Regis Resources Limited (RRL) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Regis Resources Limited Full Year Results Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Jim Beyer, Managing Director and CEO. Please go ahead.

Thanks, Mel. Good morning, everyone, and thank you all for joining us for the Regis Resources FY '26 full year financial results. With me today is our CFO, Anthony Rechichi; our COO, Michael Holmes; and Head of Investor Relations, Matt Collings. On this call, we'll be referring to various slides that are in the pack that was released earlier this morning. And if you don't have it, the document can be downloaded from our website or from the ASX. Now moving through the pack now to Slide 3, highlighting the fantastic financial and safety performance for the year. This slide is highlighting these and underpin that is our -- underpinning all of that is our operational delivery and, of course, the favorable gold price environment. Running down the list of financial results. And while we have been focused in quarterlies on our strong cash build in the prior reporting, we're very pleased to be able to report that our statutory net profit after tax was at a record high of $715 million. That's up 180% year-on-year, and it's statutory net profit that really tells us how our overall long-term investment strategy is paying off. Combined with the continued uplift in earnings and cash generation, Regis operations really delivered for FY '26. And this has allowed us to add to our first half dividend and pay a record fully franked dividend of $0.20 per share for the second half. Now this div is made up of $0.15 per share of ordinary dividend and a $0.05 special dividend, which is immediately delivering value from the Vault break fee back to our shareholders. This delivers a total fully franked dividend payment for FY '26 of a very respectable $0.35 a share, which, by the way, is an overall payout of 39% of our group cash increase. Now this fully franked $0.35 a share dividend based on yesterday's share price -- closing price sees a very respectable yield of 6.1%. I'm sure you'll admit that by any measure, that's not a bad result. Across our assets, we've seen solid and consistent operational performance, which we expect to continue into FY '27. Gold production in last year in '26 came in at the top end of guidance at 797,000 -- sorry, 379,000 -- that will be nice. 379,050 ounces for an all-in sustaining cost of $2,945 an ounce. Now off the back of this strong production, we sold our gold into another period of record spot gold prices. And at the end of the financial year, we finished with $1.185 billion of cash and bullion after a build of $667 million over the year, and that's after paying over $300 million in divis and tax in the 12 months. Furthermore, the company is debt free. So as you can clearly see, our balance sheet is in a very strong position. And given the cash generation capability of our assets, it continues to strengthen. This all positions us well to provide both dividend returns to shareholders and remain positioned to action growth opportunities. Now with that, I'll hand over to Anthony, who will take us through in more detail our full year results.

