Collectors Universe Reports Operating Results for Third Quarter of Fiscal 2018
May 08 2018 - 4:05PM
Collectors Universe, Inc. (NASDAQ:CLCT), a leading provider of
value-added authentication and grading services to dealers and
collectors of high-value collectibles, today announced financial
results for its third quarter and nine months ended March 31, 2018.
Operational and Financial
Highlights:
- Revenues in this year’s third quarter were $17.5 million, down
6% from the $18.6 million in last year’s third quarter. For
this year’s nine months, revenues were $51.3 million, down 2% from
$52.2 million in same period of last year.
- Our cards and autograph service revenues increased by $1.0
million, or 23%, in this year’s third quarter and $2.2 million, or
17% in this year’s nine months, representing record quarterly and
nine-month revenues for that business.
- Our total coin service revenues declined by $2.0 million,
or 16%, and by $3.0 million, or 8%, in this year’s third quarter
and nine months. China coin revenues increased by
$0.7 million, or 136%, and by $1.7 million, or 33%, in this
year’s third quarter and nine months, as we continued to see brand
acceptance in that region. However, in the United States, coins
service revenues declined by $2.8 million or 24% and $5.0 million
or 17%, due to the previously disclosed slowness in the domestic
coin market.
- Coin service revenues generated by our overseas operations
(inclusive of the China revenues discussed above) were 11% and 18%
of total revenues in this year’s third quarter and nine months, as
compared to 7% and 13% of total revenues in the same respective
periods of last year.
- Our gross profit margins were 55% and 58%, respectively, in
this year’s third quarter and nine months, as compared to 60% and
62% in the same respective periods of the prior year. Those
declines were primarily attributable to the decreases in our U.S.
coin revenues, as a significant proportion of our direct costs are
relatively fixed in the short-term.
- Operating income was $2.0 million and $6.7 million in this
year’s third quarter and nine months, as compared to
$4.7 million and $12.0 million, respectively, in the
corresponding periods of the prior year. The declines in operating
income in the current year periods, primarily reflect the decreases
in U.S. coin revenues as discussed above. In addition, we incurred
higher non-cash stock-based compensation of $0.4 million and $0.6
million in this year’s third quarter and nine months, and $0.6
million in moving and lease exit costs for the relocation of our
operations and headquarters to a new facility, in this year’s nine
months.
- Income from continuing operations was $1.5 million, or $0.17
per diluted share, and $5.2 million, or $0.58 per diluted share, in
this year’s third quarter and nine months as compared to
$3.0 million, or $0.35 per diluted share, and $7.5 million, or
$0.87 per diluted share, in the corresponding respective periods of
the prior year. The provisions for income taxes in the current year
periods, reflect federal income taxes at a blended rate of 28%
arising from the Tax Cuts and Jobs Act that was enacted into law in
December 2017.
- The Company’s cash position as of March 31, 2018 was
$9.2 million, as compared to $9.8 million at June 30, 2017 and
$8.7 million at December 31, 2017. Net cash used of
$0.6 million in the nine months included $8.5 million of
cash generated from continuing operations and $3.0 million of
borrowings under our term loan, offset by $7.5 million used to pay
cash dividends to stockholders, $4.4 million used for capital
expenditures, and capitalized software costs, which are inclusive
of expenditures for our new operations and headquarter facility and
$0.2 million used for discontinued operations. In this year’s
third quarter, we paid about $0.8 million in remaining
disbursements for the new facility.
- On May 1, 2018, we announced our fourth quarter dividend of
$0.175 per share of common stock, which will be paid on May 25,
2018 to stockholders of record on May 16, 2018.
Operations Commentary
Joseph J. Orlando Chief Executive Officer, stated, “After a
slower than expected Q2, Collectors Universe finished Q3 in
stronger fashion. While there are still segments of the PCGS
domestic business and overall coin market that remain soft, other
parts of our business performed well. PCGS continues to gain
traction overseas as our international coin business increased by
55% over the same quarter a year ago. In addition, our PSA and
PSA/DNA division set another quarterly revenue record and continued
its record pace for the fiscal year”
Conference Call and Webcast
Collectors Universe will host a conference call to discuss
results on Tuesday, May 8, 2018 at 4:30 p.m. Eastern
Time/1:30 p.m. Pacific Time. Interested parties may
participate in the conference call by dialing 800-289-0438 or
323-794-2423, five to ten minutes prior to the initiation of the
call. A replay of the conference call will be available
through May 22, 2018 by dialing 888-203-1112 or 719-457-0820 and
entering access code 4327370#. A live webcast of the
conference call will also be available on the Collectors Universe
website, www.collectorsuniverse.com under Investor Relations:
Events and Presentations. The webcast will be archived for 12
months.
