DGSE Companies, Inc. (NYSE MKT: DGSE) (“DGSE” or the “Company”), a
leading wholesaler and retailer
of jewelry,
diamonds,
fine
watches, and precious metal bullion
and rare
coin products, today announced its financial results for the three
months ended March 31, 2015.
First Quarter 2015 Business and Financial Highlights
-
DGSE reported a net loss of $798,000 for the quarter, which included a
$3,000 gain from discontinued operations, and a net loss of $801,000
from continuing operations. The loss from continuing operations
included approximately $196,000 in non-recurring expenses and asset
write offs, related to the closure of two Dallas-Ft. Worth (“DFW”)
area stores.
-
Revenues from continuing operations were $12.9 million compared to
$18.0 million, a 29% decline compared to the same period in 2014. DGSE
continued to see declines in its bullion and scrap businesses, which
combined with an unusually challenging quarter for its jewelry
business to generate a significant year over year sales decline.
-
Gross profit from continuing operations decreased $877,000, or 27%,
based on lower sales. Gross profit as a percent of revenue increased
to 18.1% in the current quarter, compared to 17.8% in the first
quarter of 2014.
-
Selling, general and administrative expenses (“SG&A”) from continuing
operations were down $461,000 in the quarter, to $2.9 million compared
to $3.3 million during the first quarter of 2014. This reduction was
achieved primarily through continued efforts to reduce expenses at all
levels, including store-level operating expenses and corporate
overhead, and was partially offset by $143,000 in non-recurring
expenses related to the closure of two DFW area stores in the quarter.
-
Net loss from continuing operations was approximately $801,000 or
$0.07 per share, compared to net loss from continuing operations of
approximately $285,000, or $0.02 per share, in the first quarter of
2014.
-
Net loss, inclusive of discontinued operations, was approximately
$798,000 or $0.07 per share, compared to a net loss, inclusive of
discontinued operations, of approximately $523,000, or $0.04 per
share, in the first quarter of 2014.
Dusty Clem, Chairman of the Board and Chief Executive Officer of DGSE,
stated, “The first quarter of 2015 was an extremely challenging quarter
for DGSE. In 2014 we successfully focused our marketing, merchandising
and operating efforts on growing our jewelry, watch and diamond
businesses, and were rewarded with double digit growth in those areas.
In the first quarter of 2015, for the first time in several quarters, we
were not able to grow these lines, and in fact saw declines.” Mr. Clem
continued, “Unfortunately, we lost several days this quarter to harsh
weather conditions in two of our most important markets, DFW and
Charleston, which further exacerbated the effects of a difficult retail
environment. While this quarter represents a setback in our efforts to
create a consistently profitable DGSE, we continue to believe that
growing our jewelry business and closely managing our expenses provides
the best avenue for DGSE to offset the continued, industry-wide slowdown
in the bullion and scrap businesses.”
First Quarter 2015 Results
For the quarter ended March 31, 2015, revenues from continuing
operations were $12.9 million, a 29% decrease compared to $18.0 million
in the quarter ended March 31, 2014. Bullion and scrap sales continued
to trend downward, consistent with the industry, and DGSE’s jewelry,
watch and diamond lines saw decreases for the first time in several
quarters.
Gross profit from continuing operations in the quarter decreased by
$877,000, or 27% to $2.3 million as compared to $3.2 million during the
first quarter of 2014. Gross margin as a percentage of revenue increased
to 18.1% for the three months ended March 31, 2015, compared to 17.8%
for the same period in the prior year.
SG&A expenses decreased by $461,000, or 14%, to $2.9 million, as
compared to $3.4 million during the same period in 2014. The decrease
was achieved despite recognizing $143,000 in expenses related to the
closure of two DFW area stores. These expenses were primarily comprised
of accelerated lease expense and fees related to early lease
terminations. The overall decrease in SG&A was achieved primarily
through continued efforts to reduce expenses at all levels, including
store-level operating expenses, corporate overhead, and advertising
expense.
Loss from continuing operations for the first quarter, net of taxes, was
$801,000 or $0.07 per share compared to a net loss from continuing
operations of $285,000, or $0.02 per share, in the first quarter of 2014.