Thank you, Jim, and good morning, everyone. I'll start by having you all turn to Slide 4. And as we discussed in the recent quarterly, the full year has delivered production at the top end of guidance with financial results materially above FY '25. We sold 374,000 ounces of gold into a rising spot gold price market, and this strong performance translated directly into high cash flows and profitability. In FY '26, we delivered $1.25 billion of statutory operating cash inflows compared to $821 million last year. Impressively, we also delivered a record $715 million net profit after tax compared to $254 million in FY '25. Turning to Slide 5. That shows the cash and bullion movement during the year. It includes our bullion on hand, which is valued at market rather than at cost in this instance. If you have any questions on the difference in our presentation of these cash flows versus our statutory cash flow statement in the annual report, please feel free to follow this up with us. This chart remains pretty straightforward in its representation of our business. Our operations generated $1.5 billion. We spent $354 million on mine development, inclusive of our growth projects, $74 million on exploration and $26 million at McPhillamys. Additionally, we spent $56 million on other capital and rehabilitation, $23 million on corporate costs and interest and facility fees and paid $156 million of tax during the year. And of course, our returns to shareholders via dividend payments of $151 million during the year. Coincidentally, that's the same as the value of the final dividends we declared today. Moving on to Slide 6 now. You can see a simple yet effective representation of the ability of our assets to generate significant cash. Over the past 12 months, the business has generated $667 million of cash and bullion. And over the last 24 months, it has generated approximately $1.2 billion. Importantly, this is not by doing anything extraordinary. This is by being unhedged and by delivering what we said we would do. And as a reminder, this is after paying out over $151 million in fully franked dividends and $156 million in tax payments. Now on to our income statement at Slide 7. The layout on this slide shows our income statement in a simple, transparent flow-through from our sales to our statutory net profit. With our hedge book now distant memory and no significant one-off items, the profitability of our business is really very clear. During the year, gold sales were up 43%, off the back of record gold spot prices for very similar gold ounces sold compared to last year. Our cost of sales were 5% higher than the prior year, and that increase was driven by a few things. Firstly, there were a higher number of operations in commercial production versus last year and most notably, Garden Well Main underground mine featured in this category for part of the year, noting that its costs were capitalized for all of last year. Cost of sales also included higher royalties relating to elevated gold prices, general cost inflation and specifically the increase in diesel prices in the fourth quarter caused by unrest in the Middle East. On tax, Regis returned to being a taxpayer in FY '26, recommencing monthly installments in April '26 and paying $156 million for the year. Installments are running at around $20 million a month, and we expect to remain a taxpayer in FY '27, forecasting $15 million to $20 million per month for the first half of FY '27, before an anticipated step-up in the monthly installment rate in January, which will be triggered by the lodgement of our FY '26 income tax return. As previously flagged, a catch-up payment covering the 9 months before installments recommenced is due in December '26. We expect that to be in the order of $220 million to $240 million to be confirmed through the usual tax return completion process. All in all, looking at the results here, we produced a great net profit figure. We expect FY '27 to be simple to follow as what we have seen this year. Following from all of the strong cash flows and profits I've mentioned, naturally, the mind turns to dividends and shareholder returns. So turn to Page 8. Matt outlines our dividends for the year, which Jim has already covered in some detail. And with that, I'll pass it back to Jim now.

Thanks, Anthony. Look, to look at the half year call, I think what I said there and now ending your report with a 7x larger dividend year-on-year is certainly a great spot to hand over from. Thanks, Anthony. So while the gold price has certainly been very beneficial to us, if you can't consistently deliver the gold ounces at reasonable cost, you cannot deliver the full advantage of the price environment for shareholders. It's just a promise. The ability for Regis to pay these dividends in line with our capital management policy is really a testament to our consistent production. We deliver on what we say and have done so achieving production guidance consistently for 4 years running now. I think this slide in Slide 8 reflects the Regis approach to returns. We can see the first half performance resulted in the declaration of $0.15 share for $114 million. And as noted earlier, the second half saw the strong performance continued. This resulted in the declaration of the $0.20 fully franked dividend made up of $0.15 ordinary div and $0.05 special dividend for the return of the break fee, giving a total dividend of $151 million for the second half. This delivers a fully franked dividend for FY '26 of a very respectable $0.35 per share, a total of $265 million, as I said earlier, a very solid ratio of 39% of our group cash increase. And of course, I think I did mention earlier that the fully franked dividend delivers a very respectable 6.1% yield based on yesterday's closing share price. Now this also means that over the last 18 months -- in just the last 18 months, we have declared over $300 million worth of fully franked dividends to our shareholders. And overall, of course, $850 million since we started paying dividends. So now on the question of future dividend returns to shareholders. Our capital management policy as we released earlier this year, continues to guide how we do that. The policy provides a clear structure for returning capital while prudently considering capital allocation requirements at our existing ops, prevailing cash and bullion balances, available franking credits, and of course, funding continued growth. So under this policy, ordinary dividend payments are expected to represent between 25% and 50% of group cash increases over the preceding first half year financials. So on to Slide 9 and our guidance. Our guidance demonstrates -- and it remains unchanged. Our guidance demonstrates our focus on delivering ounces from our operations. We continue to progress against our growth strategy while producing profitable ounces and for FY '27, we've guided group production between 360,000 and 400,000 ounces for the year, a slight increase on the FY '26 at an all-in sustaining cost between $2,990 and $3,390 per ounce, underpinning our continued strong cash-generating capacity. I would note on that slide, the slight production skew in the second half and also Anthony's guidance on upcoming tax payments. Very pleasingly, we've been able to take advantage of the gold price through delivery of opportunistic ounces using the significant infrastructure in place at Duketon, something we aspire to do. And the proof of our success here is in the significant returns we are delivering to our shareholders now, no waiting required. So finally, turning to Slide 10, and in summary, we're unhedged, debt-free. Regis' consistent operational performance continues to generate strong cash. The records we set in FY '26 speak for themselves, but I'll tell you anyway. Record statutory net profit after tax of $715 million, record net cash and bullion build of $667 million, and that's after $300 million in tax and dividend payments. Together, these give us nearly $1.2 billion in net cash and bullion at the end of June '26. We're delivering record cold hard cash full year dividends of $0.35 a share for a total of $265 million fully franked for the year. So on that note, thank you all for your attention, and I'll now hand it back to Mel and open it up for questions.

