Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sprott Inc.'s 2026 third quarter results conference call. At this time, all participants are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, this conference is being recorded today, November 4th, 2026. On behalf of the speakers that follow, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking information and forward-looking statements within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are implied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements.
For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the MD&A for the quarter and Sprott's other filings with the Canadian and U.S. securities regulators. I will now turn the conference over to Mr. Whitney George. Please go ahead, Mr. George.
Thank you, operator, and good morning, everyone, and thanks for joining us today. Must be an especially busy day for everyone as they digest the results of last night's elections here in the States. On the call with me today is our CFO and Co-COO, Kevin Hibbert, and John Ciampaglia, CEO of Sprott Asset Management. Our 2026 third quarter results were released this morning and are available on our website, where you can also find the financial statements and MD&A. I'll start on slide four. To review the third quarter year-to-date highlights, it may seem obvious today, but there are currently a lot of external factors distracting investors from market fundamentals. These external factors were the story of the third quarter. The world is engulfed in two major conflicts without a clear path to closure in either of them.
During the third quarter, the war in Iran re-escalated into a broader Middle Eastern conflict. Energy and other commodity prices continued to climb, and reserve stockpiles are rapidly depleting. The resultant inflationary expectations drove fixed income markets to their worst quarterly performance in decades. U.S. 10-year treasuries declined by nearly 8% in the quarter, with yields at levels not seen in two decades. This, despite the best efforts of the U.S. Treasury Department and the Federal Reserve to convince markets they could control inflation and force rates back down. Federal Reserve Chairman Kevin Warsh delivered a hawkish speech in August in Jackson Hole Economic Policy Symposium .
Then in September, the Federal Reserve raised rates 25 basis points, more to preserve credibility than to have an economic impact. For his part, Treasury Secretary Bessent directed an intervention in the currency markets to prevent Japan from selling U.S. treasuries to defend its own currency.
Next, Bessent raised the Treasury's commitment to buy back long-dated issues. Finally, he declared, "I am the house," in an effort to scare short-term traders into covering their short positions. None of these moves had more than a momentary impact on halting the rise in rates. All of this activity contributed to a highly volatile quarter for our core investment themes of precious metals and critical materials. Our assets under management increased by $1.8 billion during the quarter to $57.3 billion, and we reported $200 million in net redemptions, due largely to redemptions in our physical trusts. We continue to benefit, on the other hand, from the expansion of our critical materials strategies, which performed well during the period, delivering $200 million in net sales. Our financial results were strong despite the choppy markets. Adjusted EBITDA was $46 million, up from $31.9 million in the third quarter of 2025.
Finally, as Kevin will discuss further in a moment, yesterday, our board of directors announced a 25% increase in our regular quarterly dividend. With that, I'll pass it over to Kevin for a review of our financial results. Kevin.
Thanks, Whitney, and good morning, everyone. I'll start on slide five, which provides a summary of our historical AUM. AUM finished the quarter at $57.3 billion, up 3% from $55.6 billion as at June 30th, and was down 4% from $59.6 billion as at September 30th, 2025. On a three-month ended basis, our AUM was positively impacted by market value appreciation across the majority of our fund products. On a nine-month ended basis, our AUM was negatively impacted by market value depreciation and net outflows from our precious metals products, partially offset by positive net inflows to our critical materials products. Importantly, average AUM for the quarter was $58.8 billion, up $16.5 billion, or 39%, from $42.3 billion this time last year.
On a year-to-date basis, average AUM was $64 billion, up $26.3 billion or 70% from $37.7 billion this time last year. Our average AUM performance was positively impacted by a combination of net inflows and market value appreciation across a majority of our fund products since the third quarter of last year, which more than offset the impact of year-to-date pullbacks in precious metals valuations. Slide six provides a brief look at our three and nine-month earnings. Net income this quarter was $22 million, up $8.8 million or 67% from $13.2 million over the same three-month period last year. On a year-to-date basis, net income was $85.5 million, up $46.9 million from $38.6 million this time last year.
