AMRK - Earnings call 2 2024 | A-Mark Precious Metals, Inc.

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Operator

Good afternoon and welcome to the A-Mark Precious Metals Conference Call for the Fiscal Second Quarter ended December 31, 2023. My name is Paul, and I will be your operator this afternoon.

Before this call, A-Mark issued its results for the fiscal second quarter 2024 in a press release, which is available in the Investor Relations section of the Company's website at www.amark.com.

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

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

Gregory Roberts

Thank afternoon for you, everyone. joining to our and Paul, good Thank call you today.

of Our to fully share second-quarter results manage conditions while less EBITDA during solid demonstrate the We non-GAAP per of platform strength results. generate favorable diluted market delivered the million $X.XX delivering our profitable still quarter, ability to our results. $XX.X generated and integrated underscoring

quarter, million $XXX XXX,XXX common provided $XX enhance share During of of an buying payable we repaid continued letter on value back morning, into This Holdings, our entered successfully repurchase by the notes transactions. approximately X to securitization coins, million. increasing of our our and by shareholder we nonbinding our that with modern for we which program shares leading asset-backed and announced multichannel a vintage AMS a marketer for intent for stock additional

be offerings. be purchase in of largest step and LPM of precious important global metals is a their most LPM strategic and A-Mark's our Asia's to is reflects inventory transactions we one resources, in expect orders these Asia able able an With of product fabricated customers commitment provide The secure will set Group access with dealers. to significant planned international acquisition Ltd., A-Mark's expanding our to of broader acquisition larger reach. and presence This growing will to that A-Mark's

strategy. and in of and We are growth our expertise its assist fulfillment will LPM proven such products that wholesale our storage e-commerce services planned ancillary portfolio and and hopeful as

the which largest LPM all to and AMS. our affiliate, Exchange, coins, of the addition nation's of the of of transaction, from we'll acquiring distributors ModernCoinMart strategic certified XX% owns of In A-Mark modern Coin assets Pinehurst one be

ModernCoinMart modern international this in Pinehurst expand shipping Through established strategic also more dealers its intends and of is to bullion while its US, many locations. to the its acquisition, to business one customers. direct-to-consumer product offering the further coin

between The venture AMS. A-Mark, Bowers equity Pinehurst, common of Stack's in a to third related Numismatics, transaction a acquire a involves and A-Mark, party XX% joint interest

these simultaneously and or of the the close to to receipt and expect transactions preparation of agreements execution of by third-party definitive X end We month, consents subject this approval.

As Las operational in global we are in all at will our logistics, we to Vegas. enhance costs. our and our effectively us efficiency, enabling a manage These AMGL growing to focus while continue also number larger invest minimizing continue to initiatives on our SKUs volume, designed platform automation increase initiatives of footprint, facility operational and

diversify confident We as strategic strategy, strive will growth our business. to support are these further and expand measures that our we

overview detailed over insights hand will our our more President, into business Gjerdrum, growth discuss the Then Thor to call metrics. will Simpson-Taylor, our operating Kathleen provide our and I of Now, Kathleen? who I CFO, a further provide Afterward, financials. strategy. will will A-Mark key

Kathleen Simpson-Taylor

everyone. and Thank you, Greg, good afternoon,

QX fiscal year. last for revenues QX to billion Our from of XXXX in X% $X.XXX billion increased $X.XXX

due revenue and an by $XXX.X prices higher silver. decrease decreased partially which Excluding or a ounces sold, million in gold gold of $XXX.X sales, average to of and was million increase X%, offset selling silver of forward

for of by of in XXXX consolidated year. QX JMB and represented the XX% the contributed XX% consolidated Revenue revenues segment QX second fiscal the revenue DTC and XX% XXXX, respectively. of in quarter compared XXXX last XX% of The of to contributed

same to year-ago $X.XXX period, X-month revenues the in XX% the increased period. from billion For our billion $X.XXX

offset contributed Excluding December $XXX.X XX% a to segment X silver respectively. of average revenues silver. The consolidated and decrease sold, of XX% million gold gold XX, in months sales, XXXX, DTC partially the the revenue prices and an $XXX.X and higher of or XXXX, for ounces which million increase due was by decreased forward and selling X%, of ended

year. year-ago for contributed fiscal Revenue of sales revenue in gross revenue $XX.X and million lower of profit with decrease the due consolidated or XX% million in both represented profit JMB the DTC by December the $XX.X for X compared XX% earned XX% and services X.XX% last wholesale ancillary The gross decreased to XXXX segments. XX, in QX QX revenues from months of to ended profits X.XX% the XXXX, Gross or of same was period. from

the by last Gross gross profit to in consolidated of XXXX year. by XX% of same profit in segment gross year-ago compared represented Gross DTC profit consolidated contributed QX of fiscal the QX in contributed XX% XX% XX% period. represented compared the JMB to QX the XXXX in profit fiscal

