A-Mark Precious Metals(AMRK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For fiscal year 2025, the company reported net income of $17.3 million, with non-GAAP adjusted net income before provision for income taxes of $53.1 million, and diluted EPS of $0.71 per share [3][14] - In Q4 2025, net income was $10.3 million, with non-GAAP adjusted net income before provision for income taxes of $19.2 million, and diluted EPS of $0.41 per share [3][14] - Revenue for Q4 2025 decreased 1% to $2.51 billion, while for the full year, revenue increased 1.3% to $10.98 billion [6][7] - Gross profit for Q4 increased 90% to $81.7 million, and for the full year, gross profit increased 22% to $210.9 million [8][9] - SG&A expenses for Q4 increased 135% to $53.4 million, and for the full year, SG&A expenses increased 55% to $139 million [9][10] - Interest income for Q4 decreased 34% to $5.3 million, while interest expense increased 34% to $12.9 million [12][13] - EBITDA for Q4 totaled $29.2 million, a 24% decrease compared to the previous year, and for the full year, EBITDA totaled $64.4 million, a 40% decrease [15] Business Line Data and Key Metrics Changes - The company sold 346,000 ounces of gold in Q4 2025, down 23% from the previous year, and 1.6 million ounces for the full year, down 11% [16] - Silver sales in Q4 totaled 15.7 million ounces, down 38% from the previous year, and 73.6 million ounces for the full year, down 32% [16] - The number of new customers in the DTC segment for Q4 was 108,900, down 81% from the previous year, while for the full year, new customers increased 57% to 1,129,200 [17][18] Market Data and Key Metrics Changes - The company has expanded its operations into Asia, with LPM Group Limited fully operational in Singapore, enhancing its reach into the Southeast Asian market [5] - The DTC segment average order value for Q4 was $2,443, down 15% from the previous year, while for the full year, it was $2,886, up 19% [19] Company Strategy and Development Direction - The company is focused on integrating recent acquisitions to optimize expenses and create greater operating leverage [4][21] - The strategic acquisitions are expected to strengthen distribution channels and expand into higher margin collectible and luxury segments [5] - The company is exploring further M&A opportunities while balancing capital allocation between inventory and acquisitions [25][26] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges in the market, including higher carrying costs and premium pressures, but expressed optimism about integration efforts and future growth [24] - The company highlighted the importance of volatility and uncertainty in the equity markets as favorable conditions for its business [34] - Management indicated that the recent acquisitions have positioned the company well for future growth despite current market conditions [21][45] Other Important Information - The company has made significant progress in integrating its acquisitions, with a focus on reducing redundancies and optimizing operations [57] - The Las Vegas distribution center is nearly fully upgraded, enhancing capacity and cost savings [29] Q&A Session Summary Question: Current cycle position - Management observed strength in April but noted a slowdown in May and June, with ongoing challenges related to higher spot prices and premium spreads [24] Question: Strategic M&A opportunities - Management is always looking for opportunities and believes they can digest more acquisitions if they arise, while balancing capital allocation [25][26] Question: Countercyclical efforts - Management reported success in the rare coin auction market, indicating that the strategy is sound and benefiting from higher margins [28] Question: Las Vegas distribution center upgrades - Management stated that the upgrades are 95% complete, with operational capacity and cost savings meeting expectations [29] Question: Environment for business - Management indicated that a good environment includes volatility and uncertainty in equity markets, which drives demand for precious metals [34] Question: Tariff impacts - Management explained that tariffs have caused disruptions and increased costs, particularly for gold imports [36] Question: Gross margin drivers - Management attributed improved gross profit margins to acquisitions and integration of higher margin businesses [40] Question: International market exposure - Management expressed optimism about growth opportunities in Asia, particularly through the LPM Group Limited acquisition [44]