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RG

ROYAL GOLD INC (RGLD)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $252.1M (+30% y/y), operating cash flow $174.0M, adjusted EPS $2.06; GAAP EPS $1.92 .
  • Versus estimates: EPS missed SPGI consensus ($2.06 vs $2.19*) and revenue was below consensus ($252.1M vs $275.1M*); metal-price tailwinds offset lower sales at certain assets .
  • Strategic scale-up: closed Sandstorm Gold and Horizon Copper acquisitions post-quarter; Kansanshi stream delivered first ounces in October (2025 deliveries guided to ~7,500 oz, lowered from ~12,500 due solely to timing) .
  • Portfolio catalysts: Mount Milligan mine-life extended to ~2045, Fourmile PEA indicates 600–750 koz/year over >25 years; both increase duration and growth potential for RGLD’s largest assets .

What Went Well and What Went Wrong

What Went Well

  • “We achieved record revenue and cash flow” driven by materially higher gold and silver prices; adjusted EBITDA margin ~82% and strong earnings of $126.8M .
  • Portfolio upgrades: “Significantly enhanced the scale, duration and diversification” via Kansanshi stream, Sandstorm and Horizon portfolios; Mount Milligan life extension and Fourmile exploration success .
  • Liquidity and cash generation: operating cash flow reached $174.0M; total liquidity ~$813M at quarter-end, with plans to repay revolver by mid‑2027 at current metal prices and absent further acquisitions .

What Went Wrong

  • Estimates miss: adjusted EPS $2.06 vs SPGI consensus $2.19*; revenue $252.1M vs $275.1M* .
  • Asset-level softness: lower gold sales from Xavantina and weaker Cortez Legacy Zone revenue partially offset strong contributions elsewhere .
  • Higher financing and deal costs: interest and other expense rose to $8.6M on higher revolver balances; $12.8M of acquisition-related costs recorded in the quarter .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$193.4 $209.6 $252.1
Net Income ($USD Millions)$113.5 $132.3 $126.8
Diluted EPS (GAAP)$1.72 $2.01 $1.92
Adjusted EPS ($)$1.51 $1.81 $2.06
Adjusted EBITDA ($USD Millions)$159.2 $175.6 $206.0
Adjusted EBITDA Margin (%)82% 84% 82%
Net Income Margin (%)59% 63% 52%
Cash from Operations ($USD Millions)$136.4 $152.8 $174.0
  • YoY: revenue +30% to $252.1M (driven by higher average gold/silver/copper prices and asset contributions); operating cash flow +$37.3M y/y to $174.0M .
  • QoQ: revenue +20% vs Q2; adjusted EBITDA +17% vs Q2 on pricing and volume leverage .

Segment Breakdown (Q3 2025)

Segment / AssetRevenue ($USD Thousands)
Stream Revenue (Total)$166,081
- Mount Milligan (Au/Cu)$61,057
- Rainy River (Au/Ag)$21,307
- Pueblo Viejo (Au/Ag)$28,140
- Andacollo (Au)$23,022
- Wassa (Au)$15,241
- Khoemacau (Ag)$12,047
- Xavantina (Au)$5,267
Royalty Revenue (Total)$85,987
- Cortez Legacy Zone (Au)$6,782
- Cortez CC Zone (Au)$10,412
- Peñasquito (Au/Ag/Pb/Zn)$18,911
- LaRonde Zone 5 (Au)$6,613
- Voisey’s Bay (Cu/Ni/Co)$4,308

KPIs (Q3 2025)

KPIValue
GEO Sales Volume72,900 GEOs
Revenue Mix78% gold / 12% silver / 7% copper
Adjusted EBITDA Margin82%
Cash G&A ($USD Millions)$7.27
Operating Cash Flow ($USD Millions)$174.0
Liquidity ($USD Millions)~$813 (working capital $188 + undrawn revolver $625)
Net Debt / TTM Adjusted EBITDA0.85x
Dividend per Share$0.45

Estimates Comparison (Q3 2025)

