Q4 2014 Net Income of $272,000 Represents
$677,000 Improvement Compared to Q4 2013
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 and year ended December 31, 2014.
Fourth Quarter 2014 Summary
- Revenue from continuing operations was
$18.1 million compared to $20.8 million in the year-ago period.
DGSE continues to see growth in its jewelry business, although
depressed prices in the precious metals market continued to drive
lower volumes in our bullion and scrap categories.
- Gross profit from continuing operations
was $3.3 million, or 18.2% of revenue, compared to $4.4 million, or
21.3% revenue in the same period last year.
- Selling, general and administrative
(“SG&A”) expenses for continuing operations decreased 25% to
$3.0 million from $4.0 million in the prior-year quarter. The
resolution of all outstanding legal and sales tax issues in 2014,
helped drive significantly lower legal and professional expenses in
the quarter.
- Income from continuing operations for
the quarter was $175,000 compared to $476,000 in the fourth quarter
of 2013.
- Discontinued operations, related to the
closure of all Southern Bullion Coin & Jewelry stores
(“Southern Bullion”) in early 2014, generated income of $97,000 in
the quarter, due to positive adjustments in anticipated final state
tax expenses, compare to a loss of $881,000 in the fourth quarter
of 2013.
- Net income was approximately $272,000
or $0.02 per share, compared to net loss of approximately $405,000,
or $0.03 per share, in the year-ago period.
Full Year 2014 Summary
- Full-year revenue from continuing
operations was $70.7 million, down 19% versus $87.1 million in
2013.
- Gross profit was $12.7 million, or
17.9% of revenue, compared to $14.2 million or 16.3% of revenue in
the prior year. Gross profit as a percent of revenue increased as
the revenue mix continued to shift away from the low margin bullion
business, which continued to see significant declines in 2014.
- SG&A expenses decreased $1.7
million or 12% to $12.7 million compared to $14.4 million in the
prior year due to a reduction in legal and professional fees, and
continued expense reduction initiatives.
- Loss from continuing operations was
$635,000 in 2014, compared to a loss of $721,000 in 2013.
- Loss from discontinued operations,
related to the closure of Southern Bullion, was approximately $3.9
million, compared to a net loss of $1.9 million in the prior year.
For 2014 discontinued operations includes the write-off of the $2.9
million intangible asset attributed to the “Southern Bullion Coin
& Jewelry” trade name, as well as the write-off of
approximately $296,000 in net book value of fixed assets previously
used in Southern Bullion operations.
- Net loss was approximately $4.5
million, including discontinued operations, compared to a net loss
of $2.7 million in the prior year.
Dusty Clem, Chief Executive Officer and Chairman of the Board,
stated, “2014 was a year of substantial change for DGSE, as we
exited the Southern Bullion business, and finally put to rest the
remaining legacy legal and sales tax issues. Subsequent to these
changes, we were pleased to see modest profitability in the most
recent two quarters, and believe that our focus on growing our
jewelry, diamond and watch businesses is the right path forward for
the company. The precious metals markets continue to be
challenging, and have had significant negative impact on our
bullion and scrap businesses. In 2015 we will continue to adapt our
operating model in order to best serve our clients and to meet the
challenges of the current markets. One of the ways in which we plan
to improve the business, is to move towards fewer, but larger
stores in our most important market, Dallas-Fort Worth. Our goal is
to provide a greater breadth of inventory, services and experience
for our clients. We are also re-launching our website to provide a
substantially improved online customer experience. This exciting
change will allow us to shift a greater share of our marketing
focus to e-commerce, and to broaden our potential reach beyond our
physical locations.”
Fourth Quarter 2014 Results
For the quarter ended December 31, 2014, revenue from continuing
operations was $18.1 million, a 13% decrease compared to $20.8
million in the quarter ended December 31, 2013, due primarily to
continued weakness in the Company’s bullion and scrap businesses,
which are consistent with industry-wide trends.
Gross profit from continuing operations for the quarter was $3.3
million, or 18.2% of revenue, compared to $4.4 million, or 21.3% of
revenue, in the prior year quarter. The overall gross profit
decrease was driven by lower sales of bullion and scrap compared to
the prior year quarter.
SG&A expenses for continuing operations decreased $1.0
million, or 25%, in the quarter ended December 31, 2014, to $3.0
million compared to approximately $4.0 million in the prior year
quarter. The resolution of all outstanding legal and sales tax
issues in 2014 helped drive significantly lower legal and
professional expenses in the quarter, combined with continued
company-wide expense reductions.
