Silver Wheaton (NYSE:SLW) announced its first-quarter results at the end of last week. The Canadian silver streaming company reported net earnings of $79.8 million, or $0.22 per share. This represents a 40% plunge from last year's first quarter but was in line with analysts' estimates. What are the key takeaways from the report for investors?

The company increased its precious metals sales (in ounces) by nearly 8% year over year. Most of this growth is due to the 78% spike in gold sales -- this jump is related to Silver Wheaton's gold stream contracts from back in February 2013, with Vale's Salobo and Sudbury mines. Moreover, the company's attributable precious metals production, via its streaming contracts, was in line with its 2014 guidance. The company also maintained the amount of silver equivalent produced and not yet delivered at 6.3 million silver equivalent ounces -- nearly unchanged from the fourth quarter of 2013. This means the company sold most of the precious metals it received.

The table below shows the changes in Silver Wheaton's gold and silver sales, including the changes in ounces sold and average realized prices.

Slw Q

Source of data: Silver Wheaton

As you can see, the rise in precious metals sales only partly offset the plunge in gold and silver prices. 

The lower prices of gold and silver also lowered the company's operating profit, which reached 49.3% in the first quarter of 2014. This is nearly 19.3 percentage points below Silver Wheaton's profit margin back in the first quarter of 2013. Furthermore, its operating cash flow fell from $165 million in the first quarter of 2013 to $115 million. 

Despite the recent decline in profitability and in operating cash flow, the company's quarterly dividend payment remained unchanged, at $0.07 per share. Since Silver Wheaton calculates its dividend based on 20% of the average operating cash flow of the past four quarters, a decline in operating cash flow will lead to a lower dividend payment. Thus, in the coming quarters, the ongoing low prices of precious metals could eventually reduce the company's operating cash flow, which will translate to a lower dividend paycheck. 

Silver Wheaton's recent earnings report showed it was able to reach its quarterly goals in terms of precious metals sales and earnings. Nonetheless, the low prices of gold and silver impacted the company's profitability. Even the sharp rise in amount of precious metals ounces sold didn't offset the negative price effect. In the coming quarters, low precious metals prices could cut into Silver Wheaton's dividend payments. But as long as Silver Wheaton keeps increasing its attributable precious metals production, the company will be able to partly offset the negative impact the low prices of precious metals have on its bottom line.

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