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RM

Royalty Management Holding Corp (RMCO)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 turned profitable: Net income of $135,180 and $0.01 EPS, versus a net loss of $274,345 and ($0.38) EPS in Q1 2023, driven largely by warrant fair value gains and lower professional fees .
  • Revenue rose to $162,100 (+~141% YoY vs $67,292), led by Environmental Services; note the press release header cites +160% YoY growth using a $62,292 prior figure, while the statements show $67,292—minor disclosure inconsistency .
  • Management emphasized a low-cost, low-overhead model; Environmental Services revenues covered most corporate expenses, and they initiated a $2.0M stock buyback; early repurchases totaled 9,591 shares by April 29, 2024 .
  • Outlook: Q2 2024 tracking above Q1 for revenue and cash flow; portfolio project Tivani (Ferrox) targeted at ~50,000 tons/year and ~$8M annualized revenue in 2025, positioning for additional free-cash-flow streams over the next six months .
  • No earnings call transcript was available; Wall Street consensus estimates via S&P Global were unavailable, limiting beat/miss comparisons [List: 0 results for earnings-call-transcript] [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • Profitability: Positive net income ($135,180) and $0.01 EPS, assisted by a $161,155 gain from warrant fair value and reduced professional fees; “we couldn’t be more excited how we are positioned… given our clean balance sheet and strong asset base” – CEO .
  • Environmental Services momentum: Segment revenue reached $136,020 in Q1; management said the unit “covers the majority of our overall corporate expenses,” and recorded a near-$1.0M monthly run-rate in March .
  • Capital allocation: Unanimous board approval of a $2.0M buyback program, with purchases already underway prior to blackout; 9,591 shares repurchased by April 29, 2024 .

What Went Wrong

  • Core operations still negative: Net loss from operations was ($3,205); profitability was driven by other income rather than operating strength .
  • Cash burn and low cash balance: Net cash used in operating activities was ($580,218) and quarter-end cash totaled $124,823; while management touts no funding obligations requiring additional capital over the next year, notes payable and interest expense remain meaningful .
  • Quality of earnings: EPS benefits from non-GAAP-like drivers (warrant fair value adjustment, interest income) and may not recur; interest expense of ($58,147) underscores financing costs persisting despite reduced professional fees .

Financial Results

MetricQ1 2023Q1 2024YoY Change
Revenue ($USD)$67,292 $162,100 +$94,808 (+140.9%)
Gross Profit ($USD)$7,291 $94,440 +$87,149 (+1,195%)
Gross Margin (%)10.8% (calc) 58.3% (calc) +47.5 pp (calc)
Operating Income (EBIT) ($USD)($154,418) ($3,205) +$151,213
EBIT Margin (%)(229.5%) (calc) (2.0%) (calc) +227.5 pp (calc)
Net Income ($USD)($274,345) $135,180 +$409,525
Diluted EPS ($USD)($0.38) $0.01 +$0.39
Interest Income ($USD)$100,673 $35,377 ($65,296)
Interest Expense ($USD)($220,601) ($58,147) +$162,454
Warrant FV Gain/Loss ($USD)$0 $161,155 +$161,155

Note: Prior quarter (Q4 2023) quarterly figures were not disclosed; RMCO filed an annual 10-K for FY 2023 without a quarterly Q4 breakdown .

Segment revenue breakdown:

SegmentQ1 2023Q1 2024YoY Change
Environmental Services ($USD)$35,100 $136,020 +$100,920 (+287.6%)
Fee Income ($USD)$9,692 $3,580 ($6,112)
Rental Income ($USD)$22,500 $22,500 $0
Total Revenue ($USD)$67,292 $162,100 +$94,808 (+140.9%)

KPIs and balance sheet/cash flow:

KPIQ1 2023Q1 2024
Weighted Avg Shares (Basic & Diluted)726,938 14,402,263
Ending Cash (Cash + Restricted Cash) ($USD)$364,773 $311,648
Cash & Equivalents ($USD)N/A$124,823
Total Assets ($USD)$13,610,731 $13,709,149
Total Liabilities ($USD)$3,990,542 $3,603,779
Stockholders’ Equity ($USD)$9,620,190 $10,105,369
Operating Cash Flow ($USD)($228,195) ($580,218)
Capitalized Intangible Purchases ($USD)$145,000 ($56,420)
Buyback Shares (cumulative to 4/29/24)N/A9,591

