A-Mark Precious Metals Inc
For the period ended Mar 31, 2024. Filed May 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
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Item 2. Results of operations
RESULTS OFOPERATIONS
Overview of Results of Operations
Consolidated Results of Operations for the Three Months Ended March 31, 2024 and 2023
The operating results of our business were as follows (in thousands, except per share and performance metrics data):
| Three Months Ended March 31, · 2024 · 2023 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $2,610,651 | 100.000% | $2,317,150 | 100.000% | $293,501 | 12.7% | |||
| Gross profit | 34,838 | 1.334% | 75,498 | 3.258% | $(40,660) | (53.9%) | |||
| Selling, general, and administrative expenses | (22,854) | (0.875%) | (23,841) | (1.029%) | $(987) | (4.1%) | |||
| Depreciation and amortization expense | (2,949) | (0.113%) | (3,340) | (0.144%) | $(391) | (11.7%) | |||
| Interest income | 6,682 | 0.256% | 6,087 | 0.263% | $595 | 9.8% | |||
| Interest expense | (9,907) | (0.379%) | (9,237) | (0.399%) | $670 | 7.3% | |||
| Losses from equity method investments | (206) | (0.008%) | (70) | (0.003%) | $136 | 194.3% | |||
| Other income, net | 763 | 0.029% | 641 | 0.028% | $122 | 19.0% | |||
| Unrealized gains on foreign exchange | 73 | 0.003% | 35 | 0.002% | $38 | 108.6% | |||
| Net income before provision for income taxes | 6,440 | 0.247% | 45,773 | 1.975% | $(39,333) | (85.9%) | |||
| Income tax expense | (1,286) | (0.049%) | (9,775) | (0.422%) | $(8,489) | (86.8%) | |||
| Net income | 5,154 | 0.197% | 35,998 | 1.554% | $(30,844) | (85.7%) | |||
| Net income attributable to noncontrolling interest | 141 | 0.005% | 78 | 0.003% | $63 | 80.8% | |||
| Net income attributable to the Company | $5,013 | 0.192% | $35,920 | 1.550% | $(30,907) | (86.0%) | |||
| Basic and diluted net income per share attributable to A-Mark Precious Metals, Inc.: | |||||||||
| Per Share Data: | |||||||||
| Basic | $0.22 | $1.53 | $(1.31) | (85.6%) | |||||
| Diluted | $0.21 | $1.46 | $(1.25) | (85.6%) | |||||
| Performance Metrics:(1) | |||||||||
| Gold ounces sold(2) | 446,000 | 659,000 | (213,000) | (32.3%) | |||||
| Silver ounces sold(3) | 25,722,000 | 36,906,000 | (11,184,000) | (30.3%) | |||||
| Inventory turnover ratio(4) | 2.3 | 2.4 | (0.1) | (4.2%) | |||||
| Number of secured loans at period end(5) | 675 | 963 | (288) | (29.9%) | |||||
(1)
See "Results of Segments" for a description of additional metrics not listed above.
(2)
(3)
(4)
Inventory turnover ratio is the cost of sales divided by average inventory for the period presented above. This calculation excludes precious metals held under financing arrangements, which are not classified as inventory on the condensed consolidated balance sheets.
(5)
Number of outstanding secured loans to customers that are primarily collateralized by precious metals at the end of the period.
