A-Mark Precious Metals Inc

RESULTS OFOPERATIONS

Overview of Results of Operations

Consolidated Results of Operations for the Three Months Ended March 31, 2025 and 2024

The operating results of our business were as follows (in thousands, except per share and performance metrics data):

(1)

See "Results of Segments" for a description of additional metrics not listed above.

(2)

Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts. SGI's and Pinehurst's metrics are included after February 28, 2025.

(3)

Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts. SGI's and Pinehurst's metrics are included after February 28, 2025.

(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, 2025 and 2024

The operating results of our business were as follows (in thousands, except per share and performance metrics data):

(1)

See "Results of Segments" for a description of additional metrics not listed above.

(2)

Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts. SGI's and Pinehurst's metrics are included after February 28, 2025.

(3)

Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts. SGI's and Pinehurst's metrics are included after February 28, 2025.

(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

Revenues for the three months ended March 31, 2025 increased $398.5 million, or 15.3%, to $3.009 billion from $2.611 billion in 2024. Excluding an increase of $155.8 million of forward sales, our revenues increased $242.7 million, or 18.0%, which was due to higher average selling prices of gold and silver, partially offset by a decrease in gold and silver ounces sold. Revenues also increased due to the acquisition of a controlling interest in SGB in June 2024, and the acquisitions of SGI and Pinehurst in February 2025.

Gold ounces sold for the three months ended March 31, 2025 decreased 14,000 ounces, or 3.1%, to 432,000 ounces from 446,000 ounces in 2024. Silver ounces sold for the three months ended March 31, 2025 decreased 10,020,000 ounces, or 39.0%, to 15,702,000 ounces from 25,722,000 ounces in 2024. On average, the selling prices for gold increased by 34.9% and selling prices for silver increased by 36.0% during the three months ended March 31, 2025 as compared to the prior year.

JMB's revenue represented 9.5% and 11.9% of the Company's consolidated revenue for the three months ended March 31, 2025 and 2024, respectively.

Revenues for the nine months ended March 31, 2025 increased $1.292 billion, or 18.0%, to $8.467 billion from $7.174 billion in 2024. Excluding an increase of $540.5 million of forward sales, our revenues increased $752.0 million, or 18.3%, which was due to higher average selling prices of gold and silver, partially offset by a decrease in gold and silver ounces sold. Revenues also increased due to the acquisition of a controlling interest in SGB in June 2024, and the acquisitions of SGI and Pinehurst in February 2025.

Gold ounces sold for the nine months ended March 31, 2025 decreased 95,000 ounces, or 6.8%, to 1,296,000 ounces from 1,391,000 ounces in 2024. Silver ounces sold for the nine months ended March 31, 2025 decreased 24,696,000 ounces, or 29.9%, to 57,979,000 ounces from 82,675,000 ounces in 2024. On average, the selling prices for gold increased by 32.7% and selling prices for silver increased by 32.3% during the nine months ended March 31, 2025 as compared to the prior year.

JMB's revenue represented 10.7% and 13.2% of the Company's consolidated revenue for the nine months ended March 31, 2025 and 2024, respectively.

Gross Profit

Gross profit for the three months ended March 31, 2025 increased $6.2 million, or 17.7%, to $41.0 million from $34.8 million in 2024. The overall gross profit increase was due to increased gross profits earned from the Direct-to-Consumer segment, partially offset by lower gross profits earned by the Wholesale Sales & Ancillary Services segment.

The Company’s overall gross margin percentage for the three months ended March 31, 2025 increased by 2.9 basis points to 1.363% from 1.334% in 2024. Excluding an increase of $155.8 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, 2025 decreased by 0.5 basis points to 2.575% from 2.580%, which was primarily due to higher premium spreads partially offset by lower trading profits. JMB’s retail market activity represented 39.7% and 45.0%, respectively, of the Company’s consolidated gross profit for the three months ended March 31, 2025 and 2024.

