Wheaton Precious Metals Hits Record Cash Flow, Yet Misses Revenue Target as Production Slips
Wheaton Precious Metals (TSX: WPM) released its third-quarter earnings for 2024, reporting earnings of $0.34 per share, consistent with estimates and up from $0.27 per share a year ago. This is attributed to the company’s ongoing ability to generate consistent earnings despite fluctuations in the underlying prices of precious metals.
Total revenue came in at $308.25 million, representing a 38.1% increase from the same period in 2023, when the company posted $223.14 million. The revenue boost is mainly attributable to a 26% increase in average realized prices per gold equivalent ounce (GEO). Yet, it is worth noting that the latest figure fell short of estimates by 5.03%, possibly due to lower-than-anticipated production from key assets like Salobo.
On a quarter-over-quarter basis, Wheaton’s revenue experienced a slight dip from the $332 million recorded in Q2 2024.
The company’s operating cash flow reached a record $254 million for the third quarter, marking a substantial 48.6% year-over-year increase from $171.1 million in Q3 2023 but is also a slight decline from the previous quarter, when it hit $257 million. Management highlighted strong cash margins as a driver, with the average cash cost per GEO at $437, a reduction from $445 in Q3 2023.
Net earnings for the quarter rose to $154.6 million, an improvement of 32.9% from $116.4 million in Q3 2023 but were relatively flat compared to Q2 2024. This leveling in net income suggests that the recent increase in gold and silver prices alone may not be sufficient to drive exponential growth in net earnings.
The firm faces a new financial headwind as rising regulatory costs, particularly the recently implemented global minimum tax, add pressure. This quarter alone, the global minimum tax contributed $28 million in additional tax expenses, highlighting an emerging cost burden for the company.
Gold equivalent ounces produced during the third quarter totaled 144,200, down by 2.1% from 147,278 GEOs in Q3 2023. This decline stems from lower production volumes at key assets such as Salobo and Constancia, only partially offset by increased output from Peñasquito, where a prior labor strike had affected production. In contrast, GEOs sold rose 9.6% year-over-year to 122,715, up from 111,935 in Q3 2023.
The balance sheet remains strong, with a cash balance of $694 million as of September 30, 2024, compared to $546.5 million at the end of December 2023. Wheaton’s liquidity, combined with a fully undrawn $2 billion revolving credit facility, underscores its financial capacity for future investment.
The firm’s recent strategic agreements, including a new precious metals streaming agreement on the Koné Project in Côte d’Ivoire and an amendment to the Fenix Project in Chile, are expected to diversify revenue streams and stabilize long-term growth.
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The management declared a dividend payout of $0.155 per share for the quarter, while stable, remains conservative given its liquidity.
Average cash costs for gold equivalent ounces were down to $437 from $445 a year earlier, underscoring slight cost control improvements. However, depletion costs rose by 19.6%, reaching $55.5 million, reflecting the long-term pressures associated with maintaining aging mines and potential challenges in controlling capital outlays for asset maintenance.
Management meanwhile has set ambitious growth targets, forecasting annual GEO production to exceed 800,000 by 2028, a 40% increase from 2024 levels.
Wheaton Precious Metals last traded at $89.28 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
