- Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to A-Mark Precious Metals Conference Call for the Fiscal First Quarter ended September 30, 2022. My name is Jenny, and I will be your operator this afternoon.

Before this call, A-Mark issued its results for the fourth quarter and fiscal year [ph] in a press release, which is available in the Investor Relations section of the company's website at www.amark.com.

You can find a link to the Investor Relations section at the top of the home page.

Joining us for today's call are A-Mark's CEO, Greg Roberts; President, Thor Gjerdrum; and CFO, Kathleen Simpson-Taylor.

will call we your remarks, their open to the questions. Following call. I'll we made necessary this conclude before provide by the during statements Then forward-looking call, the the cautions management regarding this I call be would available via Investor in replay link for remind A-Mark Relations like everyone section made is recorded of and to being will available the a that website.

please the CEO, Mr. Now, A-Mark's proceed. I to would call like over to Roberts. Sir, turn Greg

Gregory Roberts

our call you, A-Mark's you joining Thank of and again of diluted one to good history and of EPS million in Today Thank everyone. today. the Jenny, afternoon $XX net quarters reported income $X.XX. we for strongest with

on in our a customer was continue release, our growth increase XX X% These our EBITDA broadened sequential business increase our amazing further integrated a noted capabilities. demonstrate delivered of strategy, result solid percentage. increase in as a earnings A-Mark equity. also return gross a of our in XX% enhanced and our margin base generated the XX% gross has profit an strength fully and quarterly results As and point which A-Mark basis to

Our direct-to-consumer contributing gross that half our were the their to outstanding, target during to expand or continues consolidated our base as We reach our customer a customer. DTC each our to quarter successful demographic during continue additional with segment brands customers suite the quarter. growing DTC total customers XX,XXX of million own we X.X new diversified perform unique profit of in of customer over an DTC by

gross margins XXX X.X% QX. a constraints heightened of our basis points demand DTC X% gross premium supply by wider Continued result expanded a sequential in increase and as drove to in profit, spreads and

the over million As announced over XXXX. customers, JMB revenue XXX,XXX with closed and its in reported $XXX calendar asset acquisition in we BGASC, of recently

segment's full team is value our integration to as leveraging this its brand new performance technology brand expectations. BGASC's contribution for of now the to exceeding a quarter, look the forward additional in to Early are The We is and second and to fiscal JMB quarter reporting business. segment indications of DTC this potential BGASC of and the XXXX. standalone capture in that have the BGASC completed our our resources drive

Our last driver with minting which a business remaining remains nearly million levels. over our ounces near key year. during performance, We also record was production increase of same a XX quarter quarter, the the XX% at produced

production will We to SilverTowne & operations, for our its recently purchased capacity Tool acquisition our additional and furnace invest continue And and supplier, both reductions, future faster more double continue recent response for our time our Marksman to Die, of minting provide including which in to planning largest cost needs. minting tooling of We blanking Mint's facility evaluate proactive support the expand an operations. expansion further tooling and we capabilities. repairs,

I will call operating over provide and look CFO, I taking Thor Kathleen? discuss President, forward in the more financials Then to will metrics. Gjerdrum our turn walk Kathleen further a you questions. Now, our Simpson-Taylor, our your I'll through Afterwards, detail. to to update our

