A-Mark Precious Metals Reports Fiscal Second Quarter 2014 Results
- Company reports 25% increase in gross profit in quarter
- Margins improve due to favorable change in product mix
SANTA MONICA, Calif.--(BUSINESS WIRE)-- A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a full-service precious metals trading company, reported results for the 2014 fiscal second quarter ended December 31, 2013.
Fiscal Q2 2014 Highlights
- Revenue totaled $1.49 billion
- Gross profit was $7.8 million
- Net income totaled to $2.2 million
Fiscal Q2 2014 Financial Results
Revenue for the three months ended December 31, 2013 was $1.49 billion compared to $1.70 billion in the year-ago quarter. The decrease in revenue was primarily due to a decline in commodity prices for gold and silver. A decrease in the volume of gold ounces sold was largely offset by an increase in the volume of silver ounces sold, as well as stronger demand for custom silver products through certain distribution contracts.
Gross profit was $7.8 million, representing a gross profit margin of 0.5%, an improvement from a gross profit of $6.3 million or a gross profit margin of 0.4% in the year-ago quarter. Gross profit and profit margin improved as a result of increased sales of custom silver products through certain distribution contracts. Sales to distributors of unique bullion products for marketing to the retail public generate higher margins than the company’s ordinary trading activities.
General and administrative (G&A) expenses increased to $4.5 million from $3.0 million in the year-ago quarter. The increase was primarily due to higher personnel expenses; specifically recruiting and retention fees related to the addition of key employees. A one-time favorable adjustment in the prior period also contributed to the variance.
Net income totaled $2.2 million or $0.29 per diluted share, as compared to $2.5 million or $0.32 per diluted share in the year-ago quarter. The decrease in net income was primarily attributable to the increase in G&A.
Management Commentary
“The 25% increase in gross profit and strong profitability in the quarter reveals the special nature of our business and trading platform, where our topline can be volatile but our bottom line performance is not impacted,” said Greg Roberts, A-Mark’s CEO. “It’s also important to note how our custom products—which had an increasingly positive effect over the last several months—enhance gross margins and profitability, while remaining largely unaffected by short-term fluctuations in commodity prices.”
The company’s stock began trading on the NASDAQ Global Select on March 17, 2014. Management plans to begin hosting regular quarterly conference calls beginning with its fiscal third quarter results ending March 31, 2014, with the date and time to be announced approximately a week prior.
About A-Mark Precious Metals
A-Mark Precious Metals, Inc. is a full-service precious metals trading company and an official distributor for many government mints throughout the world. The company offers gold, silver, platinum and palladium in the form of bars, plates, powder, wafers, grain, ingots and coins. Its Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious metals, while its Coin & Bar unit deals in over 200 coin and bar products in a variety of weights, shapes and sizes for distribution to dealers and other qualified purchasers. The company operates trading centers in Santa Monica, California, and Vienna, Austria, for buying and selling precious metals.
In addition to wholesale and trading activity, A-Mark offers customers a variety of services, including financing, consignment and various customized financial programs. 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 in Australia, Austria, Canada, China, Mexico and South Africa. Customers of A-Mark include mints, manufacturers and fabricators, refiners, coin and metal dealers, banks and other financial institutions, jewelers, investors and collectors. For more information about A-Mark Precious Metals, visit www.amark.com.
Through its subsidiary Collateral Finance Corporation, a licensed California Finance Lender, the company offers loans collateralized by numismatic and semi-numismatic coins and bullion to coin and metal dealers, investors and collectors. Through its Transcontinental Depository Services subsidiary, it offers a variety of managed storage options for precious metals products to financial institutions, dealers, investors and collectors around the world.
Important Causations Regarding Forward-Looking Statements
Statements 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 are identified in the company’s public filings with the Securities and Exchange Commission (SEC). More information about factors that could affect the company’s business and financial results are included in its public filings with the SEC, which are available on the SEC’s website at www.sec.gov.
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.