Consolidated Results of Operations for the Nine Months Ended March 31, 2024 and 2023
The operating results of our business were as follows (in thousands, except per share and performance metrics data):
| Nine Months Ended March 31, · 2024 · 2023 · Change | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| $ · % of revenue · $ · % of revenue · $ · % | |||||||||
| Revenues | $7,174,084 | 100.000% | $6,167,206 | 100.000% | $1,006,878 | 16.3% | |||
| Gross profit | 130,284 | 1.816% | 216,059 | 3.503% | $(85,775) | (39.7%) | |||
| Selling, general, and administrative expenses | (67,095) | (0.935%) | (62,438) | (1.012%) | $4,657 | 7.5% | |||
| Depreciation and amortization expense | (8,552) | (0.119%) | (9,784) | (0.159%) | $(1,232) | (12.6%) | |||
| Interest income | 19,095 | 0.266% | 16,167 | 0.262% | $2,928 | 18.1% | |||
| Interest expense | (29,898) | (0.417%) | (22,603) | (0.367%) | $7,295 | 32.3% | |||
| Earnings from equity method investments | 3,280 | 0.046% | 7,276 | 0.118% | $(3,996) | (54.9%) | |||
| Other income, net | 1,605 | 0.022% | 2,001 | 0.032% | $(396) | (19.8%) | |||
| Unrealized gains on foreign exchange | 84 | 0.001% | 250 | 0.004% | $(166) | (66.4%) | |||
| Net income before provision for income taxes | 48,803 | 0.680% | 146,928 | 2.382% | $(98,125) | (66.8%) | |||
| Income tax expense | (10,705) | (0.149%) | (32,096) | (0.520%) | $(21,391) | (66.6%) | |||
| Net income | 38,098 | 0.531% | 114,832 | 1.862% | $(76,734) | (66.8%) | |||
| Net income attributable to noncontrolling interest | 492 | 0.007% | 306 | 0.005% | $186 | 60.8% | |||
| Net income attributable to the Company | $37,606 | 0.524% | $114,526 | 1.857% | $(76,920) | (67.2%) | |||
| Basic and diluted net income per share attributable to A-Mark Precious Metals, Inc.: | |||||||||
| Per Share Data: | |||||||||
| Basic | $1.63 | $4.89 | $(3.26) | (66.7%) | |||||
| Diluted | $1.56 | $4.64 | $(3.08) | (66.4%) | |||||
| Performance Metrics:(1) | |||||||||
| Gold ounces sold(2) | 1,391,000 | 1,853,000 | (462,000) | (24.9%) | |||||
| Silver ounces sold(3) | 82,675,000 | 110,960,000 | (28,285,000) | (25.5%) | |||||
| Inventory turnover ratio(4) | 6.8 | 7.0 | (0.2) | (2.9%) | |||||
| Number of secured loans at period end(5) | 675 | 963 | (288) | (29.9%) | |||||
(1)
See "Results of Segments" for a description of additional metrics not listed above.
(2)
(3)
(4)
Inventory turnover ratio is the cost of sales divided by average inventory for the period presented above. This calculation excludes precious metals held under financing arrangements, which are not classified as inventory on the condensed consolidated balance sheets.
(5)
Number of outstanding secured loans to customers that are primarily collateralized by precious metals at the end of the period.
Revenues
| in thousands, except performance metrics | |||||||
|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | |||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||
| Revenues | $2,610,651 | 100.000% | $2,317,150 | 100.000% | $293,501 | 12.7% | |
| Performance Metrics | |||||||
| Gold ounces sold | 446,000 | 659,000 | (213,000) | (32.3%) | |||
| Silver ounces sold | 25,722,000 | 36,906,000 | (11,184,000) | (30.3%) | |||
Revenues for the three months ended March 31, 2024 increased $293.5 million, or 12.7%, to $2.611 billion from $2.317 billion in 2023. Excluding an increase of $622.1 million of forward sales, our revenues decreased $328.6 million, or 19.6%, 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 March 31, 2024 decreased 213,000 ounces, or 32.3%, to 446,000 ounces from 659,000 ounces in 2023. Silver ounces sold for the three months ended March 31, 2024 decreased 11,184,000 ounces, or 30.3%, to 25,722,000 ounces from 36,906,000 ounces in 2023. On average, the selling prices for gold increased by 8.3% and selling prices for silver increased by 3.8% during the three months ended March 31, 2024 as compared to the prior year.
