A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a
leading full-service provider of products and services to the
global precious metals market, reported results for the fiscal
first quarter ended September 30, 2019.
Fiscal Q1 2020 Financial Highlights
- Revenues for the three months ended September 30, 2019
decreased 5% to $1.48 billion from $1.57 billion for the three
months ended September 30, 2018 and increased 74% from $850.2
million for the three months ended June 30, 2019
- Gross profit for the three months ended September 30, 2019
decreased 2% to $8.3 million (0.56% of revenue) from $8.5 million
(0.54% of revenue) for the three months ended September 30, 2018
and increased 29% from $6.5 million (0.76% of revenue) for the
three months ended June 30, 2019
- Net income for the three months ended September 30, 2019
totaled $128,000 or $0.02 per diluted share, as compared to net
income of $1.5 million or $0.21 per diluted share for the three
months ended September 30, 2018 and net loss of $823,000 or $(0.12)
per diluted share for the three months ended June 30, 2019
- Gold ounces sold in the three months ended September 30, 2019
increased 8% to 576,000 ounces from 535,000 for the three months
ended September 30, 2018 and increased 65% from 350,000 for the
three months ended June 30, 2019
- Silver ounces sold in the three months ended September 30, 2019
increased 14% to 20.9 million ounces from 18.0 million for the
three months ended September 30, 2018 and increased 67% from 12.5
million for the three months ended June 30, 2019
- As of September 30, 2019, the number of secured loans increased
109% to 3,571 from 1,705 as of September 30, 2018 and increased 27%
from 2,806 as of June 30, 2019
Fiscal Q1 2020 Financial ResultsRevenues
decreased 5% to $1.48 billion from $1.57 billion in the same
year-ago quarter. The decrease in revenues was primarily due to
lower forward sales of approximately $0.4 billion, offset by higher
gold and silver prices and higher gold and silver ounces sold.
Gross profit decreased 2% to $8.3 million (0.56% of revenue)
from $8.5 million (0.54% of revenue) in the same year-ago quarter.
The decrease in gross profit was primarily due to lower gross
profits earned by the Company’s Wholesale Trading & Ancillary
Services segment, offset by higher gross profits earned by the
Direct Sales segment (i.e. Goldline).
Selling, general and administrative expenses increased 7% to
$8.3 million from $7.7 million in the same year-ago quarter. The
increase was primarily due to an increase in overall compensation
costs of $0.2 million, and deductibles on insurance claims of $0.3
million, which were partially offset by a decrease in consulting
costs of $0.1 million.
Interest income increased 27% to $5.8 million from $4.6 million
in the same year-ago quarter. The increase was primarily due to
interest income earned by the Company’s Secured Lending Segment and
other finance product income earned by its Wholesale Trading &
Ancillary Services segment.
Interest expense increased 45% to $5.1 million from $3.6 million
in the same year-ago quarter. The increase was primarily due to
higher overall average debt levels and interest rates associated
with the Secured Lending segment’s asset-backed notes issued in
September 2018.
Net income totaled $128,000 or $0.02 per diluted share, compared
to net income of $1.5 million or $0.21 per diluted share in the
same year-ago quarter.
Management Commentary “In the first
quarter of fiscal 2020, we leveraged our diversified platform and
long-standing relationships to capitalize on the modest increase in
demand we experienced for A-Mark’s physical products, which was
incrementally higher than the demand we witnessed in the prior
quarter,” said company CEO Greg Roberts. “While we realized
broad-based improvements across our business, particularly in the
latter half of the quarter, our Secured Lending segment performed
especially well, as evidenced by the 27% sequential increase in the
number of loans outstanding and an increase in interest income from
our higher average loan portfolio during the quarter. This
performance, coupled with the increases in both gold and silver
volume sold in Q1, drove sequential improvements in our financial
results for the first quarter compared with last quarter, including
a 74% increase in revenue, a 29% increase in gross profit, and
profitability.
“Today, A-Mark has one of the most expansive product and service
offerings in the industry, and we are continuing to invest in
strategic growth areas to capitalize on and further increase our
market share within the industry. This includes expanding our
Secured Lending segment to respond to favorable trends in the
market as well as investing in our company’s digital transformation
to drive additional operational and financial efficiencies across
our business over the long-term.
