A-Mark Precious Metals Reports Fiscal Third Quarter 2024 Results

Q3 FY 2024 Diluted Earnings Per Share of $0.21

Repurchased 204,396 Common Shares for $5 Million

Expanded into Asia with the Previously Announced Acquisition of LPM Group Limited

Company Reaffirms Regular Quarterly Cash Dividend Policy of $0.20 per share

EL SEGUNDO, Calif., May 07, 2024 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a leading fully integrated precious metals platform, reported results for the fiscal third quarter ended March 31, 2024.

Management Commentary

“Our third quarter results reflect the continued ability of our fully-integrated platform to deliver profitable results even in a difficult market environment,” said A-Mark CEO Greg Roberts. “During the quarter, we faced a combination of softened demand, premium compression, and elevated gold and silver prices, which led our traditional buyers to become sellers and provided us with the opportunity to purchase their inventory. Despite the challenging environment, we delivered $0.21 per diluted share and generated $12.6 million in non-GAAP EBITDA, including one-time acquisition costs of $2.2 million. We also increased the Direct-to-Consumer number of new customers by 8% compared with our second quarter.

“We advanced the logistics automation initiatives at our A-Mark Global Logistics (AMGL) facility in Las Vegas which will support increased volume while lowering operational costs. We also continued to enhance value for our shareholders by repurchasing 204,396 shares of common stock during the quarter. Furthermore, we made significant strides in our M&A growth strategy with our expansion into Asia through the previously announced acquisition of LPM Group Limited (“LPM”). We are enthusiastic about the opportunities in the Asian market and continue to explore prospects to expand our geographic presence.

“Our commitment to generating stockholder value remains firm, and we are confident in A-Mark’s diversified and proven business model.”

Fiscal Third Quarter 2024 Operational Highlights

• Gold ounces sold in the three months ended March 31, 2024 decreased 32% to 446,000 ounces from 659,000 ounces for the three months ended March 31, 2023, and decreased 1% from 450,000 ounces for the three months ended December 31, 2023
• Silver ounces sold in the three months ended March 31, 2024 decreased 30% to 25.7 million ounces from 36.9 million ounces for the three months ended March 31, 2023, and decreased 3% from 26.6 million ounces for the three months ended December 31, 2023
• As of March 31, 2024, the number of secured loans decreased 30% to 675 from 963 as of March 31, 2023, and decreased 6% from 715 as of December 31, 2023
• As of March 31, 2024, secured loans receivable increased 19% to $115.6 million from $96.9 million as of March 31, 2023, and increased 9% from $106.6 million as of December 31, 2023
• Direct-to-Consumer new customers for the three months ended March 31, 2024 decreased 13% to 56,600 from 64,700 for the three months ended March 31, 2023, and increased 8% from 52,500 for the three months ended December 31, 2023
• Direct-to-Consumer active customers for the three months ended March 31, 2024 decreased 15% to 126,000 from 147,400 for the three months ended March 31, 2023, and decreased 8% from 136,400 for the three months ended December 31, 2023
• Direct-to-Consumer average order value for the three months ended March 31, 2024 decreased $319, or 13% to $2,133 from $2,452 for the three months ended March 31, 2023, and decreased $85, or 4% from $2,218 for the three months ended December 31, 2023
• JM Bullion’s average order value for the three months ended March 31, 2024 decreased $249, or 11% to $2,003 from $2,252 for the three months ended March 31, 2023, and decreased $58, or 3% from $2,061 for the three months ended December 31, 2023