JMB's revenue represented 11.9% and 20.4% of the Company's consolidated revenue for the three months ended March 31, 2024 and 2023, respectively.
| in thousands, except performance metrics | |||||||
|---|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | |||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||
| Revenues | $7,174,084 | 100.000% | $6,167,206 | 100.000% | $1,006,878 | 16.3% | |
| Performance Metrics | |||||||
| Gold ounces sold | 1,391,000 | 1,853,000 | (462,000) | (24.9%) | |||
| Silver ounces sold | 82,675,000 | 110,960,000 | (28,285,000) | (25.5%) | |||
Revenues for the nine months ended March 31, 2024 increased $1.007 billion, or 16.3%, to $7.174 billion from $6.167 billion in 2023. Excluding an increase of $1.514 billion of forward sales, our revenues decreased $506.9 million, or 11.0%, 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 nine months ended March 31, 2024 decreased 462,000 ounces, or 24.9%, to 1,391,000 ounces from 1,853,000 ounces in 2023. Silver ounces sold for the nine months ended March 31, 2024 decreased 28,285,000 ounces, or 25.5%, to 82,675,000 ounces from 110,960,000 ounces in 2023. On average, the selling prices for gold increased by 10.4% and selling prices for silver increased by 10.3% during the nine months ended March 31, 2024 as compared to the prior year.
JMB's revenue represented 13.2% and 20.7% of the Company's consolidated revenue for the nine months ended March 31, 2024 and 2023, respectively.
Gross Profit
| in thousands, except performance metric | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Gross profit | $34,838 | 1.334% | $75,498 | 3.258% | $(40,660) | (53.9%) |
| Performance Metric | ||||||
| Inventory turnover ratio | 2.3 | 2.4 | (0.1) | (4.2%) | ||
Gross profit for the three months ended March 31, 2024 decreased $40.7 million, or 53.9%, to $34.8 million from $75.5 million in 2023. The overall gross profit decrease was due to lower gross profits earned from both the Wholesale Sales & Ancillary Services and Direct-to-Consumer segments.
The Company’s overall gross margin percentage for the three months ended March 31, 2024 decreased by 192.4 basis points to 1.334% from 3.258% in 2023. Excluding an increase of $622.1 million of forward sales that had a negligible impact to the amount of gross profit, our gross margin percentage for the three months ended March 31, 2024 decreased by 191.7 basis points to 2.580% from 4.497%, which was primarily due to lower premium spreads, partially offset by higher trading profits. JMB’s retail market activity represented 45.0% and 47.1%, respectively, of the Company’s consolidated gross profit for the three months ended March 31, 2024 and 2023.
Our inventory turnover rate for the three months ended March 31, 2024 decreased by 4.2% to 2.3 from 2.4 in 2023. The decrease in our inventory turnover ratio was primarily due to higher average inventory balances held under product financing arrangements, partially offset by higher forward sales.
| in thousands, except performance metric | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Gross profit | $130,284 | 1.816% | $216,059 | 3.503% | $(85,775) | (39.7%) |
| Performance Metric | ||||||
| Inventory turnover ratio | 6.8 | 7.0 | (0.2) | (2.9%) | ||
Gross profit for the nine months ended March 31, 2024 decreased $85.8 million, or 39.7%, to $130.3 million from $216.1 million in 2023. The overall gross profit decrease was due to lower gross profits earned from both the Wholesale Sales & Ancillary Services and Direct-to-Consumer segments.
The Company’s overall gross margin percentage for the nine months ended March 31, 2024 decreased by 168.7 basis points to 1.816% from 3.503% in 2023. Excluding an increase of $1.514 billion of forward sales that had a negligible impact to the amount of gross profit, our gross margin percentage for the nine months ended March 31, 2024 decreased by 151.1 basis points to 3.172% from 4.683%, which was primarily due to lower premium spreads, partially offset by higher trading profits. JMB’s retail market activity represented 40.1% and 48.5%, respectively, of the Company’s consolidated gross profit for the nine months ended March 31, 2024 and 2023.
Our inventory turnover ratio for the nine months ended March 31, 2024 decreased by 2.9% to 6.8 from 7.0 in 2023. The decrease in our inventory turnover ratio was primarily due to higher average inventory balances held under product financing arrangements, partially offset by higher forward sales.
