A-Mark Precious Metals Inc
For the period ended Dec 31, 2023. Filed Feb 8, 2024.
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Dec 31, 2023 · Filed Feb 8, 2024
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Segment results of operations
The Company conducts its operations in three reportable segments: (i) Wholesale Sales & Ancillary Services, (ii) Direct-to-Consumer, and (iii) Secured Lending.
Results of Operations — Wholesale Sales & Ancillary Services Segment
The Company operates its Wholesale Sales & Ancillary Services segment directly and through its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services ("TDS"), A-M Global Logistics, LLC ("Logistics"), and AM&ST Associates, LLC ("AMST" or "Silver Towne" or the "Mint"). Also, the Wholesale Sales & Ancillary Services segment includes the consolidating eliminations of inter-segment transactions and unallocated segment adjustments.
— Wholesale Sales & Ancillary Services Segment
The operating results of our Wholesale Sales & Ancillary Services segment were as follows (in thousands, except performance metrics data):
| Three Months Ended December 31, · 2023 · 2022 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $1,708,184(a) | 100.000% | $1,499,526(b) | 100.000% | $208,658 | 13.9% | |||
| Gross profit | 23,884 | 1.398%(c) | 27,416 | 1.828%(d) | $(3,532) | (12.9%) | |||
| Selling, general, and administrative expenses | (10,577) | (0.619%) | (9,571) | (0.638%) | $1,006 | 10.5% | |||
| Depreciation and amortization expense | (313) | (0.018%) | (238) | (0.016%) | $75 | 31.5% | |||
| Interest income | 3,573 | 0.209% | 2,814 | 0.188% | $759 | 27.0% | |||
| Interest expense | (6,960) | (0.407%) | (4,410) | (0.294%) | $2,550 | 57.8% | |||
| Earnings from equity method investments | 777 | 0.045% | 4,669 | 0.311% | $(3,892) | (83.4%) | |||
| Other income, net | 260 | 0.015% | 70 | 0.005% | $190 | 271.4% | |||
| Unrealized gains on foreign exchange | 105 | 0.006% | 1 | 0.000% | $104 | 10,400.0% | |||
| Net income before provision for income taxes | $10,749 | 0.629% | $20,751 | 1.384% | $(10,002) | (48.2%) | |||
| Performance Metrics: | |||||||||
| Gold ounces sold(1) | 334,000 | 435,000 | (101,000) | (23.2%) | |||||
| Silver ounces sold(2) | 22,809,000 | 32,444,000 | (9,635,000) | (29.7%) | |||||
| Wholesale Sales ticket volume(3) | 25,262 | 21,055 | 4,207 | 20.0% | |||||
(a)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $253.3 million. This segment’s gross sales before eliminations of inter-segment activity totaled $1.961 billion.
(b)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $306.7 million. This segment’s gross sales before eliminations of inter-segment activity totaled $1.806 billion.
(c)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.134% for the period.
(d)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.731% for the period.
(1)
(2)
(3)
Wholesales Sales ticket volume represents the total number of product orders processed.
— Wholesale Sales & Ancillary Services Segment
The operating results of our Wholesale Sales & Ancillary Services segment were as follows (in thousands, except performance metrics data):
| Six Months Ended December 31, · 2023 · 2022 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $3,867,256(a) | 100.000% | $2,971,841(b) | 100.000% | $895,415 | 30.1% | |||
| Gross profit | 52,231 | 1.351%(c) | 61,922 | 2.084%(d) | $(9,691) | (15.7%) | |||
| Selling, general, and administrative expenses | (21,164) | (0.547%) | (16,949) | (0.570%) | $4,215 | 24.9% | |||
| Depreciation and amortization expense | (610) | (0.016%) | (456) | (0.015%) | $154 | 33.8% | |||
| Interest income | 6,981 | 0.181% | 5,480 | 0.184% | $1,501 | 27.4% | |||
| Interest expense | (13,723) | (0.355%) | (7,717) | (0.260%) | $6,006 | 77.8% | |||
| Earnings from equity method investments | 3,492 | 0.090% | 7,344 | 0.247% | $(3,852) | (52.5%) | |||
| Other income, net | 296 | 0.008% | 70 | 0.002% | $226 | 322.9% | |||
| Unrealized gains on foreign exchange | 11 | 0.000% | 215 | 0.007% | $(204) | (94.9%) | |||
| Net income before provision for income taxes | $27,514 | 0.711% | $49,909 | 1.679% | $(22,395) | (44.9%) | |||
| Performance Metrics: | |||||||||
| Gold ounces sold(1) | 712,000 | 911,000 | (199,000) | (21.8%) | |||||
| Silver ounces sold(2) | 50,166,000 | 61,961,000 | (11,795,000) | (19.0%) | |||||
| Wholesale Sales ticket volume(3) | 47,306 | 47,219 | 87 | 0.2% | |||||
(a)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $481.6 million. This segment’s gross sales before eliminations of inter-segment activity totaled $4.349 billion.
(b)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $643.2 million. This segment’s gross sales before eliminations of inter-segment activity totaled $3.615 billion.