Our three and nine-month ended results were primarily due to higher average AUM in our exchange-listed products and managed equity segments, with our nine-month ended results in particular also benefiting from carried interest crystallization in our private strategy segment in the first quarter of the year. Adjusted EBITDA, which excludes quarterly volatility from items like cash-settled stock-based compensation and intermittent carried interest and performance fee crystallizations, was $46 million for the quarter, up $14.1 million or 44% from $31.9 million over the same three-month period last year. It was $154.7 million on a year-to-date basis, up $75.4 million or 95% from $79.3 million this time last year.
Adjusted EBITDA increased in the quarter and on a nine-month ended basis due to higher average AUM attributable to a combination of net inflows and market value appreciation across a majority of our fund products since the third quarter of last year, which again more than offset the impact of year-to-date pullbacks in precious metals valuations. Turning now to slide seven. Over the past five years, we have generated meaningful operating leverage with AUM growing by 180%, adjusted EBITDA margin expanding from 53%- 71%, and cash and equivalents surpassing $200 million as at September 30 of this year, and no debt on the balance sheet. Finally, on slide eight, you will see here we closed the quarter with a strong cash position, announcing a 25% dividend increase, making this our third consecutive year of double-digit dividend growth.
We also continue to repurchase shares opportunistically, with total year-to-date buybacks approaching 1% of total outstanding shares. Moving forward, we continue to pursue opportunities to reinvest in the business both organically and, where prudent, inorganically to further support earnings and free cash flow growth for our shareholders. For more information on our revenues, expenses, net income, adjusted EBITDA, and balance sheet metrics, you can refer to the supplemental information section of this presentation, as well as our quarterly MD&A and financial statements filed earlier this morning. With that said, I will pass things over to John.
Thanks, Kevin, and good morning to everybody. On slide nine, assets under management in our physical trusts increased slightly in Q3, helped by a stronger gold price. Uranium and copper have been less volatile, as both of these strategic energy metals are experiencing tight physical market conditions. The uranium market continues to be in a structural supply deficit, while supply disruptions at a growing number of copper mines have taken about 5% of global production offline. In contrast, precious metals were under pressure due to liquidity, inflation, and interest rate-related selling. Silver has been the hardest hit, as import restrictions and an increase in the import duty rate in India has removed a significant physical buyer from the market. These measures implemented in May were designed to protect the value of the rupee, and it is unclear as to when these will be relaxed. Moving to slide 10.
The weakness in silver translated into redemptions for our Sprott Physical Silver Trust, which weighed on our overall quarterly results with $421 million of outflows. Despite the redemptions in PSLV, we continue to fare better than our North American competitors, increasing our market share of AUM on a year-to-date basis. Our Sprott Physical Gold Trust was a bright spot with $380 million in net flows for the quarter. Moving to slide 11, AUM was up slightly in the quarter during a very volatile period of shifting market sentiment and market noise. AUM ended the quarter at $5.6 billion. On slide 12, flows fared better in the quarter with $253 million in net additions. Investors took advantage of market weakness in uranium stocks to add to their positions. We also continue to experience positive flows in our Rare Earths Ex-China ETFs.
Despite the market noise, investors are focusing on the longer-term fundamentals for critical materials and the need to reshore. China dominates the rare earth supply chain and has repeatedly demonstrated its willingness to weaponize their position against rivals during disputes. Uranium demand is expected to increase meaningfully over the coming years, with 79 reactors under construction and over 100 being planned. This would be in addition to the 439 reactors currently operating, which are increasingly planning for life extensions and upgrades. On the uranium supply side, capital is flowing to build new greenfield projects, but they are still several years away from first production, which will keep the market in the supply deficit until the early 2030s. My final comments will focus on the diversification results we have achieved in our business over the past few years. Diversification by metal type, product wrapper, geography, and investor type.
This was not accidental. This was our strategy and is paying huge dividends. In my almost 17 years at Sprott, our business has never been as metal and product diverse, global in reach, and institutional in nature. Five and a half years ago, we had no exposure to uranium. We now have over $10 billion under management, while our assets in other critical materials continue to scale. Each metal has its own drivers and is positioned at a different point in its respective life cycle. Having multiple metals in our product suite across various geographies has strengthened our business, enhanced our resiliency, and positioned us to capitalize on the renewed and growing interest in metals and mining. I'll now pass it over to Whitney.
