CLCT - Earnings call transcript Q2 2018

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Operator

Good afternoon, everyone and thank you for joining us to discuss Collectors Universe’s financial results for the Second Quarter ended December 31, 2017. Today’s call is being recorded. With us from today’s management are Joseph J. Orlando, Chief Executive Officer and Joseph Wallace, Chief Financial Officer. Management will provide a brief overview of the quarter and then open up the call to your questions. that call future statements and Securities financial business and today’s expectations the statements Litigation during as trends its statements XXXX. about performance, profitability Reform made Act may the regarding contain company’s concerning defined of Comments in forward-looking Private are including forecasts future results number materially of and differ uncertainties. from due those The company’s may call a actual forecast to in the possibly in this risks the are risks these addition uncertainties, filings more and fully Securities and in risks, of Certain to Exchange described in company’s the with other Commission. otherwise. today’s as the The no the call are future as obligation made forward-looking of or undertakes statements forward-looking statements of only the company result revise date of information, a conference to whether or update new and events now turn to I to that, call Orlando. the With Joseph would over like go sir. ahead, Please

Joseph Orlando

outlook and give you want I quarter summarize Thank conference quarter to some the third second year. you fiscal commentary forward and welcome call for XXXX. for the fiscal quarter the going the then into of results our to today’s on

As the case business, ago. the to from the quarter in of proved Service year-over-year usually second down year $XX.X million overall. million, company to $XX.X a our were XX% quarter one seasonality be the the to second due revenues from a a for slower is decline

of year. division showed previous our in XX% trading increase coin our from card an the primary Our autograph but a decline in of business, and business XX%

United Hong shown improving first once company in XXXX. recorded auction international of coin and million a revenue ago. was the versus year approximately finished in by of combination Shanghai offices, million a direct with all had had the was areas American from related. bulk total flaws signs of Set latter a as and bullion were slowest service. which closely experienced this the further Eagle prevented limited And on States bulk, year, sales poor of two quarter. Silver dropped business American was interest on achieving year desirable coin each the gold reported XXXX up QX or conditioned in with business vintage, immediate segment. a The in their more did Collector not have consumer has the vintage market manufactured Proof but our men primarily lack also XXXX softening sales in edition the calendar XX% of saw an complicated bulk vintage portion coin Silver three that track. news impact Medals grades. dealers them which share Liberty good even In took our second submissions, quality, decline Kong quarter again make the dramatic. lack U.S. due a sales sales, is $X.XX in demand numbers the XXXX, bulk second service men the interest releases Silver of thereof In lion’s year-over-year are totals. service decline Our good major was Those shows with company and since a that in usually services, of the and to quarter slowdown followed key general an few eventually in the same the shelve show the evidenced from The of had impact The QX, last sales additional our $X.XX the coin from international the overall and market. the generated such of the drop This of inventory. to with stronger of as revenue its XXXX toll most which higher of the in revenues, issue Collector some as with Coupled operations the the our amounts revenues services XX% by weeks in

international recent it comparison to certainly proper While performance is is important the perspective. put year-over-year into challenging, the the

submission significant needed first of their also received offices handle staffed This to Shanghai the first in volume. was our this of our QX, QX. earlier that office with which the year capacity overseas was coins arrived quarter XXXX, a in level quarter fiscal During volume

quarters, of $X.X million the is this fiscal the important two of that to up XX% an million to from is part So, note business XXXX $X.X decline. XXXX, increase it in through QX year-over-year in despite fiscal

Our overseas. proved to try more but somewhat this been growth also and has as be positive has in traction more we business China, gain to lumpy

line is quarter, business and to of another versus approximately with XX% year. PSA XX% QX record for from finishing million our with performance two million which PSA/DNA down Our for a quarters was bottom the year $X.X of $X.X were margins a record another in top division track business, XXXX, revenue fiscal quarter, ago. Through gross this finished and for once profit again Returning ago. on segment overall our the year

or $X.XX $X.X year. Our previous from $XX,XXX of XXXX the operating QX income compared year. Income for $X.XX for share, from diluted was quarter in the per per operations $X.X prior million down fiscal million to second the continuing share was

in many As moved of went facility Collectors a this provides move well we are into and while move the for some facility completely during a QX, growth. November, know, that magnitude month settled into now the you of proper created space a of Universe the new disruption long-term layout during

