A-Mark Precious Metals Reports Record Fiscal Third Quarter 2021 Results

EL SEGUNDO, Calif., May 12, 2021 (GLOBE NEWSWIRE) -- 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 third quarter ended March 31, 2021.

A-Mark reported over $2 billion in revenue and record earnings in its fiscal third quarter, boosted by strong market conditions and the completion of the most significant acquisition in its history. The company's acquisition of JM Bullion (“JMB”), a leading internet retailer of precious metals, was completed on March 19, 2021. Significantly, JMB has contributed $8.5 million of gross profit and $6.8 million of pre-tax income to the company’s Direct-to-Consumer segment in the last 12 days of March following the acquisition. We had the strongest quarter of financial performance in A-Mark’s history with net income of $50.3 million, excluding a one-time $26.3 million remeasurement gain resulting from the JMB acquisition.  

The company also welcomed new shareholders during the third quarter from the company’s public offering and the issuance of stock as part of the acquisition consideration for JMB, growing our market cap and bringing our common shares outstanding to 11.1 million.

Financial highlights and results of our fiscal third quarter and fiscal nine months follow:

Fiscal Third Quarter 2021 Financial Highlights

• Revenues for the three months ended March 31, 2021 increased 63% to $2.05 billion from $1.26 billion for the three months ended March 31, 2020 and increased 35% from $1.52 billion for the three months ended December 31, 2020
• Gross profit for the three months ended March 31, 2021 increased 203% to $68.2 million (3.33% of revenue) from $22.5 million (1.79% of revenue) for the three months ended March 31, 2020 and increased 264% from $18.8 million (1.24% of revenue) for the three months ended December 31, 2020
• Net income attributable to the company for the three months ended March 31, 2021 totaled $76.6 million or $8.84 per diluted share, as compared to net income of $11.3 million or $1.61 per diluted share for the three months ended March 31, 2020 and net income of $8.9 million or $1.16 per diluted share for the three months ended December 31, 2020. Net income attributable to the company for the three months ended March 31, 2021 included a $26.3 million remeasurement gain on its pre-existing equity interest in JMB in connection with its acquisition.
• Gold ounces sold in the three months ended March 31, 2021 increased 52% to 771,000 ounces from 508,000 ounces for the three months ended March 31, 2020 and increased 61% from 479,000 ounces for the three months ended December 31, 2020
• Silver ounces sold in the three months ended March 31, 2021 increased 29% to 33.1 million ounces from 25.7 million ounces for the three months ended March 31, 2020 and increased 56% from 21.2 million ounces for the three months ended December 31, 2020
• As of March 31, 2021, the number of secured loans increased 266% to 1,571 from 429 as of March 31, 2020 and increased 19% from 1,324 as of December 31, 2020

Fiscal Third Quarter 2021 Financial Results
On March 19, 2021, pursuant to a stock purchase agreement with the selling stockholders of JMB, the company acquired the remaining 79.5% interest in JMB that it did not previously own. As a result, financial results for the three months ended March 31, 2021 include $68.4 million of revenue and $6.8 million of pre-tax income that is attributable to JMB’s operations during the post-acquisition period from March 20, 2021 through March 31, 2021.  

Revenues increased 63% to $2.05 billion from $1.26 billion in the same year-ago quarter. The increase in revenues was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gross profit increased 203% to $68.2 million (3.33% of revenue) from $22.5 million (1.79% of revenue) in the same year-ago quarter. The increase in gross profit was due to higher gross profits earned by the Wholesale Sales & Ancillary Services and Direct-to-Consumer segments. The increase in gross margin percentage was mainly attributable to significantly wider premium spreads due to increased demand and higher trading profits primarily due to increased volatility, partially offset by the impact of higher forward sales.