About Collectors Universe
Collectors Universe, Inc. is a leading provider of value-added
services to the high-value collectibles markets. The Company
authenticates and grades collectible coins, trading cards, event
tickets, autographs and memorabilia (“collectibles”). The
Company also compiles and publishes authoritative information about
United States and world coins, collectible trading cards and sports
memorabilia (“collectibles”), and operates its CCE dealer-to-dealer
Internet bid-ask market for certified coins and its Expos trade
show and conventions business. This information is accessible
to collectors and dealers at the Company's website,
http://www.collectorsuniverse.com and is also published in
print.
Cautionary Statements Regarding Forward Looking
Information
This news release contains statements regarding our
expectations, beliefs or views about our future financial
performance and trends in our business and in our markets, which
constitute "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Forward looking
statements can often be identified by the use of words such as
"believe," "expect," "anticipate," "intend," "plan," "estimate,"
"project," or future or conditional verbs such as "will," "would,"
"should," "could," or "may."
Due to a number of risks and uncertainties to which our business
and our markets are subject, our future financial performance may
differ, possibly significantly, from expectations regarding our
future financial performance that are expressed in, or that may be
implied or inferred from the discussion of our operating results in
this news release. Those risks and uncertainties, and their
possible impact on our future financial performance, include, but
are not limited to, the following: our continued dependence on our
coin business which historically has generated more than 60% of our
consolidated revenues and a substantial portion of our operating
income, making our operating results more vulnerable to conditions
that could adversely affect or cause stagnation in the prices of
precious metals or reduce demand for and transactions in
collectible coins; the risks that domestic or international
economic conditions may deteriorate and lead to reductions in the
demand for our collectibles authentication and grading services
and, consequently, in our revenues and operating results; the risk
that weakness or volatility in economic conditions or increases in
interest rates in the United States or in the overseas markets
where we operate will lead to longer-term changes in the spending
habits of consumers or in the availability, costs and use of credit
by smaller businesses, such as collectibles dealers, to fund
purchases of collectibles, which could lead to longer-term declines
in collectibles commerce and, therefore, in the demand for our
services; the risks that claims under our coin and trading card
authentication and grading warranties will increase substantially
and that the warranty reserves we maintain for such claims will
prove to be inadequate, which could cause our gross margin and
operating results to decline or cause us to incur operating losses;
the risk that our strategies of offering new services and expanding
our collectibles authentication and grading business into new
geographic areas, such as Europe and Asia will not be successful in
enabling us to improve our profitability or may even cause us to
incur significant losses; the risks and added complexity of
conducting business overseas; the risk that it may become necessary
for us to reduce the amount of, or suspend or discontinue the
payment of cash dividends in the future, due to conditions or
circumstances outside of our control, such as adverse economic or
market conditions, as well as our future financial performance and
the cash needs of our business in the future.
Additional information regarding these risks and other risks and
uncertainties to which our business is subject is contained in Item
1A, entitled “Risk Factors”, in our Annual Report on Form 10-K for
our fiscal year ended June 30, 2017 which we filed with the
Securities and Exchange Commission on August 31, 2017 and readers
of this news release are urged to review the discussion of those
risks and uncertainties in that Report. Also, our actual
financial results in the future may differ from those currently
expected due to additional risks and uncertainties of which we are
not currently aware or which we do not currently view as, but may
in the future become, material to our business or operating
results. Due to these risks and uncertainties, readers are
cautioned not to place undue reliance on the forward-looking
statements contained in this news release or in our Annual or
Quarterly Reports filed with the Securities and Exchange
Commission, which speak only as of their respective dates. We
also disclaim any obligation to update or revise any of the
forward-looking statements contained in this news release or in our
Annual Report on Form 10-K, as a result of new information, future
events or otherwise, except as may be required by law or NASDAQ
rules.
