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Agnico-Eagle (AEM) Q3 Earnings Top, Ups Production Outlook

Agnico Eagle Mines Limited AEM reported a net income of $71 million or 31 cents per share in the third quarter of 2017, compared with the year-ago quarter figure of $49.4 million or 22 cents.

Barring one-time items, earnings for the quarter were 28 cents per share, which topped the Zacks Consensus Estimate of 17 cents.

According to the company, record gold production and strong cash flow generation aided in delivering robust operational performance in the third quarter of 2017. Encouraged by strong performance, Agnico-Eagle has increased production guidance for 2017 and hiked dividend by 10%.

Agnico Eagle Mines Limited Price, Consensus and EPS Surprise

 

Agnico Eagle Mines Limited Price, Consensus and EPS Surprise | Agnico Eagle Mines Limited Quote

Revenues and Operational Highlights

Agnico-Eagle recorded revenues of $580 million in the third quarter of 2017, down about 5.1% from $610.9 million in the year-ago quarter. The figure however, surpassed the Zacks Consensus Estimate of $533 million.

Payable gold production in the third quarter improved 9.2% year over year to 454,362 ounces from 416,187 ounces in the year-ago quarter, owing to higher grades mined at Meadowbank, LaRonde and Canadian Malartic.

Total cash costs per ounce for the third quarter was $546, down 5% from the prior-year quarter figure of $575.

AISC were $789 for the third quarter, which was 4% lower compared to the prior-year quarter figure of $821.  This is mainly due to lower total cash costs per ounce and reduced sustaining capital expenditures on a year-over-year basis.

Financial Position

As of Sep 30, 2017, cash and cash equivalents were around $855.5 million, up 38.3% from year-ago quarter.

Long-term debt was $1,372.4 million in the reported quarter, down 27.9% from the prior-year quarter figure of $1,073.1 million.

There was no outstanding balance on credit facility as of Sep 30, 2017. This resulted in available credit lines of roughly $1.2 billion, excluding the uncommitted $300 million accordion feature, whose maturity date has been extended to Jun 22, 2022.

Total capital expenditures in the reported quarter was $276.8 million.

Outlook

Agnico-Eagle revised its total cash costs expectations for full-year to the range of $570-$600, down from the previous guidance of $580-$610 per ounce.

The company now expects AISC to be in the range of $820-$870 per ounce in 2017, narrower than previous guidance of $830-$880 per ounce.

Given the robust operational performance during the first nine months, the company increased production guidance and it now anticipates production to exceed 1.68 million ounces of gold in 2017, compared with the previous guidance of 1.62 million ounces.

Price Performance

Agnico-Eagle’s shares have declined 2.7% in the last three months underperforming the 2.5% fall recorded by its industry.

 



 

Zacks Rank & Key Picks

Agnico-Eagle currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Cabot Corporation CBT, FMC Corporation FMC and Westlake Chemical Corporation WLK. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Cabot has an expected long-term earnings growth rate of 10.7%.

FMC has an expected long-term earnings growth rate of 11.3%.

Westlake Chemical has an expected long-term earnings growth rate of 8.3%.

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