EL SEGUNDO, Calif., Nov. 14, 2017 (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, 2017.
Fiscal Q1 2018 Financial Highlights
- Revenues increased 20% to $2.16 billion from $1.81 billion for the three months ended September 30, 2016 and increased 63%
from $1.33 billion for the three months ended June 30, 2017
- Gross profit decreased 9% to $7.3 million from $8.1 million for the three months ended September 30, 2016 and increased 20%
from $6.1 million for the three months ended June 30, 2017
- Net income decreased 75% to $478,000 or $0.07 per diluted share from $2.0 million or $0.27 per diluted share for the three
months ended September 30, 2016 and decreased 61% from $1.2 million or $0.17 per diluted share for the three months ended June
30, 2017
- Gold ounces sold decreased 37% to 332,000 ounces from 530,000 for the three months ended September 30, 2016 and increased 14%
from 290,000 for the three months ended June 30, 2017
- Silver ounces sold decreased 33% to 14.5 million ounces from 21.8 million ounces for the three months ended September 30,
2016 and increased 3% from 14.1 million from the three months ended June 30, 2017
- Trading ticket volume increased 35% to 29,833 tickets from 22,031 for the three months ended September 30, 2016 and increased
6% from 28,098 for the three months ended June 30, 2017 (this increase was due in part to the company’s online trading portal,
which allows for smaller minimum order sizes)
- As of September 30, 2017, the number of secured loans increased 47% to 2,454 from 1,667 as of September 30, 2016 and
increased 3% from 2,375 as of June 30, 2017
Fiscal Q1 2018 Financial Results
Revenues increased 20% to $2.16 billion from $1.81 billion in the same year-ago quarter. The increase in revenues was mainly due to
higher forward sales, partially offset by a decrease in the amount of gold and silver prices and ounces sold.
Gross profit decreased 9% to $7.3 million (0.3% of revenue) from $8.1 million (0.4% of revenue) in the same year-ago quarter.
The decrease in gross profit was primarily related to a decrease in the total volume of gold and silver ounces sold and trading
profits partially offset by increased gross profits from the company’s new Goldline subsidiary. The decrease in volume of gold and
silver ounces sold was primarily related to slower market conditions in the current period compared to the same year-ago
quarter.
Selling, general and administrative expenses increased 23% to $7.0 million from $5.7 million in the same year-ago quarter. The
increase was primarily due to the acquisition of Goldline on August 28, 2017, whose September results are included in the
consolidated earnings for fiscal Q1 2018, partially offset by a decrease in performance-based compensation expense.
Interest income increased 10% to $3.2 million from $2.9 million in same year-ago quarter. The increase in interest income was
primarily due to an increase in the size of the company’s loan portfolio, which generated an increase in interest income of $0.4
million as compared to the same year-ago quarter, an increase of 21%.
Interest expense increased 22% to $2.7 million from $2.2 million in same year-ago quarter. The increase was primarily due to a
greater usage of the company’s lines of credit, the new Goldline Credit Facility and other product financing arrangements. The
increase was also due, in part, to higher LIBOR interest rates, which went into effect subsequent to the Federal Reserve rate
increases and increased amortization of loan facility costs.
Net income decreased 75% to $478,000 or $0.07 per diluted share as compared to $2.0 million or $0.27 per diluted share in the
same year-ago quarter. This decrease in net income was due primarily to lower physical sales volumes.
Management Commentary
“Although demand for physical precious metals products remains subdued industrywide, we believe we are gaining market share and
continue to look for ways to do more business in this environment,” said company CEO Greg Roberts. “To that end, we are judiciously
investing in growth areas to further diversify our business and offerings, with the objective of being in a stronger position to
capitalize on profitable opportunities when market conditions improve.
“One recent example of this strategy is our acquisition of Goldline, a leading direct retailer of precious metals to the
investor community, which we completed at the end of August. While the costs associated with the acquisition adversely affected our
results for the first quarter, we believe the acquisition presents a substantial opportunity for us to leverage Goldline’s
marketing platform to upsell and cross-sell our suite of services to their 150,000 clients and prospective client leads.”
Conference Call
A-Mark will hold a conference call today (November 14, 2017) 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: 1-877-407-0789
International number: 1-201-689-8562
The conference call will be broadcast simultaneously and available for replay via the Investor Relations 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 28, 2017.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Conference ID: 13673299
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 El Segundo, 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. Through its Goldline subsidiary, A-Mark sells precious
metals directly to the global collector and investor community, while also acting as the exclusive supplier to Goldline. For more
information, visit www.goldline.com.
