SANTA MONICA, Calif., Sept. 23, 2015 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc. (NASDAQ:AMRK), a full-service precious metals trading company and an official distributor for all the major sovereign mints, reported results for its fiscal fourth quarter and full year ended June 30, 2015.
Fiscal Q4 2015 Financial Highlights (compared to the same year-ago quarter)
- Revenue increased 3% to $1.45 billion, due to higher demand for gold and silver products.
- Gross profit margin increased 17% to 0.41%, due primarily to improvement in premium spreads.
- Selling, general and administrative expenses increased 33% to $4.1 million, due to costs associated with the new logistics center, as well as increased public company expenses.
- Net income increased 66% to $2.6 million from $1.5 million, due to higher gross profits and one-time tax benefits.
Fiscal Q4 2015 Financial Results
Revenues increased 3% to $1.45 billion from $1.41 billion in the same year-ago quarter, driven primarily by higher gold and silver ounce volumes, which were offset by lower commodity prices.
Gross profit increased 20% to $5.9 million (0.41% of revenue) from $5.0 million (0.35% of revenue) in the same year-ago quarter. The increase in gross profit was due, in part, to higher gross profits from custom coin programs.
Selling, general and administrative expenses were $4.1 million, an increase from $3.1 million in the same year-ago quarter. The increase was due to the costs related to the opening of the new logistics center, as well as expenses associated with being a public company for the entire year.
Net income increased 66% to $2.6 million, or $0.36 per diluted share, from $1.5 million, or $0.21 per diluted share, in the same year-ago quarter. The increase was primarily due to higher gross profits and certain one-time tax benefits, which were offset by higher selling, general and administrative expenses.
Fiscal 2015 Financial Results
Revenues increased 2% to $6.07 billion from $5.98 billion in fiscal 2014. The increase was primarily due to higher sales volume of silver ounces, which was partially offset by lower commodity gold prices and lower market volatility.
Gross profit was $24.5 million (0.40% of revenue) in fiscal 2015, a decrease from $27.4 million (0.46% of revenue) in fiscal 2014. The decrease in gross profit was primarily due to lower premium spreads on the company’s primary products, which were offset by higher sales volumes of primary silver products and higher-margin value-added products.
Selling, general and administrative expenses increased 10% to $17.1 million from $15.6 million in fiscal 2014. The increase was primarily due to the costs related to the opening of the logistics center, as well as full one-year costs associated with being a public company.
Net income totaled $7.1 million, or $1.00 per diluted share, a decrease from $8.3 million, or $1.09 per diluted share, in fiscal 2014, which was primarily due to lower gross margins and higher costs.
Management Commentary
"Fiscal Q4 marked our fifth consecutive quarter of profitability as a public company," said A-Mark CEO, Greg Roberts. "During the quarter, we continued to execute on our growth plan by expanding our trading capacity along with our higher-margin services and value-added product pipeline ̶ ̶ all designed to increase revenues and profitability.
“The success of our execution was evidenced by the 20% improvement in our gross profit during the fourth quarter compared to our gross profit in the same year-ago quarter. Our financial performance also reflects the solid potential of our business model, which is structured to provide consistent profitability in all market environments, while offering opportunities for significantly higher revenue and gross profit when we see increased volatility and demand for our products.
"Along those lines, we have recently experienced a strong surge in precious metals demand and volatility, driven by the weakness in the Euro, as well as the economic uncertainty in Greece, Asia and the U.S. equity markets. These macroeconomic events greatly benefit our core trading business, because it allows us to expand our volumes and trade tickets, along with our premium spreads on precious metals.
“In addition to capitalizing on the current market environment, we continue to pursue business development initiatives, which can provide us with greater capacity and more direct influence over our profitability. These initiatives include further expanding our value-added service offerings, like storage and logistics. Our new Las Vegas logistics facility is now operational, and we expect it to provide operational cost savings and synergies beginning in our fiscal second quarter.
“Looking ahead, we have entered fiscal 2016 on a strong footing, with significant operational and financial momentum. We hope to capitalize on this momentum throughout the fiscal year, and believe we are seeing initial signs of increased revenues and profitability.”
Conference Call
A-Mark will hold a conference call tomorrow (September 24, 2015) to discuss these financial results. The company's CEO, Greg Roberts, and EVP and COO, Thor Gjerdrum, will host the call at 12:00 p.m. Eastern time (9:00 a.m. Pacific time). A question and answer session will follow management's presentation.
