10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-36347

A-MARK PRECIOUS METALS, INC.

(Exact name of registrant as specified in its charter)

    Delaware
(State of Incorporation)

    11-2464169
(IRS Employer I.D. No.)

2121 Rosecrans Ave., Suite 6300, El Segundo, CA 90245

(Address of principal executive offices) (Zip code)

(310) 587-1477

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	AMRK	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes. ☑ No. ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such ﬁles). Yes. ☑ No. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

    Large accelerated filer

    ☐

    Accelerated filer

    ☑

    Non-accelerated filer

    ☐

    Smaller reporting company

    ☐

    Emerging growth company

    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes. ☐ No. ☑

As of May 3, 2024, the registrant had 22,894,814 shares of common stock, par value $0.01 per share outstanding.

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended March 31, 2024

TABLE OF CONTENTS


			Page
PART I		FINANCIAL INFORMATION	3

	Item 1.	Financial Statements	3
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	81
	Item 4.	Controls and Procedures	82

PART II		OTHER INFORMATION	83

	Item 1.	Legal Proceedings	83
	Item 1A.	Risk Factors	83
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
	Item 3.	Defaults Upon Senior Securities	99
	Item 4.	Mine Safety Disclosures	99
	Item 5.	Other Information	99
	Item 6.	Exhibits	100

Signatures			101

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Index to the Condensed Consolidated Financial Statements and Notes thereof


	Page
Condensed Consolidated Balance Sheets as of March 31, 2024 and June 30, 2023	4
Condensed Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2024 and 2023	6
Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended March 31, 2024 and 2023	7
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2024 and 2023	8
Notes to the Condensed Consolidated Financial Statements	9
Note 1. Description of Business	9
Note 2. Summary of Significant Accounting Policies	11
Note 3. Assets and Liabilities, at Fair Value	22
Note 4. Receivables, Net	25
Note 5. Secured Loans Receivable	25
Note 6. Inventories	27
Note 7. Leases	28
Note 8. Property, Plant, and Equipment	29
Note 9. Goodwill and Intangible Assets	29
Note 10. Long-Term Investments	31
Note 11. Accounts Payable and Other Current Liabilities	31
Note 12. Derivative Instruments and Hedging Transactions	31
Note 13. Income Taxes	34
Note 14. Related Party Transactions	35
Note 15. Financing Agreements	37
Note 16. Commitments and Contingencies	38
Note 17. Stockholders' Equity	39
Note 18. Customer and Supplier Concentrations	42
Note 19. Segments and Geographic Information	42
Note 20. Subsequent Events	46

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share data)


	March 31, 2024			June 30, 2023
	(unaudited)
ASSETS
Current assets
Cash(1)	$	35,167		$	39,318
Receivables, net		53,229			35,243
Derivative assets		30,875			77,881
Secured loans receivable(1)		115,645			100,620
Precious metals held under financing arrangements(1)		12,772			25,530
Inventories:
Inventories(1)		579,398			645,812
Restricted inventories		510,237			335,831
		1,089,635			981,643
Income tax receivable		4,332			—
Prepaid expenses and other assets(1)		7,536			6,956
Total current assets		1,349,191			1,267,191
Operating lease right of use assets		5,130			5,119
Property, plant, and equipment, net		16,234			12,513
Goodwill		120,956			100,943
Intangibles, net		74,917			62,630
Long-term investments		93,735			88,535
Other long-term assets		9,324			8,640
Total assets	$	1,669,487		$	1,545,571
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Lines of credit	$	—		$	235,000
Liabilities on borrowed metals		26,167			21,642
Product financing arrangements		510,237			335,831
Accounts payable and other payables		9,598			25,465
Deferred revenue and other advances		150,875			181,363
Derivative liabilities		51,146			8,076
Accrued liabilities(1)		16,786			20,418
Income tax payable		—			958
Notes payable (1)		—			95,308
Total current liabilities		764,809			924,061
Lines of credit		290,000			—
Notes payable		3,994			—
Deferred tax liabilities		16,717			16,677
Other liabilities		6,967			4,440
Total liabilities		1,082,487			945,178
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as of March 31, 2024 or June 30, 2023		—			—
Common stock, par value $0.01; 40,000,000 shares authorized; 23,893,516 and 23,672,122 shares issued and 22,881,480 and 23,336,387 shares outstanding as of March 31, 2024 and June 30, 2023, respectively		239			237
Treasury stock, 1,012,036 and 335,735 shares at cost as of March 31, 2024 and June 30, 2023, respectively		(28,277	)		(9,762	)
Additional paid-in capital		171,612			169,034
Accumulated other comprehensive loss		(898	)		(1,025	)
Retained earnings		440,490			440,639
Total A-Mark Precious Metals, Inc. stockholders’ equity		583,166			599,123
Noncontrolling interest		3,834			1,270
Total stockholders’ equity		587,000			600,393
Total liabilities, noncontrolling interest and stockholders’ equity	$	1,669,487		$	1,545,571

