GlobeNewswire Inc | Feb 9, 2021 04:30PM EST

February 09, 2021

EL SEGUNDO, Calif., Feb. 09, 2021 (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 second quarter ended December 31, 2020.

Fiscal Second Quarter 2021 Financial Highlights

-- Revenues for the three months ended December 31, 2020 increased 44% to $1.52 billion from $1.06 billion for the three months ended December 31, 2019 and decreased 19% from $1.87 billion for the three months ended September 30, 2020 -- Gross profit for the three months ended December 31, 2020 increased 131% to $18.8 million (1.24% of revenue) from $8.1 million (0.77% of revenue) for the three months ended December 31, 2019 and decreased 48% from $36.1 million (1.94% of revenue) for the three months ended September 30, 2020 -- Net income attributable to the Company for the three months ended December 31, 2020 totaled $8.9 million or $1.16 per diluted share, as compared to net income of $1.2 million or $0.17 per diluted share for the three months ended December 31, 2019 and net income of $23.1 million or $3.09 per diluted share for the three months ended September 30, 2020 -- Gold ounces sold in the three months ended December 31, 2020 increased 12% to 479,000 ounces from 428,000 ounces for the three months ended December 31, 2019 and decreased 34% from 721,000 ounces for the three months ended September 30, 2020 -- Silver ounces sold in the three months ended December 31, 2020 increased 51% to 21.2 million ounces from 14.1 million ounces for the three months ended December 31, 2019 and decreased 12% from 24.2 million ounces for the three months ended September 30, 2020 -- As of December 31, 2020, the number of secured loans decreased 65% to 1,324 from 3,725 as of December 31, 2019 and increased 18% from 1,125 as of September 30, 2020

Fiscal Second Quarter 2021 Financial ResultsRevenues increased 44% to $1.52 billion from $1.06 billion in the same year-ago quarter. The increase in revenues was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gross profit increased 131% to $18.8 million (1.24% of revenue) from $8.1 million (0.77% of revenue) in the same year-ago quarter. The increase in gross profit was due to higher gross profits from the companys Wholesale Sales & Ancillary Services and Direct Sales segments.

Selling, general and administrative expenses increased 15% to $9.0 million from $7.9 million in the same year-ago quarter. The increase in selling, general and administrative expenses was primarily due to increases in insurance costs of $0.5 million, financial and tax consulting costs of $0.4 million, compensation expense (including performance-based accruals) of $0.3 million and $0.1 million of advertising expense, which were partially offset by decreases in operating expenses of $0.1 million associated with the companys Direct Sales segment and depreciation and amortization expenses of $0.1 million.

Interest income decreased 27% to $4.5 million from $6.2 million in the same year-ago quarter. The aggregate decrease in interest income was primarily due to lower interest income earned by the companys Secured Lending segment, partially offset by higher other finance product income.

Interest expense decreased 1% to $5.0 million from $5.1 million in the same year-ago quarter. The decrease in interest expense was primarily due to a reduction in loan servicing fees, partially offset by an increase interest expense related to product financing arrangements. As compared to the same year-ago period, interest expense related to loan servicing fees decreased by $0.5 million, which was offset by an increase of $0.4 million related to product financing arrangements.

Net income attributable to the Company totaled $8.9 million or $1.16 per diluted share, a significant improvement compared to net income of $1.2 million or $0.17 per diluted share in the same year-ago quarter.

Fiscal Six Months 2020 Highlights

-- Revenues for the six months ended December 31, 2020 increased 33% to $3.38 billion from $2.54 billion for the six months ended December 31, 2019 -- Gross profit for the six months ended December 31, 2020 increased 233% to $54.9 million (1.6% of revenue) from $16.5 million (0.6% of revenue) for the six months ended December 31, 2019 -- Net income attributable to the Company for the six months ended December 31, 2020 totaled $32.0 million or $4.21 per diluted share, as compared to net income of $1.4 million or $0.19 per diluted share for the six months ended December 31, 2019 -- Gold ounces sold in the six months ended December 31, 2020 increased 20% to 1.2 million ounces from 1.0 million for the six months ended December 31, 2019 -- Silver ounces sold in the six months ended December 31, 2020 increased 30% to 45.5 million ounces from 35.0 million for the six months ended December 31, 2019

Fiscal Six Months 2020 Financial ResultsRevenues increased 33% to $3.38 billion from $2.54 billion in the same year-ago period. The increase in revenues was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gross profit increased 233% to $54.9 million (1.6% of revenue) from $16.5 million (0.6% of revenue) in the same year-ago period. The increase in gross profit was primarily due to higher gross profits earned by the companys Wholesale Sales & Ancillary Services and Direct Sales segments.