million profit from period, $XX.X X-month X.XX% to ancillary and services sales lower $XXX.X the million segment. wholesale the revenue both due X.XX% The or the period. profits was from in to decreased XX% decrease revenue gross profit gross gross year-ago or and For in of DTC of same earned

the JMB year-ago DTC Gross XX, by XXXX, XX% profit of in profit XX, XX% and period. to consolidated XX% XXXX gross December contributed for ended months of represented same the Gross X-month contributed the XXXX, represented consolidated period by the respectively. ended X the and gross XX% profit compared in segment profit December

expense, increase technology million fiscal accruals million, expenses of X% million. in of primarily $XX.X million of professional offset $X.X QX costs increase year. a costs was million, $X.X including of million, partially $XX.X last million increased lower by for of information and decrease SG&A performance-based to in The consulting change advertising QX insurance fees to in in costs $X.X and $X.X compensation XXXX from an of due higher $X.X an

expense, of was period. due an period, expenses in million $X.X of fees increase accruals consulting from XX% million, primarily million, million, change performance-based increase million. SG&A $X.X an $X.X same compensation of to increase in $XX.X information The X-month the costs including by the $X.X in in costs For insurance technology in a increased of $XX.X to and professional million offset year-ago partially an decrease

amortization and The decreased of to change XX% $X.X for Depreciation in a QX amortization $X.X primarily from expenses million QX intangibles related was JMB. decrease to due last of $X.X million year. acquired XXXX fiscal million in to

was For in $X.X to $X.X amortization The $X.X of the period, million due year-ago and a GMV. related from decrease primarily period. acquired in the to depreciation decreased million X-month expenses million change to XX% amortization same intangibles

income aggregate last by XXXX income an $X.X primarily Lending to increase QX in XX% million fiscal from in year. million. $X.X income was earned to increase in interest other $X.X of of for segment The income Secured finance in million million increase due increased an our $X.X QX Interest of and interest product

in in For $XX.X an $X.X Lending period. earned income $X.X increase the interest XX% X-month increase primarily increase in income The interest million. same income period, due income million aggregate the $XX.X an product million to and of million finance segment year-ago was Secured other increased of from by interest to in our

due $XX.X due our QX of increase from interest million XX% was The of an to facility with Interest primarily an fiscal trading in associated last to increased $X.X million XXXX in increase $X.X financing borrowings $X.X a year. credit as of related of expense an to arrangements, $X.X issuance QX partially expense the for increase increase fiscal costs million XXXX. product and related their interest to offset by amortization rates, to including decrease increased notes, to million million repayment in of as well December debt due AMCS in

debt primarily in to $XX.X XX% increased expense of facility interest increased increase notes, million to product year-ago period, related by due with of offset driven partially same trading $X.X the a in to million associated $X.X in as increase X-month increase the was rates, related December the The their million an borrowings, amortization For to of repayment our financing $XX.X including decrease issuance increase million costs AMCS interest as to an from an XXXX. credit period. arrangements, due $X.X million by of well

$X.X a decrease had million servicing in also loan We fees.

year-ago equity in XX% the same method $X.X XXXX Earnings in from million million investments $X.X to decreased QX quarter. from

same X-month equity to decreased period, investees. method to our periods earnings was million both from the million $X.X in investments equity period. decrease decreased in earnings of XX% due year-ago For $X.X the method from The

$XX.X to QX the attributable Net the the quarter fiscal totaled $XX.X second XXXX income per of of for of $X.XX or diluted net or income million company share attributable company year. $X.XX to in to compares diluted million This share. per last

diluted period. For net $X.XX to company period, net $XX.X or company to which income share the per million share, or attributable compares to $X.XX same the in the $XX.X per totaled of X-month diluted million the year-ago attributable income

from to million, $XX.X for XXXX. expenses, compared $XX.X totaled the period the XX% in for for year-ago million taxes acquisition income decrease before period EBITDA, million, a $XX.X measure, depreciation in a compared provision of quarter. the for income XX% QX million income compared financial totaled XX% of liquidity decrease provision year-ago excludes decrease $XXX.X net fiscal before XXXX same million in the non-GAAP million $XX.X taxes, X-month Adjusted fiscal EBITDA income to XX% measure a QX totaled totaled period. a same for non-GAAP Adjusted a amortization, million, and net decrease in year-ago same $XX.X $XXX.X X-month $XX.X a to for QX fiscal XXXX the period. which million,

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

share. Our regular January. the A-Mark's quarterly prior to the paid Directors quarterly tangible in maintain $XXX.X per fiscal net expected quarterly common end cash It XXXX. is worth at end of program has of will recent next was the that be of from million the quarter was Board April paid cash of the The most down dividend million, the at $XXX.X company's dividend $X.XX dividend continued year. in

financial completes my summary. That

the Thor, operating Now update call key over metrics. our will an Thor? I to on will provide who turn

Thor Gjerdrum

Kathleen. you, Thank

which sold metrics our in fiscal from prior of at XXX,XXX gold was XXXX, the of last down ounces Looking and QX second QX key XXXX, of the XX% we quarter. X% year quarter fiscal from operating down for

