Coeur MiningCDE

Key highlights

• Inventory accounting reduces profit: Reported earnings included a $40 million non-cash charge, worth $0.03 per share, related to how the company had to value ore stockpiles after its recent Canadian acquisition. Excluding this one-time accounting adjustment, the company earned $98 million, or $0.10 per share.
• Revenue growth from acquisitions: Total revenue jumped 77% compared to last year to $1.0 billion, even though the prices the company received for gold and silver fell. This growth was driven by a full quarter of results from two new Canadian mines, which combined to contribute 36% of the company's total sales.
• Production faces weather delays: Silver production fell 12% from a year ago to 4.2 million ounces because of heavy seasonal rains at the Palmarejo mine and lower metal grades. Gold production reached 161,400 ounces, helped by a 39% increase at the Rochester mine where a new ore processing pad began operation.
• Shareholder returns and buybacks: The company used $111 million to buy back 12.6 million shares this quarter, which is about 46% of its free cash flow, the money left after paying for operations and building mines. Total cash on hand grew to $1.2 billion, up from $266.3 million a year ago.
• Production guidance at low end: Management expects full year production to hit the bottom of its previous ranges, targeting 630,000 ounces of gold and 18.7 million ounces of silver. Because of this lower output, costs to produce each ounce are now expected to be at the high end of the company's original estimates.

Our take: A soft quarter, but the overall growth story remains intact despite weather and technical setbacks at several mines. The 77% revenue jump shows the power of the new Canadian assets, even as heavy rains and equipment failures at New Afton clipped the headline numbers. This result solidifies the transition to a much larger company while returning significant cash to owners.