Kathleen Simpson-Taylor

everyone. Thank you, Greg afternoon good

associated QX profits Gross to to lower the represented services contributed ounces Gross an JMB revenues product QX due million to due including by arrangement, consolidated XX% interest a The in income in last in $X.X was X% company's and to from from expenses finance to profit costs, $X.X in Interest of to and XXXX profit the QX of year. to of advertising JMB. secured million was with fiscal liabilities amortization in by to $XX.X million, this with year. earned from loan aggregate decreased profit to for QX increase fiscal Interest contributed DTC profit profit consolidated from Our accruals XXXX the method of increased XXXX revenue The from attributable $X.X of earned increase financing year. increased in company to The income by decrease lower The XX% consolidated interest to fees. year. QX as million last in increase $X.X QX year amortization the in expense, and fiscal Net increase $X.X decreased from was for by $X.X in an XX% costs consulting of XX% QX compared $X.XX net in intangibles of XX% increased expense of fiscal of interest segment $X.X to and attributable lower issuance million of was DTC $X.X QX our of revenues $X.X share. in was fiscal acquired for decrease The of in Revenue million billion insurance XX% attributable from gross last for from to XX% income period. increase million offset the investments year. $X in billion last income was method gross million, diluted and for year. QX $X.X servicing decrease $X.X last The QX primarily Depreciation $X.X net segment million XX% QX year. the $X.X respectively. fiscal XXXX QX of of compares driven expenses the compensation of higher to lower income by to primarily contributed wholesale million of $X.X last credit consolidated the product split lending XXXX higher expense revenue by to related fiscal QX the increase $XX.X $XX per was performance-based of of last facility XXXX in ago fiscal of $X.X including in share fiscal totaled QX first million X.XX% million from offset XX% expense $XX.X due the compared of XXXX X% decrease quarter segments. of year. in AMCS sales in from for revenue and of associated decrease DTC this gold the XXXX XX% increase debt average $X.X XX% and compared trading million contributed partially million million $X.X million for interest in diluted XX% gross QX for in a adjusted last same of professional per And increased by Gross last million or represented equity on million, the earnings decreased SG&A for of in $X.X for and in in or amortization prices This QX the by JMB to in of investments. year. year XXXX, lower metals, income. fees was of represented and ancillary QX sold $X.XX in and billion million. to XXXX silver million, primarily Earnings XXXX. to to XXXX sold. borrowed in QX silver, QX was of $XX.X and ago two same June fiscal or fiscal computer of costs XXXX fiscal other effect QX related profit XXXX million and one segment stock and QX decrease related X% $X.X $XX million ounces increased partially X.XX% The offset selling gold due or quarter. The million million to company notes, gross of due $X.X equity a primarily

$XX.X year. weighted diluted compared is of with average shares outstanding for fiscal before stock the XXXX. effect first net during Our has depreciation fiscal totaled million split XX% XXXX. a an financial million to fiscal This adjusted $XX.X for of the expenses, two same increase been excludes million, taxes, million of diluted non-GAAP on a for million, and first QX for shares of increase diluted liquidity occurred XX average income for that in Adjusted which million of based EPS compared of in the provision the income in QX quarter $XX amortization, XX% one fiscal QX outstanding EBITDA quarter. compared ago a XXXX measure for measure, weighted year to XXXX totaled June non-GAAP quarter XXXX the XX.X acquisition last $XX.X

sheet, fiscal year turning at compared the balance end, Now, of our to to of million end $XX.X million had $XX.X cash XXXX. quarter at we

as share, at earnings million completes the at is number next tangible of the million, And XXXX. release, determination from available January It alternative the in the cash my fiscal year. and requirements, in Directors expected of end to $XXX.X That the summary. we up $XXX.X was worth announced in the quarter net in quarter will or performance, be is the XXXX. of by prior the end our A-Mark's basis. quarterly finally, Our per under was reaffirmed quarterly has Directors the dividend of on policy $X.XX common dividend regular an previously The Board announced of per paid share its initial cash policy and applicable declaration a resources, each the based financial covenants. on financial dividends Board regular including of factors, annual of cash bank October uses future company's cash The paid quarterly that subject cash of dividend $X.XX

metrics. on to turn call Thor? the will update us will Thor Now, I over who

Thor Gjerdrum

Kathleen. you, Thank

key average segments, down last down the last of in We The segment fiscal year. in X% X.X as the X% was increases purchase the XX,XXX account, total quarter. in fiscal of XXXX, silver from period of that gold approximately X% which time DTC which which Looking prior defined QX and or customers XXXX, from and The QX year-over-year at XX.X of first the of the the increase XX% quarter number from XX,XXX quarter year, made sold to of new set end at compares a QX was was order primarily up QX of XXXX prior metrics the a down in orders which DTC sold XX% delivered from X% operation is new dollar which quarter. million, base operating fiscal is from to million the the which $X,XXX, XXX,XXX JMB segment customer last was of fiscal in value XXXX customers a QX value third-party represents from was number quarter. QX have during XXXX, for which DTC QX XXXX. ounces our due average and our The product ounces segment customers first up The of was year of registered from to number during or fiscal customer last for in of the DTC metrics of base. QX organic up were growth X% is the year, customers fiscal first from we last down

