DGSE Companies, Inc. (NYSE MKT: DGSE) (“DGSE” or the “Company”),
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 three months ended March
31, 2015.
First Quarter 2015 Business and Financial Highlights
- DGSE reported a net loss of $798,000
for the quarter, which included a $3,000 gain from discontinued
operations, and a net loss of $801,000 from continuing operations.
The loss from continuing operations included approximately $196,000
in non-recurring expenses and asset write offs, related to the
closure of two Dallas-Ft. Worth (“DFW”) area stores.
- Revenues from continuing operations
were $12.9 million compared to $18.0 million, a 29% decline
compared to the same period in 2014. DGSE continued to see declines
in its bullion and scrap businesses, which combined with an
unusually challenging quarter for its jewelry business to generate
a significant year over year sales decline.
- Gross profit from continuing operations
decreased $877,000, or 27%, based on lower sales. Gross profit as a
percent of revenue increased to 18.1% in the current quarter,
compared to 17.8% in the first quarter of 2014.
- Selling, general and administrative
expenses (“SG&A”) from continuing operations were down $461,000
in the quarter, to $2.9 million compared to $3.3 million during the
first quarter of 2014. This reduction was achieved primarily
through continued efforts to reduce expenses at all levels,
including store-level operating expenses and corporate overhead,
and was partially offset by $143,000 in non-recurring expenses
related to the closure of two DFW area stores in the quarter.
- Net loss from continuing operations was
approximately $801,000 or $0.07 per share, compared to net loss
from continuing operations of approximately $285,000, or $0.02 per
share, in the first quarter of 2014.
- Net loss, inclusive of discontinued
operations, was approximately $798,000 or $0.07 per share, compared
to a net loss, inclusive of discontinued operations, of
approximately $523,000, or $0.04 per share, in the first quarter of
2014.
Dusty Clem, Chairman of the Board and Chief Executive Officer of
DGSE, stated, “The first quarter of 2015 was an extremely
challenging quarter for DGSE. In 2014 we successfully focused our
marketing, merchandising and operating efforts on growing our
jewelry, watch and diamond businesses, and were rewarded with
double digit growth in those areas. In the first quarter of 2015,
for the first time in several quarters, we were not able to grow
these lines, and in fact saw declines.” Mr. Clem continued,
“Unfortunately, we lost several days this quarter to harsh weather
conditions in two of our most important markets, DFW and
Charleston, which further exacerbated the effects of a difficult
retail environment. While this quarter represents a setback in our
efforts to create a consistently profitable DGSE, we continue to
believe that growing our jewelry business and closely managing our
expenses provides the best avenue for DGSE to offset the continued,
industry-wide slowdown in the bullion and scrap businesses.”
First Quarter 2015 Results
For the quarter ended March 31, 2015, revenues from continuing
operations were $12.9 million, a 29% decrease compared to $18.0
million in the quarter ended March 31, 2014. Bullion and scrap
sales continued to trend downward, consistent with the industry,
and DGSE’s jewelry, watch and diamond lines saw decreases for the
first time in several quarters.
Gross profit from continuing operations in the quarter decreased
by $877,000, or 27% to $2.3 million as compared to $3.2 million
during the first quarter of 2014. Gross margin as a percentage of
revenue increased to 18.1% for the three months ended March 31,
2015, compared to 17.8% for the same period in the prior year.
SG&A expenses decreased by $461,000, or 14%, to $2.9
million, as compared to $3.4 million during the same period in
2014. The decrease was achieved despite recognizing $143,000 in
expenses related to the closure of two DFW area stores. These
expenses were primarily comprised of accelerated lease expense and
fees related to early lease terminations. The overall decrease in
SG&A was achieved primarily through continued efforts to reduce
expenses at all levels, including store-level operating expenses,
corporate overhead, and advertising expense.
Loss from continuing operations for the first quarter, net of
taxes, was $801,000 or $0.07 per share compared to a net loss from
continuing operations of $285,000, or $0.02 per share, in the first
quarter of 2014.
Income from discontinued operations for the three months ended
March 31, 2015 was $3,000, related to the Southern Bullion
locations closed in 2014, compared to a net loss of $238,000 for
these locations in the same quarter of 2014. The current quarter
income relates to minor adjustments in accrued expenses related to
the wind down of all Southern Bullion operations. The Company
believes it has recognized all material expenses related to the
closure of Southern Bullion operations.
