A-Mark Precious Metals Reports Fiscal First Quarter 2016 Results

SANTA MONICA, Calif., Nov. 10, 2015 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc. (NASDAQ:AMRK), a full-service precious metals trading company and an official distributor for all the major sovereign mints, reported results for its fiscal first quarter ended September 30, 2015.

Fiscal Q1 2016 Highlights (compared to the same year-ago quarter)

  • Revenues increased 38% to $2.01 billion
  • Gross profit increased 152% to $14.4 million
  • Net income increased 371% to $5.4 million from $1.1 million
  • Silver ounces sold increased 123% to 40.5 million ounces
  • Gold ounces sold increased 102% to 895,685 ounces
  • Trading ticket volume increased 50% to 28,910 tickets

Fiscal Q1 2016 Financial Results

Revenues increased 38% to $2.01 billion from $1.45 billion in the same year-ago quarter, driven primarily by an increase in the total amount of gold ounces and silver ounces sold during the quarter, which in turn was due to increased volatility and decreased commodity prices.

Gross profit increased 152% to $14.4 million (0.72% of revenue) from $5.7 million (0.39% of revenue) in the same year-ago quarter. The increase in gross margin was due, in part, to higher spreads on the company’s primary products.

Selling, general and administrative expenses were $6.4 million, an increase from $4.2 million in the same year-ago quarter. The increase was due in part to performance-based compensation accruals and the operational cost of the Las Vegas logistic center established to provide fulfillment services to customers.

Net income increased 371% to $5.4 million or $0.76 per diluted share from $1.1 million or $0.16 per diluted share in the same year-ago quarter. The increase was primarily due to higher revenue and gross profits, offset by higher selling, general and administrative expenses.

Management Commentary

“The first quarter was exceptionally strong across the board, underscoring the earnings power of our unique business model,” said A-Mark CEO Greg Roberts. “In fact, our Trading ticket volume increased 50% to near-record levels, and both our gold and silver ounce volume more-than-doubled compared to the same year ago period. These achievements were driven by the unprecedented activity with our direct to consumer customers who service the online marketplace, as well as the strength in our core trading business.  

“Q1 also marked the first full quarter of activity in our Las Vegas logistics facility. Since its opening, the facility has garnered significant interest from current and prospective customers who are now able to take full advantage of the facility’s value-added service offerings. Our financing subsidiary also posted a record number of loans outstanding, capitalizing on the growing number of borrowers in the market.

“This first quarter certainly meant a great start to the year. However, it’s important to keep in mind that historically our fiscal second quarter tends to be a slower quarter. Through the first six weeks of the second fiscal quarter we have seen a drop in our volumes and ticket counts, we attribute this to a combination of factors, including the US Mint’s declining sales numbers in October, supply and production constraints in our silver products, and a change in investor sentiment as major stock indices have rallied.  If current market conditions remain the same, we could experience a lower performing second fiscal quarter when compared to the same year ago period.”

Conference Call

A-Mark will hold a conference call today (November 10, 2015) to discuss these financial results. The company's CEO, Greg Roberts and COO, Thor Gjerdrum, 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: 877-407-0789
International number: 201-689-8562
Conference ID: 13624076

The conference call will be broadcast simultaneously and available for replay via the Investor Information section of A-Mark’s website at www.amark.com. If you have any difficulty connecting with the conference call or webcast, please contact Liolios Group at 949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time on the same day through November 24, 2015.

Toll-free replay number: 877-870-5176
International replay number: 858-384-5517
Conference ID: 13624076

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. Through its A-M Global Logistic subsidiary, the company offers storage and order fulfillment services to our retail customers.

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; the favorable results that we are experiencing in the first fiscal quarter of 2016 not being indicative of activity for the full fiscal year; 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.

       
A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
       
  September 30,
 2015
  June 30,
 2015
       
ASSETS      
Current assets:      
Cash $ 5,044     $ 20,927  
Receivables, net 47,899     30,025  
Derivative assets 10,626     11,364  
Secured loans receivables, net 49,766     48,666  
       
Inventories:      
Inventories 204,476     152,076  
Restricted inventories 50,030     39,425  
  254,506     191,501  
       
Income taxes receivable 6,024     7,846  
Income taxes receivable from Former Parent 1,095     1,095  
Prepaid expenses and other assets 1,074     1,202  
Total current assets 376,034     312,626  
       
Property and equipment, net 2,832     2,850  
Goodwill 4,884     4,884  
Intangibles, net 2,273     2,369  
Long-term secured loans receivables 650     650  
Long-term investments 2,500     2,500  
Deferred tax assets - non-current 23     23  
Total assets $ 389,196     $ 325,902  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Lines of credit $ 176,900     $ 147,000  
Liability on borrowed metals 4,009     9,500  
Product financing arrangement 50,030     39,425  
Accounts payable 78,499     50,639  
Derivative liabilities 12,893     17,897  
Accrued liabilities 4,242     5,330  
Deferred tax liability - current 1,593     149  
Total current liabilities 328,166     269,940  
       