Selling, General, and Administrative Expense
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Selling, general, and administrative expenses | $(22,854) | (0.875%) | $(23,841) | (1.029%) | $(987) | (4.1%) |
Selling, general, and administrative expenses for the three months ended March 31, 2024 decreased $1.0 million, or 4.1%, to $22.9 million from $23.8 million in 2023. The change was primarily due to: (i) a decrease in compensation expense (including performance-based accruals) of $2.2 million, (ii) a decrease in insurance costs of $0.9 million and (iii) lower advertising costs of $0.4 million, partially offset by (iv) higher consulting and professional fees of $2.2 million and (v) an increase in information technology costs of $0.2 million.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Selling, general, and administrative expenses | $(67,095) | (0.935%) | $(62,438) | (1.012%) | $4,657 | 7.5% |
Selling, general, and administrative expenses for the nine months ended March 31, 2024 increased $4.7 million, or 7.5%, to $67.1 million from $62.4 million in 2023. The change was primarily due to: (i) an increase in consulting and professional fees of $4.8 million, (ii) an increase in information technology costs of $0.8 million, and (iii) an increase in compensation expense (including performance-based accruals) of $0.4 million, partially offset by (iv) a decrease in insurance costs of $1.4 million.
Depreciation and Amortization Expense
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Depreciation and amortization expense | $(2,949) | (0.113%) | $(3,340) | (0.144%) | $(391) | (11.7%) |
Depreciation and amortization expense for the three months ended March 31, 2024 decreased $0.4 million, or 11.7%, to $2.9 million from $3.3 million in 2023 primarily due to a $0.6 million decrease in JMB’s intangible asset amortization expense.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Depreciation and amortization expense | $(8,552) | (0.119%) | $(9,784) | (0.159%) | $(1,232) | (12.6%) |
Depreciation and amortization expense for the nine months ended March 31, 2024 decreased $1.2 million, or 12.6%, to $8.6 million from $9.8 million in 2023 primarily due to a $1.7 million decrease in JMB’s intangible asset amortization expense.
| in thousands, except performance metric | |||||||
|---|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | |||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||
| Interest income | $6,682 | 0.256% | $6,087 | 0.263% | $595 | 9.8% | |
| Performance Metric | |||||||
| Number of secured loans at period-end | 675 | 963 | (288) | (29.9%) | |||
Interest income for the three months ended March 31, 2024 increased $0.6 million, or 9.8%, to $6.7 million from $6.1 million in 2023. The aggregate increase in interest income was primarily due to a increase in other finance product income of $0.1 million and a increase in interest income earned by our Secured Lending segment of $0.5 million.
The interest income from our Secured Lending segment increased by $0.5 million, or 20.9%, compared with the prior year period. 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 29.9% to 675 as of March 31, 2024, from 963 as of March 31, 2023.
| in thousands, except performance metric | |||||||
|---|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | |||||||
| $ · % of revenue · $ · % of revenue · $ · % | |||||||
| Interest income | $19,095 | 0.266% | $16,167 | 0.262% | $2,928 | 18.1% | |
| Performance Metric | |||||||
| Number of secured loans at period-end | 675 | 963 | (288) | (29.9%) | |||
Interest income for the nine months ended March 31, 2024 increased $2.9 million, or 18.1%, to $19.1 million from $16.2 million in 2023. The aggregate increase in interest income was primarily due to an increase in other finance product income of $1.6 million and an increase in interest income earned by our Secured Lending segment of $1.4 million.