Net income from continuing operations for the fourth quarter was
$175,000, or $0.01 per share, compared to net income from
continuing operations of $476,000, or $0.04 per share, in the
year-ago quarter.
Discontinued operations, related to the closure of Southern
Bullion in early 2014, generated income of $97,000 in the quarter,
due to positive adjustments in anticipated final state tax
expenses, compared to a loss of $881,000 in the fourth quarter of
2013.
Net income was approximately $272,000 or $0.02 per share,
compared to a net loss of approximately $405,000, or $0.03 per
share, in the year-ago period, an improvement of $677,000.
“While we aren’t satisfied with the current level of
profitability,” continued Mr. Clem, “we are gratified to see that
the strategic decisions we made in early 2014 with the closure of
Southern Bullion, have allowed us to show positive income for the
second quarter in a row. We believe this is an indication that DGSE
is on the right track, and we will continue to strive to build a
company that will produce consistent returns for our
shareholders.”
Full-Year 2014 Results
Revenue from continuing operations decreased by $16.4 million,
or 19%, in the year ended December 31, 2014, to $70.7 million,
compared to $87.1 million in the prior year. This decrease was
primarily the result of continuing weakness in the bullion and
scrap markets, as noted above. Our scrap business has historically
been one of our largest revenue and profit drivers, and in 2014
that business continued to contract in line with the industry. With
the deterioration of the scrap and bullion markets, we focused our
advertising and merchandising efforts on our jewelry, watch and
diamond businesses, and despite the loss of store traffic due to
fewer scrap sellers, we continued to successfully grow our retail
jewelry business in 2014.
Gross profit for the year was $12.7 million, or 17.9% of
revenue, compared to gross profit of $14.2 million, or 16.3% of
revenue in the prior year. While gross profit decreased, gross
profit as a percent of revenue increased, as high-margin jewelry
sales became a greater share of our sales mix, and low-margin
bullion sales became a lower share.
SG&A expenses decreased $1.7 million, or 12%, in the year
ended December 31, 2014, to $12.7 million compared to $14.4 million
in the prior year. This decrease was driven by a reduction in legal
and professional costs and broad cost reduction efforts across all
areas. With the resolution of several outstanding legal matters, we
experienced significantly lower legal expenses, compared to the
prior year. We also accrued $775,000 in 2013, towards the
resolution of our 2010 Texas sales tax audit, which created a
positive variance in 2014. In addition, we were able to reduce
operating expenses in a wide variety of areas including freight,
insurance, benefits, investor relations, accounting and other
professional fees, travel and supplies. In 2014 we used some of
these savings to increase advertising spend in core markets, by
roughly 10%, or $205,000.
Depreciation and amortization increased by $30,000, or 8%, to
$383,000 compared to $353,000 in the prior year. This increase was
due primarily to new assets put into place to support our jewelry
repair business.
Loss from continuing operations in 2014 improved by $86,000, to
a loss of $635,000, or $0.05 per share, compared to a loss of
$721,000, or $0.06 per share, in 2013.
Discontinued operations in the year ended December 31, 2014
generated a loss of $3.9 million related to the Southern Bullion
locations closed down in early 2014, compared to a net loss of $1.9
million for these locations in 2013. For 2014, discontinued
operations also includes the write-off of the $2.9 million
intangible asset attributed to the “Southern Bullion Coin &
Jewelry” trade name, as well as the write-off of approximately
$296,000 related to the net book value of fixed assets previously
utilized in Southern Bullion operations.
Net loss for the year was $4.5 million, or $0.37 per share,
inclusive of discontinued operations, compared to net loss of $2.7
million, or $0.22 per share, in the prior year. The great majority
of this loss, $3.9 million, related to the discontinued operations
of Southern Bullion in 2014, including the $2.9 million non-cash
write off of the Southern Bullion intangible asset.
Balance Sheet Summary
At December 31, 2014, DGSE Companies had cash and cash
equivalents of $2.2 million compared to $2.6 million at December
31, 2013. Stockholders’ equity decreased by $4.3 million, or 42%,
to $6.1 million at December 31, 2014 compared to $10.4 million at
December 31, 2013. As of year-end, the outstanding balance on the
Company’s credit facility with NTR Metals, Inc. (“NTR”) was $2.3
million compared to $2.4 million at December 31, 2013. This
decrease is the result of loan principal repayment during 2014. On
February 4, 2015 the company and NTR entered into a two-year
extension of the credit facility, extending the termination date to
August 1, 2017. 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: March 26, 2015
Time: 4:30
p.m. ET/3:30 p.m. CT
Dial-in: 1-877-407-9039 if calling from
the United States, or 1-201-689-8470 if dialing internationally.