(c)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.111% for the period.
(d)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.861% for the period.
(1)
(2)
(3)
Wholesales Sales ticket volume represents the total number of product orders processed.
Revenues — Wholesale Sales & Ancillary Services
| in thousands, except performance metrics | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | |||||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $1,708,184(a) | 100.000% | $1,499,526(b) | 100.000% | $208,658 | 13.9% | |||
| Performance Metrics | |||||||||
| Gold ounces sold | 334,000 | 435,000 | (101,000) | (23.2%) | |||||
| Silver ounces sold | 22,809,000 | 32,444,000 | (9,635,000) | (29.7%) | |||||
| Wholesale Sales ticket volume | 25,262 | 21,055 | 4,207 | 20.0% | |||||
(a)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $253.3 million. This segment’s gross sales before eliminations of inter-segment activity totaled $1.961 billion.
(b)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $306.7 million. This segment’s gross sales before eliminations of inter-segment activity totaled $1.806 billion.
Revenues for the three months ended December 31, 2023 increased $208.7 million, or 13.9%, to $1.708 billion from $1.500 billion in 2022. Excluding an increase in forward sales of $231.6 million, our revenues decreased $22.9 million, which was due to a decrease in gold and silver ounces sold, partially offset by higher average selling prices of gold and silver.
Gold ounces sold for the three months ended December 31, 2023 decreased 101,000 ounces, or 23.2%, to 334,000 ounces from 435,000 ounces in 2022. Silver ounces sold for the three months ended December 31, 2023 decreased 9,635,000 ounces, or 29.7%, to 22,809,000 ounces from 32,444,000 ounces in 2022. On average, the selling prices for gold and silver increased by 14.2% and 14.5%, respectively, during the three months ended December 31, 2023 as compared to the prior year.
The Wholesale Sales ticket volume for the three months ended December 31, 2023 increased by 4,207 tickets, or 20.0% to 25,262 tickets from 21,055 tickets in 2022.
| in thousands, except performance metrics | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | |||||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $3,867,256(a) | 100.000% | $2,971,841(b) | 100.000% | $895,415 | 30.1% | |||
| Performance Metrics | |||||||||
| Gold ounces sold | 712,000 | 911,000 | (199,000) | (21.8%) | |||||
| Silver ounces sold | 50,166,000 | 61,961,000 | (11,795,000) | (19.0%) | |||||
| Wholesale Sales ticket volume | 47,306 | 47,219 | 87 | 0.2% | |||||
(a)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $481.6 million. This segment’s gross sales before eliminations of inter-segment activity totaled $4.349 billion.
(b)
Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $643.2 million. This segment’s gross sales before eliminations of inter-segment activity totaled $3.615 billion.
Revenues for the six months ended December 31, 2023 increased $895.4 million, or 30.1%, to $3.867 billion from $2.972 billion in 2022. Excluding an increase in forward sales of $891.6 million, our revenues increased $3.8 million, which was due to higher average selling prices of gold and silver, partially offset by a decrease in gold and silver ounces sold.
Gold ounces sold for the six months ended December 31, 2023 decreased 199,000 ounces, or 21.8%, to 712,000 ounces from 911,000 ounces in 2022. Silver ounces sold for the six months ended December 31, 2023 decreased 11,795,000 ounces, or 19.0%, to 50,166,000 ounces from 61,961,000 ounces in 2022. On average, the selling prices for gold increased by 12.6% and selling prices for silver increased by 15.0% during the six months ended December 31, 2023 as compared to the prior year.
The Wholesale Sales ticket volume for the six months ended December 31, 2023 increased by 87 tickets, or 0.2% to 47,306 tickets from 47,219 tickets in 2022.
Gross Profit — Wholesale Sales & Ancillary Services
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Gross profit | $23,884 | 1.398%(c) | $27,416 | 1.828%(d) | $(3,532) | (12.9%) |
(c)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.134% for the period.
(d)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.731% for the period.
Gross profit for the three months ended December 31, 2023 decreased $3.5 million, or 12.9%, to $23.9 million from $27.4 million in 2022. The overall gross profit decrease was primarily due to lower premium spreads, partially offset by higher trading profit.
This segment’s profit margin percentage decreased by 43.0 basis points to 1.398% from 1.828% in 2022. The decrease in gross margin percentage was mainly attributable to lower premium spreads and the impact of increased forward sales, partially offset by higher trading profits.
Excluding an increase of $231.6 million of forward sales that had a negligible impact to the amount of gross profit, this segment's gross margin percentage for the three months ended December 31, 2023 decreased by 30.8 basis points to 2.561% from 2.869%. Forward sales increase revenues but are associated with negligible gross profit. The Company enters into forward contracts to hedge its precious metals price risk exposure and not for speculative purposes.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Gross profit | $52,231 | 1.351%(c) | $61,922 | 2.084%(d) | $(9,691) | (15.7%) |
(c)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.111% for the period.
(d)
Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.861% for the period.