Thank you, John. We'll move now to slide 13 for a look at our managed equities segment. Our managed equities AUM rose modestly in the third quarter, supported by strong market gains in August before a sharp sell-off in September. Slide 14, you can see that we recorded net redemptions during the quarter as flows to our actively managed ETFs slowed and our flagship mutual fund continues to experience small redemptions as long-term investors take profits. I'll now turn to private strategies on slide 15. Our private strategies AUM was flat for the quarter at $2 billion as of September 30th, 2026. Our private strategies are well-positioned for future growth, supported by favorable market tailwinds and a strong track record.
We are also seeing increased demand from both borrowers and investors as the market evolves towards less dilutive financing solutions designed to preserve shareholder value and reduce long-term impacts on capital structures. I'll now turn to slide 16 for some closing remarks. As I wrote in my quarterly letter, amid all the noise, we continue to do all we can to create value for our clients and shareholders. Our marketing team produces a tremendous volume of best-in-class thought leadership material, and our client-facing teams are seeing increased activity from institutions and family offices. Our key accounts team's efforts to forge relationships and gain shelf space for our products on increasingly larger platforms are paying off. We're beginning to see the impacts of our technology investments on productivity, and we are evaluating new ways to become more efficient through the use of artificial intelligence. Our efforts are being recognized.
In October, Sprott was named one of Fortune Magazine's 100 fastest-growing companies. It's interesting to note that we have a lot of company among others in the mining industry. Looking ahead, we remain confident in our core positioning and the long-term outlook for precious metals and critical materials. In the U.S. and internationally, there is little political will to rein in government spending or take the difficult steps required to bring fiscal deficits under control. Ultimately, this will benefit gold and silver and their related equities. We expect geopolitical tensions to persist, creating increased competition for access to critical materials and renewed focus on incentivizing domestic production. Our financial position remains strong, and free cash flow generation is accelerating.
Our disciplined capital allocation framework is focused on growing the business through seeding new funds and strategic acquisitions, and we will also continue to return capital to shareholders through incremental dividend increases and share buybacks. That concludes our remarks for today's call, and I'll now turn it over to the operator for some Q&A. Operator?
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Étienne Ricard with BMO Capital Markets. Please go ahead.
Okay, thank you, and good morning, team. In the shareholder letter, Whitney, you note the potential to expand the ETF product suite in critical materials. You've already been quite active on this front over the past year, so I'm curious, what are some best practices that you've learned during this time, and what do you look for in a new ETF launch?
Well, whatever we do will stay within the critical materials suite of products. There are a couple of gaps that would give investors solutions. Again, more recently, we've launched some actively managed ETFs. That's a growing part of the market. We'll always be thinking about that. Additionally, I think we have a really interesting idea with our Rare Earths Ex-China, the Ex-China part being the novel part. We're always- Nothing is imminent, but we're always thinking about new ways to deliver the best possible product suite for our investors.
Okay. Switching to capital allocation. The cash position continues to build, and even with the increase in the dividend, the payout ratio remains quite conservative here. Whitney, where do you see the best use of capital going forward, given the firm is quite selective on acquisitions?
Well, there's still some things, legacy things out there, on one hand. On the other hand, we are in the marketing process for our fourth lending fund, where we will make a co-investment. A 25% dividend increase with declining AUM is, I think, fairly strong. It's not the 30% that we did or 33% last year, but clearly the board is confident in the resilience of our business. Again, we've bought more stock back in, actually subsequent to the end of the quarter, than we have, I think, in our history. Markets, we expect, will continue to be volatile. We're not immune from swings in the market, and we'll continue to be opportunistic on that front.
Have you seen more inbounds from third parties on potential partnerships on the distribution side of things?
Everything has gone very quiet in the last three months. Again, people really are kind of frozen a little bit with this Iran conflict going on. Maybe the election being behind us will clear some up. We are exploring some modest distribution partnerships in Asia, but nothing that is particularly major. We are making very good progress in Europe with our partnership with HANetf, and we continue to be open, whether it is through distribution partnerships or local listings. All of those things are kind of up in the air, but on the table.
Thank you very much.
Thank you. Your next question comes from Bart Dziarski with RBC Capital Markets. Please go ahead.