Selling, general and administrative expenses increased 42% to $14.8 million from $10.4 million in the same year-ago quarter. The increase in selling, general and administrative expenses was primarily due to $2.2 million in costs associated with the company’s acquisition of JMB, an increase of $1.7 million related to JMB’s operations subsequent to the acquisition, of which $1.0 million is attributable to amortization expense, and an increase of $0.3 million associated with Goldline’s marketing activities.

Interest income decreased 21% to $4.7 million from $6.0 million in the same year-ago quarter. The aggregate decrease in interest income was primarily due to lower interest income earned by the company’s Secured Lending segment, partially offset by higher other finance product income.

Interest expense increased 6% to $5.3 million from $5.1 million in the same year-ago quarter. The increase was primarily driven by higher interest expense associated with product financing arrangements, partially offset by a reduction in loan servicing fees, lower interest and fees from liability on borrowed metals, and lower interest expense related to the company’s Trading Credit Facility. As compared to the same year-ago period, interest expense related to product financing arrangements increased by $0.7 million, which was offset by a decrease in interest expense related to loan servicing fees of $0.2 million, $0.1 million from liability on borrowed metals, and $0.1 million of Trading Credit Facility interest expense.

Other income increased 1,574% to $7.8 million from $0.5 million in the same year-ago quarter. The aggregate increase was primarily due to an increase of $7.1 million related to the company’s proportionate share of its equity-method investees' earnings and an increase of $0.2 million in royalties earned.  

Net income attributable to the company totaled $76.6 million or $8.84 per diluted share, compared to net income of $11.3 million or $1.61 per diluted share in the same year-ago quarter. Net income attributable to the company for the three months ended March 31, 2021 included a $26.3 million remeasurement gain on its pre-existing equity interest in JMB in connection with its acquisition. Excluding the remeasurement gain, net income attributable to the company for the three months ended March 31, 2021 was $50.3 million.   Net income attributable to the company also included $2.2 million of non-recurring costs associated with the acquisition of JMB.

Fiscal Nine Months 2021 Highlights

• Revenues for the nine months ended March 31, 2021 increased 43% to $5.43 billion from $3.80 billion for the nine months ended March 31, 2020
• Gross profit for the nine months ended March 31, 2021 increased 216% to $123.1 million (2.27% of revenue) from $38.9 million (1.03% of revenue) for the nine months ended March 31, 2020
• Net income attributable to the company for the nine months ended March 31, 2021 totaled $108.6 million or $13.61 per diluted share, as compared to net income of $12.7 million or $1.80 per diluted share for the nine months ended March 31, 2020. Net income attributable to the company for the nine months ended March 31, 2021 included a $26.3 million remeasurement gain on its pre-existing equity interest in JMB in connection with its acquisition.
• Gold ounces sold in the nine months ended March 31, 2021 increased 30% to 1.97 million ounces from 1.51 million for the nine months ended March 31, 2020
• Silver ounces sold in the nine months ended March 31, 2021 increased 29% to 78.6 million ounces from 60.7 million for nine months ended March 31, 2020
  

Fiscal Nine Months 2021 Financial Results
Financial results for the nine months ended March 31, 2021 include $68.4 million of revenue and $6.8 million of pre-tax income that is attributable to JMB’s operations during the post-acquisition period from March 20, 2021 through March 31, 2021.

Revenues increased 43% to $5.43 billion from $3.80 billion in the same year-ago period. The increase in revenues was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gross profit increased 216% to $123.1 million (2.27% of revenue) from $38.9 million (1.03% of revenue) in the same year-ago period. The increase in gross profit was due to higher gross profits earned by the company’s Wholesale Sales & Ancillary Services and Direct-to-Consumer segments. The increase in gross margin percentage was mainly attributable to significantly wider premium spreads due to increased demand, higher trading profits primarily due to increased volatility, and lower forward sales.

