Freehold Royalties Ltd

FRU

Equity

ISIN CA3565001086 / Valor 12173639

Toronto Stock Exchange (2024-12-24)

CAD 12.65%

Freehold Royalties Ltd
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About company

Freehold Royalties Ltd is a Canadian-based company that specializes in owning and managing a diversified portfolio of mineral titles and royalties on oil and gas properties across North America. The company's business model is designed to offer investors lower-risk returns and sustainable growth over the long term, primarily through the payment of dividends. Freehold's portfolio, characterized by high-netback properties, allows it to generate revenue without bearing the operational costs associated with the direct extraction of resources. This strategy positions Freehold as an intermediary that benefits from the production of oil and gas by others, leveraging the ongoing demand for these commodities while minimizing its operational risks and expenses.

Summarized from source with an LLMView SourceSector: Energy

Income Taxes

Freehold Royalties Ltd. reported an increase in income tax expenses for Q2-2024, with current income tax expense rising to $8.8 million and deferred income tax expense to $3.0 million. This increase is attributed to higher revenues compared to the same period in 2023. The Canadian government's announcement to increase the capital gains income tax inclusion rate for corporations is not expected to significantly affect Freehold's income taxes.

Net Income and Comprehensive Income

For Q2-2024, Freehold Royalties Ltd. achieved a net income of $39.3 million, a 62% increase from $24.3 million in Q2-2023. The rise in net income is due to higher royalty and other revenue, as well as foreign exchange gains. Comprehensive income also saw a significant increase, influenced by foreign currency translation gains related to the company's U.S. subsidiary.

Cash Flow from Operations

Freehold Royalties Ltd. reported funds from operations of $59.6 million ($0.40/share) for Q2-2024, up from $53.0 million ($0.35/share) in Q2-2023. This increase reflects higher royalty and other revenues. However, cash flow from operations for Q2-2024 was $47.6 million, a 5% decrease from $49.9 million in the same quarter of 2023, impacted by increased working capital.

Working Capital

As of June 30, 2024, Freehold Royalties Ltd.'s working capital stood at $28.9 million, a 31% increase from $22.1 million at December 31, 2023. This rise is due to higher accounts receivables from increased revenues, a stronger U.S. dollar, and expansion in the U.S. asset base, along with income tax installment payments exceeding the associated expense.

Long-Term Debt

Freehold Royalties Ltd.'s long-term debt increased to $228.0 million as of June 30, 2024, up from $123.0 million at the end of 2023. The increase is primarily due to debt draws to fund 2024 U.S. acquisitions. The company's credit facilities include a revolving facility of $285 million and an operating facility of $15 million, with a maturity date of October 21, 2025. The company remains in compliance with all financial covenants.

Summarized from source with an LLMView Source

Key figures

-10.4%1Y

11.0%3Y

70.5%5Y

Performance

20.0%1Y

30.6%3Y

42.9%5Y

Volatility