A-Mark Precious Metals Reports Fiscal Fourth Quarter and Full Year 2020 Results

EL SEGUNDO, Calif., Sept. 10, 2020 (GLOBE NEWSWIRE) -- A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a leading full-service provider of products and services to the global precious metals market, reported results for the fiscal fourth quarter and full year ended June 30, 2020.

Fiscal Fourth Quarter 2020 Financial Highlights

  • Revenues for the three months ended June 30, 2020 increased 96% to $1.67 billion from $850.2 million for the three months ended June 30, 2019 and increased 32% from $1.26 billion for the three months ended March 31, 2020
  • Gross profit for the three months ended June 30, 2020 increased 335% to $28.0 million (1.68% of revenue) from $6.5 million (0.76% of revenue) for the three months ended June 30, 2019 and increased 25% from $22.5 million (1.79% of revenue) for the three months ended March 31, 2020
  • Net income for the three months ended June 30, 2020 totaled $17.8 million or $2.49 per diluted share, as compared to net loss of $823,000 or $(0.12) per diluted share for the three months ended June 30, 2019 and net income of $11.3 million or $1.61 per diluted share for the three months ended March 31, 2020  
  • Gold ounces sold in the three months ended June 30, 2020 increased 91% to 669,000 ounces from 350,000 for the three months ended June 30, 2019 and increased 32% from 508,000 for the three months ended March 31, 2020
  • Silver ounces sold in the three months ended June 30, 2020 increased 136% to 29.6 million ounces from 12.5 million ounces for the three months ended June 30, 2019 and increased 15% from 25.7 million from the three months ended March 31, 2020
  • As of June 30, 2020, the number of secured loans decreased 74% to 717 from 2,806 as of June 30, 2019 and increased 67% from 429 as of March 31, 2020

Fiscal Fourth Quarter 2020 Financial Results
Revenues increased 96% to $1.67 billion from $850.2 million in the same year-ago quarter. The increase was primarily due to an increase in the total amount of gold and silver ounces sold and higher selling prices of gold and silver.

Gross profit increased 335% to $28.0 million (1.68% of revenue) from $6.5 million (0.76% of revenue) in the same year-ago quarter. The increase was due to higher gross profits from the Wholesale Trading & Ancillary Services and Direct Sales segments.

Selling, general and administrative expenses increased 21% to $10.2 million from $8.4 million in the same year-ago quarter. The increase was primarily due to increases in compensation expense (including performance-based accruals) of $1.8 million, advertising expense of $0.1 million, consulting costs of $0.2 million, and computer software expense of $0.2 million, which were partially offset by decreases in operating expenses of $0.5 million associated with the Company’s Direct Sales segment.

Interest income decreased 38% to $3.3 million from $5.3 million in the same year-ago quarter. The aggregate decrease in interest income was primarily due to lower interest income earned by our Secured Lending segment.

Interest expense decreased 24% to $3.6 million from $4.7 million in the same year-ago quarter. The decrease in interest expense was primarily related to the Company’s Trading Credit Facility and loan servicing fees, partially offset by an increase in interest expense related to our product financing arrangements and liabilities on borrowed metals.

Net income totaled $17.8 million or $2.49 per diluted share, a significant improvement from a net loss of $823,000 or $(0.12) per diluted share in the same year-ago quarter.

Full Year 2020 Financial Highlights

  • Revenues for the full year ended June 30, 2020 increased 14% to $5.46 billion from $4.78 billion for the full year ended June 30, 2019
  • Gross profit for the full year ended June 30, 2020 increased 110% to $67.0 million (1.23% of revenue) from $32.0 million (0.67% of revenue) for the full year ended June 30, 2019
  • Net income for the full year ended June 30, 2020 totaled $30.5 million or $4.31 per diluted share, as compared to net income of $2.2 million or $0.31 per diluted share for the full year ended June 30, 2019
  • Gold ounces sold in the full year ended June 30, 2020 increased 21% to 2,181,000 ounces from 1,799,000 for the full year ended June 30, 2019
  • Silver ounces sold in the full year ended June 30, 2020 increased 34% to 90.4 million ounces from 67.6 million ounces for the full year ended June 30, 2019 

Full Year 2020 Financial Results
Revenues increased 14% to $5.46 billion from $4.78 billion in the same year-ago period. The increase was primarily due to an increase in the total amount of gold and silver ounces sold and higher selling prices of gold and silver, partially offset by lower forward sales.