turn inventory of with was a our quarter, X.X last quarter. and from first year, decrease ratio was in fiscal QX prior X.X, the For which XX% comparable the

of and totaled of loans June. decrease XX% from prices. during end end million, material Finally, year. metals XX% periods of experienced the decrease decreased declining of of quarter of XX, portfolio number precious of The precious rising the a prices. Typically, of during metal of increased end decrease fiscal last market loans September September the of the loan a CFC XX% the number in the totaled from X,XXX, of from our paid off precious value and drop of loans the were during periods at prices secured the Numerous dollar September a of at a when metals XXXX end $XX.X

controls related remarks. I'll and Greg? it That not and my for to operated over prepared concludes Our Greg turn we system remarks. losses. now any effectively, incur loan closing did

Gregory Roberts

Thank Kathleen. Thor and you,

are will off start optimistic a As we're strong of XXXX you period that for year solid be to and our performance in this see, can another fiscal A-Mark.

creating To Looking market continue and metals and this our for our tailwinds, investment see wholesale shareholders. momentum including and on to macro we geographic platform, elevated ahead, and to segments. our products for positive value build continuing while our supply presence opportunities constraints in are precious reach, both further evaluate demand strength we expand retail to

are remain integrated and platform for optimistic us We synergistic model and with and over to are business will Jenny? long-term. that align that our the profitability business opportunities A-Mark. our and, allow focusing realize proven growth on We model

Operator

floor is you. Thank questions. you, Instructions] [Operator Thank and gentlemen, the for Greg. open now Ladies

this Our first your come Thomas, from question of Forte Davidson. live. will line Thomas

Thomas Forte

Great.

impressive you. thank Kathleen, a questions. a A quarter. at the one and, quarter. time. have of numbers couple of Thor on lot go Greg, a good, I'll really in Congrats So, I great

a were Although, was large should achieve your think growth future? had you Greg, you your grow what said you mint in you ability an And production the to such able to production, higher think there. acquisition to production? stood How I XX% out to efforts how sounds private in to me advance made about we like your

Gregory Roberts

was And think just hiccup. any that or and tool whenever a acquisition we locally locked or the acquisition -- did expertise where are I our die Well, hit any to it when make located. mint sure a was up small of their actually we to is it machines we operations our we of our struggling company need a

So, contributor in was on of we for have production, running maxing lines we a all XX/X, quarter. of all been believe production able very our I our don't get of was where this out the production were in been are to with that were very happy we've our we stay increase quarters to the top and capabilities that. to operating, our I and really of to what the number our, working think production increase -- something all of for able a acquire

to the of we a out maximized having when And good was this at competitors for They quarter. did not once performance or the testament timing demand And what in we Jamie it SilverTowne. particularly had. were product. our our because it So, and they hit available product Brett really had by for plenty limited again, park us of

So, now, really, business of that's parts potential we time together, quarter. And you think, all got tremendous. I these this I seen now, is think as of integrated the when fully done work over all that they the really have

Thomas Forte

right. All

having There's like impact trying -- I'm these are feel moving for because your business, your to three are that the And So, I explanation directions. historically of would Greg. impact on or thank things think I business. you understand in things different some

With or prices up not is in basis maybe Maybe movements especially global managing gold and necessarily I silver? generate earnings, profits? and it's able the one then first to it? I'm metal geopolitical, a extent what kind interesting a movement would gold you're So, of the in sure third, then to seems macroeconomic, it And I'm the not silver, to And persistent, that with favorable how negative. tailwind. positive how on think, just is of this be you're misinterpreting it's So, well precious and and impressive down favorable? that such a

