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01/10 16:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed strong financial performance with record revenue, net income, and EBITDA, alongside significant deleveraging efforts. Despite some concerns about inflationary pressures and exploration risks, the company's robust cash flow, cost efficiency, and strategic focus on exploration and growth potential indicate a positive outlook. The market cap suggests moderate sensitivity to news, supporting a prediction of a positive stock price movement in the 2% to 8% range over the next two weeks.
Revenue $410 million, a record result for Q3 2025. This demonstrates the company's ability to capture upside in strong markets while maintaining cost protection in weaker ones.
Net Income $101 million, a record result for Q3 2025. This reflects the company's strong operational and financial performance.
Adjusted EBITDA $196 million, a record result for Q3 2025. This indicates robust profitability and operational efficiency.
Net Leverage Improved from 1.8x in Q3 2024 to 0.3x in Q3 2025, an 83% reduction. This was achieved through deleveraging efforts, including repaying debt and reducing annual interest expenses by over $15 million.
Operating Cash Flow $148 million, showcasing strong cash generation capabilities.
Free Cash Flow $90 million, with all four producing assets generating positive free cash flow for the second consecutive quarter.
Silver Production 4.6 million ounces, up 2% from the previous quarter. This was supported by strong by-product credits and operational momentum.
Cash Costs for Silver Negative $2.03 per ounce, attributed to strong by-product credits.
All-in Sustaining Costs (AISC) for Silver $11.01 per ounce, reflecting cost efficiency.
Mine Site Revenues $393 million, with silver contributing 48%, gold 37%, and base metals the remainder. This highlights the company's strong silver revenue base.
Silver Margins $31.57 per ounce, representing 74% of the realized price of silver, indicating robust profitability.
Greens Creek Free Cash Flow Nearly $75 million, demonstrating its status as a premier silver mine.
Casa Berardi Free Cash Flow Nearly $36 million, showing a positive cash flow inflection.
Lucky Friday Free Cash Flow $13.5 million, nearly triple the prior quarter, reflecting operational improvements.
Keno Hill Free Cash Flow $8.3 million, marking the second consecutive quarter of positive free cash flow during ramp-up.
Silver production: Achieved 4.6 million ounces, up 2% from last quarter. Cash costs were negative $2.03 per ounce, and all-in sustaining costs were $11.01 per ounce.
Gold production: Casa Berardi produced 25,000 ounces of gold, with cash costs of $1,582 per ounce and all-in sustaining costs of $1,746 per ounce.
Keno Hill ramp-up: Produced nearly 900,000 ounces of silver, achieving two consecutive quarters of positive free cash flow. Underground development is tracking 13% above plan year-to-date.
Silver market positioning: Hecla benefits from strong silver and gold prices, with silver margins at $31.57 per ounce, representing 74% of the realized price of silver.
Nevada exploration strategy: Plans to unlock value from Nevada assets, including Midas, Hollister, and Aurora, with significant exploration potential and existing infrastructure.
Financial performance: Achieved record revenues of $410 million, net income of $101 million, and adjusted EBITDA of $196 million. Operating cash flow was $148 million, and free cash flow was $90 million.
Deleveraging: Reduced net leverage from 1.8x to 0.3x year-over-year, eliminating over $15 million in annual interest expense.
Operational improvements: All four producing assets generated positive free cash flow for the second consecutive quarter. Greens Creek led with $75 million in free cash flow.
Capital allocation framework: Focused on safety, sustaining capital, growth capital, exploration, deleveraging, and shareholder returns. Exploration investment to increase to 2%-5% of revenues in 2026.
Portfolio rationalization: Assessing capital allocation to prioritize high-return opportunities and monetize non-core assets.
Operational Risks: The company is managing risks related to the completion of the Lucky Friday surface cooling project, which is critical for accessing deeper high-grade zones and extending mine life. Delays or issues in this project could impact future profitability.
Regulatory Risks: The company has highlighted the importance of obtaining permits, such as the wetlands permit for Greens Creek's dry stack tailings expansion. Regulatory delays or denials could hinder operational and expansion plans.
Supply Chain Risks: Keno Hill's operations were previously impacted by reliability issues with the Yukon Energy hydroelectric plant. Although repairs have been made, any future disruptions could pose operational risks.
Economic Risks: The company’s financial performance is heavily reliant on metal prices, particularly silver and gold. A downturn in these prices could significantly impact cash flow and profitability.
Strategic Execution Risks: The company is actively evaluating options to extend production at Casa Berardi beyond 2027. Failure to identify viable options could lead to a production gap and reduced cash flow.
Exploration Risks: The company plans to increase investment in exploration, particularly in Nevada. However, exploration activities carry inherent risks, including the potential for not discovering economically viable resources.
Silver Market Outlook: Silver is expected to face its fifth consecutive year of supply shortages, with rising industrial demand and investment flows projected to support prices for years to come.
Production Guidance: The company has tightened its production guidance for Greens Creek, Lucky Friday, Keno Hill, and Casa Berardi based on strong year-to-date performance. Greens Creek is expected to maintain robust free cash flow generation, while Keno Hill is positioned to meet its 2025 silver production guidance.
Cost Guidance: Cost guidance has been reiterated for Greens Creek, Lucky Friday, and Casa Berardi, with slight adjustments for Lucky Friday due to operational momentum.
Capital Expenditures: Capital expenditure guidance for 2025 remains unchanged for Casa Berardi, while Keno Hill's capital expenditures are expected to modestly exceed original guidance due to outperforming underground development.
Exploration Investment: The company plans to increase exploration investment to 2%-5% of revenues in 2026, focusing on high-return opportunities in both brownfield and greenfield projects.
Operational Projects: The Lucky Friday surface cooling project is on track for completion in the first half of 2026, which will enable access to deeper high-grade zones and extend mine life. Greens Creek's dry stack tailings expansion has received its wetlands permit, critical for future operations.
Nevada Exploration Strategy: A comprehensive exploration strategy for Nevada assets is being developed, with heightened activity expected in 2026 to unlock value from properties with significant historical production.
Casa Berardi Future Plans: The company is evaluating options to extend production at Casa Berardi beyond 2027, potentially reducing the previously disclosed production gap and maintaining its status as a cash flow contributor.
Quarterly Dividend: The company currently pays a quarterly dividend.
Shareholder Returns: The company will consider further shareholder returns only after operational requirements are met and the balance sheet is strong.
The earnings call revealed strong financial performance with record revenue, net income, and EBITDA, alongside significant deleveraging efforts. Despite some concerns about inflationary pressures and exploration risks, the company's robust cash flow, cost efficiency, and strategic focus on exploration and growth potential indicate a positive outlook. The market cap suggests moderate sensitivity to news, supporting a prediction of a positive stock price movement in the 2% to 8% range over the next two weeks.
The earnings call summary highlights strong financial metrics, including record revenue and improved silver margins, coupled with reduced costs at key sites. The Q&A reveals optimism for future production improvements and strategic debt reduction. However, some uncertainties remain, such as permitting timelines and production guidance for Casa Berardi. Given the strong financial performance and strategic initiatives, the stock price is likely to see a positive movement, especially considering the market cap's moderate size.
The earnings call presented mixed signals. Financial performance showed improvement with increased revenue and EBITDA, while free cash flow and leverage ratio improved. However, cost pressures, particularly at Lucky Friday, and operational challenges at Casa Berardi pose risks. The elimination of dividends to improve cash position may concern investors. The Q&A revealed planned downtimes and unclear responses on production curtailment, adding uncertainty. Given the market cap, the stock is likely to experience a neutral movement, with positive financial metrics balanced by operational risks and cost pressures.
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