XXX,XXX from of year-ago period. silver down from down down ounces We the quarter. For XX% million last of of we XX% last sold period, X-month sold from which the QX which was is ounces fiscal in gold, same XX.X year XXXX, XX% and QX

new XX,XXX new made during for purchase customers sold quarter. X-month of number of same registered For was customers of million The last a and was XX% XX% XXXX, the period time have in QX year silver, segment, defined the the number which period. we which increased or XX.X set first of ounces from the down a up as XX% from or in DTC the down QX that which is fiscal account year-ago period, the from last was

the in number period, new customers the due the in year-over-year which prior number base, was increase the which The approximately from is total customers same customers XX% lists. as an the the period. segment XX,XXX, end in JMB organic X-month was The was year-ago total million, DTC $X.X customer growth XXX,XXX the in from the increase segment at was of For customer of of as the acquired customers second DTC of to down our well quarter XX% in year. new

segment to from orders delivered down of DTC the customers QX value, which The the quarter. fiscal X% excluding QX dollar product represents value and average from program XXXX was was down during average DTC $X,XXX, orders, X% which segment XXXX prior order fiscal accumulation

DTC X-month same year-ago For average is period, was our from down the which order period. X% value $X,XXX, the

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

the period, period. year-ago the For in our ratio was turn from X.X%, X% increase X.X% inventory same X-month a

a December September. of secured of $XXX, loans decrease a of the of and from end from decrease XX, number at end of the XX% XX% December Finally, the XXXX, totaled

loan While our our loans receivable value increase to December periods, $XXX.X XX, million, the as increase XXXX. loans these from number XX, XXXX, September increased the of secured over XX, portfolio from X% X% December bringing same of XXXX, and a secured decreased, balance of a

now will to closing over my Greg concludes I turn for Greg? prepared remarks. remarks. That it

Gregory Roberts

opportunities strong geographic with synergies on and Thor A-Mark's access presence Thank will A-Mark's create expand to our and supply, including our strategic reliable Kathleen. remains footprint, integrated market that you, platform, further to reach relations. customer our fully successful focus and logistics

realizing into work AMS, these look we initiatives strategic bring. synergies transactions expansion towards finalizing may that the and forward our the growth While and to with potential to Asia we

and diversified to That stockholder and generating commitment value proven A-Mark's are remarks. firm, prepared remains we Our Operator? in concludes model. business confident my

Operator

from Instructions] the question is [Operator coming first Mike And today from D.A. Baker Davidson.

Michael Baker

ask a last Okay. I They was guys. quarter, wanted bit consensus strategically less appreciate bottoming are when quarter, of and the Thanks, you EBITDA the metrics. frankly, presume EPS sense. But EBITDA were period a like and might earnings to than whatever make apparently last I seems this and fully felt at less consensus less for acquisitions. was than but the a this X-month business than little about accretive we ton estimates where look guess the estimates I worth. quarter softer. because of visibility to good not into a bit last get over little it a might idea sort when might of type $X.XX improve of the improve or minimum, any back quarter, quarter,

Gregory Roberts

you would saw say that I some continued Thank for the quarter Yes. question. softness. the

the supply to the affecting over that to last products, willing premiums in XX for continue on the product. premium is have of in than currently silver particular, silver the think fabricated pay There And are weaker marketplace. seen I be that's months. historically people we plenty

So we adjust have retail premiums and at share, our our to we had have down been a but level. market both competing, wholesale keeping

I be looking bright we're most on sheet have inventory valuable make the levels think acquiring very that been opportune doing purchases, we've which think lower that and reflected forward, see premiums will our we we our you inventory us some which of that opportunities on in to acquire able and balance some given plan inventory, will note, to carrying. a great

to At out forward. think inventories through the looking or we great things have rid get of same that we're and time, move potential don't looking go our

buy than to our Silver and particular of distributors. are a certainly be the product spots. to bright be from Silver to and continues quarter. more the US we strong bit see So demand We from the continuing allocation the that some quarter for And moment. allocation on there other this US reshuffling, been Eagles been some There Mint, last both has have continuing Eagles at of

with now. So, that I think dealing we're it's right what

caused particular, to factor spot think have panic before customers. any that's certainly the any And seen I we've prices, a really fairly or are prices and range-bound, spot call been now. for this in And when that hasn't action range-bound. right

other performing think markets away up that can money or factor our until well, equity the X the and very a I have ago, is draw week been from markets.

seeing we're a of bit So that I think little also.

Michael Baker

know, start those we're for I it makes look don't In ask to more That something excited? are? $X What higher like XXX, Can like gold, the that. a I better. follow-up $X the out, Okay. us of gets is on Obviously, the spreads spread in you Can you of remind points? silver spread, XXX, What look making historically sense. those way ranges now what Where you guys? terms better way range, kind do I the is tracking right money? they're

Gregory Roberts

this be was result. with market I quarter think To EBITDA $XX this honest in in making a you, million fantastic

So let's start there.

