Franco-Nevada Corp (FNV) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

May 3, 2023 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Franco-Nevada Corporation's First Quarter 2023 Results Conference Call and Webcast. This call is being recorded on May 3, 2023. [Operator Instructions].

I would now like to turn the conference over to your host, Candida Hayden, Senior Analyst, Investor Relations. Please go ahead.

Candida Hayden

Thank you, Joanna. Good morning, everyone. Thank you for joining us today to discuss Franco-Nevada's first quarter 2023 results. Accompanying this call is a presentation, which is available on our website at franco-nevada.com where you will also find our full financial results. The presentation is also available to view on the webcast.

During our call this morning, Paul Brink, President and CEO of Franco-Nevada, will provide introductory remarks; followed by Sandip Rana, Chief Financial Officer, who will provide a brief review of our results. This will be followed by a Q&A period. Our full executive team is available to answer any questions. Participants may submit questions by telephone or via the webcast. We would like to remind participants that some of today's commentary may contain forward-looking information, and we refer you to our detailed cautionary note on Slide 3 of this presentation.

I will now turn over the call to Paul Brink, President and CEO of Franco-Nevada.

Paul Brink

Thank you, Candida, and good morning. I'll start with a note on our ongoing director succession. At our AGM yesterday, we were sad to mark the retirement of two of our directors, Louis Gignac and Elliott Pew. Louis was one of the original Directors of Franco-Nevada and his expertise and guidance has been the foundation of many of our investment decisions. Elliott joined our Board in 2019 and was key to directing our oil and gas investments. Thank you, Louis and Elliott, for the enormous contribution that you've made to our success.

Turning now to the first quarter results. Our diversified portfolio continues to generate strong cash flow and high margins, though the quarter was impacted by production disruptions at Cobre Panama and Antapaccay as well as lower energy prices. Stronger precious metal deliveries are anticipated in Q2 with the social disruptions at Antapaccay having subsided and First Quantum in the government of Panama having agreed on terms for a refreshed concession contract.

The results for the quarter while lower bring home to me the robustness of our business. Despite the production impacts, the business still generated an 83% adjusted EBITDA margin and a 55% adjusted net income margin. We have no fixed costs related to our royalty and stream assets, so a temporary production hold is largely a deferral of revenue. We like to see great ore bodies get even better over time. And I think that will apply to both Cobre Panama and Antapaccay.