“As we look forward, we are cautiously optimistic about our
prospects this year, especially given the macro backdrop and
upcoming election year. The investments and initiatives we have
completed have positioned us well and give us increased confidence
in our organization as whole. We believe these factors will support
a stronger fiscal 2020 with more predictable growth and increased
profitability.”
Conference CallA-Mark will hold a conference
call today (November 7, 2019) to discuss these financial results.
The company's CEO Greg Roberts, President Thor Gjerdrum and CFO
Kathleen Simpson-Taylor will host the call at 4:30 p.m. Eastern
time (1:30 p.m. Pacific time). A question and answer session will
follow management's presentation.
To participate, please dial the appropriate number at least five
minutes prior to the start time and ask for the A-Mark Precious
Metals conference call.
U.S. dial-in number: 1-888-224-1121International number:
1-323-994-2082Conference ID: 7727329
The conference call will be broadcast simultaneously and
available for replay via the Investor Relations section of A-Mark’s
website at www.amark.com. If you have any difficulty connecting
with the conference call or webcast, please contact A-Mark’s
investor relations team at 1-949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern
time on the same day through November 21, 2019.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Conference ID: 7727329
About A-Mark Precious MetalsFounded in 1965,
A-Mark Precious Metals, Inc. (NASDAQ: AMRK) is a leading
full-service precious metals trading company and wholesaler of
gold, silver, platinum and palladium bullion and related products.
The company’s global customer base includes sovereign and private
mints, manufacturers and fabricators, refiners, dealers, financial
institutions, industrial users, investors, collectors, and
e-commerce and other retail customers. The company conducts its
operations through three complementary segments: Wholesale Trading
& Ancillary Services, Secured Lending, and Direct Sales.
A-Mark operates several business units in its Wholesale Trading
& Ancillary Services segment, including Industrial, Coin and
Bar, Trading and Finance, Transcontinental Depository Services
(TDS), Logistics, and the Mint (as more fully described below). Its
Industrial unit services manufacturers and fabricators of products
utilizing precious metals, while its Coin and Bar unit deals in
over 200 different products for distribution to dealers and other
qualified purchasers. As a U.S. Mint-authorized purchaser of gold,
silver and platinum coins, A-Mark purchases bullion products
directly from the U.S. Mint for sale to customers. A-Mark also has
distributorships with other sovereign mints, including Australia,
Austria, Canada, China, Mexico, South Africa and the United
Kingdom. Through its TDS subsidiary, A-Mark provides customers with
a variety of managed storage options for precious metals worldwide.
Through its A-M Global Logistics subsidiary, A-Mark provides
customers an array of complementary services, including receiving,
handling, inventorying, processing, packaging and shipping of
precious metals and custom coins on a secure basis. A-Mark also
holds a majority stake in a joint venture that owns the minting
operations known as SilverTowne Mint (Mint), which designs and
produces minted silver products which provide greater product
selection to customers, price stability within the supply chain as
well as more secured access to silver during volatile market
environments.
The company operates its Secured Lending segment through its
wholly-owned subsidiaries, Collateral Finance Corporation (CFC) and
AM Capital Funding, LLC (AMCF). Founded in 2005, CFC is a
California licensed finance lender that originates and acquires
loans secured by bullion and numismatic coins. Its customers
include coin and precious metal dealers, investors, and collectors.
AMCF was formed in 2018 for the purpose of securitizing eligible
secured loans of CFC.
A-Mark operates its Direct Sales segment primarily through its
wholly-owned subsidiary Goldline Inc. (Goldline), a direct retailer
of precious metals for the investor community. Goldline markets
A-Mark’s precious metal products through various channels,
including radio, television, and the Internet.
A-Mark is headquartered in El Segundo, California and with
offices and facilities in Los Angeles, California, Vienna, Austria,
Las Vegas, Nevada, and Winchester, Indiana. For more information,
visit www.amark.com.
