A-Mark Precious Metals Reports Fiscal Second Quarter 2019 Results

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EL SEGUNDO, Calif., Feb. 11, 2019 (GLOBE NEWSWIRE) -- , a leading full-service provider of products and services to the global precious metals market, reported results for the fiscal second quarter ended December 31, 2018.

Gross profit decreased 7% to $8.3 million (0.8% of revenue) from $8.9 million (0.5% of revenue) in the same year-ago quarter. The decrease in gross profit was primarily due to lower trading profits of the Wholesale Trading & Ancillary Services segment and decreased gross profit from the company’s Direct Sales segment (i.e., Goldline).

Selling, general and administrative expenses decreased 13% to $8.1 million from $9.3 million in the same year-ago quarter. The decrease was primarily due to lower operating expenses incurred by the company’s Direct Sales segment of $1.5 million and a reduction of $0.5 million of legal expenses and investigatory acquisition costs. These reductions were partially offset by higher overall compensation costs of $0.6 million.

Interest income increased 42% to $4.7 million from $3.3 million in the same year-ago quarter. The increase was driven primarily by other finance product income, including finance fees earned related to repurchase arrangements with customers, which increased by $0.8 million compared to the same year-ago period and represented approximately 61% of the aggregate increase.

Interest expense increased 39% to $4.7 million from $3.4 million in the same year-ago quarter. The increase was primarily due to the newly issued notes payable related to the Secured Lending segment and an increase in liability on borrowed metals, partially offset by a reduction of liabilities for the Trading Credit Facility and product financing arrangements. 

Net income totaled $577,000 or $0.08 per diluted share, an improvement from net loss of $205,000 or $(0.03) per diluted share in the same year-ago quarter.

Gross profit increased 4% to $16.8 million (0.6% of revenue) from $16.2 million (0.4% of revenue) in the same year-ago period. The increase in gross profit was primarily due to higher gross profits from the company’s Wholesale Trading & Ancillary Services segment, offset by lower trading profits and gross profit from the Direct Sales segment (i.e., Goldline).

Selling, general and administrative expenses decreased 3% to $15.8 million from $16.3 million in the same year-ago period. The decrease was primarily due to lower operating expenses incurred by the Direct Sales segment of $0.6 million and a reduction of $0.9 million of legal and investigatory acquisition costs. The reductions were partially offset by increased overall compensation costs of $1.2 million.

Interest income increased 43% to $9.2 million from $6.4 million in the same year-ago period. This increase was driven primarily by other finance product income, including finance fees earned related to repurchase arrangements with customers, which increased by $1.7 million compared to the same year-ago period. The increase was also driven by higher interest rates and an increase in the weighted-average value of the company’s secured loan portfolio. Interest income earned from the secured loan portfolio increased by $0.4 million compared to the same year-ago period.

Interest expense increased 35% to $8.2 million from $6.1 million in the same year-ago period. The increase was primarily due to newly issued notes payable related to the Secured Lending segment and an increase in liability on borrowed metals, which was partially offset by a reduction in liabilities for the Trading Credit Facility and product financing arrangements. In comparison to the same year-ago period, interest expense increased $1.7 million related to the newly issued notes payable, $0.7 million related to the liability on borrowed metals and $0.1 million related to the Goldline Credit Facility. This was partially offset by $(0.1) million related to the Trading Credit Facility (including debt amortization costs) and $(0.2) million related to product financing arrangements. The Goldline Credit Facility was paid off in full during the period.

Net income totaled $2.1 million or $0.29 per diluted share, an improvement from $273,000 or $0.04 per diluted share in the same year-ago period.

“Looking forward to the second half of the fiscal year, we have seen a 3% increase in both gold and silver prices since the end of December and have continued to experience increased volatility in the market and robust demand for A-Mark’s physical products. Moreover, the price of gold exceeded $1,300 per ounce in January for the first time in over six months. We remain cautiously optimistic about our prospects, especially given the macro backdrop and geopolitical environment, and will continue to act opportunistically to capitalize on attractive near-term trading opportunities while strategically scaling our business for long-term success.”

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: 1-877-407-0789International number: 1-201-689-8562Conference ID: 13687174

The conference call will be broadcast simultaneously and available for replay via the Investor Relations section of A-Mark’s website at . If you have any difficulty connecting with the conference call or webcast, please contact A-Mark’s investor relations team at 1-949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time through February 25, 2019.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Conference ID: 13687174

A-Mark operates several business units in its Wholesale Trading & Ancillary Services segment, including Industrial, Coin and Bar, Trading and Finance, Transcontinental Depository Services (TDS), Logistics and Mint. Its Industrial unit services manufacturers and fabricators of products utilizing precious metals, while its Coin and Bar unit deals in over 200 different products for distribution to dealers and other qualified purchasers. 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, South Africa and the United Kingdom. Through its subsidiary, A-Mark provides customers with storage and management solutions for precious metals worldwide. Through its A-M Global Logistics subsidiary, A-Mark provides customers an array of complementary services, including storage, shipping, and delivery of precious metals and custom coins on a secure basis. A-Mark also holds a majority stake in a joint venture that owns the minting operations known as , which enables A-Mark to mint proprietary products as well as provides greater access to fabricated silver products.

The company operates its Secured Lending segment through its wholly-owned subsidiary, . Founded in 2005, CFC is a California licensed finance lender that originates and acquires loans secured by bullion and numismatic coins. Its customers include coin and precious metal dealers, investors and collectors.

A-Mark operates its Direct Sales segment through its wholly-owned subsidiary , a direct retailer of precious metals to the investor community. Goldline markets A-Mark’s precious metal products through various channels, including radio, television and the Internet.

A-Mark is headquartered in El Segundo, California and with offices and facilities in Vienna, Austria and Las Vegas, Nevada. For more information, visit .

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.

The operating results of our business for the three months ended December 31, 2018 and 2017 are as follows:

The operating results of our business for the six months ended December 31, 2018 and 2017 are as follows:

 

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Globe Newswire: 21:05 GMT Monday 11th February 2019

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