UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ________ to ________
Commission File Number:
(Exact name of registrant as specified in its charter)
(State of Incorporation) |
|
(IRS Employer I.D. No.) |
(Address of principal executive offices) (Zip code)
(
(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 |
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.
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).
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 |
☐ |
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☑ |
|
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 January 31, 2025, the registrant had
1
A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period Ended December 31, 2024
TABLE OF CONTENTS
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Page |
PART I |
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3 |
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Item 1. |
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3 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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46 |
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Item 3. |
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81 |
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Item 4. |
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82 |
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PART II |
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83 |
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Item 1. |
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83 |
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Item 1A. |
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83 |
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Item 2. |
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99 |
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Item 3. |
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100 |
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Item 4. |
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100 |
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Item 5. |
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100 |
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Item 6. |
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101 |
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102 |
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2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Index to the Condensed Consolidated Financial Statements and Notes thereof
3
A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
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December 31, 2024 |
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June 30, 2024 |
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(unaudited) |
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ASSETS |
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Current assets |
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Cash |
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$ |
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$ |
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Receivables, net |
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Derivative assets |
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Secured loans receivable |
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Precious metals held under financing arrangements |
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Inventories: |
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Inventories |
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Restricted inventories |
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Income tax receivable |
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Prepaid expenses and other assets |
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Total current assets |
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Operating lease right of use assets |
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Property, plant, and equipment, net |
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Goodwill |
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Intangibles, net |
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Long-term investments |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Liabilities on borrowed metals |
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$ |
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$ |
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Product financing arrangements |
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Accounts payable and other payables |
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Deferred revenue and other advances |
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Derivative liabilities |
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Accrued liabilities |
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Notes payable |
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Total current liabilities |
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Lines of credit |
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Notes payable |
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Deferred tax liabilities |
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Other liabilities |
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Total liabilities |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, par value $ |
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Treasury stock, |
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( |
) |
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( |
) |
Additional paid-in capital |
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Accumulated other comprehensive income |
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Retained earnings |
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Total A-Mark Precious Metals, Inc. stockholders’ equity |
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Noncontrolling interests |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying Notes to the Condensed Consolidated Financial Statements
4
A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share and per share data; unaudited)
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Three Months Ended December 31, |
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Six Months Ended December 31, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general, and administrative expenses |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Depreciation and amortization expense |
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( |
) |
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( |
) |
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( |
) |
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( |
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Interest income |
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Interest expense |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
Earnings (losses) from equity method investments |
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( |
) |
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( |
) |
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Other income, net |
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Unrealized (losses) gains on foreign exchange |
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( |
) |
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( |
) |
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Net income before provision for income taxes |
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Income tax expense |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income |
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Net (loss) income attributable to noncontrolling interests |
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( |
) |
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( |
) |
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Net income attributable to the Company |
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$ |
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$ |
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$ |
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$ |
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Basic and diluted net income per share attributable |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted-average shares outstanding: |
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Basic |
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Diluted |
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See accompanying Notes to the Condensed Consolidated Financial Statements
5
A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except for share data; unaudited)
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Common Stock |
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Additional Paid-in |
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Retained |
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Accumulated other comprehensive |
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Treasury Stock |
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Total A-Mark Precious Metals, Inc. Stockholders' |
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Non-controlling |
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Total Stockholders’ |
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Shares |
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Amount |
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Capital |
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Earnings |
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income (loss) |
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Shares |
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Amount |
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Equity |
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Interest |
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Equity |
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Balance, June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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( |
) |
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$ |
( |
) |
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$ |
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$ |
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$ |
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|||||||
Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|||
Cumulative translation adjustment, net of tax |
|
— |
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— |
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— |
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— |
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— |
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— |
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— |
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Exercise of share-based awards |
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— |
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— |
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— |
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— |
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— |
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|||||
Net settlement of share-based awards |
|
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— |
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( |
) |
|
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— |
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— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Repurchases of common stock |
|
— |
|
|
|
— |
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— |
|
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— |
|
|
|
— |
|
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|
( |
) |
|
|
( |
) |
|
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( |
) |
|
|
— |
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( |
) |
Dividends declared |
|
— |
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— |
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( |
) |
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— |
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— |
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|
|
— |
|
|
|
( |
) |
|
|
— |
|
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|
( |
) |
|
Balance, September 30, 2023 |
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( |
) |
|
|
( |
) |
|
|
( |
) |
|
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|||||||
Net income |
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— |
|
|
|
— |
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— |
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— |
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|
— |
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|
— |
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|
||||
Share-based compensation |
|
— |
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|
— |
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|
|
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|
|
— |
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|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
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|
|||
Cumulative translation adjustment, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net settlement of share-based awards |
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
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|
— |
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|
|
— |
|
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|
( |
) |
|
|
— |
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|
|
( |
) |
|
Repurchases of common stock |
|
— |
|
|
|
— |
|
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|
— |
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|
— |
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|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance, December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
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|
$ |
|
|||||||
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|
||||||||||
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
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|
$ |
|
||||||||
Net income |
|
— |
|
|
|
— |
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|
|
— |
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|
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|
— |
|
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|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
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|
|||
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Cumulative translation adjustment, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
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|
|||
Exercise of share-based awards |
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|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
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|
|||||
Dividends declared |
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Balance, September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||||||
Net income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Share-based compensation |
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Cumulative translation adjustment, net of tax |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net settlement of share-based awards |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Repurchases of common stock |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Repurchases of common stock from related party |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance, December 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
See accompanying Notes to the Condensed Consolidated Financial Statements
6
A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
|
|
Six Months Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash flows from operating activities: |
|
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Depreciation and amortization |
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Amortization of loan cost |
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Share-based compensation |
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Losses (earnings) from equity method investments |
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( |
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Dividends and distributions received from equity method investees |
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Other |
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( |
) |
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Changes in assets and liabilities: |
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Receivables, net |
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( |
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Secured loans made to affiliates |
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Derivative assets |
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Income tax receivable |
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( |
) |
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( |
) |
Precious metals held under financing arrangements |
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Inventories |
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( |
) |
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( |
) |
Prepaid expenses and other assets |
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( |
) |
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( |
) |
Accounts payable and other payables |
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( |
) |
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( |
) |
Deferred revenue and other advances |
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( |
) |
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Derivative liabilities |
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( |
) |
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Liabilities on borrowed metals |
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Accrued liabilities |
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( |
) |
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( |
) |
Income tax payable |
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( |
) |
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Net cash used in operating activities |
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( |
) |
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( |
) |
Cash flows from investing activities: |
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Capital expenditures for property, plant, and equipment |
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( |
) |
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( |
) |
Purchase of long-term investments |
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( |
) |
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Purchase of intangible assets |
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( |
) |
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Secured loans receivable, net |
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( |
) |
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Purchase of marketable securities |
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( |
) |
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Proceeds from sale of marketable securities |
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Other |
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( |
) |
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Net cash provided by (used in) investing activities |
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( |
) |
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Cash flows from financing activities: |
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Product financing arrangements, net |
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Dividends paid |
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( |
) |
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( |
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Borrowings under lines of credit |
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Repayments under lines of credit |
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( |
) |
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( |
) |
Repayment of notes |
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( |
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Proceeds from notes payable to related party |
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Repayments on notes payable to related party |
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( |
) |
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Repurchases of common stock |
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( |
) |
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( |
) |
Repurchases of common stock from a related party |
|
|
( |
) |
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— |
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Debt funding issuance costs |
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( |
) |
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( |
) |
Proceeds from the exercise of share-based awards |
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Payments for tax withholding related to net settlement of share-based awards |
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( |
) |
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Net cash (used in) provided by financing activities |
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( |
) |
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Net decrease in cash |
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( |
) |
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( |
) |
Cash, beginning of period |
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Cash, end of period |
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$ |
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$ |
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Supplemental disclosures of cash flow information: |
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Cash paid during the period for: |
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Interest paid |
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$ |
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$ |
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Income taxes paid |
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$ |
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$ |
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Income taxes refunded |
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$ |
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$ |
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Non-cash investing and financing activities: |
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Declared distributions and unpaid dividends |
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$ |
( |
) |
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$ |
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Property, plant, and equipment acquired on account |
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$ |
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$ |
— |
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See accompanying Notes to the Condensed Consolidated Financial Statements
7
A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS
Basis of Presentation
The consolidated financial statements comprise those of A-Mark Precious Metals, Inc. ("A-Mark", also referred to as "we", "us", and the "Company"), its consolidated subsidiaries, and its joint venture in which the Company has a controlling interest.
Business Segments
The Company conducts its operations in
Wholesale Sales & Ancillary Services
The Company operates its Wholesale Sales & Ancillary Services segment directly and through its consolidated subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services, LLC ("TDS" or “Storage”), A-M Global Logistics, LLC (“AMGL” or "Logistics"), AM&ST Associates, LLC ("AMST" or the "Silver Towne Mint"), and AM/LPM Ventures, LLC, which we formed to acquire LPM Group Limited ("LPM").
The Wholesale Sales & Ancillary Services segment operates as a full-service precious metals company. We offer gold, silver, platinum, and palladium in the form of bars, plates, powder, wafers, grain, ingots, and coins. Our Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious metals. Our Coin and Bar unit deals in approximately
Through its wholly-owned subsidiary AMTAG, the Company promotes its products and services to certain international markets. Through our wholly-owned subsidiary TDS, we offer a variety of managed storage options for precious metals products to financial institutions, dealers, investors, and collectors around the world.
The Company's wholly-owned subsidiary AMGL is based in Las Vegas, Nevada, and provides our customers an array of complementary services, including receiving, handling, inventorying, processing, packing, and shipping of precious metals and custom coins on a secure basis.
Through its wholly-owned subsidiary AMST, the Company designs and produces minted silver products. Our Silver Towne Mint operations allow us to provide greater product selection to our customers as well as to gain increased access to silver during volatile market environments, which have historically created higher demand for precious metals products.
The Company operates LPM, its Asia headquarters, through its subsidiary AM/LPM Ventures, LLC. Based in Hong Kong, LPM offers the Company's full-service precious metals products and services in Asia and internationally.
Direct-to-Consumer
The Company operates its Direct-to-Consumer segment through its wholly-owned subsidiaries JM Bullion, Inc. (“JMB”) and Goldline, Inc. (“Goldline”), and through its investment in Silver Gold Bull, Inc. ("SGB"). As of December 31, 2024, JMB had several wholly-owned subsidiaries, including: Buy Gold and Silver Corp. ("BGASC"), BX Corporation ("BullionMax"), Gold Price Group, Inc. (“GPG”), Silver.com, Inc. (“Silver.com”), Provident Metals Corp. (“PMC”), and CyberMetals Corp. ("CyberMetals"). Goldline, Inc. owns 100% of AMIP, LLC ("AMIP"). SGB and Goldline each have a
8
JM Bullion, Inc.
JMB is a leading e-commerce retailer providing access to a broad array of gold, silver, copper, platinum, and palladium products through its websites. JMB owns and operates numerous websites targeting specific niches within the precious metals retail market, including JMBullion.com, ProvidentMetals.com, Silver.com, CyberMetals.com, GoldPrice.org, SilverPrice.org, BGASC.com, BullionMax.com, and Gold.com. Typically, JMB offers approximately
In April 2022, JMB commercially launched the CyberMetals online platform, where customers can purchase and sell fractional shares of digital gold, silver, platinum, and palladium bars in a range of denominations. CyberMetals’ customers have the option to convert their digital holdings to fabricated precious metals products via an integrated redemption flow with JMB. These products may be designated by the customer for storage by the Company or shipped directly to the customer.
Goldline, Inc.
The Company acquired Goldline in August 2017 through an asset purchase transaction with Goldline, LLC, which had been in operation since 1960. Goldline is a direct retailer of precious metals to the investor community, and markets its precious metal products on television, radio, and the internet, as well as through customer service outreach. Goldline’s subsidiary AMIP manages its intellectual property. PMPP was formed in fiscal 2019 pursuant to terms of a joint venture agreement with SGB, for the purpose of purchasing precious metals from the partners' retail customers, and then reselling the acquired products back to affiliates of the partners. PMPP commenced its operations in fiscal 2020.
Silver Gold Bull, Inc.
In 2014, the Company acquired its initial ownership interest in SGB, a leading e-commerce precious metals retailer in Canada. Through its website, SilverGoldBull.com, SGB offers a variety of products from gold, silver, platinum, and palladium bars, coins and rounds, as well as certified coins from mints around the world. In 2018 and 2022, the Company made incremental investments to increase its ownership interest in SGB to
In connection with the exercise of its option in June 2024, the Company modified certain terms and conditions of its option to acquire additional ownership interest in SGB, including extending the term of the remaining unexercised option to September 2025 as well as reducing the option to increase its ownership from
In June 2024, SGB declared a $
Secured Lending
The Company operates its Secured Lending segment through its wholly-owned subsidiary, Collateral Finance Corporation, LLC, including its wholly-owned subsidiary, CFC Alternative Investments (“CAI”) (collectively “CFC”).
CFC is a California licensed finance lender that originates and acquires commercial loans secured primarily by bullion and numismatic coins. CFC's customers include coin and precious metal dealers, investors, and collectors.
CAI is a holding company that has a
9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed consolidated financial statements reflect the financial condition, results of operations, statements of stockholders’ equity, and cash flows of the Company, and were prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). The Company consolidates its subsidiaries that are wholly-owned, and majority owned, and entities that are variable interest entities where the Company is determined to be the primary beneficiary. In addition to A-Mark, our consolidated financial statements include the accounts of: AMTAG, TDS, AMGL, AMST, AM/LPM Ventures, JMB, Goldline, SGB, and CFC. Intercompany accounts and transactions are eliminated.
Comprehensive Income
Our other comprehensive income and losses are comprised of unrealized gains and losses associated with the translation of foreign-based equity method investments which are shown in our condensed consolidated statements of stockholders' equity.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. These estimates include, among others, determination of fair value (primarily, with respect to precious metal inventory, derivatives, assets and liabilities acquired in business combinations, certain financial instruments, and certain investments); impairment assessments of property, plant and equipment, long-term investments, and intangible assets; valuation allowance determination on deferred tax assets; determining the incremental borrowing rate for calculating right of use assets and lease liabilities; and revenue recognition judgments. Actual results could materially differ from these estimates.
Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the condensed consolidated balance sheets, condensed consolidated statements of income, condensed consolidated statements of stockholders’ equity, and condensed consolidated statements of cash flows for the periods presented in accordance with U.S. GAAP. Operating results for the three and six months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2025 or for any other interim period during such fiscal year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “2024 Annual Report”), as filed with the SEC. Amounts related to disclosure of June 30, 2024 balances within these interim condensed consolidated financial statements were derived from the audited consolidated financial statements and notes thereto included in the 2024 Annual Report.
Fair Value Measurement
The Accounting Standards Codification ("ASC") Fair Value Measurements and Disclosures Topic 820 ("ASC 820") creates a single definition of fair value for financial reporting. The rules associated with ASC 820 state that valuation techniques consistent with the market approach, income approach, and/or cost approach should be used to estimate fair value. Selection of a valuation technique, or multiple valuation techniques, depends on the nature of the asset or liability being valued, as well as the availability of data. (See Note 3.)
Concentration of Credit Risk
Cash is maintained at financial institutions, and, at times, balances exceed federally insured limits. The Company has not experienced any losses related to these balances.