A-Mark also holds a majority stake in a joint venture that owns the minting operations known as SilverTowne Mint. SilverTowne
Mint is a leading producer of fabricated silver bullion and specialty products. 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.
Company Contact:
Thor Gjerdrum, President
A-Mark Precious Metals, Inc.
310-587-1414
thor@amark.com
Investor Relations Contact:
Matt Glover
Liolios Group, Inc.
949-574-3860
AMRK@liolios.com
| A-MARK PRECIOUS METALS, INC. |
| CONDENSED CONSOLIDATED BALANCE
SHEETS |
| (amounts in thousands, except for share
data) |
| (unaudited) |
| |
| |
September 30,
2017 |
|
June 30,
2017 |
| ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash |
$ |
8,357 |
|
|
$ |
13,059 |
|
| Receivables, net |
42,133 |
|
|
39,295 |
|
| Derivative assets |
20,326 |
|
|
17,587 |
|
| Secured loans receivable |
88,871 |
|
|
91,238 |
|
| |
|
|
|
| Inventories: |
|
|
|
| Inventories |
186,720 |
|
|
149,316 |
|
| Restricted inventories |
124,864 |
|
|
135,343 |
|
| |
311,584 |
|
|
284,659 |
|
| |
|
|
|
| Income taxes receivable |
5,881 |
|
|
— |
|
| Prepaid expenses and other assets |
2,627 |
|
|
1,183 |
|
| Total current assets |
479,779 |
|
|
447,021 |
|
| |
|
|
|
| Plant, property and equipment, net |
8,320 |
|
|
6,607 |
|
| Goodwill |
10,331 |
|
|
8,881 |
|
| Intangibles, net |
8,910 |
|
|
4,065 |
|
| Long-term investments |
8,024 |
|
|
7,967 |
|
| Deferred tax assets - non-current |
1,176 |
|
|
3,959 |
|
| Total assets |
$ |
516,540 |
|
|
$ |
478,500 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
| Current liabilities: |
|
|
|
| Lines of credit |
$ |
219,000 |
|
|
$ |
180,000 |
|
| Liability on borrowed metals |
15,010 |
|
|
5,625 |
|
| Product financing arrangements |
124,864 |
|
|
135,343 |
|
| Accounts payable |
45,660 |
|
|
41,947 |
|
| Derivative liabilities |
23,989 |
|
|
34,582 |
|
| Note payable - related party |
— |
|
|
500 |
|
| Accrued liabilities |
4,831 |
|
|
4,945 |
|
| Income taxes payable |
— |
|
|
1,418 |
|
| Total current liabilities |
433,354 |
|
|
404,360 |
|
| Deferred tax liabilities - non-current |
1,904 |
|
|
— |
|
| Debt obligation (related party) |
6,818 |
|
|
— |
|
| Other long-term liabilities (related party) |
1,123 |
|
|
1,117 |
|
| Total liabilities |
443,199 |
|
|
405,477 |
|
| |
|
|
|
| Commitments and contingencies |
|
|
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
| Preferred stock, $0.01 par value, authorized 10,000,000 shares;
issued and outstanding: none as of September 30, 2017 and June 30, 2017 |
— |
|
|
— |
|
| Common Stock, par value $0.01; 40,000,000 shares authorized;
7,031,450 shares issued and outstanding as of September 30, 2017 and June 30, 2017 |
71 |
|
|
71 |
|
| Additional paid-in capital |
23,962 |
|
|
23,526 |
|
| Retained earnings |
45,910 |
|
|
45,994 |
|
| Total A-Mark Precious Metals, Inc. stockholders’
equity |
69,943 |
|
|
69,591 |
|
| Non-controlling interest |
3,398 |
|
|
3,432 |
|
| Total stockholders’ equity |
73,341 |
|
|
73,023 |
|
| Total liabilities, non-controlling interest and stockholders’
equity |
$ |
516,540 |
|
|
$ |
478,500 |
|
| 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, |
|
2017 |
|
2016 |
|
| Revenues |
|
$ |
2,163,790 |
|
|
$ |
1,805,653 |
|
|
| Cost of sales |
|
2,156,484 |
|
|
1,797,589 |
|
|
| Gross profit |
|
7,306 |
|
|
8,064 |
|
|
| |
|
|
|
|
|
| Selling, general and administrative expenses |
|
(6,976 |
) |
|
(5,664 |
) |
|
| Interest income |
|