Gross profit increased 110% to $67.0 million (1.23% of revenue) from $32.0 million (0.67% of revenue) in the same year-ago period. This increase was due to higher gross profits from the Wholesale Trading & Ancillary Services and Direct Sales segments.

Selling, general and administrative expenses increased 13% to $36.8 million from $32.5 million in the same year-ago period. The increase was primarily due to increases in compensation expense (including performance-based accruals) of $4.5 million, computer software expense of $0.5 million, and depreciation and amortization expense of $0.4 million, which were partially offset by decreases in operating expenses of $1.1 million associated with the Company’s Direct Sales segment, and consulting expense of $0.4 million.

Interest income increased 10% to $21.2 million from $19.3 million in the same year-ago period. The aggregate increase in interest income was primarily due to interest income earned by the Company’s Secured Lending segment and other finance product income.

Interest expense increased 10% to $18.9 million from $17.1 million in the same year-ago period. The increase in interest expense was related primarily to the Company’s notes payable (which were issued in September 2018), loan servicing fees, product financing arrangements, and liabilities on borrowed metals, partially offset by reductions in interest expense related to our Trading Credit Facility, and the Goldline Credit Facility.

Net income totaled $30.5 million or $4.31 per diluted share, a significant improvement compared to net income of $2.2 million or $0.31 per diluted share in the same year-ago period.

Management Commentary 
“The fourth quarter capped off a record year for A-Mark,” said company CEO Greg Roberts. “Following the macroeconomic events in March that spurred the unprecedented volatility in the precious metals market, the fourth quarter was a period characterized by sustained and heightened demand and related product volumes. This consistency helped to drive sequential improvements in our key financial metrics, including a 25% increase in gross profit to $28.0 million as well as a 58% increase in net income to $17.8 million or $2.49 per diluted share compared with our third quarter. The record financial results we realized for both Q4 and fiscal 2020 resulted in Return on Equity of 17.6% for the quarter and 30.2% for the fiscal year and demonstrate the attractiveness of our business model, which is designed to generate continuing revenue streams in normal market conditions and outsized profitability during volatile market periods. 

“Our ecosystem of synergistic turn-key solutions has allowed us to capture significant value across the precious metals market and enables us to more effectively take advantage of supply constrained and volatile market conditions like those we saw in in the second half of the year. The strategic investments we’ve made over the last several years to expand capacity and operational capabilities have ideally positioned A-Mark to continue capitalizing on the current market conditions while increasing our market share and driving growth over the long term.

“Our operational and financial success in Q4 allowed us to enter fiscal 2021 with significant momentum. The market dynamics and trends we experienced in the fourth quarter have continued to date into fiscal Q1, highlighted by sustained demand and high volatility. These factors give us optimism for the year ahead as we look to take advantage of the opportunities in front of us. We believe our strong competitive position, robust platform, expanding customer base and diversified business model will help drive growth and profitability in the years ahead.”

Special Dividend
A-Mark’s Board of Directors approved a special dividend of $1.50 per common share. The special dividend will be paid on or about September 25, 2020 to stockholders of record as of September 21, 2020.

Conference Call
A-Mark will hold a conference call today (September 10, 2020) to discuss these financial results. The company's CEO Greg Roberts, President Thor Gjerdrum and CFO Kathleen Simpson-Taylor will host the call at 4:30 p.m. Eastern time (1:30 p.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: 13709056

The conference call will be broadcast simultaneously and available for replay via the Investor Relations section of A-Mark’s website at www.amark.com. 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 September 24, 2020.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Conference ID: 13709056

About A-Mark Precious Metals

Founded in 1965, A-Mark Precious Metals, Inc. (NASDAQ: AMRK) is a leading full-service precious metals trading company and wholesaler of gold, silver, platinum and palladium bullion and related products. The company’s global customer base includes sovereign and private mints, manufacturers and fabricators, refiners, dealers, financial institutions, industrial users, investors, collectors, and e-commerce and other retail customers. The company conducts its operations through three complementary segments: Wholesale Trading & Ancillary Services, Secured Lending, and Direct Sales.

