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A-Mark Precious Metals Reports Fiscal First Quarter 2023 Results

 

Q1 FY 2023 Diluted Earnings Per Share of $1.83

up from $1.08 in Q1 FY 2022 and $1.52 in Q4 FY 2022

 

37% YoY Increase in Gross Profit for the Quarter

 

Company Affirms Regular Quarterly Cash Dividend Policy

 

 

El Segundo, CA – November 8, 2022 – A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a leading fully integrated precious metals platform, reported results for the fiscal first quarter ended September 30, 2022.

 

Fiscal First Quarter 2023 Operational Highlights

 

Gold ounces sold in the three months ended September 30, 2022 decreased 6% to 629,000 ounces from 669,000 ounces for the three months ended September 30, 2021, and decreased 2% from 641,000 ounces for the three months ended June 30, 2022
Silver ounces sold in the three months ended September 30, 2022 increased 28% to 35.9 million ounces from 28.1 million ounces for the three months ended September 30, 2021, and decreased 4% from 37.6 million ounces for the three months ended June 30, 2022
As of September 30, 2022, the number of secured loans decreased 48% to 1,082 from 2,074 as of September 30, 2021, and decreased 52% from 2,271 as of June 30, 2022
Direct-to-Consumer new customers for the three months ended September 30, 2022 decreased 7% to 49,000 from 52,900 for the three months ended September 30, 2021, and compares to 48,800 for the three months ended June 30, 2022
Direct-to-Consumer active customers for the three months ended September 30, 2022 increased 19% to 139,900 from 117,700 for the three months ended September 30, 2021, and increased 5% from 133,100 for the three months ended June 30, 2022
Direct-to-Consumer average order value for the three months ended September 30, 2022 increased $42, or 2% to $2,333 from $2,291 for the three months ended September 30, 2021, and decreased $409, or 15% from $2,742 for the three months ended June 30, 2022
JM Bullion’s average order value for the three months ended June 30, 2022 increased $21, or 1% to $2,151 from $2,130 for the three months ended September 30, 2021, and decreased $346, or 14% from $2,497 for the three months ended June 30, 2022

 

 


 

 

 

 

Three Months Ended September 30,

 

 

2022

2021

Selected Operating Metrics:

 

 

 

 

 

Gold ounces sold (1)

 

629,000

 

669,000

 

Silver ounces sold (2)

 

35,917,000

 

28,127,000

 

Number of secured loans at period end (3)

 

1,082

 

2,074

 

Direct-to-Consumer ("DTC") number of new customers (4)

 

49,000

 

52,900

 

Direct-to-Consumer number of active customers (5)

 

139,900

 

117,700

 

Direct-to-Consumer number of total customers (6)

 

2,062,000

 

1,835,500

 

Direct-to-Consumer average order value ("AOV") (7)

 

$ 2,333

 

$ 2,291

 

JM Bullion (“JMB”) average order value (8)

 

$ 2,151

 

$ 2,130

 

CyberMetals number of new customers (9)

 

2,300

 

-

 

CyberMetals number of active customers (10)

 

2,000

 

-

 

CyberMetals number of total customers (11)

 

8,200

 

-

 

CyberMetals customer assets under management (12)

 

$ 4,600,000

 

$ -

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts.

(2) Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts.

(3) Number of outstanding secured loans to customers that are primarily collateralized by precious metals at the end of the period.

(4) DTC number of new customers represents the number of customers that have registered or set up a new account or made a purchase for the first time during the period within the Direct-to-Consumer segment (includes JMB, GLI and PMPP).

(5) DTC number of active customers represents the number of customers that have made a purchase during the period within the Direct-to-Consumer segment.

(6) DTC number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past within the Direct-to-Consumer segment.

(7) DTC AOV represents the average dollar value of third-party product orders (excluding accumulation program orders) delivered to the customer during the period within the Direct-to-Consumer segment.

(8) JMB AOV represents the average dollar value of third-party product orders delivered to JMB's customers during the period.

(9) CyberMetals number of new customers represents the number of customers that have registered or set up a new account or made a purchase for the first time during the period on the CyberMetals platform.

(10) CyberMetals number of active customers represents the number of customers that have made a purchase during the period from the CyberMetals platform.

