit of a wider longer term perspective on the evolution of our exchange listed product suite.

Etfs around the World are now 11 trillion and counting has become a very important category for every asset management firm globally.

Pleased to share that over the last few years since we made our mutual fund business divestiture in middle of 2017, our exchange listed business has grown from $3 6 billion under management to $23 seven as of Middle of February.

This has really been driven by three well timed acquisitions also a organic growth strategy, where we have launched a number of funds across multiple geographies exchanges. We are now competing from and we've gone from six different product categories to now 13, and our overall suites grown from 500.

The 16th Fantasy Whitney mentioned.

We were active in 2023 with seven new ETF launches and in the coming weeks, we have two more that will be coming to market.

These exchange listed products.

Have very far global distribution reach if an investor can access the ticker there essentially a target client for us.

Moving to the next slide I just wanted to highlight the tremendous growth we've seen in our uranium franchise.

The markets and the pure play focus that these funds offer the growing liquidity institutional interest.

<unk> been expanding over the last six months, and particularly and I think we're really well positioned there.

Physically range Trust is now our largest single find it's brought the sprott uranium miners ETF is the world's largest pure play uranium mining ETF. It also have the European version UCITS form the.

The Sprott junior uranium miners ETF recently achieved its first year anniversary with $300 million in assets, which is incredible we are in the process of calling that finding across Europe, which will be available in the coming days.

Let's go onto the next slide.

Recently, the price of uranium has breached the $100 a pound threshold. This is a price we have not seen since 2007. It is really behaving differently than most other commodities, which have suffered a bit.

Based on tightening interest rates and soft economic growth around the world. We thought it was interesting to share. This chart from bank of America.

The nominal price of uranium over the last.

Three Boe markets as well as in real terms in today's dollars and while people might be excited about uranium hitting $100 and we sure are we think that there is a lot more upside and when you look at the two previous bull market in today's dollar terms prices peaked at 170 in the first one.

And close to $200 in the last one which was in the 2000 and what's really driving our bullish forecast is around demand, we see very durable demand based on all the builds and progress and planned around the world. We anticipate that annual uranium demand will grow from 180 million pounds per year. Some.

We're in the range of 250, most likely $300 million in the year 2040 uncovered utility requirements range from $1 billion five to $2 3 billion pounds, which is quite staggering going out to 2040.

We've also seen a number of supply challenges with every commodity bull market you would obviously assume a supply response.

What we have seen over the last six months is two of the world's largest producers of uranium have both signaled some near term and short term production challenges.

And we don't expect any material new uranium mine to be built in the next four to six years.

It's fair to say that geopolitical risks related to uranium and the nuclear fuel cycle remain very high there is a bill that will inevitably get passed in the U S that will ban Russia and enriched.

Let's go to the next slide just to give you some perspective on sales last year, we had lighter sales for the overall year I think this was really a function of <unk>.

Investors sitting on the sidelines there is six trillion alone U S money market funds collecting 5% cash interest yield and we have not seen a lot of risk capital come back in the market largely based on fed signals.

Our trust traded at wider discounts than normal in the second half of the year and we did experience some redemptions like many precious metals funds.

<unk> experienced.

Looking forward to AUR, obviously AUM is important because it's what drives revenue we saw very good.

On the next slide and you can talk a little bit about flows. This has been very positive in our Etfs. The uranium funds really pulled in a lot of capital last year as interest in the sector has expanded enormously not just from investor type, but also globally.

Iranian Etfs that were really driving a lot of the flows.

On slide 14, the ETF proxy AUM grew by 80% last year a lot of that was you R&M our uranium mining ETF again.

It's important to have a number of different categories positioned on the shelf. So that when one of these metals comes and devote were well positioned to capture flows.

And with that I will pass it over to Randy.

Yes.

Thank you John I'm on slide 15.

Talk a little bit about our managed equities franchise.

Performance in our managed equity segment continued to be challenged in 2023 investors have been reluctant to allocate to the mining sector and flows have been absent across.

Across that category collectively our managed equity strategies reported modest redemptions in 2023.

But we are committed to the future of that business.

<unk>.

The equities have decoupled from the basic commodity prices Goldman silver primarily.

And have reached historic lows in relative terms.

Slide 16, we talk a little bit about our private strategies.

Royalty funnel.

As I mentioned earlier, we're currently incubating an actively managed physical commodity strategy that we seeded and launched in December.

