SANTA MONICA, Calif., Nov. 07, 2016 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc.
(NASDAQ:AMRK), a full-service precious metals trading company and an official distributor for all the major
sovereign mints, reported results for the fiscal first quarter ended September 30, 2016.
Fiscal Q1 2017 Highlights
- Revenues decreased 10% to $1.81 billion from $2.01 billion for the three months ended September 30, 2015 and increased 4.1%
from $1.74 billion for the three months ended June 30, 2016
- Gross profit decreased 44% to $8.1 million from $14.4 million for the three months ended September 30, 2015 and increased
6.6% from $7.6 million for the three months ended June 30, 2016
- Net income decreased 65% to $2.0 million or $0.27 per diluted share from $5.6 million or $0.80 per diluted share for the
three months ended September 30, 2015 and increased 83% from $1.1 million or $0.15 per diluted share for the three months ended
June 30, 2016
- Gold ounces sold decreased 41% to 530,000 ounces from 896,000 for the three months ended September 30, 2015 and decreased
25.5% from 711,000 for the three months ended June 30, 2016
- Silver ounces sold decreased 46% to 21.8 million ounces from 40.5 million from the three months ended September 30, 2015 and
decreased 15.6% from 25.8 million ounces for the three months ended June 30, 2016
- Trading ticket volume decreased 24% to 22,031 tickets from 28,910 for the three months ended September 30, 2015 and increased
5.1% from 20,964 for the three months ended June 30, 2016
- Number of secured loans increased 255% to 1,667 as of September 30, 2016 from 470 as of September 30, 2015 and increased
42.1% from 1,173 as of June 30, 2016
Fiscal Q1 2017 Financial Results
Revenues decreased 10% to $1.81 billion from $2.01 billion in the same year-ago quarter. The decrease in revenue was primarily due
to lower gold and silver ounces sold as compared to the same year-ago quarter as a result of the unusual market conditions in
fiscal Q1 2016 in which commodities experienced unusually high volatility. This decrease was partially offset by an increase
in precious metal prices.
Gross profit decreased 44% to $8.1 million (0.45% of revenue) from $14.4 million (0.72% of revenue) in the same year-ago
quarter. The decline in gross profit margin was primarily due to lower premium spreads on the company’s primary products, as well
as lower ounces and lower total tickets compared to the same year-ago quarter. The tighter premium spreads and lower volumes as
compared to the same year-ago quarter were due primarily to the unusual market conditions in fiscal Q1 2016 in which commodities
experienced unusually high volatility resulting in a widening of trading spreads and higher demand.
Selling, general and administrative expenses decreased 12% to $5.7 million from $6.4 million in the same year-ago quarter. The
decrease was primarily due to lower performance-based compensation accruals. The decrease in selling, general and administrative
expenses was partially offset by $250,000 of consulting expenses primarily related to the development and implementation of a new
enterprise resource planning system and $600,000 of other non-recurring expenses.
Interest income increased 49% to $2.9 million from $1.9 million in same year-ago quarter, driven primarily by an increase in the
size of the company’s loan portfolio, as well as increased utilization of the Company’s inventory finance products by its wholesale
customers.
Interest expense increased 82% to $2.2 million from $1.2 million in same year-ago quarter, which was primarily due to greater
usage of the company’s lines of credit and other product financing arrangements.
Net income decreased 65% to $2.0 million or $0.27 per diluted share from $5.6 million or $0.80 per diluted share in the same
year-ago quarter. The decrease in net income was primarily due to lower revenue and gross profit.
Management Commentary
“Fiscal Q1 was gratifying in many ways because it validated our business model in a relatively subdued precious metals market,”
said company CEO, Greg Roberts. “These conditions were consistent with the prior quarter, so looking at our results on a sequential
basis, nearly every metric was up, including revenue, gross profit, and net income, despite lower physical metal ounces sold. The
sequential improvement was driven by strong demand for our higher-margin custom coin and finance products. This solid performance
illustrates the advantages of our diversified business model, which provides multiple revenue streams and offers opportunities for
significantly higher gross profit in market environments with increased volatility and demand—similar to what we experienced in
fiscal Q1 of last year.
“Our initiatives to expand our capacity and product offerings continue to gain traction. This is highlighted by several recent
accomplishments, particularly the strategic investment we made in SilverTowne Mint, a leading producer of fabricated silver
products. SilverTowne significantly expands our capacity to meet unforeseen surges in demand during volatile market
environments.