Gross profit for the six months ended December 31, 2023 decreased $9.7 million, or 15.7%, to $52.2 million from $61.9 million in 2022. The gross profit decrease was primarily due to lower premium spreads, partially offset by higher trading profits.
This segment’s profit margin percentage decreased by 73.3 basis points to 1.351% from 2.084% in 2022. The decrease in gross margin percentage was mainly attributable to the impact of increased forward sales and lower premium spreads, partially offset by higher trading profits.
Excluding an increase of $891.6 million of forward sales that had a negligible impact to the amount of gross profit, this segment's gross margin percentage for the six months ended December 31, 2023 decreased by 47.6 basis points to 2.534% from 3.010% in the prior year. Forward sales increase revenues but are associated with negligible gross profit. The Company enters into forward contracts to hedge its precious metals price risk exposure and not for speculative purposes.
Selling, General and Administrative Expenses — Wholesale Sales & Ancillary Services
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Selling, general, and administrative expenses | $(10,577) | (0.619%) | $(9,571) | (0.638%) | $1,006 | 10.5% |
Selling, general and administrative expenses for the three months ended December 31, 2023 increased $1.0 million, or 10.5%, to $10.6 million from $9.6 million in 2022. The change was primarily due to: (i) an increase in compensation expense (including performance-based accruals) of $0.8 million, (ii) higher consulting and professional fees of $0.7 million, and (iii) an increase in advertising costs of $0.3 million, partially offset by (iv) a decrease in insurance costs of $0.9 million.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Selling, general, and administrative expenses | $(21,164) | (0.547%) | $(16,949) | (0.570%) | $4,215 | 24.9% |
Selling, general and administrative expenses for the six months ended December 31, 2023 increased $4.2 million, or 24.9%, to $21.2 million from $16.9 million in 2022. The change was primarily due to: (i) an increase in consulting and professional fees of $2.5 million and (ii) an increase in compensation expense (including performance-based accruals) of $1.4 million, (iii) an increase in advertising costs of $0.7 million, and (iv) an increase in information technology costs of $0.2 million, partially offset by (v) a decrease in insurance costs of $0.6 million.
Interest Income — Wholesale Sales & Ancillary Services
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest income | $3,573 | 0.209% | $2,814 | 0.188% | $759 | 27.0% |
Interest income for the three months ended December 31, 2023 increased $0.8 million, or 27.0%, to $3.6 million from $2.8 million in 2022. The overall increase is primarily due to an increase in interest earned from repurchase arrangements with customers of $0.8 million.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest income | $6,981 | 0.181% | $5,480 | 0.184% | $1,501 | 27.4% |
Interest income for the six months ended December 31, 2023 increased $1.5 million, or 27.4%, to $7.0 million from $5.5 million in 2022. The overall increase was primarily due to an increase in interest earned from repurchase arrangements with customers of $1.4 million.
Interest Expense — Wholesale Sales & Ancillary Services
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest expense | $(6,960) | (0.407%) | $(4,410) | (0.294%) | $2,550 | 57.8% |
Interest expense for the three months ended December 31, 2023 increased $2.6 million, or 57.8%, to $7.0 million from $4.4 million in 2022. The overall increase was primarily due to (i) an increase of $1.4 million in connection with our Trading Credit Facility (due to an increase in interest rates as well as increased borrowings) and the AMCF Notes (including amortization of debt issuance costs), (ii) higher interest and fees from product financing arrangements of $1.1 million, and (iii) inter-segment eliminations related to JMB’s product financing activity with A-Mark of $0.2 million, partially offset by (iv) lower interest expense related to liabilities on borrowed metals of $0.1 million.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest expense | $(13,723) | (0.355%) | $(7,717) | (0.260%) | $6,006 | 77.8% |
Interest expense for the six months ended December 31, 2023 increased $6.0 million, or 77.8%, to $13.7 million from $7.7 million in 2022. The overall increase was primarily due to (i) an increase of $4.5 million in connection with our Trading Credit Facility (due to an increase in interest rates as well as increased borrowings) and the AMCF Notes (including amortization of debt issuance costs) and (ii) higher interest and fees from product financing arrangements of $1.6 million, partially offset by (iii) inter-segment eliminations related to JMB’s product financing activity with A-Mark of $0.2 million.
Earnings from Equity Method Investments— Wholesale Sales & Ancillary Services
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Earnings from equity method investments | $777 | 0.045% | $4,669 | 0.311% | $(3,892) | (83.4%) |
Earnings from equity method investments for the three months ended December 31, 2023 decreased $3.9 million, or 83.4%, to a $0.8 million from $4.7 million in 2022 due to decreased earnings of our equity method investees.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Earnings from equity method investments | $3,492 | 0.090% | $7,344 | 0.247% | $(3,852) | (52.5%) |
Earnings from equity method investments for the six months ended December 31, 2023 decreased $3.9 million, or 52.5%, to $3.5 million from $7.3 million in 2022 due to decreased earnings of our equity method investees.