Income from discontinued operations for the three months ended March 31,
2015 was $3,000, related to the Southern Bullion locations closed in
2014, compared to a net loss of $238,000 for these locations in the same
quarter of 2014. The current quarter income relates to minor adjustments
in accrued expenses related to the wind down of all Southern Bullion
operations. The Company believes it has recognized all material expenses
related to the closure of Southern Bullion operations.
Net loss for the first quarter was $798,000 or $0.07 per share, compared
to a net loss of $523,000, or $0.04 per share, in the first quarter of
2014.
Mr. Clem concluded, “We clearly are not satisfied with our current
results, and are continuing to make adjustments to the business, in
order to regain profitability in a very difficult environment for our
industry. We continue to contemplate a wide range of options that we
believe will increase the Company’s value.”
Balance Sheet Summary
As of March 31, 2015, DGSE had cash and cash equivalents of $1.2 million
compared to $2.2 million at December 31, 2014. Stockholders’ equity
decreased 13% to $5.3 million at March 31, 2015 compared to $6.1 million
at December 31, 2014. As of March 31, 2015, the outstanding balance on
the Company’s credit facility with NTR Metals, LLC was $2.3 million
compared to $2.3 million at December 31, 2014.
Conference Call
DGSE’s management will conduct a live teleconference to discuss its
financial results:
Date:
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|
May 13, 2015
|
Time:
|
|
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4:30 p.m. ET/3:30 p.m. CT
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Dial-in:
|
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1-877-407-9039 if calling from the United States, or 1-201-689-8470
if dialing internationally.
|
Replay:
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A replay will be available until midnight on May 20, 2015, which may
be accessed by dialing 1-877-870-5176 within the United States and
1-858-384-5517 if dialing internationally. Please use passcode
13609625 to access the replay.
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Webcast:
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The call will be webcast and will be available by visiting http://public.viavid.com/index.php?id=114605.
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About DGSE Companies
DGSE Companies, Inc. wholesales and retails jewelry, diamonds, fine
watches, and precious metal bullion and rare coin products through its
Charleston Gold & Diamond Exchange, Chicago Gold & Diamond Exchange
(formerly Bullion Express), and Dallas Gold & Silver Exchange
operations. DGSE also owns Fairchild International, Inc., one of the
largest vintage watch wholesalers in the country. In addition to its
retail facilities in Illinois, South Carolina, and Texas, the Company
operates websites which can be accessed at www.dgse.com,
and www.cgdeinc.com.
Real-time price quotations and real-time order execution in precious
metals are provided on another DGSE website at www.USBullionExchange.com.
Wholesale customers can access the full vintage watch inventory through
the restricted site at www.FairchildWatches.com.
The Company is headquartered in Dallas, Texas and its common stock
trades on the NYSE MKT exchange under the symbol "DGSE."
This press release includes statements which may constitute
"forward-looking" statements, usually containing the words "believe,"
"estimate," "project," "expect" or similar expressions. These statements
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements.
Factors that would cause or contribute to such differences include, but
are not limited to, continued acceptance of the company's products and
services in the marketplace, competitive factors, dependence upon
third-party vendors, and other risks detailed in the company's periodic
report filings with the Securities and Exchange Commission. By making
these forward-looking statements, the company undertakes no obligation
to update these statements for revisions or changes after the date of
this release.
