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Iamgold (IAG) Posts in-Line Earnings in Q2, Sales Rise Y/Y

Iamgold Corp. IAG posted net earnings (as reported) of $506.5 million or $1.09 per share in second-quarter 2017, against a net loss of $12.2 million or 3 cents recorded a year ago.

Barring one-time items, adjusted earnings came in at a penny per share for the quarter, compared with a break-even result reported a year ago. The figure came in line with the Zacks Consensus Estimate.

Sales rose roughly 18% year over year to $274.5 million in second-quarter 2017. Sales benefited from increased sales at Westwood and Essakane, partly offset by lower sales at Rosebel and lower realized gold prices.

Iamgold Corporation Price, Consensus and EPS Surprise

 

Iamgold Corporation Price, Consensus and EPS Surprise | Iamgold Corporation Quote

Operational Performance

Attributable gold production was 223,000 ounces for the quarter, up 13% year over year. Cost of sales was $238.6 million in the reported quarter, up 15% due to higher operating costs, higher depreciation and higher royalty expense. Margin per gold equivalent ounce sold was $516, up $3 per ounce from prior year period.

All-in sustaining costs fell 12% year-over-year to $975 per ounce in the quarter.

Financial Review

Net cash from operating activities was $88.7 million, up 25% year-over-year from $71.2 million. Cash and cash equivalents and restricted cash was $800.1 million at the end of the reported quarter, up 4.9% from prior year quarter.

Outlook

According to Iamgold, Essakane and Rosebel are benefiting from operational improvements while developments at Westwood continue to be on track. The reserves at Rosebel concession increased by 80% and the company has also entered into a joint venture for its Cote Gold Project, which demonstrated low operating costs, significant conversion of resources into reserves and attractive returns.

Moving forward, the company has maintained cost and production guidance for 2017. It expects gold production in 2017 to be in the band of 845,000-to-885,000 ounces. Also, total cash cost is expected to be between $740 and $780 per ounce. All-in sustaining cost is anticipated between $1,000 and $1,080 an ounce.  

Price Performance

Shares of Iamgold have moved up 25.4% in last three months, versus the industry’s 2.2% decline.


 

Zacks Rank &  Key Picks

Iamgold currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are POSCO PKX, The Chemours Company CC and Kronos Worldwide Inc KRO. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

POSCO has expected long-term earnings growth rate of 5%.

Chemours has expected long-term earnings growth rate of 15.5%.

Kronos Worldwide has expected long-term earnings growth rate of 5%.

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