Portfolio Rationalization Expected to Enable
Continuing Operations to Return to Profitability
DGSE Companies, Inc. (NYSE MKT: DGSE), 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 quarter ended March 31, 2014.
First Quarter 2014 Business and Financial Highlights
- Dusty Clem was promoted to Chairman and
Chief Executive Officer of DGSE Companies, Inc. replacing James
Vierling who resigned as CEO of DGSE to accept a position with
Elemetal, LLC, DGSE’s largest shareholder.
- The company closed six locations in its
Southern Bullion Coin and Jewelry division (“Southern Bullion”).
Subsequent to the end of the quarter, all remaining Southern
Bullion locations were closed for a total of 23 store closings
since February 2014; DGSE expects to record $3.7 million in
non-recurring charges in 2014 as part of discontinued
operations.
- Revenues were $19.9 million compared to
$29.2 million, a 32% decline compared to the year-ago period.
Significant decreases in both bullion and scrap sales were a result
of the drop in gold prices.
- Gross profit was $4.4 million, or 22.3%
of revenue, compared to $5.3 million, or 18.1% of revenue in the
same period last year. The 4.2% improvement was driven by an
increase in high-margin jewelry sales, as well as improved margins
on bullion and scrap sales.
- Selling, general and administrative
expenses (“SG&A”) were essentially flat at $4.7 million during
both the first quarter of 2014 and 2013.
- Net loss, inclusive of the
non-recurring expenses, was approximately $523,000 or $0.04 per
share, compared to net income of approximately $300,000, or $0.02
per share, in the first quarter of 2013.
- The company successfully executed a
one-year extension of the loan agreement with NTR Metals, LLC
(“NTR”), extending the maturity date to August 1, 2015. All other
terms of the agreement remain the same.
Dusty Clem, Chairman of the Board and Chief Executive Officer,
stated, “In light of existing market realities, we took decisive
action during the quarter to mitigate our losses in order to return
the company’s continuing operations to profitability. Collectively,
the 23 Southern Bullion locations we closed this year contributed
approximately $1.9 million to our net losses for 2013. These
closures allow us to return all of our attention to the 12
locations that can support the full exchange model which DGSE has
successfully operated for decades. Moving forward, we continue to
focus on building a more robust e-commerce platform and bolstering
revenues in the higher-margin segments of our business, including
our high-end jewelry, diamonds and watches.”
First Quarter 2014 Results
For the quarter ended March 31, 2014, revenues were $19.9
million, a 32% decrease compared to $29.2 million in the quarter
ended March 31, 2013, due primarily to significant decreases in
both bullion and scrap sales as a result of declining gold prices,
which were on average 11% lower (as measured by London PM Fix) than
in the same period last year.
Gross profit in the quarter was $4.4 million, or 22.3% of
revenue, compared to $5.3 million, or 18.1% of revenue, in the
prior year quarter. The increase in gross margin as a percentage of
sales was the result of an increase in high-margin jewelry sales,
as well as higher margins realized on bullion and scrap, despite
their decrease in sales.
SG&A expenses decreased by approximately $17,000, or 0.4%,
in the first quarter, to $4.7 million compared to $4.7 million for
the first quarter of 2013. In addition, the company incurred
approximately $75,000 and $102,000 during the three months ended
March 31, 2014 and 2013, respectively, in professional fees and
costs associated with the 2012 restatement of the company’s
financial statements, the 2010 sales tax audit, and related legal
matters.
Net loss for the first quarter was $523,000 or $0.04 per share,
inclusive of the non-recurring expenses, compared to net income of
$300,000, or $0.02 per share, in the year-ago quarter.
“Through our actions in the first part of 2014, we have laid a
foundation for consistent profitability going forward by
eliminating ongoing losses and lowering our overall cost
structure,” added Brett Burford, DGSE’s Chief Financial Officer.
“We are optimistic about moving forward with fewer distractions,
and the ability to focus our efforts on a proven business model
which has worked well, in good markets and bad, for years.”
Balance Sheet Summary
At March 31, 2014, DGSE Companies had cash and cash equivalents
of $2.8 million compared to $3.2 million at December 31, 2013.
