CLCT - Earnings call transcript Q3 2018

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Operator

Good afternoon, everyone. And thank you for joining us to discuss Collectors Universe’s Financial Results for the Third Quarter ended March 31, 2018. With us today from 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 forecasted 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. today’s as forward-looking The no the call, are events a obligation made forward-looking new otherwise. undertakes whether statements, statements of only the Company of revise date of future result conference to as or update information, and or turn to the like now call to Orlando. would I that, Joseph over With Joe?

Joseph Orlando

welcome commentary quarter quarter fashion. going for the results Collectors for Thank conference summarize want slower in a some today’s the forward Universe I the our you. fiscal third finished QX, you stronger call on to QX give And quarter XXXX. fiscal of fourth year. the After into outlook and then to

from year fact, revenue In second was history. our in perspective, best QX the a XX it

to in X% in revenues all-time service revenue mind down from $XX.X ago, year-over-year third a record. quarter $XX.X the million, While last decline million year year were from a figure from the keep an QX that represented

major of once again. quarter end our activity U.S. trading pick-up the business, to coin The decline in soft impacted continued but years. from On in of sales the XX% auction previous weak near the QX of a was autograph recently U.S. material PCGS positive the to in market past and been market segments year. said continued card show our products relatively the and experience have last the note, as in the had showed a cannot compared started conditions grow bulk The $X business at consumer bulk our business impact general XX% by Vintage, revenue on business increase downturn division released a be in primary which same to market. This demand said, QX. from coin in Our as services coin for performance, million to down and That year. for an the roughly the of prices vintage international realized the bulk QX,

with in last Hong-Kong quarters, its this Our our versus million more first The million three year for revenue up and in was $X.X $X.X a Shanghai, million than year. for revenue $X combined which and have revenue million fiscal million $X.X million through from the Kong France, Hong Shanghai the combined majority office, $X doubled versus three ago. in QX, in our $X.X quarters of from emanated of year Through offices XXXX. offices growth Shanghai which

This included The for fiscal has well. fiscal the the track million another At for most Our revenue at any was XXXX. approximately $XX incoming is XXXX. XXXX, the in million set PSA in performance history other approximately and finishing year and reach PSA. the the of quarter represented a as surpass period as business PSA's ago. its three revenue record on a QX $XX.X been helped The segment quarter, ago. close the its quarter QX, division The collectibles. same PSA/DNA million versus XX record all-time million case records major XXX,XXX versus were Through year quarterly shipped during revenue $X.X milestone figure total finished with line bottom year for brisk million division certified fiscal in submission with $X.X doors our division QX in opening since top to of an another collectibles revenue its the annual for this record units of quarters Several record-setting set PSA division. for over

handle expanding focus capacity our on operational business. been has to surging this So

We and output are of to committed to increasing shifts technology, training using efficiency. improve cross a new combination hires, additional

brand is has strong as ever it as been. Our

PSA sports the few a of for XXXX sold X X, Honus Mickey is the Wagner. paid for card the some became example weeks million. record baseball Mint than Just tremendous $X.XX high-end ago, auction last the other Mantle highest ever generated The a fact the gains in past card an in Topps XX sold TXXX XXXX iconic Mantle price any that Mint collectibles XXX,XXX have for that years. PSA It an made

about adjust year brand excitement customer strength ago. further need the our business, which XX% grow satisfy base. and Gross Returning we evident, new down is overall from level our were and for PSA of demand to our While business. a to margins to XX% profit quarter, was the market the to the

to for share, operating was of Our was from was $X.X U.S. Income year. continuing $X.XX $X.XX from for third revenues. due to the down million QX income the the This in share quarter decline XXXX, or prior diluted compared million the per $X mainly per $X.X previous coin year. fiscal operations million in

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

Joseph Wallace

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

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

in and share. million, million, months, million, $XX generated For numbers, and months. $X.X $XX.X revenue X% $X.XX income from above operating operations per operations third operating X% the declined months continuing or diluted $XX.X in Company $X.X revenues of the ’XX. diluted of compares million income nine income Based the million of earned share nine after-tax from by the revenues $X.XX income continuing on the of after-tax of or million, per quarter nine and fiscal to of $X.X of the for This