“In addition to expanding our capacity and production capabilities, we have completed the wholesale operations consolidation
plan for our Las Vegas logistics facility. By consolidating those operations into one primary location under our control, we have
reduced dependence on third-party service providers, while enhancing quality control, reducing operating costs, and ensuring a more
vertically integrated business model. An essential part of our strategy for this facility is to expand our suite of ancillary
services, including long-term secured storage. IRA custody is now becoming a growing area within precious metals storage, and we
are pleased to have recently secured our first customer for this service. We hope to secure additional customers during fiscal
2017.
“And finally, while the relatively subdued market conditions continue to persist in our current fiscal quarter, both in terms of
demand and volatility, we remain focused on executing our plan to grow our platform of high-margin and turnkey solutions. We
entered fiscal 2017 with encouraging momentum; now, we aim to leverage that progress, as well as our diversified business model, to
expand margins and capitalize on market conditions as they arise.”
Conference Call
A-Mark will hold a conference call today (November 7, 2016) to discuss these financial results. The company's CEO Greg Roberts,
President Thor Gjerdrum and CFO Cary Dickson will host the call at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). A question and
answer session will follow management's presentation.
To participate, please dial the appropriate number at least five minutes prior to the start time, and ask for the A-Mark
Precious Metals conference call.
U.S. dial-in number: 877-407-0789
International number: 201-689-8562
The conference call will be broadcast simultaneously and available for replay via the Investor Information section of A-Mark’s
website at www.amark.com. If you have any difficulty connecting with the conference call or webcast, please
contact Liolios Group at 949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern time through November 21, 2016.
Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Conference ID: 13649389
About A-Mark Precious Metals
A-Mark Precious Metals, Inc. is a full-service precious metals trading company and an official distributor for many government
mints throughout the world. The company offers gold, silver, platinum and palladium in the form of bars, plates, powder, wafers,
grain, ingots and coins. Its Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious
metals, while its Coin & Bar unit deals in over 200 coin and bar products in a variety of weights, shapes and sizes for
distribution to dealers and other qualified purchasers. The company operates trading centers in Santa Monica, California, and
Vienna, Austria, for buying and selling precious metals.
In addition to wholesale and trading activity, A-Mark offers customers a variety of services, including financing, consignment
and various customized financial programs. As a U.S. Mint-authorized purchaser of gold, silver and platinum coins, A-Mark purchases
bullion products directly from the U.S. Mint for sale to customers. A-Mark also has distributorships with other sovereign mints,
including in Australia, Austria, Canada, China, Mexico and South Africa. Customers of A Mark include mints, manufacturers and
fabricators, refiners, coin and metal dealers, banks and other financial institutions, jewelers, investors and collectors. For more
information about A-Mark Precious Metals, visit www.amark.com.
Through its subsidiary Collateral Finance Corporation, a licensed California Finance Lender, the company offers loans
collateralized by numismatic and semi-numismatic coins and bullion to coin and metal dealers, investors and collectors. Through its
Transcontinental Depository Services subsidiary, it offers a variety of managed storage options for precious metals products to
financial institutions, dealers, investors and collectors around the world. Through its A-M Global Logistics subsidiary, the
company provides its customers an array of complementary services, including storage, shipping, handling, receiving, processing,
and inventorying of precious metals and custom coins on a secure basis.
A-Mark recently acquired a majority stake in a joint venture, AM&ST Associates, LLC (AM&ST), which concurrently acquired
the entire minting business from Indiana-based SilverTowne Mint, a leading producer of fabricated silver bullion and specialty
products. SilverTowne Mint continues to hold a non-majority stake in the joint venture. A-Mark has entered into an exclusive
distributorship agreement with AM&ST and intends to leverage AM&ST’s fabrication capabilities and extensive coin die
portfolio to expand its custom coin programs, as well as introduce new custom products for individual customers. For more
information about SilverTowne Mint, please visit www.silvertownemint.com.
Important Cautions Regarding Forward-Looking Statements
Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are
"forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange
Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ
materially from those expressed or implied in these statements. Factors that could cause actual results to differ include the
following: the failure to execute our growth strategy as planned; greater than anticipated costs incurred to execute this strategy;
changes in the current international political climate which has favorably contributed to demand and volatility in the precious
metals markets; increased competition for our higher margin services, which could depress pricing; the failure of our business
model to respond to changes in the market environment as anticipated; general risks of doing business in the commodity markets; and
other business, economic, financial and governmental risks as described in in the Company’s public filings with the Securities and
Exchange Commission.
