HL Q2 2026 - Post-Call Earnings Update

Event: Quartr Q2 2026 event Retrieved: 2026-08-05T21:55:00Z Comparison mode: maximal Scorecard contract: v1

Consensus scorecard

Management and Q&A

• CEO Rob Krcmarov addressed the revenue shortfall directly and gave two causes, neither of them production: metal prices pulled back from the early-year highs, and a meaningful amount of silver concentrate — mostly at Greens Creek — was produced but not sold as of quarter end. That inventory shipped in early August and will appear in third-quarter results. He described the Greens Creek sales pattern as historically lumpy.
• All figures discussed on the call are from continuing operations, a point Investor Relations flagged at the open.
• Financial results given on the call: mine revenue $323m (silver 68%, gold 14%, remainder base-metal by-products), net income from continuing operations $118m or $0.18 per share, adjusted EBITDA $199m against $94m a year ago, operating cash flow $175m, and free cash flow $136m — the second-best quarter on record against last quarter's $144m record.
• Every mine generated free cash flow. Greens Creek set a site record at $130m and Lucky Friday at $88m; Keno Hill contributed nearly $15m, its fifth consecutive quarter of positive free cash flow.
• Balance sheet: $483m cash, no long-term debt outside capital leases, an essentially undrawn $225m revolver with a $75m accordion. CFO Russell Lawlar said the company has moved from roughly $270m net debt a year ago to roughly $472m net cash, "the strongest balance sheet in Hecla's history."
• Production: 4.2 million ounces of silver, up 8% sequentially, with Lucky Friday setting a quarterly record of 1.5 million ounces on higher mill grade. Consolidated total recordable injury frequency rate improved to 1.57 from 2.07 in Q1, which Krcmarov said "matters more to me than any financial metric on this slide."
• New project detail — Greens Creek pyrite concentrate circuit. VP Operations Brian Erickson disclosed a new processing circuit that would produce a marketable pyrite concentrate from mill tailings currently sent to the dry stack facility. Once ramped, it could add approximately 1.0-1.2 million ounces of silver and 10,000-15,000 ounces of gold in annual production on top of existing Greens Creek output, while reducing tailings volume. Capital cost is estimated at $40m-$60m, incremental operating cost at $10m-$15m per annum, and first production is targeted between Q4 2027 and the first half of 2028 with roughly a one-year ramp.
• Asked by Cosmos Chiu (CIBC) whether the ounces are before payability, Lawlar confirmed to apply a payability factor. He declined to publish a return-on-invested-capital figure while engineering is unfinished, but said the project would "exceed substantially" the 12-15% ROIC criterion presented at the company's investor day earlier this year. Krcmarov said concentrate quality is very high with "extremely high demand from multiple inquirers."
• Asked by Kevin O'Halloran (BMO) about permitting and space constraints, COO Carlos Aguiar said minimum permitting is required for the pyrite circuit and he sees no significant delays. Krcmarov added that material previously stuck in resources could convert to reserves once pyritic ore can be processed at a profit, but declined to quantify it.
• Greens Creek tailings reprocessing. The dry stack facility contains 51 million ounces of silver and over 600,000 ounces of gold plus other metals, an in-situ value of roughly $6.1 billion at 30 June 2026 metal prices before any recovery or processing capital. Phase 3 metallurgical test work with a specialist vendor begins this month and is expected to complete in the quarter; that work plus confirming a suitable processing facility determines how the company proceeds. Krcmarov re-read this passage on air after Erickson's line dropped, to complete the record.