MetricActualSPGI Consensus
Primary EPS ($)$2.06 $2.19*
Revenue ($USD Millions)$252.1 $275.1*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gold Sales VolumeFY 2025210,000–230,000 oz Within prior range Maintained
Silver Sales VolumeFY 20252.7–3.3 Moz Within prior range Maintained
Copper Sales VolumeFY 202513.5–16.0 Mlb Within prior range Maintained
Other Metals SalesFY 2025$18–$21M Within prior range Maintained
Effective Tax RateFY 202517%–22% Within prior range Maintained
DD&AFY 2025Within prior ranges (not quantified) Within prior range Maintained
DividendQ4 2025$0.45/share $0.45/share Maintained
Kansanshi Stream DeliveriesFY 2025~12,500 oz (announced Aug) ~7,500 oz (timing only) Lowered (timing)
Revolver Paydown TargetMulti-yearn/aRepay by ~mid‑2027 (base-case) New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Portfolio diversification & scaleAnnounced Sandstorm/Horizon deals to add producing/development assets; focus on precious metals, strong balance sheet Closed Sandstorm/Horizon; management to “work hard” to ensure market understands expanded cash flow, growth, and gold leverage Strengthening diversification narrative
Mount MilliganQ2: short-term grade issues; PFS life extension on track PFS indicates ~10-year LOM extension to ~2045; reserve increases; BC fast-track permitting status Positive duration/quality upgrade
Fourmile (Cortez)Q1: exploration and PFS expected; royalty ~3.1% blended across Cortez assets PEA: 600–750 koz/yr over >25 years; RGLD royalty ~1.6% GSR on Fourmile Upside strengthening
Pueblo Viejo silver circuit & deferralsQ1: silver recovery work; deferred Ag ~1.97Moz; gradual catch-up expected Plant optimization progresses; deferrals ~2.3Moz at Sep 30; timing of delivery uncertain Recovery improving, catch-up extended
Kansanshi rampNot applicable (closed Aug; guided ~12.5k oz in 2025) First ~2.3k oz delivered in Oct; 2025 revised to ~7.5k oz (contract timing, not production shortfall) Ramping; timing nuance clarified
Capital returns & leverageQ2: debt draw for Kansanshi; intent to delever; dividend priority maintained Comfortable with ~$1.225B debt; target net debt/EBITDA 1–1.5x; repay by mid‑2027; dividend increase evaluated seasonally; buybacks less likely near-term Balanced deleveraging with growth

Management Commentary

  • “Our portfolio performed very well and allowed us to take full advantage of the materially higher gold and silver prices… we achieved record revenue and cash flow” — Bill Heissenbuttel, CEO .
  • “We have significantly enhanced the scale, duration and diversification of our portfolio… we will work hard… to ensure that the market understands and appreciates the cash flow, growth potential and gold leverage of our expanded business” — CEO .
  • “We ended the quarter with approximately $813 million of liquidity… we intend to pay down our outstanding debt from future cash flow, and we expect to repay the outstanding balance around mid-2027” — CFO .

Q&A Highlights

  • Kansanshi deliveries: 2025 reduction (~12.5k → ~7.5k oz) strictly timing of delivery mechanics; no production shortfall; ounces pushed into 2026 due to month-lag concentrate delivery cadence .
  • Leverage comfort and plan: Management “very comfortable” with current debt; pro forma net debt/EBITDA targeted ~1–1.5x; focus on deleveraging through 2026 while staying opportunistic on BD .
  • Sandstorm/Horizon integration: deal-related costs to be captured in 4Q; aim to exit 2025 with “clean” run-rate into 2026 .
  • LaRonde Zone 5 true-up: payment covered historical shortfall (Nov 2022–Jun 2025) due to area-of-interest misinterpretation; explains Q3 royalty uplift .
  • 2026 outlook cadence: investor day planned for late March; consolidated guidance to be discussed then; reluctance on multi-year consolidated targets remains .

Estimates Context

  • SPGI consensus EPS $2.19* vs reported adjusted EPS $2.06 (miss), and consensus revenue $275.1M* vs reported $252.1M (miss) .
  • Drivers: strong metal prices supported y/y growth; asset-level mix effects (e.g., lower Xavantina, Cortez Legacy) and delivery timing nuances (e.g., concentrate streams) likely contributed to gap vs consensus expectations .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Pricing leverage intact: robust gold/silver backdrop translated into record revenue and cash flow; adjusted EBITDA margin remained >80% .
  • Duration and growth upgraded: Mount Milligan extension and Fourmile PEA broaden long-term cash flow visibility; Sandstorm/Horizon add scale and diversification .
  • Near-term ramp details matter: Kansanshi deliveries are monthly and lag mine production; 2025 reduced solely on timing—expect normalization into 2026 .
  • Balance sheet strategy: liquidity ~$813M; management comfortable with leverage; clear plan to repay revolver by mid‑2027 at current metal prices, absent further M&A .
  • Royalty/stream mix supports margin resilience: low cash G&A (~$7.27M) and high-margin revenue structure underpin strong profitability through cycles .
  • Watch asset-level updates: PV silver recovery progress and deferred silver delivery timing; Rainy River and Back River ramp trajectories; Khoemacau expansion milestones .
  • Trading implications: despite an estimates miss, the narrative is improving around portfolio duration and diversification; upcoming investor day (March) may re-rate expectations as consolidated run-rate emerges .