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RG

ROYAL GOLD INC (RGLD)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: Revenue $209.6M, Diluted EPS $2.01, Operating cash flow $152.8M; adjusted EPS $1.81 and adjusted EBITDA margin 84% driven by strong gold prices and portfolio leverage .
  • Versus estimates: adjusted EPS beat Wall Street consensus ($1.81 vs $1.678*) while revenue was a slight miss ($209.6M vs $213.7M*); consensus based on 5 EPS and 2 revenue estimates (S&P Global) .
  • Guidance maintained: management reiterated FY 2025 sales, DD&A, and tax-rate guidance ranges issued in March; no changes this quarter .
  • Strategic catalysts: announced agreements to acquire Sandstorm Gold and Horizon Copper, and closed Kansanshi gold stream ($1.0B advance; revolver amended to $1.4B with $825M draw), positioning for greater scale and diversification .

What Went Well and What Went Wrong

What Went Well

  • “Another quarter of excellent financial results, with record revenue, earnings and operating cash flow,” reflecting leverage to strong precious metals prices .
  • Adjusted EBITDA margin rose to 84%, with gold contributing ~78% of revenue; cash G&A remained low and stable .
  • Stream advance at Pueblo Viejo fully offset; expected contributions continue into mid‑2040s as mine-life extension advances .

What Went Wrong

  • Centerra lowered 2025 Mount Milligan gold production guidance to 145–165koz due to lower-than-anticipated grades; Royal Gold maintained FY guidance but acknowledged risk-adjusted offsetting across assets .
  • Xavantina guidance cut to 40–50koz for 2025 as transition to mechanized mining proceeds; cash price under the stream increased from 25% to 40% after threshold reached .
  • Continued silver delivery deferrals at Pueblo Viejo (~2.1Moz deferred at quarter end), limiting reported silver sales despite gold strength .

Financial Results

Quarterly trend and YoY comparison

MetricQ4 2024Q1 2025Q2 2025Notes
Revenue ($USD Millions)$202.6 $193.4 $209.6 Record in Q2
Diluted EPS ($)$1.63 $1.72 $2.01 Record in Q2
Net Income ($USD Millions)$107.4 $113.5 $132.3 Record in Q2
Adjusted EBITDA ($USD Millions)$169.6 $159.2 $175.6 Record in Q2
Adjusted EBITDA Margin (%)84% 82% 84% Stable high margin
Operating Cash Flow ($USD Millions)$141.1 $136.4 $152.8 Record in Q2
MetricQ2 2024Q2 2025
Revenue ($USD Millions)$174.1 $209.6
Diluted EPS ($)$1.23 $2.01
Net Income ($USD Millions)$81.2 $132.3

Versus Wall Street Consensus (S&P Global)

MetricConsensusActualSurprise
Adjusted EPS ($)1.678*1.81 Beat
Revenue ($USD Millions)213.7*209.6 Miss

Values marked with * retrieved from S&P Global.

Segment breakdown (Stream vs Royalty)

MetricQ4 2024Q1 2025Q2 2025
Stream Revenue ($USD Millions)$124.8 $122.5 $133.2
Royalty Revenue ($USD Millions)$77.8 $71.0 $76.5
Revenue by Metal (%)Gold 77%, Silver 10%, Copper 9 Gold 75%, Silver 12%, Copper 9 Gold 78%, Silver 11%, Copper 7

KPIs

KPIQ4 2024Q1 2025Q2 2025
GEOs (sales volume)76,100 67,600 63,900
Cash G&A ($USD Millions)6.33 7.87 7.56
Liquidity ($USD Billions)~$1.20 ~$1.25 ~$1.25
Dividend per share ($)0.45 0.45 0.45