• Midas restart. The hub-and-spoke model would route ore from Midas and potentially Hollister or other regional sources through the existing permitted mill, and remaining mineralization under the existing mill is being evaluated as an additional source. Asked by Alex Terentiew (National Bank) whether first ore is two to three years away in a best case, VP Matt Blattman said that is "probably in that range"; Krcmarov then said "it will probably be a little bit longer than that." Most key permits — mill, tailings facility — are in hand; a portal to access the new discoveries would almost certainly require a new permit.
• Keno Hill commercial production timing. Krcmarov said only one of the five stated commercial production criteria has been met (silver recovery). If the critical permits arrive by mid-2029 and key infrastructure is executed over the next two to three years, with the tailings expansion advanced far enough in 2029 to let the mill resume normal production, the company expects to begin ramping to higher production levels by roughly the end of 2029. He acknowledged the ramp "has been taking a little bit longer than what was initially thought."
• Asked by Terentiew whether the permitting timeline can be compressed, Krcmarov said not really: "Permitting takes its course... the regulators take as long as they need," including First Nations consultation, with the sequence focused on water treatment, tailings and waste dump capacity.
• Asked by Chiu whether the 625,000-ounce Keno Hill quarter is a sustainable rate, Aguiar said Q3 is projected to be very similar to Q2 as new zones are developed, with the second half slightly better than the first, and Krcmarov said the company expects to meet its revised guidance.
• Asked by Josh Wolfson (RBC) about the Lucky Friday grade, Krcmarov and Aguiar both said the high grade was scheduled and a matter of timing, is not expected to repeat, and will "revert back to the mean."
• On the Lucky Friday surface cooling project completing by September, Krcmarov said it was designed for the long-term future as the mine deepens and that productivity gains are difficult to quantify but logical.
• Asked by Chiu why site-level free cash flow ($130m + $88m + ~$14m) does not tie to consolidated free cash flow of $136m, Lawlar explained that mine-site free cash flow adds back corporate-allocated exploration expense, which rose from Q1 to Q2, plus corporate cash outflows and working capital timing.
• Asked by Heiko Ihle (H.C. Wainwright) about metal-price sensitivity in costs, Lawlar said the most direct tie is the Lucky Friday profit share, that the company deliberately built high silver prices into it entering the year and has seen the cost abate as prices fell, and that he would have to follow up with a per-ounce formula.
• Lawlar devoted a prepared segment to energy cost insulation: high-grade underground ore means low tons processed per ounce and no large diesel haul truck fleets, so fuel was only about 3% of the consolidated cost structure this quarter, and power — the largest energy input — comes primarily from local renewable hydropower that is not priced off crude or gas.
• Tax: during the quarter the company combined its Nevada U.S. group with its main U.S. group, so Nevada expenses can be used against Greens Creek and Lucky Friday income, lowering the effective rate. Management expects to utilize federal and state net operating losses for the year.
• Asked by Dalton Baretto (Canaccord) about germanium and gallium given the Trail smelter upgrade, Erickson said the company has looked at it in ore, tailings reprocessing and pyrite concentrate, and that it is "pretty minor" and would require smelter conversations on recovery and payability. On antimony at Lucky Friday, Krcmarov said the mine does not have significant antimony compared with its neighbors.
• Asked whether Hecla would consolidate the Silver Valley, Krcmarov said the company is "primarily excited by the inherent upside in our own assets," noted Lucky Friday has had no meaningful exploration since about 2011 and that a program is starting now, and said it would consider a compelling value proposition but prefers its own ground.
• Capital spending is weighted to the second half on better construction weather and equipment deliveries ordered earlier in the year, per Lawlar.

