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Goldcorp (GG) Q1 Earnings Miss, Revenues Beat Estimates - Analyst Blog

Goldcorp Inc. 's GG first-quarter 2015 adjusted earnings (excluding one-time items) were $12 million or a penny per share compared with $209 million or 26 cents per share recorded in the year-ago quarter. The decline in adjusted earnings was due to lower realized margins on gold sales, incremental depreciation and depletion expense, and a higher effective tax rate. Earnings per share also missed the Zacks Consensus Estimate of 10 cents.

Adjusted earnings exclude foreign exchange loss on translation of deferred income tax assets and liabilities, losses from derivatives, and gains from the disposition of Wharf mining interests. However, earnings include the impact of stock-based compensation.

Net loss, as reported, for the quarter was $87 million or 11 cents per share compared with net earnings of $98 million or 12 cents per share in the first quarter of 2014.

Goldcorp posted revenues (as adjusted) of $1,270 million in the reported quarter, up 3.4% year over year. Revenues also surpassed the Zacks Consensus Estimate of $966 million. Average realized gold price for the quarter declined 6.2% to $1,217 per ounce from $1,297 per ounce in the prior-year quarter.

Gold sales increased around 21% year over year to 827,500 ounces in the reported quarter, while production increased 6.6% to 724,800 ounces. All-in sustaining costs were $885 per gold ounce (up 5.4% year over year), while cash cost totaled $585 per ounce on a by-product basis (up 15.4%) and $670 per ounce (down 0.4%) on a co-product basis.

Silver production fell 11.1% year over year to 8.5 million ounces from 9.6 million ounces in the prior-year quarter.

Goldcorp's shares fell as much as around 7% in the trading session following the earnings release.

Mining Highlights

At the Penasquito mine, gold production was 155,600 ounces, an increase of 19.9% year over year and a rise of 10.3% sequentially. The sequential increase was driven by higher production resulting from higher sulphide grades mined from the heart of the deposit in Phase 5C and the bottom of Phase 4. All-in sustaining cost was $702 per ounce, an increase from the year-ago quarter figure of $371, but a sequential decrease from $1,472 per ounce. The sequential decrease was due to increased gold production and lower sustaining capital expenditures.

Gold production at Los Filos decreased 24% year over year to 60,700 ounces due to higher stripping activity at a new phase of the Los Filos pit. This was offset by an optimization of leaching operations leading to lower ore processed. All-in sustaining cost was $1,164 per ounce compared with $805 per ounce in the year-ago quarter owing to higher sustaining capital expenditures, higher operating costs and lower gold production.

Gold production at Red Lake increased 13% year over year and decreased 17.6% sequentially to 107,400 ounces at an all-in sustaining cost of $799 per ounce. The sequential decrease was due to higher mined grades, offset by lower tonnage from the Campbell Complex.

The company reported first gold production from the Eleonore mine in Quebec in Oct 2014. Production from the mine totaled 32,500 ounces in the first quarter of 2015. Production was impacted due to ramp-up issues with the tailings filter press.

At Porcupine in Ontario, gold production in the quarter was 56,000 ounces, down 15.8% year over year and 38% sequentially, at an all-in sustaining cost of $1,175 per ounce. Production decreased from the previous quarter due to lower grades and lower tonnage, owing to adverse weather conditions which impacted stockpile and mill operations.

At Pueblo Viejo, where Goldcorp holds a 40% interest and Barrick Gold Corp. ABX a 60% interest, gold production fell 15.3% year over year to 90,000 ounces (40% basis), at an all-in sustaining cost of $573 per ounce. Gold production also decreased 23.7% over the prior quarter due to lower head grades and lower recoveries.

Cerro Negro in Argentina, which started commercial production from Jan 1, 2015 receiving permanent power from the national grid on Feb 2, 2015, produced 92,600 ounces of gold in the first quarter of 2015. Gold sold during the quarter was 160,500 ounces at an all-in sustaining cost of $704 per ounce. Gold ounces sold exceeded production as 115,200 gold ounces produced in 2014 were sold in the first quarter of 2015.

Financial Position

As of Mar 31, 2015, cash and cash equivalents were $365 million, down 63.5% from $1,001 million as of Mar 31, 2014. Long-term debt stood at $3,670 million as of Mar 31, 2015, compared with $1,482 million as of Mar 31, 2014. The company's adjusted operating cash flow was $366 million in the reported quarter compared with $281 million in the year-ago quarter.

Outlook

Goldcorp reaffirmed its guidance for 2015 as it expects gold production for the full year in the range of 3.3-3.6 million ounces, at all-in sustaining costs of $875-$950 per ounce of gold due to new contributions from Cerro Negro and Éleonore. Gold production is expected to increase throughout 2015, with higher grades from the Penasco pit at Penasquito and the revamping of both Cerro Negro and Eleonore.

Capital expenditures for 2015 are also projected to be between $1.2 billion and $1.4 billion, as expected earlier. Goldcorp anticipates effective tax rate for full-year 2015 to be 45%, and 39% for each of the second, third and fourth quarters.

Zacks Rank

Goldcorp currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the gold mining industry include Gold Fields Ltd. GFI and Sibanye Gold Limited SBGL , both sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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