| A-MARK PRECIOUS METALS, INC. | |||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||||||
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012 | |||||||||||||||||||||||||||
| (in thousands, except for share and per share data) | |||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||
|
Three Months Ended |
Three Months Ended |
$ | % | ||||||||||||||||||||||||
|
in thousands |
$ |
% of |
$ |
% of |
Increase/ |
Increase/ |
|||||||||||||||||||||
| Revenue | $ | 1,488,653 | 100.0 | % | $ | 1,696,781 | 100.0 | % | $ | (208,128 | ) | (12.3 | )% | ||||||||||||||
| Gross profit | 7,834 | 0.5 | % | 6,254 | 0.4 | % | 1,580 | 25.3 | % | ||||||||||||||||||
| General and administrative expenses | (4,503 | ) | (0.3 | )% | (2,994 | ) | (0.2 | )% | 1,509 | 50.4 | % | ||||||||||||||||
| Interest income | 1,403 | 0.1 | % | 2,114 | 0.1 | % | (711 | ) | (33.6 | )% | |||||||||||||||||
| Interest expense | (889 | ) | (0.1 | )% | (945 | ) | (0.1 | )% | (56 | ) | (5.9 | )% | |||||||||||||||
| Unrealized gain on foreign exchange | 24 | — | % | 48 | — | % | (24 | ) | NM | ||||||||||||||||||
| Net income before provision for income taxes | 3,869 | 0.3 | % | 4,477 | 0.3 | % | (608 | ) | (13.6 | )% | |||||||||||||||||
| Provision for income taxes | (1,621 | ) | (0.1 | )% | (1,991 | ) | (0.1 | )% | 370 | (18.6 | )% | ||||||||||||||||
| Net income | $ | 2,248 | 0.2 | % | $ | 2,486 | 0.1 | % | $ | (238 | ) | (9.6 | )% | ||||||||||||||
|
NM = Not meaningful. |
|||||||||||||||||||||||||||
|
in whole amounts |
Three Months Ended December 31, | |||||||||||||||||
| Basic and diluted weighted average income per common share | 2013 | 2012 |
Increase/ |
% of Increase/ |
||||||||||||||
| Basic - net income (1) | $ | 0.29 | $ | 0.32 | $ | (0.03 | ) | (9.4 | )% | |||||||||
| Diluted - net income (1) | $ | 0.29 | $ | 0.32 | $ | (0.03 | ) | (9.4 | )% | |||||||||
____________________
(1) = Basic and diluted income
per share based on historical SGI basic and fully diluted share figures,
adjusted on a pro-forma basis of one share of A-Mark stock issued for
every four shares of SGI stock held.
| A-MARK PRECIOUS METALS, INC. | |||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||||
| (amounts in thousands, except share data) | |||||||||||||
| (unaudited) | |||||||||||||
|
December 31, |
June 30, |
||||||||||||
| ASSETS | |||||||||||||
| Current assets: | |||||||||||||
| Cash | $ | 15,015 | $ | 21,565 | |||||||||
| Receivables, net | 102,473 | 109,947 | |||||||||||
| Inventories: | |||||||||||||
| Inventories | 134,523 | 123,824 | |||||||||||
| Restricted inventories | 25,506 | 38,554 | |||||||||||
| 160,029 | 162,378 | ||||||||||||
| Deferred tax assets | 5,993 | 5,993 | |||||||||||
| Prepaid expenses and other assets | 868 | 487 | |||||||||||
| Total current assets | 284,378 | 300,370 | |||||||||||
| Property and equipment, net | 1,226 | 1,213 | |||||||||||
| Goodwill | 4,884 | 4,884 | |||||||||||
| Intangibles, net | 2,949 | 3,141 | |||||||||||
| Total assets | $ | 293,437 | $ | 309,608 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
| Lines of credit | $ | 106,000 | $ | 95,000 | |||||||||
| Liability on borrowed metals | 11,226 | 20,117 | |||||||||||
| Product financing arrangement | 25,506 | 38,554 | |||||||||||
| Accounts payable | 84,610 | 86,010 | |||||||||||
| Accrued liabilities | 4,985 | 6,601 | |||||||||||
| Payable to parent | — | 1,015 | |||||||||||
| Income taxes payable to parent | 7,615 | 8,505 | |||||||||||
| Total current liabilities | 239,942 | 255,802 | |||||||||||
| Deferred tax liabilities | 552 | 552 | |||||||||||
| Total liabilities | 240,494 | 256,354 | |||||||||||
| Commitments and contingencies | |||||||||||||
| Stockholders’ equity: | |||||||||||||
|
Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none at December 31, 2013 and June 30, 2013 |
— | — | |||||||||||
| Common Stock, par value $0.01; 40,000,000 authorized 7,402,664 issued and outstanding at December 31, 2013 and June 30, 2013 | 74 | 74 | |||||||||||
| Additional paid-in capital | 24,445 | 24,370 | |||||||||||
| Retaining earnings | 28,424 | 28,810 | |||||||||||
| Total stockholders’ equity | 52,943 | 53,254 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 293,437 | $ | 309,608 | |||||||||
| A-MARK PRECIOUS METALS, INC. | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (in thousands, except for share and per share data) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