Fiscal Nine Months 2024 Operational Highlights

• Gold ounces sold in the nine months ended March 31, 2024 decreased 25% to 1.4 million ounces from 1.9 million ounces for the nine months ended March 31, 2023
• Silver ounces sold in the nine months ended March 31, 2024 decreased 26% to 82.7 million ounces from 111.0 million ounces for the nine months ended March 31, 2023
• Direct-to-Consumer new customers for the nine months ended March 31, 2024 decreased 40% to 148,200 from 244,900 for the nine months ended March 31, 2023. For the nine-month period ended March 31, 2023, approximately 30% of the new customers were attributable to the acquired customer list of BGASC in October 2022
• Direct-to-Consumer active customers for the nine months ended March 31, 2024 increased 8% to 368,800 from 342,500 for the nine months ended March 31, 2023
• Direct-to-Consumer average order value for the nine months ended March 31, 2024 decreased $141, or 6% to $2,253 from $2,394 for the nine months ended March 31, 2023
• JM Bullion’s average order value for the nine months ended March 31, 2024 decreased $123, or 6% to $2,093 from $2,216 for the nine months ended March 31, 2023
  
  

Fiscal Third Quarter 2024 Financial Highlights

• Revenues for the three months ended March 31, 2024 increased 13% to $2.611 billion from $2.317 billion for the three months ended March 31, 2023 and increased 26% from $2.079 billion for the three months ended December 31, 2023
• Gross profit for the three months ended March 31, 2024 decreased 54% to $34.8 million from $75.5 million for the three months ended March 31, 2023 and decreased 24% from $46.0 million for the three months ended December 31, 2023
• Gross profit margin for the three months ended March 31, 2024 decreased to 1.33% of revenue, from 3.26% of revenue for the three months ended March 31, 2023, and decreased from 2.21% of revenue in the three months ended December 31, 2023
• Net income attributable to the Company for the three months ended March 31, 2024 decreased 86% to $5.0 million from $35.9 million for the three months ended March 31, 2023, and decreased 64% from $13.8 million for the three months ended December 31, 2023
• Diluted earnings per share totaled $0.21 for the three months ended March 31, 2024, an 86% decrease compared to $1.46 for the three months ended March 31, 2023, and decreased 63% from $0.57 for the three months ended December 31, 2023
• Adjusted net income before provision for income taxes, depreciation, amortization, and acquisition costs (“Adjusted net income before provision for income taxes” or “Adjusted net income”), a non-GAAP financial performance measure, for the three months ended March 31, 2024 decreased 76% to $11.6 million from $49.2 million for the three months ended March 31, 2023, and decreased 47% from $21.7 million for the three months ended December 31, 2023
• Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP liquidity measure, for the three months ended March 31, 2024 decreased 76% to $12.6 million from $52.3 million for the three months ended March 31, 2023, and decreased 50% from $25.1 million for the three months ended December 31, 2023
  
  

Fiscal Nine Months 2024 Financial Highlights

• Revenues for the nine months ended March 31, 2024 increased 16% to $7.174 billion from $6.167 billion for the nine months ended March 31, 2023
• Gross profit for the nine months ended March 31, 2024 decreased 40% to $130.3 million from $216.1 million for the nine months ended March 31, 2023
• Gross profit margin for the nine months ended March 31, 2024 decreased to 1.82% of revenue, from 3.50% of revenue for the nine months ended March 31, 2023
• Net income attributable to the Company for the nine months ended March 31, 2024 decreased 67% to $37.6 million from $114.5 million for the nine months ended March 31, 2023
• Diluted earnings per share totaled $1.56 for the nine months ended March 31, 2024, a 66% decrease compared to $4.64 for the nine months ended March 31, 2023
• Adjusted net income for the nine months ended March 31, 2024 decreased 62% to $60.1 million from $156.9 million for the nine months ended March 31, 2023
• EBITDA for the nine months ended March 31, 2024 decreased 58% to $68.2 million from $163.1 million for the nine months ended March 31, 2023
  
  

Fiscal Third Quarter 2024 Financial Summary

Revenues increased 13% to $2.611 billion from $2.317 billion in the same year-ago quarter. Excluding an increase of $622.1 million of forward sales, our revenues decreased $328.6 million, or 20%, which was due to a decrease in gold and silver ounces sold, partially offset by higher average selling prices of gold and silver. The Direct-to-Consumer segment contributed 13% and 23% of the consolidated revenue in the fiscal third quarters of 2024 and 2023, respectively. JMB’s revenue represented 12% of the consolidated revenues for the fiscal third quarter of 2024 compared with 20% for the prior year fiscal third quarter.