10
Assets that potentially subject the Company to concentrations of credit risk consist principally of receivables, loans of inventory to customers, and inventory hedging transactions. Based on an assessment of credit risk, the Company typically grants collateralized credit to its customers. Credit risk with respect to loans of inventory to customers is minimal. The Company enters into inventory hedging transactions, principally utilizing metals commodity futures contracts traded on national futures exchanges or forward contracts with credit worthy financial institutions. All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions. Substantially all of these transactions are secured by the underlying metals positions.
Foreign Currency
The functional currency of the Company is the United States dollar ("USD"). All transactions in foreign currencies are recorded in USD at the then-current exchange rate(s). Upon settlement of the underlying transaction, all amounts are remeasured to USD at the current exchange rate on date of settlement. All unsettled foreign currency transactions that remain in accounts receivable and trade account payables are remeasured to USD at the period end exchange rates. Foreign currency remeasurement gains and losses are recorded in the current period net income.
The Company has three foreign subsidiaries that generate foreign currency remeasurement gains and losses: AMTAG, LPM and SGB. Because these entities have a functional currency of USD, foreign currency remeasurement gains and losses from these foreign subsidiaries are recorded in net income.
For the Company’s foreign-based equity method investments, the proportionate share of the investee’s income is translated into USD at the average exchange rate for the period and the investment is translated using the exchange rate as of the end of the reporting period. The unrealized gains and losses associated with the translation of the investment are deferred in accumulated other comprehensive income on the Company's condensed consolidated balance sheets.
To manage the effect of foreign currency exchange fluctuations, the Company utilizes foreign currency forward contracts. These derivatives generate gains and losses when settled and/or marked-to-market.
Business Combinations
The Company accounts for business combinations by applying the acquisition method in accordance with Business Combinations Topic 805 of the ASC (“ASC 805”). The Company evaluates each purchase transaction to determine whether the acquired assets meet the definition of a business. Transaction costs related to the acquisition of a business are expensed as incurred and excluded from the fair value of consideration transferred. The identifiable assets acquired, liabilities assumed and noncontrolling interests, if any, in an acquired entity are recognized and measured at their estimated fair values. The excess of the fair value of consideration transferred over the fair values of identifiable assets acquired, liabilities assumed and noncontrolling interests, if any, in an acquired entity is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets and liabilities. Net cash paid to acquire a business is classified as investing activities on the accompanying condensed consolidated statements of cash flows.
In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under ASC Topic 480, Distinguishing Liabilities from Equity, we recognize a liability equal to the fair value of the expected contingent payments as of the acquisition date. We remeasure this liability each reporting period, with the resulting changes recorded as selling, general, and administrative expenses. The assumptions used in estimating fair value of contingent consideration liabilities require significant judgment; the use of different assumptions and judgments could result in a materially different estimate of fair value which may have a material impact on our results from operations and financial position.
Variable Interest Entity
A variable interest entity ("VIE") is a legal entity that has either (i) a total equity investment that is insufficient to finance its activities without additional subordinated financial support or (ii) whose equity investors as a group lack the ability to control the entity’s activities or lack the ability to receive expected benefits or absorb obligations in a manner that is consistent with their investment in the entity.
A VIE is consolidated for accounting purposes by its primary beneficiary, which is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates VIEs when it is deemed to be the primary beneficiary. Management regularly reviews and re-evaluates its previous determinations regarding whether it holds a variable interest in potential VIEs, the status of an entity as a VIE, and whether the Company is required to consolidate such VIEs in its condensed consolidated financial statements.
11
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2024 and June 30, 2024.
Allowance for Credit Losses
On
The Company sets credit and position risk limits based on management's judgments of the customer's creditworthiness and regularly monitors its credit arrangements. These limits include gross position limits for counterparties engaged in sales and purchase transactions with the Company. They also include collateral limits for different types of sale and purchase transactions that counterparties may engage in from time to time.
ASC 326 provides a practical expedient for assets secured by collateral when repayment is expected to be provided substantially through the sale of the collateral in the event of the borrower's financial difficulty. In these arrangements, a reporting entity may estimate the expected credit losses by comparing the fair value of the collateral as of the balance sheet date to the asset’s amortized cost basis. In situations when the fair value of the collateral is equal to or greater than the amortized cost, a reporting entity may determine that there are no expected credit losses. The Company applies the practical expedient based on collateral maintenance provisions in estimating an allowance for credit losses for its secured loan receivables activity. The Company has not historically experienced credit losses related to its lending activity, and since it does not expect any future losses, no allowance has been recorded for this asset class. We expect trends and business practices to continue in a manner consistent with historical activity.
The Company has not historically experienced credit losses related to its other receivables activity; including (i) customer trade receivables, (ii) wholesale trade advances, and (iii) due from brokers, and, accordingly, no allowance has been recorded for these asset classes.
Precious Metals Held Under Financing Arrangements
The Company enters into arrangements with certain customers under which it purchases precious metals from the customers which are subject to repurchase by the customer at the spot value of the product on the repurchase date. The precious metals purchased under these arrangements consist of rare and unique items, and therefore the Company accounts for these transactions as precious metals held under financing arrangements, which generate financing income rather than revenue earned from precious metals inventory sales. In these repurchase arrangements, the Company holds legal title to the metals and earns financing income for the duration of the agreement.
These arrangements are typically terminable by either party upon
Inventories
The Company's inventory, which consists primarily of bullion and bullion coins, is acquired and initially recorded at cost and then marked to fair market value. The fair market value of the bullion and bullion coins comprises two components: (i) published market values attributable to the cost of the raw precious metal, and (ii) the market value of the premium, which is attributable to the incremental value of the product in its finished goods form. The market value attributable solely to such premium is readily determinable by reference to multiple sources.
The Company’s inventory, except for certain lower of cost or net realizable value basis products (as discussed below), are subsequently recorded at their fair market values, that is, "marked-to-market." The daily changes in the fair market value of our inventory are offset by daily changes in the fair market value of hedging derivatives that are taken with respect to our inventory positions; both the change in the fair market value of the inventory and the change in the fair market value of these derivative instruments are recorded in cost of sales in the condensed consolidated statements of income.
12
While the premium component of our bullion coins included in inventory is marked-to-market, our commemorative coin inventory, including its premium component, is held at the lower of cost or net realizable value, because the value of commemorative coins is influenced more by supply and demand determinants than by the underlying spot price of the precious metal content of the commemorative coins. Unlike our bullion coins, the value of commemorative coins is not subject to the same level of volatility as bullion coins because our commemorative coins typically carry a substantially higher premium over the spot metal price than bullion coins. Neither the commemorative coin inventory nor the premium component of our inventory is hedged. (See Note 6.)
Leased Right of Use Assets
We lease warehouse space, office facilities, and equipment. Our operating leases with terms longer than twelve months are recorded at the sum of the present value of the lease's fixed minimum payments as operating lease right of use assets ("ROU assets") in the Company’s condensed consolidated balance sheets. Lease terms include all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Our lease agreements do not contain any significant residual value guarantees or material restrictive covenants. Our finance leases are another type of ROU asset, but are classified in the Company’s condensed consolidated balance sheets as a component of property, plant, and equipment at the present value of the lease payments. Finance leases were not material during any period presented.
The ROU asset amounts include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by lease incentives. We use our incremental borrowing rate as the discount rate to determine the present value of the lease payments for leases, as our leases do not have readily determinable implicit discount rates. Our incremental borrowing rate is the rate of interest that we would incur to borrow on a collateralized basis over a similar term and amount in a similar economic environment.
Operating lease cost is recognized on a straight-line basis over the lease term. The depreciable life of ROU assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. (See Note 7.)
For a lease modification, an evaluation is performed to determine if it should be treated as either a separate lease or a change in the accounting of an existing lease. Any amounts related to a modified lease are reflected as an operating lease ROU asset or related operating lease liability in our condensed consolidated balance sheet.
Property, Plant, and Equipment
Property, plant, and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using a straight-line method based on the estimated useful lives of the related assets, ranging from
The Company reviews the carrying value of these assets for impairment whenever events and circumstances indicate that the carrying value of the asset may not be recoverable. In evaluating for impairment, the carrying value of each asset or group of assets is compared to the undiscounted estimated future cash flows expected to result from its use and eventual disposition. An impairment loss is recognized for the difference when the carrying value exceeds the discounted estimated future cash flows. The factors considered by the Company in performing this assessment include current and projected operating results, trends and prospects, the manner in which these assets are used, and the effects of obsolescence, demand and competition, as well as other economic factors.
Finite-lived Intangible Assets
Finite-lived intangible assets consist primarily of customer relationships, developed technology, and non-compete agreements. Certain existing customer relationships intangible assets are amortized in a non-linear manner which best reflects our estimate of the pattern in which the economic benefits of the assets are consumed. All other intangible assets subject to amortization are amortized using the straight-line method over their useful lives, which are estimated to be
Goodwill and Indefinite-lived Intangible Assets
Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired. Goodwill and other indefinite-lived intangibles (such as trade names, trademarks, and domain names) are not subject to amortization, but are evaluated for impairment at least annually. For tax purposes, goodwill acquired in connection with a taxable asset acquisition is generally deductible.
13
The Company evaluates its goodwill and other indefinite-lived intangibles for impairment in the fourth quarter of the fiscal year (or more frequently if indicators of potential impairment exist) in accordance with ASC 350. Goodwill is reviewed for impairment at a reporting unit level, which for the Company, corresponds to the Company’s operating segments.
Evaluation of goodwill for impairment
The Company has the option to first qualitatively assess whether relevant events and circumstances make it more likely than not that the fair value of the reporting unit's goodwill is less than its carrying value. A qualitative assessment includes analyzing current economic indicators associated with a particular reporting unit such as changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, among others, to determine if there would be a significant decline to the fair value of a particular reporting unit. If the qualitative assessment indicates it is not more likely than not that goodwill is impaired, no further testing is required.
If, based on this qualitative assessment, management concludes that goodwill is more likely than not to be impaired, or elects not to perform the qualitative assessment, then it is required to perform a quantitative analysis to determine the fair value of the business, and compare the calculated fair value of the reporting unit with its carrying amount, including goodwill. If through this quantitative analysis the Company determines the fair value of a reporting unit exceeds its carrying amount, the goodwill of the reporting unit is considered not to be impaired. If the Company concludes that the fair value of the reporting unit is less than its carrying value, a goodwill impairment loss will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. (See Note 9.)
Evaluation of indefinite-lived intangible assets for impairment
The Company evaluates its indefinite-lived intangible assets (i.e., trade names, trademarks, and domain names) for impairment. In assessing its indefinite-lived intangible assets for impairment, the Company has the option to first perform a qualitative assessment to determine whether events or circumstances exist that lead to a determination that it is unlikely that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If the Company determines that it is unlikely that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company is not required to perform any additional tests in assessing the asset for impairment. However, if the Company concludes otherwise or elects not to perform the qualitative assessment, then it is required to perform a quantitative analysis to determine if the fair value of an indefinite-lived intangible asset is less than its carrying value. If through this quantitative analysis the Company determines the fair value of an indefinite-lived intangible asset exceeds its carrying amount, the indefinite-lived intangible asset is considered not to be impaired. If the Company concludes that the fair value of an indefinite-lived intangible asset is less than its carrying value, an impairment loss will be recognized for the amount by which the carrying amount exceeds the indefinite-lived intangible asset’s fair value.
The methods used to estimate the fair value measurements of the Company’s reporting units and indefinite-lived intangible assets include those based on the income approach (including the discounted cash flow and relief-from-royalty methods) and those based on the market approach (primarily the guideline transaction and guideline public company methods). (See Note 9.)
Long-Term Investments
Investments in privately-held entities are accounted for using the equity method when the Company has significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between
Investments in privately-held entities for which the Company has little or no influence over the investee are initially recorded at cost. Because the investments do not have a readily determinable fair value, the Company has elected to measure the investments at cost minus impairments, if any, with changes recognized in net income. If the Company identifies observable price changes in orderly transactions for an identical or a similar investment, the Company’s investment will be measured at fair value as of the date the observable transaction occurs.
We evaluate our long-term investments for impairment quarterly or whenever events or changes in circumstances indicate that a decline in the fair value of these assets is determined to be other-than-temporary. Additionally, the Company performs an ongoing evaluation of the investments with which the Company has variable interests to determine if any of these entities are VIEs that are required to be consolidated. None of the Company’s long-term investments were VIEs as of December 31, 2024 and June 30, 2024.
14
Accumulated Other Comprehensive Income
For the Company’s foreign-based equity method investments, the proportionate share of the investee’s income is translated into U.S. dollars at the average exchange rate for the period and the investment is translated using the exchange rate as of the end of the reporting period. Foreign currency translation gains and losses associated with this activity are deferred and included as a component of accumulated other comprehensive income in the accompanying condensed consolidated balance sheets.
Treasury Stock
The Company periodically purchases its own common stock that is traded on public markets as part of announced stock repurchase programs. The repurchased common stock is classified as treasury stock on the consolidated balance sheets and held at cost. The direct costs incurred to acquire treasury stock are treated like stock issue costs and added to the cost of the treasury stock, which includes applicable fees and taxes. Other than the shares issued to acquire LPM in February 2024, which we subsequently repurchased in November 2024, there have been no reissuances of treasury stock.
Noncontrolling Interests
The Company’s condensed consolidated financial statements include entities in which the Company has a controlling financial interest. Noncontrolling interest is the portion of equity (net assets) in an entity in which the Company has a controlling financial interest that is not attributable, directly or indirectly, to the Company. Such noncontrolling interest is reported on the condensed consolidated balance sheets within equity, separately from the Company’s equity. On the condensed consolidated statements of income, revenues, expenses and net income or loss from the less-than-wholly owned subsidiary are reported at their consolidated amounts, including both the amounts attributable to the Company and the noncontrolling interest. Income or loss is allocated to the noncontrolling interest based on its weighted-average ownership percentage for the applicable period. The condensed consolidated statements of equity include beginning balances, activity for the period and ending balances for each component of stockholders’ equity, noncontrolling interest and total equity.
Revenue Recognition
Settlement Date Accounting
Substantially all of the Company’s sales of precious metals are conducted using sales contracts that meet the definition of derivative instruments in accordance with Derivatives and Hedging Topic 815 of the ASC ("ASC 815"). The contract underlying the Company's commitment to deliver precious metals is referred to as a “fixed-price forward commodity contract” because the price of the commodity is fixed at the time the order is placed. Revenue is recognized on the settlement date, which is defined as the date on which: (i) the quantity, price, and specific items being purchased have been established, (ii) metals have been delivered to the customer, and (iii) payment has been received or is covered by the customer’s established credit limit with the Company.
All derivative instruments are marked-to-market during the interval between the order date and the settlement date, with the changes in the fair value charged to cost of sales. The Company’s hedging strategy to mitigate the market risk associated with its sales commitments is described separately below under the caption “Hedging Activities.”
Types of Orders that are Physically Delivered
The Company’s contracts to sell precious metals to customers are usually settled with the physical delivery of metals to the customer, although net settlement (i.e., settlement at an amount equal to the difference between the contract value and the market price of the metal on the settlement date) is permitted. Below is a summary of the Company’s major order types and the key factors that determine when settlement occurs and when revenue is recognized for each type:
15
In general, unshipped orders for which a customer advance has been received by the Company are classified as advances from customers. Orders that have been paid for and shipped, but not yet delivered to the customer are classified as deferred revenue. Both customer advances and deferred revenue are shown, in the aggregate, as deferred revenue and other advances in the consolidated financial statements. (See Note 11.)