3,161 |
|
|
2,884 |
|
|
| Interest expense |
|
(2,733 |
) |
|
(2,241 |
) |
|
| Other income (expense) |
|
61 |
|
|
(39 |
) |
|
| Unrealized loss on foreign exchange |
|
(101 |
) |
|
(6 |
) |
|
| Net income before provision for income taxes |
|
718 |
|
|
2,998 |
|
|
| Provision for income taxes |
|
(274 |
) |
|
(1,059 |
) |
|
| Net income |
|
444 |
|
|
1,939 |
|
|
| Add: Net loss attributable to non-controlling interest |
|
(34 |
) |
|
(11 |
) |
|
| Net income attributable to the Company |
|
$ |
478 |
|
|
$ |
1,950 |
|
|
| |
|
|
|
|
|
| Basic and diluted income per share attributable to A-Mark
Precious Metals, Inc.: |
|
| Basic |
|
$ |
0.07 |
|
|
$ |
0.28 |
|
|
| Diluted |
|
$ |
0.07 |
|
|
$ |
0.27 |
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
| Basic |
|
7,031,400 |
|
|
7,023,300 |
|
|
| Diluted |
|
7,122,400 |
|
|
7,108,500 |
|
|
| A-MARK PRECIOUS METALS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| (amounts in thousands) |
| (unaudited) |
| |
| Three Months Ended |
|
September 30,
2017 |
|
September 30,
2016 |
|
| Cash flows from operating activities: |
|
|
|
|
|
| Net income |
|
$ |
444 |
|
|
$ |
1,939 |
|
|
| Adjustments to reconcile net income to net cash used in operating
activities: |
|
|
|
|
|
| Depreciation and amortization |
|
529 |
|
|
321 |
|
|
| Amortization of loan cost |
|
233 |
|
|
204 |
|
|
| Deferred income taxes |
|
4,687 |
|
|
1,868 |
|
|
| Interest added to principal of secured loans |
|
(15 |
) |
|
(17 |
) |
|
| Share-based compensation |
|
436 |
|
|
191 |
|
|
| Earnings from equity method investment |
|
(57 |
) |
|
14 |
|
|
| Receivables |
|
(1,792 |
) |
|
22,556 |
|
|
| Secured loans |
|
(77 |
) |
|
(3,262 |
) |
|
| Secured loans to Former Parent |
|
(2,215 |
) |
|
1,369 |
|
|
| Derivative assets |
|
(1,914 |
) |
|
4,957 |
|
|
| Income tax receivable |
|
(5,881 |
) |
|
(1,023 |
) |
|
| Inventories |
|
(14,384 |
) |
|
(52,558 |
) |
|
| Prepaid expenses and other assets |
|
(802 |
) |
|
(357 |
) |
|
| Accounts payable |
|
1,417 |
|
|
14,606 |
|
|
| Derivative liabilities |
|
(10,593 |
) |
|
(22,935 |
) |
|
| Liabilities on borrowed metals |
|
436 |
|
|
(156 |
) |
|
| Accrued liabilities |
|
(3,147 |
) |
|
(3,787 |
) |
|
| Earn-out payments for related party contingent consideration in
excess of acquisition-date fair value |
|
(208 |
) |
|
— |
|
|
| Receivable from/payables to Former Parent |
|
— |
|
|
203 |
|
|
| Income taxes payable |
|
(1,418 |
) |
|
— |
|
|
| Net cash used in operating activities |
|
(34,321 |
) |
|
(35,867 |
) |
|
| Cash flows from investing activities: |
|
|
|
|
|
| Capital expenditures for property and equipment |
|
(318 |
) |
|
(336 |
) |
|
| Secured loans, net |
|
4,674 |
|
|
(10,368 |
) |
|
| Acquisition of subsidiary, net of cash |
|
(9,548 |
) |
|
(3,421 |
) |
|
| Net cash used in investing activities |
|
(5,192 |
) |
|
(14,125 |
) |
|
| Cash flows from financing activities: |
|
|
|
|
|
| Product financing arrangements, net |
|
(10,478 |
) |
|
58,431 |
|
|
| Dividends |
|
(562 |
) |
|
— |
|
|
| Borrowings (repayments) under lines of credit, net |
|
39,000 |
|
|
(9,000 |
) |
|
| Proceeds from issuance of debt obligation payable to related
party |
|
7,500 |
|
|
— |
|
|
| Repayments on notes payable to related party |
|
(500 |
) |
|
— |
|
|
| Stock award grant |
|
— |
|
|
172 |
|
|
| Debt funding fees |
|
(149 |
) |
|
— |
|
|
| Net cash provided by financing activities |
|
34,811 |
|
|
49,603 |
|
|
| |
|
|
|
|
|
