Franco-Nevada (FNV) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $260.1 million, with 110,264 GEOs sold; record gold prices offset lower production at key assets, but results were down year-over-year due to the absence of Cobre Panama and reduced output at Candelaria and Antamina.

• Adjusted EBITDA was $221.9 million (85.3% margin), and adjusted net income was $144.9 million ($0.75/share); net income was $79.5 million, impacted by a $69.8 million tax expense from new global minimum tax measures.

• Major acquisitions included a gold stream on SolGold's Cascabel project (part of a $750 million syndicated package) and a 1.8% NSR royalty on Newmont's Yanacocha operations for $210 million, both expected to contribute significantly in future periods.

• New mines (Salares Norte, Greenstone, Tocantinzinho) began production, with first deliveries expected to boost results in H2 2024.

• Maintained a strong financial position with no debt and $2.4 billion in available capital as of June 30, 2024.

Financial highlights

• 110,264 GEOs sold in Q2 2024, down from 168,515 in Q2 2023 (or 131,865 excluding Cobre Panama); H1 2024 totaled 233,161 GEOs and $516.9 million in revenue.

• Total revenue was $260.1 million, down from $329.9 million year-over-year, but up from $258.2 million when excluding Cobre Panama.

• Adjusted EBITDA margin was 85.3% (Q2 2024), and adjusted net income margin was 55.7%.

• Cash cost per GEO was $264, down from $280 in Q2 2023, supporting margin expansion.

• Operating cash flow was $194.4 million, a 26% decrease year-over-year.

Outlook and guidance

• Full-year 2024 guidance for GEOs sold remains at 480,000–540,000, with precious metal GEOs at 360,000–400,000; expected to be at the lower end of both ranges due to lower diversified asset contributions and revised commodity price assumptions.

• Anticipates stronger deliveries from Candelaria and ramp-up at Tocantinzinho, Greenstone, and Salares Norte in H2 2024.

• Cascabel stream expected to contribute ~50 koz GEOs annually over the first 10 years of full production; Yanacocha Sulfides project expected to extend mine life beyond 2040.

• Effective tax rate expected to be 19%–20% going forward due to Barbados tax changes.