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 and six months ended
June 30, 2015.
Second Quarter 2015 Business and Financial Highlights
- DGSE reported a net loss of $90,000 for
the quarter, which included a $42,000 gain from discontinued
operations, and a loss of $132,000 from continuing operations.
- Revenues for the quarter from
continuing operations were $14.9 million compared to $17.5 million,
a 15% decline compared to the same period in 2014. DGSE continued
to see declines in its bullion and scrap businesses, while its
jewelry, watch and diamond business was flat to the prior
year.
- Gross profit for the quarter from
continuing operations decreased $441,000, or 15%, based on lower
sales. Gross profit as a percent of revenue was consistent with the
second quarter of 2014, at 17.2%.
- Selling, general and administrative
expenses (“SG&A”) from continuing operations were down $824,000
in the quarter, to $2.5 million compared to $3.4 million during the
second quarter of 2014. This reduction was achieved primarily
through continued efforts to reduce expenses at all levels,
including store-level operating expenses, corporate overhead and
advertising expense.
- Loss for the quarter from continuing
operations, net of taxes, was approximately $132,000 or $0.01 per
share, compared to loss from continuing operations, net of taxes,
of approximately $539,000, or $0.04 per share, in the second
quarter of 2014, an improvement of $407,000.
- Net loss, inclusive of discontinued
operations, was approximately $90,000 or $0.01 per share, compared
to a net loss, inclusive of discontinued operations, of
approximately $4,452,000, or $0.36 per share, in the second quarter
of 2014, an improvement of $4,362,000.
- During the quarter, DGSE closed one
store in the DFW market, and incurred a minor write down in fixed
assets. Subsequent to the end of the quarter, DGSE closed a store
in the Charleston market, and will recognize certain costs related
to this closure in the third quarter.
- On August 10, the Company announced
that Dusty Clem had tendered his resignation from the positions of
Chairman, Chief Executive Officer, and President of DGSE, effective
September 15, 2015. A search is currently under way for Mr. Clem’s
replacement.
- Two of the Company’s independent
Directors also tendered their resignation, for personal reasons,
unrelated to Mr. Clem’s resignation. Bruce A. Quinnell and Dennis
A. McGill resigned effective August 4, 2015 and August 6, 2015
respectively.
Dusty Clem, Chief Executive Officer of DGSE, stated, “The second
quarter of 2015 represents a significant improvement over the same
period last year, as well as the first quarter of 2015. While our
bullion and scrap businesses continued to decline due to a
difficult precious metals environment, our jewelry business was
stable versus the prior year and up significantly from the first
quarter, despite having fewer locations. In addition, through
ongoing efforts to control costs and strategically exit
underperforming stores, we have continued to lower our cost
structure.” Mr. Clem continued, “DGSE will continue to focus on its
strategy of growing our jewelry, watch and diamond businesses,
while consolidating our store count where appropriate, with the
goal of creating a smaller, but consistently profitable business
for our shareholders.”
Second Quarter 2015 Results
For the quarter ended June 30, 2015, revenues from continuing
operations were $14.9 million, a 15% decrease compared to $17.5
million in the quarter ended June 30, 2014. Bullion and scrap sales
continued to trend downward, consistent with the industry, and
DGSE’s jewelry, watch and diamond lines were consistent with the
prior year quarter.
Gross profit from continuing operations in the quarter decreased
by $441,000, or 15%, to $2.6 million as compared to $3.0 million
during the second quarter of 2014. Gross margin as a percentage of
revenue was 17.2% for the three months ended June 30, 2015, which
was consistent from the same period in the prior year.
SG&A expenses decreased by $824,000, or 25%, to $2.5
million, as compared to $3.4 million during the same period in
2014. 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 second quarter, net of
taxes, was $132,000 or $0.01 per share compared to a loss from
continuing operations of $539,000, or $0.04 per share, in the
second quarter of 2014.
Income from discontinued operations for the three months ended
June 30, 2015 was $42,000, related to the Southern Bullion Coin
& Jewelry (“Southern Bullion”) locations closed in 2014,
compared to a net loss of $3,913,000 for these locations in the
same quarter of 2014. The current quarter income relates to
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 second quarter was $90,000 or $0.01 per share,
compared to a net loss of $4,452,000, or $0.36 per share, in the
second quarter of 2014.
Year-to-Date 2015 Results
For the six months ended June 30, 2015, revenues from continuing
operations were $27.8 million, a 22% decrease compared to $35.6
million in the six months ended June 30, 2014. Bullion and scrap
sales continued to trend downward, consistent with the industry,
and DGSE’s jewelry, watch and diamond lines were down slightly
compared to the same period in the prior year.
Gross profit from continuing operations in the first six months
of 2015 decreased by $1.3 million, or 21%, to $4.9 million as
compared to $6.2 million during the first six months of 2014. Gross
margin as a percentage of revenue was 17.6% for the six months
ended June 30, 2015, which was up slightly from 17.5% in the same
period in the prior year.
SG&A expenses decreased by $1.3 million, or 19%, to $5.4
million, as compared to $6.7 million during the same period in
2014. The decrease was achieved despite recognizing $143,000 in
expenses related to the closure of three 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 six months of
2015, net of taxes, was $933,000 or $0.07 per share compared to a
loss from continuing operations of $824,000, or $0.07 per share, in
the first six months of 2014.