[Operator Instructions] Your first question comes from Jonathon Sharp with JPMorgan.

Jim and team, just -- yes, congratulations on the good year and the nice dividend there. But just looking forward, how should we think about FY '27 dividend capacity, especially given that tax catch-up and front-end loaded CapEx?

Yes. Look, it's -- I mean our guidance of -- and our policy still remains in place. Obviously, we will be looking carefully at what that -- what our group cash increase is over those periods and also looking to understand whether they're sort of small term variations in our position, which is also something that we will consider in our dividend policy. We've seen blips that are just a cyclical variation in the short term or are we seeing a long-term change, which is -- I mean, we still see once we're through this period of catching up on the tax, we continue to be in a very strong position to build cash and we expect that to be reflected in our dividends.

Okay. Great. And just second question, balance sheet, looking really strong $1.2 billion cash and bullion. How do you currently prioritize capital between organic growth, ordinary or special dividends, buybacks, M&A, just your thinking there?

Yes. Look, it's a good question, Jonathon. Easy question to ask, a tricky one to answer, really. That's where our judgment comes in. We look to see what we -- obviously, from an internal point of view, we've got one eye on McPhillamys, which is a great project sitting out. At the moment, we're targeting that to be FID ready in the first half of calendar '28. So actually, that's getting closer. Pleasingly, we've really -- when we look at our business and our structure, we've certainly got enough -- even after paying the dividends, we've got enough coming in on our balance sheet to be having a view that we can fund that. We'll probably look to consider whether we improve the returns on that by leveraging a little bit, but that's a bit further down the track. So obviously, we look at our internals. We can -- there's always going to be, hopefully, demand for a little bit of capital at Duketon as well as we start to open up and discover -- add new pits like Beamish South as we've seeing how that shapes up. We may have more underground. These are hundreds of millions of dollars required. They're quite modest. In fact, the undergrounds provide great returns. So we still factor those in. And then we've got to keep -- definitely got to keep our powder dry on the -- when opportunities present themselves. Having a strong balance sheet is always a good asset to have there. The key is exercising discipline. I'd like to think that if people are looking at that cash and thinking, we're going to do something silly with it, then I would point to the discipline in our decision-making that we've made in the past. Certainly, Tropicana was an excellent investment. We're very pleased with that. I'm not sure if I've mentioned it, but certainly, when we paid $900 million, people thought we'd overpaid for it, and it's already paid back over $1 billion in cash to us and got plenty of life left in the thing. And so that's how we can make -- we think we can see value where perhaps others can't. But also we exercised discipline in our capital, which is exactly what we did in the M&A space a month or so ago when we decided not to progress with the Vault deal and participate in any kind of auction there. So I think that our shareholders should take some comfort in the fact that we are disciplined. We're not reckless and we'll make decisions around capital allocation that we see is in the best interest of our shareholders.