A-Mark operates several business units in its Wholesale Trading & Ancillary Services segment, including Industrial, Coin and Bar, Trading and Finance, Storage, Logistics, and the Mint (as more fully described below). 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 Australia, Austria, Canada, China, Mexico, South Africa and the United Kingdom. Through its Transcontinental Depository Services subsidiary, A-Mark provides customers with a variety of managed storage options for precious metals worldwide. Through its A-M Global Logistics subsidiary, A-Mark provides customers an array of complementary services, including receiving, handling, inventorying, processing, packaging and shipping 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 SilverTowne Mint (Mint), which designs and produces minted silver products which provide greater product selection to customers, price stability within the supply chain as well as more secured access to silver during volatile market environments.

The company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation (CFC) and AM Capital Funding, LLC (AMCF). Founded in 2005, CFC is a 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.  AMCF was formed in 2018 for the purpose of securitizing eligible secured loans of CFC. 

A-Mark operates its Direct Sales segment primarily through its wholly-owned subsidiary Goldline Inc. (Goldline), a direct retailer of precious metals for 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, with offices and facilities in Los Angeles, California, Vienna, Austria, Las Vegas, Nevada, and Winchester, Indiana. For more information, visit www.amark.com.

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; 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.

Company Contact:
Thor Gjerdrum, President
A-Mark Precious Metals, Inc.
1-310-587-1414
thor@amark.com

Investor Relations Contact:
Matt Glover
Gateway Investor Relations
1-949-574-3860
AMRK@gatewayIR.com               


A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS 
(amounts in thousands, except for share data)

  June 30,
2020
   June 30,
2019
 
ASSETS         
Current assets:         
Cash $52,325   $8,320 
Receivables  49,142    26,895 
Derivative assets  46,325    2,428 
Secured loans receivable  63,710    125,298 
Precious metals held under financing arrangements  178,577    208,792 
Inventories:         
Inventories  246,603    198,356 
Restricted inventories  74,678    94,505 
   321,281    292,861 
Income tax receivable      1,473 
Prepaid expenses and other assets  2,659    2,783 
Total current assets  714,019    668,850 
Operating lease right of use assets  4,223     
Property, plant, and equipment, net  5,675    6,731 
Goodwill  8,881    8,881 
Intangibles, net  4,974    5,852 
Long-term investments  16,763    11,885 
Deferred tax assets      3,163 
Other long-term assets  3,500     
Total assets $758,035   $705,362 
LIABILITIES AND STOCKHOLDERS’ EQUITY         
Current liabilities:         
Lines of credit $135,000   $167,000 
Liabilities on borrowed metals  168,206    201,144 
Product financing arrangements  74,678    94,505 
Accounts payable and other current liabilities  140,930    62,180 
Derivative liabilities  25,414    9,971 
Accrued liabilities  10,397    6,137 
Income tax payable  2,135     
Total current liabilities  556,760    540,937 
Notes payable  92,517    91,859 
Deferred tax liabilities  62     
Other liabilities  3,802     
Total liabilities  653,141    632,796 
Commitments and contingencies         
Stockholders’ equity:         
Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as of June 30, 2020 and June 30, 2019       
Common stock, par value $0.01; 40,000,000 shares authorized; 7,031,500 and 7,031,450 shares issued and outstanding as of June 30, 2020 and June 30, 2019, respectively  71    71 
Additional paid-in capital  27,289    26,452 
Retained earnings  73,644    43,135 
Total A-Mark Precious Metals, Inc. stockholders’ equity  101,004    69,658 
Non-controlling interests  3,890    2,908 
Total stockholders’ equity  104,894    72,566 
Total liabilities, non-controlling interests and stockholders’ equity $758,035   $705,362 



A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share and per share data)