Selling, general and administrative expenses increased 18% to $19.0 million from $16.1 million in the same year-ago period. The increase in selling, general and administrative expenses was primarily due to increases in compensation expense (including performance-based accruals) of $2.2 million, insurance costs of $0.4 million, financial and tax consulting costs of $0.4 million, computer software costs of $0.2 million and advertising costs of $0.2 million, which were partially offset by decreases in operating expenses of $0.3 million associated with the companys Direct Sales segment and depreciation and amortization expense of $0.2 million.

Interest income decreased 29% to $8.5 million from $12.0 million in the same year-ago period. The decrease in Interest income was primarily due to interest income earned by the companys Secured Lending segment, partially offset by higher other finance product income.

Interest expense decreased 9% to $9.3 million from $10.2 million in the same year-ago period. The decrease in interest expense was primarily due to reductions in interest expense related to the companys Trading Credit Facility and loan servicing fees, partially offset by increases in interest expense related to product financing arrangements and liability on borrowed metals.

Net income attributable to the Company totaled $32.0 million or $4.21 per diluted share, an improvement from $1.4 million or $0.19 per diluted share in the same year-ago period.

Management Commentary The second quarter was another solid period for A-Mark, said CEO Greg Roberts. Following the unprecedented volatility in the precious metals market during Q1 that produced outsized profitability for A-Mark, Q2 was characterized by above average product demand, volumes and premium spreads. These market dynamics allowed us to realize another quarter of strong financial performance, highlighted by the $8.9 million we generated in net income, which contributed to the most profitable first half of any fiscal year in our history. Our financial results continue to demonstrate the strength of our unique business model, which is designed to generate consistent and diverse revenue streams in normal market conditions and outsized profitability during volatile market periods.

We continue to benefit from the scalability of our fully-integrated platform and highly complementary business segments, which have enabled us to capture significant value across the precious metals market especially during periods of supply constrained and volatile market conditions. The strategic investments we have made to expand A-Marks direct sales are yielding encouraging results and have positioned A-Mark to take advantage of the current market conditions and to drive growth in the years ahead.

Our business continues to benefit from the sustained rally in the precious metals market and we remain confident that our favorable competitive position, industry-leading platform, and proven business model will help us capitalize on the near-term opportunities and realize continued growth and profitability over the long term.

Conference CallA-Mark will hold a conference call today (February 9, 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 5:00 p.m. Eastern time (2:00 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: 13716127

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 February 23, 2021.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Conference ID: 13716127

AboutA-Mark Precious MetalsFounded in 1965,A-Mark Precious Metals, Inc.(NASDAQ: AMRK) is a leading full-service precious metals 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 Sales & Ancillary Services, Secured Lending, and Direct Sales.

A-Mark operates several business units in its Wholesale Sales & 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, including Australia, Austria, Canada, China, Mexico, South Africa and the United Kingdom. Through its Transcontinental 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; the effects of the COVID-19 pandemic and the eventual return to normalized business and economic conditions;and the strategic, business, economic, financial, political and governmental risks 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in thousands, except for share data) (unaudited)