Gregory Roberts

is that within then tend And, really of recovery said at and particularly because, and towards level as we've thereafter, quarter dips. and really focus DTC kind always dips, that we reporting, have where and spot the we'll silver good times silver. think that We've there. dips as I the start quickly buy silver on for said us. demand And we're in as volatility to significant would had that quarter. new before, level well the and, recent the in have wholesale the this buyers particular we traded we many up our currently when lows, prices one and instances highs In then, I did or supercharges two at made the

well advantage advantage levels positioned that. there. ready I theme when talked is of all of in that that And a range -- in again, I was once lot large the And a take positioning just I of had And silver we think in just at common think, take gold we of QX. they're and think, that's the ourselves about, that prices to opportunities demand. being to So drove very A-Mark

I a to was, strong Now, few quarter, -- think, August, and of us. it slow obviously, July fairly were for do throughout this XX robust in were this with we quarter, volatility. but in very, across weeks was lot had we a active we had And particularly very all a September, we days, had

And a weeks, couple $XX the I little that that in of frame in the whenever and had the for move price, day kind a this think very recent, one I'm big drives kind Again, we've move of, day. had days, maybe volatility the of Silver move that weeks, going had to just you a the day. play single in type had days, that's us. a can in in few $X lot activity. QX, that two of last same I now recent for that is the of a to I part and bit just the to us. And a in it a to your demand And macro, supply, think economic, seen has initial little relates question as significant bit, well back gold in That's imbalances. it quarter. talking you've see do moves overall about, of

I in things benefiting The us. and good very I we're ago, transitory it a to for said, for continued good was again, turmoil, us. said, And, political good drive year think As and it that. and our And wasn't, I inflation it from and business. didn't polarization continues is

think -- everything in I I your hit So, question, but

Thomas Forte

Yep. did. you Yes,

So me. again, last And in question for impressive quarter. very congrats a

about from level? acquired think So at future about the some sounds It like How BGASC. M&A potential you're we expansion high you assets of activities? geographic talking a your potential should

Gregory Roberts

I think believe very as being about you should us active.

opportunity we're believe -- there with do that that we is -- company. there We -- of now, ever. a moat presenting because for than great we've what right that the are, wider is think themselves A-Mark believe believe opportunities we the around us done we are I

really said, sheet investment, performance are really right return very very the we -- no I active. well think, the good we I indications will that, shareholder over we and debt, think, move deal. long advantage be the $XXX that expect I equity we BGASC to have take feel will, ability term just can for the unbelievable. our And here. our this about I of just with just opportunities, million now our And a in is like we good to be anticipated. improve And strength feel us, of and us advantage balance are in even our that just on to businesses and of these set-up them, model these plug acquisitions. We quicker than believe ecosystem we into Early

Thomas Forte

that. to congrats excited again, quarter. hear very And, We're to the

Gregory Roberts

Thank you.

Operator

very you Thank much.

question is from Gibas coming next live. of your Securities. Greg, is Your Greg line Northland

Greg Gibas

of if to for also really the -- wanted on Hey, Thor around follow-up But, the margin congrats maybe And questions. spreads regarding improvement, Kathleen. wanted changing there, the buying Greg, mix ask the house gross just is it improvement, that could all from, anything you're higher Thanks in regard. just wondering in I versus more too? that kind to increased coming discuss on you production, prices if taking seeing the of could discuss, you customers. or from maybe and lower Great. if on on mostly on or any metals, and shift results patterns margins front seeing

Gregory Roberts

ourselves, Yes, that, XXX-ounce gross ounce follow silver on make we on in just profit XX products. amount We and them I I silver, of bigger our we and good if those make more we products, X and the and collect ourselves them who overall know and that particularly ounces a mean, think us make gross profit money a manufacture piece chain. is of those