Results of Operations — Direct-to-Consumer Segment
The Company operates its Direct-to-Consumer segment through our wholly-owned subsidiaries: JM Bullion, Inc. (“JMB”), Goldline, Inc. (“Goldline”), and through our 50%-owned subsidiary Precious Metals Purchasing Partners, LLC ("PMPP").
— Direct-to-Consumer Segment
The operating results of our Direct-to-Consumer ("DTC") segment were as follows (in thousands, except performance metrics data):
| Three Months Ended December 31, · 2023 · 2022 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $370,631(a) | 100.000% | $450,179(b) | 100.000% | $(79,548) | (17.7%) | |||
| Gross profit | 22,157 | 5.978%(c) | 36,553 | 8.120%(d) | $(14,396) | (39.4%) | |||
| Selling, general and administrative expenses | (11,444) | (3.088%) | (10,724) | (2.382%) | $720 | 6.7% | |||
| Depreciation and amortization expense | (2,410) | (0.650%) | (2,934) | (0.652%) | $(524) | (17.9%) | |||
| Interest expense | (793) | (0.214%) | (966) | (0.215%) | $(173) | (17.9%) | |||
| Other expense, net | — | —% | (12) | (0.003%) | $12 | 100.0% | |||
| Net income before provision for income taxes | $7,510 | 2.026% | $21,917 | 4.869% | $(14,407) | (65.7%) | |||
| Performance Metrics: | |||||||||
| Gold ounces sold(1) | 116,000 | 130,000 | (14,000) | (10.8%) | |||||
| Silver ounces sold(2) | 3,766,000 | 5,693,000 | (1,927,000) | (33.8%) | |||||
| Number of new customers(3) | 52,500 | 131,200 | (78,700) | (60.0%) | |||||
| Number of active customers(4) | 136,400 | 116,400 | 20,000 | 17.2% | |||||
| Number of total customers(5) | 2,439,900 | 2,193,200 | 246,700 | 11.2% | |||||
| DTC ticket volume from new customers(6) | 36,418 | 45,426 | (9,008) | (19.8%) | |||||
| DTC ticket volume from pre-existing customers(7) | 133,329 | 146,047 | (12,718) | (8.7%) | |||||
| DTC total ticket volume(8) | 169,747 | 191,473 | (21,726) | (11.3%) | |||||
| DTC average order value(9) | $2,218 | $2,389 | $(171) | (7.2%) | |||||
| JMB average order value(9) | $2,061 | $2,238 | $(177) | (7.9%) | |||||
(a)
Includes $1.8 million of inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment.
(b)
Includes $0.2 million of inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment.
(c)
Gross profit percentage, excluding inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, was 6.001% for the period.
(d)
Gross profit percentage, excluding inter-segment company sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, was 8.113% for the period.
(1)
Gold ounces sold represents the ounces of gold product sold and delivered during the period.
(2)
Silver ounces sold represents the ounces of silver product sold and delivered during the period.
(3)
Number of new customers represents the number of customers that have registered or setup a new account or made a purchase for the first time during the period.
(4)
Number of active customers represents the number of customers that have made a purchase during any month during the period.
(5)
Number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past.
(6)
Ticket volume from new customers represents the number of product orders from new customers processed by JMB, Goldline, and PMPP during the period.
(7)
Ticket volume from pre-existing customers represents the total number of product orders from pre-existing customers processed by JMB, Goldline, and PMPP during the period.
(8)
Total ticket volume represents the total number of product orders processed by JMB, Goldline, and PMPP during the period.
(9)
Average Order Value ("AOV") represents the average dollar value of product orders (excluding accumulation program orders) delivered to the customer during the period.
— Direct-to-Consumer Segment
The operating results of our Direct-to-Consumer ("DTC") segment were as follows (in thousands, except performance metrics data):
| Six Months Ended December 31, · 2023 · 2022 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $696,177(a) | 100.000% | $878,215(b) | 100.000% | $(182,038) | (20.7%) | |||
| Gross profit | 43,215 | 6.207%(c) | 78,639 | 8.954%(d) | $(35,424) | (45.0%) | |||
| Selling, general and administrative expenses | (22,310) | (3.205%) | (20,725) | (2.360%) | $1,585 | 7.6% | |||
| Depreciation and amortization expense | (4,817) | (0.692%) | (5,812) | (0.662%) | $(995) | (17.1%) | |||
| Interest expense | (1,895) | (0.272%) | (1,733) | (0.197%) | $162 | 9.3% | |||
| Other expense, net | — | —% | (12) | (0.001%) | $12 | 100.0% | |||
| Net income before provision for income taxes | $14,193 | 2.039% | $50,357 | 5.734% | $(36,164) | (71.8%) | |||
| Performance Metrics: | |||||||||
| Gold ounces sold(1) | 233,000 | 283,000 | (50,000) | (17.7%) | |||||
| Silver ounces sold(2) | 6,787,000 | 12,093,000 | (5,306,000) | (43.9%) | |||||
| Number of new customers(3) | 91,600 | 180,200 | (88,600) | (49.2%) | |||||
| Number of active customers(4) | 242,800 | 188,500 | 54,300 | 28.8% | |||||
| Number of total customers(5) | 2,439,900 | 2,193,200 | 246,700 | 11.2% | |||||
| DTC ticket volume from new customers(6) | 60,978 | 64,615 | (3,637) | (5.6%) | |||||
| DTC ticket volume from pre-existing customers(7) | 245,126 | 313,518 | (68,392) | (21.8%) | |||||
| DTC total ticket volume(8) | 306,104 | 378,133 | (72,029) | (19.0%) | |||||
| DTC average order value(9) | $2,316 | $2,361 | $(45) | (1.9%) | |||||
| JMB average order value(9) | $2,140 | $2,195 | $(55) | (2.5%) | |||||
(a)
Includes $3.4 million of inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment.
