Altius Minerals’ Earnings Call: Gains Amid Challenges

Altius Minerals ((TSE:ALS)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Altius Minerals presented a mixed sentiment, reflecting both positive strides and notable challenges. Key highlights included significant gains from deconsolidation and strategic partnerships, which were offset by declines in revenue, adjusted EBITDA, and operating cash flow. The company is positioned for growth in its renewables and metals portfolios, yet financial metrics suggest a need for cautious optimism moving forward.

Significant Gain on Deconsolidation

The company reported a substantial gain on the deconsolidation of ARR, amounting to $87.1 million. This financial maneuver will see Altius account for its 57% interest in ARR as a joint venture, marking a strategic shift in its financial reporting approach.

Net Earnings Surge

Altius Minerals experienced a remarkable surge in net earnings for the fourth quarter of 2024, reaching $85.5 million or $1.82 per share. This is a significant turnaround from a net loss of $2.2 million or $0.05 per share in the same quarter of the previous year, highlighting a robust financial recovery.

New Strategic Partners for Kami Project

The Kami project received a boost with the addition of Nippon Steel and Sojitz as strategic development partners. This partnership enhances the potential of the 3% gross sales royalty held by Altius, promising future growth and development.

Expansion of Silicon and Merlin Gold Resources

The company announced an increase in inferred gold resources at the Merlin deposit by approximately 3 million ounces, bringing it to a total of 12.1 million ounces. Combined resources for the Silicon and Merlin projects now exceed 16 million ounces, underscoring significant growth in their resource portfolio.

Renewables Portfolio Growth

ARR reported a 60% revenue growth in 2024, with expectations to maintain this trajectory. The growth is supported by two large royalty projects currently under construction by Enbridge, indicating a strong future for Altius in the renewables sector.

Decline in Royalty Revenue

Despite growth in other areas, Altius saw a decline in royalty revenue, with Q4 2024 figures at $13.5 million compared to $14.7 million in 2023. The full-year revenue also dropped to $64 million from $69.4 million in the previous year, indicating challenges in maintaining revenue streams.

Decreased Adjusted EBITDA

The adjusted EBITDA for Q4 2024 fell to $9.3 million from $10.3 million in 2023, with the annual figure dropping to $44.1 million from $53.7 million. This decline reflects ongoing financial challenges that the company must address.

Reduced Operating Cash Flow

Operating cash flow also saw a reduction, with Q4 adjusted figures at $2.3 million, down from $7 million in Q4 2023. The annual adjusted operating cash flow decreased to $24.8 million from $34.8 million, highlighting cash flow management as a key area of focus.

Challenges in the U.S. Renewable Sector

While demand for renewable energy is increasing, Altius faces challenges due to negative sentiments from the U.S. administration towards renewables. This could potentially impact growth in this sector, necessitating strategic adjustments.

Lower Potash Prices

The company’s performance was partially hindered by lower potash prices, although there was some firming towards the end of the year. This price volatility affected overall revenue and remains a concern for future financial stability.

Forward-Looking Guidance

Looking ahead, Altius Minerals provided guidance that reflects both optimism and caution. The company reported a decrease in royalty revenue and adjusted EBITDA for the year, yet net earnings saw a substantial increase due to gains on deconsolidation. Strategic partnerships and resource expansions are expected to drive future growth, while capital allocation remains focused on debt reduction and dividend payments. With $16 million in cash and $116 million in unused revolver capacity, the company is positioned to navigate upcoming challenges.

In conclusion, the Altius Minerals earnings call highlighted a company in transition, balancing significant gains with financial challenges. While strategic partnerships and resource expansions offer promising growth avenues, declines in revenue and cash flow necessitate careful management. Investors should remain cautiously optimistic as Altius navigates the evolving landscape of renewables and metals.