$X.X by quarterly coin million months, and $X and $X coin revenues U.S. or representing as business representing market declined declined in XX% the in for brand months, million for Revenues autograph the Total nine $X.X million quarter or third million business. continued and U.S. $X to Our revenues the and or revenues nine in also that in XX% XX% and in million nine year's acceptance our greater by or months reflecting nine coin XXX% $X.X the this that the region. year's million in China third quarter months, and generated third general quarter we by in $X.X third in third coin million see up months, X% or quarter, the XX% XX% by $X nine record and slowness disclosed the by of increases quarter million, nine or and months. XX% the cards the revenues quarter. this were increased in for the and previously in

showed continued coin periods coin quarterly year. nine and have overseas revenues generating XX% our coin were of Notwithstanding and compared Despite revenues operations, revenues China China, to the months, slower revenue, our and third quarter and we our the in prior our Past financial the months the and to year cards that importance of in the including and performance. are in quarter a period generating Our overall nine autograph market XX% X% market. business nine and the our business month and same to business U.S. we quarter a nine and month third record XX% XX% continuing U.S. the rebounds. total to third coin lower as XX% and of experience revenues, reflects record business represented challenging of typically revenues, after

U.S. of our will although, channel respect coins is However, customer on strongest customer; to we the are increase ultimately a with channel the us our the submissions that for will it relationship at to from third and determine occur. the China submissions China; to got early is our previously non-exclusive our when on it to action banking to believe basis. too China customer this disclosed and quarter year we service we in from as to seasonally typically this the that will Furthermore, continue banking is It in however, and our terminated this exclusive point early business, With enable have prepared overtime, create that in too that predict effect future authenticate quarter China.

represented autographs third nine primarily incurred of terms, marketing million and nine to profit of costs quarters moving The about quarter terms, expenses in to and this margins the G&A Our banking our as revenues decline the compared as XX% proportion and fiscal million exits the were the We XX% are The same year's in the of In about current experience from and of and direct year's compensation performance-based of as same reductions quarter and our higher prior Partially first in gross nine costs and costs periods in as incentives, this expenses increased current In quarter the the increased costs recruitment margins cost in our are dollar from months XX% compared the months and $X.X months. in resulting the current offsetting and fixed and and $X.X a the nine lower by year selling in and is second results periods coin XX% relatively increased the in stock-based current third of periods, Selling cards third XX% million in businesses. or reflected the year. fiscal gross of and generated revenues and periods to same the decline from year. depreciation periods in of year quarter the XX% were XX% by the the expenses nine XX% primarily to-date in and and revenues expenses periods lease operating $X.X G&A of short-term. significant and million increases period. compared revenues and non-cash in XX% growing reflects XX% in in months. were and China’s marketing 'XX. last the year. -- $X.X profit in the XX% dollar those and channel months and that amortization

compared announced to Company about disbursements $X.X obtained September five new In loan loan to Joe. business share, software per to to year this this operations discontinued year's and of a $X.X our costs a paid and stockholders purposes. $X $X.XXX were $X.X of third capital of offset million, million, borrowings dividends on for expenditures and May from $X as $X.X now XXXX, In general million On million in which facility, to of under ’XX, XX, as June the record XXth cash on million cash remaining $X.X Turning generated of in to will position used months outstanding March term $X.X Xst, the $X.X Net I at $X.X new at the sheet. XX, a December hand of included XX, XXXX. headquarter balance operations May used the and quarterly to Company's and capitalized and operations. dividend by corporate stockholders million of XX, paid $X.X will quarter, million March May for million for for fund paid nine unsecured million The of under costs $X.X million, continuing facility. at back loan XXXX. XXth. was cash XXXX There borrowings we be term million call used we million

Joseph Orlando

Thanks Joe.

team customers has we would better and but With the the fiscal Universe what was of organization, on zero to the productive versus Before and remainder for best belt, a QX, In shareholders. do. rest term. business. that and our QX, a goal attention session. QX make prioritize over but of key QX, will parties. our to place two-day strategic and agree management to we the focus February, experience ways, for improve XXXX. two any great the our conclude, a the of outlook a in under benefit interested needs in actions that is of comments performance Profitably the projects will In unique our the bear establish growing our priorities be understanding is Collectors planning in the still off-site work but for our represented the few have services three of a most our lot This can we that company, company and the serve on proved believe session upon most company several performance key took in help I long like decades primary the in of our fruit all to participated

an make in In perspective, included will not which help addition, restructuring provide an unit from but our This instituted our once more of management action savings cohesive company should annual only a organization. restructuring team about million plan, a it the $X complete. operational