(11) CyberMetals number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past from the CyberMetals platform.

(12) CyberMetals customer assets under management represents the total value of assets managed by the Company on behalf of CyberMetals customers.

 

 

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Three Months Ended

 

 

September 30, 2022

June 30, 2022

Selected Operating Metrics:

 

 

 

 

 

Gold ounces sold (1)

 

629,000

 

641,000

 

Silver ounces sold (2)

 

35,917,000

 

37,597,000

 

Number of secured loans at period end (3)

 

1,082

 

2,271

 

Direct-to-Consumer ("DTC") number of new customers (4)

 

49,000

 

48,800

 

Direct-to-Consumer number of active customers (5)

 

139,900

 

133,100

 

Direct-to-Consumer number of total customers (6)

 

2,062,000

 

2,013,000

 

Direct-to-Consumer average order value ("AOV") (7)

 

$ 2,333

 

$ 2,742

 

JM Bullion ("JMB") average order value (8)

 

$ 2,151

 

$ 2,497

 

CyberMetals number of new customers (9)

 

2,300

 

5,200

 

CyberMetals number of active customers (10)

 

2,000

 

2,800

 

CyberMetals number of total customers (11)

 

8,200

 

5,900

 

CyberMetals customer assets under management (12)

 

$ 4,600,000

 

$ 3,700,000

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts.

(2) Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts.

(3) Number of outstanding secured loans to customers that are primarily collateralized by precious metals at the end of the period.

(4) DTC number of new customers represents the number of customers that have registered or set up a new account or made a purchase for the first time during the period within the Direct-to-Consumer segment (includes JMB, GLI and PMPP).

(5) DTC number of active customers represents the number of customers that have made a purchase during the period within the Direct-to-Consumer segment.

(6) DTC number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past within the Direct-to-Consumer segment.

(7) DTC AOV represents the average dollar value of third-party product orders (excluding accumulation program orders) delivered to the customer during the period within the Direct-to-Consumer segment.

(8) JMB AOV represents the average dollar value of third-party product orders delivered to JMB's customers during the period.

(9) CyberMetals number of new customers represents the number of customers that have registered or set up a new account or made a purchase for the first time during the period on the CyberMetals platform.

(10) CyberMetals number of active customers represents the number of customers that have made a purchase during the period from the CyberMetals platform.

(11) CyberMetals number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past from the CyberMetals platform.

(12) CyberMetals customer assets under management represents the total value of assets managed by the Company on behalf of CyberMetals customers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Fiscal First Quarter 2023 Financial Highlights

 

Revenues for the three months ended September 30, 2022 decreased 6% to $1.90 billion from $2.01 billion for the three months ended September 30, 2021 and decreased 9% from $2.09 billion for the three months ended June 30, 2022
Gross profit for the three months ended September 30, 2022 increased 37% to $76.6 million from $56.0 million for the three months ended September 30, 2021 and increased 13% from $67.8 million for the three months ended June 30, 2022
Gross profit margin for the three months ended September 30, 2022 increased to 4.03% of revenue, from 2.78% of revenue for the three months ended September 30, 2021, and improved from 3.24% of revenue in the three months ended June 30, 2022
Net income attributable to the Company for the three months ended September 30, 2022 increased 73% to $45.1 million from $26.0 million for the three months ended September 30, 2021, and increased 21% from $37.3 million for the three months ended June 30, 2022
Diluted earnings per share totaled $1.83 for the three months ended September 30, 2022, a 69% increase compared to $1.08 for the three months ended September 30, 2021, adjusted for the effect of the two-for-one stock split that occurred in June 2022, and increased 20% from $1.52 for the three months ended June 30, 2022, adjusted for the effect of the two-for-one stock split that occurred in June 2022
Adjusted net income before provision for income taxes, depreciation, amortization, and acquisition costs (“Adjusted net income before provision for income taxes” or “Adjusted net income”), a non-GAAP financial measure, for the three months ended September 30, 2022 increased 49% to $61.3 million from $41.1 million for the three months ended September 30, 2021, and increased 21% from $50.6 million for the three months ended June 30, 2022
Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP liquidity measure, for the three months ended September 30, 2022 increased 52% to $62.2 million from $41.0 million for the three months ended September 30, 2021, and increased 24% from $50.3 million for the three months ended June 31, 2022

