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 three and six months ended June 30, 2016.
Second Quarter 2016 Business and Financial Highlights
- Revenues for the quarter from
continuing operations were $15.5 million compared to $14.9 million,
a 3.7% increase compared to the same period in 2015.
- Gross profit from continuing operations
decreased by $287,000, or 11.2%, based on sales mix. Gross profit
as a percent of revenue decreased to 14.7% of revenues in the
current quarter, compared to 17.2% in the same period last
year.
- Selling, general and administrative
(“SG&A”) expenses for continuing operations increased slightly
to $2.6 million compared to $2.5 million in the same period
last year.
- Loss from continuing operations, net of
taxes, for the quarter was $537,000 compared to a loss from
continuing operations of $132,000 in the second quarter of
2015.
- Net loss, inclusive of discontinued
operations, was approximately $537,000 or $0.04 per share, compared
to a net loss of approximately $90,000, or $0.01 per share, in the
year-ago period.
- On June 20, 2016, DGSE entered into a
stock purchase agreement with Elemetal, LLC and NTR Metals, LLC in
which DGSE will issue common stock in exchange for the cancellation
and forgiveness of approximately $5.9 million of debt and trade
payable. The closing of this transaction is dependent upon various
conditions, including obtaining the approval by stockholders.
- During the quarter, DGSE closed the
only store in the Chicago market and incurred a write down in fixed
assets.
Second Quarter 2016 Results
For the quarter ended June 30, 2016, revenues from
continuing operations were $15.5 million, a 3.7% increase
compared to $14.9 million in the quarter ended June 30, 2015.
Bullion sales were up compared to the prior year quarter. Jewelry
and scrap sales were down approximately 29% and 11%, respectively,
compared to the prior year quarter.
Gross profit from continuing operations for the second quarter
of 2016 decreased $287,000, or 11.2%, to $2.3 million compared
to $2.6 million in the prior year quarter. Gross margin as a
percentage of revenue decreased to 14.7% for the three months ended
June 30, 2016, compared to 17.2% for the same period in the prior
year.
SG&A expenses increased by $60,000, or 2%, to $2.6 million,
as compared to $2.5 million during the same period in 2015. The
slight increase in SG&A as compared to the prior year quarter
is primarily due to cost associated with proposed transactions with
Elemetal, LLC and NTR Metals, LLC.
Depreciation and amortization increased by $28,000, or 34%, to
$110,000 compared to $82,000 for the same period in the prior year.
This increase was due to one-time write off of assets formerly
utilized in one store closed during second quarter of 2016.
Loss from continuing operations for the second quarter of 2016,
net of taxes, was $537,000 or $0.04 per share, compared to a loss
from continuing operations of $132,000, or $0.01 per share, in the
second quarter of 2015.
Net loss, inclusive of discontinued operations, was
approximately $537,000 or $0.04 per share, compared to a net loss
of approximately $90,000, or $0.01 per share, in the year-ago
period.
Year-to-Date 2016 Results
For the six months ended June 30, 2016, revenues from continuing
operations were $27.3 million, a 2.0% decrease compared to $27.8
million in the six months ended June 30, 2015, due primarily to
continued weakness in the Company’s scrap business, which is
consistent with industry-wide trends. Bullion sales were up 19%
compared to prior year, while jewelry sales were down 2% for the
same period in the prior year.
Gross profit from continuing operations for the first six months
of 2016 decreased by $471,000, or 9.6%, to $4.4 million
compared to $4.9 million during the first six months of 2015.
Gross margin as a percentage of revenue decreased to 16.2% for the
six months ended June 30, 2016, compared to 17.6% for the same
period in the prior year.
SG&A expenses decreased by $0.2 million, or 3.7%, to $5.2
million, as compared to $5.4 million during the same period in
2015. The decrease in SG&A is due to our continued efforts to
reduce expenses at all levels, including store-level operating
expenses, corporate overhead and advertising expense.
Depreciation and amortization decreased by $13,000, or 5.8%, to
$209,000 compared to $222,000 for the same period in the prior
year. This decrease was due to one-time write off of assets
formerly utilized in four stores closed during Fiscal 2015.
Loss from continuing operations for the second quarter of 2016,
net of taxes, was $1.2 million, or $0.10 per share, compared to a
loss from continuing operations of $0.9 million, or $0.07 per
share, in the second quarter of 2015.
Net loss, inclusive of discontinued operations, was
approximately $1.2 million, or $0.10 per share, compared to a net
loss of approximately $0.9 million, or $0.07 per share, in the
year-ago period.
Balance Sheet Summary
At June 30, 2016, we had cash and cash equivalents of $1.1
million compared to $1.8 million at December 31, 2015.