December31, June30, 2020 2020ASSETS Current assets: Cash $ 14,922 $ 52,325 Receivables, net 101,864 49,142 Derivative assets 57,849 46,325 Secured loans receivable 95,817 63,710 Precious metals held under financing arrangements 160,255 178,577 Inventories: Inventories 245,151 246,603 Restricted inventories 272,531 74,678 517,682 321,281 Prepaid expenses and other assets 3,131 2,659 Total current assets 951,520 714,019 Operating lease right of use assets 3,642 4,223 Property, plant, and equipment, net 5,913 5,675 Goodwill 8,881 8,881 Intangibles, net 4,657 4,974 Long-term investments 30,013 16,763 Other long-term assets 2,500 3,500 Total assets $ 1,007,126 $ 758,035 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Lines of credit $ 175,000 $ 135,000 Liabilities on borrowed metals 141,796 168,206 Product financing arrangements 272,531 74,678 Accounts payable and other current liabilities 142,372 140,930 Derivative liabilities 50,809 25,414 Accrued liabilities 9,431 10,397 Income tax payable 715 2,135 Total current liabilities 792,654 556,760 Notes payable 92,874 92,517 Deferred tax liabilities 62 62 Other liabilities 3,108 3,802 Total liabilities 888,698 653,141 Commitments and contingencies Stockholders? equity: Preferred stock, $0.01 par value, authorized10,000,000 shares; issued ? ? and outstanding: none as of December31, 2020 andJune30, 2020Common stock, par value $0.01; 40,000,000 sharesauthorized; 7,131,462and 7,031,500 shares issued and outstanding as of 72 71 December31, 2020and June30, 2020, respectivelyAdditional paid-in capital 29,093 27,289 Retained earnings 84,461 73,644 Total A-Mark Precious Metals, Inc. stockholders? 113,626 101,004 equityNon-controlling interests 4,802 3,890 Total stockholders? equity 118,428 104,894 Total liabilities, non-controlling interests and $ 1,007,126 $ 758,035 stockholders? equity

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

Three Months Ended Six Months Ended December31, December31, December31, December31, 2020 2019 2020 2019Revenues $ 1,518,744 $ 1,055,590 $ 3,384,860 $ 2,536,604 Cost of sales 1,499,993 1,047,459 3,329,964 2,520,133 Gross profit 18,751 8,131 54,896 16,471 Selling,general, and (9,033 ) (7,870 ) (19,039 ) (16,140 )administrativeexpensesInterest income 4,533 6,232 8,516 12,000 Interest (5,037 ) (5,081 ) (9,330 ) (10,223 )expenseOther income 2,567 150 7,052 (16 )(expense), netUnrealizedgains (losses) 19 125 (78 ) 3 on foreignexchangeNet incomebefore 11,800 1,687 42,017 2,095 provision forincome taxesIncome tax (2,586 ) (432 ) (9,097 ) (537 )expenseNet income 9,214 1,255 32,920 1,558 Net incomeattributable to 289 21 912 196 non-controllinginterestsNet incomeattributable to $ 8,925 $ 1,234 $ 32,008 $ 1,362 the CompanyBasic anddiluted netincome pershare attributableto A-MarkPreciousMetals, Inc.:Basic $ 1.26 $ 0.17 $ 4.53 $ 0.19 Diluted $ 1.16 $ 0.17 $ 4.21 $ 0.19 Weightedaverage shares outstanding:Basic 7,063,000 7,031,400 7,064,800 7,031,400 Diluted 7,713,300 7,056,300 7,610,400 7,074,800

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

Six Months Ended December31, 2020 2019 Cash flows from operating activities: Net income $ 32,920 $ 1,558 Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization 1,006 1,334 Amortization of loan cost 968 730 Deferred income taxes ? 474 Interest added to principal of secured loans (4 ) (10 )Share-based compensation 388 410 Earnings from equity method investments (6,488 ) (114 )Changes in assets and liabilities: Receivables (52,722 ) 2,297 Secured loans receivable (309 ) 2,131 Secured loans made to affiliates 8,662 5,108 Derivative assets (11,524 ) (2,931 )Income tax receivable ? 7 Precious metals held under financing arrangements 18,322 11,820 Inventories (196,401 ) 29,930 Prepaid expenses and other assets (532 ) 359 Accounts payable and other current liabilities 1,442 174 Derivative liabilities 25,395 (923 )Liabilities on borrowed metals (26,410 ) (8,255 )Accrued liabilities (1,068 ) (743 )Income tax payable (1,420 ) ? Net cash (used in) provided by operating (207,775 ) 43,356 activitiesCash flows from investing activities: Capital expenditures for property, plant, and (937 ) (455 )equipmentPurchase of long-term investments (6,763 ) ? Purchase of intangible assets ? (150 )Secured loans receivable, net (40,456 ) (34,274 )Other secured loans, net 1,000 (3,500 )Net cash used in investing activities (47,156 ) (38,379 )Cash flows from financing activities: Product financing arrangements, net 197,853 (14,739 )Dividends paid (21,191 ) ? Borrowings and repayments under lines of credit, 40,000 13,000 netDebt funding issuance costs (551 ) ? Net settlement on issuance of common shares on 1,417 ? exercise of optionsNet cash provided by (used in) financing 217,528 (1,739 )activitiesNet (decrease) increase in cash, cash equivalents, (37,403 ) 3,238 and restricted cashCash, cash equivalents, and restricted cash, 52,325 8,320 beginning of periodCash, cash equivalents, and restricted cash, end $ 14,922 $ 11,558 of period

