Evolution Mining FY24 Earnings Call Highlights

Evolution Mining (ASX: EVN) reported a clean sweep of better-than-expected revenue, EBITDA and net profit for FY24, boosted by soaring gold prices, higher production and stabilising costs.

FY24 Earnings Summary

• Underlying EBITDA up 67% to $1.51 billion

• EBITDA margin up 900 bps to 47%

• Net mine cash flow up 1,533% to $583.7 million

• Underlying profit after tax up 135% to $481.8 million

• Earnings per share up 147% to 22 cents (6.8% beat)

• Average gold selling price up 23% to A$3,190

• Average selling copper price up 9% to A$13,657

• All-in sustaining cost down 2% to A$1,477

• Final dividend up 150% to 5 cents per share

• Full-year dividend of 7 cents per share

The underlying EBITDA and profit after tax figures were 4.9% and 17.5% ahead of Macquarie estimates (as at 18 July 2024).

Earnings Call Highlights

Record earnings: "Any set of results that headline, record net profits, record underlying EBITDA, record earnings per share and a more than doubling of our final dividend are a pleasure to predict." – Executive Chairman Jake Klein

Dividend track record: "We continue our track record of being a dividend payer with our 23rd consecutive dividend, I declare today, noting that as our cash generation increases as planned, so will our dividends." – Executive Chairman Jake Klein

Cost outlook: "Our all-in sustaining costs will continue to be one of the lowest in the sector at $1,475 to $1,575 per ounce." – Chief Executive Lawrie Conway

Leverage/debt outlook: "After investing $740 million into our long-life, high-margin business and paying $80 million in dividends during the year, gearing reduced from 33% to 25%. We are delivering on our commitment to deleverage the balance sheet while continuing to invest in the business and pay dividends." – CFO Barend Johannes van der Merwe

More to come: "We delivered on our promise to start deleveraging in FY24 and gearing reduced from 33% to 25%. This was achieved at gold and copper prices that were well below on spot prices. And as explained earlier, current spot prices, we expect to generate more cash in FY25 that will drive gearing down further." – CFO Barend Johannes van der Merwe

Northparkes performance: "The acquisition of North Park in December last year has exceeded our expectations in almost every aspect in the first seven months of our ownership, and it adds to the outstanding portfolio of gold and copper assets we have assembled." – Executive Chairman Jake Klein

Gold outlook: "Gold and copper prices are very high. And as I articulated in my biggest Diggers and Dealers presentation last week, I believe there is very good reason to believe they will go even higher." – Executive Chairman Jake Klein

Analyst Q&A Highlights

Gearing and leverage targets: "So we are driving that gearing further down. And I think we kind of think about it in 5% increments. So I think the next stop that we'd be targeting is gearing to 20%, which will be a good outcome. And then I think on a long-term sustainable basis, where we believe it fits comfortable is around at 15% or just below that level."

Where are cost pressures coming from in 2025: "So we'll see labor, we've allowed for labor total movement of 5% for the year. We've then seen most of the others around 3%. Labor is 50% of our cost base. So it's an average about 4% increase 2025 over 2024, and that's what we've allowed for."

Is FY25 guidance a bit too conservative: "I think on the upside is making sure that the stability that we've started to see at Red Lake continues and builds that momentum. We've talked about it where they used to need 3,000 tonnes a day out of the mines. They're now working on the basis of build a stockpile, maintain a stockpile. So they've got to be able to consistently be above that 3,000 tonnes a day."

This article was generated with the support of AI and reviewed by an editor.