DTC trouble then just -- about more well we're strain that a retail do ounces quarter at level at level, would had our to big accommodate to our to particular. been think that built That friends to able business, a flowing the you're We've more and to point And the -- then this wide ounces that wholesale and to just all us. side. and our to been keep the lot company I as out touched ever did very to and SMI, before, supply silver have raw at in we're And hiccups we manufacturing as the and avoid it, way and seeing more, that it it. metal than is really we've both able traders minting And chain says touching a at able DTC. from right just I the the number has we've was our didn't with. through now, logistics broader for businesses, we others demographics

We're really really, some seeing we're like we in think of doing, same this we QX. definitely, of together came vision I initially certainly, it's and what So, the really, performance. our quarter, what feel

very as you about at when think surprising a I talk first a all coming different, our from, DTC to repeat continue very and and now, large I for see people are any of a this like, that and the much buys, the are also DTC the size last -- large, there week and as purchases. right at positive the much little we're things very positive at of third, say that that And first it's coming of those I a And I to transactions look purchases touched is well where see number mostly, new business just individual we're gold a top think large levels. large and would very and segment, silver that that, that second we I invoices changes, smaller call, time we we're we're with seeing continuing and, on our customer bit or to feel at month, very for growing. on some time users on real buyers, and numbers are smaller the in, when products able seeing just source large just

really had it not is do. with able So news, And it's to for slack. a we're have everybody been any a good that's to time I just pick not pleased really really that are as us and they've A-Mark, able very, the we've employees the of it any just missed think days, our down up and we at what opportunity. to relates very great And --

Greg Gibas

in seeing you impact, that rates, do metals really on the you any -- guess in to purchases regarding to and that due ask, of to to and, use too. I Right, expect you kind you new or short fund term appreciate guys hear certain--? increased the purchases. from Do see all repeat customers and to are did relation purchases I great strong Greg, color, about borrowing strong want

Gregory Roberts

borrowings, we we costs. because borrowing benchmark. think Certainly, do rates And it's have our index a experienced And us. short that a increased tied an have higher affected interest I pay term or rate to on

I the number all borrowing actual -- if cash, you We've If of at into but really little a myself, our generated just the metrics, hasn't would our right that because looked increase dollars and guess you I to and strong we're bit, dig a now. that back the guess had would would amount at gross interest essence, less tremendous we're queue fluctuated probably haven't self-funding. I paid, much look actual we're free and just borrowing I we've of two less with money. quarters believe in I back, dollars And

kind gross we -- to we on passing to So it's because where believe should we're whether it of increased costs performance generally say our people, relates or rate it's be borrowing many to Whether customers And has exceptional. it'd I that lend increase. been our when just, as happening the now. rise, that's not as able right to rates we dollars, be outperform

of kind there. that's So everything

Greg Gibas

Yes. for Sure. one, the minting you me, for helpful. very That's Last expansion talked facility. about plans on

of kind that Just timing and around more if bit it? little a you could discuss the wondering

Gregory Roberts

talk we talk minting, when we different mean, I two Yes. entities. about about

we and margin quarters not Sunshine to minority and specialty products but the are our that's can ready Sunshine in in to SilverTowne that to Mint. and to Mint XX go grow more with we're worked also and able And we've Jason some new us we talked machinery how interest raw Winchester, higher at We've land will are the level, Indiana working has and before, just everything be products, that's starting beneficiary are couple look SMI, acquire capacity been acquired At our that. capacity. the say raise team been this hard need of regular for of Winchester, able can some the in in to Power continues, A-Mark at And they well. we days, And of demand We some to we've at we've pleased we more think opportunity Brad last to create with have very to very plans and getting they only and been have least the just Tom I that integrate SilverTowne and in facility, a have the there. very Jamie we level. SMI about expand doing his event have at what last to going out great that

So and over said, grow I to smartly and -- and space. out the of -- far it's cautiously to quickly. continuing too where two integration, clear we we and comfortable sell our I vertical we're want to we've to a this and three what think the the very without part skews we production we're dominate getting looking with But available path the, point, like can this all expand next see our too to have to pace years,

Greg Gibas

Great to hear. congrats Thanks. And again.

Gregory Roberts

Thank you.