(b)
Includes $0.6 million of inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment.
(c)
Gross profit percentage, excluding inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, was 6.227% for the period.
(d)
Gross profit percentage, excluding inter-segment company sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, was 8.949% for the period.
(1)
Gold ounces sold represents the ounces of gold product sold and delivered during the period.
(2)
Silver ounces sold represents the ounces of silver product sold and delivered during the period.
(3)
Number of new customers represents the number of customers that have registered or setup a new account or made a purchase for the first time during the period.
(4)
Number of active customers represents the number of customers that have made a purchase during any month during the period.
(5)
Number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past.
(6)
Ticket volume from new customers represents the number of product orders from new customers processed by JMB, Goldline, and PMPP during the period.
(7)
Ticket volume from pre-existing customers represents the total number of product orders from pre-existing customers processed by JMB, Goldline, and PMPP during the period.
(8)
Total ticket volume represents the total number of product orders processed by JMB, Goldline, and PMPP during the period.
(9)
Average Order Value ("AOV") represents the average dollar value of product orders (excluding accumulation program orders) delivered to the customer during the period.
Revenues — Direct-to-Consumer
| in thousands, except performance metrics | |||||||
|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | |||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||
| Revenues | $370,631 | 100.000% | $450,179 | 100.000% | $(79,548) | (17.7%) | |
| Performance Metrics: | |||||||
| Gold ounces sold | 116,000 | 130,000 | (14,000) | (10.8%) | |||
| Silver ounces sold | 3,766,000 | 5,693,000 | (1,927,000) | (33.8%) | |||
| Number of new customers | 52,500 | 131,200 | (78,700) | (60.0%) | |||
| Number of active customers | 136,400 | 116,400 | 20,000 | 17.2% | |||
| Number of total customers | 2,439,900 | 2,193,200 | 246,700 | 11.2% | |||
| DTC ticket volume from new customers | 36,418 | 45,426 | (9,008) | (19.8%) | |||
| DTC ticket volume from pre-existing customers | 133,329 | 146,047 | (12,718) | (8.7%) | |||
| DTC total ticket volume | 169,747 | 191,473 | (21,726) | (11.3%) | |||
| DTC average order value | $2,218 | $2,389 | $(171) | (7.2%) | |||
| JMB average order value | $2,061 | $2,238 | $(177) | (7.9%) | |||
Revenues for the three months ended December 31, 2023 decreased $79.5 million, or 17.7%, to $370.6 million from $450.2 million in 2022. The decrease in revenue was due to a decrease in gold and silver ounces sold, partially offset by an increase in average selling prices of gold and silver. For the three months ended December 31, 2023, JMB's revenue decreased $76.7 million, while revenue of Goldline and PMPP, in the aggregate, decreased by $2.8 million as compared to the prior year.
Gold ounces sold for the three months ended December 31, 2023 decreased 14,000 ounces, or 10.8%, to 116,000 ounces from 130,000 ounces in 2022. Silver ounces sold for the three months ended December 31, 2023 decreased 1,927,000 ounces, or 33.8%, to 3,766,000 ounces from 5,693,000 ounces in 2022.
Gold ounces sold by JMB decreased 14,000 ounces for the three months ended December 31, 2023 compared to 2022. Gold ounces sold by Goldline and PMPP, in the aggregate, remained flat compared to 2022. Silver ounces sold by JMB decreased 1,780,000 ounces for the three months ended December 31, 2023 compared to 2022. Silver ounces sold by Goldline and PMPP, in the aggregate, decreased 147,000 ounces compared to 2022.
On average, selling prices for gold increased by 10.9% and selling prices for silver increased by 7.3% during the three months ended December 31, 2023 as compared to the prior year.
The number of new customers for the three months ended December 31, 2023 decreased 78,700, or 60.0% to 52,500 from 131,200 in 2022. The number of active customers for the three months ended December 31, 2023 increased 20,000, or 17.2% to 136,400 from 116,400 in 2022. The number of total customers as of December 31, 2023 increased 246,700, or 11.2% to 2,439,900 from 2,193,200 as of December 31, 2022. These changes in customer-based metrics were primarily due to JMB's activity.
As of December 31, 2023, the number of total CyberMetals customers was 26,200, and CyberMetals customer assets under management were $6.5 million.