Net loss for the first quarter was $798,000 or $0.07 per share,
compared to a net loss of $523,000, or $0.04 per share, in the
first quarter of 2014.
Mr. Clem concluded, “We clearly are not satisfied with our
current results, and are continuing to make adjustments to the
business, in order to regain profitability in a very difficult
environment for our industry. We continue to contemplate a wide
range of options that we believe will increase the Company’s
value.”
Balance Sheet Summary
As of March 31, 2015, DGSE had cash and cash equivalents of $1.2
million compared to $2.2 million at December 31, 2014.
Stockholders’ equity decreased 13% to $5.3 million at
March 31, 2015 compared to $6.1 million at December 31, 2014.
As of March 31, 2015, the outstanding balance on the Company’s
credit facility with NTR Metals, LLC was $2.3 million compared to
$2.3 million at December 31, 2014.
Conference Call
DGSE’s management will conduct a live teleconference to discuss
its financial results:
Date: May 13, 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 May 20,
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 13609625 to access the replay.
Webcast:
The call will be webcast and will be
available by visiting
http://public.viavid.com/index.php?id=114605.
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.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, 2015
2014 ASSETS Current Assets: Cash
and cash equivalents $ 1,179,427 $ 2,184,435 Trade receivables, net
of allowances 14,668 904,076 Inventories 11,442,658 11,144,157
Prepaid expenses 196,042 104,513 Assets related to discontinued
operations 28,478 49,729 Total
current assets 12,861,273 14,386,910 Property and equipment,
net 4,237,393 4,365,767 Intangible assets, net 24,122 27,568 Other
assets 127,681 128,356 Total assets $ 17,250,469
$ 18,908,601
LIABILITIES Current
Liabilities: Current maturities of long-term debt $ 133,210 $
131,003 Current maturities of capital leases 11,692 11,529 Accounts
payable-trade 5,347,930 5,831,736 Accrued expenses 1,130,765
1,541,552 Customer deposits and other liabilities 1,154,027
1,082,778 Liabilities related to discontinued operations
279,749 303,564 Total current
liabilities 8,057,373 8,902,162 Line of credit, related
party 2,303,359 2,303,359 Long-term debt, less current maturities
1,578,143 1,616,237 Total
liabilities 11,938,875 12,821,758 Commitments and
contingencies
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 30,000,000
shares authorized;12,253,846 and 12,175,584 shares issued and
outstanding
122,538 122,388 Additional paid-in capital 34,254,371 34,231,271
Accumulated deficit (29,065,315 ) (28,266,816 ) Total
stockholders' equity 5,311,594 6,086,843 Total
liabilities and stockholders' equity $ 17,250,469 $
18,908,601
DGSE COMPANIES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) For the Three Months
Ended March 31, 2015
2014 Revenue: Sales $ 12,875,149 $
18,064,307 Cost of goods sold 10,541,966
14,853,636 Gross margin 2,333,183 3,210,671 Expenses:
Selling, general and administrative expenses 2,886,043 3,346,774
Depreciation and amortization 140,624 90,585
3,026,667 3,437,359
Operating loss (693,484 ) (226,688 ) Other
expense (income): Other income, net (3,033 ) (26,495 ) Interest
expense 83,768 80,813 80,735
54,318 Loss from continuing operations
before income taxes (774,219 ) (281,006 ) Income tax expense
26,844 3,579 Loss from
continuing operations (801,063 ) (284,585 ) Discontinued
operations: Income (loss) from discontinued operations, net of
taxes 2,564 (238,393 ) Net loss $
(798,499 ) $ (522,978 ) Basic net loss per common share:
Loss from continuing operations $ (0.07 ) $ (0.02 ) Loss from
discontinued operations - (0.02 ) Net loss per
share $ (0.07 ) $ (0.04 ) Diluted net loss per common share:
Loss from continuing operations $ (0.07 ) $ (0.02 ) Loss from
discontinued operations - (0.02 ) Net loss per
share $ (0.07 ) $ (0.04 ) Weighted-average number of common
shares Basic 12,245,679 12,193,940 Diluted 12,245,679 12,193,940
DGSE Companies, Inc.Dusty Clem, 972-587-4021Chairman and
CEOinvestorrelations@dgse.com
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