Income from discontinued operations for the six months ended
June 30, 2015 was $44,000, related to the Southern Bullion
locations closed in 2014, compared to a net loss of $4,152,000 for
these locations in the same six months of 2014. The current period
income relates to 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 six months of 2015 was $889,000 or $0.07
per share, compared to a net loss of $4,975,000, or $0.41 per
share, in the first six months of 2014.
Balance Sheet Summary
As of June 30, 2015, DGSE had cash and cash equivalents of $1.4
million compared to $2.2 million at December 31, 2014.
Stockholders’ equity decreased 14% to $5.2 million at June 30, 2015
compared to $6.1 million at December 31, 2014. As of June 30, 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.
“As we announced earlier this week, Dusty Clem will be leaving
DGSE in the coming weeks. On behalf of DGSE, I would like to thank
Dusty for his many contributions to the Company, and wish him the
best in his future endeavors,” stated C. Brett Burford, Chief
Financial Officer of DGSE. “We have begun the search for a new
leader that will continue DGSE’s efforts to create profitable,
long-term growth for our shareholders. During this transition, we
expect no impact on our ability to service our customers at the
store level and create a positive jewelry, bullion and numismatic
buying, and selling, experience.”
Conference Call
DGSE’s management will conduct a live teleconference to discuss
its financial results:
Date: August 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 August 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 13617039 to access the
replay.
Webcast:
The call will be webcast and will be
available by visiting
http://public.viavid.com/index.php?id=115881.
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 June
30, December 31, 2015 2014
(Unaudited) ASSETS Current Assets: Cash and cash
equivalents $ 1,444,800 $ 2,184,435 Trade receivables, net of
allowances 171,479 904,076 Inventories 10,259,796 11,144,157
Prepaid expenses 188,172 104,513 Assets related to discontinued
operations - 49,729 Total
current assets 12,064,247 14,386,910 Property and equipment,
net 4,227,158 4,365,767 Intangible assets, net 20,676 27,568 Other
assets 127,321 128,356 Total assets $ 16,439,402
$ 18,908,601
LIABILITIES Current
Liabilities: Current maturities of long-term debt $ 135,454 $
131,003 Current maturities of capital leases 11,817 11,529 Accounts
payable-trade 4,569,895 5,831,736 Accrued expenses 775,180
1,541,552 Customer deposits and other liabilities 1,655,850
1,082,778 Liabilities related to discontinued operations
212,485 303,564 Total current
liabilities 7,360,681 8,902,162 Line of credit, related
party 2,303,359 2,303,359 Long-term debt, less current maturities
1,540,425 1,616,237 Total
liabilities 11,204,465 12,821,758 Commitments and
contingencies
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value; 30,000,000
shares authorized; 12,296,446 and 12,238,846 shares issued and
outstanding
122,964 122,388 Additional paid-in capital 34,267,577 34,231,271
Accumulated deficit (29,155,604 ) (28,266,816 ) Total
stockholders' equity 5,234,937 6,086,843 Total
liabilities and stockholders' equity $ 16,439,402 $
18,908,601
DGSE
COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) For the Three Months
Ended June 30, For the Six Months Ended June
30, 2015 2014 2015
2014 Revenue: Sales $ 14,942,637 $ 17,518,412
$ 27,817,786 $ 35,582,719 Cost of goods sold 12,373,461
14,508,228 22,915,427
29,361,864 Gross margin 2,569,176 3,010,184 4,902,359
6,220,855 Expenses: Selling, general and administrative
expenses 2,533,139 3,357,366 5,419,181 6,704,140 Depreciation and
amortization 81,708 91,230
222,332 181,815 2,614,847
3,448,596 5,641,513 6,885,955
Operating loss (45,671 ) (438,412 )
(739,154 ) (665,100 ) Other expense (income): Other
income, net (670 ) (31,166 ) (3,703 ) (57,661 ) Interest expense
88,893 88,330 172,661
169,143 88,223 57,164
168,958 111,482 Loss from
continuing operations before income taxes (133,894 ) (495,576 )
(908,112 ) (776,582 ) Income tax (benefit) expense
(1,921 ) 43,491 24,923 47,070
Loss from continuing operations (131,973 ) (539,067 )
(933,035 ) (823,652 ) Discontinued operations: Income (loss)
from discontinued operations, net of taxes 41,683
(3,913,172 ) 44,247 (4,151,565 )
Net loss $ (90,290 ) $ (4,452,239 ) $ (888,788 ) $ (4,975,217 )
Basic net loss per common share: Loss from continuing
operations $ (0.01 ) $ (0.04 ) $ (0.07 ) $ (0.07 ) Loss from
discontinued operations 0.00 (0.32 )
0.00 (0.34 ) Net loss per share $ (0.01 ) $ (0.36 ) $
(0.07 ) $ (0.41 ) Diluted net loss per common share: Loss
from continuing operations $ (0.01 ) $ (0.04 ) $ (0.07 ) $ (0.07 )
Loss from discontinued operations 0.00 (0.32 )
0.00 (0.34 ) Net loss per share $ (0.01 ) $
(0.36 ) $ (0.07 ) $ (0.41 ) Weighted-average number of
common shares Basic 12,262,741 12,210,397 12,254,257 12,202,214
Diluted 12,262,741 12,210,397 12,254,257 12,202,214
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version on businesswire.com: http://www.businesswire.com/news/home/20150813006374/en/
DGSE Companies, Inc.C. Brett Burford, 972-587-4021Chief
Financial Officerinvestorrelations@dgse.com
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