For the three months ended December 31, 2023, the Direct-to-Consumer ticket volume related to new customers decreased by 9,008 tickets, or 19.8%, to 36,418 tickets from 45,426 tickets in 2022. For the three months ended December 31, 2023, Direct-to-Consumer ticket volume related to pre-existing customers decreased by 12,718 tickets, or 8.7%, to 133,329 tickets from 146,047 tickets in 2022. For the three months ended December 31, 2023, the Direct-to-Consumer total ticket volume decreased by 21,726 tickets, or 11.3%, to 169,747 tickets from 191,473 tickets in 2022.
For the three months ended December 31, 2023, the Direct-to-Consumer average order value decreased by $171, or 7.2%, to $2,218 from $2,389 in 2022.
| in thousands, except performance metrics | |||||||
|---|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | |||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||
| Revenues | $696,177 | 100.000% | $878,215 | 100.000% | $(182,038) | (20.7%) | |
| Performance Metrics: | |||||||
| Gold ounces sold | 233,000 | 283,000 | (50,000) | (17.7%) | |||
| Silver ounces sold | 6,787,000 | 12,093,000 | (5,306,000) | (43.9%) | |||
| Number of new customers | 91,600 | 180,200 | (88,600) | (49.2%) | |||
| Number of active customers | 242,800 | 188,500 | 54,300 | 28.8% | |||
| Number of total customers | 2,439,900 | 2,193,200 | 246,700 | 11.2% | |||
| DTC ticket volume from new customers | 60,978 | 64,615 | (3,637) | (5.6%) | |||
| DTC ticket volume from pre-existing customers | 245,126 | 313,518 | (68,392) | (21.8%) | |||
| DTC total ticket volume | 306,104 | 378,133 | (72,029) | (19.0%) | |||
| DTC average order value | $2,316 | $2,361 | $(45) | (1.9%) | |||
| JMB average order value | $2,140 | $2,195 | $(55) | (2.5%) | |||
Revenues for the six months ended December 31, 2023 decreased $182.0 million, or 20.7%, to $696.2 million from $878.2 million in 2022. The decrease in revenue was due to a decrease in gold and silver ounces sold, partially offset by higher average selling prices of gold and silver. For the six months ended December 31, 2023, JMB's revenue decreased $172.5 million and revenue of Goldline and PMPP, in the aggregate, decreased by $9.5 million as compared to the prior year.
Gold ounces sold for the six months ended December 31, 2023 decreased 50,000 ounces, or 17.7%, to 233,000 ounces from 283,000 ounces in 2022. Silver ounces sold for the six months ended December 31, 2023 decreased 5,306,000 ounces, or 43.9%, to 6,787,000 ounces from 12,093,000 ounces in 2022.
Gold ounces sold by JMB decreased 48,000 ounces for the six months ended December 31, 2023 compared to 2022. Gold ounces sold by Goldline and PMPP, in the aggregate, decreased 2,000 ounces compared to 2022. Silver ounces sold by JMB decreased 4,939,000 ounces for the six months ended December 31, 2023 compared to 2022. Silver ounces sold by Goldline and PMPP, in the aggregate, decreased 367,000 ounces compared to 2022.
On average, selling prices for gold increased by 9.6% and selling prices for silver increased by 12.4% during the six months ended December 31, 2023 as compared to the prior year.
The number of new customers for the six months ended December 31, 2023 decreased 88,600, or 49.2%, to 91,600 from 180,200 in 2022. The number of active customers for the six months ended December 31, 2023 increased 54,300, or 28.8% to 242,800 from 188,500 in 2022. The number of total customers as of December 31, 2023 increased 246,700, or 11.2% to 2,439,900 from 2,193,200 as of December 31, 2022. These changes in customer-based metrics were primarily due to JMB's activity.
As of December 31, 2023, the number of total CyberMetals customers was 26,200, and CyberMetals customer assets under management were $6.5 million.
For the six months ended December 31, 2023, the Direct-to-Consumer ticket volume related to new customers decreased by 3,637 tickets, or 5.6%, to 60,978 tickets from 64,615 tickets in 2022. For the six months ended December 31, 2023, Direct-to-Consumer ticket volume related to pre-existing customers decreased by 68,392 tickets, or 21.8%, to 245,126 tickets from 313,518 tickets in 2022. For the six months ended December 31, 2023, the Direct-to-Consumer total ticket volume decreased by 72,029 tickets, or 19.0%, to 306,104 tickets from 378,133 tickets in 2022.
For the six months ended December 31, 2023, the Direct-to-Consumer average order value decreased by $45, or 1.9%, to $2,316 from $2,361 in 2022.
Gross Profit — Direct-to-Consumer
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Gross profit | $22,157 | 5.978% | $36,553 | 8.120% | $(14,396) | (39.4%) |
Gross profit for the three months ended December 31, 2023 decreased by $14.4 million, or 39.4%, to $22.2 million from $36.6 million in 2022. The decrease in gross profit was mainly due to a decreased gross profit margin percentage as well as a lower ticket volume during the period.