 

 

4


 

 

 

 

Three Months Ended September 30,

 

 

2022

2021

 

 

(in thousands, except Earnings per Share and Weighted Average Shares Outstanding)

Selected Key Financial Statement Metrics:

 

 

 

 

 

Revenues

 

$ 1,900,351

 

$ 2,013,971

 

Gross profit

 

$ 76,592

 

$ 56,009

 

Depreciation and amortization expense

 

$ (3,184)

 

$ (8,271)

 

Net income attributable to the Company

 

$ 45,125

 

$ 26,024

 

 

 

 

 

 

 

Earnings per Share (1):

 

 

 

 

 

Basic

 

$ 1.93

 

$ 1.16

 

Diluted

 

$ 1.83

 

$ 1.08

 

Weighted Average Shares Outstanding (1):

 

 

 

 

 

Basic

 

23,396,400

 

22,525,200

 

Diluted

 

24,685,200

 

24,018,600

 

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

 

 

Adjusted net income before provision for income taxes

 

$ 61,274

 

$ 41,108

 

EBITDA

 

$ 62,226

 

$ 41,006

 

 

 

 

 

 

 

 

 

 

 

 

 

  (1) Q1 FY 2022 is retroactively adjusted for the effect of the June 2022 two-for-one stock split in the form of a stock dividend.

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

September 30, 2022

June 30, 2022

 

 

(in thousands, except Earnings per Share and Weighted Average Shares Outstanding)

Selected Key Financial Statement Metrics:

 

 

 

 

 

Revenues

 

$ 1,900,351

 

$ 2,089,804

 

Gross profit

 

$ 76,592

 

$ 67,750

 

Depreciation and amortization expense

 

$ (3,184)

 

$ (3,223)

 

Net income attributable to the Company

 

$ 45,125

 

$ 37,336

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

Basic

 

$ 1.93

 

$ 1.62

 

Diluted

 

$ 1.83

 

$ 1.52

 

Weighted Average Shares Outstanding:

 

 

 

 

 

Basic

 

23,396,400

 

23,085,500

 

Diluted

 

24,685,200

 

24,494,100

 

 

 

 

 

 

 

Non-GAAP Financial Measures:

 

 

 

 

 

Adjusted net income before provision for income taxes

 

$ 61,274

 

$ 50,628

 

EBITDA

 

$ 62,226

 

$ 50,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Fiscal First Quarter 2023 Financial Summary

 

Revenues decreased 6% to $1.90 billion from $2.01 billion in the same year-ago quarter due to a decrease in gold ounces sold and lower average selling prices of gold and silver, partially offset by an increase in silver ounces sold.

 

The Direct-to-Consumer segment contributed 23% and 26% of the consolidated revenue in the fiscal first quarters of 2023 and 2022, respectively. JMB’s revenue represented 20% of the consolidated revenues for the fiscal first quarter of 2023 compared with 23% for the prior year fiscal first quarter.

 

Gross profit increased 37% to $76.6 million (4.03% of revenue) from $56.0 million (2.78% of revenue) in the same year-ago quarter. The increase in gross profit was due to higher gross profits earned from the Wholesale Sales & Ancillary Services and Direct-to-Consumer segments. The Direct-to-Consumer segment contributed 55% and 54% of the consolidated gross profit in the fiscal first quarters of 2023 and 2022, respectively. Gross profit contributed by JMB represented 48% of the consolidated gross profit in the fiscal first quarter of 2023 and 44% of the consolidated gross profit for the prior year fiscal first quarter.

 

Selling, general and administrative expenses increased 7% to $17.8 million from $16.7 million in the same year-ago quarter. The change was primarily due to an increase in compensation expense (including performance-based accruals) of $1.0 million, higher advertising cost of $0.7 million, an increase in computer-related expenses of $0.2 million, partially offset by lower consulting and professional fees of $0.5 million and lower insurance costs of $0.5 million.

 

Depreciation and amortization expense decreased 62% to $3.2 million from $8.3 million in the same year-ago quarter. The decrease was primarily due to $5.1 million of JMB’s intangible asset amortization expense.