Our inventory turnover ratio for the three months ended March 31, 2025 increased by 4.3% to 2.4 from 2.3 in 2024. The increase in our inventory turnover ratio was primarily due to higher forward sales, partially offset by higher average inventory balances.

Gross profit for the nine months ended March 31, 2025 decreased $1.1 million, or 0.8%, to $129.2 million from $130.3 million in 2024. The overall gross profit decrease was due to lower gross profits earned from the Wholesale Sales & Ancillary Services segment, partially offset by an increase in gross profits earned by the Direct-to-Consumer segment.

The Company’s overall gross margin percentage for the nine months ended March 31, 2025 decreased by 29.0 basis points to 1.526% from 1.816% in 2024. Excluding an increase of $540.5 million 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, 2025 decreased by 51.3 basis points to 2.659% from 3.172%, which was primarily due to lower premium spreads and lower trading profits. JMB’s retail market activity represented 38.2% and 40.1%, respectively, of the Company’s consolidated gross profit for the nine months ended March 31, 2025 and 2024.

Our inventory turnover ratio for the nine months ended March 31, 2025 increased by 1.5% to 6.9 from 6.8 in 2024. The increase in our inventory turnover ratio was primarily due to higher forward sales, partially offset by higher average inventory balances.

Selling, General and Administrative Expense

Selling, general and administrative expenses for the three months ended March 31, 2025 increased $10.6 million, or 46.2%, to $33.4 million from $22.9 million in 2024. The change was primarily due to: (i) an increase in consulting and professional fees of $4.4 million, (ii) an increase in compensation expense (including performance-based accruals) of $3.4 million, (iii) higher advertising costs of $1.5 million, and (iv) an increase in facilities expense of $0.7 million. Selling, general and administrative expenses for the three months ended March 31, 2025 include $8.7 million of expenses incurred by LPM, SGB, SGI, and Pinehurst, which were not included in the same year-ago period, as they were not yet consolidated subsidiaries for the full period.

Selling, general, and administrative expenses for the nine months ended March 31, 2025 increased $18.7 million, or 27.8%, to $85.8 million from $67.1 million in 2024. The change was primarily due to: (i) an increase in compensation expense (including performance-based accruals) of $6.5 million, (ii) an increase in consulting and professional fees of $5.9 million, (iii) an increase in advertising costs of $3.2 million, (iv) an increase in facilities expense of $1.5 million, (v) an increase in information technology costs of $0.4 million, and (vi) an increase in insurance costs of $0.2 million. Selling, general and administrative expenses for the nine months ended March 31, 2025 include $19.2 million of expenses incurred by LPM, SGB, SGI, and Pinehurst, which were not included in the same year-ago period, as they were not yet consolidated subsidiaries for the full period.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended March 31, 2025 increased $2.0 million, or 69.4%, to $5.0 million from $2.9 million in 2024 primarily due to an increase in amortization expense of $2.4 million relating to intangible assets acquired through our acquisitions of LPM, SGI, and Pinehurst and acquisition of a controlling interest in SGB, partially offset by a decrease in JMB intangible asset amortization of $0.6 million.

Depreciation and amortization expense for the nine months ended March 31, 2025 increased $5.8 million, or 67.7%, to $14.3 million from $8.6 million in 2024 primarily due to an increase in amortization expense of $6.8 million relating to intangible assets acquired through our acquisitions of LPM, SGI, and Pinehurst and acquisition of a controlling interest in SGB, partially offset by a decrease in JMB intangible asset amortization of $1.7 million.

Interest income for the three months ended March 31, 2025 increased $0.0 million, or 0.6%, to $6.7 million from $6.7 million in 2024. The aggregate increase in interest income was due to an increase in other finance product income of $0.4 million and a decrease in interest income earned by our Secured Lending segment of $0.4 million.

The interest income from our Secured Lending segment decreased by $0.4 million, or 13.0%, compared with the prior year period. The decrease in interest income earned from the segment’s secured loan portfolio was primarily due to lower average monthly loan balances and by fewer loans outstanding. The number of secured loans outstanding decreased by 27.3% to 491 as of March 31, 2025, from 675 as of March 31, 2024.