|
December 31, |
December 31, |
December 31, |
December 31, |
|||||||||||||||||
| Revenues | $ | 1,488,653 | $ | 1,696,781 | $ | 2,984,632 | $ | 3,316,596 | ||||||||||||
| Cost of sales | 1,480,819 | 1,690,527 | 2,969,815 | 3,305,308 | ||||||||||||||||
| Gross profit | 7,834 | 6,254 | 14,817 | 11,288 | ||||||||||||||||
| Selling, general and administrative expenses | (4,503 | ) | (2,994 | ) | (8,152 | ) | (6,087 | ) | ||||||||||||
| Interest income | 1,403 | 2,114 | 2,907 | 4,166 | ||||||||||||||||
| Interest expense | (889 | ) | (945 | ) | (1,877 | ) | (1,874 | ) | ||||||||||||
| Unrealized gain on foreign exchange | 24 | 48 | 60 | 22 | ||||||||||||||||
| Net income before provision for income taxes | 3,869 | 4,477 | 7,755 | 7,515 | ||||||||||||||||
| Provision for income taxes | (1,621 | ) | (1,991 | ) | (3,141 | ) | (3,344 | ) | ||||||||||||
| Net income | $ | 2,248 | $ | 2,486 | $ | 4,614 | $ | 4,171 | ||||||||||||
| Basic and diluted income per share: | ||||||||||||||||||||
| Basic - net income | $ | 0.29 | $ | 0.32 | $ | 0.60 | $ | 0.53 | ||||||||||||
| Diluted - net income | $ | 0.29 | $ | 0.32 | $ | 0.59 | $ | 0.52 | ||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||
| Basic | 7,729,181 | 7,657,119 | 7,729,401 | 7,926,459 | ||||||||||||||||
| Diluted | 7,885,640 | 7,708,723 | 7,886,167 | 7,978,063 | ||||||||||||||||
| A-MARK PRECIOUS METALS, INC. | ||||||||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||
| (in thousands, except for share and per share data) | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
|
Common |
Common |
Additional |
Retained |
Total |
||||||||||||||||||||||
| Balance, June 30, 2013 | 7,402,644 | $ | 74 | $ | 24,370 | $ | 28,810 | $ | 53,254 | |||||||||||||||||
| Net income | — | — | — | 4,614 |
4,614 |
|||||||||||||||||||||
| Share-based compensation | — | — | 75 | — | 75 | |||||||||||||||||||||
| Dividend Declared | — | — | — | (5,000 | ) | (5,000 | ) | |||||||||||||||||||
| Balance, December 31, 2013 | 7,402,644 | $ | 74 | $ | 24,445 | $ | 28,424 | $ |
52,943 |
|||||||||||||||||
| A-MARK PRECIOUS METALS, INC. | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (amounts in thousands) | ||||||||||||||
| (unaudited) | ||||||||||||||
| Six Months Ended | ||||||||||||||
|
December 31, |
December 31, |
|||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net Income | $ | 4,614 | $ | 4,171 | ||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
| Depreciation and amortization | 443 | 398 | ||||||||||||
| Provision for doubtful accounts | — | (700 | ) | |||||||||||
| Share-based compensation | 75 | 37 | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Receivables | 7,474 | 14,800 | ||||||||||||
| Inventories | 2,349 | 18,020 | ||||||||||||
| Prepaid expenses and other current assets | (381 | ) | (168 | ) | ||||||||||
| Accounts payable | (1,400 | ) | (2,722 | ) | ||||||||||
| Liabilities on borrowed metals | (8,891 | ) | 8,063 | |||||||||||
| Accrued liabilities | (1,616 | ) | (2,106 | ) | ||||||||||
| Payable to parent | (1,905 | ) | (2,369 | ) | ||||||||||
| Net cash provided by operating activities | 762 | 37,424 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Capital expenditures for property and equipment | (264 | ) | (157 | ) | ||||||||||
| Net cash used in investing activities | (264 | ) | (157 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Product financing arrangement, net | (13,048 | ) | (10,799 | ) | ||||||||||
| Dividends paid to parent | (5,000 | ) | (15,000 | ) | ||||||||||
| Borrowings (repayments) under lines of credit, net | 11,000 | (11,500 | ) | |||||||||||
| Net cash used in financing activities | (7,048 | ) | (37,299 | ) | ||||||||||
| Net decrease in cash and cash equivalents | (6,550 | ) | (32 | ) | ||||||||||
| Cash and cash equivalents, beginning of period | 21,565 | 11,273 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 15,015 | $ | 11,241 | ||||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||
| Cash paid during the period for: | ||||||||||||||
| Interest expense | $ | 1,851 | $ | 1,824 | ||||||||||
| Income taxes | $ | 3,925 | $ | 4,750 | ||||||||||
Company Contact:
A-Mark Precious Metals, Inc.
Thor
Gjerdrum, EVP & COO
310-587-1414
thor@amark.com
or
Investor
Relations Contact:
Liolios Group, Inc.
Matt Glover or
Michael Koehler
949-574-3860
AMRK@liolios.com
Source: A-Mark Precious Metals, Inc.
Released March 27, 2014