Gross profit decreased 54% to $34.8 million (1.33% of revenue) from $75.5 million (3.26% of revenue) in the same year-ago quarter. The decrease in gross profit was due to lower gross profits earned from both the Wholesale Sales & Ancillary Services and Direct-to-Consumer segments. The Direct-to-Consumer segment contributed 52% and 57% of the consolidated gross profit in the fiscal third quarters of 2024 and 2023, respectively. Gross profit contributed by JMB represented 45% of the consolidated gross profit in the fiscal third quarter of 2024 and 47% of the consolidated gross profit for the prior year fiscal third quarter.

Selling, general and administrative expenses decreased 4% to $22.9 million from $23.8 million in the same year-ago quarter. The change was primarily due to a decrease in compensation expense (including performance-based accruals) of $2.2 million, a decrease in insurance costs of $0.9 million, and lower advertising costs of $0.4 million, partially offset by higher consulting and professional fees of $2.2 million and an increase in information technology costs of $0.2 million.

Depreciation and amortization expense decreased 12% to $2.9 million from $3.3 million in the same year-ago quarter. The change was primarily due to a $0.6 million decrease in JMB’s intangible asset amortization expense.

Interest income increased 10% to $6.7 million from $6.1 million in the same year-ago quarter. The aggregate increase in interest income was primarily due to an increase in other finance product income of $0.1 million and an increase in interest income earned by our Secured Lending segment of $0.5 million.

Interest expense increased 7% to $9.9 million from $9.2 million in the same year-ago quarter. The increase in interest expense was primarily due to an increase of $1.3 million associated with our Trading Credit Facility due to an increase in interest rates as well as increased borrowings and an increase of $0.9 million related to product financing arrangements, partially offset by a decrease of $1.4 million related to the AMCF Notes (including amortization of debt issuance costs) due to the repayment in December 2023.

Losses from equity method investments increased 194% to $0.2 million from $0.1 million in the same year-ago quarter. The decrease was due to decreased earnings of our equity method investees.

Net income attributable to the Company totaled $5.0 million or $0.21 per diluted share, compared to net income of $35.9 million or $1.46 per diluted share in the same year-ago quarter.

Adjusted net income before provision for income taxes for the three months ended March 31, 2024 totaled $11.6 million, a decrease of $37.5 million or 76% compared to $49.2 million in the same year-ago quarter. The decrease is principally due to lower net income before provision for income taxes.

EBITDA for the three months ended March 31, 2024 totaled $12.6 million, a decrease of $39.7 million or 76% compared to $52.3 million in the same year-ago quarter. The decrease was principally due to lower net income.

Fiscal Nine Months 2024 Financial Summary

Revenues increased 16% to $7.174 billion from $6.167 billion in the same year-ago period. Excluding an increase of $1.514 billion of forward sales, our revenues decreased $506.9 million, or 11.0%, which was due to a decrease in gold and silver ounces sold, partially offset by higher average selling prices of gold and silver. The Direct-to-Consumer segment contributed 14% and 23% of the consolidated revenue for the nine months ended March 31, 2024 and 2023, respectively. JMB’s revenue represented 13% of the consolidated revenues for the nine months ended March 31, 2024 compared with 21% for the nine months ended March 31, 2023.

Gross profit decreased 40% to $130.3 million (1.82% of revenue) from $216.1 million (3.50% of revenue) in the same year-ago period. The decrease in gross profit was due to lower gross profits earned from both the Wholesale Sales & Ancillary Services and Direct-to-Consumer segments. The Direct-to-Consumer segment contributed 47% and 56% of the consolidated gross profit for the nine months ended March 31, 2024 and 2023, respectively. Gross profit contributed by JMB represented 40% and 48% of the consolidated gross profit for the nine months ended March 31, 2024 and 2023, respectively.

Selling, general and administrative expenses increased 8% to $67.1 million from $62.4 million in the same year-ago period. The change was primarily due to an increase in consulting and professional fees of $4.8 million, an increase in information technology costs of $0.8 million, and an increase in compensation expense (including performance-based accruals) of $0.4 million, partially offset by a decrease in insurance costs of $1.4 million.