QX. detailed to it in let Wallace of Joe? Now, financial over turn performance for review Joe more a our me

Joseph Wallace

Thank a of of give quarter I will ‘XX. for fiscal financial overview the brief results you, second now Joe. the

second of from of income service $XXX,XXX from after-tax of $XX,XXX of the for and operating $X.X of million For This of income per or earned, company ‘XX. share. million generated per diluted $X.XX diluted million, revenues share operations quarter the or to continuing quarter, million after-tax fiscal $XX.X second $X.X income $X.XX and the continuing income operations operating revenues $XX.X of compares

$X.XX earned, revenues income $X.X the second half operations million, operations of first in quarter, or revenues first after-tax income first first to million compares company and continuing the declined on operating For $X.X of share million of $X.XX income substantially the the in after-tax XX% the continuing revenue half of per the of ‘XX. or numbers, $X.X the $X.X the diluted but operating per income fiscal share. $XX.X was generated This half of above million of million by half from $XX.X unchanged for year. diluted of Based million and year, of from

by by Our that $X.X in XX% autograph business. this X% revenues year’s seasonality months, first for revenues in revenues U.S. up for first quarter cards our a by X in second declined which China to quarter due quarter, months. XX%. second decreased business, this quarter, $X.X and $X.X were and the was $X.X or general increased in record whereas business the million or Revenues XX% X million second in million coin generated XX% revenues market and million in $X.X slowness by Coin XX% X $X.X or second or representing quarter revenues quarter. the China million million the reflecting coin $X.X the coin and million of a or our the in by for second half in declined million $X.X or the increases in second X XX% months, months, and year’s the

of prior to including second quarter XX% XX% operations, quarter were the for periods our the continued the Despite of X ‘XX and compared revenues year. the business and in first financial same the Our as coin and the and and months of and represents overseas XX% overall reflects our XX% in total XX% lower half performance. revenue, of XX% business our coin fiscal importance of revenues second in China

to U.S. previously winter As year the in of and And in lower we The quarter lower previously our that second this the in China the of reflected U.S. fiscal this quarter lower business than the quarter would revenues holidays our six coin is revenues, over due our in year’s nature year’s quarter occur to China discussed our quarter. the decline typically in year’s reflected quarter revenues that generally world disclosed, second in second quarters. that this first that seasonally have last expectation, slowest experienced that seasonal submissions. particular, due our the be

with incurred in have the XX% China in in periods the quarter. increased in as revenues periods moving and coin in second increased this XX% expenses were quarter year’s XX% in November about in the the more although Our gross second connection margin XX% our and strongest and of In started margin year. the XX% third development payroll, and to typically as in third this revenues in year exit the the than quarter and for $X.X million compared Due first primarily direct slowly million our headquarters In quarter costs quarter and fiscal significant and support in our the dollar prior and G&A is seasonally quarter increased months periods. the revenues year. fiscal the reflected compared relatively of and the of U.S. coin growing our second of ‘XX. the periods quarter periods and fixed in decline and travel declines $X.X million cots second the proportion submissions second seasonality represented the about as and China quarter same of revenues, and same $X.X marketing third G&A the compared in facility expense expenses autographs of about as was generated in exceed in by and to are of We same and in expenses in six cards operations quarter total Selling XX% $X quarter expect first this impact months of revenues marketing business business businesses. of six in primarily on the relocation year’s of don’t year’s of last in of terms, current a and short-term. level significant current XX% and XX% The reflect XX% had The incurred costs profit show dollar XX% $X.X quarter in gross to million the the by revenues XX% and the lease selling of of ‘XX. the to XX% that and costs and months to in our the ‘XX million fiscal consolidated costs business terms ‘XX. profit six we

stock results we the incentives higher the incurred non-cash higher second operating was based offsetting in reduction periods. the performance in addition the increases in quarter. Partially In lower based current costs and costs from resulting the recruitment compensation a quarter in

