A-Mark Precious Metals Reports Fiscal Second Quarter 2014 Results

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Company reports 25% increase in gross profit in quarter

Margins improve due to favorable change in product mix

SANTA MONICA, Calif.--(BUSINESS WIRE)--A-Mark Precious Metals, Inc. (NASDAQ: AMRK), a full-service precious metals trading company, reported results for the 2014 fiscal second quarter ended December 31, 2013.

Fiscal Q2 2014 Highlights

Revenue totaled $1.49 billion
Gross profit was $7.8 million
Net income totaled to $2.2 million

Fiscal Q2 2014 Financial Results

Revenue for the three months ended December 31, 2013 was $1.49 billion compared to $1.70 billion in the year-ago quarter. The decrease in revenue was primarily due to a decline in commodity prices for gold and silver. A decrease in the volume of gold ounces sold was largely offset by an increase in the volume of silver ounces sold, as well as stronger demand for custom silver products through certain distribution contracts.

Gross profit was $7.8 million, representing a gross profit margin of 0.5%, an improvement from a gross profit of $6.3 million or a gross profit margin of 0.4% in the year-ago quarter. Gross profit and profit margin improved as a result of increased sales of custom silver products through certain distribution contracts. Sales to distributors of unique bullion products for marketing to the retail public generate higher margins than the company’s ordinary trading activities.

General and administrative (G&A) expenses increased to $4.5 million from $3.0 million in the year-ago quarter. The increase was primarily due to higher personnel expenses; specifically recruiting and retention fees related to the addition of key employees. A one-time favorable adjustment in the prior period also contributed to the variance.

Net income totaled $2.2 million or $0.29 per diluted share, as compared to $2.5 million or $0.32 per diluted share in the year-ago quarter. The decrease in net income was primarily attributable to the increase in G&A.

Management Commentary

“The 25% increase in gross profit and strong profitability in the quarter reveals the special nature of our business and trading platform, where our topline can be volatile but our bottom line performance is not impacted,” said Greg Roberts, A-Mark’s CEO. “It’s also important to note how our custom products—which had an increasingly positive effect over the last several months—enhance gross margins and profitability, while remaining largely unaffected by short-term fluctuations in commodity prices.”

The company’s stock began trading on the NASDAQ Global Select on March 17, 2014. Management plans to begin hosting regular quarterly conference calls beginning with its fiscal third quarter results ending March 31, 2014, with the date and time to be announced approximately a week prior.

About A-Mark Precious Metals

A-Mark Precious Metals, Inc. is a full-service precious metals trading company and an official distributor for many government mints throughout the world. The company offers gold, silver, platinum and palladium in the form of bars, plates, powder, wafers, grain, ingots and coins. Its Industrial unit services manufacturers and fabricators of products utilizing or incorporating precious metals, while its Coin & Bar unit deals in over 200 coin and bar products in a variety of weights, shapes and sizes for distribution to dealers and other qualified purchasers. The company operates trading centers in Santa Monica, California, and Vienna, Austria, for buying and selling precious metals.

In addition to wholesale and trading activity, A-Mark offers customers a variety of services, including financing, consignment and various customized financial programs. As a U.S. Mint-authorized purchaser of gold, silver and platinum coins, A-Mark purchases bullion products directly from the U.S. Mint for sale to customers. A-Mark also has distributorships with other sovereign mints, including in Australia, Austria, Canada, China, Mexico and South Africa. Customers of A-Mark include mints, manufacturers and fabricators, refiners, coin and metal dealers, banks and other financial institutions, jewelers, investors and collectors. For more information about A-Mark Precious Metals, visit www.amark.com.

Through its subsidiary Collateral Finance Corporation, a licensed California Finance Lender, the company offers loans collateralized by numismatic and semi-numismatic coins and bullion to coin and metal dealers, investors and collectors. Through its Transcontinental Depository Services subsidiary, it offers a variety of managed storage options for precious metals products to financial institutions, dealers, investors and collectors around the world.

Important Causations Regarding Forward-Looking Statements

Statements in this press release that relate to future plans, objectives, expectations, performance, events and the like are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities Exchange Act of 1934. Future events, risks and uncertainties, individually or in the aggregate, could cause actual results to differ materially from those expressed or implied in these statements. Factors that could cause actual results to differ are identified in the company’s public filings with the Securities and Exchange Commission (SEC). More information about factors that could affect the company’s business and financial results are included in its public filings with the SEC, which are available on the SEC’s website at www.sec.gov.

The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. Additionally, any statements related to future improved performance and estimates of revenues and earnings per share are forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012
(in thousands, except for share and per share data)
(unaudited)

	Three Months Ended December 31, 2013					Three Months Ended December 31, 2012					$			%
in thousands	$			% of revenue		$			% of revenue		Increase/ (decrease)			Increase/ (decrease)
Revenue	$	1,488,653		100.0	%	$	1,696,781		100.0	%	$	(208,128	)	(12.3	)%
Gross profit	7,834			0.5	%	6,254			0.4	%	1,580			25.3	%
General and administrative expenses	(4,503		)	(0.3	)%	(2,994		)	(0.2	)%	1,509			50.4	%
Interest income	1,403			0.1	%	2,114			0.1	%	(711		)	(33.6	)%
Interest expense	(889		)	(0.1	)%	(945		)	(0.1	)%	(56		)	(5.9	)%
Unrealized gain on foreign exchange	24			—	%	48			—	%	(24		)	NM
Net income before provision for income taxes	3,869			0.3	%	4,477			0.3	%	(608		)	(13.6	)%
Provision for income taxes	(1,621		)	(0.1	)%	(1,991		)	(0.1	)%	370			(18.6	)%
Net income	$	2,248		0.2	%	$	2,486		0.1	%	$	(238	)	(9.6	)%

NM = Not meaningful.

in whole amounts	Three Months Ended December 31,
Basic and diluted weighted average income per common share	2013		2012		Increase/ (decrease)			% of Increase/ (decrease)
Basic - net income ⁽¹⁾	$	0.29	$	0.32	$	(0.03	)	(9.4	)%
Diluted - net income⁽¹⁾	$	0.29	$	0.32	$	(0.03	)	(9.4	)%

____________________
(1) = Basic and diluted income per share based on historical SGI basic and fully diluted share figures, adjusted on a pro-forma basis of one share of A-Mark stock issued for every four shares of SGI stock held.