The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and
variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made.
Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are
forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements.
| |
| A-MARK PRECIOUS METALS,
INC. |
| CONDENSED CONSOLIDATED BALANCE
SHEETS |
| (amounts in thousands, except for share
data) |
| (unaudited) |
| |
| |
September 30,
2016 |
|
June 30,
2016 |
| |
|
|
|
| ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash |
$ |
16,753 |
|
|
$ |
17,142 |
|
| Receivables, net |
20,746 |
|
|
43,302 |
|
| Derivative assets |
28,775 |
|
|
33,732 |
|
| Secured loans receivable |
82,782 |
|
|
70,004 |
|
| |
|
|
|
| Inventories: |
|
|
|
| Inventories |
179,826 |
|
|
185,699 |
|
| Restricted inventories |
117,789 |
|
|
59,358 |
|
| |
297,615 |
|
|
245,057 |
|
| |
|
|
|
| Income taxes receivable |
8,341 |
|
|
7,318 |
|
| Income taxes receivable from Former Parent |
— |
|
|
203 |
|
| Prepaid expenses and other assets |
1,656 |
|
|
1,503 |
|
| Total current assets |
456,668 |
|
|
418,261 |
|
| |
|
|
|
| Plant, property and equipment, net |
5,730 |
|
|
3,482 |
|
| Goodwill |
8,881 |
|
|
4,620 |
|
| Intangibles, net |
4,391 |
|
|
1,987 |
|
| Long-term secured loans receivable |
— |
|
|
500 |
|
| Long-term investments |
7,859 |
|
|
7,873 |
|
| Deferred tax assets - non-current |
— |
|
|
424 |
|
| Total assets |
$ |
483,529 |
|
|
$ |
437,147 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
| Current liabilities: |
|
|
|
| Lines of credit |
$ |
203,000 |
|
|
$ |
212,000 |
|
| Liability on borrowed metals |
4,196 |
|
|
4,352 |
|
| Product financing arrangements |
117,789 |
|
|
59,358 |
|
| Accounts payable |
61,867 |
|
|
46,769 |
|
| Derivative liabilities |
13,519 |
|
|
36,454 |
|
| Note payable - related party |
500 |
|
|
— |
|
| Accrued liabilities |
4,279 |
|
|
7,660 |
|
| Total current liabilities |
405,150 |
|
|
366,593 |
|
| Deferred tax liabilities - non-current |
8,689 |
|
|
7,245 |
|
| Other long-term liabilities |
1,117 |
|
|
— |
|
| Total liabilities |
414,956 |
|
|
373,838 |
|
| |
|
|
|
| Commitments and contingencies |
|
|
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
| Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as
of September 30, 2016 and June 30, 2016 |
— |
|
|
— |
|
Common Stock, par value $0.01; 40,000,000 shares authorized; 7,031,450 and 7,021,450
shares issued and outstanding as of September 30, 2016 and June 30, 2016, respectively |
71 |
|
|
71 |
|
| Additional paid-in capital |
22,583 |
|
|
22,220 |
|
| Retained earnings |
42,476 |
|
|
41,018 |
|
| Total A-Mark Precious Metals, Inc. stockholders’ equity |
65,130 |
|
|
63,309 |
|
| Non-controlling interests |
3,443 |
|
|
— |
|
| Total stockholders’ equity |
68,573 |
|
|
63,309 |
|
| Total liabilities, non-controlling interests and stockholders’
equity |
$ |
483,529 |
|
|
$ |
437,147 |
|
| |
|
| A-MARK PRECIOUS METALS, INC. |
|
| CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
|
| (in thousands, except for share and per share
data) |
|
| (unaudited) |
|
| |
|
| |
|
Three Months Ended |
|
| |
|
September 30,
2016 |
|
September 30,
2015 |
|
| Revenues |
|
$ |
1,805,653 |
|
|
$ |
2,006,936 |
|
|
| Cost of sales |
|
1,797,589 |
