GlobeNewswire Inc | Sep 10, 2020 04:05PM EDT

September 10, 2020

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

Fiscal Fourth Quarter 2020 Financial Highlights

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

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

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

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

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

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

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

Full Year 2020 Financial Highlights

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

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

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

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

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

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

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

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

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

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

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

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

To participate, please dial the appropriate number at least five minutes prior to the start time and ask for the A-Mark Precious Metals conference call.

U.S. dial-in number: 1-877-407-0789International number: 1-201-689-8562Conference ID: 13709056

The conference call will be broadcast simultaneously and available for replay via the Investor Relations section of A-Marks website at www.amark.com. If you have any difficulty connecting with the conference call or webcast, please contact A-Marks investor relations team at 1-949-574-3860.

A replay of the call will be available after 7:30 p.m. Eastern time through September 24, 2020.

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

AboutA-Mark Precious Metals

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

A-Mark operates several business units in its Wholesale Trading & Ancillary Services segment, including Industrial, Coin and Bar, Trading and Finance, Storage, Logistics, and the Mint (as more fully described below).Its Industrialunit services manufacturers and fabricators of products utilizing precious metals, while its Coin and Bar unit deals in over 200 different products for distribution to dealers and other qualified purchasers. As aU.S.Mint-authorized purchaser of gold, silver and platinum coins, A-Mark purchases bullion products directly from theU.S.Mint for sale to customers. A-Mark also has distributorships with other sovereign mints, includingAustralia,Austria,Canada,China,Mexico,South Africaand theUnited Kingdom. Through itsTranscontinental Depository Servicessubsidiary, A-Mark provides customers with a variety of managed storage options for precious metals worldwide. Through its A-M Global Logistics subsidiary, A-Mark provides customers an array of complementary services, including receiving, handling, inventorying, processing, packaging and shipping of precious metals and custom coins on a secure basis. A-Mark also holds a majority stake in a joint venture that owns the minting operations known asSilverTowne Mint(Mint), which designs and produces minted silver products which provide greater product selection to customers, price stability within the supply chain as well as more secured access to silver during volatile market environments.

The company operates its Secured Lending segment through its wholly-owned subsidiaries,Collateral Finance Corporation(CFC) andAM Capital Funding, LLC(AMCF). Founded in 2005, CFC is alicensed finance lender that originates and acquires loans secured by bullion and numismatic coins. Its customers include coin and precious metal dealers, investors, and collectors. AMCF was formed in 2018 for the purpose of securitizing eligible secured loans of CFC.

A-Mark operates its Direct Sales segment primarily through its wholly-owned subsidiaryGoldline Inc.(Goldline), a direct retailer of precious metals for the investor community. Goldline markets A-Marks precious metal products through various channels, including radio, television, and the Internet.

A-Mark is headquartered inEl Segundo, California, with offices and facilities inLos Angeles, California,Vienna, Austria,Las Vegas, Nevada, andWinchester, Indiana. For more information, visitwww.amark.com.

Important Cautions Regarding Forward-Looking StatementsStatements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ include the following: the failure to execute our growth strategy as planned; greater than anticipated costs incurred to execute this strategy; changes in the current international political climate which has favorably contributed to demand and volatility in the precious metals markets; increased competition for our higher margin services, which could depress pricing; the failure of our business model to respond to changes in the market environment as anticipated; general risks of doing business in the commodity markets; and other business, economic, financial and governmental risks as described in in the companys public filings with the Securities and Exchange Commission.

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

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

Investor Relations Contact:Matt GloverGateway Investor Relations1-949-574-3860AMRK@gatewayIR.com