(1)

Includes amounts of the consolidated variable interest entity as of June 30, 2023, which are presented separately in the table below.

See accompanying Notes to the Condensed Consolidated Financial Statements

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)

In September 2018, AM Capital Funding, LLC (“AMCF”), a wholly-owned subsidiary of Collateral Finance Corporation ("CFC”), completed an issuance of Secured Senior Term Notes, Series 2018-1, Class A in the aggregate principal amount of $72.0 million and Secured Subordinated Term Notes, Series 2018-1, Class B in the aggregate principal amount of $28.0 million (collectively, the "AMCF Notes"). In December 2023, the AMCF Notes were repaid in full, and AMCF became inactive.

The Company consolidates a variable interest entity ("VIE") if the Company is considered to be the primary beneficiary. AMCF is a VIE because its initial equity investment may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company. The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., cash, secured loans, or precious metals), has the right to receive (and has received) the proceeds from the securitization transaction, earn ongoing interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income.

The following table presents the assets and liabilities of this VIE, which are included in the condensed consolidated balance sheets above. Due to the repayment of the AMCF Notes in December 2023, the VIE did not have assets or liabilities as of March 31, 2024. When outstanding, the holders of the AMCF Notes had a first priority security interest in the assets as shown in the table below, which were in excess of the AMCF Notes' aggregate principal amount. Additionally, the liabilities of the VIE included intercompany balances, which were eliminated in consolidation. (See Note 15.)


	March 31, 2024		June 30, 2023
ASSETS OF THE CONSOLIDATED VIE
Cash	$	—	$	1,915
Secured loans receivable		—		46,368
Precious metals held under financing arrangements		—		14,950
Inventories		—		56,841
Prepaid expenses and other assets		—		7
Total assets of the consolidated variable interest entity	$	—	$	120,081
LIABILITIES OF THE CONSOLIDATED VIE
Deferred payment obligations(1)	$	—	$	30,083
Accrued liabilities		—		551
Notes payable(2)		—		99,762
Total liabilities of the consolidated variable interest entity	$	—	$	130,396

(1)

This is an intercompany balance which is eliminated in consolidation and not shown on the condensed consolidated balance sheets.

(2)

As of June 30, 2023, $5.0 million of the AMCF Notes were held by the Company which were eliminated in consolidation and not shown on the condensed consolidated balance sheets.

See accompanying Notes to the Condensed Consolidated Financial Statements

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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


	Three Months Ended March 31,						Nine Months Ended March 31,
	2024			2023			2024			2023
Revenues	$	2,610,651		$	2,317,150		$	7,174,084		$	6,167,206
Cost of sales		2,575,813			2,241,652			7,043,800			5,951,147
Gross profit		34,838			75,498			130,284			216,059
Selling, general, and administrative expenses		(22,854	)		(23,841	)		(67,095	)		(62,438	)
Depreciation and amortization expense		(2,949	)		(3,340	)		(8,552	)		(9,784	)
Interest income		6,682			6,087			19,095			16,167
Interest expense		(9,907	)		(9,237	)		(29,898	)		(22,603	)
Earnings (losses) from equity method investments		(206	)		(70	)		3,280			7,276
Other income, net		763			641			1,605			2,001
Unrealized gains on foreign exchange		73			35			84			250
Net income before provision for income taxes		6,440			45,773			48,803			146,928
Income tax expense		(1,286	)		(9,775	)		(10,705	)		(32,096	)
Net income		5,154			35,998			38,098			114,832
Net income attributable to noncontrolling interest		141			78			492			306
Net income attributable to the Company	$	5,013		$	35,920		$	37,606		$	114,526
Basic and diluted net income per share attributable to A-Mark Precious Metals, Inc.:
Basic	$	0.22		$	1.53		$	1.63		$	4.89
Diluted	$	0.21		$	1.46		$	1.56		$	4.64