Contact:Joseph WallaceChief Financial
OfficerCollectors Universe949-567-1245Email:
jwallace@collectors.com
- tables to follow -
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In Thousands, except per share
data)(Unaudited) |
|
|
Three Months EndedMarch
31, |
|
Nine Months EndedMarch
31, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net revenues |
$ |
17,512 |
|
$ |
18,596 |
|
$ |
51,328 |
|
$ |
52,206 |
|
Cost of revenues |
|
7,818 |
|
|
7,365 |
|
|
21,745 |
|
|
19,979 |
|
Gross
profit |
|
9,694 |
|
|
11,231 |
|
|
29,583 |
|
|
32,227 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling and
marketing expenses |
|
2,513 |
|
|
2,210 |
|
|
7,688 |
|
|
6,959 |
|
General and
administrative expenses |
|
5,195 |
|
|
4,312 |
|
|
15,148 |
|
|
13,274 |
|
Total operating
expenses |
|
7,708 |
|
|
6,522 |
|
|
22,836 |
|
|
20,233 |
|
Operating income |
|
1,986 |
|
|
4,709 |
|
|
6,747 |
|
|
11,994 |
|
Interest and other
income (expense), net |
|
116 |
|
|
13 |
|
|
107 |
|
|
(59 |
) |
Income before provision
for income taxes |
|
2,102 |
|
|
4,722 |
|
|
6,854 |
|
|
11,935 |
|
Provision for income
taxes |
|
630 |
|
|
1,765 |
|
|
1,678 |
|
|
4,467 |
|
Income from continuing
operations |
|
1,472 |
|
|
2,957 |
|
|
5,176 |
|
|
7,468 |
|
Income (loss) from
discontinued operations, net of income taxes |
|
2 |
|
|
6 |
|
|
89 |
|
|
(3 |
) |
Net income |
$ |
1,474 |
|
$ |
2,963 |
|
$ |
5,265 |
|
$ |
7,465 |
|
|
|
|
|
|
|
|
|
Net income per basic
share: |
|
|
|
|
|
|
|
Income from continuing
operations |
$ |
0.17 |
|
$ |
0.35 |
|
$ |
0.60 |
|
$ |
0.88 |
|
Income from
discontinued operations |
|
- |
|
|
- |
|
|
0.01 |
|
|
- |
|
Net income per
basic share |
$ |
0.17 |
|
$ |
0.35 |
|
$ |
0.61 |
|
$ |
0.88 |
|
|
|
|
|
|
|
|
|
Net income per diluted
share: |
|
|
|
|
|
|
|
Income from continuing
operations |
$ |
0.17 |
|
$ |
0.35 |
|
$ |
0.58 |
|
$ |
0.87 |
|
Income from
discontinued operations |
|
- |
|
|
- |
|
|
0.01 |
|
|
- |
|
Net income per
diluted share |
$ |
0.17 |
|
$ |
0.35 |
|
$ |
0.59 |
|
$ |
0.87 |
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
8,703 |
|
|
8,482 |
|
|
8,651 |
|
|
8,478 |
|
Diluted |
|
8,902 |
|
|
8,569 |
|
|
8,855 |
|
|
8,569 |
|
Dividends declared per
common share |
$ |
0.175 |
|
$ |
0.35 |
|
$ |
0.875 |
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In Thousands, except per share
data)(Unaudited) |
|
ASSETS |
March 31, 2018 |
|
June
30, 2017 |
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
9,179 |
|
|
$ |
9,826 |
|
Accounts
receivable, net of allowance of $69 and $77 at March 31, 2018
and June 30, 2017, respectively |
|
2,672 |
|
|
|
3,615 |
|
Inventories,
net |
|
2,929 |
|
|
|
2,722 |
|
Prepaid expenses
and other current assets |
|
1,610 |
|
|
|
1,661 |
|
Total current
assets |
|
16,390 |
|
|
|
17,824 |
|
|
|
|
|
Property and equipment,
net |
|
8,576 |
|
|
|
3,163 |
|
Goodwill |
|
2,083 |
|
|
|
2,083 |
|
Intangible assets,
net |
|
2,341 |
|
|
|
2,183 |
|
Deferred income tax
assets |
|
2,499 |
|
|
|
2,864 |
|
Other assets |
|
477 |
|
|
|
413 |
|
Non-current assets of
discontinued operations |
|
- |
|
|
|
79 |
|
Total
assets |
$ |
32,366 |
|
|
$ |
28,609 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
2,605 |
|
|
$ |
2,660 |
|
Accrued
liabilities |
|
1,884 |
|
|
|
1,652 |
|
Accrued
compensation and benefits |
|
3,276 |
|
|
|
4,373 |
|
Current portion
of long-term debt |
|
375 |
|
|
|
- |
|
Income taxes
payable |
|
168 |
|
|
|
664 |
|
Deferred
revenue |
|
3,560 |
|
|
|
2,676 |
|
Current
liabilities of discontinued operations |
|
- |
|
|
|
391 |
|
