A-Mark Precious Metals(AMRK) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for fiscal Q2 2025 increased 32% to $2.742 billion from$ 2.079 billion in Q2 of last year, with a 38% increase when excluding forward sales [9][10] - Net income attributable to the company for Q2 2025 totaled $6.6 million or$ 0.27 per diluted share, compared to $13.8 million or$ 0.57 per diluted share in the same period last year [23] - Adjusted net income before provision for income taxes decreased 38% to $13.4 million compared to$ 21.7 million in the same year-ago quarter [23] - EBITDA for Q2 fiscal 2025 totaled $16.2 million, a 35% decrease compared to$ 25.1 million in Q2 fiscal 2024 [24] Business Line Data and Key Metrics Changes - The DTC segment contributed 21% of consolidated revenue in Q2 2025, up from 18% in Q2 2024 [10] - JMB's revenue represented 11% of consolidated revenue for Q2 2025, down from 16% in Q2 2024 [10] - Gross profit for fiscal Q2 2025 decreased 3% to $44.8 million, representing 1.63% of revenue, compared to 2.22% in Q2 of last year [12] Market Data and Key Metrics Changes - Gold ounces sold in Q2 fiscal 2025 increased 4% year-over-year to 466,000 ounces, while silver ounces sold decreased 18% to 21.8 million ounces [28][29] - The number of new customers in the DTC segment increased 25% year-over-year to 65,400 in Q2 fiscal 2025 [30] Company Strategy and Development Direction - The company is focused on expanding its domestic and geographic reach, diversifying its customer base, and enhancing its DTC customer base [34] - A-Mark Precious Metals, Inc. entered into a definitive agreement to acquire Spectrum Group International, which will expand its presence in the premium collectible market [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted that the current market conditions are challenging due to elevated precious metal prices and subdued demand, but the company is managing well [4][5] - The management expressed optimism about the strategic acquisition of Stacks Bowers Galleries, highlighting potential synergies and cross-selling opportunities [6][45] Other Important Information - SG&A expenses for fiscal Q2 2025 increased 15% to$ 25.8 million, primarily due to higher consulting and professional fees [14] - The company returned capital to shareholders through the repurchase of $5.1 million of common stock during the quarter [26] Q&A Session Summary Question: Insights on comparable periods of low volatility and elevated gold prices - Management indicated that current conditions are unprecedented, with gold prices reaching new highs, and compared the situation to historical trends from 1980 [36][39] Question: Counter-cyclicality of the numismatics effort and wine collection - Management highlighted the potential for cross-selling between Stacks' customer base and A-Mark's DTC brands, emphasizing the strategic fit of the acquisition [42][45] Question: Performance of Stacks and profitability drivers - Management noted that Stacks had a strong first half of the fiscal year, driven by significant auction events, but cautioned about cyclicality in their business [50][52] Question: Marketing efforts to increase DTC volume - Management confirmed ongoing marketing strategies aimed at increasing active customer numbers and re-engaging previous customers, with positive results [53][55] Question: Timing and synergies of the SGI acquisition - Management explained that the acquisition timing was strategic, allowing access to A-Mark's balance sheet and inventory, which would enhance Stacks' growth potential [61][64] Question: Accretiveness of the SGI deal - Management expressed confidence in the deal being accretive, estimating significant EBITDA contributions post-acquisition [76] Question: Balancing capital allocation for dividends, buybacks, and M&A - Management discussed the importance of balancing capital allocation strategies, emphasizing the need for accretive deals while maintaining shareholder returns [93][96]