Weighted-average shares outstanding:
Basic		22,847,200			23,421,300			23,098,000			23,435,700
Diluted		23,822,800			24,655,400			24,140,500			24,690,900

See accompanying Notes to the Condensed Consolidated Financial Statements

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except for share data; unaudited)


	Common Stock				Additional Paid-in			Retained			Accumulated other comprehensive			Treasury Stock						Total A-Mark Precious Metals, Inc. Stockholders'			Non-controlling			Total Stockholders’
	Shares		Amount		Capital			Earnings			income (loss)			Shares			Amount			Equity			Interest			Equity
Balance, June 30, 2022		23,379,888	$	234	$	166,526		$	321,849		$	—			—		$	—		$	488,609		$	1,862		$	490,471
Net income		—		—		—			45,125			—			—			—			45,125			112			45,237
Share-based compensation		—		—		535			—			—			—			—			535			—			535
Earnings distribution paid to noncontrolling interest		—		—		—			—			—			—			—			—			(1,001	)		(1,001	)
Cumulative translation adjustment, net of tax		—		—		—			—			52			—			—			52			—			52
Common stock issued as employee compensation		10,500		—		293			—			—			—			—			293			—			293
Exercise of share-based awards		3,333		—		63			—			—			—			—			63			—			63
Net settlement of share-based awards		59,618		1		(1,606	)		—			—			—			—			(1,605	)		—			(1,605	)
Dividends declared		—		—		3			(28,158	)		—			—			—			(28,155	)		—			(28,155	)
Balance, September 30, 2022		23,453,339		235		165,814			338,816			52			—			—			504,917			973			505,890
Net income		—		—		—			33,481			—			—			—			33,481			116			33,597
Share-based compensation		—		—		534			—			—			—			—			534			—			534
Cumulative translation adjustment, net of tax		—		—		—			—			(1,103	)		—			—			(1,103	)		—			(1,103	)
Exercise of share-based awards		73,336		1		661			—			—			—			—			662			—			662
Net settlement of share-based awards		3,296		—		—			—			—			—			—			—			—			—
Balance, December 31, 2022		23,529,971		236		167,009			372,297			(1,051	)		—			—			538,491			1,089			539,580
Net income		—		—		—			35,920			—			—			—			35,920			78			35,998
Share-based compensation		—		—		538			—			—			—			—			538			—			538
Cumulative translation adjustment, net of tax		—		—		—			—			(178	)		—			—			(178	)		—			(178	)
Exercise of share-based awards		66,370		—		700			—			—			—			—			700			—			700
Repurchases of common stock		—		—		—			—			—			(335,735	)		(9,762	)		(9,762	)		—			(9,762	)
Dividends declared		—		—		6			(4,744	)		—			—			—			(4,738	)		—			(4,738	)
Balance, March 31, 2023		23,596,341	$	236	$	168,253		$	403,473		$	(1,229	)		(335,735	)	$	(9,762	)	$	560,971		$	1,167		$	562,138

Balance, June 30, 2023		23,672,122	$	237	$	169,034		$	440,639		$	(1,025	)		(335,735	)	$	(9,762	)	$	599,123		$	1,270		$	600,393
Net income		—		—		—			18,827			—			—			—			18,827			156			18,983
Share-based compensation		—		—		664			—			—			—			—			664			—			664
Cumulative translation adjustment, net of tax		—		—		—			—			187			—			—			187			—			187
Exercise of share-based awards		159,999		2		958			—			—			—			—			960			—			960
Net settlement of share-based awards		10,556		—		(307	)		—			—			—			—			(307	)		—			(307	)
Repurchases of common stock		—		—		—			—			—			(171,268	)		(5,016	)		(