Hedging Activities
The value of our inventory and our purchase and sale commitments are linked to the prevailing price of the underlying precious metal commodity. The Company seeks to minimize the effect of price changes of the underlying commodity and enters into inventory hedging transactions, principally utilizing metals commodity forward contracts with credit worthy financial institutions or futures contracts traded on national futures exchanges. The Company hedges by each commodity type (gold, silver, platinum, and palladium). All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions.
Commodity forward and futures contracts entered into for hedging purposes are recorded at fair value on the trade date and are marked-to-market each period. The difference between the original contract values and the market values of these contracts are reflected as derivative assets or derivative liabilities in the condensed consolidated balance sheets at fair value, with the corresponding unrealized gains or losses included as a component of cost of sales. When these contracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses for forward contracts are recorded in revenue and cost of sales, respectively, and the net realized gains and losses for futures are recorded in cost of sales.
The Company enters into forward and futures contracts solely for the purpose of hedging our inventory holding risk, and not for speculative market purposes. The Company’s gains and losses on derivative instruments are substantially offset by the changes in the fair market value of the underlying precious metals inventory, which is also recorded in cost of sales in the condensed consolidated statements of income. (See Note 12.)
Other Sources of Revenue
The Company recognizes its storage, logistics, licensing, and other services revenues in accordance with ASC 606, Revenue from Contracts with Customers, which follows five basic steps to determine whether revenue can be recognized: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company recognizes revenue when (or as) it satisfies its obligation by transferring control of the good or service to the customer. This is either satisfied over time or at a point in time. A performance obligation is satisfied over time if one of the following criteria are met: (i) the customer simultaneously receives and consumes the benefits as the Company performs, (ii) the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the Company's performance does not create an asset with an alternative use to the Company, and the Company has an enforceable right for payment of performance completed-to-date. When none of those is met, a performance obligation is satisfied at a point-in-time.
The Company recognizes storage revenue as the customer simultaneously receives and consumes the storage services (e.g., fixed storage fees based on the passage of time). The Company recognizes logistics (i.e., fulfillment) revenue when the customer receives the benefit of the services. The Company recognizes advertising and consulting revenues when the service is performed, and the benefit of the service is received by the customer. In aggregate, these types of service revenues account for less than 1% of the Company's consolidated revenues.
16
Interest Income
In accordance with Interest Topic 835 of the ASC ("ASC 835"), the following are interest income generating activities of the Company:
Interest Expense
The Company accounts for interest expense on the following arrangements in accordance with ASC 835:
Leased metal transactions are a similar type of transaction, except the Company is not required to pledge other precious metal as collateral for the precious metal received. The fees charged by the third-party are based on the spot value of the pool metal received.
Both borrowed and leased metal transactions provide an additional source of liquidity, as the Company usually monetizes the metals received under such arrangements. Repayment is usually in the same form as the metals advanced, but may be settled in cash.
17
Amortization of Debt Issuance Costs
Debt issuance costs incurred in connection with the issuance of the AMCF Notes (see Note 15) have been included as a component of the carrying amount of the debt, and Trading Credit Facility debt issuance costs are included in prepaid expenses and other assets in the Company's condensed consolidated balance sheets. Debt issuance costs are amortized to interest expense over the contractual term of the debt. Debt issuance costs of the Trading Credit Facility are amortized on a straight-line basis, while all other debt issuance costs are amortized using the effective interest method. Amortization of debt issuance costs included in interest expense was $
Earnings from Equity Method Investments
The Company's proportional interest in the reported earnings or losses from equity method investments is shown on the condensed consolidated statements of income as earnings or losses from equity method investments.
Other Income, Net
The Company's other income, net is comprised of royalty and consulting income, which is recognized when earned, gains or losses on other investments, and fair value adjustments to our acquisition-related contingent consideration liability.
Advertising
Advertising and marketing costs consist primarily of internet advertising, online marketing, direct mail, print media, and television commercials and are expensed when incurred. Advertising costs totaled $
Shipping and Handling Costs
Shipping and handling costs represent costs associated with shipping product to customers and receiving product from vendors and are included in cost of sales in the consolidated statements of income. Shipping and handling costs totaled $
Share-Based Compensation
Equity-based awards
The Company accounts for equity awards under the provisions of Compensation - Stock Compensation Topic 718 of the ASC ("ASC 718"), which establishes fair value-based accounting requirements for share-based compensation to employees. ASC 718 requires the Company to recognize the grant-date fair value of stock options and other equity-based compensation issued to employees as expense over the service period in the Company's condensed consolidated financial statements. The expense is adjusted (excluding awards settleable in cash) for actual forfeitures of unvested awards as they occur. For equity awards that contain a performance condition other than market condition, when the outcome of the performance condition is determined to be not probable, no compensation expense is recognized, and any previously recognized compensation expense is reversed. (See Note 17.)
Liability-based awards
The Company has granted a cash-incentive award based on the total shareholder return of the Company's common stock determined at the end of the award's performance period. Because the award will be settled in cash, the Company accounts for it as a liability-based award and, as such, expense relating to this award is required to be measured at fair value at each reporting date until the date of settlement. (See Note 17.)
18
Income Taxes
As part of the process of preparing its consolidated financial statements, the Company is required to estimate its provision for income taxes in each of the tax jurisdictions in which it conducts business, in accordance with Income Taxes Topic 740 of the ASC ("ASC 740"). The Company computes its annual tax rate based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it earns income. Significant judgment is required in determining the Company's annual tax rate and in evaluating uncertainty in its tax positions. The Company has adopted the provisions of ASC 740-10, which clarifies the accounting for uncertain tax positions. ASC 740-10 requires that the Company recognizes the impact of a tax position in the financial statements if the position is not more likely than not to be sustained upon examination based on the technical merits of the position. The Company recognizes interest and penalties related to certain uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and income taxes payable in the Company’s condensed consolidated balance sheets. See Note 13 for more information on the Company’s accounting for income taxes.
Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. The factors used to assess the likelihood of realization include the Company's forecast of the reversal of temporary differences, future taxable income, and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company's effective tax rate on future earnings. Based on our assessment, it appears more likely than not that all of the net deferred tax assets will be realized through future taxable income.
Earnings per Share ("EPS")
The Company calculates basic EPS by dividing net income by the weighted-average number of common shares outstanding during the year. Diluted EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the year, adjusted for the potentially dilutive effect of stock options, restricted stock units (“RSUs"), and deferred stock units (“DSUs") using the treasury stock method.
The Company considers participating securities in its calculation of EPS. Under the two-class method of calculating EPS, earnings are allocated to both common shares and participating securities. The Company’s participating securities include vested RSU and DSU awards. Unvested RSU and DSU awards are not considered participating securities as they are forfeitable until the vesting date.
A reconciliation of shares used in calculating basic and diluted earnings per common share is presented below (in thousands):
|
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Three Months Ended December 31, |
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Six Months Ended December 31, |
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|
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2024 |
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2023 |
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2024 |
|
|
2023 |
|
||||
Basic weighted-average shares of common stock outstanding |
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|
||||
Effect of common stock equivalents |
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Diluted weighted-average shares outstanding |
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||||
The anti-dilutive shares excluded from the table above were
Recent Accounting Pronouncements
From time to time, the Financial Accounting Standards Board ("FASB") or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASC are communicated through issuance of an Accounting Standards Update ("ASU").
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates the guidance on segment disclosures to require entities to disclose significant segment expenses and other segment items, as well as the title and position of its chief operating decision maker. This update will be applied retrospectively and is effective for the Company's annual reporting period for its fiscal year which began on July 1, 2024. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements, but we expect the adoption of the standard to impact certain of our segment reporting disclosures.
19
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates the guidance on income tax disclosures to require entities to disclose specific categories within the rate reconciliation, provide additional information for reconciling items that meet certain quantitative thresholds, and provide additional information about income taxes paid. This update is effective for the Company for its fiscal year beginning on July 1, 2025; early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Topic 220), which requires additional disclosures, for interim and annual reporting, of expenses by nature, such as inventory purchases, employee compensation, depreciation and amortization, and selling expenses. This update is effective for the Company for its fiscal year beginning July 1, 2027 and interim periods thereafter, and may be applied either prospectively or retrospectively. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
Management does not believe that any other recently issued, but not yet effective for the Company, accounting pronouncement, if currently adopted would have a material effect on the Company's condensed consolidated financial statements.
3. ASSETS AND LIABILITIES, AT FAIR VALUE
Fair Value of Financial Instruments
A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity. The fair value of financial instruments represents amounts that would be received upon the sale of those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk adjusted discount rates, and available observable and unobservable inputs.
For most of the Company's financial instruments, the carrying amount approximates fair value. The carrying amounts of cash, receivables, secured loans receivable, accounts payable and other current liabilities, accrued liabilities, and income taxes payable approximate fair value due to their short-term nature. The carrying amounts of derivative assets and derivative liabilities, liabilities on borrowed metals and product financing arrangements are marked-to-market on a daily basis to fair value. The carrying amounts of lines of credit approximate fair value based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities.
Valuation Hierarchy
In determining the fair value of its financial instruments, the Company employs a fair value hierarchy that prioritizes the inputs for the valuation techniques used to measure fair value. ASC 820 established a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
20
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The significant assumptions used to determine the carrying value and the related fair value of the assets and liabilities measured at fair value on a recurring basis are described below:
Inventories. The Company's inventory, which consists primarily of bullion and bullion coins, is acquired and initially recorded at cost and then marked to fair market value. The fair market value of the bullion and bullion coins comprises two components: (i) published market values attributable to the cost of the raw precious metal, and (ii) the market value of the premium, which is attributable to the incremental value of the product in its finished goods form. The market value attributable solely to such premium is readily determinable by reference to multiple sources. Except for commemorative coin inventory, which are included in inventory at the lower of cost or net realizable value, the Company’s inventory is subsequently recorded at their fair market values on a daily basis. The fair value for commodities inventory (i.e., inventory excluding commemorative coins) is determined using pricing data derived from the markets on which the underlying commodities are traded. Precious metals commodities inventory is classified in Level 1 of the valuation hierarchy.
Precious Metals Held Under Financing Arrangements. The Company enters into arrangements with certain customers under which A-Mark purchases precious metals from the customers which are subject to repurchase by the customer at the spot value of the product on the repurchase date. The precious metals purchased under these arrangements consist of rare and unique items, and therefore the Company accounts for these transactions as precious metals held under financing arrangements, which generate financing income rather than revenue earned from precious metals inventory sales. In these repurchase arrangements, the Company holds legal title to the metals and earns financing income for the duration of the agreement. The fair value for precious metals held under financing arrangements (a commodity, like inventory above) is determined using pricing data derived from the markets on which the underlying commodities are traded. Precious metals held under financing arrangements are classified in Level 1 of the valuation hierarchy.
Derivatives. Futures contracts, forward contracts, and open sale and purchase commitments are valued at their fair values, based on the difference between the quoted market price and the contractual price (i.e., intrinsic value) and are included within Level 1 of the valuation hierarchy.
Margin and Borrowed Metals Liabilities. Margin and borrowed metals liabilities consist of the Company's commodity obligations to margin customers and suppliers, respectively. Margin liabilities and borrowed metals liabilities are carried at fair value, which is determined using quoted market pricing and data derived from the markets on which the underlying commodities are traded. Margin and borrowed metals liabilities are classified in Level 1 of the valuation hierarchy.
Product Financing Arrangements. Product financing arrangements consist of financing agreements for the transfer and subsequent re-acquisition of the sale of gold and silver at an agreed-upon price based on the spot price with a third-party. Such transactions allow the Company to repurchase this inventory upon demand. The third-party charges monthly interest as a percentage of the market value of the outstanding obligation, which is carried at fair value. The obligation is stated at the amount required to repurchase the outstanding inventory. Fair value is determined using quoted market pricing and data derived from the markets on which the underlying commodities are traded. Product financing arrangements are classified in Level 1 of the valuation hierarchy.
Acquisition-related Contingent Consideration. We may be required to pay contingent consideration up to $
The contingent consideration liability related to our acquisition of LPM is measured at fair value at each reporting period using a Monte Carlo Simulation model ("MCS model") with Level 3 unobservable inputs including estimated future cash flows generated by LPM, discount rates, and earnings volatility. Key assumptions used in the MCS model as of December 31, 2024 were an EBITDA risk premium of
21
The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis, aggregated by each fair value hierarchy level (in thousands):
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|
December 31, 2024 |
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Quoted Price in Active Markets for Identical Instruments |
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Significant Other Observable Inputs |
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Significant Unobservable Inputs |
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Total |
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Assets: |
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|
|
|
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|
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|
||||
Inventories(1) |
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$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Precious metals held under financing arrangements |
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|
|
|
|
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|
|
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|
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Derivative assets — open sale and purchase commitments, net |
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|
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Derivative assets — futures contracts |
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|
||||
Derivative assets — forward contracts |
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|
|
|
|
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|
|
|
|
|
||||
Total assets, valued at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
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|
|
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|
|
|
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|
||||
Liabilities on borrowed metals |
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$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product financing arrangements |
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|
|
|
|
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|
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Derivative liabilities — open sale and purchase commitments, net |
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Derivative liabilities — margin accounts |
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Derivative liabilities — futures contracts |
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Acquisition-related contingent consideration |
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|
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|
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|
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Total liabilities, valued at fair value |
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$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
June 30, 2024 |
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|||||||||||||
|
|
Quoted Price in Active Markets for Identical Instruments |
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Significant Other Observable Inputs |
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Significant Unobservable Inputs |
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Total |
|
||||
Assets: |
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|
|
|
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|
|
|
||||
Inventories (1) |
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$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Precious metals held under financing arrangements |
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|
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|
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|
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Derivative assets — open sale and purchase commitments, net |
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|
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Derivative assets — futures contracts |
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Derivative assets — forward contracts |
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|
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|
||||
Total assets, valued at fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities on borrowed metals |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product financing arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative liabilities — open sale and purchase commitments, net |
|
|
|
|
|
|
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|
|
|
|
|
||||
Derivative liabilities — margin accounts |
|
|
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|
||||
Derivative liabilities — futures contracts |
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|
||||
Derivative liabilities — forward contracts |
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|
||||
Acquisition-related contingent consideration |
|
|
|
|
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|
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|
|
|
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|
||||
Total liabilities, valued at fair value |
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$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
There were no transfers in or out of Level 2 or 3 from other levels within the fair value hierarchy during the reported periods.
Assets Measured at Fair Value on a Non-Recurring Basis
Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only under certain circumstances. These include (i) investments in private companies when there are identifiable events or changes in circumstances that may have a significant adverse impact on the fair value of these assets, (ii) equity method investments that are remeasured to the acquisition-date fair value upon the Company obtaining a controlling interest in the investee during a step acquisition, (iii) property, plant, and equipment and definite-lived intangibles, (iv) goodwill, and (v) indefinite-lived intangibles, all of which are written down to fair value when they are held for sale or determined to be impaired.