Selling, general and administrative expenses increased 28% to $33.8 million from $26.5 million in the same year-ago period. The increase in selling, general and administrative expenses was primarily due to $2.6 million in costs associated with the JMB acquisition, increases in compensation expense, including performance-based accruals of $2.1 million, an increase of $1.7 million related to JMB’s operations subsequent to the acquisition, of which $1.0 million is attributable to amortization expense, increased insurance costs of $0.7 million, and an increase in computer software expense of $0.2 million.

Interest income decreased 26% to $13.2 million from $18.0 million in the same year-ago period. The aggregate decrease in interest income was primarily due to lower interest income earned by the company’s Secured Lending segment, partially offset by higher other finance product income.

Interest expense decreased 4% to $14.7 million from $15.3 million in the same year-ago period. The decrease in interest expense was primarily due to reductions in interest expense related to the company’s Trading Credit Facility and loan servicing fees, partially offset by increases in interest expense related to product financing arrangements. As compared to the same year-ago period, the amount of interest expense that decreased included $1.0 million of Trading Credit Facility interest expense including debt amortization costs and $0.8 million of loan servicing cost, offset by increased interest expense of $1.2 million related to product financing arrangements.

Other income increased 3,211% to $14.8 million from $0.5 million in the same year-ago period. The aggregate increase was primarily due to an increase of $13.5 million related to the company’s proportionate share of its equity-method investees' earnings, an increase of $0.6 million in royalties earned, and $0.2 million of costs associated with the settlement of our purchase of Goldline that was recognized during the nine months ended March 31, 2020.  

Net income attributable to the company totaled $108.6 million or $13.61 per diluted share, compared to net income of $12.7 million or $1.80 per diluted share in the same year-ago period. Net income attributable to the company for the nine months ended March 31, 2021 included a $26.3 million remeasurement gain on its pre-existing equity interest in JMB in connection with its acquisition. Excluding the remeasurement gain, net income attributable to the company for the nine months ended March 31, 2021 was $82.3 million. Net income attributable to the company also included $2.6 million of non-recurring costs associated with the acquisition of JMB.

Management Commentary  
“Our record financial results for the third quarter and the first nine months of fiscal 2021 continue to demonstrate the effectiveness of our vertically integrated platform and complementary business segments, including our expanded Direct-to-Consumer segment, our minting partnerships, logistics capabilities and strong customer relationships,” said A-Mark CEO Greg Roberts. “The A-Mark team has executed exceptionally well to capitalize on the secular tailwinds that are driving precious metals volume. In particular, the growing demand for silver and gold products from wholesale and retail customers, coupled with tight supply, resulted in continued high premium spreads. These dynamics allowed us to realize the strongest quarter of financial performance in A-Mark’s history with net income of $50.3 million, excluding the one-time $26.3 million remeasurement gain resulting from the JMB acquisition. Our diluted EPS of $8.84 for the quarter is based on the weighted average shares during the quarter and not on the higher 11.1 million shares outstanding at the end of March.

“We delivered a record quarter in our Direct-to-Consumer segment, which included continued strength at Goldline and a notably strong initial contribution from JMB in just the 12 days it was included in our quarter post acquisition, which enabled us to benefit from the building demand for precious metals from the online and e-commerce channels.

“Our private mint, Silver Towne, which recently became wholly owned, and minority interest in Sunshine Mint, continue to enable our Wholesale Sales & Ancillary Services and Direct-to-Consumer segments to outperform. Being a vertically integrated operator with robust minting capabilities has provided us with a sustainable competitive advantage, including price stability within the supply chain and more secured access to silver during volatile periods and supply-strained environments. Our recent equipment purchases have dramatically expanded overall capacity and production capabilities at Silver Towne. We continue to focus on industrial sourcing of raw material and fabricated product production to meet the increased market demand we are experiencing for silver and gold products.

“We entered the fiscal fourth quarter with continued operational momentum. Our business continues to benefit from the sustained rally in the precious metals market, and we remain confident that our favorable competitive position, industry-leading platform, and proven business model will help us capitalize on the near-term opportunities and realize continued growth and profitability over the long term.”