 

Interest income decreased 8% to $5.1 million from $5.5 million in the same year-ago quarter. The aggregate decrease in interest income was primarily due to lower interest income earned by our Secured Lending segment and lower other finance product income.

 

Interest expense increased 12% to $6.1 million from $5.5 million in the same year-ago quarter. The increase in interest expense was primarily driven by $0.5 million associated with the Company’s Trading Credit Facility and the AMCF Notes (including amortization of debt issuance costs), $0.2 million related to product financing arrangements, $0.1 million in interest associated with liabilities on borrowed metals, offset by a decrease of $0.2 million of loan servicing fees.

 

Earnings from equity method investments increased 80% to $2.7 million from $1.5 million in the same year-ago quarter. The net increase of $1.2 million was primarily due to increased earnings from equity method investments.

 

Net income attributable to the Company totaled $45.1 million or $1.83 per diluted share, compared to net income of $26.0 million or $1.08 per diluted share in the same year-ago quarter, adjusted for the effect of the two-for-one stock split that occurred in June 2022.

 

Adjusted net income for the three months ended September 30, 2022 totaled $61.3 million, an increase of $20.2 million or 49% compared to $41.1 million in the same year-ago quarter. The increase is principally due to $25.2 million of higher net income before provision for income taxes and $0.1 million of higher depreciation expense, offset by $5.2 million of lower amortization of acquired intangibles.

 

EBITDA for the three months ended September 30, 2022 totaled $62.2 million, an increase of $21.1 million or 52% compared to $41.0 million in the same year-ago quarter. The increase was principally due to higher net income of $19.1 million. See the reconciliation of net income to EBITDA for further details.

 

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Management Commentary

 

“Our first quarter results continue to demonstrate the strength of our fully integrated precious metals platform and diversified business model,” said A-Mark CEO Greg Roberts. “We delivered robust growth across our key financial metrics, including a 13% sequential increase in gross profit, a 79 basis point increase in our gross margin percentage, a 24% increase in EBITDA, and a 9% quarterly return on equity. Our business is fundamentally strengthened and more diverse as a result of our growth strategy, which has broadened our customer base and further enhanced our fully integrated capabilities.

 

“As we announced last month, JMB closed the asset acquisition of BGASC, one of the largest coin and bullion e-commerce dealers in the United States with over 120,000 customers. We have integrated BGASC as a standalone brand in our DTC segment, and look forward to BGASC’s contribution to the segment’s performance in the second quarter of fiscal 2023.

 

“Our minting business also remains a key driver for our performance with production levels remaining near record levels. We continue to invest in our minting operations, including the recent acquisition of our largest tooling supplier, Marksmen Tool and Die, and investments in other capital to further expand both our minting facility and production capacity.

 

“Favorable market conditions, continued supply constraints and elevated demand in both the retail and wholesale segments have continued to positively impact our business in fiscal 2023 resulting in one of the strongest quarters in A-Mark’s history. Our performance is attributable to our industry-leading fully integrated precious metals platform and business model, which we hope to continue to expand through synergistic acquisitions and strategic investments. We remain optimistic that our proven business model will allow us to realize growth and profitability over the long term.”

 

Quarterly Cash Dividend Policy

A-Mark’s Board of Directors has re-affirmed its previously announced regular quarterly cash dividend policy of $0.20 per common share ($0.80 per share on an annual basis). The initial quarterly cash dividend under the policy was paid on October 24, 2022 to stockholders of record as of October 10, 2022. It is expected that the next quarterly dividend will be paid in January 2023. The declaration of regular cash dividends in the future is subject to the determination each quarter by the Board of Directors, based on a number of factors, including the Company’s financial performance, available cash resources, cash requirements and alternative uses of cash and applicable bank covenants.

 

 

Conference Call

 

A-Mark will hold a conference call today (November 8, 2022) to discuss these financial results. A-Mark management will host the call at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) followed by a question-and-answer period.

 

To participate, please call the conference telephone number 10 minutes before the start time and ask for the A-Mark Precious Metals conference call.

 

Webcast: https://www.webcaster4.com/Webcast/Page/2867/46777

U.S. dial-in number: 1-877-545-0320

International number: 1-973-528-0002

Access Code: 107872

 

 

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The conference call will be webcast 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 November 22, 2022.