Great. Thanks for taking the question. Good morning, everyone. Whitney, you talked about the free cash flow generation is actually accelerating, which is a pretty positive statement, just given the choppy macro kind of environment we've had this year. Could you unpack that comment a little bit in terms of what is driving that free cash flow acceleration, given the backdrop?
Well, first of all, we are getting operating leverage on our fixed cost. Secondly, we have a highly variable compensation system that is tied to deliver cash flow torque. You will see that our net revenues are rising, but compensation is not keeping pace. That is really in part because every Sprott employee is a shareholder, and so it is not as if they are losing out or we have to compensate them. They are aligned. I think those are the big factors. Obviously, compensation is our biggest expense, and to the extent that we can get some leverage, we will continue to do that. On the flip side, we would expect compensation to decline as much as net revenue. I think we are going to both deliver operating leverage as we grow, but we will defend that in the rough spots.
Great. Thanks.
Bart, just to add to that. I think Whitney summarized that well, but I would also just sort of keep in mind that another big driver of our earnings as well as our free cash flow is the fact that obviously we get paid on the average AUM. Notwithstanding the tougher environment we have been seeing of late, it is really the averages that kind of really drive our free cash flow build, and secondarily, obviously, to the operating leverage that Whitney touched on. But it is also another very important factor, just because it is not as if the average moves in lockstep with the spot.
We are able to capture the daily pricing of the vast majority of our products when they are higher and continue to, as a result, be able to outperform on earnings and free cash flow, even as you start seeing the pullbacks in the pricing.
So, it's really the ability to harvest that cash flow historically, as we move forward in times like this, that enables us to continue to still have the free cash flow kind of outlooks that we have internally.
Got it. That's very helpful. Thanks, guys. Then just a follow-up, I guess related as well. You mentioned the impact of technology investments on productivity and your use of AI. So, maybe could you give us a bit of examples, or is it translating to dollar saves, et cetera, just how you're leveraging that component within the business? Thanks.
I wouldn't say we're in the savings mode at this stage. Again, things are moving rapidly. One has to be a little bit cautious to not get out over their skis. So, we're not going to be on the cutting edge, but we're certainly going to be a fast follower. Again, it's more on the productivity side. Same number of people getting a lot more done, whether it's our CRM system, we hired a full-time professional to organize and run that in terms of efficiency with client-facing, also reaching new clients to a lot of back office functions, which I would let Kevin speak to.
Yeah. So, to Whitney's point, again, it's not about cost savings for us at this stage. It's more so, at least from a global shared services perspective, getting our people, our processes, and our technology to a point of enhancement, sort of such that the quality of what we're doing and the speed of execution is enhanced. The cost savings will probably come further down the road. But again, to Whitney's point, when it comes to technology, in particular AI, we don't believe in first mover advantage per se. We like to kind of slow play it a little bit, or as they say, kind of be quick but don't rush. So we're using it right now for efficiency gains, quality of analysis, processing, lowering times to complete tasks, things of that sorts.
But as far as meaningful cost savings, that's not something that we would see now, and that's actually not the goal at this stage. But eventually, we will get there like everyone else will.
Got it. Thanks. That's very helpful.
Thank you. Your next question comes from Graham Ryding with TD Securities. Please go ahead.
Hi. Good morning. Whitney, maybe I can just start with you. Can you describe perhaps the ideal conditions for precious metals prices to expand?
Well, certainly we saw that this time last year. If people start to get concerned about the debasement trade again, that clearly, I think, would be supportive of precious metals. I think the fundamentals and critical materials are already baked in. I mean, there's supply deficits in things like silver, even maybe copper now, certainly uranium. So basic supply and demand are all working in our favor. The physical world is very much cooperating and is ideal. It's really just a function of when investors decide to participate or change their allocations. We saw some of that with an explosive start to the year. We certainly know it can happen, but you can't time markets, and you can't predict commodity prices for sure. We've proven that over and over.
You can just be prepared because in this world today, it's everything happening all at once when it occurs, whether it's an individual stock or whether it's a commodity or whether it's a whole market.
Understood. Obviously, recently, the sort of the move higher in Q3 and early part of Q4 with interest rates has put some pressure on precious metal sentiment. Do you view that as more of a temporary dynamic and not structural?