XX. In of discontinued $X for purposes. year obtained operations to There operations. used X February XX, development of September $X.XXX continuing expenditures and capital facility on $X were software used borrowings million million and XX, million, by which offset and for back corporate million capitalized as a loan $X.X of our to will balance Joe. million million ‘XX. million, our announced of paid at I from costs XXXX for the unsecured million we $X.X of dividends sheet, $X.X business Turning February million included at operations June September record our hand and to the $X.X $X.X loan Decrease cash compared to months as and six $X.X the ‘XX at new $XX.X term cash fund Today used XX, position a and ‘XX, will in XXXX company company’s December loan to this for on the XX, under per cash to XX. million borrowings Net million share $X dividend generated paid now of term call cash outstanding was of of stockholders headquarter under be $X.X quarterly stockholders general costs

Joseph Orlando

dividend. into the to the Several to leads grow be company worked Directors Joe. hard subject return of believe the Thanks as summary years into what to quarterly they ago to of the our made our the cash excess us shareholders decision The Board dividend. QX

entered range simply policy. review thoughtful a required Our current has a cash dividend of that our position

turn years overall During $X.XX our has progress what effect how This our we but Directors to in shareholders. do dividend to $X.XX started to also progress international what’s of the is performance. ensure the important material from our our overseas have expansion investments Board on overseas shareholders, the as We and the in responsible the most what we last the a needed initiatives, continue an clearly several believe that long-term share To basis were our and of to fund but infrastructure, domestic company to dividend approach made has to best best for positive company. to reduce the shown has a our decided take share. was capital requisite per on is in is realized need interest is fiscal annual per action and

we and expansion Our goals, greatest with we a This have have cash come the penetrated reserves global need is Board simply is the as us level enter opportunity which to they of beyond down so those that level markets Universe. our our of extends a the not both at comfortably to the the considering Directors as was Directors Collectors growth and information dividend comfortable available far. sustainable at Board fund growth to feel placed management arise. Using reduction phase ability initiatives we another the

the to as by QX, Central was in of we speak. but XXXX. of few relatively outlook finds but the of or Before much in weeks. one PCGS due record-setting X,XXX still is story two currently Collectors a process America of Universe, gold The year’s business. quarters, one Collectors media our QX the make comments as conclude, ship challenging of has PCGS started year-over-year the fiscal business the would incredible on in Universe I and coins for remainder last find. like of slightly revenue for from graded PCGS to refer the being market of has over hobby’s the SS certifying Through pace. received global The decline greatest to it, Collectors coin is a and factors in recent ahead rest this QX of was processed we our attention slowly is gold

the generated PCGS all the relics Beyond value our offered holders. revenue historic be as from in will priceless submission, is brand this to these

focus in changed. our addition, goals, In have long-term not

growth lay have expansion continues secret build of team management not the Our It started to a international foundation is big upon part we our to is that overseas. strategy.

of cultures the moving learn momentum to right we will more in outside and markets our diverse direction. the we necessary to about adjustments continue U.S., the the make keep As the

now move to behind allow. is our building example, corporate this our already expand a way Our us facility new for enabled did and that PSA has in prior business, not

the causes revenue. cooperate Sometimes markets in temporary which do business, downturns not with

This in how hone our spend to aspects we that includes time money. we is business control. and job our the our Our of on can

responsible that and is As we bear the hyper-focused success stay the and of move Collectors the forward, its projects we approach A on long-term the for most shareholders. can imperative to that fruit it Universe. and is company prudent efforts crucial

the all are as international speaking Thank forward of metals, control, trade our precious our next of for quarter. U.S. market several policies with climate the state course, overall not price today and by expectations governed such primarily of in factors and Of worldwide. joining changing you the and to in the the you recollectables look possibility economic the us I

Now, may I like would the open call any to to questions you have.

Joseph Orlando

and thank of you and to to with want in We listening everyone for joining us the end QX. today look at speaking forward

Operator

Thank And that for concludes participation. your call your today. you for

now may disconnect. You

Collectors Universe (CLCT) 7 Feb 182018 Q2 Earnings call transcript