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Tivani (Ferrox) Production/Revenue2025Not provided~50,000 tons/year; ~$8M annualized revenueNew guidance provided
Company Revenue/Cash Flow DirectionalityQ2 2024Not provided“Tracking growth compared to first quarter in both revenues and cash flow”Directionally raised
Stock Repurchase ProgramNext 24 monthsNoneUp to $2.0M of Class A common sharesNew program
Liquidity/Obligations OutlookNext 12 monthsNot provided“No funding obligations or term notes over the next year that require additional capital”New statement; contextual caveat: notes payable exist

Earnings Call Themes & Trends

No Q1 2024 earnings call transcript was available.

TopicPrevious Mentions (Q-2, Q-1)Current Period (Q1 2024)Trend
Operating model / cost disciplineSPAC disclosures, limited operating detail (Q3 2023) ; FY 2023: going concern note, thin cash after trust redemptions Low-cost, low-overhead emphasized; Environmental Services covering corporate expenses Narrative strengthening toward lean model
Environmental Services performanceNot highlighted previouslySegment revenue $136,020; March monthly run-rate near $1.0M; covers majority of expenses Improving traction
Capital allocationNone prior$2.0M buyback authorized; early purchases New shareholder return lever
Portfolio development (Ferrox/TR Mining/AML)Legacy portfolio noted in filings Tivani guidance for 2025; TR Mining royalty agreement; AML convertibles Execution steps visible
Liquidity and financingFY 2023: low cash; notes/warrants on balance sheet Management states no additional capital needs for term notes; but notes payable/interest expense persist Mixed; monitor cash burn vs obligations

Management Commentary

  • “We continue a strong start to the 2024 year with a focus on value creation events and opportunistic growth… we couldn’t be more excited how we are positioned to continue to grow the business given our clean balance sheet and strong asset base.” – CEO, Q1 press release .
  • “RMC Environmental Services continues to operate efficiently and covers the majority of our overall corporate expenses… Over the next six months we anticipate additional revenue streams to expand… positioning us well for an exciting 2025.” – CEO, Q1 press release .
  • “Cash flow generated from operations will be used for new investments, stock buybacks and/or dividend depending on share value.” – Business update .

Q&A Highlights

  • No Q1 2024 earnings call transcript was found; therefore no Q&A highlights or clarifications to report [List: 0 results for earnings-call-transcript].

Estimates Context

  • Wall Street consensus (S&P Global Capital IQ) for Q1 2024 EPS and revenue was unavailable; RMCO had limited/no analyst coverage at the time, so beat/miss analysis vs estimates cannot be performed credibly [GetEstimates error].
  • Implication: Short-term estimate revisions are unlikely to drive near-term stock moves until coverage is established; investors should focus on operational KPIs and capital allocation signals .

Key Takeaways for Investors

  • Quality of earnings: Q1 profitability was primarily driven by a non-operational warrant fair value gain ($161,155) with core operations still slightly negative; monitor progression toward sustained operating profits in Q2 .
  • Environmental Services is the near-term cash engine; March’s near-$1.0M monthly run-rate and Q1 segment revenue suggest improving scale; watch quarterly conversion of run-rate into sustained cash flow .
  • Buyback underpins capital discipline; the $2.0M authorization and early repurchases provide downside support and signal confidence in intrinsic value .
  • Portfolio catalysts: Tivani’s 2025 production/revenue targets and TR Mining royalties add optionality; diligence timelines and capex milestones will shape realization .
  • Liquidity vs obligations: Despite management’s assertion of no funding needs for term notes in the next year, notes payable and interest expense remain; track cash flow trajectory and note maturities (e.g., Round B due dates) .
  • Near-term focus: Q2 trajectory (“tracking growth” vs Q1) is critical to validate operational momentum; expect narrative updates via 8-Ks/10-Q rather than calls given limited coverage [31: doc not read here].
  • Execution risk: Growth relies on project execution (Ferrox/AML/TR Mining) and maintaining low overhead; monitor conversion of guidance into booked revenue and free cash flow .