Operator

Thank you very much.

Your question line next your is is ROTH Andrew, Capital Andrew Partners. coming of Scutt from live.

Andrew Scutt

answered. on Good Most of been the afternoon, and my have congrats results. questions strong

So just CyberMetals. one a quick on

Gregory Roberts

Yes.

Andrew Scutt

and this have a what -- picture last efforts know potential customers Do you well? guys gone you We're guys progressed seen of to Have marketing I done drive of the that to about few as clear the a you few also in platform. the has now how just on And marketing is quarters talked business? potential out any from launch. And kind the you we've some healthy see especially growth, quarters.

Gregory Roberts

Yes.

maybe with think much I that the converted have JM of We most our you're think as DTC we as existing pretty finished we testing Bullion. customers don't that from customers seeing And the would. base. at many that hoped I is customer growth we've coming

delivery, wants that and customer I function take them. metal always wants been of to a has demographic physical the to customer think that that's the makeup the shipped who of metals JMB the a

think customer of place for for to some I I type we is believe conversion, see not CyberMetals. us be that that the fishing but the best for physical probably metal customer that

to going there. we're think I growth see continue to steady

that innovative or to marketing we We and test JM see convert of of know A-Mark more to tech even channels is. been normal the JM you we've Bullion started able to started outside in our do brands some try newer, Goldline who to DTC marketing, advertising Bullion and to don't have or have related test or any that that touch some would customers

working slower slower, results. some with seeing We look platform servicing the little the bit systems we're managing would than but going good. on little say to performance. we initially to everybody problem to I The happy how have The that thought, the great. update a is a maybe doing goes. and trades climb continuing are no But whatsoever. we So And it's logistics we probably is be of this forward working

So customers find we we're a I to need to have for a fish just in different great think now CyberMetals. is going little to platform, pond

Andrew Scutt

and color the for congrats Thanks on again results. the strong

Gregory Roberts

Thank you.

Operator

Thank [Operator Instructions] you.

to That in appear to Mr. questions concludes back queue at the this our now his no over the question-and-answer to turn Roberts for have would like session. further remarks. call we closing I Okay, time.

Gregory Roberts

very thank I'd shareholders we support. you dedication your for much. like Many thanks to for you call progress continued very moving employees our you and look apprised of for And today. commitment our A-Mark’s our success. Thank A-Mark to keeping Thank Thank their you forward. much. to forward joining to

Operator

we today's call, that to cautions provide conclude call. regarding statement statements includes during Before made this I like important forward-looking Safe would A-Mark's Harbor

dates cause risks Act or meaning planned; failure they expect, future the of to which and incurred the higher and estimate, forward-looking competition as like such to market the the which thereof were margin execute failure call, to company's the greater current future to business, Securities forward-looking for anticipate, events, regarding model that on forward-looking The costs services, anticipated following: made to Act risks Litigation increased should, the political differ company's of XXXX. this in Exchange of economic, to performance, than and A-Mark's as that the cause statements implied respond plan changes in as in with growth of changes climate; events, in markets; could plans, statements, of international commodity variations made. the objectives, A-Mark's Securities filings of are these anticipated; general uncertainties strategy believe, expectations, words identify Commission. actual the results individually expressed business the the statements and Future intend, Exchange depress or business today's materially certain execute expressions which there Securities similar During statements. relate public statements results and and Private and pricing; governmental described only those company's include domestic strategy; Reform the within speak XXXX risks Factors of in from actual were in aggregate as other could foresee, could the differ events financial and and the the environment the doing

Additionally, any cautioned undue estimates company performance on statements related or place per to Readers forward-looking and statements. revenues revise statements. future The obligation are share undertakes publicly improved reliance update forward-looking to forward-looking are not and no of these any to statements. earnings

that today's everyone will available of section call. remind I the you a would like Finally, earnings joining website. in call A-Mark's replay link for for be Investors a the recording us via today for link Thank to company's of

You disconnect. now may

A-Mark Precious Metals (AMRK) 9 Nov 222023 Q1 Earnings call transcript