| Net decrease in cash, cash equivalents, and restricted cash |
|
(4,702 |
) |
|
(389 |
) |
|
| Cash, cash equivalents, and restricted cash, beginning of
period |
|
13,059 |
|
|
17,142 |
|
|
| Cash, cash equivalents, and restricted cash, end of period |
|
$ |
8,357 |
|
|
$ |
16,753 |
|
|
| A-MARK PRECIOUS METALS, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
| (amounts in thousands) |
| (unaudited) |
| |
| Three Months Ended |
|
September 30,
2017 |
|
September 30,
2016 |
|
| Supplemental disclosures of cash flow information: |
|
|
|
|
|
| Cash paid during the period for: |
|
|
|
|
|
| Interest expense |
|
$ |
1,823 |
|
|
$ |
1,456 |
|
|
| Income taxes |
|
$ |
2,869 |
|
|
$ |
307 |
|
|
| |
|
|
|
|
|
| Non-cash investing and financing
activities: |
|
|
|
|
|
| Interest added to principal of secured loans |
|
$ |
15 |
|
|
$ |
17 |
|
|
| Debt funding fee |
|
$ |
534 |
|
|
$ |
— |
|
|
| Contribution of assets from minority interest |
|
$ |
— |
|
|
$ |
3,454 |
|
|
| Payable to minority interest partner for acquired business |
|
$ |
— |
|
|
$ |
500 |
|
|
| Earn out obligation payable to minority interest partner |
|
$ |
— |
|
|
$ |
1,523 |
|
|
Overview of Results of Operations for the Three Months Ended September 30, 2017 and 2016
Condensed Consolidated Results of Operations
The operating results of our business for the three months ended September 30, 2017 and 2016 are as follows:
| in thousands, except per share data |
|
|
| Three Months Ended September 30, |
2017 |
|
2016 |
|
$ |
|
% |
| |
$ |
|
%
of revenue |
|
$ |
|
%
of revenue |
|
Increase/
(decrease) |
|
Increase/
(decrease) |
| Revenues |
$ |
2,163,790 |
|
|
100.000 |
% |
|
$ |
1,805,653 |
|
|
100.000 |
% |
|
$ |
358,137 |
|
|
19.8 |
% |
| Gross profit |
7,306 |
|
|
0.338 |
% |
|
8,064 |
|
|
0.447 |
% |
|
$ |
(758 |
) |
|
(9.4 |
)% |
| Selling, general and administrative expenses |
(6,976 |
) |
|
(0.322 |
)% |
|
(5,664 |
) |
|
(0.314 |
)% |
|
$ |
1,312 |
|
|
23.2 |
% |
| Interest income |
3,161 |
|
|
0.146 |
% |
|
2,884 |
|
|
0.160 |
% |
|
$ |
277 |
|
|
9.6 |
% |
| Interest expense |
(2,733 |
) |
|
(0.126 |
)% |
|
(2,241 |
) |
|
(0.124 |
)% |
|
$ |
492 |
|
|
22.0 |
% |
| Other income (expense) |
61 |
|
|
0.003 |
% |
|
(39 |
) |
|
(0.002 |
)% |
|
$ |
100 |
|
|
(256.4 |
)% |
| Unrealized gain on foreign exchange |
(101 |
) |
|
(0.005 |
)% |
|
(6 |
) |
|
— |
% |
|
$ |
(95 |
) |
|
NM |
|
| Net income before provision for income taxes |
718 |
|
|
0.033 |
% |
|
2,998 |
|
|
0.166 |
% |
|
$ |
(2,280 |
) |
|
(76.1 |
)% |
| Provision for income taxes |
(274 |
) |
|
(0.013 |
)% |
|
(1,059 |
) |
|
(0.059 |
)% |
|
$ |
(785 |
) |
|
(74.1 |
)% |
| Net income |
444 |
|
|
0.021 |
% |
|
1,939 |
|
|
0.107 |
% |
|
$ |
(1,495 |
) |
|
(77.1 |
)% |
| Add: |
Net loss attributable to non-controlling interest |
(34 |
) |
|
(0.002 |
)% |
|
(11 |
) |
|
(0.001 |
)% |
|
$ |
23 |
|
|
NM |
|
| Net income attributable to the Company |
$ |
478 |
|
|
0.022 |
% |
|
$ |
1,950 |
|
|
0.108 |
% |
|
$ |
(1,472 |
) |
|
(75.5 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted income per share attributable to A-Mark
Precious Metals, Inc.: |
| Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
| Basic |
$ |
0.07 |
|
|
|
|
$ |
0.28 |
|
|
|
|
$ |
(0.21 |
) |
|
(75.0 |
)% |
| Diluted |
$ |
0.07 |
|
|
|
|
$ |
0.27 |
|
|
|
|
$ |
(0.20 |
) |
|
(74.1 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
| NM |
Not meaningful. |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