|
|
1,992,512 |
|
|
| Gross profit |
|
8,064 |
|
|
14,424 |
|
|
| |
|
|
|
|
|
| Selling, general and administrative expenses |
|
(5,664 |
) |
|
(6,408 |
) |
|
| Interest income |
|
2,884 |
|
|
1,933 |
|
|
| Interest expense |
|
(2,241 |
) |
|
(1,234 |
) |
|
| Other (expense) income |
|
(39 |
) |
|
412 |
|
|
| Unrealized loss on foreign exchange |
|
(6 |
) |
|
(39 |
) |
|
| Net income before provision for income taxes |
|
2,998 |
|
|
9,088 |
|
|
| Provision for income taxes |
|
(1,059 |
) |
|
(3,469 |
) |
|
| Net income |
|
1,939 |
|
|
5,619 |
|
|
| Less: Net loss attributable to non-controlling interests |
|
(11 |
) |
|
— |
|
|
| Net income attributable to A-Mark |
|
$ |
1,950 |
|
|
$ |
5,619 |
|
|
| |
|
|
|
|
|
| Basic and diluted income per share attributable to A-Mark Precious Metals,
Inc.: |
|
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.28 |
|
|
$ |
0.81 |
|
|
| Diluted |
|
$ |
0.27 |
|
|
$ |
0.80 |
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
| Basic |
|
7,023,300 |
|
|
6,973,500 |
|
|
| Diluted |
|
7,108,500 |
|
|
7,058,700 |
|
|
| A-MARK PRECIOUS METALS, INC. |
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
| (amounts in thousands) |
|
| (unaudited) |
|
| |
|
| Three Months Ended |
|
September 30,
2016 |
|
September 30,
2015 |
|
| Cash flows from operating activities: |
|
|
|
|
|
| Net income |
|
$ |
1,939 |
|
|
$ |
5,619 |
|
|
| Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
| Depreciation and amortization |
|
321 |
|
|
303 |
|
|
| Amortization of loan cost |
|
204 |
|
|
— |
|
|
| Deferred income taxes |
|
1,868 |
|
|
1,444 |
|
|
| Interest added to principal of secured loans |
|
(17 |
) |
|
(26 |
) |
|
| Share-based compensation |
|
191 |
|
|
53 |
|
|
| Earnings from equity method investment |
|
14 |
|
|
(255 |
) |
|
| Changes in assets and liabilities: |
|
|
|
|
|
| Receivables |
|
22,556 |
|
|
(17,223 |
) |
|
| Secured loans |
|
(3,262 |
) |
|
340 |
|
|
| Secured loans to Former Parent |
|
1,369 |
|
|
(710 |
) |
|
| Derivative assets |
|
4,957 |
|
|
738 |
|
|
| Income tax receivable |
|
(1,023 |
) |
|
1,822 |
|
|
| Inventories |
|
(52,558 |
) |
|
(63,005 |
) |
|
| Prepaid expenses and other current assets |
|
(357 |
) |
|
128 |
|
|
| Accounts payable |
|
14,606 |
|
|
27,860 |
|
|
| Derivative liabilities |
|
(22,935 |
) |
|
(5,004 |
) |
|
| Liabilities on borrowed metals |
|
(156 |
) |
|
(5,491 |
) |
|
| Accrued liabilities |
|
(3,787 |
) |
|
(1,088 |
) |
|
| Receivable from/payables to Former Parent |
|
203 |
|
|
— |
|
|
| Net cash used in operating activities |
|
(35,867 |
) |
|
(54,495 |
) |
|
| Cash flows from investing activities: |
|
|
|
|
|
| Capital expenditures for property and equipment |
|
(336 |
) |
|
(189 |
) |
|
| Secured loans, net |
|
(10,368 |
) |
|
(1,355 |
) |
|
| Acquisition of majority-owned subsidiary, net of cash |
|
(3,421 |
) |
|
— |
|
|
| Net cash used in investing activities |
|
(14,125 |
) |
|
(1,544 |
) |
|
| Cash flows from financing activities: |
|
|
|
|
|
| Product financing arrangements, net |
|
58,431 |
|
|
10,605 |
|
|
| Dividends |
|
— |
|
|
(349 |
) |
|
| (Repayments) borrowings under lines of credit, net |
|
(9,000 |
) |
|
29,900 |
|
|
| Release of common stock |
|
172 |
|
|
— |
|
|
