A-Mark Precious Metals(AMRK) - 2025 Q4 - Annual Report

Part I Business Description A-Mark Precious Metals is a fully integrated company offering products and services across wholesale, direct-to-consumer, and secured lending segments Overview - A-Mark is a fully integrated precious metals company offering gold, silver, platinum, palladium, and copper bullion, numismatic coins, and related products to wholesale and retail customers[9] - The company operates through three complementary segments: Wholesale Sales & Ancillary Services, Direct-to-Consumer, and Secured Lending[9] - A-Mark serves a global customer base including mints, manufacturers, refiners, dealers, e-commerce retailers, banks, financial institutions, commodity brokerage houses, industrial users, investors, collectors, and retail customers[9] History - Founded in 1965, A-Mark became an authorized purchaser of gold and silver bullion coins from the United States Mint in 1986, expanding relationships with major sovereign mints globally[11] - The company was spun off and became publicly traded in 2014[11] - Transitioned to a vertically integrated company with acquisitions like Goldline (2017) and JM Bullion (2021), and expanded international operations organically and through acquisitions in Canada, Europe, and Asia[13][14] - Acquired the successor to Spectrum Group International, Inc. (SGI) in February 2025, expanding into the collectible coin and currency market[15] Business Segments Overview - Wholesale Sales & Ancillary Services: Wholesales gold, silver, platinum, palladium bullion and related products, offers financing, secure storage, and logistics, and owns a silver mint and distributes for sovereign/private mints[16] - Direct-to-Consumer: Sells precious metals to domestic and international retail customers through consumer-facing subsidiaries[16] - Secured Lending: Provides liquidity by originating and acquiring commercial loans collateralized by bullion, numismatic coins, and graded sports cards[16] Competitive Advantages - Integrated operations spanning trading, distribution, logistics, minting, storage, hedging, financing, and consignment[18] - Extensive and varied customer base including financial institutions, dealers, collectors, investors, manufacturers, refiners, and mints[18] - Expertise in e-commerce and marketing, secure storage, and long-standing relationships with major sovereign mints (e.g., U.S. Mint for over 35 years)[18] - Ability to obtain favorable pricing and financing terms due to size, minting operations for custom products, and global trading systems with experienced traders managing commodity price risk[18] Growth Strategy - Continue growing consumer-facing brands and investing in the Direct-to-Consumer segment to acquire and retain customers[18] - Cross-sell existing products and services (e.g., proprietary minted products, secure storage) to its approximately 4.2 million total retail customers[18] - Leverage minting capabilities (SilverTowne, noncontrolling interest in Sunshine Minting) to sell additional proprietary products to wholesale and direct-to-consumer customers[18] - Expand global footprint in Canada, Europe, and Asia, building on recent acquisitions like LPM (Asia) and SGB (Canada)[26][33] - Leverage technology to deliver new products and increased services, including developing new digital products (e.g., mobile interface for buying/selling/storing physical metal) and improving customer interfaces[26] - Pursue strategic investments and acquisitions to broaden product offerings, serve existing customers, enter new geographic regions, and target new customer demographics, as evidenced by recent acquisitions of SGI, Pinehurst, and AMS[26] Wholesale Sales & Ancillary Services Segment Details - Sells over 2,000 different products including gold, silver, platinum, and palladium coins and bars from major sovereign and private mints[22][23] - Provides customized financing, secure storage, and turn-key logistics services through subsidiaries like AMGL and TDS[16][30] - Operates SilverTowne Mint for fabricating silver bullion products and holds a noncontrolling interest in Sunshine Minting, Inc[31] - Engages in commodity hedging to protect inventory from market price fluctuations and offers precious metals price quotes in various foreign currencies[27] - International operations include offices in Vienna, Austria (AMTAG), Hong Kong (LPM, Asia headquarters), and Singapore (AM Precious Metals Singapore PTE Ltd.)[33] - Recent acquisitions (SGI, Pinehurst) expanded operations into collectible coin and currency markets, with wholesale activities integrated into this segment[28][29] Direct-to-Consumer Segment Details - Operates through subsidiaries like JM Bullion (JMB), Goldline, SGI, Pinehurst, AMS, and an investment in Silver Gold Bull (SGB)[35] - JMB is a leading internet retailer offering over 7,000 different products (coins, rounds, bars) through various proprietary websites (e.g., JMBullion.com, ProvidentMetals.com, CyberMetals.com)[37][38][39] - CyberMetals platform allows customers to buy/sell fractional shares of digital precious metals, convertible to physical products[40] - Goldline markets precious metals via television, radio, podcasts, and internet, focusing on the investor community[45] - SGB is a leading e-commerce precious metals retailer in Canada, with the Company increasing its ownership to 55.4% in June 2024[49] - Recent acquisitions (SGI, Pinehurst, AMS) expanded direct-to-consumer offerings, including rare coin auctions and e-commerce retail of modern and numismatic coins[50][51][52] - JMB and PMPP (joint venture with Goldline and SGB) offer direct-to-consumer purchase programs for precious metals, serving as an inventory source[43][47] Secured Lending Segment Details - Operates through Collateral Finance Corporation, LLC (CFC), a California licensed finance lender[54][55] - Originates and acquires commercial loans secured by bullion, numismatic coins, and graded sports cards[55] Secured Loans Outstanding (June 30, 2025) | Metric | Amount (approx.) | | :----- | :--------------- | | Total Secured Loans | $94.0 million | | Originated by CFC | 89% | | Acquired from third-parties | 11% | - Loans are typically short-term (approx. six months) with no significant exposure to interest rate fluctuations[57] - All loans are fully secured with loan-to-value (LTV) ratios between 50% and 85%, with margin calls if LTV exceeds prescribed maximums (typically 85%)[58] - CFC has never experienced losses of principal on its loans[58] - Finances loan activities primarily through A-Mark's demand line of credit[61] Liquidity - Business depends substantially on ability to obtain financing for operations[62] - Sources of cash from operating activities include receipts from precious metals sales and interest payments on secured loans[62] - Sources of cash from financing activities include an uncommitted line of credit, fixed interest rate notes, and other structured financing products[63] Uncommitted Line of Credit (June 30, 2025) | Metric | Amount | | :----- | :----- | | Access up to | $467.0 million | | Maturity Date | September 2026 | Market Making Activity - A-Mark acts as a principal market maker, maintaining a two-way market for buying and selling precious metals[65] Material Resources - Maintains substantial inventory of bullion and coins for selection and prompt delivery[66] - Acquires product from customers, government/private mints, mines, refiners, and commodity exchanges[66] - Precious metals inventories are marked-to-market daily, except for collectible coin inventory (lower of cost or net realizable value)[67] - Policy is to remain substantially hedged against commodity price risk using financial derivative instruments (forward and futures contracts)[67] [Sales and Marketing](index=11&type=section&id=Sales%20and%2