To participate, please dial the appropriate number at least five minutes prior to the start time, and ask for the A-Mark Precious Metals conference call.
| U.S. dial-in number: 1-877-407-0789 | ||||
| International number: 1-201-689-8562 | ||||
| Conference ID: 13618109 | ||||
The conference call will be broadcast simultaneously and available for replay via the Investor Information section of A-Mark’s website at www.amark.com. If you have any difficulty connecting with the conference call or webcast, please contact Liolios Group at 949-574-3860.
A replay of the call will be available after 3:00 p.m. Eastern time on the same day through October 8, 2015.
| Toll-free replay number: 1-877-870-5176 | |||||
| International replay number: 1-858-384-5517 | |||||
| Conference ID: 13618109 | |||||
About A-Mark Precious Metals
A-Mark Precious Metals, Inc. is a full-service precious metals trading company and an official distributor for many government mints throughout the world. The company offers gold, silver, platinum and palladium in the form of bars, plates, powder, wafers, grain, ingots and coins. Its Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious metals, while its Coin & Bar unit deals in over 200 coin and bar products in a variety of weights, shapes and sizes for distribution to dealers and other qualified purchasers. The company operates trading centers in Santa Monica, California, and Vienna, Austria, for buying and selling precious metals.
In addition to wholesale and trading activity, A-Mark offers customers a variety of services, including financing, consignment and various customized financial programs. As a U.S. Mint-authorized purchaser of gold, silver and platinum coins, A-Mark purchases bullion products directly from the U.S. Mint for sale to customers. A-Mark also has distributorships with other sovereign mints, including in Australia, Austria, Canada, China, Mexico and South Africa. Customers of A‑Mark include mints, manufacturers and fabricators, refiners, coin and metal dealers, banks and other financial institutions, jewelers, investors and collectors. For more information about A-Mark Precious Metals, visit www.amark.com.
Through its subsidiary Collateral Finance Corporation, a licensed California Finance Lender, the company offers loans collateralized by numismatic and semi-numismatic coins and bullion to coin and metal dealers, investors and collectors. Through its Transcontinental Depository Services subsidiary, it offers a variety of managed storage options for precious metals products to financial institutions, dealers, investors and collectors around the world. Through its A-M Global Logistic subsidiary, the company offers storage and order fulfillment services to our retail customers.
Important Cautions Regarding Forward-Looking Statements
Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ include the following: the failure to execute our growth strategy as planned; greater than anticipated costs incurred to execute this strategy; the favorable results that we are experiencing in the first fiscal quarter of 2016 not being indicative of activity for the full fiscal year; changes in the current international political climate which has favorably contributed to demand and volatility in the precious metals markets; increased competition for our higher margin services, which could depress pricing; the failure of our business model to respond to changes in the market environment as anticipated; general risks of doing business in the commodity markets; and other business, economic, financial and governmental risks as described in in the Company’s public filings with the Securities and Exchange Commission.
The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
| A-MARK PRECIOUS METALS, INC. | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (amounts in thousands, except share data) | |||||||
| June 30, | 2015 | 2014 | |||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash | $ | 20,927 | $ | 13,193 | |||
| Receivables, net | 90,055 | 102,824 | |||||
| Inventories: | |||||||
| Inventories | 152,076 | 150,944 | |||||
| Restricted inventories | 39,425 | 24,610 | |||||
| 191,501 | 175,554 | ||||||