| Net cash provided by financing activities |
|
49,603 |
|
|
40,156 |
|
|
| |
|
|
|
|
|
| Net (decrease) increase in cash and cash equivalents |
|
(389 |
) |
|
(15,883 |
) |
|
| Cash and cash equivalents, beginning of period |
|
17,142 |
|
|
20,927 |
|
|
| Cash and cash equivalents, end of period |
|
$ |
16,753 |
|
|
$ |
5,044 |
|
|
| |
|
|
|
|
|
| Supplemental disclosures of cash flow information: |
|
|
|
|
|
| Cash paid during the period for: |
|
|
|
|
|
| Interest expense |
|
$ |
1,456 |
|
|
$ |
1,134 |
|
|
| Income taxes |
|
$ |
307 |
|
|
$ |
— |
|
|
| Non-cash investing and financing activities: |
|
|
|
|
|
| Interest added to principal of secured loans |
|
$ |
14 |
|
|
$ |
26 |
|
|
| Contribution of assets from minority interest |
|
$ |
3,454 |
|
|
$ |
— |
|
|
| Note issued minority interest partner for acquired business |
|
$ |
500 |
|
|
$ |
— |
|
|
| Earn out obligation payable to minority interest partner |
|
$ |
1,523 |
|
|
$ |
— |
|
|
| |
|
|
|
|
|
|
|
|
|
Consolidated Results of Operations
The operating results of our business for the three months ended September 30, 2016 and 2015 are as follows:
| in
thousands, except per share data |
|
|
| Three Months Ended September 30, |
2016 |
|
2015 |
|
$ |
|
% |
| |
$ |
|
% of
revenue |
|
$ |
|
% of
revenue |
|
Increase/(decrease) |
|
Increase/(decrease) |
| Revenues |
$ |
1,805,653 |
|
|
100.000 |
% |
|
$ |
2,006,936 |
|
|
100.000 |
% |
|
$ |
(201,283 |
) |
|
(10.0 |
)% |
| Gross profit |
8,064 |
|
|
0.447 |
% |
|
14,424 |
|
|
0.719 |
% |
|
$ |
(6,360 |
) |
|
(44.1 |
)% |
| Selling, general and administrative expenses |
(5,664 |
) |
|
(0.314 |
)% |
|
(6,408 |
) |
|
(0.319 |
)% |
|
$ |
(744 |
) |
|
(11.6 |
)% |
| Interest income |
2,884 |
|
|
0.160 |
% |
|
1,933 |
|
|
0.096 |
% |
|
$ |
951 |
|
|
49.2 |
% |
| Interest expense |
(2,241 |
) |
|
(0.124 |
)% |
|
(1,234 |
) |
|
(0.061 |
)% |
|
$ |
1,007 |
|
|
81.6 |
% |
| Other (expense) income |
(39 |
) |
|
(0.002 |
)% |
|
412 |
|
|
0.021 |
% |
|
$ |
(451 |
) |
|
(109.5 |
)% |
| Unrealized loss on foreign exchange |
(6 |
) |
|
— |
% |
|
(39 |
) |
|
(0.002 |
)% |
|
$ |
33 |
|
|
NM |
| Net income before provision for income taxes |
2,998 |
|
|
0.166 |
% |
|
9,088 |
|
|
0.453 |
% |
|
$ |
(6,090 |
) |
|
(67.0 |
)% |
| Provision for income taxes |
(1,059 |
) |
|
(0.059 |
)% |
|
(3,469 |
) |
|
(0.173 |
)% |
|
$ |
(2,410 |
) |
|
69.5 |
% |
| Net income |
1,939 |
|
|
0.107 |
% |
|
5,619 |
|
|
0.280 |
% |
|
$ |
(3,680 |
) |
|
(65.5 |
)% |
| Less: Net loss attributable to non-controlling interests |
(11 |
) |
|
— |
% |
|
— |
|
|
— |
% |
|
$ |
(11 |
) |
|
— |
% |
| Net income attributable to A-Mark |
$ |
1,950 |
|
|
0.108 |
% |
|
$ |
5,619 |
|
|
0.280 |
% |
|
$ |
(3,669 |
) |
|
(65.3 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted income per share attributable to A-Mark
Precious Metals, Inc.: |
|
|
| Per Share
Data: |
|
|
|
|
|
|
|
|
|
|
|
| Basic |
$ |
0.28 |
|
|
|
|
$ |
0.81 |
|
|
|
|
$ |
(0.53 |
) |
|
(65.4 |
)% |
| Diluted |
$ |
0.27 |
|
|
|
|
$ |
0.80 |
|
|
|
|
$ |
(0.53 |
) |
|
(66.3 |
)% |
Company Contact: Thor Gjerdrum, President A-Mark Precious Metals, Inc. 310-587-1414 thor@amark.com Investor Relations Contact: Matt Glover or Najim Mostamand Liolios Group, Inc. 949-574-3860 AMRK@liolios.com