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gold Sales (oz)FY 2025210,000–230,000 Reiterated ranges Maintained
Silver Sales (Moz)FY 20252.7–3.3 Reiterated ranges Maintained
Copper Sales (Mlb)FY 202513.5–16.0 Reiterated ranges Maintained
Other Metals ($M)FY 2025$18–$21 Reiterated ranges Maintained
DD&A ($M)FY 2025$126–$142 Reiterated ranges Maintained
Effective Tax Rate (%)FY 202517–22 Reiterated ranges Maintained
DividendQ4 2025$0.45/share prior cadence$0.45 declared Aug 19, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Leverage to gold priceManagement highlighted direct leverage to rising gold; record revenue, OCF, EPS in 2024 and strong start to 2025 with rising gold price Records again; gold ~78% of revenue; margin 84% Positive, sustained
Mount Milligan outlookPFS to extend mine life on track; 2025 guidance maintained (165–185koz Au) Centerra lowered 2025 Au guidance to 145–165koz; infill drilling underway Near-term cautious
Pueblo Viejo recovery/deferralsThroughput ramp to 14Mt/y by 2028, silver recovery project by Q4’25; silver deferrals discussed Stream advance fully offset; ~2.1Moz deferred silver outstanding Gold improving; silver constrained
Liquidity/Capital structureDebt reduced to $0; ~$1.2B liquidity at YE’24 Revolver amended to $1.4B; $825M draw for Kansanshi; $575M availability remaining Capacity increased
M&A/Portfolio scaleAdded Back River and Cactus royalties; new contributors (Manh Choh, Côté) Agreements to acquire Sandstorm and Horizon; portfolio scale/diversification Acceleration of consolidation

Management Commentary

  • CEO: “Royal Gold produced another quarter of excellent financial results, with record revenue, earnings and operating cash flow, demonstrating again the leverage in our business to strong precious metal prices.”
  • CEO on strategy: “The acquisitions of Sandstorm Gold and Horizon Copper will bring scale, growth and diversification… and make us the most diversified and gold-focused company in our sector.”
  • CFO: Tax expense included discrete benefits ($9.3M withholding refund; $4.3M valuation allowance release); adjusted EPS $1.81; OCF a record $153M .
  • Operations: Mount Milligan grade issues and guidance cut; Andacollo SAG mill restart; Rainy River production ramp; Xavantina guidance reduced and cash price increase to 40% post-threshold .

Q&A Highlights

  • Deleveraging path post-transactions: Excess cash flow prioritized to repay revolver over “a couple years,” balanced with business development opportunities .
  • Guidance resilience amid asset variability: Royal Gold uses rigorous, risk-adjusted budgeting with timing lags and historical performance to maintain FY sales guidance despite Mount Milligan/Xavantina headwinds .
  • Africa exposure: Country-by-country approach; comfortable with Zambia and Botswana, continued openness to investments given portfolio diversification benefits .
  • Capital returns: Share buybacks not prioritized; focus on debt repayment and selective investments .
  • Sandstorm/Horizon process: Preliminary proxy filing expected shortly; targeting Q4 close subject to customary approvals .
  • Deferred gold ounces (Mount Milligan Cost Support Agreement): First 11,111oz tranche expected in Q3/Q4 timing window; mark-to-market treatment upon receipt and sale; not included in 2025 sales/GEO guidance .

Estimates Context

  • Adjusted EPS beat: $1.81 vs $1.678*; driven by higher metals prices, lower DD&A rates, and discrete tax benefits (underlying effective tax rate ~17.9% ex-discretes) .
  • Revenue miss: $209.6M vs $213.7M*; headwinds from Xavantina and silver deferrals at Pueblo Viejo partly offset by stronger contributions from Mount Milligan and Peñasquito .
  • Estimate breadth: 5 EPS and 2 revenue estimates for Q2 (S&P Global). Values retrieved from S&P Global.

Key Takeaways for Investors

  • High-quality beat on earnings with sustained 80%+ adjusted EBITDA margin underscores the defensive, price-levered nature of the stream/royalty model .
  • Near-term asset variability (Mount Milligan grades, Xavantina transition, silver deferrals) is being offset by portfolio diversification; FY 2025 guidance affirmed .
  • Strategic moves (Kansanshi stream; Sandstorm/Horizon acquisitions) expand scale and optionality; expect pro-forma diversification and passive fund interest to improve capital access and valuation support .
  • Liquidity remains robust ($1.25B at Q2; revolver capacity $1.4B); management targeting disciplined deleveraging post-deals—watch Q4 close and subsequent paydown cadence .
  • Trading lens: EPS beat vs modest revenue miss plus M&A pipeline can drive narrative; catalysts include Sandstorm/Horizon proxy filings/approvals, Mount Milligan PFS, Pueblo Viejo silver recovery project progress, and first deferred gold deliveries .
  • Dividend continuity (24th annual increase into 2025; $0.45/share quarterly) supports income profile while pursuing growth .
  • Monitor asset-level updates (Rainy River ramp, Andacollo stability, Khoemacau expansion feasibility) for incremental uplift or risk mitigation .