Commitments and contingencies      
       
Stockholders’ equity:      
Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as of September 30, 2015 and June 30, 2015      
Common Stock, par value $0.01; 40,000,000 authorized; 6,973,549 and 6,973,549 issued and outstanding as of September 30, 2015 and June 30, 2015, respectively 70     70  
Additional paid-in capital 22,523     22,470  
Retaining earnings 38,437     33,422  
Total stockholders’ equity 61,030     55,962  
Total liabilities and stockholders’ equity $ 389,196     $ 325,902  
               


       
A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share and per share data)
       
    Three Months Ended  
    September 30, 2015   September 30, 2014  
Revenues   $ 2,006,936     $ 1,453,466    
Cost of sales   1,992,512     1,447,736    
Gross profit   14,424     5,730    
           
Selling, general and administrative expenses   (6,408 )   (4,219 )  
Interest income   1,933     1,477    
Interest expense   (1,234 )   (1,063 )  
Unrealized losses on foreign exchange   (39 )   (9 )  
Net income before provision for income taxes   8,676     1,916    
Provision for income taxes   (3,312 )   (778 )  
Net income   $ 5,364     $ 1,138    
           
Basic and diluted income per share:          
Basic - net income   $ 0.77     $ 0.16    
Diluted - net income   $ 0.76     $ 0.16    
Weighted average shares outstanding:          
Basic   6,973,500     6,962,742    
Diluted   7,058,700     7,065,700    
               


           
A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
           
Three Months Ended   September 30,
 2015
  September 30,
 2014
 
Cash flows from operating activities:          
Net Income   $ 5,364     $ 1,138    
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   303     228    
Deferred income taxes   1,444        
Interest added to principal of secured loans   (26 )   (91 )  
Share-based compensation   53     62    
Changes in assets and liabilities:          
Receivables   (17,223 )   (19,286 )  
Secured loans   340     1,992    
Secured loans to Former Parent   (710 )   2,562    
Derivative assets   738     (24,026 )  
Income tax receivable   1,822        
Inventories   (63,005 )   16,314    
Prepaid expenses and other current assets   128     (115 )  
Accounts payable   27,860     5,816    
Derivative liabilities   (5,004 )   21,680    
Liabilities on borrowed metals   (5,491 )   3,289    
Accrued liabilities   (1,088 )   (2,135 )  
Income taxes payable       (1,794 )  
Net cash (used in) provided by operating activities   (54,495 )   5,634    
Cash flows from investing activities:          
Capital expenditures for property and equipment   (189 )   (53 )  
Purchase of cost method investment       (1,111 )  
Secured loans, net   (1,355 )   (1,809 )  
Net cash used in investing activities   (1,544 )   (2,973 )  
Cash flows from financing activities:          
Product financing arrangement, net   10,605     (3,997 )  
Dividends paid   (349 )      
Borrowings under lines of credit, net   29,900     (7,200 )  
Net cash provided by (used in) financing activities   40,156     (11,197 )  
           
Net decrease in cash and cash equivalents   (15,883 )   (8,536 )  
Cash and cash equivalents, beginning of period   20,927     13,193    
Cash and cash equivalents, end of period   $ 5,044     $ 4,657    
           
Supplemental disclosures of cash flow information:          
Cash paid during the period for:          
Interest expense   $ 1,134     $ 1,003    
Income taxes   $     $ 2,572    
Non-cash investing and financing activities:          
Interest added to principal of secured loans   $ 26     $ 91    
                   

RESULTS OF OPERATIONS

The operating results of our business for the three months ended September 30, 2015 and 2014 are as follows:

     
in thousands, except per share data    
Three Months Ended September 30, 2015   2014   $   %
  $   % of
revenue
  $   % of
revenue
  Increase/
(decrease)
  Increase/
(decrease)
Revenues $ 2,006,936     100.000 %   $ 1,453,466     100.000 %   $ 553,470     38.1 %
Gross profit 14,424     0.719 %   5,730     0.394 %   $ 8,694     151.7 %
Selling, general and administrative expenses (6,408 )   (0.320 )%   (4,219 )   (0.290 )%   $ 2,189     51.9 %
Interest income 1,933     0.096 %   1,477     0.102 %   $ 456     30.9 %
Interest expense (1,234 )   (0.061 )%   (1,063 )   (0.073 )%   $ 171     16.1 %
Unrealized losses on foreign exchange (39 )   (0.002 )%   (9 )   (0.001 )%   $ 30     NM
Net income before provision for income taxes 8,676     0.432 %   1,916     0.132 %   $ 6,760     352.8 %
Provision for income taxes (3,312 )   (0.165 )%   (778 )   (0.054 )%   $ 2,534     325.7 %
Net income $ 5,364     0.267 %   $ 1,138     0.078 %   $ 4,226     371.4 %
                       
Per Share Data:                      
Basic $ 0.77         $ 0.16         $ 0.61     381.3 %
Diluted $ 0.76         $ 0.16         $ 0.60     375.0 %
                       

 

Company Contact:
Thor Gjerdrum, EVP & COO
A-Mark Precious Metals, Inc.
310-587-1414
thor@amark.com

Investor Relations Contact:
Matt Glover or Michael Koehler
Liolios Group, Inc.
949-574-3860
AMRK@liolios.com

Source: A-Mark Precious Metals