Depreciation and amortization expense decreased 13% to $8.6 million from $9.8 million in the same year-ago period. The change was primarily due to a $1.7 million decrease in JMB’s intangible asset amortization expense.

Interest income increased 18% to $19.1 million from $16.2 million in the same year-ago period. The aggregate increase in interest income was primarily due to an increase in other finance product income of $1.6 million and an increase in interest income earned by our Secured Lending segment of $1.4 million.

Interest expense increased 32% to $29.9 million from $22.6 million in the same year-ago period. The increase in interest expense was primarily driven by the following components: an increase of $6.9 million associated with our Trading Credit Facility due to an increase in interest rates as well as increased borrowings, an increase of $2.5 million related to product financing arrangements, partially offset by a decrease of $1.8 million related to the AMCF Notes (including amortization of debt issuance costs) due to the repayment in December 2023, and a $0.3 million decrease in loan servicing fees.

Earnings from equity method investments decreased 55% to $3.3 million from $7.3 million in the same year-ago period. The decrease was due to decreased earnings of our equity method investees.

Net income attributable to the Company totaled $37.6 million or $1.56 per diluted share, compared to net income of $114.5 million or $4.64 per diluted share in the same year-ago period.

Adjusted net income before provision for income taxes for the nine months ended March 31, 2024 totaled $60.1 million, a decrease of $96.8 million or 62% compared to $156.9 million in the same year-ago period. The decrease is principally due to lower net income before provision for income taxes.

EBITDA for the nine months ended March 31, 2024 totaled $68.2 million, a decrease of $95.0 million or 58% compared to $163.2 million in the same year-ago period. The decrease was principally due to lower net income.

Quarterly Cash Dividend Policy

A-Mark’s Board of Directors has re-affirmed its previously announced regular quarterly cash dividend policy of $0.20 per common share ($0.80 per share on an annual basis). The Company paid a $0.20 quarterly cash dividend on April 29, 2024 to stockholders of record as of April 16, 2024. It is expected that the next quarterly dividend will be paid in July 2024. The declaration of regular cash dividends in the future is subject to the determination each quarter by the Board of Directors, based on a number of factors, including the Company’s financial performance, available cash resources, cash requirements and alternative uses of cash and applicable bank covenants.

Conference Call

A-Mark will hold a conference call today (May 7, 2024) to discuss these financial results. A-Mark management will host the call at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) followed by a question-and-answer period. To participate, please call the conference telephone number 10 minutes before the start time and ask for the A-Mark Precious Metals conference call.

Webcast: https://www.webcaster4.com/Webcast/Page/2867/50365
U.S. dial-in number: 1-888-506-0062
International number: 1-973-528-0011
Participant Access Code: 607245

The call will also be broadcast live and available for replay on the Investor Relations section of A-Mark’s website at ir.amark.com. If you have any difficulty connecting with the conference call or webcast, please contact A-Mark’s investor relations team at 1-949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time through May 21, 2024.

Toll-free replay number: 1-877-481-4010
International replay number: 1-919-882-2331
Participant Access Code: 50365

About A-Mark Precious Metals

Founded in 1965, A-Mark Precious Metals, Inc. is a leading fully integrated precious metals platform that offers an array of gold, silver, platinum, palladium, and copper bullion, numismatic coins, and related products to wholesale and retail customers via a portfolio of channels. The company conducts its operations through three complementary segments: Wholesale Sales & Ancillary Services, Direct-to-Consumer, and Secured Lending. The company’s global customer base spans sovereign and private mints, manufacturers and fabricators, refiners, dealers, financial institutions, industrial users, investors, collectors, e-commerce customers, and other retail customers.

