Revenues up 11% to Record Q3
levels
Collectors Universe, Inc. (NASDAQ: CLCT), a leading provider of
value-added authentication and grading services to dealers and
collectors of collectibles, today announced financial results for
its third quarter of fiscal year 2019.
Q3 Financial Highlights:
- Revenues up 11% to $19.5 million versus $17.5 million
- Gross Profit Margin up to 60% versus 55%
- Operating Margins up to 24% ($4.8 million) versus 11% ($2.0
million)
- Cash at March 31, 2019 up to $15.7 million versus $12.4 million
at December 31, 2018
Q3 and Nine Months Review:
- In this year’s third quarter, revenues increased by 11% to a
third quarter record of $19.5 million and operating income
increased to a quarterly record of $4.8 million as compared to last
year’s third quarter revenues of $17.5 million and operating income
of $2.0 million. In addition to the 11% revenue increase, the
improved operating income reflected a higher gross profit margin of
60% and a reduction of $0.8 million in operating expenses. Cash
increased to $15.7 million at March 31, 2019 from $12.4 million at
December 31, 2018 and $9.2 million at March 31, 2018.
- The revenue increase in the quarter was comprised of a $1.3
million, or 24%, increase in cards and autographs revenues and a
$0.9 million, or 10%, increase in US coin revenues. The cards
and autographs revenues in the quarter represented a quarterly
record for that business. Total coin revenues, which is inclusive
of the overseas coin operations, increased by 7%, in the quarter.
- The record revenues of $52.7 million in this year’s nine months
included a $3.7 million or 24% increase in cards and autograph
revenues and a 7% increase in US coin revenues. The cards and
autographs revenues represented record nine months revenues for
that business. Total revenues in the nine months were up $1.3
million or 3%, despite the revenue reduction in China of $3.9
million, due to the absence of banking channel revenues in China
this year. Operating income for this year’s nine months increased
by $3.1 million to $9.8 million from $6.7 million in last year’s
nine months, mostly arising from the improved operating results in
this year’s third quarter.
- The gross profit margins were 60% and 58% in this year’s third
quarter and nine months as compared to 55% and 58% in last year’s
third quarter and nine months. The improved gross profit
margin in this year’s third quarter, reflected higher gross profit
margins in our coin and cards and autographs businesses, due to
higher average service fees earned and a higher number of units
authenticated and graded, in the quarter.
- Income from continuing operations in this year’s third quarter
was $3.6 million, or $0.40 per diluted share, as compared to $1.5
million, or $0.17, per diluted share in last year’s third
quarter. For the nine months, income from continuing
operations was $7.2 million, or $0.80 per diluted share, as
compared to $5.2 million, or $0.58 per diluted share, in last
year’s nine months.
- The Company’s cash position as of March 31, 2019 was $15.7
million, as compared to $10.6 million as of June 30, 2018. Net cash
generated of $5.1 million in this year’s nine months included cash
generated from continuing operations of $11.9 million, partially
offset by $4.9 million used to pay cash dividends to stockholders,
$1.5 million used for capital expenditures and capitalized software
costs and $0.4 million used to paydown the Company’s term
loan.
- On April 22, 2019, we announced our quarterly cash dividend of
$0.175 per share, which will be paid on May 31, 2019 to
stockholders of record on May 17, 2019.
Management Commentary and Outlook:
Joseph J. Orlando, President and Chief Executive Officer,
stated, “Q3 is typically our seasonally-strongest quarter of the
fiscal year and, in 2019, it proved to be just that. The strong
revenue figure coupled with continued progress in streamlining our
business resulted in our best operating results for any quarter in
Company history. Furthermore, our cash position improved from $12.4
million at the end of Q2 in December to $15.7 million at the end of
Q3.”