Secondly, I understand don't your question.

the to didn't threw a to you you lot going have make of questions, asking just which basic. answer what the it cost you're more you're the spreads for, sense our because but out, numbers we specific. one, don't simple the to pretty So And to I them I've me. The higher what need is and be specific is of know. between more products heard we money be sell make, that

Michael Baker

Sure. Maybe sorry, me didn't I ask No, it let properly. it. just rephrase

just Bullion JM at so competitors. prices So prices I'm instance, we at I I'm way it we're silvers look it. $X think spot if like trying tracking around what like And we're Maybe to for and wrong, at the -- versus of number do, the around looks retail I'm... what look it's trying silver, that's a we

Gregory Roberts

depends to about. specific really on you're me. what product doesn't sense talking That It make

sells United approximately you at the per Mint up premium States wholesale help at Eagles $X, Silver value. the sells to bit, the out Bullion over selling ounce $X whether whether A-Mark a at that's JM at. what premium, or $X then $X melt coins And a at at So sells little wholesale end

product or be going SilverTowne Sunshine that Silver a Mint to or a the talking Canadian Eagle. lower is than Royal about premium you're minted If product, even

that has So we one or the going different products make specifically to the profitable X,XXX really, question A-Mark more and to probably no product about premiums product, more. it sell to is there's because tied be instantly

question know $XXX As about. gold, ounce. don't on per it per what Is that premium relates to ounce? you're I $XXX the talking

Michael Baker

up take I'll after. just follow I'll offline. it

Operator

Pipes is B. question Lucas next coming Riley. from from The Lucas.

Lucas Pipes

cultural you perspective. your proceed? to I'll start the to questions into do strategy you an Asia, think presence envision maybe in with some integration higher-level dig some question But of how aware on your more and Thank Or do of? you specifics. then first for kind be is issues the about how

Gregory Roberts

of LPM, last for well fairly and period to years, we've to we X price been and X acquisitions. long Sure. This significant different and the I we a well for to But side about the transactions. a leading X other believe through X exclusively obviously, we transaction which was They've came point. enthusiastic release, the at here quite in factors a fairly we're decade. opportunities as an never get it's the has thought excited as negotiating and for side. you target, us a together when deal. complete of or good transaction diligence was diligence able a good number the the as around A-Mark in very can as us bit over that on And for this as And have you Hong for our lot see complicated it international the mean, to well most of of as with all based looked Asia. from of LTM, been over at a different acquisition this Kong. as have a paid, been We and operating

here good properly structured very be reward happy the paid. with deal. it would the seller, the which with We're transaction the earnout is to happy for And we price recognized. we whole with very We happened. think and the is potential risk happy the as us. looked has at for We're -- We're that

with So it. we're happy

think before our it's we company to that into I we a important got were trading note wholesale DTC segment. historically,

of expanded supply with a different And accretive sovereign JM, and retail their around e-commerce up we've currently of currently the of as different that both and greatly and now number a in retail. believe relationships we've segment. products, have number and expertise we have they A-Mark believe to supplier that all A-Mark amount LPM is DTC those built will tremendous specialty a world, with very we of does mints, a not be wholesale. licenses suppliers They of private that mints, number wholesale product a in

LPM wholesale and about currently XX% is approximately XX% to XX%, XX% retail.

with. a over amount to in by we we area the this struggled making there's region cultural or of not expanding acquisition of grow in retail tremendous we aren't Obviously, side an So familiar have think the reasons for opportunity things. the just that the years

are think we acquire to trading particularly and are and best been business we've the us both LPM worlds. both opportunity if staff, had business retail, important. a business acquire And pipeline used or think has a gives Asia, I the in And very the you you need to gives need you're you able going business, and are that and Chang. and need people think going we've us the for CEO of the doing and strong very a a I that to that the to access about which both Founder, we property a This transaction the we wholesale us be trading before that the to the we of desk wholesaler, retail. excited wholesaler people. to is wholesale right fortunate It are Charlie extremely products intellectual and acquire you customers, not need

what right and there Charlie's team to And at that now cultural well JM Bullion go both long knowledge that well the being he expertise business go in expansion. local to as on we as from we and Asia enthusiastic in is. positioned Pacelli of in knowledge and to e-commerce, we're has, Rob bring about very as think are potential his the as Bringing his we

are visitors platform the business Singapore. we some from at LPM well market. And I people believe also closely looking great think in local that who opportunity for Singapore into us a are We other as expand Singapore good or doing as Singapore to both from population to countries. that there's think there, we're is the

very Kong We're good very comfortable us, A-Mark it's a we a expand safe right that's safe in So United into. just place for as think Hong just -- see with for very of to really expand LPM a the this very now, States. to but a outside opportunity environment

Lucas Pipes

us of M&A X, what very bridgehead Greg. follow-ups continue think that. this as after we That's kind here into we amount world for this is kind digest announcement active a will some think on of do you very then North this market? Or today? Is X around play put it elsewhere be look, you the appetite platform to America? much Thank or the of your first? good helpful. Asian now let you, And Should