Interest income for the nine months ended March 31, 2025 increased $1.5 million, or 7.9%, to $20.6 million from $19.1 million in 2024. The aggregate increase in interest income was due to an increase in other finance product income of $1.7 million and a decrease in interest income earned by our Secured Lending segment of $0.2 million.

The interest income from our Secured Lending segment decreased by $0.2 million, or 2.1%, compared with the prior year period. The decrease in interest income earned from the segment’s secured loan portfolio was primarily due to higher average monthly loan balances, partially offset by fewer loans outstanding. The number of secured loans outstanding decreased by 27.3% to 491 as of March 31, 2025, from 675 as of March 31, 2024.

Interest expense for the three months ended March 31, 2025 increased $3.0 million, or 30.7%, to $13.0 million from $9.9 million in 2024. The increase in interest expense was primarily due to an increase of $2.0 million related to product financing arrangements and an increase of $0.9 million from liabilities on borrowed metals.

Interest expense for the nine months ended March 31, 2025 increased $3.4 million, or 11.4%, to $33.3 million from $29.9 million in 2024. The increase in interest expense was primarily due to: (i) an increase of $2.9 million related to product financing arrangements, (ii) an increase of $1.6 million from liabilities on borrowed metals, and (iii) an increase of $1.3 million associated with our Trading Credit Facility due to increased borrowings as well as an increase in the weighted-average effective interest rate, partially offset by (iv) a decrease of $2.5 million related to the AMCF Notes (including amortization of debt issuance costs) due to their repayment in December 2023.

Earnings (Losses) from Equity Method Investments

Earnings (losses) from equity method investments for the three months ended March 31, 2025 increased $0.0 million, or 7.8%, to a loss of $0.2 million from a loss of $0.2 million in 2024. The change in earnings (losses) from equity method investments was not significant.

Earnings (losses) from equity method investments for the nine months ended March 31, 2025 decreased $5.3 million, or 162.6%, to a loss of $2.1 million from earnings of $3.3 million in 2024 due to decreased earnings of our equity method investees.

Other Income, Net

Other income, net for the three months ended March 31, 2025 increased $0.4 million, or 53.5%, to $1.2 million from $0.8 million in 2024. The change in other income, net was not significant.

Other income, net for the nine months ended March 31, 2025 increased $0.2 million, or 14.1%, to $1.8 million from $1.6 million in 2024. The change in other income, net was not significant.

Remeasurement Loss on Pre-Existing Equity Interest

The Company incurred a remeasurement loss on our pre-existing equity interest in Pinehurst in February 2025 through the acquisition of the remaining equity interests it did not previously own. See further details in Note 1.

Income Tax Expense

Our income tax benefit (expense) was $1.2 million and ($1.3) million for the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate was approximately 12.4% and 20.0% for the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate varied from the federal statutory rate for the three months ended March 31, 2025 primarily due to the excess tax benefit from share-based compensation, partially offset by adjustments related to our acquisition of the remaining outstanding equity interests in Pinehurst, state taxes (net of federal tax benefit), Section 162(m) executive compensation disallowance, and other normal course non-deductible expenditures. Our effective tax rate for the three months ended March 31, 2024 varied from the tax computed at the federal statutory rate primarily due to 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.

Our income tax expense was $2.6 million and $10.7 million for the nine months ended March 31, 2025 and 2024, respectively. Our effective tax rate was approximately 31.1% and 21.9% for the nine months ended March 31, 2025 and 2024, respectively. Our effective tax rate varied from the federal statutory rate for the nine months ended March 31, 2025 primarily due to the excess tax benefit from share-based compensation, partially offset by adjustments related to our acquisition of the remaining outstanding equity interests in Pinehurst, state taxes (net of federal tax benefit), Section 162(m) executive compensation disallowance, and other normal course non-deductible expenditures. Our effective tax rate for the nine months ended March 31, 2024 varied from the tax computed at the federal statutory rate primarily due to 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.