Orlando continued, “The PCGS US vintage and trade show revenues
were up a combined $0.5 million year-over-year, while our bulk
services were up about $0.4 million versus last year’s Q3. Part of
the growth in PCGS Bulk was aided by a successful Apollo 11
coin-grading program that generated thousands of these popular
commemorative coins for submission. The creative packaging designed
by the PCGS team helped raise our Q3 Bulk ASP over last year’s ASP.
PCGS International produced mixed results. Our Hong Kong office
finished the quarter with record Q3 revenues, up 25% versus last
year, while our Shanghai and Paris offices were down slightly, but
remained relatively flat compared to the previous year.”
“The PSA and PSA/DNA business set another all-time revenue
quarterly record for the division and eclipsed last year’s Q3
revenue by roughly $1.3 million, a 24% increase year-over-year.
Based on the first three quarters of fiscal 2019, this part of our
company is expected to close out its ninth consecutive year of top
and bottom line growth. The PSA backlog remains at record levels
heading into Q4. The Company is currently revamping our existing
space to expand operational capacity, so we can ultimately improve
the extended turnaround times facing our customers.”
“The management team is focused on improving the fundamentals of
our Company and refining our international strategy, while
exploring new potential revenue streams that could enhance our
growth prospects in the future.”
Conference Call and Webcast
Collectors Universe will host a conference call to discuss
results on Wednesday, May 1, 2019 at 4:30 p.m. Eastern Time/1:30
p.m. Pacific Time. Interested parties may participate in the
conference call by dialing 334-323-0522 or 877-260-1479, five to
ten minutes prior to the initiation of the call. A replay of
the conference call will be available through May 15, 2019 by
dialing 888-203-1112 or 719-457-0820 and entering access code
4988871#. 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 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 , which make our operating results more vulnerable to
conditions that could adversely affect or cause stagnation in the
prices of precious metals and collectible coins; the risks that the
economic recovery may stall, or that domestic or international
economic conditions may deteriorate as a result of events outside
of our control, that could lead to reductions in the demand for our
collectibles authentication and grading services and, consequently,
in our revenues and operating results; the risk that the weakness
or volatility of economic conditions will lead to longer-term
changes in the spending habits of consumers and in the availability
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 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, 2018 which we filed with the
Securities and Exchange Commission on August 30, 2018, 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 in
the future may 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, implied or inferred, 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 OrlandoPresident and Chief
Executive Officer949-567-1170 Email: jorlando@collectors.com Joseph
WallaceSenior Vice President and Chief Financial
Officer949-567-1245 Email: jwallace@collectors.com |
|
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In Thousands, except per share