Overview of Results of Operations for the Three Months Ended December 31, 2020 and 2019

Condensed Consolidated Results of Operations

The operating results of our business for the three months ended December 31, 2020 and 2019 are as follows:

in thousands,except per share dataThree MonthsEnded 2020 2019 $ % December31, $ % of $ % of Increase/ Increase/ revenue revenue (decrease) (decrease)Revenues $ 1,518,744 100.000 % $ 1,055,590 100.000 % $ 463,154 43.9 %Gross profit 18,751 1.235 % 8,131 0.770 % $ 10,620 130.6 %Selling,general, and (9,033 ) (0.595 )% (7,870 ) (0.746 )% $ 1,163 14.8 %administrativeexpensesInterest income 4,533 0.298 % 6,232 0.590 % $ (1,699 ) (27.3 %)Interest (5,037 ) (0.332 )% (5,081 ) (0.481 )% $ (44 ) (0.9 %)expenseOther income, 2,567 0.169 % 150 0.014 % $ 2,417 1,611.3 %netUnrealizedgains on 19 0.001 % 125 0.012 % $ (106 ) (84.8 %)foreignexchangeNet incomebefore 11,800 0.777 % 1,687 0.160 % $ 10,113 599.5 %provision forincome taxesIncome tax (2,586 ) (0.170 )% (432 ) (0.041 )% $ 2,154 498.6 %expenseNet income 9,214 0.607 % 1,255 0.119 % $ 7,959 634.2 %Net incomeattributable to 289 0.019 % 21 0.002 % $ 268 1,276.2 %non-controllinginterestsNet incomeattributable to $ 8,925 0.588 % $ 1,234 0.117 % $ 7,691 623.3 %the CompanyBasic anddiluted netincome pershare attributable toA-Mark PreciousMetals, Inc.:Per Share Data: Basic $ 1.26 $ 0.17 $ 1.09 641.2 %Diluted $ 1.16 $ 0.17 $ 0.99 582.4 %

Overview of Results of Operations for the Six Months Ended December31, 2020 and 2019

Condensed Consolidated Results of Operations

The operating results of our business for the six months ended December31, 2020 and 2019 are as follows:

in thousands,except per share dataSix MonthsEnded 2020 2019 $ % December31, $ % of $ % of Increase/ Increase/ revenue revenue (decrease) (decrease)Revenues $ 3,384,860 100.000 % $ 2,536,604 100.000 % $ 848,256 33.4 %Gross profit 54,896 1.622 % 16,471 0.649 % $ 38,425 233.3 %Selling,general, and (19,039 ) (0.562 )% (16,140 ) (0.636 )% $ 2,899 18.0 %administrativeexpensesInterest income 8,516 0.252 % 12,000 0.473 % $ (3,484 ) (29.0 %)Interest (9,330 ) (0.276 )% (10,223 ) (0.403 )% $ (893 ) (8.7 %)expenseOther income 7,052 0.208 % (16 ) (0.001 )% $ 7,068 44,175.0 %(expense), netUnrealized(losses) gains (78 ) (0.002 )% 3 0.000 % $ 81 2,700.0 %on foreignexchangeNet incomebefore 42,017 1.241 % 2,095 0.083 % $ 39,922 1,905.6 %provision forincome taxesIncome tax (9,097 ) (0.269 )% (537 ) (0.021 )% $ 8,560 1,594.0 %expenseNet income 32,920 0.973 % 1,558 0.061 % $ 31,362 2,013.0 %Net incomeattributable to 912 0.027 % 196 0.008 % $ 716 365.3 %non-controllinginterestsNet incomeattributable to $ 32,008 0.946 % $ 1,362 0.054 % $ 30,646 2,250.1 %the CompanyBasic anddiluted netincome pershare attributable toA-Mark PreciousMetals, Inc.:Per Share Data: Basic $ 4.53 $ 0.19 $ 4.34 2,284.2 %Diluted $ 4.21 $ 0.19 $ 4.02 2,115.8 %