Important Cautions Regarding Forward-Looking
StatementsStatements in this press release that relate to
future plans, objectives, expectations, performance, events and the
like are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and the Securities
Exchange Act of 1934. Future events, risks and uncertainties,
individually or in the aggregate, could cause actual results to
differ materially from those expressed or implied in these
statements. Factors that could cause actual results to differ
include the following: the failure to execute our growth strategy
as planned; greater than anticipated costs incurred to execute this
strategy; changes in the current international political climate
which has favorably contributed to demand and volatility in the
precious metals markets; increased competition for our higher
margin services, which could depress pricing; the failure of our
business model to respond to changes in the market environment as
anticipated; general risks of doing business in the commodity
markets; and other business, economic, financial and governmental
risks as described in in the company’s public filings with the
Securities and Exchange Commission.
The words "should," "believe," "estimate," "expect," "intend,"
"anticipate," "foresee," "plan" and similar expressions and
variations thereof identify certain of such forward-looking
statements, which speak only as of the dates on which they were
made. Additionally, any statements related to future improved
performance and estimates of revenues and earnings per share are
forward-looking statements. The company undertakes no obligation to
publicly update or revise any forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking
statements.
Company Contact:Thor Gjerdrum, PresidentA-Mark
Precious Metals, Inc.1-310-587-1414thor@amark.com
Investor Relations Contact:Matt GloverGateway
Investor Relations1-949-574-3860AMRK@gatewayIR.com
A-MARK PRECIOUS METALS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(amounts in thousands, except for share
data)
|
September 30, 2019 |
|
June 30, 2019 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
12,461 |
|
|
$ |
8,320 |
|
Receivables, net |
23,643 |
|
|
26,895 |
|
Derivative assets |
19,546 |
|
|
2,428 |
|
Secured loans receivable |
150,473 |
|
|
125,298 |
|
Precious metals held under financing arrangements |
200,809 |
|
|
208,792 |
|
Inventories: |
|
|
|
Inventories |
213,068 |
|
|
198,356 |
|
Restricted inventories |
159,130 |
|
|
94,505 |
|
|
372,198 |
|
|
292,861 |
|
|
|
|
|
Income tax receivable |
1,500 |
|
|
1,473 |
|
Prepaid expenses and other assets |
2,605 |
|
|
2,783 |
|
Total current
assets |
783,235 |
|
|
668,850 |
|
|
|
|
|
Operating lease right of use assets, net |
5,066 |
|
|
— |
|
Plant, property and equipment, net |
6,448 |
|
|
6,731 |
|
Goodwill |
8,881 |
|
|
8,881 |
|
Intangibles, net |
5,599 |
|
|
5,852 |
|
Long-term investments |
11,897 |
|
|
11,885 |
|
Deferred tax assets - non-current |
3,071 |
|
|
3,163 |
|
Other long-term assets |
3,000 |
|
|
— |
|
Total
assets |
$ |
827,197 |
|
|
$ |
705,362 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Lines of credit |
$ |
204,000 |
|
|
$ |
167,000 |
|
Liabilities on borrowed metals |
196,738 |
|
|
201,144 |
|
Product financing arrangements |
159,130 |
|
|
94,505 |
|
Accounts payable |
85,405 |
|
|
62,180 |
|
Derivative liabilities |
6,690 |
|
|
9,971 |
|
Accrued liabilities |
5,391 |
|
|
6,137 |
|
Total current
liabilities |
657,354 |