data)(Unaudited)
|
Three Months EndedMarch
31, |
|
Nine Months EndedMarch
31, |
|
|
2019 |
|
|
|
2018 |
|
|
2019 |
|
|
|
2018 |
Net revenues |
$ |
19,471 |
|
|
$ |
17,512 |
|
$ |
52,670 |
|
|
$ |
51,328 |
Cost of revenues |
|
7,827 |
|
|
|
7,818 |
|
|
21,982 |
|
|
|
21,745 |
Gross profit |
|
11,644 |
|
|
|
9,694 |
|
|
30,688 |
|
|
|
29,583 |
Operating expenses: |
|
|
|
|
|
|
|
Selling and
marketing expenses |
|
2,509 |
|
|
|
2,513 |
|
|
7,803 |
|
|
|
7,688 |
General and
administrative expenses |
|
4,370 |
|
|
|
5,195 |
|
|
13,079 |
|
|
|
15,148 |
Total
operating expenses |
|
6,879 |
|
|
|
7,708 |
|
|
20,882 |
|
|
|
22,836 |
Operating income |
|
4,765 |
|
|
|
1,986 |
|
|
9,806 |
|
|
|
6,747 |
Interest and other income
(expense), net |
|
(4 |
) |
|
|
116 |
|
|
(146 |
) |
|
|
107 |
Income before provision
for income taxes |
|
4,761 |
|
|
|
2,102 |
|
|
9,660 |
|
|
|
6,854 |
Provision for income
taxes |
|
1,202 |
|
|
|
630 |
|
|
2,489 |
|
|
|
1,678 |
Income from continuing
operations |
|
3,559 |
|
|
|
1,472 |
|
|
7,171 |
|
|
|
5,176 |
Income from discontinued
operations, net of income taxes |
|
- |
|
|
|
2 |
|
|
- |
|
|
|
89 |
Net income |
$ |
3,559 |
|
|
$ |
1,474 |
|
$ |
7,171 |
|
|
$ |
5,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per basic
share: |
|
|
|
|
|
|
|
Income from continuing
operations |
$ |
0.40 |
|
|
$ |
0.17 |
|
$ |
0.80 |
|
|
$ |
0.60 |
Income from discontinued
operations |
|
- |
|
|
|
- |
|
|
- |
|
|
|
0.01 |
Net income
per basic share |
$ |
0.40 |
|
|
$ |
0.17 |
|
$ |
0.80 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
Net income per diluted
share: |
|
|
|
|
|
|
|
Income from continuing
operations |
$ |
0.40 |
|
|
$ |
0.17 |
|
$ |
0.80 |
|
|
$ |
0.58 |
Income from discontinued
operations |
|
- |
|
|
|
- |
|
|
- |
|
|
|
0.01 |
Net income
per diluted share |
$ |
0.40 |
|
|
$ |
0.17 |
|
$ |
0.80 |
|
|
$ |
0.59 |
|
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
8,938 |
|
|
|
8,703 |
|
|
8,936 |
|
|
|
8,651 |
Diluted |
|
8,966 |
|
|
|
8,902 |
|
|
8,958 |
|
|
|
8,855 |
Dividends declared per
common share |
$ |
0.175 |
|
|
$ |
0.175 |
|
$ |
0.525 |
|
|
$ |
0.875 |
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In Thousands, except per share data)(Unaudited)
|
|
|
|
ASSETS |
March 31,2019 |
|
June
30, 2018 |
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
15,716 |
|
|
$ |
10,581 |
|
Accounts
receivable, net of allowance of $74 and $80 at March 31, 2019
and June 30, 2018, respectively |
|
2,552 |
|
|
|
2,608 |
|
Inventories,
net |
|
2,294 |
|
|
|
2,579 |
|
Prepaid expenses
and other current assets |
|
1,698 |
|
|
|
1,965 |
|
Total
current assets |
|
22,260 |
|
|
|
17,733 |
|
|
|
|
|
Property and equipment,
net |
|
7,703 |
|
|
|
8,378 |
|
Goodwill |
|
2,083 |
|
|
|
2,083 |
|
Intangible assets,
net |
|
2,301 |
|
|
|
2,319 |
|
Deferred income tax
assets |
|
1,222 |
|
|
|
1,222 |
|
Other assets |
|
467 |
|
|
|
479 |
|
Total assets |
$ |
36,036 |
|
|
$ |
32,214 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts
payable |
$ |
2,405 |
|
|
$ |
2,487 |
|
Accrued
liabilities |
|
1,685 |
|
|
|
1,998 |
|
Accrued
compensation and benefits |
|
3,134 |
|
|
|
3,401 |
|
Current portion of
long-term debt |
|
750 |
|
|
|
562 |
|
Income taxes
payable |
|
1,195 |
|
|
|
312 |
|
Deferred
revenue |
|
3,704 |
|
|
|
3,213 |
|
Total
current liabilities |
|
12,873 |
|
|
|
11,973 |
|
|
|
|
|