business coin position amid the overall goal is market ourselves still of growth when our market, While for softer the cooperative. itself is finds where and to

in interest have talent revenue taking and well. expansion, in We there in collectibles, sports recognition opportunities world. the regions. the basketball collectibles, once assets authenticate for in and Asia PCGS to that and the already opportunities, There but of further domestically leading non-sports throughout we has PSA brand everything and and Pokémon both reach Gathering are This in helped cards PSA baseball from and Collectors our Magic local which is to relationships various great Asia. establish internationally. has level a grade includes hire years, as new Universe recent started and global

our need returns profitably Universe introduce to and proposition to but should the like very we powerful That this the move the can forward. give as provide help grow been and best Collectors opportunity Just of company, we shareholders. our value rest better PSA discipline discipline collecting we brand us world. successful, PCGS, has to to improve

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

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

Operator

[Operator from with first question our Asset Instructions] And Cowen we’ll take Alexander McDonald Management.

Alexander McDonald

you've over any years. if few changes wondering resubmission past the notably seen I'm U.S. coin volume

Joseph Orlando

terms that reviews sort so in Resubmission of not thing, submissions. of raw

Alexander McDonald

Correct, yes…

Joseph Orlando

of there of that in coin well. material don’t also any business. that there or has is noticeable the I reviews But certainly all or don’t portion I decline business in been as part noticeable any part of been has business material No, and think the card It's think resubmission. decline at a decline the the or any

Alexander McDonald

most then? obviously side from come its then So raw of the

Joseph Orlando

past side mean coin material. card to that the spreads Yes, coin lot true comes where and a create is the market cycles. to the retail, things as management to one which of over on aren't year into the that our new us cards. there of come the vintage go or This through the community, side, that of hurt the We for fresh prevents it I team the and well. market market more the come of from to and collections of lack through auction that according where dealer and was machine the continuing opportunity collector throughout continually go We fresh coins market gives cycles material

So XXXX. coin the beginnings last into they team, the year according continued to it’s saw this management and of

Alexander McDonald

And I then picture just a bit a here. question bigger guess of

sheet. on of one bigger is your balance assets cash So the

think it's trended guess years. basis, it's I I been past the couple downwards percentage of Although, on a

low a on capital on capital side. pretty business, working and both are the CapEx guys You

do you maintain balance? why cash So elevated this

Joseph Wallace

than a about. how to think we we’ve company, China with is in decided it’s appropriate we And we $XX February where the million believe million to cash a to cash It variable back also of associated cut for us that that determined cash I time. at felt in on our recall balance around have as headed. lower our was unofficially public sheet, because any getting our we have obviously bit you'll dividend, point we’re that's in and comfortable $X.X much

China. get can been repatriated cash sometimes from delayed And

a sheet in appropriate variables cash general, in terms $XX we in about have So But it's point line. our company to any as of on believe million at there’s of balance public the couple time.

Alexander McDonald

liquidity that opportunities is up organic for And buffer? coming for growth, more potential or acquisition or just

Joseph Wallace

There’s for small and potential internationally, it's things it's for any liquidity new acquisitions, expanding buffer, for introducing it’s that. like services

Alexander McDonald

hop I’ll here. and off And more just then one

up year-to-date year-to-date number of year and out last year the Just to it's a looking stock-based be X turned bigger last at compensation, then for number. number times

so this So is over the year-to-date for the last guess year year-over-year, what increase far accounting I year?

Joseph Wallace

look couple stock-based terms a your in One fiscal recognized a at we ’XX, you performance LTIP is trend, of QX our quarterly you if a large our There’s of spread them and time, on as compensation see that a that will expense we numbers out basis in things. determined because it under for plan. goals met old

June those and in of through year's, with of therefore, So the shares accounted associated this that’s shares increase. of those divesting for investment the part continued

the part In increase for December and new addition the most that a back plan. of late introduced plan December, by be long-term for management bonds incentive ’XX, accounted LTIP we new for in would the

Operator

Instructions] turn or closing for at comments. Mr. questions. no this the any I’ll conference And [Operator time, Orlando, you are to additional over there

Joseph Orlando

for look with quarter. We joining speaking like to would us thank and today, everyone forward to you next

Operator

conclude your That does Thank you you. Thank participation. conference today’s for call.

You may now disconnect.

Collectors Universe (CLCT) 8 May 182018 Q3 Earnings call transcript