Gregory Roberts

sure. For

starting and gives Hong the that I a the in acquiring grow to us point think people the we're great Kong. business that platform LPM's and business organically really

think we it's even Asia, this and I reiterate on looked that's into need -- DTC and a side that just or and logistics acquisition, would at needed we we going again, enthusiastic important. e-commerce us. moved storage, opportunity we and desk things expand all to the about really have either to before I in we to And would hard and think, would very retail relocate And give So the market. could this have long to and very we're create have to needed have those we needed we've

be will good acquire to efficiently. both expand that this ability very going we has great very platform the things really can we is believe business us, so a for and and And it

And look months our one for the about have slower premiums still softer, we are said still is very silver where M&A, opportunities. to competitors, lower opportunities the X a a is we and seeing you and that of, are potential there, think and As linings out enthusiastic X, buy other proponent acquisitions. opportunity M&A there I've I happen, I your that of good of experienced been we very it's to continue and before, market big also always on a we things at that if are things and competitors, see difficult are we're number

as I X acquisitions. as size this transaction, other think the the smaller well million $XX of the

I good think a about us. worth. very tangible for of size it's It's our XX% net

think I very this no money. without to of debt raising able any we're that comfortably do new with more or thought

the at thought that as bit as think the on robust in sure past, have I So opportunities right at from LPM do components targets we're they to targets we've advantage continuing to as properly focused at look things having I continuing would everything that standpoint sized taking make want without so been able I to and risk we moment. X maybe and when that for able and strength can transaction the results to that and long take undervalued, stock value continue tight. And reward little dividends, years in the to a shareholder of look from the when to we be a as opportune we to results from this size to be everything our think for is we negotiate able think A-Mark stock the we are well ago. back is from is to A-Mark inventory and talked as inventory, key well looking buy hard able add can being been is be advantage to But believe that deal. aren't we've to M&A are at being way, us our we I times that And more think this and about things everything of going about of buy able as very returning

of this the all at and opportunities in So transactions feel company as looking we're and advantage can these think good these sizings they positioned, the I thoughtful of of present for and take the and is very good we haul, we're that very decisions and in make long well all themselves. very very we're

Lucas Pipes

of appreciate I turn now. really it luck. over the all Greg, Best color. for will

Operator

question coming Thank Andrew is you. Scutt next ROTH from MKM. The from

Andrew Scutt

like First, follow-ups on to a few LPM. I'd just ask

it ask differently. Just maybe a little bit

So you remarks opportunities that in your see you the prepared in orders. LPM larger inventory to own mentioned secure help leveraging

could whatnot So how you to on that, or of wealth just of Precious Metals propensity many Western consumers, their then invest And personal higher was kind I to in wondering say, products, be LPM? have a you'll Asian to I Consumers. SKUs kind provide able and secondly guess,

So do you kind maybe just but you opportunities of into see, growth Singapore, further said, expanding there? like

Gregory Roberts

Absolutely.

restricted little So has XX prepared a as able likely more years to that remarks with LPM the has buy operated over hold. the than sheet balance the illustrated, they're Metals last not a Precious of and that bit and amount inventory

inventory. the a I the work of or opportunity call it out great think could LPM gives -- call you opportunity A-Mark's that one of you synergy can it an is to it that,

favorable take sell. LPM we into we what will at buy opportunities consideration these start new believes to or to premiums can inventory as take So prices, they

And the larger the more cheaper you buy, the talk when about purchases, in marketplace, we the price.

business get can and question. synergy that more a if we're if through It of they and be a sell what discount. sense price your will be power answers help be able bigger and helps that America going XX% advantage our it's will A-Mark's to hopefully So LPM can identify take products and balance also will purchase retail to take That helpful sheet for of. LPM own have we and advantage wholesale stronger buy negotiating get A-Mark and look sell products make of a to XX%, when buying, makes better in that us we LPM can North to

Andrew Scutt

one And much. perfect. more you, Thank follow-up. then that No, was just very

of few running additional the acquired mint oversupply So handful expansion? maybe in kind have I kind have you medium in at right last of men's a now, share but there's term, new on know the capacity. the near entered around at the geographies. of or XX you thoughts guys months, mid-capacity over Meanwhile, full a businesses, market been any could

Gregory Roberts

SilverTowne Yes. we're comfortably moment, Mint. the for much not of moment, expansion. production the We're the the looking too I managing mean, at out at

at they to been fortunate SilverTowne does comes nimble produce. and a being have job Mint when We that it very enough what great the pivoting

bars So them busy adjusting product one-ounce XXX-ounce or whether it's altering to whatever we're it rounds or with products, is, what or able specialty keep every making week. they're