22
Our non-recurring valuations use significant unobservable inputs and significant judgments and therefore fall under Level 3 of the fair value hierarchy. The valuation inputs include assumptions on the appropriate discount rates, long-term growth rates, relevant comparable company earnings multiples, and the amount and timing of expected future cash flows. The cash flows employed in the analyses are based on the Company’s estimated outlook and various growth rates. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective equity method investment, asset group, or reporting unit. In assessing the reasonableness of its determined fair values, the Company evaluates its results against other value indicators, such as comparable transactions and comparable public company trading values.
4. RECEIVABLES, NET
Receivables, net consisted of the following (in thousands):
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|
December 31, 2024 |
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June 30, 2024 |
|
||
Customer trade receivables |
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$ |
|
|
$ |
|
||
Wholesale trade advances |
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|
|
|
|
|
||
Due from brokers and other |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Customer Trade Receivables. Customer trade receivables represent short-term, non-interest bearing amounts due from precious metal sales, advances related to financing products, and other secured interests in assets of the customer.
Wholesale Trade Advances. Wholesale trade advances represent advances of various bullion products and cash advances for purchase commitments of precious metal inventory. Typically, these advances are unsecured, short-term, and non-interest bearing, and are made to wholesale metals dealers and government mints.
Due from Brokers and Other. Due from brokers and other consists of the margin requirements held at brokers related to open futures contracts (see Note 12) and other receivables.
5. SECURED LOANS RECEIVABLE
Below is a summary of the carrying value of our secured loans (in thousands):
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Secured loans originated |
|
$ |
|
|
$ |
|
||
Secured loans originated - with a related party |
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|
|
|
|
|
||
|
|
|
|
|
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|
||
Secured loans acquired |
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|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Secured Loans - Originated: Secured loans include short-term loans, which include a combination of on-demand lines and short-term facilities. These loans are fully secured by the customer's assets, which predominantly include bullion, numismatic, and semi-numismatic material, and are typically held in safekeeping by the Company. See Note 14 for further information regarding our secured loans made to related parties.
Secured Loans - Acquired: Secured loans also include short-term loans, which include a combination of on-demand lines and short-term facilities that are purchased from our customers. The Company acquires a portfolio of their loan receivables at a price that approximates the outstanding balance of each loan in the portfolio, as determined on the effective transaction date. Each loan in the portfolio is fully secured by the borrower's assets, which could include bullion, numismatic or semi-numismatic material, and are typically held in safekeeping by the Company. The seller of the loan portfolio generally retains the responsibility for the servicing and administration of the loans.
As of December 31, 2024 and June 30, 2024, our secured loans carried weighted-average effective interest rates of
The secured loans that the Company generates with its active customers are reflected as an operating activity on the condensed consolidated statements of cash flows. The secured loans that the Company generates with borrowers that are not active customers are reflected as an investing activity on the condensed consolidated statements of cash flows as secured loans receivables, net. For the secured loans that (i) are reflected as an investing activity and have terms that allow the borrowers to increase their loan balance (at the discretion of the Company) based on the excess value of their collateral compared to their aggregate principal balance of loan, and (ii) are repayable on demand or in the short-term, the borrowings and repayments are netted on the condensed consolidated statements of cash flows.
23
Credit Quality of Secured Loans Receivables and Allowance for Credit Losses
General
The Company's secured loan receivables portfolio comprises loans with similar credit risk profiles, which enables the Company to apply a standard methodology to determine the credit quality for each loan and the allowance for credit losses, if any.
The credit quality of each loan is generally determined by the collateral value assessment, loan-to-value (“LTV”) ratio (that is, the principal amount of the loan divided by the estimated value of the collateral) and the type (or class) of secured material. All loans are fully secured by precious metal bullion, numismatic and semi-numismatic collateral, or graded sports cards, which remains in the physical custody of the Company for the duration of the loan. The term of the loans is generally
When an account is in default or if a margin call has not been met on a timely basis, the loan is considered non-performing and the Company has the right to liquidate the borrower's collateral in order to satisfy the unpaid balance of the outstanding loans, including accrued and unpaid interest.
Class and Credit Quality of Loans
The three classes of secured loan receivables are defined by collateral type: (i) bullion, (ii) numismatic and semi-numismatic and (iii) graded sports cards. The Company required LTV ratios vary with the class of loans. Typically, the Company requires an LTV ratio of approximately
The Company's secured loans by portfolio class, which align with internal management reporting, were as follows (in thousands):
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||||||||||
Bullion |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Numismatic and semi-numismatic |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Graded sports cards |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
|
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Due to the nature of market fluctuations of precious metal commodity prices, we monitor the bullion collateral value of each loan on a daily basis, based on spot price of precious metals. Numismatic and graded sports cards collateral values are updated by numismatic and graded sports cards specialists typically within every
Generally, we initiate the margin call process when the outstanding loan balance is in excess of
Loans with LTV ratios of less than 75% are generally considered to be higher quality loans.
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||||||||||
Loan-to-value of less than 75% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Loan-to-value of 75% or more |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
|
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
The Company had
Non-Performing Loans/Impaired Loans
Historically, the Company has not established an allowance for any credit losses because the Company maintains sufficient collateral to satisfy amounts due.
24
Non-performing loans have the highest probability for credit loss. If needed, an allowance for secured loan credit losses attributable to non-performing loans is recorded based on the most probable source of repayment, which is normally the liquidation of collateral. Due to the accelerated liquidation terms of the Company's loan portfolio, past due loans are generally liquidated within 90 days of default. In the event a loan were to become non-performing and the collateral is not sufficient to satisfy amounts due, the Company would determine a reserve to reduce the carrying balance to its estimated net realizable value. As of December 31, 2024 and June 30, 2024, the Company had
A loan is considered impaired if it is probable, based on current information and events, that the Company will be unable to collect all amounts due according to the contractual terms of the loan. Customer loans are reviewed for impairment and include loans that are non-performing, or if the customer is in bankruptcy. In the event of an impairment, recognition of interest income would be suspended, and the loan would be placed on non-accrual status at the time. Accrual would be resumed, and previously suspended interest income would be recognized, when the loan becomes contractually current and/or collection doubts are removed. Cash receipts on impaired loans are recorded first against the principal and then to any unrecognized interest income. For the three and six months ended December 31, 2024, the Company incurred
6. INVENTORIES
Our inventory consists of the precious metals that the Company has physically received, and inventory held by third-parties, which, at the Company's option, it may or may not receive.
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Inventory held for sale |
|
$ |
|
|
$ |
|
||
Repurchase arrangements with customers |
|
|
|
|
|
|
||
Consignment arrangements with customers |
|
|
|
|
|
|
||
Commemorative coins, held at lower of cost or net realizable value |
|
|
|
|
|
|
||
Borrowed precious metals |
|
|
|
|
|
|
||
Product financing arrangements |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Inventory Held for Sale. Inventory held for sale represents precious metals, excluding commemorative coin inventory, that have been received by the Company and are not subject to repurchase by or consignment arrangements with third parties, borrowed precious metals, or product financing arrangements. As of December 31, 2024 and June 30, 2024, inventory held for sale totaled $
Repurchase Arrangements with Customers. The Company enters into arrangements with certain customers under which A-Mark sells and then purchases precious metals from the customer which are subject to repurchase by the customer at the fair value of the product on the repurchase date. These initial transactions with the customer do not qualify as sales and are excluded from revenue. Under these arrangements, the Company, which holds legal title to the metals, earns financing income until the time the arrangement is terminated, or the material is repurchased by the customer. In the event of a repurchase by the customer, the Company records a sale.
These arrangements are typically terminable by either party upon 14 days' notice. Upon termination, the customer’s rights to repurchase any remaining inventory is forfeited. As of December 31, 2024 and June 30, 2024, included within inventories is $
Consignment Arrangements with Customers. The Company periodically loans metals to customers on a short-term consignment basis. Inventory loaned under consignment arrangements to customers as of December 31, 2024 and June 30, 2024 totaled $
Commemorative Coins. Our commemorative coin inventory, including its premium component, is held at the lower of cost or net realizable value, because the value of commemorative coins is influenced more by supply and demand determinants than by the underlying spot price of the precious metal content of the commemorative coins. The value of commemorative coins is not subject to the same level of volatility as bullion coins because our commemorative coins typically carry a substantially higher premium over the spot metal price than bullion coins. Our commemorative coins are not hedged and totaled $
25
Borrowed Precious Metals. Borrowed precious metals inventory include: (i) metals held by suppliers as collateral on advanced pool metals, (ii) metals due to suppliers for the use of their consigned inventory, (iii) unallocated metal positions held by customers in the Company’s inventory, and (iv) shortages in unallocated metal positions held by the Company in the supplier’s inventory. Unallocated or pool metal represents an unsegregated inventory position that is due on demand, in a specified physical form, based on the total ounces of metal held in the position. Amounts due under these arrangements require delivery either in the form of precious metals or cash. The Company's inventory included borrowed precious metals with market values totaling $
Product Financing Arrangements. This inventory represents amounts held as security by lenders for obligations under product financing arrangements. The Company enters into a product financing agreement for the transfer and subsequent re-acquisition of gold and silver at an agreed-upon price based on the spot price with a third-party finance company. This inventory is restricted and is held at a custodial storage facility in exchange for a financing fee, paid to the third-party finance company. During the term of the financing, the third-party finance company holds the inventory as collateral, and both parties intend for the inventory to be returned to the Company at an agreed-upon price based on the spot price on the finance arrangement repurchase date. These transactions do not qualify as sales and have been accounted for as financing arrangements in accordance with ASC 470-40 Product Financing Arrangements. The obligation is stated at the amount required to repurchase the outstanding inventory. Both the product financing arrangements and the underlying inventory are carried at fair value, with changes in fair value included in cost of sales in the consolidated statements of income. Such obligations totaled $
The Company mitigates market risk of its physical inventory and open commitments through commodity hedge transactions. (See Note 12.) As of December 31, 2024 and June 30, 2024, the unrealized gains or losses resulting from the difference between market value and cost of physical inventory were gains of $
Premium Component of Inventory
The premium component, at market value, included in the inventory as of December 31, 2024 and June 30, 2024 totaled $
7. LEASES
Components of lease expense were as follows (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Variable lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short term lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Finance lease costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
For the six months ended December 31, 2024, we made cash payments of $
26
The future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities as of December 31, 2024 for our operating leases were as follows (in thousands):
Fiscal Year ending June 30, |
|
Operating Leases |
|
|
|
2025 (remainder) |
|
$ |
|
|
|
2026 |
|
|
|
|
|
2027 |
|
|
|
|
|
2028 |
|
|
|
|
|
2029 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
Total lease payments |
|
|
|
|
|
Imputed interest |
|
|
( |
) |
|
Total operating lease liability |
|
$ |
|
(1) |
|
- current |
|
$ |
|
(2) |
|
- long-term |
|
|
|
(3) |
|
|
|
$ |
|
(1) |
|
For information regarding the Company's related party leases, refer to Note 14.
8. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment consisted of the following (in thousands):
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Computer software |
|
$ |
|
|
$ |
|
||
Plant equipment |
|
|
|
|
|
|
||
Leasehold improvements |
|
|
|
|
|
|
||
Office furniture, and fixtures |
|
|
|
|
|
|
||
Computer equipment |
|
|
|
|
|
|
||
Building and other |
|
|
|
|
|
|
||
Total depreciable assets |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Property and equipment not placed in service |
|
|
|
|
|
|
||
Land |
|
|
|
|
|
|
||
Property, plant, and equipment, net |
|
$ |
|
|
$ |
|
||
Property, plant and equipment depreciation and amortization expense was $
9. GOODWILL AND INTANGIBLE ASSETS
Goodwill is an intangible asset that arises when a company acquires an existing business or assets (net of assumed liabilities) which comprise a business. In general, the amount of goodwill recorded in an acquisition is calculated as the purchase price of the business minus the fair market value of the tangible assets and the identifiable intangible assets, net of the assumed liabilities. Goodwill and intangibles can also be established by push-down accounting. Below is a summary of the significant transactions that generated our goodwill and intangible assets:
27
Carrying Value
The carrying value of goodwill and other purchased intangibles are described below (dollar amounts in thousands):
|
|
|
|
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||||||||||||||||||||||||||
|
|
Estimated Useful Lives |
|
Remaining Weighted-Average Amortization Period |
|
Gross Carrying Amount |
|
|
Accumulated |
|
|
Accumulated |
|
|
Net Book Value |
|
|
Gross Carrying Amount |
|
|
Accumulated |
|
|
Accumulated |
|
|
Net Book Value |
|
||||||||
Identifiable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Existing customer relationships |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
||||||
Developed technology |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||||
Non-compete and other |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||||
Employment agreement |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
||||
Intangibles subject to amortization |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||||||||
Trade names and trademarks |
|
Indefinite |
|
Indefinite |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||||
Domain name |
|
Indefinite |
|
Indefinite |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Identifiable intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill |
|
Indefinite |
|
Indefinite |
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||||
The Company's intangible assets are subject to amortization except for trade names, trademarks, and domain names, which have indefinite lives. Amortization expense related to the Company's intangible assets was $
Impairment
We recorded a non-recurring impairment charge of $
Estimated Amortization
Estimated annual amortization expense related to definite-lived intangible assets for the succeeding five years is as follows (in thousands):
Fiscal Year Ending June 30, |
|
Amount |
|
|
2025 (remainder) |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
|
|
$ |
|
|
28
10. LONG-TERM INVESTMENTS
The following table shows the carrying value and ownership percentage of the Company's investment in privately-held entities accounted for either under the equity or cost method (in thousands):
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
|
||||||||||
Investee |
|
Carrying Value |
|
|
Ownership Percentage |
|
|
Carrying Value |
|
|
Ownership Percentage |
|
|
||||
Pinehurst Coin Exchange, Inc. |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
||||
Sunshine Minting, Inc. |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
||||
Company A |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
||||
Company B |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
||||
Texas Precious Metals, LLC |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
||||
Atkinsons Bullion & Coins |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
||||
APS Investment, LLC (1) |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
||||
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
||||
We consider all of our equity method investees to be related parties. See Note 14 for a summary of the Company's aggregate balances and activity with these related party entities. All of the Company's investees are accounted for using the equity method, with the exception of Company A, which is accounted for using the cost method and is not considered a related party.
11. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
Accounts payable and other current liabilities consisted of the following (in thousands):
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Trade payables to customers |
|
$ |
|
|
$ |
|
||
Other accounts payable |
|
|
|
|
|
|
||
Accounts payable and other payables |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Deferred revenue |
|
$ |
|
|
$ |
|
||
Advances from customers |
|
|
|
|
|
|
||
Deferred revenue and other advances |
|
$ |
|
|
$ |
|
||
As of December 31, 2024 and June 30, 2024, advances from customers included $
12. DERIVATIVE INSTRUMENTS AND HEDGING TRANSACTIONS
The Company is exposed to market risk, such as changes in commodity prices and foreign exchange rates. To manage the volatility related to these exposures, the Company enters into various derivative products, such as forward and futures contracts. By policy, the Company historically has entered into derivative financial instruments for the purpose of hedging substantially all of Company's market exposure to precious metals prices, and not for speculative purposes. The Company’s gains (losses) on derivative instruments are substantially offset by the changes in the fair market value of the underlying precious metals inventory, both of which are recorded in cost of sales in the condensed consolidated statements of income.