Guidance and KPI clarification

Updated neutral analysis

• The call did not change the reported quarter. Revenue of $333.851m missed consensus by 9.5% and GAAP diluted EPS of $0.17 missed by 6.3%; the scorecard above is carried forward from the preliminary report verbatim.
• The call did, however, give the revenue miss a specific and testable explanation. Management attributed it to metal price pullback plus unsold Greens Creek concentrate that shipped in early August. That is a timing claim with a date attached, and it is verifiable in the third-quarter result rather than a general assertion about lumpiness.
• The gap between the reported quarter and the underlying cash performance is unusually wide. Revenue fell from a record $411m to $334m, but adjusted EBITDA more than doubled year over year to $199m, free cash flow of $136m came within $8m of the all-time record, and both Greens Creek and Lucky Friday set site free cash flow records.
• The balance sheet transition is the most concrete new fact: roughly $270m of net debt a year ago to roughly $472m of net cash today, with $483m of cash and an undrawn revolver. Management explicitly framed this as buying the option to fund the project pipeline on its own timeline.
• Two Greens Creek brownfield projects moved from mention to sized disclosure. The pyrite concentrate circuit now carries production, capital, operating cost and timing ranges; the tailings reprocessing project carries a contained-metal figure and an in-situ value with a stated next milestone this quarter. Neither has a published return figure, and the company deliberately withheld the ROIC number.
• The in-situ value of approximately $6.1bn for the tailings is stated before any recovery or processing capital and before recovery assumptions, and management said so explicitly. It is not an NPV and should not be read as one.
• Keno Hill is the clearest negative from the call. Full-year guidance is 2.2-2.6 million ounces with Q3 projected similar to Q2, only one of five commercial production criteria has been met, and the ramp to higher production is now framed as roughly end-2029 contingent on permits by mid-2029 that management says it cannot accelerate. The tailings storage facility permit received this quarter is real progress against that sequence.
• Unit cost guidance improved where it matters most. Greens Creek silver production guidance rose and both its cash cost and AISC guides improved, driven by strong gold and zinc by-product credits and a first half that outperformed. Lucky Friday cash costs came down but AISC went modestly higher on planned sustaining capital, and management flagged that capital spending is weighted to the second half.
• The cost structure argument on energy is specific rather than promotional: fuel at approximately 3% of consolidated cost, high-grade underground ore requiring fewer tons per ounce, and hydro-sourced power that is not priced off crude. It is a claim that can be checked against peers.
• The main cost sensitivity management identified runs the other way from the revenue sensitivity: the Lucky Friday profit share moves with the silver price, so a lower silver price lowers that cost line. Management could not supply a per-ounce formula and undertook to follow up.
• On capital allocation, management named no buyback, no dividend change, and no acquisition. Asked directly about Silver Valley consolidation, the CEO redirected to organic upside, noting Lucky Friday has not been meaningfully explored since about 2011.
• The Nevada portfolio is entirely exploration-stage optionality at this point: two new veins at Midas, drilling underway at Hollister, Aurora drilling starting mid-August with first holes possibly this fall, and an Aurora mill that management said is "not in great condition." A Midas production decision is gated on the drill result and, per the CEO, is slightly further out than the two-to-three years another executive indicated.

Market context and limitations

• No market data was retrieved for this post-call update. The preliminary report carries the release-day price snapshot; a quote taken now would not isolate a reaction to the call.
• The consensus scorecard is carried forward verbatim from the preliminary report for this event; no new Quartr actual or API Ninjas estimate was retrieved, and stage claims forbid revising a completed stage.
• The full transcript for this event was read in its entirety — all 171 paragraphs, covering the operator introduction, prepared remarks from Mike Parkin, Rob Krcmarov, Brian Erickson, Carlos Aguiar, Russell Lawlar and Kurt Allen, the complete question and answer session with H.C. Wainwright, CIBC, RBC Capital Markets, BMO Capital Markets, Canaccord, Scotiabank and National Bank, and the closing remarks.
• Basis note, not a correction: the preliminary scorecard uses GAAP diluted EPS of $0.17 from the Form 10-Q, which is the total-company figure. On the call the CFO cited $0.18 per share from continuing operations. Both figures are the company's own; they differ because of discontinued operations, and the scorecard basis is unchanged.
• Every figure above is stated by management on the call. Where a per-ounce cost is shown as negative — Greens Creek cash cost of $(17.11) and AISC of $(10.71) — that is the company's presentation after by-product credits, meaning by-product revenue exceeds the cost applicable to silver.
• Prior guidance ranges were not restated on the call for any site, so the size of each guidance revision is not determinable from this source; direction is given where management characterized it.
• Two speakers experienced line drops during the call. Brian Erickson's line was interrupted during the tailings reprocessing disclosure and Rob Krcmarov re-read the affected passage on air; the transcript preserves both. Several other exchanges contain crosstalk between executives in separate offices.
• The pyrite concentrate production figures are pre-payability, confirmed by the CFO in Q&A, and all project economics remain subject to change as engineering advances.
• The presentation slides referenced throughout the prepared remarks were not read for this update; figures above come from the spoken transcript.

Source links

• Quartr Q2 2026 event
• Quartr Q2 2026 earnings release
• Quartr Q2 2026 Form 10-Q
• Quartr Q2 2026 presentation slides