For the three months ended December 31, 2023, the Direct-to-Consumer segment's profit margin percentage decreased by 214.2 basis points to 5.978% from 8.120% in 2022. The decrease in the gross profit margin percentage was primarily due to the lower gross profit percentages of JMB, but also to lower gross profit percentages of Goldline and PMPP.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Gross profit | $43,215 | 6.207% | $78,639 | 8.954% | $(35,424) | (45.0%) |
Gross profit for the six months ended December 31, 2023 decreased by $35.4 million, or 45.0%, to $43.2 million from $78.6 million in 2022. The decrease in gross profit was mainly due to a decreased gross profit margin percentage as well as a lower ticket volume during the period.
For the six months ended December 31, 2023, the Direct-to-Consumer segment's profit margin percentage decreased by 274.7 basis points to 6.207% from 8.954% in 2022. The decrease in the gross profit margin percentage was primarily due to the lower gross profit percentages of JMB, but also to lower gross profit percentages of Goldline and PMPP.
Selling, General and Administrative Expense — Direct-to-Consumer
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Selling, general and administrative expenses | $(11,444) | (3.088%) | $(10,724) | (2.382%) | $720 | 6.7% |
Selling, general and administrative expenses for the three months ended December 31, 2023 increased $0.7 million, or 6.7%, to $11.4 million from $10.7 million in 2022. The change was primarily due to (i) an increase in compensation expense (including performance-based accruals) of $0.7 million and (ii) an increase in information technology costs of $0.4 million, partially offset by (iii) lower advertising costs of $0.7 million.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Selling, general and administrative expenses | $(22,310) | (3.205%) | $(20,725) | (2.360%) | $1,585 | 7.6% |
Selling, general and administrative expenses for the six months ended December 31, 2023 increased $1.6 million, or 7.6%, to $22.3 million from $20.7 million in 2022. The change was primarily due to (i) an increase in compensation expense (including performance-based accruals) of $1.3 million and (ii) an increase in information technology costs of $0.4 million, partially offset by (iii) a decrease in advertising costs of $0.7 million.
Depreciation and Amortization Expense — Direct-to-Consumer
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Depreciation and amortization expense | $(2,410) | (0.650%) | $(2,934) | (0.652%) | $(524) | (17.9%) |
Depreciation and amortization expense for the three months ended December 31, 2023, decreased $0.5 million, or 17.9%, to $2.4 million from $2.9 million in 2022 primarily due to a $0.6 million decrease in JMB’s intangible asset amortization expense.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Depreciation and amortization expense | $(4,817) | (0.692%) | $(5,812) | (0.662%) | $(995) | (17.1%) |
Depreciation and amortization expense for the six months ended December 31, 2023, decreased $1.0 million, or 17.1%, to $4.8 million from $5.8 million in 2022 primarily due to a $1.1 million decrease in JMB’s intangible asset amortization expense.
Interest expense — Direct-to-Consumer
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest expense | $(793) | (0.214%) | $(966) | (0.215%) | $(173) | (17.9%) |
Interest expense for the three months ended December 31, 2023 decreased $0.2 million to $0.8 million from $1.0 million in 2022. The decrease in interest expense was not significant.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest expense | $(1,895) | (0.272%) | $(1,733) | (0.197%) | $162 | 9.3% |
Interest expense for the six months ended December 31, 2023 increased $0.2 million to $1.9 million from $1.7 million in 2022. The increase in interest expense was not significant.
Results of Operations — Secured Lending Segment
The Company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation, LLC ("CFC")and CFC Alternative Investments (“CAI”). AM Capital Funding, LLC (“AMCF”), a wholly-owned subsidiary of CFC, was formed for the issuance of certain notes, which were repaid in December 2023. AMCF is currently inactive.
— Secured Lending Segment
The operating results of our Secured Lending segment were as follows (in thousands, except performance metrics data):
| Three Months Ended December 31, · 2023 · 2022 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of interestincome · $ · % of interestincome · $ · % | |||||||||
| Interest income | $2,738 | 100.000% | $2,170 | 100.000% | $568 | 26.2% | |||
| Interest expense | (2,415) | (88.203%) | (1,860) | (85.714%) | $555 | 29.8% | |||
| Selling, general and administrative expenses | (375) | (13.696%) | (518) | (23.871%) | $(143) | (27.6%) | |||
| Depreciation and amortization expense | (88) | (3.214%) | (88) | (4.055%) | $— | —% | |||
| Other income, net | 309 | 11.286% | 775 | 35.714% | $(466) | (60.1%) | |||
| Net income before provision for income taxes | $169 | 6.172% | $479 | 22.074% | $(310) | (64.7%) | |||
| Performance Metric: | |||||||||
| Number of secured loans at period end(1) | 715 | 1,049 | (334) | (31.8%) | |||||
(1)
Number of outstanding secured loans to customers at the end of the period.