Commodity Price Management
The Company manages the value of certain assets and liabilities of its trading business, including trading inventory, by employing a variety of hedging strategies. These strategies include the management of exposure to changes in the market values of the Company's trading inventory through the purchase and sale of a variety of derivative instruments, such as forward and futures contracts.
The Company enters into derivative transactions solely for the purpose of hedging its inventory subject to price risk, and not for speculative market purposes. Due to the nature of the Company's global hedging strategy, the Company is not using hedge accounting as defined under ASC 815, whereby the gains or losses would be deferred and included as a component of other comprehensive income. Instead, gains or losses resulting from the Company's forward and futures contracts and open sale and purchase commitments are reported in the condensed consolidated statements of income as unrealized gains or losses on commodity contracts (a component of cost of sales), with the related unrealized amounts due from or to counterparties reflected as derivative assets or liabilities on the condensed consolidated balance sheets.
29
The Company's trading inventory and purchase and sale transactions consist primarily of precious metal products. The value of these assets and liabilities are marked-to-market daily to the prevailing closing price of the underlying precious metals. The Company's precious metals inventory is subject to fluctuations in market value, resulting from changes in the underlying commodity prices. Inventory purchased or borrowed by the Company is subject to price changes. Inventory borrowed is considered a natural hedge, since changes in value of the metal held are offset by the obligation to return the metal to the supplier.
Open sale and purchase commitments are subject to changes in value between the date the purchase or sale price is fixed (the trade date) and the date the metal is received or delivered (the settlement date). The Company seeks to minimize the effect of price changes of the underlying commodity through the use of forward and futures contracts. The Company’s open sale and purchase commitments typically settle within
The Company's policy is to substantially hedge its inventory position, net of open sale and purchase commitments that are subject to price risk, and regularly enters into precious metals commodity forward and futures contracts with financial institutions to hedge against this risk. The Company uses futures contracts, which typically settle within
The Company’s management sets credit and position risk limits. These limits include gross position limits for counterparties engaged in sales and purchase transactions with the Company. They also include collateral limits for different types of sale and purchase transactions that counterparties may engage in from time to time.
Derivative Assets and Liabilities
The Company's derivative assets and liabilities represent the net fair value of the difference (or intrinsic value) between market values and trade values at the trade date for open precious metals sale and purchase contracts, as adjusted on a daily basis for changes in market values of the underlying metals, until settled. The Company's derivative assets and liabilities also include the net fair value of open precious metals forward and futures contracts. The precious metals forward and futures contracts are settled at the contract settlement date.
All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions (i.e., offsetting derivative instruments). As such, for the Company's derivative contracts with the same counterparty, the receivables and payables have been netted on the condensed consolidated balance sheets. Such derivative contracts include open sale and purchase commitments, futures, forward and margin accounts.
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||||||||||||||||||||||||||
|
|
Gross |
|
|
Amounts |
|
|
Cash |
|
|
Net |
|
|
Gross |
|
|
Amounts |
|
|
Cash |
|
|
Net |
|
||||||||
Nettable derivative assets: |
|
|
|
|||||||||||||||||||||||||||||
Open sale and purchase commitments |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Futures contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Nettable derivative liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Open sale and purchase commitments |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||||
Margin accounts |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
Futures contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Forward contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Gains or Losses on Derivative Instruments
The Company records the derivative at the trade date with corresponding unrealized gains or losses shown as a component of cost of sales in the condensed consolidated statements of income. The Company adjusts the derivatives to fair value on a daily basis until the transactions are settled. When these contracts are net settled, the unrealized gains and losses are reversed, and the realized gains and losses for forward contracts are recorded in revenue and cost of sales, respectively, and the net realized gains and losses for futures contracts are recorded in cost of sales.
30
Below is a summary of the net gains (losses) on derivative instruments (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
||||
Gains (losses) on derivative instruments: |
|
|
|
|
|||||||||||||
Unrealized gains (losses) on open futures commodity and forward contracts and open sale and purchase commitments, net |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|||
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
The Company’s net gains (losses) on derivative instruments, as shown in the table above, were substantially offset by the changes in the fair market value of the underlying precious metals inventory, which were also recorded in cost of sales in the condensed consolidated statements of income.
Summary of Hedging Positions
In a hedging relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value of the underlying hedged item.
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Inventories |
|
$ |
|
|
$ |
|
||
Precious metals held under financing arrangements |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Less unhedgeable inventories: |
|
|
|
|
|
|
||
Commemorative coin inventory, held at lower of cost or net realizable value |
|
|
( |
) |
|
|
( |
) |
Premium on metals position |
|
|
( |
) |
|
|
( |
) |
Precious metal value not hedged |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Commitments at market: |
|
|
|
|
|
|
||
Open inventory purchase commitments |
|
|
|
|
|
|
||
Open inventory sales commitments |
|
|
( |
) |
|
|
( |
) |
Margin sales commitments |
|
|
( |
) |
|
|
( |
) |
In-transit inventory no longer subject to market risk |
|
|
( |
) |
|
|
( |
) |
Unhedgeable premiums on open commitment positions |
|
|
|
|
|
|
||
Borrowed precious metals |
|
|
( |
) |
|
|
( |
) |
Product financing arrangements |
|
|
( |
) |
|
|
( |
) |
Advances on industrial metals |
|
|
|
|
|
|
||
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Precious metal subject to price risk |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Precious metal subject to derivative financial instruments: |
|
|
|
|
|
|
||
Precious metals forward contracts at market values |
|
|
|
|
|
|
||
Precious metals futures contracts at market values |
|
|
|
|
|
|
||
Total market value of derivative financial instruments |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net precious metals subject to commodity price risk |
|
$ |
|
|
$ |
|
||
Notional Balances of Derivatives
The notional balances of the Company's derivative instruments, consisting of contractual metal quantities, are expressed at current spot prices of the underlying precious metal commodity.
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Purchase commitments |
|
$ |
|
|
$ |
|
||
Sales commitments |
|
$ |
( |
) |
|
$ |
( |
) |
Margin sales commitments |
|
$ |
( |
) |
|
$ |
( |
) |
Open forward contracts |
|
$ |
|
|
$ |
|
||
Open futures contracts |
|
$ |
|
|
$ |
|
||
The contract amounts (i.e., notional balances) of the Company's forward and futures contracts and the open sales and purchase commitments are not reflected in the accompanying condensed consolidated balance sheets. The Company records the difference between the market price of the underlying metal or contract and the trade amount at fair value.
31
The Company is exposed to the risk of failure of the counterparties to its derivative contracts. Significant judgment is applied by the Company when evaluating the fair value implications. The Company regularly reviews the creditworthiness of its major counterparties and monitors its exposure to concentrations. As of December 31, 2024, the Company believes its risk of counterparty default is mitigated as a result of such evaluation and the short-term duration of these arrangements.
Foreign Currency Exchange Rate Management
The Company utilizes foreign currency forward contracts to manage the effect of foreign currency exchange fluctuations on its sale and purchase transactions. These contracts generally have maturities of less than one week.
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||
Foreign exchange forward contracts |
|
$ |
|
|
$ |
|
||
Open sale and purchase commitment transactions, net |
|
$ |
|
|
$ |
|
||
13. INCOME TAXES
Net income from operations before provision for income taxes is shown below (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
|||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
U.S. |
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company files a consolidated federal income tax return based on a June 30 tax year end. The provision for income tax expense by jurisdiction and the effective tax rate are shown below (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
|||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Federal |
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
State and local |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective income tax rate |
|
|
% |
|
|
|
% |
|
|
% |
|
|
% |
||||
Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rates for the three and six months ended December 31, 2024 primarily due to the excess tax benefit from share-based compensation, partially offset by state taxes (net of federal tax benefit), foreign tax rate differential, Section 162(m) executive compensation disallowance, and other normal course non-deductible expenditures. Our provision for income taxes varied from the tax computed at the U.S. federal statutory income tax rates for the three and six months ended December 31, 2023 primarily due to the excess tax benefit from share-based compensation and the foreign derived intangible income special deduction, partially offset by state taxes (net of federal tax benefit), Section 162(m) executive compensation disallowance, and other normal course non-deductible expenditures.
32
Income Taxes Receivable and Payable
As of December 31, 2024 and June 30, 2024, we had an income tax receivable of $
Deferred Tax Assets and Liabilities
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized by evaluating both positive and negative evidence. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2024 and June 30, 2024, management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets. We based this conclusion on historical and projected operating performance, as well as our expectation that our operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets. A tax valuation allowance was considered unnecessary, as management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets.
As of December 31, 2024, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal, state and foreign), resulting in a federal deferred tax liability of $
Unrecognized Tax Benefits
The Company has taken or expects to take certain tax benefits on its income tax return filings that it has not recognized as a tax benefit (i.e., an unrecognized tax benefit) on its condensed consolidated statements of income. The Company's measurement of its uncertain tax positions is based on management's assessment of all relevant information, including, but not limited to prior audit experience, audit settlement, or lapse of the applicable statute of limitations. As of December 31, 2024 there have been no material changes to our unrecognized tax benefits or any related interest or penalties since June 30, 2024.
Tax Examinations
The Company files income tax returns in the United States, and various state, local, and foreign jurisdictions. The Company is currently subject to a
Related parties include entities which the Company controls or has the ability to significantly influence, and entities which are under common control with the Company. Related parties also include persons who are affiliated with related entities or the Company who are in a position to influence corporate decisions (such as owners, executives, board members and their families). In the normal course of business, we enter into transactions with our related parties. Below is a list of related parties with whom we have had significant transactions during the presented periods:
Our related party transactions primarily include (i) sales and purchases of precious metals, (ii) financing activities, (iii) repurchase arrangements, (iv) hedging transactions, and (v) related party lease and construction arrangements. Below is a summary of our related party transactions. The amounts presented for each period reflect each entity’s related party status for that period.
33
Balances with Related Parties
Receivables and Payables, Net
Our related party net receivables and payables balances were as shown below (in thousands):
|
|
December 31, 2024 |
|
June 30, 2024 |
||||||||||||||||
|
|
Receivables |
|
Payables |
|
Receivables |
|
Payables |
||||||||||||
Stack's Bowers Galleries |
|
$ |
|
|
|
$ |
|
(3) |
|
$ |
|
(1) |
|
$ |
|
|
||||
Equity method investees |
|
|
|
(2) |
|
|
|
(4) |
|
|
|
|
|
|
|
(4) |
||||
Other |
|
|
|
|
|
|
|
(4) |
|
|
|
|
|
|
|
(4) |
||||
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Secured Loans Receivable
On March 1, 2018, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit on the wholesale value (i.e., the excess over the spot value of the metal), of numismatic products bearing interest at a competitive rate per annum, with a maximum borrowing line (subject to temporary increases) of $
On March 4, 2022, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit based on the collateral value of Stack's Bowers Galleries' secured customers' notes. The loan bears interest at a competitive rate per annum, with a maximum borrowing line of $
Operating Lease Right of Use Assets
As of December 31, 2024 and June 30, 2024, our related party right of use assets were $
Property, Plant, and Equipment
AMGL entered into an agreement, effective as of July 1, 2024, with W.A. Richardson Builders, LLC (“WAR Construction”) to effectuate the build out of the Company’s Las Vegas logistics facility. The majority owner and co-manager of WAR Construction is the spouse of a member of the Board of Directors of the Company, and the other co-manager is a
Long-term Investments
As of December 31, 2024 and June 30, 2024, the aggregate carrying balance of the equity method investments was $
Other Long-term Assets
In June 2022, the Company acquired an option to purchase additional ownership interest in SGB. This option was partially exercised and modified in June 2024. The option is exercisable through September 2025. (See Note 1.)
Notes Payable
On April 1, 2021, CCP entered into a loan agreement ("CCP Note") with CFC, which provides CFC with up to $
34
In June 2024, SGB declared a $
Share Repurchases
In November 2024, we repurchased
Activity with Related Parties
Sales and Purchases
Our sales and purchases with companies deemed to be related parties were as follows (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||||
|
|
Sales |
|
|
Purchases |
|
|
Sales |
|
|
Purchases |
|
|
Sales |
|
|
Purchases |
|
|
Sales |
|
|
Purchases |
|
||||||||
Stack's Bowers Galleries |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Equity method investees(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Interest Income
We earned interest income from related parties as set forth below (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Interest income from secured loans receivables |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest income from finance products and repurchase arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Selling, General, and Administrative
The Company incurred selling, general, and administrative expense related to its leasing agreements with Solid Crossing and Stack's Bowers Galleries and its consulting agreement with Cerberus Limited of $
Interest Expense
The Company incurred interest expense related to its note with CCP of $
Equity Method Investments — Earnings, Dividends and Distributions Received
The Company's proportional share of our equity method investee's earnings (losses) totaled $(
The Company received dividend and distribution payments from our equity method investees that totaled, in the aggregate, $
Other Income
The Company earned royalty and consulting services income from related parties that totaled $
35
Transactions with Directors and Officers
Directors and officers of the Company engaged in transactions through A-Mark and/or its subsidiaries for an aggregate dollar value of $
15. FINANCING AGREEMENTS
Lines of Credit - Trading Credit Facility
On December 21, 2021, the Company entered into a three-year committed facility provided by a syndicate of financial institutions (the “Trading Credit Facility”), with a total revolving commitment of up to $
The Trading Credit Facility is secured by substantially all of the Company’s assets on a first priority basis and is guaranteed by all of the Company's subsidiaries. The Trading Credit Facility currently bears interest at the daily rate plus an applicable margin of
The Trading Credit Facility provides the Company with the liquidity to buy and sell billions of dollars of precious metals annually. We routinely use funds drawn under the Trading Credit Facility to purchase metals from our suppliers and for operating cash flow purposes. Our CFC subsidiary also uses the funds drawn under the Trading Credit Facility to finance certain of its lending activities.
Borrowings totaled $
The Trading Credit Facility contains various covenants, all of which the Company was in compliance with as of December 31, 2024.
Interest expense related to the Company’s Trading Credit Facility totaled $
Interest expense related to the Company’s Trading Credit Facility totaled $
Notes Payable - AMCF Notes
In September 2018, AM Capital Funding, LLC (“AMCF”), previously a wholly-owned subsidiary of CFC, completed an issuance of Secured Senior Term Notes (collectively, the "AMCF Notes"): Series 2018-1, Class A (the “Class A Notes”) in the aggregate principal amount of $
Prior to its dissolution in June 2024, AMCF was a VIE because its initial equity investment may have been insufficient to maintain its ongoing collateral requirements without additional financial support from the Company. The Company was the primary beneficiary of this VIE because the Company had the right to determine the type of collateral (i.e., cash, secured loans, or precious metals), had the right to receive (and had received) the proceeds from the securitization transaction, earn ongoing interest income from the secured loans (subject to collateral requirements), and had the obligation to absorb losses should AMCF's interest expense and other costs have exceeded its interest income.
36
For the three months ended December 31, 2024 and 2023, interest expense related to the AMCF Notes (including loan amortization costs) totaled $
Prior to repayment, the AMCF Notes' weighted-average effective interest rate was
Notes Payable — Related Party
See Note 14.
Liabilities on Borrowed Metals
The Company recorded liabilities on borrowed metals with market values totaling $
For the three months ended December 31, 2024 and 2023, the interest expense related to liabilities on borrowed metals totaled $
Advanced Pool Metals
The Company borrows precious metals from its suppliers and customers under short-term agreements using other precious metals from its inventory as collateral. The Company has the ability to sell the metals advanced. These arrangements can be settled by repayment in similar metals or in cash. Once the obligation is settled, the metals held as collateral are released back to the Company.