 

Toll-free replay number: 1-877-481-4010

International replay number: 1-919-882-2331

Replay Passcode: 46777

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, Direct-to-Consumer, and Secured Lending. 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 SilverTowne 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.

 

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 six separately branded, company-owned websites targeting specific niches within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, GoldPrice.org, SilverPrice.org and BGASC.com. JMB also owns CyberMetals.com, an online platform where customers can purchase and sell fractional shares of digital gold, silver, platinum and palladium bars in a range of denominations. 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.

 

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.

 

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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. These include statements regarding future macroeconomic conditions and demand for precious metal products, and the Company’s ability to effectively respond to changing economic conditions. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results or circumstances 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 the Company’s growth strategy, including the inability to identify suitable or available acquisition or investment opportunities; 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; potential adverse effects of the current problems in the national and global supply chains; increased competition for the Company’s higher margin services, which could depress pricing; the failure of the Company’s business model to respond to changes in the market environment as anticipated; changes in consumer demand and preferences for precious metal products generally; potential negative effects that inflationary pressure may have on our business; the failure of our investee companies to maintain, or address the preferences of, their customer bases; general risks of doing business in the commodity markets; the continued 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 and other Risk Factors 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.

 

Use and Reconciliation of Non-GAAP Financial and Liquidity Measures

In addition to presenting the Company’s financial results determined in accordance with U.S. GAAP, management believes the following non-GAAP measures are useful in evaluating the Company’s operating performance: “adjusted net income before provision for income taxes” and “earnings before interest, taxes, depreciation and amortization” (“EBITDA”). Management believes the “adjusted net income before provision for income taxes” non-GAAP financial measure assists investors and analysts by facilitating comparison of period-to-period operational performance on a consistent basis by excluding items that management does not believe are indicative of the Company’s core operating performance. The items excluded from this financial measure may have a material impact on the Company’s financial results. Certain of those items are non-recurring, while others are non-cash in nature. Management believes the EBITDA non-GAAP liquidity measure assists investors and analysts by facilitating comparison with other publicly traded companies. Non-GAAP measures do not have standardized definitions and should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with U.S. GAAP, and should be read in conjunction with the financial statements included in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC. Management encourages investors and others to review the Company’s financial information in its entirety and not to rely on any single financial or liquidity measure.

 

In the Company’s reconciliation from its reported U.S. GAAP “net income before provision for income taxes” to its non-GAAP “adjusted net income before provision for income taxes”, the Company eliminates the impact of the following three amounts: (i) acquisition expenses; (ii) amortization expenses related to intangible assets acquired; and (iii) depreciation

 

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expense. The Company’s reconciliations from its reported U.S. GAAP “net cash provided by (used in) operating activities” to its non-GAAP “EBITDA” are provided below and are also included in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC for the quarterly period ended September 30, 2022.

 

 

Company Contact:

Steve Reiner, Executive Vice President, Capital Markets & Investor Relations

A-Mark Precious Metals, Inc.

1-310-587-1410

sreiner@amark.com

 

Investor Relations Contact:

Matt Glover or Jeff Grampp, CFA

Gateway Investor Relations

1-949-574-3860

AMRK@gatewayIR.com

 

 

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A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except for share data)

 

 

 

 

September 30,

2022

 

 

 

June 30,

2022

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash

 

$

64,635

 

 

 

$

37,783

 

Receivables, net

 

 

110,848

 

 

 

 

97,040

 

Derivative assets

 

 

32,507

 

 

 

 

91,743

 

Secured loans receivable

 

 

87,313

 

 

 

 

126,217

 

Precious metals held under financing arrangements

 

 

49,327

 

 

 

 

79,766

 

Inventories:

 

 

 

 

 

 

 

 

 

Inventories

 

 

458,487

 

 

 

 

458,347

 

Restricted inventories

 

 

167,009

 

 

 

 

282,671

 

 

 

 

625,496

 

 

 

 

741,018

 

Prepaid expenses and other assets

 

 

9,134

 

 

 

 

7,558

 

Total current assets

 

 

979,260

 

 

 

 

1,181,125

 

Operating lease right of use assets

 

 

5,981

 

 

 

 

6,482

 

Property, plant, and equipment, net

 

 

10,477

 

 

 

 

9,845

 

Goodwill

 