| Income taxes receivable | 7,846 | — | |||||
| Income taxes receivable from Former Parent | 1,095 | 3,139 | |||||
| Prepaid expenses and other assets | 1,202 | 613 | |||||
| Total current assets | 312,626 | 295,323 | |||||
| Property and equipment, net | 2,850 | 1,678 | |||||
| Goodwill | 4,884 | 4,884 | |||||
| Intangibles, net | 2,369 | 2,753 | |||||
| Long-term receivables | 650 | — | |||||
| Long-term investments | 2,500 | 500 | |||||
| Deferred tax assets - non-current | 23 | — | |||||
| Total assets | $ | 325,902 | $ | 305,138 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Lines of credit | $ | 147,000 | $ | 135,200 | |||
| Liability on borrowed metals | 9,500 | 8,709 | |||||
| Product financing arrangement | 39,425 | 24,610 | |||||
| Accounts payable | 68,536 | 77,426 | |||||
| Accrued liabilities | 5,330 | 6,070 | |||||
| Income taxes payable | — | 2,178 | |||||
| Deferred tax liability - current | 149 | 1,456 | |||||
| Total current liabilities | 269,940 | 255,649 | |||||
| Deferred tax liabilities | — | 33 | |||||
| Total liabilities | 269,940 | 255,682 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as of June 30, 2015 and June 30, 2014 | — | — | |||||
| Common Stock, par value $0.01; 40,000,000 authorized; 6,973,548 and 6,962,742 issued and outstanding as of June 30, 2015 and June 30, 2014, respectively | 70 | 70 | |||||
| Additional paid-in capital | 22,470 | 22,317 | |||||
| Retaining earnings | 33,422 | 27,069 | |||||
| Total stockholders’ equity | 55,962 | 49,456 | |||||
| Total liabilities and stockholders’ equity | $ | 325,902 | $ | 305,138 | |||
| A-MARK PRECIOUS METALS, INC. | |||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||
| (in thousands, except for share and per share data) | |||||||||
| Years Ended June 30, | 2015 | 2014 | |||||||
| Revenues | $ | 6,070,234 | $ | 5,979,354 | |||||
| Cost of sales | 6,045,736 | 5,951,913 | |||||||
| Gross profit | 24,498 | 27,441 | |||||||
| Selling, general and administrative expenses | (17,131 | ) | (15,570 | ) | |||||
| Interest income | 6,073 | 5,592 | |||||||
| Interest expense | (4,311 | ) | (3,926 | ) | |||||
| Unrealized gains (losses) on foreign exchange | 19 | (6 | ) | ||||||
| Net income before provision for income taxes | 9,148 | 13,531 | |||||||
| Provision for income taxes | (2,097 | ) | (5,272 | ) | |||||
| Net income | $ | 7,051 | $ | 8,259 | |||||
| Basic and diluted income per share: | |||||||||
| Basic - net income | $ | 1.01 | $ | 1.10 | |||||
| Diluted - net income | $ | 1.00 | $ | 1.09 | |||||
| Weighted average shares outstanding: | |||||||||
| Basic | 6,962,800 | 7,530,300 | |||||||
| Diluted | 7,062,600 | 7,590,400 | |||||||
| A-MARK PRECIOUS METALS, INC. | |||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (amounts in thousands) | |||||||||
| Years Ended June 30, | 2015 | 2014 | |||||||
| Cash flows from operating activities: | |||||||||
| Net Income | $ | 7,051 | $ | 8,259 | |||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||
| Depreciation and amortization | 895 | 934 | |||||||
| Deferred income taxes | (1,364 | ) | 6,930 | ||||||
| Interest added to principal of secured loans | (212 | ) | (476 | ) | |||||
| Share-based compensation | 253 | 194 | |||||||
| Loss on sale of property and equipment | 41 | — | |||||||
| Changes in assets and liabilities: | |||||||||
| Receivables | 20,224 | 14,282 | |||||||
| Secured loans to Former Parent | 2,562 | (2,562 | ) | ||||||
| Income tax receivable | (7,846 | ) | — | ||||||
| Inventories | (15,947 | ) | (13,176 | ) | |||||
| Prepaid expenses and other current assets | (589 | ) | (126 | ) | |||||
| Accounts payable | (8,890 | ) | (8,584 | ) | |||||
| Liabilities on borrowed metals | 791 | (11,408 | ) | ||||||
| Accrued liabilities | (740 | ) | (531 | ) | |||||
| Receivable from/ payables to Former Parent | 2,044 | (12,659 | ) | ||||||
| Income taxes payable | (2,178 | ) | 2,178 | ||||||
| Net cash used in operating activities | (3,905 | ) | (16,745 | ) | |||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures for property and equipment | (1,784 | ) | (1,011 | ) | |||||
| Proceeds from the sale of property and equipment | 60 | — | |||||||
| Purchase of cost method investment | (2,000 | ) | (500 | ) | |||||