Stockholders’ equity decreased by $1.2 million, or 30.7%, to
$2.7 million at June 30, 2016 compared to
$3.9 million at December 31, 2015. As of June 30, 2016
and December 31, 2015, the outstanding balance on the Company’s
credit facility with NTR Metals, Inc. remained the same at $2.3
million.
Conference Call
DGSE Companies management will conduct a live teleconference to
discuss its financial results:
Date: August 15, 2016
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
22, 2016, 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 13642867 to access the replay.
Webcast:
The call will be webcast and will be
available by visiting
http://public.viavid.com/index.php?id=120698.
About DGSE Companies,
Inc.
DGSE Companies, Inc. wholesales and retails jewelry, diamonds,
fine watches, precious metal bullion and rare coin products through
its 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 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.
DGSE COMPANIES, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June
30, December 31, 2016 2015
(Unaudited) ASSETS Current Assets: Cash and cash
equivalents $ 1,064,249 $ 1,752,711 Trade receivables, net of
allowances 196,386 229,848 Inventories 9,637,714 9,565,506 Prepaid
expenses 157,212 106,547 Total
current assets 11,055,561 11,654,612 Property and equipment,
net 4,177,924 4,281,388 Intangible assets, net 6,892 13,784 Other
assets 117,355 204,226 Total assets $ 15,357,732
$ 16,154,010
LIABILITIES Current
Liabilities: Current maturities of long-term debt $ 1,520,664 $
1,589,522 Current maturities of capital leases 12,326 12,069
Accounts payable-trade 6,697,963 5,689,056 Accrued expenses 871,001
1,174,458 Customer deposits and other liabilities 1,071,743
1,309,648 Liabilities related to discontinued operations
190,810 190,810 Total current
liabilities 10,364,507 9,965,563 Line of credit, related
party 2,303,359 2,303,359 Long-term debt, less current maturities
7,435 13,664 Total liabilities
12,675,301 12,282,586 Commitments and contingencies
STOCKHOLDERS' EQUITY Common stock, $0.01 par value;
30,000,000 shares authorized;
12,359,466 and 12,296,446 shares issued
and outstanding
123,594 122,964 Additional paid-in capital 34,305,269 34,267,577
Accumulated deficit (31,746,432 ) (30,519,117 ) Total
stockholders' equity 2,682,431 3,871,424 Total
liabilities and stockholders' equity $ 15,357,732 $
16,154,010
DGSE COMPANIES, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) For
the Three Months Ended
June 30,
For the Six Months Ended
June 30,
2016 2015 2016
2015 Revenue:
Sales
$ 15,498,406 $ 14,942,637 $ 27,272,922 $ 27,817,786 Cost of goods
sold 13,216,550 12,373,461
22,842,023 22,915,427 Gross margin 2,281,856
2,569,176 4,430,899 4,902,359 Expenses: Selling, general and
administrative expenses 2,593,159 2,533,139 5,217,515 5,419,181
Depreciation and amortization 109,636 81,708
209,400 222,332 2,702,795
2,614,847 5,426,915
5,641,513 Operating loss (420,939 )
(45,671 ) (996,016 ) (739,154 ) Other expense
(income): Other expense (income), net 353 (670 ) (261 ) (3,703 )
Interest expense 100,563 88,893
195,770 172,661 100,916
88,223 195,509 168,958
Loss from continuing operations before income taxes (521,855 )
(133,894 ) (1,191,525 ) (908,112 ) Income tax expense
(benefit) 15,062 (1,921 ) 35,626
24,923 Loss from continuing operations
(536,917 ) (131,973 ) (1,227,151 ) (933,035 ) Discontinued
operations: (Loss) income from discontinued operations, net of
taxes (67 ) 41,683 (164 ) 44,247
Net loss $ (536,984 ) $ (90,290 ) $ (1,227,315 ) $
(888,788 ) Basic net loss per common share: Loss from
continuing operations $ (0.04 ) $ (0.01 ) $ (0.10 ) $ (0.07 )
(Loss) income from discontinued operations - -
- - Net loss per share $ (0.04 )
$ (0.01 ) $ (0.10 ) $ (0.07 ) Diluted net loss per common
share: Loss from continuing operations $ (0.04 ) $ (0.01 ) $ (0.10
) $ (0.07 ) (Loss) income from discontinued operations -
- - - Net loss per
share $ (0.04 ) $ (0.01 ) $ (0.10 ) $ (0.07 )
Weighted-average number of common shares Basic 12,328,956
12,262,741 12,313,228 12,254,257 Diluted 12,328,956 12,262,741
12,313,228 12,254,257
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version on businesswire.com: http://www.businesswire.com/news/home/20160815006046/en/
DGSE Companies, Inc.Matthew M. Peakes, CEO,
972-587-4021investorrelations@dgse.com
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