Liabilities on Borrowed Metals — Other
Liabilities may also arise from: (i) unallocated metal positions held by customers in the Company’s inventory, (ii) amounts due to suppliers for the use of their consigned inventory, and (iii) shortages in unallocated metal positions held by the Company in the supplier’s inventory. Unallocated or pool metal represents an unsegregated inventory position that is due on demand, in a specified physical form, based on the total ounces of metal held in the position. Amounts due under these arrangements require delivery either in the form of precious metals or in cash.
Product Financing Arrangements
The Company has agreements with third-party financial institutions which allow the Company to transfer its gold and silver inventory at an agreed-upon price, which is based on the spot price. Such agreements allow the Company to repurchase this inventory upon demand at an agreed-upon price based on the spot price on the repurchase date. The third-party charges a monthly fee as a percentage of the market value of the outstanding obligation; such monthly charges are classified in interest expense. These transactions do not qualify as sales, and therefore have been accounted for as financing arrangements and are reflected in the condensed consolidated balance sheet as product financing arrangements. The obligation is stated at the amount required to repurchase the outstanding inventory. Both the product financing obligation and the underlying inventory (which is entirely restricted) are carried at fair value, with changes in fair value recorded as a component of cost of sales in the condensed consolidated statements of income. Such obligations totaled $
For the three months ended December 31, 2024 and 2023, the interest expense related to product financing arrangements totaled $
16. COMMITMENTS AND CONTINGENCIES
Refer to Note 16 of the Notes to Consolidated Financial Statements in the 2024 Annual Report for information relating to employment contracts and other commitments. The Company is not aware of any material changes to commitments as summarized in the 2024 Annual Report.
37
Legal Matters
The Company is from time-to-time party to various lawsuits, claims and other proceedings, that arise in the ordinary course of its business.
Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including our assessment of the merits of particular claims, we do not expect that these legal proceedings or claims will have any material adverse impact on our future consolidated financial position, results of operations, or cash flows.
In accordance with U.S. GAAP, we review the need to accrue for any loss contingency and establish a liability when, in the opinion of management, it is probable that a matter would result in a liability and the amount of loss, if any, can be reasonably estimated. We do not believe that the resolution of any currently pending lawsuits, claims and proceedings, either individually or in the aggregate, will have a material adverse effect on financial position, results of operations or liquidity. However, the outcomes of any currently pending lawsuits, claims and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case.
Additionally, we record receivables for insurance recoveries relating to litigation-related losses and expenses if and when such amounts are covered by insurance and recovery of such losses or expenses are due.
17. STOCKHOLDERS’ EQUITY
Dividends
Dividends are recorded if and when they are declared by the board of directors.
On
On
Share Repurchase Program
In April 2018, the Company's board of directors approved a share repurchase program which authorized the Company to purchase up to
During the six months ended December 31, 2024, we repurchased
Under the share repurchase program, we may repurchase shares of our common stock from time to time at prevailing market prices, depending on market conditions, through open market or privately negotiated transactions. Subject to applicable corporate securities laws, repurchases may be made at such times and prices and in amounts as management deems appropriate. We are not obligated to repurchase any shares under the program, and repurchases under the program may be discontinued if management determines that additional repurchases are not warranted.
2014 Stock Award and Incentive Plan
The Company's amended and restated 2014 Stock Award and Incentive Plan (the "2014 Plan") was approved most recently on October 27, 2022 by the Company's stockholders. As of December 31, 2024,
38
Under the 2014 Plan, the Company may grant options and other equity awards as a means of attracting and retaining officers, employees, non-employee directors and consultants, to provide incentives to such persons and to align the interests of such persons with the interests of stockholders by providing compensation based on the value of the Company's stock. Awards under the 2014 Plan may be granted in the form of incentive or non-qualified stock options, stock appreciation rights ("SARs"), restricted stock, RSUs, dividend equivalent rights, other stock-based awards (which may include outright grants of shares) and cash incentive awards. The 2014 Plan also authorizes grants of awards with performance-based conditions and market-based conditions. The 2014 Plan is administered by the Compensation Committee of the board of directors, which, in its discretion, may select officers and other employees, directors (including non-employee directors) and consultants to the Company and its subsidiaries to receive grants of awards. The board of directors itself may perform any of the functions of the Compensation Committee under the 2014 Plan.
Under the 2014 Plan, the exercise price of options and base price of SARs, as set by the Compensation Committee, generally may not be less than the fair market value of the shares on the date of grant, and the maximum term of stock options and SARs is
Stock Options
The Company measures the compensation cost of stock options using the Black-Scholes option pricing model, which uses various inputs such as the market price per share of common stock and estimates that include the risk-free interest rate, volatility, expected life and dividend yield.
The Company incurred compensation expense related to stock options of $
The following table summarizes stock option activity:
|
|
Options |
|
|
Weighted-Average Exercise Price Per Share |
|
|
Aggregate |
|
|
Weighted-Average Grant Date Fair Value Per Award (1) |
|
||||
Fiscal 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Exercises |
|
|
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Exercisable at December 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fiscal 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding at June 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Exercises |
|
|
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Outstanding at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Exercisable at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)
The following table summarizes information about stock options as of December 31, 2024:
Exercise Price Ranges |
|
|
Options Outstanding |
|
|
Options Exercisable |
|
|||||||||||||||||||||||
From |
|
|
To |
|
|
Number of |
|
|
Weighted-Average Remaining Contractual Life |
|
|
Weighted-Average Exercise Price |
|
|
Number of |
|
|
Weighted-Average Remaining Contractual Life |
|
|
Weighted-Average Exercise Price |
|
||||||||
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||||
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||||
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||||
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||||
$ |
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||||||
39
The following table summarizes nonvested stock option activity:
|
|
Options |
|
|
|
Weighted-Average Grant Date Fair Value Per Award |
|
||
Nonvested outstanding at June 30, 2024 |
|
|
|
|
|
$ |
|
||
Vested |
|
|
( |
) |
|
|
$ |
|
|
Nonvested outstanding at December 31, 2024 |
|
|
|
|
|
$ |
|
||
Restricted Stock Units
RSUs granted by the Company are not transferable and automatically convert to shares of common stock on a one-for-one basis as the awards vest or at a specified date after vesting. RSUs granted to a non-US citizen are referred to as "deferred stock units" or "DSUs". The Company measures the compensation cost of RSUs based on the closing price of the underlying shares at the grant date.
The Company incurred compensation expense related to RSUs of $
The following table summarizes RSU activity:
|
|
Awards |
|
|
|
Weighted-Average Fair Value per Unit at Grant Date |
|
|
||
Fiscal 2024 |
|
|
|
|
|
|
|
|
||
Nonvested outstanding at June 30, 2023 |
|
|
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
|
$ |
|
|
||
Vested & delivered |
|
|
( |
) |
|
|
$ |
|
|
|
Vested & deferred (1) |
|
|
( |
) |
|
|
$ |
|
|
|
Nonvested outstanding at December 31, 2023 |
|
|
|
|
|
$ |
|
|
||
Vested but subject to deferred settlement at December 31, 2023 (1) |
|
|
|
|
|
$ |
|
|
||
Outstanding at December 31, 2023 |
|
|
|
|
|
$ |
|
|
||
Fiscal 2025 |
|
|
|
|
|
|
|
|
||
Nonvested outstanding at June 30, 2024 |
|
|
|
|
|
$ |
|
|
||
Granted |
|
|
|
|
|
$ |
|
|
||
Vested & delivered |
|
|
( |
) |
|
|
$ |
|
|
|
Vested & deferred (1) |
|
|
( |
) |
|
|
$ |
|
|
|
Nonvested outstanding at December 31, 2024 (2) |
|
|
|
|
|
$ |
|
|
||
Vested but subject to deferred settlement at December 31, 2024 (1) |
|
|
|
|
|
$ |
|
|
||
Outstanding at December 31, 2024 (2) |
|
|
|
|
|
$ |
|
|
||
(1)
(2)
Cash Incentive Bonus Award
Effective in the first quarter of fiscal 2024, a cash incentive bonus is payable at the end of the fiscal 2024-2027 employment term of our chief executive officer ("CEO") (subject to acceleration in the event of certain terminations of employment or a change in control) equal to
The fair value of this liability award is estimated with a Black-Scholes valuation model that uses certain assumptions, such as expected volatility, risk-free interest rate, life of the award, dividend rate and strike price. The Company also estimates the most probable aggregate total of the performance bonus to be paid over the performance period in determining the strike price of the award. The grant date fair value of this liability award was $
40
Compensation expense is recognized on a straight-line basis over the performance period, with the amount recognized fluctuating due to remeasurement of fair value at the end of each reporting period because the award is classified as a liability. The Company recognized compensation expense (income) related to this cash incentive bonus award of ($
Certain Anti-Takeover Provisions
The Company’s certificate of incorporation and by-laws contain certain anti-takeover provisions that could have the effect of making it more difficult for a third-party to acquire, or of discouraging a third-party from attempting to acquire, control of the Company without negotiating with its board of directors. Such provisions could limit the price that investors might be willing to pay in the future for the Company’s securities. Certain of such provisions allow the Company to issue preferred stock with rights senior to those of the common stock or impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions.
18. CUSTOMER AND SUPPLIER CONCENTRATIONS
Customer Concentrations
The following customer provided 10 percent or more of the Company's revenues (in thousands):
|
|
Three Months Ended December 31, |
|
|
Six Months Ended December 31, |
|
|
||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
||||||||||||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
||||||||
Total revenue |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
||||||||
Customer concentrations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
HSBC Bank (1) |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
(1) Sales with this trading partner include sales on forward contracts that are entered into for hedging purposes rather than sales characterized with the physical delivery of precious metal product. This sales activity has been reported within the Wholesale Sales & Ancillary Services segment.
No single customer provided 10 percent or more of the Company's accounts receivable balances as of December 31, 2024.
The following customer accounted for 10 percent or more of the Company's secured loans receivable (in thousands):
|
|
December 31, 2024 |
|
|
June 30, 2024 |
|
||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||
Total secured loans receivable |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Customer concentrations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Customer A |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Supplier Concentrations
The Company buys precious metals from a variety of sources, including through brokers and dealers, from sovereign and private mints, from refiners and directly from customers. The Company believes that no one supplier or small group of suppliers is critical to its business, since other sources of supply are available that provide similar products on comparable terms.
19. SEGMENTS AND GEOGRAPHIC INFORMATION
The Company evaluates segment reporting in accordance with Segment Reporting Topic 280 of the ASC (“ASC 280”), each reporting period, including evaluating the organizational structure and the reporting package that is reviewed by the chief operating decision makers. The Company's operations are organized under
41
Revenue
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Revenue by segment (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Eliminations of inter-segment sales |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Wholesale Sales & Ancillary Services, net of eliminations (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct-to-Consumer |
|
|
|
(a) |
|
|
|
(b) |
|
|
|
(c) |
|
|
|
(d) |
||||
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Revenue by geographic region |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
United States |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
North America, excluding United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asia Pacific |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
South America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Gross Profit and Gross Margin Percentage
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Gross profit by segment(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Eliminations and adjustments |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Wholesale Sales & Ancillary Services, net of eliminations and adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct-to-Consumer, net of eliminations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Gross margin percentage by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
||||
Wholesale Sales & Ancillary Services, net of eliminations and adjustments |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
||||
Direct-to-Consumer |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
||||
Consolidated gross margin percentage |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
||||
42
Operating Income and (Expenses)
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Operating income (expenses) by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Eliminations |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Wholesale Sales & Ancillary Services, net of eliminations |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services, net of eliminations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Depreciation and amortization expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Earnings (losses) from equity method investments |
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||
Other (expense) income, net |
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||
Unrealized gains on foreign exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Direct-to-Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Depreciation and amortization expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Unrealized losses on foreign exchange |
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Secured Lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general, and administrative expenses |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Depreciation and amortization expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Earnings (losses) from equity method investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|||
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Net Income Before Provision for Income Taxes
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Net income before provision for income taxes by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Direct-to-Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Secured Lending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||
Advertising Expense
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Advertising expense by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Direct-to-Consumer |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
Secured Lending |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Capital Expenditures for Long-Lived Assets
in thousands |
|
Three Months Ended December 31, |
|
Six Months Ended December 31, |
||||||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
|
|
2023 |
|
|
||||||||
Capital expenditures for long-lived assets by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholesale Sales & Ancillary Services |
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
Direct-to-Consumer |
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
|
$ |
( |
) |
|
43
Inventories
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Inventories by segment |
|
|
|
|
|
|
|
||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
||
Direct-to-Consumer |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Inventories by geographic region |
|
|
|
|
|
|
|
||
United States |
|
$ |
|
|
|
$ |
|
||
North America, excluding United States |
|
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
Total Assets
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Total assets by segment |
|
|
|
|
|
|
|
||
Wholesale Sales & Ancillary Services (1) |
|
$ |
|
|
|
$ |
|
||
Eliminations |
|
|
( |
) |
|
|
|
( |
) |
Wholesale Sales & Ancillary Services, net of eliminations |
|
|
|
|
|
|
|
||
Direct-to-Consumer |
|
|
|
|
|
|
|
||
Secured Lending |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Total assets by geographic region |
|
|
|
|
|
|
|
||
United States |
|
$ |
|
|
|
$ |
|
||
North America, excluding United States |
|
|
|
|
|
|
|
||
Europe |
|
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
Long-term Assets
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Long-term assets by segment |
|
|
|
|
|
|
|
||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
||
Direct-to-Consumer |
|
|
|
|
|
|
|
||
Secured Lending |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Long-term assets by geographic region |
|
|
|
|
|
|
|
||
United States |
|
$ |
|
|
|
$ |
|
||
North America, excluding United States |
|
|
|
|
|
$ |
|
||
Europe |
|
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
44
Goodwill
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Goodwill by segment |
|
|
|
|
|
|
|
||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
||
Direct-to-Consumer(1) |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
Intangible assets
in thousands |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|
|
June 30, 2024 |
|
||
Intangible assets by segment |
|
|
|
|
|
|
|
||
Wholesale Sales & Ancillary Services |
|
$ |
|
|
|
$ |
|
||
Direct-to-Consumer(1) |
|
|
|
|
|
|
|
||
|
|
$ |
|
|
|
$ |
|
||
20. SUBSEQUENT EVENTS
Dividend
On
Credit Agreement
On January 29, 2025, the Company entered into an Eleventh Amendment to the Trading Credit Facility which increases the total facility by $
Acquisition of Spectrum Group International, Inc.
On
Under the terms of the SGI Agreement, the Company will acquire all of the stock of SGI in a merger transaction for aggregate consideration of $
Consummation of the acquisition is subject to various closing conditions. The Company anticipates closing the acquisition in the third quarter of the current fiscal year.
45
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Quarterly Report on Form 10-Q ("Form 10-Q") contains statements that are considered forward-looking statements. Forward-looking statements give the Company's current expectations and forecasts of future events. All statements other than statements of current or historical fact contained in this Quarterly Report, including statements regarding the Company's future financial position, business strategy, budgets, projected costs and plans, and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. These statements are based on the Company's current plans, estimates and beliefs, and the Company's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this Quarterly Report may turn out to be inaccurate. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this Form 10-Q.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes contained elsewhere in this Form 10-Q, and in the audited consolidated financial statements and notes contained in the Form 10-K for the fiscal year ended June 30, 2024. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in this Quarterly Report, particularly in “Risk Factors.”