| Secured loans, net | (10,454 | ) | (4,121 | ) | |||||
| Net cash used in investing activities | (14,178 | ) | (5,632 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Product financing arrangement, net | 14,815 | (13,944 | ) | ||||||
| Dividends paid | (698 | ) | (10,000 | ) | |||||
| Borrowings under lines of credit, net | 11,800 | 40,200 | |||||||
| Retirement of repurchased Afinsa and Auctentia common stock and interest in A-Mark Precious Metals, Inc. | — | (2,198 | ) | ||||||
| Repurchase and retirement of restricted stock for payroll taxes | (100 | ) | (53 | ) | |||||
| Net cash provided by financing activities | 25,817 | 14,005 | |||||||
| Net decrease in cash and cash equivalents | 7,734 | (8,372 | ) | ||||||
| Cash and cash equivalents, beginning of period | 13,193 | 21,565 | |||||||
| Cash and cash equivalents, end of period | $ | 20,927 | $ | 13,193 | |||||
| Supplemental disclosures of cash flow information: | |||||||||
| Cash paid during the period for: | |||||||||
| Interest expense | $ | 4,141 | $ | 3,908 | |||||
| Income taxes | $ | 12,883 | $ | 7,667 | |||||
| Non-cash investing and financing activities: | |||||||||
| Interest added to principal of secured loans | $ | 212 | $ | 476 | |||||
| Secured loans received in satisfaction of customer receivable | $ | — | $ | 12,800 | |||||
RESULTS OF OPERATIONS
The operating results of our business for the years ended June 30, 2015 and 2014 are as follows:
| Years Ended June 30, | 2015 | 2014 | $ | % | ||||||||||||||||
| $ | % of revenue | $ | % of revenue | Increase/ (decrease) | Increase/ (decrease) | |||||||||||||||
| Revenues | $ | 6,070,234 | 100.000 | % | $ | 5,979,354 | 100.000 | % | $ | 90,880 | 1.5 | % | ||||||||
| Gross profit | 24,498 | 0.404 | % | 27,441 | 0.459 | % | $ | (2,943 | ) | (10.7 | )% | |||||||||
| Selling, general and administrative expenses | (17,131 | ) | (0.282 | )% | (15,570 | ) | (0.261 | )% | $ | 1,561 | 10.0 | % | ||||||||
| Interest income | 6,073 | 0.100 | % | 5,592 | 0.094 | % | $ | 481 | 8.6 | % | ||||||||||
| Interest expense | (4,311 | ) | (0.071 | )% | (3,926 | ) | (0.066 | )% | $ | 385 | 9.8 | % | ||||||||
| Unrealized gains (losses) on foreign exchange | 19 | — | % | (6 | ) | — | % | $ | 25 | NM | ||||||||||
| Net income before provision for income taxes | 9,148 | 0.151 | % | 13,531 | 0.226 | % | $ | (4,383 | ) | (32.4 | )% | |||||||||
| Provision for income taxes | (2,097 | ) | (0.035 | )% | (5,272 | ) | (0.088 | )% | $ | (3,175 | ) | (60.2 | )% | |||||||
| Net income | $ | 7,051 | 0.116 | % | $ | 8,259 | 0.138 | % | $ | (1,208 | ) | (14.6 | )% | |||||||
| Per Share Data: | ||||||||||||||||||||
| Basic | $ | 1.01 | $ | 1.10 | $ | (0.09 | ) | (8.2 | )% | |||||||||||
| Diluted | $ | 1.00 | $ | 1.09 | $ | (0.09 | ) | (8.3 | )% | |||||||||||
The operating results of our business for the three months ended June 30, 2015 and 2014 are as follows:
| Three Months Ended June 30, | 2015 | 2014 | $ | % | ||||||||||||||||
| $ | % of revenue | $ | % of revenue | Increase/ (decrease) | Increase/ (decrease) | |||||||||||||||
| Revenues | $ | 1,453,402 | 100.000 | % | $ | 1,413,048 | 100.000 | % | $ | 40,354 | 2.9 | % | ||||||||
| Gross profit | 5,951 | 0.410 | % | 4,960 | 0.351 | % | $ | 991 | 20.0 | % | ||||||||||
| Selling, general and administrative expenses | (4,069 | ) | (0.282 | )% | (3,067 | ) | (0.218 | )% | $ | 1,002 | 32.7 | % | ||||||||
| Interest income | 1,591 | 0.110 | % | 1,421 | 0.101 | % | $ | 170 | 12.0 | % | ||||||||||
| Interest expense | (1,122 | ) | (0.077 | )% | (1,047 | ) | (0.074 | )% | $ | 75 | 7.2 | % | ||||||||
| Unrealized gains (losses) on foreign exchange | 226 | 0.016 | % | (6 | ) | — | % | $ | 232 | NM | ||||||||||
| Net income before provision for income taxes | 2,577 | 0.177 | % | 2,261 | 0.160 | % | $ | 316 | 14.0 | % | ||||||||||
| Provision for income taxes | (11 | ) | (0.000 | )% | (712 | ) | (0.050 | )% | $ | (701 | ) | (98.5 | )% | |||||||
| Net income | $ | 2,566 | 0.177 | % | $ | 1,549 | 0.110 | % | $ | 1,017 | 65.7 | % | ||||||||
| Per Share Data: | ||||||||||||||||||||
| Basic | $ | 0.37 | $ | 0.21 | $ | 0.16 | 76.2 | % | ||||||||||||
| Diluted | $ | 0.36 | $ | 0.21 | $ | 0.15 | 71.4 | % | ||||||||||||