|
|
DGSE COMPANIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
1,179,427
|
|
|
|
$
|
2,184,435
|
|
Trade receivables, net of allowances
|
|
|
|
14,668
|
|
|
|
|
904,076
|
|
Inventories
|
|
|
|
11,442,658
|
|
|
|
|
11,144,157
|
|
Prepaid expenses
|
|
|
|
196,042
|
|
|
|
|
104,513
|
|
Assets related to discontinued operations
|
|
|
|
28,478
|
|
|
|
|
49,729
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
12,861,273
|
|
|
|
|
14,386,910
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
4,237,393
|
|
|
|
|
4,365,767
|
|
Intangible assets, net
|
|
|
|
24,122
|
|
|
|
|
27,568
|
|
Other assets
|
|
|
|
127,681
|
|
|
|
|
128,356
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
17,250,469
|
|
|
|
$
|
18,908,601
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
$
|
133,210
|
|
|
|
$
|
131,003
|
|
Current maturities of capital leases
|
|
|
|
11,692
|
|
|
|
|
11,529
|
|
Accounts payable-trade
|
|
|
|
5,347,930
|
|
|
|
|
5,831,736
|
|
Accrued expenses
|
|
|
|
1,130,765
|
|
|
|
|
1,541,552
|
|
Customer deposits and other liabilities
|
|
|
|
1,154,027
|
|
|
|
|
1,082,778
|
|
Liabilities related to discontinued operations
|
|
|
|
279,749
|
|
|
|
|
303,564
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
8,057,373
|
|
|
|
|
8,902,162
|
|
|
|
|
|
|
|
|
Line of credit, related party
|
|
|
|
2,303,359
|
|
|
|
|
2,303,359
|
|
Long-term debt, less current maturities
|
|
|
|
1,578,143
|
|
|
|
|
1,616,237
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
11,938,875
|
|
|
|
|
12,821,758
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
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STOCKHOLDERS' EQUITY
|
|
|
|
|
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Common stock, $0.01 par value; 30,000,000 shares authorized; 12,253,846
and 12,175,584 shares issued and outstanding
|
|
|
|
122,538
|
|
|
|
|
122,388
|
|
Additional paid-in capital
|
|
|
|
34,254,371
|
|
|
|
|
34,231,271
|
|
Accumulated deficit
|
|
|
|
(29,065,315
|
)
|
|
|
|
(28,266,816
|
)
|
Total stockholders' equity
|
|
|
|
5,311,594
|
|
|
|
|
6,086,843
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
17,250,469
|
|
|
|
$
|
18,908,601
|
|
|
|
DGSE COMPANIES, INC. AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(UNAUDITED)
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|
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|
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For the Three Months Ended
|
|
|
|
March 31,
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
Sales
|
|
|
$
|
12,875,149
|
|
|
|
$
|
18,064,307
|
|
Cost of goods sold
|
|
|
|
10,541,966
|
|
|
|
|
14,853,636
|
|
Gross margin
|
|
|
|
2,333,183
|
|
|
|
|
3,210,671
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
2,886,043
|
|
|
|
|
3,346,774
|
|
Depreciation and amortization
|
|
|
|
140,624
|
|
|
|
|
90,585
|
|
|
|
|
|
3,026,667
|
|
|
|
|
3,437,359
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
|
(693,484
|
)
|
|
|
|
(226,688
|
)
|
|
|
|
|
|
|
|
Other expense (income):
|
|
|
|
|
|
|
Other income, net
|
|
|
|
(3,033
|
)
|
|
|
|
(26,495
|
)
|
Interest expense
|
|
|
|
83,768
|
|
|
|
|
80,813
|
|
|
|
|
|
80,735
|
|
|
|
|
54,318
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
|
(774,219
|
)
|
|
|
|
(281,006
|
)
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
26,844
|
|
|
|
|
3,579
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
|
(801,063
|
)
|
|
|
|
(284,585
|
)
|
|
|
|
|
|
|
|
Discontinued operations:
|
|
|
|
|
|
|
Income (loss) from discontinued operations, net of taxes
|
|
|
|
2,564
|
|
|
|
|
(238,393
|
)
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(798,499
|
)
|
|
|
$
|
(522,978
|
)
|
|
|
|
|
|
|
|
Basic net loss per common share:
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(0.02
|
)
|
Loss from discontinued operations
|
|
|
|
-
|
|
|
|
|
(0.02
|
)
|
Net loss per share
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
Diluted net loss per common share:
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(0.02
|
)
|
Loss from discontinued operations
|
|
|
|
-
|
|
|
|
|
(0.02
|
)
|
Net loss per share
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
Weighted-average number of common shares
|
|
|
|
|
|
|
Basic
|
|
|
|
12,245,679
|
|
|
|
|
12,193,940
|
|
Diluted
|
|
|
|
12,245,679
|
|
|
|
|
12,193,940
|
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Copyright Business Wire 2015