INTRODUCTION
Management's discussion and analysis of financial condition and results of operations is provided as a supplement to the accompanying condensed consolidated financial statements and related notes to aid in the understanding of our results of operations and financial condition. Our discussion is organized as follows:
46
comparing results for the periods presented.
EXECUTIVE OVERVIEW
Our Business
The Company conducts its operations in three reportable segments: (i) Wholesale Sales & Ancillary Services, (ii) Direct-to-Consumer, and (iii) Secured Lending.
Wholesale Sales & Ancillary Services Segment
The Company operates its Wholesale Sales & Ancillary Services segment directly and through its consolidated subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services, LLC ("TDS" or “Storage”), A-M Global Logistics, LLC (“AMGL” or "Logistics"), AM&ST Associates, LLC ("AMST" or the “Silver Towne Mint"), and AM/LPM Ventures, LLC, which we formed to acquire LPM Group Limited ("LPM").
The Wholesale Sales & Ancillary Services segment operates as a full-service precious metals company. We offer gold, silver, platinum, and palladium in the form of bars, plates, powder, wafers, grain, ingots, and coins. Our Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious metals. Our Coin and Bar unit deals in approximately 2,100 coin and bar products in a variety of weights, shapes, and sizes for distribution to dealers and other qualified purchasers. We have a marketing support office in Vienna, Austria, a numismatics showroom in Hong Kong, and a trading center in El Segundo, California. The trading center, for buying and selling precious metals, is available to receive orders 24 hours every day, even when many major world commodity markets are closed. In addition to Wholesale Sales activity, A-Mark offers its customers a variety of ancillary services, including financing, storage, consignment, logistics, and various customized financial programs. As a U.S. Mint-authorized purchaser of gold, silver, platinum, and palladium coins, A-Mark purchases product directly from the U.S. Mint, and it also purchases product from other sovereign mints, for sale to its customers.
Through its wholly-owned subsidiary AMTAG, the Company promotes its products and services to certain international markets. Through our wholly-owned subsidiary TDS, we offer a variety of managed storage options for precious metals products to financial institutions, dealers, investors, and collectors around the world.
The Company's wholly-owned subsidiary AMGL is based in Las Vegas, Nevada, and provides our customers an array of complementary services, including receiving, handling, inventorying, processing, packing, and shipping of precious metals and custom coins on a secure basis.
47
Through its wholly-owned subsidiary AMST, the Company designs and produces minted silver products. Our Silver Towne Mint operations allow us to provide greater product selection to our customers and greater pricing stability within the supply chain, as well as to gain increased access to fabricated silver products during volatile market environments, which have historically created higher demand for precious metals products.
In February 2024, the Company acquired LPM, one of Asia's largest precious metals dealers. Headquartered in Hong Kong, LPM extends A-Mark's global reach by offering its full-service precious metals products and services in Asia and internationally.
Direct-to-Consumer
The Company operates its Direct-to-Consumer segment through its wholly-owned subsidiaries JM Bullion, Inc. (“JMB”) and Goldline, Inc. (“Goldline”), and through its investment in Silver Gold Bull, Inc. ("SGB"). JMB currently has several wholly-owned subsidiaries, including: Buy Gold and Silver Corp. ("BGASC"), BX Corporation ("BullionMax"), Gold Price Group, Inc. (“GPG”), Silver.com, Inc. (“Silver.com”), Provident Metals Corp. (“PMC”), and CyberMetals Corp. ("CyberMetals"). Goldline owns 100% of AMIP, LLC ("AMIP"). SGB and Goldline each have a 50% ownership interest in Precious Metals Purchasing Partners, LLC ("PMPP"). As the context requires, references to JMB may include BGASC, BullionMax, GPG, Silver.com, PMC, and CyberMetals and references to Goldline may include AMIP and PMPP.
JMB is a leading e-commerce retailer providing access to a broad array of gold, silver, copper, platinum, and palladium products through its websites. JMB owns and operates numerous websites targeting specific niches within the precious metals retail market, including JMBullion.com, ProvidentMetals.com, Silver.com, CyberMetals.com, GoldPrice.org, SilverPrice.org, BGASC.com, BullionMax.com, and Gold.com.
In April 2022, JMB commercially launched the CyberMetals online platform, where customers can purchase and sell fractional shares of digital gold, silver, platinum, and palladium bars in a range of denominations. CyberMetals’ customers have the option to convert their digital holdings to fabricated precious metals products via an integrated redemption flow with JMB. These products may be designated for storage by the Company or shipped directly to the customer.
The Company acquired Goldline in August 2017 through an asset purchase transaction with Goldline, LLC, which had been in operation since 1960. Goldline is a direct retailer of precious metals to the investor community, and markets its precious metal products on television, radio, and the internet, as well as through customer service outreach. AMIP manages Goldline’s intellectual property.
PMPP was formed in fiscal 2019 pursuant to terms of a joint venture agreement between Goldline and SGB, for the purpose of purchasing precious metals from the partners' retail customers, and then reselling the acquired products back to affiliates of the partners. PMPP commenced operations in fiscal 2020.
In 2014, the Company acquired its initial ownership interest in SGB, a leading e-commerce precious metals retailer in Canada, increasing its ownership to 55.4% in June 2024 at which time we obtained a controlling ownership interest in SGB, and SGB became a consolidated subsidiary of the Company. Our investment in SGB expands our direct-to-consumer footprint in the international market. Through its website, SilverGoldBull.com, SGB offers a variety of products from gold, silver, platinum, and palladium bars, coins and rounds, as well as certified coins from mints around the world.
Secured Lending
The Company operates its Secured Lending segment through its wholly-owned subsidiary, Collateral Finance Corporation, LLC, including its wholly-owned subsidiary, CFC Alternative Investments (“CAI”) (collectively “CFC”).
CFC is a California licensed finance lender that originates and acquires commercial loans secured primarily by bullion and numismatic coins. CFC's customers include coin and precious metal dealers, investors, and collectors. As of December 31, 2024, CFC had $98.5 million in secured loans outstanding, of which 13.2% were acquired from third parties (some of which may be customers of A-Mark) and approximately 86.8% were originated by CFC.
CAI is a holding company that has an equity method interest in Collectible Card Partners, LLC (“CCP”). CCP originates commercial loans secured by graded sports cards. CCP commenced operations in fiscal 2022.
AM Capital Funding, LLC (“AMCF”), previously a wholly-owned subsidiary of CFC, was formed for the purpose of securitizing eligible secured loans of CFC. AMCF issued and administered Secured Senior Term Notes: Series 2018-1, Class A, with an 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 referred to as the "AMCF Notes"). The AMCF Notes were repaid in full in December 2023. AMCF was dissolved in June 2024.
48
Our Strategy
The Company was formed in 1965 and has grown into a significant participant in the bullion and coin markets, with $9.7 billion in revenues for fiscal year 2024. We have remained active in seeking investment opportunities to strategically enhance our business, and also continue to focus on growth in the volume of our business, our geographic presence, and the scope of complementary products, services, and technological tools that we offer to our customers. In doing so, we seek to leverage off the strengths of our existing integrated operations, which span trading, e-commerce, distribution, logistics, minting, storage, hedging, financing, and consignment products and services, including:
Our Customers
Our customers include financial institutions, bullion retailers, industrial manufacturers and fabricators, sovereign mints, refiners, coin and metal dealers, investors, collectors, and e-commerce and other retail customers. The Company makes a two-way market in its wholesale operations, which results in many customers also operating as our suppliers in that segment. This diverse base of wholesale customers purchases a variety of products from the Company in a multitude of grades, primarily in the form of coins and bars. Our Direct-to-Consumer segment sells to (and, through JMB and PMPP, buys from) retail customers, with JMB and SGB focusing on e-commerce operations and Goldline marketing through various traditional and e-commerce channels to the investor community. The Direct-to-Consumer segment offers these customers a variety of gold, silver, copper, platinum, and palladium products.
Factors Affecting Revenues, Gross Profit, Interest Income, and Interest Expense
Set forth below are the key factors affecting the Company’s revenues, gross profit, interest income, and interest expense. These factors may be attributable to both the Company’s ongoing business activities as well as from Company acquisitions.
Revenues. The Company enters into transactions to sell and deliver gold, silver, platinum, and palladium to industrial and commercial users, coin and bullion dealers, mints, and financial institutions. The metals are investment or industrial grade and are sold in a variety of shapes and sizes.
The Company also sells and delivers gold, silver, platinum, palladium, and copper products directly to customers and the investor community through its Direct-to Consumer segment. Customers may place orders online at one of the Company's websites or over the phone.
The Company sells precious metals on forward contracts at a fixed price based on current prevailing precious metal spot prices with a certain delivery date in the future (up to six months from inception date of the forward contract). The Company also uses other derivative products (primarily futures contracts) or combinations thereof to hedge commodity risks. We enter into these forward and futures contracts as part of our hedging strategy to mitigate our price risk of holding inventory; they are not entered into for speculative purposes.
Forward sales contracts by their nature are required to be included in revenues, unlike futures contracts which do not impact the Company’s revenue. The decision to use a forward contract versus another derivative type of product (e.g., a futures contract) for hedging purposes is based on the economics of the transaction. Since the volume of hedging can be significant, the movement in and out of forwards can substantially impact revenues, either positively or negatively, from period to period. For this reason, the Company believes ounces sold (excluding ounces sold on forward sales contracts) is a meaningful metric to assess our top line performance.
49
In addition, the Company earns revenue by providing storage solutions for precious metals and numismatic coins for financial institutions, dealers, investors, and collectors worldwide and by providing storage and order-fulfillment services to our retail customers. The Company also earns revenue from advertisements placed on our Direct-to-Consumer websites. These revenue streams represent less than 1% of the Company’s consolidated revenues.
The Company operates in a high volume/low margin industry. Revenues are impacted by three primary factors: product volume, market prices, and market volatility. A material change in any one or more of these factors may result in a significant change in the Company’s revenues. A significant increase or decrease in revenues can occur simply based on changes in the underlying commodity prices and may not be reflective of an increase or decrease in the volume of products sold.
Gross Profit. Gross profit is the difference between our revenues and the cost of our products sold. Since we quote prices based on the current commodity market prices for precious metals, we enter into a combination of forward and futures contracts to effect a hedge position equal to the underlying precious metal commodity value, which substantially represents inventory subject to price risk. We enter into these derivative transactions solely for the purpose of hedging our inventory, and not for speculative purposes. Our gross profit includes the gains and losses resulting from these derivative instruments. However, the gains and losses on the derivative instruments are substantially offset by the gains and losses on the corresponding changes in the market value of our precious metals inventory. As a result, our results of operations generally are not materially impacted by changes in commodity prices.
Interest Income. The Company enters into secured loans and secured financing structures with its customers under which it charges interest. CFC originates loans and acquires loan portfolios that are secured by precious metal bullion and numismatic material owned by the borrowers and held by the Company for the term of the loan. Also, the Company offers a number of secured financing options to its customers to finance their precious metals purchases including consignments and other structured inventory finance products whereby the Company earns a fee based on the underlying value of the precious metal ("repurchase arrangements with customers").
Interest Expense. The Company incurs interest expense associated with its lines of credit, notes payable, product financing agreements for the transfer and subsequent re-acquisition of gold, silver, and platinum at a fixed price with a third-party finance company ("product financing arrangements"), and short-term precious metal borrowing arrangements with our suppliers ("liabilities on borrowed metals").
Performance Metrics
In addition to financial statement indicators, management also utilizes key operational metrics to assess the performance of our business. SGB's performance metrics have been included in our consolidated financial results from June 21, 2024, the date we obtained a controlling ownership interest in SGB, and SGB became a consolidated subsidiary of the Company.
Gold and Silver Ounces Sold and Delivered to Customers. A key performance metric we utilize is the number of ounces of gold and silver sold and delivered to our customers (excluding ounces recorded on forward contracts). These metrics reflect our business volume without regard to changes in commodity pricing, which also impacts revenue, but can mask actual business trends.
The primary purpose of entering into forward sales transactions is to hedge commodity price risk. Although the revenues realized from these forward sales transactions are often significant, they generally have negligible impact on gross margins. As a result, the Company excludes the ounces recorded on forward contracts from its performance metrics, as the Company does not enter into forward sales transactions for speculative purposes.
Wholesale Sales Ticket Volume. Another measure of our business that is unaffected by changes in commodity pricing is ticket volume (or number of orders processed). Ticket volume for the Wholesale Sales & Ancillary Services segment measures the total number of wholesale orders processed during the period. In periods of higher volatility, there is generally increased trading in the commodity markets, causing increased demand for our products, resulting in higher business volume. During periods of heightened demand, order size per ticket may increase.
Direct-to-Consumer Customers. We are focused on attracting new customers and retaining existing customers to drive revenue growth. We use the following three metrics as revenue growth indicators when assessing our customer base:
50
Direct-to-Consumer Ticket Volume. Ticket volume for the Direct-to-Consumer segment measures the number of product orders processed during the period. In periods of higher volatility, there is generally increased consumer demand for our products, resulting in higher business volume. We use the following three metrics indicators when assessing our ticket volume:
Average Order Value. Average order value for the Direct-to-Consumer segment and JMB measures the average dollar value of product orders (excluding accumulation program orders) delivered to the customer during the period.
Inventory Turnover. Inventory turnover is another performance measure on which we are focused and is calculated as the cost of sales divided by the average inventory during the relevant period. Inventory turnover is a measure of how quickly inventory has moved during the period. A higher inventory turnover ratio, which we typically experience during periods of higher volatility when trading is more robust, typically reflects a more efficient use of our capital.
The period of time that inventory is held by the Company varies depending upon the nature of our inventory commitments with customers and suppliers. See Note 6 to the Company's condensed consolidated financial statements for a description of our classifications of inventory by type. When management analyzes inventory turnover on a period over period basis, consideration is given to each inventory type and its corresponding impact on the inventory turnover calculation. For example:
Additionally, our inventory turnover ratio can be affected by hedging activity, as the period over period change of the inventory turnover ratio may be significantly impacted by a period over period change in hedging volume. For example, if trading activity were to remain constant over two periods, but there were significantly higher forward sales in the current period compared to a prior period, the calculated inventory turnover ratio would increase notwithstanding the constancy of the trading volume.
Number of Secured Loans. Finally, as a measure of the size of our Secured Lending segment, we utilize the number of outstanding secured loans to customers that are primarily collateralized by precious metals at the end of each quarter.
The Company calculates a loan-to-value ("LTV") ratio for each loan as the principal amount of the loan divided by the liquidation value of the collateral, which is based on daily spot market prices of precious metal bullion. When the market price of the pledged collateral decreases and thereby increases the LTV ratio of a loan above a prescribed maximum ratio, usually 85%, the Company has the option to make a margin call on the loan. As a result, a decline of precious metal market prices may cause a decrease in the number of loans outstanding in a period.