To summarize on slide 17.

Our uranium strategies have delivered remarkable growth and now account for 30% of total AUM we.

We have a strong pipeline of new products and as John mentioned Tomorrow, We will launch our junior uranium miners.

Usage fund in Europe, and looking ahead, we're very confident long term trends supporting our positioning in precious metals and critical materials are intact.

We are just beginning to demonstrate the potential of our highly scalable management platform and we're looking forward to creating value for our clients and shareholders in the years ahead.

That concludes our prepared remarks today I'd like to turn it over to the operator for Q&A.

One moment.

One moment for our first question.

And our first question comes from the line of Graham Ryding from TD Securities. Your question. Please.

Hi, good morning.

There were some flows in the quarter into managed equities.

But can you sort of other <unk>.

Other line, what asset class or maybe what channels did did that relate to.

Hi, Graham on managed equities I wouldn't say anything in particularly I think.

So I wouldn't attribute it to any one pocket obviously, we have mandates that we managed for people around the world in different forms sub advisory relationship separate accounts.

And it's just been kind of a drip.

Ross the.

The whole product suite.

Okay, so would that be like I'm, saying $212 million.

In the quarter for flows into your other managed equities does that or like institutional type.

Flows, which can be a bit lumpier.

What would that be.

We have not had any material Institute institutional.

Outflows there not in a size.

Maybe Kevin did you have a thought yes, Graeme I'll get back to you on that I have to pull the details of it but I think I know what it is but I want to be certain price then get you a reply back.

How can I make one comment.

One of our largest products is our.

Our precious metals mining mutual fund run by John Hathaway.

Mutual funds most.

Great that you got as of when.

<unk> is strong that adds to AUM as well as attract new capital So bar.

Barring any kind of enthusiasm for the mining sector.

That's just kind of going to be a natural kind of progression, but we are definitely of the view that things could change and that could change very quickly and very dramatically.

Okay understood.

You talked about pipeline of new products for 2020 for should we be thinking critical minerals are for energy transition materials.

For those or are you looking broader to other asset classes.

Index, which are basically futures based products that are heavily tilted to oil and gas and yes. Some some minerals in AG, but completely unmet critical things like uranium lithium.

And have very low exposures to other.

Minerals like nickel and cobalt et cetera, so we.

We think this fills a gap in the market the world seems to be increasingly focused on metals that are critical for energy transition.

And I think that's where a lot of our expertise as is being integrated into either active or passive strategies.

Okay.

And then should we be thinking like in terms of you are pretty active in streamlining your business in 2023.

Are there other areas you're looking at or are you largely done and how should we how do you think about I guess the strategic benefit here on Blake Your managed equities and your private strategy side of your business how that complements your exchange listed side.

I think we're done.

What we have now is all on strategy.

We think we are experts in the mining industry and we offer a suite of products, where individual investors large institutional investors.

And we do we are doing it globally, so very pleased with the platform now.

Looking forward to being rewarded.

For that those efforts.

Okay.

Thats It for me I'll re queue.

Q if theres any more thank you.

Thank you.

And as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone.

Okay.

And.

One moment for.

Our next question.

And our next question is a follow up from Graham Ryding from TD Securities.

Okay I didn't want to.

The lineup, but I'll keep going.

It was Kevin those questions for you if there was $5 3 million I think.

And other expenses that were excluded from base EBITDA.

There's some FX in there, but what are the other main items that would.

That would be contributing to that.

Four 3 million overall.

So the vast majority so youre asking about other expense rate.

Yes.

Excluded from base EBITDA I can see the FX, but theres lots of other stuff that I can see I think it was like $3 7 million of other stuff in there that I'm not sure what it is.

Right. So the vast majority of our other expenses would be all of the costs associated with the exit of the non core businesses.

Well as anything nonrecurring around professional fees.

Pertaining to those transactions and then new fund startup costs.

Okay.

Perfect. Thank you.

Thank you.

Again, if you do have a question at this time, Please press star one one.

Great.

Okay.

And I'm not showing any further questions at this time I would like to hand, the program back to Whitney George for any further remarks.

Thank you everyone for participating in this call. We appreciate your interest in spot and look forward to speaking to you again after our first quarter results.

Personally I would like to extend.

Thanks to our committed long term shareholders, who have been supportive of our strategy and some very engaged and active in helping to get to get our story out so with that have a good day, everybody and thanks for thanks for joining us bye bye.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

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