A-Mark’s Wholesale Sales & Ancillary Services segment distributes and purchases precious metal products from sovereign and private mints. As a U.S. Mint-authorized purchaser of gold, silver, and platinum coins since 1986, A-Mark purchases bullion products directly from the U.S. Mint for sale to customers. A-Mark also has longstanding distributorships with other sovereign mints, including Australia, Austria, Canada, China, Mexico, South Africa, and the United Kingdom. The company sells more than 200 different products to e-commerce retailers, coin and bullion dealers, financial institutions, brokerages, and collectors. In addition, A-Mark sells precious metal products to industrial users, including metal refiners, manufacturers, and electronic fabricators.

Located in the heart of Hong Kong’s Central Financial District, LPM Group Limited (LPM), is one of Asia’s largest precious metals dealers. LPM was acquired by AM/LPM Ventures, LLC, a subsidiary of A-Mark. LPM offers a wide selection of products to its wholesale and retail customers, through its retail showroom and 24/7 online trading platform, including recently released silver coins, gold bullion, certified coins, and the latest collectible numismatic issues.

Through its A-M Global Logistics subsidiary, A-Mark provides its customers with a range of complementary services, including managed storage options for precious metals as well as receiving, handling, inventorying, processing, packaging, and shipping of precious metals and coins on a secure basis. A-Mark’s mint operations, which are conducted through its wholly owned subsidiary Silver Towne Mint, enable the company to offer customers a wide range of proprietary coin and bar offerings and, during periods of market volatility when the availability of silver bullion from sovereign mints is often product constrained, preferred product access.

A-Mark’s Direct-to-Consumer segment operates as an omni-channel retailer of precious metals, providing access to a multitude of products through its wholly owned subsidiaries, JM Bullion and Goldline. JM Bullion is a leading e-commerce retailer of precious metals and operates eight separately branded, company-owned websites targeting specific niches within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, Gold.com, GoldPrice.org, SilverPrice.org, BGASC.com, and BullionMax.com. JMB also owns CyberMetals.com, an online platform where customers can purchase and sell fractional shares of digital gold, silver, platinum, and palladium bars in a range of denominations. Goldline markets precious metals directly to the investor community through various channels, including television, radio, and telephonic sales efforts. A-Mark also holds minority ownership interests in four additional direct-to-consumer brands.

The company operates its Secured Lending segment through its wholly owned subsidiary, Collateral Finance Corporation (CFC). Founded in 2005, CFC is a California licensed finance lender that originates and acquires loans secured by bullion and numismatic coins. Its customers include coin and precious metal dealers, investors, and collectors.

A-Mark is headquartered in El Segundo, CA and has additional offices and facilities in the neighboring Los Angeles area as well as in Dallas, TX, Las Vegas, NV, Winchester, IN, Vienna, Austria, and Hong Kong. For more information, visit www.amark.com.

A-Mark periodically provides information for investors on its corporate website, www.amark.com, and its investor relations website, ir.amark.com. This includes press releases and other information about financial performance, reports filed or furnished with the SEC, information on corporate governance, and investor presentations.

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. These include statements regarding expectations with respect to future profitability and growth, dividend declarations, the amount or timing of any future dividends, future macroeconomic conditions and demand for precious metal products, and the Company’s ability to effectively respond to changing economic conditions. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results or circumstances 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 the Company’s growth strategy, including the inability to identify suitable or available acquisition or investment opportunities; greater than anticipated costs incurred to execute this strategy; the inability to successfully integrate recently acquired businesses; changes in the current international political climate, which historically has favorably contributed to demand and volatility in the precious metals markets but also poses certain risks and uncertainties for the company, particularly in recent periods; potential adverse effects of the current problems in the national and global supply chains; increased competition for the Company’s higher margin services, which could depress pricing; the failure of the Company’s business model to respond to changes in the market environment as anticipated; changes in consumer demand and preferences for precious metal products generally; potential negative effects that inflationary pressure may have on our business; the inability of the Company to expand capacity at Silver Towne Mint, the failure of our investee companies to maintain, or address the preferences of, their customer bases; general risks of doing business in the commodity markets; and the strategic, business, economic, financial, political and governmental risks and other Risk Factors described in in the Company’s public filings with the Securities and Exchange Commission (“SEC”).