— Secured Lending Segment
The operating results of our Secured Lending segment were as follows (in thousands, except performance metrics data):
| Six Months Ended December 31, · 2023 · 2022 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of interestincome · $ · % of interestincome · $ · % | |||||||||
| Interest income | $5,432 | 100.000% | $4,600 | 100.000% | $832 | 18.1% | |||
| Interest expense | (4,373) | (80.504%) | (3,916) | (85.130%) | $457 | 11.7% | |||
| Selling, general and administrative expenses | (767) | (14.120%) | (923) | (20.065%) | $(156) | (16.9%) | |||
| Depreciation and amortization expense | (176) | (3.240%) | (176) | (3.826%) | $— | —% | |||
| Earnings (losses) from equity method investments | (6) | (0.110%) | 2 | 0.043% | $(8) | (400.0%) | |||
| Other income, net | 546 | 10.052% | 1,302 | 28.304% | $(756) | (58.1%) | |||
| Net income before provision for income taxes | $656 | 12.077% | $889 | 19.326% | $(233) | (26.2%) | |||
| Performance Metric: | |||||||||
| Number of secured loans at period end(1) | 715 | 1,049 | (334) | (31.8%) | |||||
(1)
Number of outstanding secured loans to customers at the end of the period.
Interest Income — Secured Lending
| in thousands, except performance metric | |||||||
|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | |||||||
| $ · % of interestincome · $ · % of interestincome · $ · % | |||||||
| Interest income | $2,738 | 100.000% | $2,170 | 100.000% | $568 | 26.2% | |
| Performance Metric | |||||||
| Number of secured loans at period-end | 715 | 1,049 | (334) | (31.8%) | |||
Interest income for the three months ended December 31, 2023 increased $0.6 million, or 26.2%, to $2.7 million from $2.2 million in 2022. The increase in interest income earned from the segment’s secured loan portfolio was primarily due to an increase in interest rates and higher average monthly loan balances, partially offset by fewer loans outstanding. The number of secured loans outstanding decreased by 334, or 31.8%, to 715 from 1,049 as of December 31, 2022.
| in thousands, except performance metric | |||||||
|---|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | |||||||
| $ · % of interestincome · $ · % of interestincome · $ · % | |||||||
| Interest income | $5,432 | 100.000% | $4,600 | 100.000% | $832 | 18.1% | |
| Performance Metric | |||||||
| Number of secured loans at period-end | 715 | 1,049 | (334) | (31.8%) | |||
Interest income for the six months ended December 31, 2023 increased $0.8 million, or 18.1%, to $5.4 million from $4.6 million in 2022. The increase in interest income earned from the segment’s secured loan portfolio was primarily due to an increase in interest rates and higher average monthly loan balances, partially offset by fewer loans outstanding. The number of secured loans outstanding decreased by 334, or 31.8% to 715 from 1,049 as of December 31, 2022.
Interest Expense — Secured Lending
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of interestincome | $ | % of interestincome | $ | % | |
| Interest expense | $(2,415) | (88.203%) | $(1,860) | (85.714%) | $555 | 29.8% |
Interest expense for the three months ended December 31, 2023 increased $0.6 million, or 29.8%, to $2.4 million from $1.9 million in 2022. The change in interest expense was not significant.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of interestincome | $ | % of interestincome | $ | % | |
| Interest expense | $(4,373) | (80.504%) | $(3,916) | (85.130%) | $457 | 11.7% |
Interest expense for the six months ended December 31, 2023 increased $0.5 million, or 11.7%, to $4.4 million from $3.9 million in 2022. The change in interest expense was not significant.
Selling, General and Administrative Expenses — Secured Lending
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of interestincome | $ | % of interestincome | $ | % | |
| Selling, general, and administrative expenses | $(375) | (13.696%) | $(518) | (23.871%) | $(143) | (27.6%) |
Selling, general, and administrative expenses for the three months ended December 31, 2023 decreased $0.1 million, or 27.6%, to $0.4 million from $0.5 million in 2022. The change in selling, general, and administrative expenses was not significant.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of interestincome | $ | % of interestincome | $ | % | |
| Selling, general, and administrative expenses | $(767) | (14.120%) | $(923) | (20.065%) | $(156) | (16.9%) |
Selling, general, and administrative expenses for the six months ended December 31, 2023 decreased $0.2 million, or 16.9%, to $0.8 million from $0.9 million in 2022. The change in selling, general, and administrative expenses was not significant.
Other Income, Net — Secured Lending
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of interestincome | $ | % of interestincome | $ | % | |
| Other income, net | $309 | 11.286% | $775 | 35.714% | $(466) | (60.1%) |
Other income, net for the three months ended December 31, 2023 decreased $0.5 million, or 60.1%, to $0.3 million from $0.8 million in 2022 primarily due to lower royalties earned.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Six Months Ended December 31, · 2023 · 2022 · Change | ||||||
| $ | % of interestincome | $ | % of interestincome | $ | % | |
| Other income, net | $546 | 10.052% | $1,302 | 28.304% | $(756) | (58.1%) |
Other income, net for the six months ended December 31, 2023 decreased $0.8 million, or 58.1%, to $0.5 million from $1.3 million in 2022 primarily due to lower royalties earned.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.