I view it as a liquidity issue. When liquidity gets tight, people sell what they can, not necessarily what they want. We're living in a world with huge, highly levered algorithmic trading shops using massive leverage. When you get a risk-off event, the risk officer walks over and the margin calls go out. We've seen this since I've been following gold. When you have a liquidity crisis or event or squeeze, it's the first thing that goes down. Also, because it's insurance, but once the crisis is over and the Fed or the Treasury responds, the first thing people go back to is gold, and then shortly thereafter, silver. I think that's the world we're living in. I think that has more to do with price performance in the third and since the third quarter.
Again, the long-term direction in our view is very much up. Clearly, the world wants to use gold increasingly as part of their reserves. It is not just the people who are unfriendly. It is our best friends. South Korea started buying gold back in the summer. Germany announced they are going to start re-accumulating for the first time, I think, in 27 years. Sovereign debt is starting to worry people, and gold is the obvious outlet and has been for centuries.
Okay, great. My last question, if I could, Kevin, share-based comp was up quarter-over-quarter. What were the factors driving the increase?
Sure. The biggest driver is the fact that the stock price this quarter recovered a bit by 6%, but in the previous quarter, from March to June, the stock was off 16%.
Perfect. That is it for me. Thank you.
Thank you. Your next question comes from Scott with CIBC. Please go ahead.
Hi, good morning. Wanted to ask a question on flows. There was a bit of a divergence between the physical gold and the physical silver, maybe more than the price action in the commodities would have suggested. Is there anything specific to call out in the Sprott Physical Silver Trust other than the commentary you had earlier?
Yeah. Hi, Scott. It's John. Yeah, I mean, silver obviously has had a wild ride in the last 12 months, and it's obviously corrected very meaningfully. Silver has always been more volatile and more torquey, and we've clearly seen outflows in the category. The much larger iShares competitor has lost quite a bit in flows year to date, and we've actually increased our market share as a result. I would say nothing specific. The group of ETFs, which we track every day, has been under selling pressure. As I mentioned, we've had a large buyer of physical silver over the last couple years basically pull back because of the new import restrictions and higher duties in India. We have no idea around how temporary that will be. Usually, these things tend to be temporary. They can't go on forever in terms of preventing citizens from owning precious metals.
Nothing specific other than silver's had a very large correction, and people have pulled money out of all of the funds.
I'd add to that our trusts are different than ETFs. If somebody redeems an ETF, the silver, the shares go away instantly. In our case, the redemption feature is a monthly one, and there's no reason why an arb would need to exercise it in any given month. In part, what you saw was just a delayed reaction to the dislocations that happened in the spring. The timing doesn't line up, match up perfectly.
Thanks. That's really helpful color. I just wanted to ask another question on a comment you had earlier, just on that you're seeing impacts of your efforts to gain shelf space on larger platforms. Just wondering if you could give us a sense of where you've made the most progress and what you're seeing really play out as you look at the larger platforms.
Well, larger, so size begets size in the ETF business. To be on the largest platforms, that would be Merrill Lynch, JP Morgan, UBS, I mean, you have to have, be over a billion-dollar ETF. You have to have history. You have to have certain liquidity requirements. We've seen a lot of progress, particularly in the uranium ETF in that sense. A lot of these other ETFs that we have, they're fairly new. They're initially bought by either individuals or maybe independent advisors, small advisors, where those aren't concerns. But as they grow, they become eligible, and we have a whole team that works on this. Where we're seeing the biggest progress right now would be on regional advisors. The Raymond James, Janney Montgomery, LPL Financial would be a few, maybe Stifel. They're regional, but they manage trillions of dollars.
As those platforms open up to us, the addressable audience obviously increases fairly dramatically. It's a very slow process. It requires a lot of time and effort, and it requires your ETFs growing to a certain scale.
Great. Thank you. Appreciate it.
Thank you. Ladies and gentlemen, as a reminder, if you have a question, please press star one. Ladies and gentlemen, that concludes today's Q&A session. I will turn the call back over to Mr. Whitney George.
Thank you, everyone, for participating in this call. We appreciate your interest in Sprott and look forward to speaking to you again after our year-end results. Until then, we will remain contrarian, innovative, and aligned. Thank you.