So through this we we a week twice once that discussion or them is production to balance want a just and what manufacture. on go

numbers get product. we the premium At situation to is we where the situation and the we just relates at the cost ounce equipment or acquire Sunshine don't to grow opportunity make manufacturing could need a And SilverTowne. if environment, do But as us see we an some we minting. activity a an premiums prices a produce contract, tend can either lower this smaller to to moment, I M&A to I mint to fixed see as give there that a believe an or type production do find may a prolonged that could at it money that opportunity can't at where

opportunities down I road, think nothing the moment. will the focused but there we're be that at on

Andrew Scutt

for detail. very Thank one much for Great. very the me. And last you quick

mind? an that additional acquiring guys inventory. just being volatile mentioning in been guys acquiring Do kind Or up, potentially you of you coming inventory level thinking of year election optimal as guys you you're in opportunistic the inventory? are have You've with do

Gregory Roberts

do to feel that have events situations favorable feel the what to management we lining in but be equation not of that things, election, see going try to to a in here number for seem situations but estate We are will do demand commercial a continuing to up products. -- the predict -- bank historically at number of future shifted and a of are supply number number that we A-Mark. be of future, don't personally and And we Certainly, the us issues, want to there personally, the that A-Mark the is everybody, speak rates a the I do really situation, think I our for there interest inflation. and I real and happen that

would So yellow just do lot see a say, what flashing. kind I lights of of are I that

balance. is our think I job to

us we look inventory toward sure have as increase inventory And as if the now, our greatest future, of occurs. at that balance sure an as looking and make to I we mix we event mentioned earlier, and gives inventory the want want make we we the the the potential right that to we're and

consciously inventory, will give don't selling has currently repositioning inventory that acquiring we potential mix that of are looking we us new inventory, So to think opportunity. the that inventory and

production, you that, the look the the over our position our and to carry That's hopefully have to supply X do make may the bit how best business, and and do if and product do overnight. being have rise positioned in and financing be our that have inventories we well a rise in most just that the demand you quickly wants. we're a to months, -- we past, manufacture, equation that everybody you changes pivot when we like product that to with in next position as because we conjunction little will able inventory, In see likely of ourselves see costs can't

the looking us in right We're the we investing when in that different are investing are money it. the that inventory but to in we talked make all invest about, So currently sell most ourselves. we will areas I've

Andrew Scutt

again. and on That's quarter for Thanks, me. acquisitions. the Congrats it the

Gregory Roberts

you. Okay. Great. Thank

Operator

from coming Gibas question next you. The is Greg Securities. Northland from Thank

Gregory Gibas

Greg, Thor, them may to do LPM's compare be question we how think Should relatively the of for first Kathleen, transaction. wanted to thanks margins congrats A-Mark? taking as ask, and comparable? on the I

Gregory Roberts

higher carry that products or customers important JM our little of of retail It's And be are DTC what it at the look wholesale mix or it'd that a all I is even to I wholesale. Bullion a sell should whether a a product specialty they mix. think think LPM. licensed more note margin is Silver Yes, think a Bull and it's Gold as brands, I that you skewed towards little It and level. a mix Pinehurst, mix of do at bit between

So LPM sellers through their our that licensing and we their exclusive products, have historically needed. products of

Now we retailers. with products those to share have had other

think So that much fair of LPM's historically to sales we that as I would wholesale product haven't it's say got we of like.

LPM for So an expand great distributor products. to opportunity their be on we specialty see as and a that

as that businesses. margins as think A-Mark I bit not wholesale, than their little higher our skew but high a probably should DTC

Gregory Gibas

just sense. so you similar where And modeling, seen think But seen about to about -- QX to you QX? spreads things Makes far, we just relative as Great. have have think fiscal as Sure. fiscal move. we hard say

Gregory Roberts

Yes.

say, and would slight think in that some January February, areas, saw some I I we strength.

the market, little market. I I a product does mint or bit Eagle the strength and And the mint generally less other now, of our products. well think Silver sovereign we're which on supply moment seeing Silver demand in private bode right for at Eagle little a feel our do little a more

that's of side probably things. say plus would the I So

private we that as X-ounce, similar seeing I what to relates in think XX-ounce premiums As it label products, we're QX. saw X-ounce,

little But able mix Some higher. products products our lower, to in. products a we're orders we can broad bit a a they any little fill to as best come are trying bit inventory we're when that as so some of

Operator

next Coffin Praetorian question from Capital. from coming is The Brandon

Brandon Coffin

we're entities. clarifying into guess just segments A-Mark you and could that ecosystem. from just are which us of with like big-box specifically could help A-Mark's relationship where you if us earning Walmart, X those help And I curious Costco if kind understand business fits by retailers maybe revenue specific

Gregory Roberts

Yes, been long great question. a indirectly time. into has them. We supply Walmart market for selling the

We have to while. But Walmart that a have in growth the not A-Mark. there material for seen they been is

So is us. for new big-box anything comment that really not

been in I think is Costco. very doing Costco the news, interested Costco in the is everybody has moment. at what

of on They in the as order Costco A-Mark products at will fulfillment. supplying a I their logistics and Bull their Gold stores. currently Canada Costco floor in that I positioned very Calgary are selling partners think well this. some Bull has our Silver of that as Gold presence in for the handling say Costco. well some are is of Silver

-- to in Bull Silver can are are we any working moment opportunities definitely participate at continuing or specifically in Gold where Gold Silver tune. may is we needs we can and for look Bull Costco A-Mark in So Canada, that the domestic have.

