A-Mark Precious Metals Q3 2025 Earnings Call Transcript

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Provided by Quartr
May 7, 2025

Key Takeaways

  • Revenue growth: Revenues increased 15% year-over-year to $3.0 billion in Q3, driven by higher average gold and silver selling prices.
  • Profit resilience: Despite volatile markets and one-time acquisition costs of $4.6 million plus a $7 million remeasurement loss, the company delivered $41 million in gross profit and $5.7 million in non-GAAP adjusted net income.
  • Strategic acquisitions: A Mark completed three deals—Pinehurst Coin Exchange, Spectrum Group International, and AMS Holdings LLC—expanding into higher-margin luxury segments and adding about 4 million DTC customers.
  • Net loss: The company reported an $8.5 million net loss in Q3 (EPS –$0.36) versus a $5 million net income in the prior year, and adjusted net income before taxes fell 51%.
  • Rising SG&A: Selling, general and administrative expenses jumped 46% to $33.4 million due to higher consulting fees, acquisition costs, compensation and integration expenses.
AI Generated. May Contain Errors.
Earnings Conference Call
A-Mark Precious Metals Q3 2025
00:00 / 00:00

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Operator

Good afternoon, and welcome to A Mark Precious Metals Conference Call for the Fiscal Third Quarter Ended 03/31/2025. My name is Kelly, and I will be your operator this afternoon. Before this call, A Mark issued its results for the fiscal third quarter twenty twenty five in a press release, which is available in the Investor Relations section of the company's website at www.amark.com. You can find the link to the Investor Relations section at the top of the homepage. Joining us for today's call are A Mark's CEO, Greg Roberts President, Thor Gerdrum and CFO, Kathleen Simpson Taylor.

Operator

Following their remarks, we will open the call to your questions. Then, before we conclude the call, I'll provide the necessary cautions regarding the forward looking statements made by management during this call. I would like to remind everyone that this call is being recorded and will be made available for replay via a link available in the Investor Relations section of A website. Now I would like to turn the call over to A Mark's CEO, Mr. Greg Roberts. The floor is yours.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Thank you, Kelly, and good afternoon, everyone. Thank you for joining the A Mark call today. Our third quarter results demonstrate A Mark's performance during very volatile market conditions. Early quarter concerns around tariffs led to decreased market liquidity and backwardation contributing to trading losses and higher interest expense due to increases in product financing rates. Despite these headwinds, one time acquisition related costs of $4,600,000 and a one time remeasurement loss of $7,000,000 on our Pinehurst Coin Exchange pre existing equity interest, we delivered $41,000,000 in gross profit, 5,700,000.0 in non GAAP adjusted net income and $1,300,000 in non GAAP EBITDA.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

We capitalized on the softer market conditions to execute three strategic acquisitions: Pinehurst Coin Exchange, Spectrum Group International, which closed during the quarter, and AMS Holdings LLC, which closed just after quarter end. These acquisitions have strengthened our competitive position while expanding our footprint into higher margin luxury segments. As we integrate these businesses into A Mark's infrastructure, we anticipate both immediate and long term cost efficiencies. Our consolidations efforts will help eliminate operational redundancies while supporting increased transaction volume. Our A Mark Global Logistics facility in Las Vegas is fully prepared for the upcoming integration phase.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

With our hardware upgrade now complete, we have identified numerous opportunities to drive operational efficiencies. We continue to invest in automation technology in Las Vegas, enabling us to process higher volumes while reducing operational costs. We also made significant progress with our LPM acquisition, having successfully launched both retail and wholesale trading capabilities. We are optimistic about the long term growth opportunities in the Asian markets across wholesale and e commerce channels and look forward to scaling the LPM brand alongside our other portfolio assets. Looking ahead, market conditions have shown some modest improvement With our expanded brand portfolio and substantial optimization opportunities, we remain confident in A Mark's long term growth trajectory and our continuing ability to deliver shareholder value.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Now, I will turn the call over to CFO Kathleen Simpson Taylor, who will provide a more detailed overview of our financial performance. Following that, our President, Thor Jardrum, will discuss our key operating metrics. Finally, I will offer further insights into the strategic direction and growth initiatives driving our business. Kathleen?