Deferred rent |
|
3,824 |
|
|
|
3,535 |
|
Long-Term Debt |
|
1,875 |
|
|
|
2,438 |
|
|
|
|
|
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; 9,148 and 9,015 issued
and outstanding at March 31, 2019 and June 30, 2018,
respectively. |
|
9 |
|
|
|
9 |
|
Additional paid-in
capital |
|
87,088 |
|
|
|
86,369 |
|
Accumulated
deficit |
|
(69,633 |
) |
|
|
(72,110 |
) |
Total
stockholders’ equity |
|
17,464 |
|
|
|
14,268 |
|
Total
liabilities and stockholders’ equity |
$ |
36,036 |
|
|
$ |
32,214 |
|
|
|
|
|
|
|
|
|
COLLECTORS UNIVERSE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(In Thousands)(Unaudited)
|
|
|
Nine Months EndedMarch
31, |
|
|
2019 |
|
|
|
2018 |
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Net income |
$ |
7,171 |
|
|
$ |
5,265 |
|
|
Discontinued
operations |
|
- |
|
|
|
(89 |
) |
|
Income from continuing
operations |
|
7,171 |
|
|
|
5,176 |
|
|
Adjustments to reconcile
income from continuing operations to net cash provided by
operating activities: |
|
|
|
|
Depreciation and
amortization expense |
|
2,132 |
|
|
|
1,612 |
|
|
Stock-based
compensation expense |
|
720 |
|
|
|
951 |
|
|
Provision for
bad debts |
|
5 |
|
|
|
14 |
|
|
Provision for
inventory write-down |
|
143 |
|
|
|
389 |
|
|
Provision for
warranty claims |
|
402 |
|
|
|
343 |
|
|
Loss on sale of
property and equipment |
|
6 |
|
|
|
95 |
|
|
Deferred income
taxes |
|
- |
|
|
|
365 |
|
|
Change in operating
assets and liabilities: |
|
|
|
|
Accounts
receivable |
|
51 |
|
|
|
953 |
|
|
Inventories |
|
142 |
|
|
|
(596 |
) |
|
Prepaid expenses
and other |
|
339 |
|
|
|
51 |
|
|
Other
assets |
|
11 |
|
|
|
(64 |
) |
|
Accounts payable
and accrued liabilities |
|
(577 |
) |
|
|
(168 |
) |
|
Accrued
compensation and benefits |
|
(267 |
) |
|
|
(1,096 |
) |
|
Income taxes
payable |
|
883 |
|
|
|
(496 |
) |
|
Deferred
revenue |
|
492 |
|
|
|
884 |
|
|
Deferred
rent |
|
289 |
|
|
|
63 |
|
|
Net cash provided by operating activities of continuing
operations |
|
11,942 |
|
|
|
8,476 |
|
|
Net cash used in operating activities of discontinued
businesses |
|
(12 |
) |
|
|
(228 |
) |
|
Net cash provided by operating activities |
|
11,930 |
|
|
|
8,248 |
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Capital expenditures |
|
(749 |
) |
|
|
(3,626 |
) |
|
Capitalized software |
|
(787 |
) |
|
|
(720 |
) |
|
Proceeds from sale of
business |
|
12 |
|
|
|
6 |
|
|
Proceeds from sale of
property and equipment |
|
18 |
|
|
|
- |
|
|
Patents and other
intangibles |
|
- |
|
|
|
(7 |
) |
|
Net
cash used in investing activities |
|
(1,506 |
) |
|
|
(4,347 |
) |
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
(Repayments) Borrowings
under term loan |
|
(375 |
) |
|
|
3,000 |
|
|
Dividends paid to common
stockholders |
|
(4,914 |
) |
|
|
(7,548 |
) |
|
Net
cash used in financing activities |
|
(5,289 |
) |
|
|
(4,548 |
) |
|
|
|
|
Net increase
(decrease) in cash and cash equivalents |
|
5,135 |
|
|
|
(647 |
) |
Cash and cash
equivalents at beginning of period |
|
10,581 |
|
|
|
9,826 |
|
Cash and
cash equivalents at end of period |
$ |
15,716 |
|
|
$ |
9,179 |
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
Interest paid during the
period |
$ |
119 |
|
$ |
39 |
Income taxes paid
during the period |
$ |
1,735 |
|
$ |
1,542 |
Leasehold Improvements
contributed by landlord |
$ |
- |
|
$ |
2,949 |
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