Stockholders’ equity decreased 4.4% to $10 million at March 31,
2014 compared to $10.4 million at December 31, 2013. As of March
31, 2014, the outstanding balance on the company’s credit facility
with NTR was $2.3 million compared to $2.4 million at December 31,
2013. On February 25, 2014, the company and NTR entered into a
one-year extension of the loan agreement, extending the maturity
date to August 1, 2015. All other terms of the agreement remain the
same.
Conference Call
DGSE Companies management will conduct a live teleconference to
discuss its financial results:
Date: May 14, 2014
Time: 4:30
p.m. ET/3:30 p.m. CT
Dial-in: 1-888-846-5003 if calling from
the United States, or 1-480-629-9856 if dialing internationally.
Replay: A replay will be available until May 21, 2014, 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
4682366 to access the replay.
Webcast:
The call will be webcast and will be
available by visiting
http://public.viavid.com/index.php?id=109109
About DGSE Companies
DGSE Companies, Inc. wholesales and retails jewelry, diamonds,
fine watches, and precious metal bullion and rare coin products
through its Bullion Express, Charleston Gold & Diamond
Exchange, 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 internet websites which can be accessed at
www.bullionexpress.com, 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, 2014 2013
(Unaudited) ASSETS Current Assets: Cash and cash
equivalents $ 2,784,944 $ 3,214,770 Trade receivables, net of
allowances 285,137 269,616 Inventories 12,222,439 12,921,857
Prepaid expenses 279,884 236,649
Total current assets 15,572,404 16,642,892 Property and
equipment, net 5,051,582 5,074,860 Intangible assets, net 2,881,986
2,942,314 Other assets 183,071 244,065 Total assets $
23,689,043 $ 24,904,131
LIABILITIES
Current Liabilities: Accounts payable-trade $ 5,933,462 $ 5,666,059
Accrued expenses 1,696,873 2,137,361 Customer deposits and other
liabilities 1,934,949 2,401,574 Current maturities of long-term
debt 124,600 122,536 Current maturities of capital leases
11,209 11,091 Total current liabilities
9,701,093 10,338,621 Line of credit, related party 2,303,359
2,383,359 Long-term debt, less current maturities 1,723,045
1,757,827 Total liabilities 13,727,497
14,479,807 Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 30,000,000
shares authorized; 12,203,584 and 12,175,584 shares issued and
outstanding
122,035
121,755 Additional paid-in capital
34,105,574
34,045,654 Accumulated deficit (24,266,063 )
(23,743,085 ) Total stockholders' equity 9,961,546 10,424,324
Total liabilities and stockholders' equity $
23,689,043 $ 24,904,131
DGSE
COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
Three Months EndedMarch
31,
2014 2013 Revenue: Sales
$ 19,896,146 $ 29,249,573 Cost of goods sold 15,462,402
23,946,749 Gross margin 4,433,744 5,302,824
Expenses: Selling, general and administrative expenses
4,657,542 4,675,006 Depreciation and amortization 190,923
192,884 4,848,465
4,867,890 Operating (loss) income (414,721 )
434,934 Other expense (income): Other income,
net (31,261 ) (12,147 ) Interest expense 84,562
51,704 53,301 39,557
(Loss) income from continuing operations before income taxes
(468,022 ) 395,377 Income tax expense 17,316
57,600 (Loss) income from continuing
operations (485,338 ) 337,777 Discontinued operations: Loss
from discontinued operations, net of taxes of $0 (37,640 )
(37,365 ) Net (loss) income $ (522,978 ) $ 300,412
Basic net (loss) income per common share: (Loss)
income from continuing operations $ (0.04 ) $ 0.02 Loss from
discontinued operations (0.00 ) (0.00 ) Net (loss)
income per share $ (0.04 ) $ 0.02 Diluted net (loss)
income per common share: (Loss) income from continuing operations $
(0.04 ) $ 0.02 Loss from discontinued operations (0.00 )
(0.00 ) Net (loss) income per share $ (0.04 ) $ 0.02
Weighted-average number of common shares Basic 12,193,940
12,175,584 Diluted 12,193,940 12,313,048
DGSE Companies, Inc.Dusty Clem, 972-587-4021Chairman, President
and CEOinvestorrelations@dgse.comorHayden IRBrett Maas,
646-536-7331Managing Partnerbrett@haydenir.com
DGSE Companies (AMEX:DGSE)
Historical Stock Chart
From Jun 2024 to Jul 2024
DGSE Companies (AMEX:DGSE)
Historical Stock Chart
From Jul 2023 to Jul 2024