The interest income from our Secured Lending segment increased by $1.4 million, or 19.1%, compared with the prior year period. 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 29.9% to 675 as of March 31, 2024, from 963 as of March 31, 2023.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest expense | $(9,907) | (0.379%) | $(9,237) | (0.399%) | $670 | 7.3% |
Interest expense for the three months ended March 31, 2024 increased $0.7 million, or 7.3%, to $9.9 million from $9.2 million in 2023. The increase in interest expense was primarily due to (i) an increase of $1.3 million associated with our Trading Credit Facility due to an increase in interest rates as well as increased borrowings and (ii) an increase of $0.9 million related to product financing arrangements, partially offset by (iii) a decrease of $1.4 million related to the AMCF Notes (including amortization of debt issuance costs) due to the repayment in December 2023.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Interest expense | $(29,898) | (0.417%) | $(22,603) | (0.367%) | $7,295 | 32.3% |
Interest expense for the nine months ended March 31, 2024 increased $7.3 million, or 32.3%, to $29.9 million from $22.6 million in 2023. The increase in interest expense was primarily driven by each of the following components: (i) an increase of $6.9 million associated with our Trading Credit Facility due to an increase in interest rates as well as increased borrowings and (ii) an increase of $2.5 million related to product financing arrangements, partially offset by (iii) a decrease of $1.8 million related to the AMCF Notes (including amortization of debt issuance costs) due to the repayment in December 2023 and (iv) a $0.3 million decrease in loan servicing fees.
Earnings (Losses) from Equity Method Investments
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Losses from equity method investments | $(206) | (0.008%) | $(70) | (0.003%) | $136 | 194.3% |
Losses from equity method investments for the three months ended March 31, 2024 increased $0.1 million, or 194.3%, to $0.2 million from $0.1 million in 2023 due to decreased earnings of our equity method investees.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Earnings from equity method investments | $3,280 | 0.046% | $7,276 | 0.118% | $(3,996) | (54.9%) |
Earnings from equity method investments for the nine months ended March 31, 2024 decreased $4.0 million, or 54.9%, to $3.3 million from $7.3 million in 2023 due to decreased earnings of our equity method investees.
Other Income, Net
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Other income, net | $763 | 0.029% | $641 | 0.028% | $122 | 19.0% |
Other income, net for the three months ended March 31, 2024 increased $0.1 million, or 19.0%, to $0.8 million from $0.6 million in 2023. The change in other income, net was not significant.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Other income, net | $1,605 | 0.022% | $2,001 | 0.032% | $(396) | (19.8%) |
Other income, net for the nine months ended March 31, 2024 decreased $0.4 million, or 19.8%, to $1.6 million from $2.0 million in 2023. The decrease in other income, net was primarily due to a decrease in royalties earned of $1.0 million, partially offset by a $0.6 million increase in gains on other investments.
Income Tax Expense
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Three Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Income tax expense | $(1,286) | (0.049%) | $(9,775) | (0.422%) | $(8,489) | (86.8%) |
Our income tax expense was $1.3 million and $9.8 million for the three months ended March 31, 2024 and 2023, respectively. Our effective tax rate was approximately 20.0% and 21.4% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and 2023, our effective tax rate differed from the federal statutory rate primarily due to the foreign derived intangible income special deduction and the excess tax benefit from share-based compensation, partially offset by Section 162(m) executive compensation disallowance, state taxes (net of federal tax benefit), and other normal course non-deductible expenditures.
| in thousands | ||||||
|---|---|---|---|---|---|---|
| Nine Months Ended March 31, · 2024 · 2023 · Change | ||||||
| $ | % of revenue | $ | % of revenue | $ | % | |
| Income tax expense | $(10,705) | (0.149%) | $(32,096) | (0.520%) | $(21,391) | (66.6%) |
Our income tax expense was $10.7 million and $32.1 million for the nine months ended March 31, 2024 and 2023, respectively. Our effective tax rate was approximately 21.9% and 21.8% for the nine months ended March 31, 2024 and 2023, respectively. For the nine months ended March 31, 2024 and 2023, our effective tax rate differed from the federal statutory rate primarily due to the foreign derived intangible income special deduction and the excess tax benefit from share-based compensation, partially offset by Section 162(m) executive compensation disallowance, state taxes (net of federal tax benefit), and other normal course non-deductible expenditures.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.