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.

Use and Reconciliation of Non-GAAP Measures

In addition to presenting the Company’s financial results determined in accordance with U.S. GAAP, management believes the following non-GAAP measures are useful in evaluating the Company’s operating performance: “adjusted net income before provision for income taxes” and “earnings before interest, taxes, depreciation and amortization” (“EBITDA”). Management believes the “adjusted net income before provision for income taxes” non-GAAP financial performance measure assists investors and analysts by facilitating comparison of period-to-period operational performance on a consistent basis by excluding items that management does not believe are indicative of the Company’s core operating performance. The items excluded from this financial measure may have a material impact on the Company’s financial results. Certain of those items are non-recurring, while others are non-cash in nature. Management believes the EBITDA non-GAAP liquidity measure assists investors and analysts by facilitating comparison of our business operations before investing activities, interest, and income taxes with other publicly traded companies. Non-GAAP measures do not have standardized definitions and should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with U.S. GAAP, and should be read in conjunction with the financial statements included in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC. Management encourages investors and others to review the Company’s financial information in its entirety and not to rely on any single financial or liquidity measure.

In the Company’s reconciliation from its reported U.S. GAAP “net income before provision for income taxes” to its non-GAAP “adjusted net income before provision for income taxes”, the Company eliminates the impact of the following three amounts: (i) acquisition expenses; (ii) amortization expenses related to intangible assets acquired; and (iii) depreciation expense. The Company’s reconciliations from its reported U.S. GAAP “net income before provision for income taxes” to its non-GAAP “adjusted net income before provision for income taxes”, and “net income” and “net cash provided by (used in) operating activities” to its non-GAAP “EBITDA” are provided below and are also included in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC for the quarterly period ended March 31, 2024.

Company Contact:
Steve Reiner, Executive Vice President, Capital Markets & Investor Relations
A-Mark Precious Metals, Inc.
1-310-587-1410
sreiner@amark.com

Investor Relations Contact:
Matt Glover or Greg Bradbury
Gateway Group, Inc.
1-949-574-3860
AMRK@gateway-grp.com

Overview of Results of Operations for the Three Months Ended March 31, 2024 and 2023

Consolidated Results of Operations

The operating results for the three months ended March 31, 2024 and 2023 were as follows (in thousands, except per share data):

Overview of Results of Operations for the Three Months Ended March 31, 2024 and December 31, 2023

Consolidated Results of Operations

The operating results for the three months ended March 31, 2024 and December 31, 2023 were as follows (in thousands, except per share data):

Overview of Results of Operations for the Nine Months Ended March 31, 2024 and 2023

Consolidated Results of Operations

The operating results for the nine months ended March 31, 2024 and 2023 were as follows (in thousands, except per share data):

Reconciliation of U.S. GAAP to Non-GAAP Measures for the Three Months Ended March 31, 2024 and 2023

A reconciliation of net income before provision for income taxes to adjusted net income before provision for income taxes for the three months ended March 31, 2024 and 2023 follows (in thousands):

A reconciliation of net income to EBITDA, and operating cash flows to EBITDA for the three months ended March 31, 2024 and 2023 follows (in thousands):

Reconciliation of U.S. GAAP to Non-GAAP Measures for the Three Months Ended March 31, 2024 and December 31, 2023

A reconciliation of net income before provision for income taxes to adjusted net income before provision for income taxes for the three months ended March 31, 2024 and December 31, 2023 follows (in thousands):

A reconciliation of net income to EBITDA, and operating cash flows to EBITDA for the three months ended March 31, 2024 and December 31, 2023 follows (in thousands):

Reconciliation of U.S. GAAP to Non-GAAP Measures for the Nine Months Ended March 31, 2024 and 2023

A reconciliation of net income before provision for income taxes to adjusted net income before provision for income taxes for the nine months ended March 31, 2024 and 2023 follows (in thousands):

A reconciliation of net income to EBITDA, and operating cash flows to EBITDA for the nine months ended March 31, 2024 and 2023 follows (in thousands):