Conference Call
A-Mark will hold a conference call today (May 12, 2021) 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: 1-855-327-6837
International number: 1-631-891-4304
Conference ID: 10014676

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 through May 26, 2021.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Conference ID: 10014676

About A-Mark Precious Metals

Founded in 1965, A-Mark Precious Metals, Inc. (NASDAQ: AMRK) is a leading fully integrated precious metals platform that offers an array of gold, silver, platinum, palladium, and copper bullion, numismatic coins and related products to wholesale and retail customers via a portfolio of channels. The company conducts its operations through three complementary segments: Wholesale Sales & Ancillary Services, Secured Lending, and Direct-to-Consumer. The company’s global customer base spans sovereign and private mints, manufacturers and fabricators, refiners, dealers, financial institutions, industrial users, investors, collectors, and e-commerce and other retail customers.

A-Mark’s Wholesale Sales & Ancillary Services segment distributes and purchases precious metal products from sovereign and private mints. As a U.S. Mint-authorized purchaser of gold, silver, and platinum coins since 1986, A-Mark purchases bullion products directly from the U.S. Mint for sale to customers. A-Mark also has longstanding distributorships with other sovereign mints, including Australia, Austria, Canada, China, Mexico, South Africa and the United Kingdom. The company sells more than 200 different products to e-commerce retailers, coin and bullion dealers, financial institutions, brokerages and collectors. In addition, A-Mark sells precious metal products to industrial users, including metal refiners, manufacturers and electronic fabricators.

Through its A-M Global Logistics subsidiary, A-Mark provides its customers with a range of complementary services, including managed storage options for precious metals as well as receiving, handling, inventorying, processing, packaging, and shipping of precious metals and coins on a secure basis. A-Mark’s mint operations, which are conducted through its wholly owned subsidiary Silver Towne Mint, enable the company to offer customers a wide range of proprietary coin and bar offerings and, during periods of market volatility when the availability of silver bullion from sovereign mints is often product constrained, preferred product access.

The company operates its Secured Lending segment through its wholly owned subsidiaries, Collateral Finance Corporation (CFC) and AM Capital Funding. 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. AM Capital Funding was formed in 2018 for the purpose of securitizing eligible secured loans of CFC.

A-Mark’s Direct-to-Consumer segment operates as an omni-channel retailer of precious metals, providing access to a multitude of products through its wholly owned subsidiaries, JM Bullion and Goldline. JM Bullion is a leading e-commerce retailer of precious metals and operates five separately branded, company-owned websites targeting specific niches within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, GoldPrice.org, SilverPrice.org. Goldline markets precious metals directly to the investor community through various channels, including television, radio and telephonic sales efforts. A-Mark also holds minority ownership interests in two additional direct-to-consumer brands.

A-Mark is headquartered in El Segundo, CA and has additional offices and facilities in the neighboring Los Angeles area as well as in Dallas, TX, Las Vegas, NV, Winchester, IN, and Vienna, Austria. For more information, visit www.amark.com.

Important Cautions 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 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; the effects of the COVID-19 pandemic and the eventual return to normalized business and economic conditions; and the strategic, business, economic, financial, political and governmental risks 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:
Steve Reiner, Executive Vice President, Capital Markets & Investor Relations
A-Mark Precious Metals, Inc.
310.587.1410
sreiner@amark.com

Investor Relations Contact:
Matt Glover
Gateway Investor Relations
1-949-574-3860
AMRK@gatewayIR.com

Overview of Results of Operations for the Three Months Ended March 31, 2021 and 2020

Condensed Consolidated Results of Operations

The operating results of our business for the three months ended March 31, 2021 and 2020 are as follows:

Overview of Results of Operations for the Nine Months Ended March 31, 2021 and 2020

Condensed Consolidated Results of Operations

The operating results of our business for the nine months ended March 31, 2021 and 2020 are as follows:

Released May 12, 2021