Total current
liabilities |
|
11,868 |
|
|
|
12,416 |
|
|
|
|
|
Deferred rent |
|
3,289 |
|
|
|
276 |
|
Long Term Debt |
|
2,625 |
|
|
|
- |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
Preferred stock,
$.001 par value; 3,000 shares authorized; no shares issued or
outstanding |
|
- |
|
|
|
- |
|
Common stock,
$.001 par value; 20,000 shares authorized; 9,016 and 8,921 issued
and outstanding at March 31, 2018 and June 30, 2017,
respectively. |
|
9 |
|
|
|
9 |
|
Additional
paid-in capital |
|
85,899 |
|
|
|
84,948 |
|
Accumulated
deficit |
|
(71,324 |
) |
|
|
(69,040 |
) |
Total
stockholders’ equity |
|
14,584 |
|
|
|
15,917 |
|
Total
liabilities and stockholders’ equity |
$ |
32,366 |
|
|
$ |
28,609 |
|
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (In Thousands)(Unaudited) |
|
|
Nine Months EndedMarch
31, |
|
|
2018 |
|
|
|
2017 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net income |
$ |
5,265 |
|
|
$ |
7,465 |
|
|
Discontinued
operations |
|
(89 |
) |
|
|
3 |
|
|
Income from continuing
operations |
|
5,176 |
|
|
|
7,468 |
|
|
Adjustments to
reconcile income from continuing operations to net cash
provided by operating activities: |
|
|
|
|
Depreciation and
amortization expense |
|
1,612 |
|
|
|
1,243 |
|
|
Stock-based
compensation expense |
|
951 |
|
|
|
330 |
|
|
Provision for
bad debts |
|
14 |
|
|
|
32 |
|
|
Provision for
inventory write-down |
|
389 |
|
|
|
32 |
|
|
Provision for
warranty claims |
|
343 |
|
|
|
506 |
|
|
Loss on sale of
property and equipment |
|
95 |
|
|
|
5 |
|
|
Deferred income
taxes |
|
365 |
|
|
|
- |
|
|
Change in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
953 |
|
|
|
(36 |
) |
|
Inventories |
|
(596 |
) |
|
|
(1,050 |
) |
|
Prepaid expenses
and other |
|
51 |
|
|
|
(323 |
) |
|
Other
assets |
|
(64 |
) |
|
|
(172 |
) |
|
Accounts payable
and accrued liabilities |
|
(168 |
) |
|
|
(286 |
) |
|
Accrued
compensation and benefits |
|
(1,096 |
) |
|
|
402 |
|
|
Income taxes
payable |
|
(496 |
) |
|
|
1,252 |
|
|
Deferred
revenue |
|
884 |
|
|
|
445 |
|
|
Deferred
rent |
|
63 |
|
|
|
(73 |
) |
|
Net cash
provided by operating activities of continuing operations |
|
8,476 |
|
|
|
9,775 |
|
|
Net cash used in
operating activities of discontinued businesses |
|
(228 |
) |
|
|
(379 |
) |
|
Net cash
provided by operating activities |
|
8,248 |
|
|
|
9,396 |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Proceeds from sale of
business |
|
6 |
|
|
|
53 |
|
|
Capital
expenditures |
|
(3,626 |
) |
|
|
(919 |
) |
|
Capitalized
software |
|
(720 |
) |
|
|
(723 |
) |
|
Patents and other
intangibles |
|
(7 |
) |
|
|
(5 |
) |
|
Net cash used in
investing activities |
|
(4,347 |
) |
|
|
(1,594 |
) |
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Borrowings under term
loan |
|
3,000 |
|
|
|
- |
|
|
Dividends paid to
common stockholders |
|
(7,548 |
) |
|
|
(8,933 |
) |
|
Net cash used in
financing activities |
|
(4,548 |
) |
|
|
(8,933 |
) |
|
|
|
|
Net
decrease in cash and cash equivalents |
|
(647 |
) |
|
|
(1,131 |
) |
Cash and
cash equivalents at beginning of period |
|
9,826 |
|
|
|
11,967 |
|
Cash and
cash equivalents at end of period |
$ |
9,179 |
|
|
$ |
10,836 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION: |
|
|
|
|
|
|
|
Interest
paid during the period |
$ |
39 |
|
|
$ |
- |
|
Income
taxes paid during the period |
|
1,542 |
|
|
$ |
2,934 |
|
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
Leasehold
Improvements contributed by landlord |
$ |
2,949 |
|
|
$ |
- |
|
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