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

June30, June30, 2020 2019ASSETS Current assets: Cash $ 52,325 $ 8,320 Receivables 49,142 26,895 Derivative assets 46,325 2,428 Secured loans receivable 63,710 125,298 Precious metals held under financing arrangements 178,577 208,792 Inventories: Inventories 246,603 198,356 Restricted inventories 74,678 94,505 321,281 292,861 Income tax receivable ? 1,473 Prepaid expenses and other assets 2,659 2,783 Total current assets 714,019 668,850 Operating lease right of use assets 4,223 ? Property, plant, and equipment, net 5,675 6,731 Goodwill 8,881 8,881 Intangibles, net 4,974 5,852 Long-term investments 16,763 11,885 Deferred tax assets ? 3,163 Other long-term assets 3,500 ? Total assets $ 758,035 $ 705,362 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Lines of credit $ 135,000 $ 167,000 Liabilities on borrowed metals 168,206 201,144 Product financing arrangements 74,678 94,505 Accounts payable and other current liabilities 140,930 62,180 Derivative liabilities 25,414 9,971 Accrued liabilities 10,397 6,137 Income tax payable 2,135 ? Total current liabilities 556,760 540,937 Notes payable 92,517 91,859 Deferred tax liabilities 62 ? Other liabilities 3,802 ? Total liabilities 653,141 632,796 Commitments and contingencies Stockholders? equity: Preferred stock, $0.01 par value, authorized10,000,000 shares; issued and outstanding: none ? ? as of June30, 2020 and June30, 2019Common stock, par value $0.01; 40,000,000 sharesauthorized; 7,031,500and7,031,450 shares issued 71 71 and outstanding as of June30, 2020 and June30,2019, respectivelyAdditional paid-in capital 27,289 26,452 Retained earnings 73,644 43,135 Total A-Mark Precious Metals, Inc. stockholders? 101,004 69,658 equityNon-controlling interests 3,890 2,908 Total stockholders? equity 104,894 72,566 Total liabilities, non-controlling interests and $ 758,035 $ 705,362 stockholders? equity

A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(in thousands, except for share and per share data)

Years Ended June30, June30, 2020 2019Revenues 5,461,094 $ 4,783,157 Cost of sales 5,394,121 4,751,199 Gross profit 66,973 31,958 Selling, general, and administrative expenses (36,756 ) (32,502 )Interest income 21,237 19,270 Interest expense (18,859 ) (17,146 )Other income, net 5,226 1,697 Unrealized gains on foreign exchange 57 ? Net income before provision for income taxes 37,878 3,277 Income tax expense (6,387 ) (1,015 )Net income 31,491 2,262 Net income attributable to non-controlling 982 37 interestsNet income attributable to the Company $ 30,509 $ 2,225 Basic and diluted net income per shareattributable to A-Mark Precious Metals, Inc.:Basic $ 4.34 $ 0.32 Diluted $ 4.31 $ 0.31 Weighted average shares outstanding: Basic 7,031,500 7,031,400 Diluted 7,080,500 7,085,300

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

Years Ended June30, 2020 2019 Cash flows from operating activities: Net income $ 31,491 $ 2,262 Adjustments to reconcile net income to net cash provided by (used in) operating activities:Provision (reversal) for doubtful accounts ? (30 )Depreciation and amortization 2,900 2,807 Amortization of loan cost 1,484 1,192 Deferred income taxes 3,225 707 Interest added to principal of secured loans (19 ) (19 )Change in accrued earn-out ? (588 )Debt extinguishment costs ? 45 Share-based compensation 953 1,096 Earnings from equity method investments (4,878 ) (1,198 )Changes in assets and liabilities: Receivables (22,247 ) 8,992 Secured loans receivable 3,086 (1,304 )Secured loans made to affiliates 5,261 (1,535 )Derivative assets (43,897 ) 4,967 Income tax receivable 1,473 80 Precious metals held under financing arrangements 30,215 53,774 Inventories (28,420 ) (12,745 )Prepaid expenses and other assets 59 (668 )Accounts payable and other current liabilities 78,750 16,183 Derivative liabilities 15,443 (10,486 )Liabilities on borrowed metals (32,938 ) (79,202 )Accrued liabilities 3,859 1,137 Income tax payable 2,135 ? Net cash provided by (used in) operating activities 47,935 (14,533 )Cash flows from investing activities: Capital expenditures for property, plant, and (836 ) (490 )equipmentPurchase of long-term investments ? (2,300 )Purchase of intangible assets (150 ) ? Secured loans receivable, net 53,260 (12,015 )Other loans originated (3,500 ) ? Net cash provided by (used in) investing activities 48,774 (14,805 )Cash flows from financing activities: Product financing arrangements, net (19,827 ) (19,435 )Borrowings and repayments under lines of credit, (32,000 ) (33,000 )netRepayments on notes payable to related party ? (7,500 )Proceeds from issuance of notes payable ? 95,000 Debt funding issuance costs (761 ) (3,798 )Non-controlling ownership interest contribution ? 100 Net payments related to share-based award (116 ) ? activitiesNet cash (used in) provided by financing activities (52,704 ) 31,367 Net increase in cash, cash equivalents, and 44,005 2,029 restricted cashCash, cash equivalents, and restricted cash, 8,320 6,291 beginning of periodCash, cash equivalents, and restricted cash, end of $ 52,325 $ 8,320 period