Replay: A replay will be available until midnight on April
2, 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 13604535 to access the replay.
Webcast:
The call will be webcast and will be
available by visiting
http://public.viavid.com/index.php?id=113643.
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.cgdeinc.com, and www.dgse.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.
-- Tables follow --
DGSE COMPANIES, INC. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2014
2013 ASSETS Current Assets: Cash and
cash equivalents $ 2,184,435 $ 2,637,726 Trade receivables, net of
allowances 904,076 162,670 Inventories 11,144,157 9,992,156 Prepaid
expenses 104,513 138,600 Assets related to discontinued operations
49,729 3,711,740 Total current
assets 14,386,910 16,642,892 Property and equipment, net
4,365,767 4,588,695 Intangible assets, net 27,568 41,353 Other
assets 128,356 189,426 Noncurrent assets related to discontinued
operations - 3,441,765 Total assets $ 18,908,601
$ 24,904,131
LIABILITIES Current
Liabilities: Current maturities of long-term debt $ 131,003 $
122,536 Current maturities of capital leases 11,529 11,091 Accounts
payable-trade 5,831,736 5,535,624 Accrued expenses 1,541,552
1,729,528 Customer deposits and other liabilities 1,082,778
2,349,943 Liabilities related to discontinued operations
303,564 589,899 Total current
liabilities 8,902,162 10,338,621 Line of credit, related
party 2,303,359 2,383,359 Long-term debt, less current maturities
1,616,237 1,757,827 Total
liabilities 12,821,758 14,479,807 Commitments and
contingencies
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 30,000,000
shares authorized; 12,238,846 and 12,175,584 shares issued and
outstanding
122,388 121,755 Additional paid-in capital 34,231,271 34,045,654
Accumulated deficit (28,266,816 ) (23,743,085 ) Total
stockholders' equity 6,086,843 10,424,324 Total
liabilities and stockholders' equity $ 18,908,601 $
24,904,131
DGSE COMPANIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
For the Year Ended
December 31,
For the Three Months Ended
December 31,
2014 2013
2014 2013
Revenue: Sales $ 70,742,755 $ 87,095,935 $ 18,119,787 $
20,791,043 Cost of goods sold 58,091,288
72,888,844 14,823,580 16,356,560
Gross margin 12,651,467 14,207,091 3,296,207 4,434,483
Expenses: Selling, general and administrative expenses 12,670,968
14,363,216 3,038,184 4,008,303 Depreciation and amortization
382,565 353,034 93,965
83,921 13,053,533 14,716,250
3,132,149 4,092,224 Operating
(loss) income (402,066 ) (509,159 ) 164,058
342,259 Other expense (income): Other
(income) expense, net (174,189 ) (106,696 ) (129,510 ) (106,909 )
Interest expense 341,382 261,185
82,999 90,619 167,193
154,489 (46,511 ) (16,290 ) Income
(loss) from continuing operations before income taxes (569,259 )
(663,648 ) 210,569 358,549 Income tax expense (benefit)
65,416 57,168 35,441
(117,211 ) Income (loss) from continuing operations
(634,675 ) (720,816 ) 175,128 475,760 Discontinued
operations: Income (loss) from discontinued operations, net of
taxes (3,889,056 ) (1,938,373 ) 96,771
(880,850 ) Net income (loss) $ (4,523,731 ) $
(2,659,189 ) $ 271,899 $ (405,090 ) Basic net income
(loss) per common share: Income (loss) from continuing operations $
(0.05 ) $ (0.06 ) $ 0.01 $ 0.04 Income (loss) from discontinued
operations (0.32 ) (0.16 ) 0.01
(0.07 ) Net income (loss) per share $ (0.37 ) $ (0.22 ) $ 0.02
$ (0.03 ) Diluted net income (loss) per common share:
Income (loss) from continuing operations $ (0.05 ) $ (0.06 ) $ 0.01
$ 0.04 Income (loss) from discontinued operations (0.32 )
(0.16 ) 0.01 (0.07 ) Net income (loss)
per share $ (0.37 ) $ (0.22 ) $ 0.02 $ (0.03 )
Weighted-average number of common shares Basic 12,216,787
12,175,584 12,238,661 12,175,584 Diluted 12,216,787 12,175,584
12,238,661 12,175,584
DGSE Companies, Inc.James D. Clem, CEO,
972-587-4021investorrelations@dgse.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