Non-GAAP Measures
In addition to key operational metrics that are used to assess the performance of our business, management also uses non-GAAP financial performance and liquidity measures. We believe "adjusted net income before provision for income taxes” and "EBITDA" can provide useful information to evaluate our financial performance and liquidity position. Non-GAAP measures do not have standardized definitions and should not be a substitute for measures that are prepared in accordance with U.S. GAAP. For a reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measure reported in our condensed consolidated statements of income and consolidated statements of cash flows and a discussion of certain limitations inherent in such measures, refer to the “Non-GAAP Measures” section below.
Fiscal Year
Our fiscal year end is June 30 each year.
51
Macroeconomic Volatility
Macroeconomic uncertainty and the volatility in the financial markets in recent years have positively affected the Company’s trading revenues and gross profit as the volatility of the price of precious metals and numismatics typically results in an increase in the spread between bid and ask prices on these products. Although conditions may fluctuate from period to period, when volatility is high, we historically experience increased demand for products in each of our coin and bar, industrial, and retail businesses. While macroeconomic uncertainty continues to impact our business, its effects have been less pronounced in the current and prior fiscal year. The Company cannot predict the periods during which increased volatility will occur or the level of increased volatility, the effect of volatility and macroeconomic uncertainty on the Company, or whether other effects on the Company and its businesses will materialize in the short or long term.
52
RESULTS OF OPERATIONS
Overview of Results of Operations
Consolidated Results of Operations for the Three Months Ended December 31, 2024 and 2023
The operating results of our business were as follows (in thousands, except per share and performance metrics data):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Three Months Ended December 31, |
|
2024 |
|
|
|
2023 |
|
|
|
Change |
|
||||||||||||||||||
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% |
|
||||||
Revenues |
|
$ |
2,742,345 |
|
|
|
|
100.000 |
% |
|
|
$ |
2,078,815 |
|
|
|
|
100.000 |
% |
|
|
$ |
663,530 |
|
|
|
|
31.9 |
% |
Gross profit |
|
|
44,767 |
|
|
|
|
1.632 |
% |
|
|
|
46,041 |
|
|
|
|
2.215 |
% |
|
|
$ |
(1,274 |
) |
|
|
|
(2.8 |
%) |
Selling, general, and administrative expenses |
|
|
(25,754 |
) |
|
|
|
(0.939 |
%) |
|
|
|
(22,396 |
) |
|
|
|
(1.077 |
%) |
|
|
$ |
3,358 |
|
|
|
|
15.0 |
% |
Depreciation and amortization expense |
|
|
(4,639 |
) |
|
|
|
(0.169 |
%) |
|
|
|
(2,811 |
) |
|
|
|
(0.135 |
%) |
|
|
$ |
1,828 |
|
|
|
|
65.0 |
% |
Interest income |
|
|
6,794 |
|
|
|
|
0.248 |
% |
|
|
|
6,311 |
|
|
|
|
0.304 |
% |
|
|
$ |
483 |
|
|
|
|
7.7 |
% |
Interest expense |
|
|
(10,363 |
) |
|
|
|
(0.378 |
%) |
|
|
|
(10,168 |
) |
|
|
|
(0.489 |
%) |
|
|
$ |
195 |
|
|
|
|
1.9 |
% |
Earnings (losses) from equity method investments |
|
|
(2,410 |
) |
|
|
|
(0.088 |
%) |
|
|
|
777 |
|
|
|
|
0.037 |
% |
|
|
$ |
(3,187 |
) |
|
|
|
(410.2 |
%) |
Other income, net |
|
|
461 |
|
|
|
|
0.017 |
% |
|
|
|
569 |
|
|
|
|
0.027 |
% |
|
|
$ |
(108 |
) |
|
|
|
(19.0 |
%) |
Unrealized (losses) gains on foreign exchange |
|
|
(840 |
) |
|
|
|
(0.031 |
%) |
|
|
|
105 |
|
|
|
|
0.005 |
% |
|
|
$ |
(945 |
) |
|
|
|
(900.0 |
%) |
Net income before provision for income taxes |
|
|
8,016 |
|
|
|
|
0.292 |
% |
|
|
|
18,428 |
|
|
|
|
0.886 |
% |
|
|
$ |
(10,412 |
) |
|
|
|
(56.5 |
%) |
Income tax expense |
|
|
(2,042 |
) |
|
|
|
(0.074 |
%) |
|
|
|
(4,467 |
) |
|
|
|
(0.215 |
%) |
|
|
$ |
(2,425 |
) |
|
|
|
(54.3 |
%) |
Net income |
|
|
5,974 |
|
|
|
|
0.218 |
% |
|
|
|
13,961 |
|
|
|
|
0.672 |
% |
|
|
$ |
(7,987 |
) |
|
|
|
(57.2 |
%) |
Net (loss) income attributable to noncontrolling interests |
|
|
(584 |
) |
|
|
|
(0.021 |
%) |
|
|
|
195 |
|
|
|
|
0.009 |
% |
|
|
$ |
(779 |
) |
|
|
|
(399.5 |
%) |
Net income attributable to the Company |
|
$ |
6,558 |
|
|
|
|
0.239 |
% |
|
|
$ |
13,766 |
|
|
|
|
0.662 |
% |
|
|
$ |
(7,208 |
) |
|
|
|
(52.4 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic and diluted net income per share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic |
|
$ |
0.28 |
|
|
|
|
|
|
|
$ |
0.60 |
|
|
|
|
|
|
|
$ |
(0.32 |
) |
|
|
|
(53.3 |
%) |
||
Diluted |
|
$ |
0.27 |
|
|
|
|
|
|
|
$ |
0.57 |
|
|
|
|
|
|
|
$ |
(0.30 |
) |
|
|
|
(52.6 |
%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performance Metrics:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gold ounces sold(2) |
|
|
466,000 |
|
|
|
|
|
|
|
|
450,000 |
|
|
|
|
|
|
|
|
16,000 |
|
|
|
|
3.6 |
% |
||
Silver ounces sold(3) |
|
|
21,828,000 |
|
|
|
|
|
|
|
|
26,575,000 |
|
|
|
|
|
|
|
|
(4,747,000 |
) |
|
|
|
(17.9 |
%) |
||
Inventory turnover ratio(4) |
|
|
2.2 |
|
|
|
|
|
|
|
|
1.9 |
|
|
|
|
|
|
|
|
0.3 |
|
|
|
|
15.8 |
% |
||
Number of secured loans at period end(5) |
|
|
518 |
|
|
|
|
|
|
|
|
715 |
|
|
|
|
|
|
|
|
(197 |
) |
|
|
|
(27.6 |
%) |
||
53
Consolidated Results of Operations for the Six Months Ended December 31, 2024 and 2023
The operating results of our business were as follows (in thousands, except per share and performance metrics data):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Six Months Ended December 31, |
|
2024 |
|
|
|
2023 |
|
|
|
Change |
|
||||||||||||||||||
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% |
|
||||||
Revenues |
|
$ |
5,457,441 |
|
|
|
|
100.000 |
% |
|
|
$ |
4,563,433 |
|
|
|
|
100.000 |
% |
|
|
$ |
894,008 |
|
|
|
|
19.6 |
% |
Gross profit |
|
|
88,210 |
|
|
|
|
1.616 |
% |
|
|
|
95,446 |
|
|
|
|
2.092 |
% |
|
|
$ |
(7,236 |
) |
|
|
|
(7.6 |
%) |
Selling, general, and administrative expenses |
|
|
(52,371 |
) |
|
|
|
(0.960 |
%) |
|
|
|
(44,241 |
) |
|
|
|
(0.969 |
%) |
|
|
$ |
8,130 |
|
|
|
|
18.4 |
% |
Depreciation and amortization expense |
|
|
(9,348 |
) |
|
|
|
(0.171 |
%) |
|
|
|
(5,603 |
) |
|
|
|
(0.123 |
%) |
|
|
$ |
3,745 |
|
|
|
|
66.8 |
% |
Interest income |
|
|
13,881 |
|
|
|
|
0.254 |
% |
|
|
|
12,413 |
|
|
|
|
0.272 |
% |
|
|
$ |
1,468 |
|
|
|
|
11.8 |
% |
Interest expense |
|
|
(20,350 |
) |
|
|
|
(0.373 |
%) |
|
|
|
(19,991 |
) |
|
|
|
(0.438 |
%) |
|
|
$ |
359 |
|
|
|
|
1.8 |
% |
Earnings (losses) from equity method investments |
|
|
(1,832 |
) |
|
|
|
(0.034 |
%) |
|
|
|
3,486 |
|
|
|
|
0.076 |
% |
|
|
$ |
(5,318 |
) |
|
|
|
(152.6 |
%) |
Other income, net |
|
|
661 |
|
|
|
|
0.012 |
% |
|
|
|
842 |
|
|
|
|
0.018 |
% |
|
|
$ |
(181 |
) |
|
|
|
(21.5 |
%) |
Unrealized (losses) gains on foreign exchange |
|
|
(662 |
) |
|
|
|
(0.012 |
%) |
|
|
|
11 |
|
|
|
|
0.000 |
% |
|
|
$ |
(673 |
) |
|
|
|
(6,118.2 |
%) |
Net income before provision for income taxes |
|
|
18,189 |
|
|
|
|
0.333 |
% |
|
|
|
42,363 |
|
|
|
|
0.928 |
% |
|
|
$ |
(24,174 |
) |
|
|
|
(57.1 |
%) |
Income tax expense |
|
|
(3,797 |
) |
|
|
|
(0.070 |
%) |
|
|
|
(9,419 |
) |
|
|
|
(0.206 |
%) |
|
|
$ |
(5,622 |
) |
|
|
|
(59.7 |
%) |
Net income |
|
|
14,392 |
|
|
|
|
0.264 |
% |
|
|
|
32,944 |
|
|
|
|
0.722 |
% |
|
|
$ |
(18,552 |
) |
|
|
|
(56.3 |
%) |
Net (loss) income attributable to noncontrolling interests |
|
|
(1,150 |
) |
|
|
|
(0.021 |
%) |
|
|
|
351 |
|
|
|
|
0.008 |
% |
|
|
$ |
(1,501 |
) |
|
|
|
(427.6 |
%) |
Net income attributable to the Company |
|
$ |
15,542 |
|
|
|
|
0.285 |
% |
|
|
$ |
32,593 |
|
|
|
|
0.714 |
% |
|
|
$ |
(17,051 |
) |
|
|
|
(52.3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic and diluted net income per share attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Per Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic |
|
$ |
0.67 |
|
|
|
|
|
|
|
$ |
1.40 |
|
|
|
|
|
|
|
$ |
(0.73 |
) |
|
|
|
(52.1 |
%) |
||
Diluted |
|
$ |
0.65 |
|
|
|
|
|
|
|
$ |
1.34 |
|
|
|
|
|
|
|
$ |
(0.69 |
) |
|
|
|
(51.5 |
%) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performance Metrics:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gold ounces sold(2) |
|
|
864,000 |
|
|
|
|
|
|
|
|
945,000 |
|
|
|
|
|
|
|
|
(81,000 |
) |
|
|
|
(8.6 |
%) |
||
Silver ounces sold(3) |
|
|
42,277,000 |
|
|
|
|
|
|
|
|
56,953,000 |
|
|
|
|
|
|
|
|
(14,676,000 |
) |
|
|
|
(25.8 |
%) |
||
Inventory turnover ratio(4) |
|
|
4.7 |
|
|
|
|
|
|
|
|
4.3 |
|
|
|
|
|
|
|
|
0.4 |
|
|
|
|
9.3 |
% |
||
Number of secured loans at period end(5) |
|
|
518 |
|
|
|
|
|
|
|
|
715 |
|
|
|
|
|
|
|
|
(197 |
) |
|
|
|
(27.6 |
%) |
||
54
Revenues
in thousands, except performance metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Three Months Ended December 31, |
|
2024 |
|
|
|
2023 |
|
|
|
Change |
|
||||||||||||||||||
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% |
|
||||||
Revenues |
|
$ |
2,742,345 |
|
|
|
|
100.000 |
% |
|
|
$ |
2,078,815 |
|
|
|
|
100.000 |
% |
|
|
$ |
663,530 |
|
|
|
|
31.9 |
% |
Performance Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gold ounces sold |
|
|
466,000 |
|
|
|
|
|
|
|
|
450,000 |
|
|
|
|
|
|
|
|
16,000 |
|
|
|
|
3.6 |
% |
||
Silver ounces sold |
|
|
21,828,000 |
|
|
|
|
|
|
|
|
26,575,000 |
|
|
|
|
|
|
|
|
(4,747,000 |
) |
|
|
|
(17.9 |
%) |
||
Revenues for the three months ended December 31, 2024 increased $663.5 million, or 31.9%, to $2.742 billion from $2.079 billion in 2023. Excluding an increase of $167.3 million of forward sales, our revenues increased $496.2 million, or 38.1%, which was due to an increase in gold ounces sold and higher average selling prices of gold and silver, partially offset by a decrease in silver ounces sold.
Gold ounces sold for the three months ended December 31, 2024 increased 16,000 ounces, or 3.6%, to 466,000 ounces from 450,000 ounces in 2023. Silver ounces sold for the three months ended December 31, 2024 decreased 4,747,000 ounces, or 17.9%, to 21,828,000 ounces from 26,575,000 ounces in 2023. On average, the selling prices for gold increased by 35.1% and selling prices for silver increased by 37.3% during the three months ended December 31, 2024 as compared to the prior year.
JMB's revenue represented 11.3% and 16.3% of the Company's consolidated revenue for the three months ended December 31, 2024 and 2023, respectively.
in thousands, except performance metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six Months Ended December 31, |
|
2024 |
|
|
|
2023 |
|
|
|
Change |
|
||||||||||||||||||
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% of revenue |
|
|
|
$ |
|
|
|
% |
|
||||||
Revenues |
|
$ |
5,457,441 |
|
|
|
|
100.000 |
% |
|
|
$ |
4,563,433 |
|
|
|
|
100.000 |
% |
|
|
$ |
894,008 |
|
|
|
|
19.6 |
% |
Performance Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gold ounces sold |
|
|
864,000 |
|
|
|
|
|
|
|
|
945,000 |
|
|
|
|
|
|
|
|
(81,000 |
) |
|
|
|
(8.6 |
%) |
||
Silver ounces sold |
|
|
42,277,000 |
|
|
|
|
|
|
|
|
56,953,000 |
|
|
|
|
|
|
|
|
(14,676,000 |
) |
|
|
|
(25.8 |
%) |
||
Revenues for the six months ended December 31, 2024 increased $894.0 million, or 19.6%, to $5.457 billion from $4.563 billion in 2023. Excluding an increase of $384.7 million of forward sales, our revenues increased $509.3 million, or 18.5%, which was due to higher average selling prices of gold and silver, partially offset by a decrease in gold and silver ounces sold.
Gold ounces sold for the six months ended December 31, 2024 decreased 81,000 ounces, or 8.6%, to 864,000 ounces from 945,000 ounces in 2023. Silver ounces sold for the six months ended December 31, 2024 decreased 14,676,000 ounces, or 25.8%, to 42,277,000 ounces from 56,953,000 ounces in 2023. On average, the selling prices for gold increased by 31.4% and selling prices for silver increased by 31.0% during the six months ended December 31, 2024 as compared to the prior year.
JMB's revenue represented 11.3% and 13.9% of the Company's consolidated revenue for the six months ended December 31, 2024 and 2023, respectively.
Gross Profit
in thousands, except performance metric |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||