Costco's has overall I into potential general, the the Precious to expand entry market. Metals market the In think

to the metals, overall our owning thereby could growth As to investors introduce precious a of of trusted Costco industry. retailer, the new contributing benefits

believe that So I is a positive.

I Precious Metals metals consumers experience. think for And that Costco's purchase think their more to widespread presence and accessibility demographic. convenient precious a I move shopping routine can during make explore broader allows the and just

numbers, but America and over I different Costco members XXX think North Canada. million heard has across I've

this into marketplace. see we as large a a opportunity to obviously, bring So customers new

time. have we So excited been a about long for

They at having this any that amount is advantage be a to different an for of Bull opportunity demographic I to that's to that And new increase stores that way guys people their it as some Costco see we've -- seem their our seen that. what or in is new our you ounces think from using currently a this customer group take buy. to of limiting it's marketplace, Gold Canada. does can Silver I of actually good To point, of to the in a a time give and DTC try the membership programs. and membership talking and pop-up reports think us, A-Mark

very point, Metals. very this their To about more been they've the interactions Costco and positive customers interest customers' the with optimistic they're about learning and in Precious

So I good us. think this for very is

very is one of in brands. DTC if one customer limited and their their and wants gold think we a terrific at educated from X a opportunity our ounce in more, really a much way creates Costco gold I companies that find or segment Costco, time A-Mark's they'll buy is buying DTC to to hope customer if of ounces it from that of for the

we an that's how it So see as opportunity A-Mark. for

Brandon Coffin

opportunities see then wholesale exactly do arm buying the Sunshine with where selling be maybe is and the and men's Costco or those And Where you. first? Thank SilverTowne follow-up. future coming products? Would you that a something through just potentially Great. potential

Gregory Roberts

that already started to think in products. Sunshine I Costco Canada sell has

it number think So our and businesses, whether Costco logistics. continues, our that service Costco, whether be it now. well-positioned and to long and view that We're mint answers wants we that it's our question. the for term, it think we platforms and challenge able storage I think products, be wholesale, will we involvement, whether be accept it a be to if that of ready And if we're right I private them across

Operator

from Thank coming is you. from Management. Asset The question Sey Jacobs next Jacobs

Seymour Jacobs

to wanted sort the LTM down I drill accretion of calculation. on So

that quarter, So this X.X% as a as, I it It's was EBITDA in had think, quarters. a slow margin. stands, triple previous past quarter, A-Mark which been as high about

to somewhat Given you're what $XXX that. and you or of fair from to to apply similar to EBITDA mix And LPM? in of revenue -- the I've margins is got acquiring aggressive earlier about to A-Mark, wholesale range environments it of said follow-ons the revenue retail then that bad million conservative, or good being average X

Gregory Roberts

Yes.

'XX. LPM better performance, had of 'XX tell significantly little was our margins than target. it's they and in in can a had 'XX from moving you As bit a

our worth. the entry stock and this that bit acquisition fair And for point little as price pay we us negotiate $XX.X we we at very transaction the down So, tangible payout did and put and with as performance. it's opportunity of on for $XX at further that paying, we million the of net we any a cash looked million we up think at looked a and was ended that

would or if the and worked So structure, with of the things tune needed we And of we the position each validate all that the changed we all earn-out giving be the we that numbers, those be time an or were paid a to good would on market sellers opportunity out. structure it negotiated very of the numbers would structure the with in turns us. acquisition if the earn-out pay out happy were get us. It very if for the we and better, participate it performance and purchase, for very they would

is But this closer part, is a think as probably look conditions. expect? that it what's I looking you're add as going hopefully normal have focused can can know the we is to you're little margins. that think the So for most I and I bit belief think is I little expand revenue, what of it's do EBITDA we And margin market what business on that their we in our well But at at with a and part comes and to what bit. how transaction, a challenge this thinking X%

little So maybe you're than compare to trying a bit that higher them. as

retail, more grow incrementally say. I and I line -- the So DTC what in let's current at our we if can their revenue retail A-Mark think margins in couldn't are. margins any the be dollars DTC will increased more we are or why wouldn't line reason be level don't can those with a we see than the bit do expand little higher And wholesale,

Seymour Jacobs

Thanks. Great.

one little that. follow-up on So, question

Kong, before. You getting wholesale. share for wasn't opportunity and mind their Sunshine their become that of a share bars about know SilverTowne don't there in part to talked it more but become of many sort they an whereas revenue menu or I Hong for Is purchases SilverTowne A-Mark sell of synergies how wallet suppliers?