A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)

	December 31, 2013		June 30, 2013

ASSETS
Current assets:
Cash	$	15,015	$	21,565
Receivables, net	102,473		109,947

Inventories:
Inventories	134,523		123,824
Restricted inventories	25,506		38,554
	160,029		162,378
Deferred tax assets	5,993		5,993
Prepaid expenses and other assets	868		487
Total current assets	284,378		300,370
Property and equipment, net	1,226		1,213
Goodwill	4,884		4,884
Intangibles, net	2,949		3,141
Total assets	$	293,437	$	309,608

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Lines of credit	$	106,000	$	95,000
Liability on borrowed metals	11,226		20,117
Product financing arrangement	25,506		38,554
Accounts payable	84,610		86,010
Accrued liabilities	4,985		6,601
Payable to parent	—		1,015
Income taxes payable to parent	7,615		8,505
Total current liabilities	239,942		255,802
Deferred tax liabilities	552		552
Total liabilities	240,494		256,354
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none at December 31, 2013 and June 30, 2013	—		—
Common Stock, par value $0.01; 40,000,000 authorized 7,402,664 issued and outstanding at December 31, 2013 and June 30, 2013	74		74
Additional paid-in capital	24,445		24,370
Retaining earnings	28,424		28,810
Total stockholders’ equity	52,943		53,254
Total liabilities and stockholders’ equity	$	293,437	$	309,608

A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share and per share data)
(unaudited)

	Three Months Ended						Six Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012

Revenues	$	1,488,653		$	1,696,781		$	2,984,632		$	3,316,596
Cost of sales	1,480,819			1,690,527			2,969,815			3,305,308
Gross profit	7,834			6,254			14,817			11,288

Selling, general and administrative expenses	(4,503		)	(2,994		)	(8,152		)	(6,087		)
Interest income	1,403			2,114			2,907			4,166
Interest expense	(889		)	(945		)	(1,877		)	(1,874		)
Unrealized gain on foreign exchange	24			48			60			22
Net income before provision for income taxes	3,869			4,477			7,755			7,515
Provision for income taxes	(1,621		)	(1,991		)	(3,141		)	(3,344		)
Net income	$	2,248		$	2,486		$	4,614		$	4,171

Basic and diluted income per share:
Basic - net income	$	0.29		$	0.32		$	0.60		$	0.53
Diluted - net income	$	0.29		$	0.32		$	0.59		$	0.52
Weighted average shares outstanding
Basic	7,729,181			7,657,119			7,729,401			7,926,459
Diluted	7,885,640			7,708,723			7,886,167			7,978,063

A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except for share and per share data)
(unaudited)

	Common Stock (Shares)	Common Stock		Additional Paid-in Capital		Retained Earnings			Total Stockholders’ Equity
Balance, June 30, 2013	7,402,644	$	74	$	24,370	$	28,810		$	53,254
Net income	—	—		—		4,614			4,614
Share-based compensation	—	—		75		—			75
Dividend Declared	—	—		—		(5,000		)	(5,000		)
Balance, December 31, 2013	7,402,644	$	74	$	24,445	$	28,424		$	52,943

A-MARK PRECIOUS METALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)

	Six Months Ended
	December 31, 2013			December 31, 2012
Cash flows from operating activities:
Net Income	$	4,614		$	4,171
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	443			398
Provision for doubtful accounts	—			(700		)
Share-based compensation	75			37
Changes in assets and liabilities:
Receivables	7,474			14,800
Inventories	2,349			18,020
Prepaid expenses and other current assets	(381		)	(168		)
Accounts payable	(1,400		)	(2,722		)
Liabilities on borrowed metals	(8,891		)	8,063
Accrued liabilities	(1,616		)	(2,106		)
Payable to parent	(1,905		)	(2,369		)
Net cash provided by operating activities	762			37,424
Cash flows from investing activities:
Capital expenditures for property and equipment	(264		)	(157		)
Net cash used in investing activities	(264		)	(157		)
Cash flows from financing activities:
Product financing arrangement, net	(13,048		)	(10,799		)
Dividends paid to parent	(5,000		)	(15,000		)
Borrowings (repayments) under lines of credit, net	11,000			(11,500		)
Net cash used in financing activities	(7,048		)	(37,299		)

Net decrease in cash and cash equivalents	(6,550		)	(32		)
Cash and cash equivalents, beginning of period	21,565			11,273
Cash and cash equivalents, end of period	$	15,015		$	11,241
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense	$	1,851		$	1,824
Income taxes	$	3,925		$	4,750

Contacts:

Company Contact:
A-Mark Precious Metals, Inc.
Thor Gjerdrum, EVP & COO
310-587-1414
thor@amark.com
or
Investor Relations Contact:
Liolios Group, Inc.
Matt Glover or Michael Koehler
949-574-3860
AMRK@liolios.com

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