Release Date: February 06, 2025

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 32% increase in revenues for fiscal Q2 2025, reaching $2.742 billion, driven by higher average selling prices of gold and silver.
• The company is nearing completion of its facility expansion and logistic initiatives at A-Mark Global Logistics in Las Vegas, which is expected to enhance operational efficiency.
• A-Mark Precious Metals Inc (NASDAQ:AMRK) has entered into a definitive agreement to acquire Spectrum Group International, expanding its presence into premium collectible markets and higher-margin luxury markets.
• The DTC segment showed strong performance, contributing 21% of consolidated revenue in fiscal Q2 2025, up from 18% in the previous year.
• The number of new customers in the DTC segment increased by 25% year-over-year, indicating successful marketing efforts and customer acquisition strategies.

Negative Points

• Gross profit for fiscal Q2 2025 decreased by 3% to $44.8 million, primarily due to lower profits from the wholesale sales and ancillary services segment.
• SG&A expenses increased by 15% to $25.8 million, driven by higher consulting and professional fees, advertising costs, and compensation expenses.
• Earnings from equity method investments decreased significantly, resulting in a loss of $2.4 million in Q2 2025 compared to earnings of $0.8 million in the previous year.
• Net income attributable to the company decreased to $6.6 million or $0.27 per diluted share, down from $13.8 million or $0.57 per diluted share in Q2 of the previous year.
• The number of secured loans decreased by 28% from the previous year, indicating potential challenges in the secured lending segment.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with AMRK.

Q: Greg, can you provide some historical context for the current low volatility and elevated gold prices? A: Greg Roberts, CEO: We are in uncharted waters with gold prices consistently reaching new highs. The current situation is reminiscent of 1980, particularly in silver, where market flow exceeded demand. Despite these challenges, A-Mark is effectively managing its operations and maintaining strong relationships with refiners.

Q: How should we view the countercyclicality of the numismatic and wine efforts from the SGI deal? A: Greg Roberts, CEO: Spectrum Wine Auctions is a collectible but not directly related to numismatics. However, we see synergies in cross-selling bullion products to Stax's customer base and leveraging JM Bullion's success in selling numismatic coins. Stax's revenue mix is impressive, and we believe their higher margins will complement A-Mark, especially when bullion margins are low.

Q: Can you discuss the performance of Stax over the last six months and what's driving its profitability? A: Greg Roberts, CEO: Stax's first six months are typically front-loaded due to their auction cycles, particularly the August auction. This year, they acquired the Brun Collection, which significantly contributed to their performance. However, there is some cyclicality in their business.

Q: How are your marketing efforts progressing in driving volume through your DTC channels? A: Greg Roberts, CEO: We continue to focus on increasing active customer numbers and re-engaging inactive customers. Our strategy has yielded impressive results, with significant growth in new and returning customers. We believe this will benefit us when market conditions improve.

Q: What led to the timing of the SGI acquisition, and what synergies do you expect? A: Greg Roberts, CEO: The acquisition makes sense now as both companies have evolved. Stax will benefit from A-Mark's balance sheet, inventory, and lower costs. We anticipate synergies in inventory management and customer base expansion. The timing was right as Stax was reaching a growth ceiling due to its balance sheet limitations.

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