Gregory Roberts

we introduce we wholesale Yes. that's mean and I a and doesn't on LPM SilverTowne customers plenty cost products of retail as because of that that great have week, It inventory. out anymore buying customers both shelf, we inventory. us to synergy have every the -- to

in Now we we logistics, will more Kong. have already process little to have to -- will on a of the Hong bit we've and started stage product the

months a part supplier test, And already agreement to facility. as we've with ago. Hong we've note Kong, started we doing ship for as that to customers, We've as had Kong. specifically. well And of to of products and already inventory it's with Brink's to around their important in think into Hong we entered and started negotiations AMS started of finance X out the been we've part LPM And have as in agreement well our I that as the of a their some with LPM Vegas supplier AMS

with operational for been months. them X the we've So last

we've a we really good what it takes get where to of and So can idea able profitability. been LPM's improve

that. have on we So actually been working

Seymour Jacobs

question Okay. And last and the transaction then general. in on

all this XX% in the almost buying $XX your going costs to that million? of there missing buyback it. of capital sort X% money of and at from the -- pace more the flow margin subtract to back to this? making out any any other like million, does spent vis-à-vis quarter sort that than do borrowing not market any this acquisition cash harder of make You Is cash said how Are something to stock, or relates your also less you $XX return need forward? and it it paying money capital You're are for cost on on X% Or this. you there you're

Gregory Roberts

money this not Well, I X% question. enthusiastic that super I think this am about in I there's a didn't of do market. to make unknown little bit on acquisition.

a this to getting I think change share. market of A-Mark tiny really has the opportunity and market what we're the fraction is that doing very to currently a add business to really in

So or what I by us. than money did it if XXXX that significantly revenue historically. have what made know owned to they what XXXX business I A-Mark even and is in good times. made on their would worth was profitability know that I own. has know that more this LPM made XXXX, I And in think they or

a So, I'm looking as but run. it at at I'm this as looking a not single. home

Seymour Jacobs

Okay. And to buy this does then ability of back it the the question, part impinge buyback your at pace?

Gregory Roberts

No.

that a the time all continue or the the afford to I making this think be buyback deal us whether other these sure Board, to balance right that of A-Mark dividend quite management we acquisitions stock whether in was be opportunity it of spent or bit size future. it it be things, and the whether would

back pretty buy shares That's we've price the outstanding. to bought the And that as buyback we're here deal itself. relates it this stock $XX that XXX,XXX to in we're a everything EBITDA if to I we think well $XX going the other big so And Obviously, at this ago against long is think opportunity wasn't of it that the very quarter. million feel in very million we moment or that share a the attractive quarter made opportunities, sized I to doing a buyback, when we was presents back well. a positioned for announced continue keep stock.

think well. continuing everything about I'm pretty to I do excited So

Operator

Thank session. like his call now to And Mr. the to conclude back you. this I'd turn remarks. closing question-and-answer does Roberts our for over

Gregory Roberts

you for apprised look call I success for Thank progress the our that call the listen Paul. of it all you, thanks Once to joined keeping on again, our shareholders joining. their want will and the later to and of A-Mark's Thank well to commitment future. shareholders our aren't you employees to who the in that to as as recorded. forward thank dedication today,

Operator

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

there made regarding future call, today's forward-looking statements During were events.

the to to and future regarding events, respond, XXXX. A-Mark's respect macroeconomic declarations, to for relate plans, expectations, Exchange the the of changing of Litigation and Private expectations products, demand metal future with objectives, Act company's dividend statements effectively the future and within include timing respond Securities XXXX or of statements dividends, the performance, Reform amount and like precious economic conditions. to ability any meaning conditions of the the that Statements These Securities are Act forward-looking

consents aggregate from parties transactions. proposed in agree following. documents, expressed the and Future in failure individually the results respect contemplated with the or events, on of transactions risks, the all; and actual These the parties the at transaction within transactions greater-than-anticipated to implied materially to third-party or to consummate the timeline cause With uncertainties currently could definitive those these to the incurred failure the or differ the expected of necessary failure to approvals, complete obtain statements. Holdings, costs to AMS include the

in competition adverse model which the for depress the or changes in that or the risks identify the increased or supply described precious changes business, of markets, the preferences bases, and to the problems other economic, execute the current governmental markets; Other the the the Securities financial, maintain demand the historically suitable including and Exchange the the doing factors cause opportunities, inability business the of to precious the current and the may that to and generally, address have companies to filings the differ on and failure strategic public of for expand could to risks capacity our as costs company anticipated; of to effects national pressure business, greater-than-anticipated SilverTowne, in incurred of negative actual custom and consumer in general volatility commodity at investee strategy; respond international company's effects services, the include inflationary chains, in higher-margin execute which growth contributed changes to available risk political customer pricing; in the global metal acquisition investment products failure could company's their to environment preferences the strategy, favorably political company's market demand climate, factors results Commission. metals has business with and potential and to of inability potential in failure company's our

Listeners forward-looking to not or these revise The update statements. company place forward-looking undertakes no on any to undue are cautioned publicly reliance obligation statements.

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

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A-Mark Precious Metals (AMRK) 6 Feb 242024 Q2 Earnings call transcript