A-Mark Precious Metals Reports Fiscal Fourth Quarter and Full Year 2015 Results

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 %

 

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

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

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