|
|
540,937 |
|
Notes payable |
92,017 |
|
|
91,859 |
|
Other liabilities |
4,791 |
|
|
— |
|
Total
liabilities |
754,162 |
|
|
632,796 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.01 par value, authorized 10,000,000 shares;
issued and outstanding: none as of September 30, 2019 and June 30,
2019 |
— |
|
|
— |
|
Common stock, par value $0.01; 40,000,000 shares authorized;
7,031,450 shares issued and outstanding as of September 30, 2019
and June 30, 2019 |
71 |
|
|
71 |
|
Additional paid-in capital |
26,618 |
|
|
26,452 |
|
Retained earnings |
43,263 |
|
|
43,135 |
|
Total A-Mark Precious Metals, Inc. stockholders’
equity |
69,952 |
|
|
69,658 |
|
Non-controlling interests |
3,083 |
|
|
2,908 |
|
Total stockholders’
equity |
73,035 |
|
|
72,566 |
|
Total liabilities,
non-controlling interests and stockholders’ equity |
$ |
827,197 |
|
|
$ |
705,362 |
|
|
|
|
|
A-MARK PRECIOUS METALS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except for share and per
share data)
Three Months Ended September 30, |
|
2019 |
|
2018 |
|
Revenues |
|
$ |
1,481,014 |
|
|
$ |
1,565,090 |
|
|
Cost of sales |
|
1,472,674 |
|
|
1,556,615 |
|
|
Gross profit |
|
8,340 |
|
|
8,475 |
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
(8,270 |
) |
|
(7,719 |
) |
|
Interest income |
|
5,768 |
|
|
4,551 |
|
|
Interest expense |
|
(5,142 |
) |
|
(3,552 |
) |
|
Other (expense) income,
net |
|
(166 |
) |
|
248 |
|
|
Unrealized loss on foreign
exchange |
|
(122 |
) |
|
(70 |
) |
|
Net income before provision for
income taxes |
|
408 |
|
|
1,933 |
|
|
Income tax expense |
|
(105 |
) |
|
(499 |
) |
|
Net income |
|
303 |
|
|
1,434 |
|
|
Net income (loss) attributable to non-controlling interests |
|
175 |
|
|
(47 |
) |
|
Net income attributable to the
Company |
|
$ |
128 |
|
|
$ |
1,481 |
|
|
|
|
|
|
|
|
Basic and
diluted net income per share attributable to A-Mark Precious
Metals, Inc.: |
|
Basic |
|
$ |
0.02 |
|
|
$ |
0.21 |
|
|
Diluted |
|
$ |
0.02 |
|
|
$ |
0.21 |
|
|
|
|
|
|
|
|
Weighted average
shares outstanding: |
|
|
|
|
|
Basic |
|
7,031,400 |
|
|
7,031,400 |
|
|
Diluted |
|
7,091,000 |
|
|
7,091,900 |
|
|
|
|
|
|
|
|
|
|
A-MARK PRECIOUS METALS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(amounts in thousands)
Three Months Ended September 30, |
|
2019 |
|
2018 |
|
Cash flows from
operating activities: |
|
|
|
|
|
Net income |
|
$ |
303 |
|
|
$ |
1,434 |
|
|
Adjustments to reconcile net income to net cash used in operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
668 |
|
|
697 |
|
|
Amortization of loan cost |
|
353 |
|
|
211 |
|
|
Deferred income taxes |
|
92 |
|
|
453 |
|
|
Interest added to principal of secured loans |
|
(5 |
) |
|
(5 |
) |
|
Share-based compensation |
|
166 |
|
|
272 |
|
|
Earnings from equity method investments |
|
(11 |
) |
|
(248 |
) |
|
Changes in assets and liabilities: |
|
|
|
|
|
Receivables |
|
3,252 |
|
|
(21,476 |
) |
|
Secured loans receivable |
|
1,543 |
|
|
93 |
|
|
Secured loans made to affiliates |
|
5,154 |
|
|
6,824 |
|
|
Derivative assets |
|
(17,118 |
) |
|
4,689 |
|
|
Income tax receivable |
|
(27 |
) |
|
(8 |
) |
|
Precious metals held under financing arrangements |
|
7,983 |
|
|
30,090 |
|
|
Inventories |
|
(79,337 |
) |
|
(9,689 |
) |
|
Prepaid expenses and other assets |
|
(17 |
) |
|
(208 |
) |
|
Accounts payable |
|
23,225 |
|
|
14,996 |
|
|
Derivative liabilities |
|
(3,281 |
) |
|
15,517 |
|
|
Liabilities on borrowed metals |
|
(4,406 |
) |
|
(53,148 |