 

100,943

 

 

 

 

100,943

 

Intangibles, net

 

 

65,253

 

 

 

 

67,965

 

Long-term investments

 

 

73,022

 

 

 

 

70,828

 

Other long-term assets

 

 

5,471

 

 

 

 

5,471

 

Total assets

 

$

1,240,407

 

 

 

$

1,442,659

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Lines of credit

 

$

63,000

 

 

 

$

215,000

 

Liabilities on borrowed metals

 

 

55,909

 

 

 

 

59,417

 

Product financing arrangements

 

 

167,009

 

 

 

 

282,671

 

Accounts payable and other payables

 

 

28,574

 

 

 

 

6,127

 

Deferred revenue and other advances

 

 

183,183

 

 

 

 

175,545

 

Derivative liabilities

 

 

89,899

 

 

 

 

75,780

 

Accrued liabilities

 

 

17,663

 

 

 

 

21,813

 

Income tax payable

 

 

10,227

 

 

 

 

382

 

Total current liabilities

 

 

615,464

 

 

 

 

836,735

 

Notes payable

 

 

98,182

 

 

 

 

94,073

 

Deferred tax liabilities

 

 

15,388

 

 

 

 

15,408

 

Other liabilities

 

 

5,483

 

 

 

 

5,972

 

Total liabilities

 

 

734,517

 

 

 

 

952,188

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued

   and outstanding: none as of September 30, 2022 and June 30, 2022

 

 

 

 

 

 

 

Common stock, par value $0.01; 40,000,000 shares authorized; 23,453,339

   and 23,379,888 shares issued and outstanding as of September 30, 2022

   and June 30, 2022, respectively

 

 

235

 

 

 

 

234

 

Additional paid-in capital

 

 

165,814

 

 

 

 

166,526

 

Accumulated other comprehensive income

 

 

52

 

 

 

 

 

Retained earnings

 

 

338,816

 

 

 

 

321,849

 

Total A-Mark Precious Metals, Inc. stockholders’ equity

 

 

504,917

 

 

 

 

488,609

 

Noncontrolling interest

 

 

973

 

 

 

 

1,862

 

Total stockholders’ equity

 

 

505,890

 

 

 

 

490,471

 

Total liabilities, noncontrolling interest and stockholders’ equity

 

$

1,240,407

 

 

 

$

1,442,659

 

 

 

 

 

11


 

 

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for share and per share data)

 

 

 

Three Months Ended

 

 

 

September 30,

2022

 

 

 

September 30,

2021

 

Revenues

 

$

1,900,351

 

 

 

$

2,013,971

 

Cost of sales

 

 

1,823,759

 

 

 

 

1,957,962

 

Gross profit

 

 

76,592

 

 

 

 

56,009

 

Selling, general, and administrative expenses

 

 

(17,784

)

 

 

 

(16,677

)

Depreciation and amortization expense

 

 

(3,184

)

 

 

 

(8,271

)

Interest income

 

 

5,096

 

 

 

 

5,531

 

Interest expense

 

 

(6,130

)

 

 

 

(5,473

)

Earnings from equity method investments

 

 

2,677

 

 

 

 

1,489

 

Other income, net

 

 

527

 

 

 

 

409

 

Unrealized gains (losses) on foreign exchange

 

 

214

 

 

 

 

(224

)

Net income before provision for income taxes

 

 

58,008

 

 

 

 

32,793

 

Income tax expense

 

 

(12,771

)

 

 

 

(6,669

)

Net income

 

 

45,237

 

 

 

 

26,124

 

Net income attributable to noncontrolling interest

 

 

112

 

 

 

 

100

 

Net income attributable to the Company

 

$

45,125

 

 

 

$

26,024

 

Basic and diluted net income per share attributable

   to A-Mark Precious Metals, Inc.:

 

 

 

 

 

 

 

 

 

Basic

 

$

1.93

 

 

 

$

1.16

 

Diluted

 

$

1.83

 

 

 

$

1.08

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

23,396,400

 

 

 

 

22,525,200

 

Diluted

 

 

24,685,200

 

 

 

 

24,018,600

 

 

 

12


 

 

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

 

Three Months Ended September 30,

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

45,237

 

 

$

26,124

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,184

 

 

 

