A-Mark Precious Metals Inc (AMRK) Q1 2025 Earnings Call Highlights: Revenue Growth Amidst ...

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Revenue: Increased 9% to $2.72 billion from $2.48 billion in Q1 of last year.
Gross Profit: Decreased 12% to $43.4 million or 1.6% of revenue from $49.4 million or 1.99% of revenue in Q1 of last year.
SG&A Expenses: Increased 22% to $26.6 million from $21.8 million in Q1 of last year.
Depreciation and Amortization: Increased 69% to $4.7 million from $2.8 million in Q1 of last year.
Interest Income: Increased 16% to $7.1 million from $6.1 million in Q1 of last year.
Interest Expense: Increased 2% to $10 million from $9.8 million in Q1 of last year.
Net Income: $9 million or 37 per diluted share, compared to $18.8 million or 77 per diluted share in Q1 of last year.
Adjusted Net Income Before Taxes: $14.8 million, a decrease of 45% from $26.8 million in Q1 of last year.
EBITDA: $17.8 million, a 41% decrease from $30.4 million in Q1 of last year.
Cash: $46.9 million at quarter end, compared to $48.6 million at June 30, 2024.
Tangible Net Worth: $313.3 million, up from $306 million at June 30, 2024.
Gold Sales: 398,000 ounces, down 20% from Q1 of last year.
Silver Sales: 20.4 million ounces, down 33% from Q1 of last year.
DTC Segment Revenue Contribution: 18% in fiscal Q1 2025, up from 13% in Q1 2024.
JMB Revenue Contribution: 11% of consolidated revenues in fiscal Q1 2025, compared to 12% in Q1 of last year.
New Customers in DTC Segment: 55,300, up 41% from Q1 of last year.
Total Customers in DTC Segment: Approximately 3.1 million, a 31% increase from prior year.
Average Order Value in DTC Segment: $2,967, up 22% from Q1 fiscal 2024.
Inventory Turnover Ratio: 2.3, an 8% decrease from 2.5 in Q1 of last year.
Secured Loans: 562, a decrease of 30% from September 30, 2023.
Loan Portfolio Value: $101.9 million, a decrease of 10% from June 30, 2024.

Warning! GuruFocus has detected 3 Warning Sign with AMRK.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

A-Mark Precious Metals Inc (NASDAQ:AMRK) reported a 9% increase in revenues for fiscal Q1 2025, reaching $2.72 billion.
The company successfully extended its trading credit facility maturity to September 2026, ensuring liquidity for future capital needs.
A-Mark Precious Metals Inc (NASDAQ:AMRK) made strategic advancements, including the expansion of its global logistics facility and automation initiatives, expected to enhance operational capacity and efficiency.
The acquisition of Regency Mint's assets by Silvertowne Mint is set to enhance A-Mark Precious Metals Inc (NASDAQ:AMRK)'s minting capabilities and expand its customer base.
The Direct-to-Consumer (DTC) segment showed strong performance, contributing 54% to the consolidated gross profit in fiscal Q1 2025, up from 43% in the previous year.

Negative Points

Gross profit for fiscal Q1 2025 decreased by 12% to $43.4 million, primarily due to lower profits from wholesale sales and ancillary services.
SG&A expenses increased by 22% to $26.6 million, driven by higher compensation, advertising, consulting fees, and costs from newly consolidated subsidiaries.
Earnings from equity method investments fell by 79% to $0.6 million, indicating decreased earnings from equity investees.
Net income attributable to the company dropped to $9 million or 37 per diluted share, compared to $18.8 million or 77 per diluted share in the previous year.
The number of secured loans decreased by 30% from the previous year, with the loan portfolio's dollar value dropping by 10% from June 2024.

Q & A Highlights

Q: How should we think about the levers you can pull to stimulate demand in a challenging environment? A: Gregory Roberts, CEO, explained that they can increase marketing expenses to attract new customers. While they can't control customer spending, they believe investing in new customer acquisition during slower markets is beneficial for the future. They have had some exceptional weeks and are well-positioned to capitalize on increased demand when it occurs.

Q: What are your current thoughts on strategic M&A, especially during periods like this? A: Gregory Roberts noted that the Silvertowne Mint acquisition was well-timed, allowing them to enhance their minting capabilities. He mentioned that they have filled their M&A pipeline and are optimistic about completing favorable acquisitions in the next 90 days.

Q: Why do you think macro headwinds will begin to shift, leading to increased demand? A: Roberts highlighted that persistent high spot prices for gold and silver have led to increased buybacks, affecting margins and premiums. However, he noted a recent shift in retail buyer sentiment and a drop in spot prices, which could positively impact demand and premiums.

Q: Can you provide more detail on the ratio of what you were buying in versus what you were selling? A: Roberts mentioned that historically, the buyback ratio was around 10%, but it had increased to 30% in previous quarters. Recently, they have seen weeks where the ratio dropped to 5%, indicating a shift towards more buying from retail customers.

Q: What are your expectations for buyer and seller sentiment in 2025, especially with political changes? A: Roberts stated that it's difficult to predict political impacts, but historically, contested elections have been beneficial. He emphasized that their business thrives in environments with unsustainable deficits and borrowing, regardless of the political landscape.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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