) |
|
Accrued liabilities |
|
(1,016 |
) |
|
(792 |
) |
|
Net cash used in
operating activities |
|
(62,479 |
) |
|
(10,298 |
) |
|
Cash flows from
investing activities: |
|
|
|
|
|
Capital expenditures for plant, property, and equipment |
|
(137 |
) |
|
(122 |
) |
|
Secured loans receivable, net |
|
(31,868 |
) |
|
21,621 |
|
|
Other loans originated |
|
(3,000 |
) |
|
— |
|
|
Net cash (used in)
provided by investing activities |
|
(35,005 |
) |
|
21,499 |
|
|
Cash flows from
financing activities: |
|
|
|
|
|
Product financing arrangements, net |
|
64,625 |
|
|
(60,814 |
) |
|
Borrowings and repayments under lines of credit, net |
|
37,000 |
|
|
(21,000 |
) |
|
Proceeds from issuance of notes payable |
|
— |
|
|
90,000 |
|
|
Debt funding issuance costs |
|
— |
|
|
(2,964 |
) |
|
Net cash provided by
financing activities |
|
101,625 |
|
|
5,222 |
|
|
Net increase in cash,
cash equivalents, and restricted cash |
|
4,141 |
|
|
16,423 |
|
|
Cash, cash
equivalents, and restricted cash, beginning of period |
|
8,320 |
|
|
6,291 |
|
|
Cash, cash
equivalents, and restricted cash, end of period |
|
$ |
12,461 |
|
|
$ |
22,714 |
|
|
|
|
|
|
|
|
Overview of Results of Operations for the Three Months
Ended September 30, 2019 and 2018
Condensed Consolidated Results of
Operations
The operating results of our business for the
three months ended September 30, 2019 and 2018 are as follows:
in thousands,
except per share data |
|
|
Three Months Ended September 30, |
2019 |
|
2018 |
|
$ |
|
% |
|
$ |
|
% of revenue |
|
$ |
|
% of revenue |
|
Increase/ (decrease) |
|
Increase/ (decrease) |
Revenues |
$ |
1,481,014 |
|
|
100.000 |
% |
|
$ |
1,565,090 |
|
|
100.000 |
% |
|
$ |
(84,076 |
) |
|
(5.4 |
)% |
Gross profit |
8,340 |
|
|
0.563 |
% |
|
8,475 |
|
|
0.542 |
% |
|
$ |
(135 |
) |
|
(1.6 |
)% |
Selling, general and
administrative expenses |
(8,270 |
) |
|
(0.558 |
)% |
|
(7,719 |
) |
|
(0.493 |
)% |
|
$ |
551 |
|
|
7.1 |
% |
Interest income |
5,768 |
|
|
0.389 |
% |
|
4,551 |
|
|
0.291 |
% |
|
$ |
1,217 |
|
|
26.7 |
% |
Interest expense |
(5,142 |
) |
|
(0.347 |
)% |
|
(3,552 |
) |
|
(0.227 |
)% |
|
$ |
1,590 |
|
|
44.8 |
% |
Other (expense) income,
net |
(166 |
) |
|
(0.011 |
)% |
|
248 |
|
|
0.016 |
% |
|
$ |
414 |
|
|
166.9 |
% |
Unrealized loss on foreign
exchange |
(122 |
) |
|
(0.008 |
)% |
|
(70 |
) |
|
(0.004 |
)% |
|
$ |
52 |
|
|
NM |
|
Net income before provision
for income taxes |
408 |
|
|
0.028 |
% |
|
1,933 |
|
|
0.124 |
% |
|
$ |
(1,525 |
) |
|
(78.9 |
)% |
Income tax expense |
(105 |
) |
|
(0.007 |
)% |
|
(499 |
) |
|
(0.032 |
)% |
|
$ |
(394 |
) |
|
(79.0 |
)% |
Net income |
303 |
|
|
0.020 |
% |
|
1,434 |
|
|
0.092 |
% |
|
$ |
(1,131 |
) |
|
(78.9 |
)% |
Net income (loss) attributable to non-controlling interest |
175 |
|
|
0.012 |
% |
|
(47 |
) |
|
(0.003 |
)% |
|
$ |
222 |
|
|
472.3 |
% |
Net income attributable to the
Company |
$ |
128 |
|
|
0.009 |
% |
|
$ |
1,481 |
|
|
0.095 |
% |
|
$ |
(1,353 |
) |
|
(91.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted net income per share attributable to A-Mark Precious
Metals, Inc.: |
Per Share
Data: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.02 |
|
|
|
|
$ |
0.21 |
|
|
|
|
$ |
(0.19 |
) |
|
(90.5 |
)% |
Diluted |
$ |
0.02 |
|
|
|
|
$ |
0.21 |
|
|
|
|
$ |
(0.19 |
) |
|
(90.5 |
)% |
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A Mark Precious Metals (NASDAQ:AMRK)
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From May 2023 to May 2024