  Years Ended 
  June 30,
2020
  June 30,
2019
 
Revenues  5,461,094  $4,783,157 
Cost of sales  5,394,121   4,751,199 
Gross profit  66,973   31,958 
Selling, general, and administrative expenses  (36,756)  (32,502)
Interest income  21,237   19,270 
Interest expense  (18,859)  (17,146)
Other income, net  5,226   1,697 
Unrealized gains on foreign exchange  57    
Net income before provision for income taxes  37,878   3,277 
Income tax expense  (6,387)  (1,015)
Net income  31,491   2,262 
Net income attributable to non-controlling interests  982   37 
Net income attributable to the Company $30,509  $2,225 
Basic and diluted net income per share attributable
   to A-Mark Precious Metals, Inc.:
        
Basic $4.34  $0.32 
Diluted $4.31  $0.31 
Weighted average shares outstanding:        
Basic  7,031,500   7,031,400 
Diluted  7,080,500   7,085,300 


A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)

Years Ended June 30, 2020  2019 
Cash flows from operating activities:        
Net income $31,491  $2,262 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:        
Provision (reversal) for doubtful accounts     (30)
Depreciation and amortization  2,900   2,807 
Amortization of loan cost  1,484   1,192 
Deferred income taxes  3,225   707 
Interest added to principal of secured loans  (19)  (19)
Change in accrued earn-out     (588)
Debt extinguishment costs     45 
Share-based compensation  953   1,096 
Earnings from equity method investments  (4,878)  (1,198)
Changes in assets and liabilities:        
Receivables  (22,247)  8,992 
Secured loans receivable  3,086   (1,304)
Secured loans made to affiliates  5,261   (1,535)
Derivative assets  (43,897)  4,967 
Income tax receivable  1,473   80 
Precious metals held under financing arrangements  30,215   53,774 
Inventories  (28,420)  (12,745)
Prepaid expenses and other assets  59   (668)
Accounts payable and other current liabilities  78,750   16,183 
Derivative liabilities  15,443   (10,486)
Liabilities on borrowed metals  (32,938)  (79,202)
Accrued liabilities  3,859   1,137 
Income tax payable  2,135    
Net cash provided by (used in) operating activities  47,935   (14,533)
Cash flows from investing activities:        
Capital expenditures for property, plant, and equipment  (836)  (490)
Purchase of long-term investments     (2,300)
Purchase of intangible assets  (150)   
Secured loans receivable, net  53,260   (12,015)
Other loans originated  (3,500)   
Net cash provided by (used in) investing activities  48,774   (14,805)
Cash flows from financing activities:        
Product financing arrangements, net  (19,827)  (19,435)
Borrowings and repayments under lines of credit, net  (32,000)  (33,000)
Repayments on notes payable to related party     (7,500)
Proceeds from issuance of notes payable     95,000 
Debt funding issuance costs  (761)  (3,798)
Non-controlling ownership interest contribution     100 
Net payments related to share-based award activities  (116)   
Net cash (used in) provided by financing activities  (52,704)  31,367 
Net increase in cash, cash equivalents, and restricted cash  44,005   2,029 
Cash, cash equivalents, and restricted cash, beginning of period  8,320   6,291 
Cash, cash equivalents, and restricted cash, end of period $52,325  $8,320 


Overview of Results of Operations for the Years Ended June 30, 2020 and 2019

Consolidated Results of Operations

The operating results of our business for the years ended June 30, 2020 and 2019 are as follows:

in thousands, except per share data                        
Years Ended June 30, 2020  2019  $  % 
  $  % of
revenue
  $  % of
revenue
  Increase/
(decrease)
  Increase/
(decrease)
 
Revenues $5,461,094   100.000% $4,783,157   100.000% $677,937   14.2%
Gross profit  66,973   1.226%  31,958   0.668% $35,015   109.6%
Selling, general, and administrative expenses  (36,756)  (0.673)%  (32,502)  (0.680)% $4,254   13.1%
Interest income  21,237   0.389%  19,270   0.403% $1,967   10.2%
Interest expense  (18,859)  (0.345)%  (17,146)  (0.358)% $1,713   10.0%
Other income, net  5,226   0.096%  1,697   0.035% $3,529   208.0%
Unrealized gains on foreign exchange  57   0.001%       $57    
Net income before provision for income taxes  37,878   0.694%  3,277   0.069% $34,601   1055.9%
Income tax expense  (6,387)  (0.117)%  (1,015)  (0.021)% $5,372   529.3%
Net income  31,491   0.577%  2,262   0.047% $29,229   1292.2%
Net income attributable to non-controlling interests  982   0.018%  37   0.001% $945   2554.1%
Net income attributable to the Company $30,509   0.559% $2,225   0.047% $28,284   1271.2%
Basic and diluted net income per share attributable to A-Mark Precious Metals, Inc.:                        
Per Share Data:                        
Basic $4.34      $0.32      $4.02   1256.3%
Diluted $4.31      $0.31      $4.00   1290.3%