8,271

 

Amortization of loan cost

 

 

554

 

 

 

569

 

Deferred income taxes

 

 

(36

)

 

 

(1,423

)

Interest added to principal of secured loans

 

 

(4

)

 

 

(5

)

Share-based compensation

 

 

535

 

 

 

473

 

Earnings from equity method investments

 

 

(2,677

)

 

 

(1,489

)

Dividends received from equity method investees

 

 

551

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

(13,808

)

 

 

(15,522

)

Secured loans receivable

 

 

368

 

 

 

25

 

Secured loans made to affiliates

 

 

 

 

 

3,032

 

Derivative assets

 

 

59,236

 

 

 

(25,249

)

Precious metals held under financing arrangements

 

 

30,439

 

 

 

24,124

 

Inventories

 

 

115,522

 

 

 

(107,686

)

Prepaid expenses and other assets

 

 

(1,738

)

 

 

(689

)

Accounts payable and other payables

 

 

22,447

 

 

 

22,691

 

Deferred revenue and other advances

 

 

7,638

 

 

 

(44,244

)

Derivative liabilities

 

 

14,119

 

 

 

62,809

 

Liabilities on borrowed metals

 

 

(3,508

)

 

 

(17,248

)

Accrued liabilities

 

 

(8,282

)

 

 

(6,420

)

Income tax payable

 

 

9,845

 

 

 

2,124

 

Net cash provided by (used in) operating activities

 

 

279,622

 

 

 

(69,733

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures for property, plant, and equipment

 

 

(927

)

 

 

(709

)

Purchase of long-term investments

 

 

(500

)

 

 

(6,250

)

Secured loans receivable, net

 

 

38,540

 

 

 

(407

)

Net cash provided by (used in) investing activities

 

 

37,113

 

 

 

(7,366

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Product financing arrangements, net

 

 

(115,662

)

 

 

18,392

 

Dividends paid

 

 

(23,394

)

 

 

(22,639

)

Distributions paid to noncontrolling interest

 

 

(1,001

)

 

 

 

Borrowings and repayments under lines of credit, net

 

 

(152,000

)

 

 

9,000

 

Proceeds from issuance of related party note

 

 

3,887

 

 

 

 

Debt funding issuance costs

 

 

(170

)

 

 

(199

)

Proceeds from the exercise of share-based awards

 

 

63

 

 

 

762

 

Payments for tax withholding related to net settlement of share-based awards

 

 

(1,606

)

 

 

(13

)

Net cash (used in) provided by financing activities

 

 

(289,883

)

 

 

5,303

 

Net increase (decrease) in cash

 

 

26,852

 

 

 

(71,796

)

Cash, beginning of period

 

 

37,783

 

 

 

101,405

 

Cash, end of period

 

$

64,635

 

 

$

29,609

 

 

 

13


 

 

Overview of Results of Operations for the Three Months Ended September 30, 2022 and 2021

Consolidated Results of Operations

The operating results for the three months ended September 30, 2022 and 2021 are as follows:

 

in thousands, except per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

2022

 

 

 

2021

 

 

 

$

 

 

 

%

 

 

 

$

 

 

 

% of

revenue

 

 

 

$

 

 

 

% of

revenue

 

 

 

Increase/

(decrease)

 

 

 

Increase/

(decrease)

 

Revenues

 

$

1,900,351

 

 

 

 

100.000

%

 

 

$

2,013,971

 

 

 

 

100.000

%

 

 

$

(113,620

)

 

 

 

(5.6

%)

Gross profit

 

 

76,592

 

 

 

 

4.030

%

 

 

 

56,009

 

 

 

 

2.781

%

 

 

$

20,583

 

 

 

 

36.7

%

Selling, general, and administrative expenses

 

 

(17,784

)

 

 

 

(0.936

%)

 

 

 

(16,677

)

 

 

 

(0.828

%)

 

 

$

1,107

 

 

 

 

6.6

%

Depreciation and amortization expense

 

 

(3,184

)

 

 

 

(0.168

%)

 

 

 

(8,271

)

 

 

 

(0.411

%)

 

 

$

(5,087

)

 

 

 

(61.5

%)

Interest income

 

 

5,096

 

 

 

 

0.268

%

 

 

 

5,531