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

Consolidated Results of Operations

The operating results of our business for the years ended June30, 2020 and 2019 are as follows:

in thousands,except per share dataYears Ended 2020 2019 $ % June30, $ % of $ % of Increase/ Increase/ revenue revenue (decrease) (decrease)Revenues $ 5,461,094 100.000 % $ 4,783,157 100.000 % $ 677,937 14.2 %Gross profit 66,973 1.226 % 31,958 0.668 % $ 35,015 109.6 %Selling,general, and (36,756 ) (0.673 ) (32,502 ) (0.680 ) $ 4,254 13.1 %administrative % %expensesInterest income 21,237 0.389 % 19,270 0.403 % $ 1,967 10.2 %Interest (18,859 ) (0.345 ) (17,146 ) (0.358 ) $ 1,713 10.0 %expense % %Other income, 5,226 0.096 % 1,697 0.035 % $ 3,529 208.0 %netUnrealizedgains on 57 0.001 % ? ? $ 57 ? foreignexchangeNet incomebefore 37,878 0.694 % 3,277 0.069 % $ 34,601 1055.9 %provision forincome taxesIncome tax (6,387 ) (0.117 ) (1,015 ) (0.021 ) $ 5,372 529.3 %expense % %Net income 31,491 0.577 % 2,262 0.047 % $ 29,229 1292.2 %Net incomeattributable to 982 0.018 % 37 0.001 % $ 945 2554.1 %non-controllinginterestsNet incomeattributable to $ 30,509 0.559 % $ 2,225 0.047 % $ 28,284 1271.2 %the CompanyBasic anddiluted netincome pershare attributable toA-Mark PreciousMetals, Inc.:Per Share Data: Basic $ 4.34 $ 0.32 $ 4.02 1256.3 %Diluted $ 4.31 $ 0.31 $ 4.00 1290.3 %

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

Consolidated Results of Operations

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

in thousands,except per share dataThree Months 2020 2019 $ %Ended June30, $ % of $ % of Increase/ Increase/ revenue revenue (decrease) (decrease)Revenues $ 1,665,768 100.000 % $ 850,169 100.000 % $ 815,599 95.9 %Gross profit 28,027 1.683 % 6,450 0.759 % $ 21,577 334.5 %Selling,general, and (10,228 ) (0.614 )% (8,422 ) (0.991 )% $ 1,806 21.4 %administrativeexpensesInterest income 3,269 0.196 % 5,260 0.619 % $ (1,991 ) (37.9 )%Interest (3,585 ) (0.215 )% (4,699 ) (0.553 )% $ (1,114 ) (23.7 )%expenseOther income, 4,779 0.287 % 394 0.046 % $ 4,385 1112.9 %netUnrealizedgains on 99 0.006 % 54 0.006 % $ 45 83.3 %foreignexchangeNet income(loss) before 22,361 1.342 % (963 ) (0.113 )% $ 23,324 2422.0 %provision forincome taxesIncome tax(expense) (4,036 ) (0.242 )% 128 0.015 % $ 4,164 3253.1 %benefitNet income 18,325 1.100 % (835 ) (0.098 )% $ 19,160 2294.6 %(loss)Net income(loss)attributable to 499 0.030 % (12 ) (0.001 )% $ 511 4258.3 %non-controllinginterestsNet income(loss) $ 17,826 1.070 % $ (823 ) (0.097 )% $ 18,649 2266.0 %attributable tothe CompanyBasic anddiluted netincome (loss)per share attributable toA-Mark PreciousMetals, Inc.:Per Share Data: Basic $ 2.54 $ (0.12 ) $ 2,66 2216.7 %Diluted $ 2.49 $ (0.12 ) $ 2.61 2175.0 %

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

Consolidated Results of Operations

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

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