Overview of Results of Operations for the Three Months Ended June 30, 2020 and 2019

Consolidated Results of Operations

            The operating results of our business for the three months ended June 30, 2020 and 2019 are as follows:

in thousands, except per share data                  
Three Months Ended June 30,2020  2019  $ %
 $  % of
revenue
  $ % of
revenue
  Increase/
(decrease)
 Increase/
(decrease)
Revenues$1,665,768   100.000% $850,169  100.000% $815,599  95.9%
Gross profit 28,027   1.683%  6,450  0.759% $21,577  334.5%
Selling, general, and administrative expenses (10,228)  (0.614)%  (8,422) (0.991)% $1,806  21.4%
Interest income 3,269   0.196%  5,260  0.619% $(1,991) (37.9)%
Interest expense (3,585)  (0.215)%  (4,699) (0.553)% $(1,114) (23.7)%
Other income, net 4,779   0.287%  394  0.046% $4,385  1112.9
%
Unrealized gains on foreign exchange 99   0.006%  54  0.006% $45  83.3
%
Net income (loss) before provision for income taxes 22,361   1.342%  (963) (0.113)% $23,324  2422.0%
Income tax (expense) benefit (4,036)  (0.242)%  128  0.015% $4,164  3253.1%
Net income (loss) 18,325   1.100%  (835) (0.098)% $19,160  2294.6%
Net income (loss) attributable to non-controlling interests 499   0.030%  (12) (0.001)% $511  4258.3%
Net income (loss) attributable to the Company$17,826   1.070% $(823) (0.097)% $18,649
  2266.0%
Basic and diluted net income (loss) per share  attributable to A-Mark Precious Metals, Inc.:                  
Per Share Data:                  
Basic$2.54      $(0.12)    $2,66  2216.7%
Diluted$2.49      $(0.12)    $2.61  2175.0%


Overview of Results of Operations for the Three Months Ended June 30, 2020 and March 31, 2020

Consolidated Results of Operations

            The operating results of our business for the three months ended June 30, 2020 and March 31, 2020 are as follows:

in thousands, except per share data                   
Three Months Ended,June 30, 2020  March 31, 2020  $ %
 $  % of
revenue
  $ % of
revenue
  Increase/
(decrease)
 Increase/
(decrease)
Revenues$1,665,768  100.000% $1,258,722  100.000% $407,046   32.3%
Gross profit 28,027  1.683%  22,475  1.786% $5,552   24.7%
Selling, general, and administrative expenses (10,228) (0.614)%  (10,388) (0.825)% $(160)  (1.5)%
Interest income 3,269  0.196%  5,968  0.474% $(2,699)  (45.2)%
Interest expense (3,585) (0.215)%  (5,051) (0.401)% $(1,466)  (29.0)%
Other income, net 4,779  0.287%  463  0.037% $4,316   932.2%
Unrealized gains (losses) on foreign exchange 99  0.006%  (45) (0.004)% $144   320.0%
Net income before provision for income taxes 22,361  1.342%  13,422  1.066% $8,939   66.6%
Income tax expense (4,036) (0.242)%  (1,814) (0.144)% $2,222   122.5%
Net income 18,325  1.100%  11,608  0.922% $6,717   57.9%
Net income attributable to non-controlling interests 499  0.030%  287  0.023% $212   73.9%
Net income attributable to the Company$17,826  1.070% $11,321  0.899% $6,505   57.5%
Basic and diluted net income per share  attributable to A-Mark Precious Metals, Inc.:                  
Per Share Data:                  
Basic$2.54     $1.61     $0.93   57.8%
Diluted$2.49     $1.61     $0.88   54.7%

 

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