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

Thank you, Greg, and good afternoon, everyone. Our revenues for fiscal Q3 twenty twenty five increased 15% to $3,000,000,000 from $2,600,000,000 in the same year ago quarter. Excluding an increase of $155,800,000 of forward sales, our revenues increased $242,700,000 or 18%, which was due to higher average selling prices of gold and silver, partially offset by a decrease in gold and silver ounces sold. The DTC segment contributed 1913% of the consolidated revenue in the fiscal third quarters of twenty twenty five and 2024, respectively. JMB's revenue represented 10% of the consolidated revenue for the fiscal third quarter of twenty twenty five, compared with 12% for the prior year fiscal third quarter.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

For the nine month period, our revenues increased 18% to $8,500,000,000 from $7,200,000,000 in the same year ago period. Excluding an increase of $540,500,000 of forward sales, our revenues increased $752,000,000 or 18.3%, which was due to higher average selling prices of gold and silver, partially offset by a decrease in gold and silver ounces sold. The DTC segment contributed 1914% of the consolidated revenue for the nine months ended 03/31/2025, and 2024, respectively. Revenue contributed by JMB represented 11% of the consolidated revenues for the nine months ended 03/31/2025, compared with 13% in the same year ago period. Gross profit for fiscal Q3 twenty twenty five increased 18% to $41,000,000 or 1.36% of revenue from $34,800,000 or 1.33 of revenue in Q3 of last year.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

The increase in gross profits was due to higher gross profits earned from the DTC segment, partially offset by lower gross profits earned from the Wholesale Sales and Ancillary Services segment. Gross profit contributed by the DTC segment represented sixty one percent and fifty two percent of the consolidated gross profit in the fiscal third quarters of twenty twenty five and 2024, respectively. Gross profit contributed by JMB represented 40% of the consolidated gross profit in Q3 twenty twenty five compared to 45% in Q3 of last year. For the nine month period, gross profit decreased 1% to $129,300,000 or 1.53% of revenue from $130,300,000 or 1.82% of revenue in the same year ago period. The decrease in gross profit was due to lower gross profits earned from the Wholesale Sales and Ancillary Services segment, partially offset by an increase in gross profits earned by the DTC segment.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

Gross profit contributed by the DTC segment represented 57% of the consolidated gross profit for the nine months ended March 30 the months ended March thirty one, twenty Gross profit contributed by JMB represented thirty eight percent and forty percent of the consolidated gross profit for the nine months ended March thirty one, '20 '20 '5 and 2024, respectively. SG and A expenses for fiscal Q3 twenty twenty five increased 46% to $33,400,000 from $22,900,000 in the same year ago quarter. The change was primarily due to an increase in consulting and professional fees of 4,400,000.0 including an increase in one time acquisition costs of $2,400,000 an increase in compensation expense, including performance based accruals, of 3,400,000.0 higher advertising costs of $1,500,000 and an increase in facilities expense of $700,000 Selling, general and administrative expenses also include $8,700,000 of expenses incurred by LPM, Pinehurst, SGB, and SGI, which were not included in the same year ago period as they were not yet consolidated subsidiaries for the full period. For the nine month period, SG and A expenses increased 28% to $85,800,000 from $67,100,000 in the same year ago period.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

The change was primarily due to an increase in compensation expense, including performance based accruals, of $6,500,000 an increase in consulting and professional fees of $5,900,000 including an increase in one time acquisition costs of $2,600,000 an increase in advertising costs of $3,200,000 an increase in facilities expense of $1,500,000 an increase in information technology costs of $400,000 and an increase in insurance costs of 200,000.0 Selling, general and administrative expenses for the nine months ended 03/31/2025 include $19,200,000 of expenses incurred by LPM, Pinehurst, SGB, and SGI, which were not included in the same year ago period as they were not yet consolidated subsidiaries for the full period. Depreciation and amortization expense for fiscal Q3 twenty twenty five increased 69% to $5,000,000 from $2,900,000 in the same year ago quarter. The change was primarily due to an increase in amortization expense of $2,400,000 related to the intangible assets acquired through our acquisitions of LPM, Pinehurst, and SGI, and our acquisition of a controlling interest in SGB. This was partially offset by a decrease in JMB intangible asset amortization of $600,000 For the nine month period, depreciation and amortization expense increased 68% to $14,300,000 from $8,600,000 in the same year ago period.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

The change was primarily due to an increase in amortization expense of $6,800,000 related to intangible assets acquired through our acquisitions of LPM, Pinehurst, and SGI, and our acquisition of a controlling interest in SGB, this was partially offset by a decrease in JMB intangible asset amortization of $1,700,000 Interest income for fiscal Q3 twenty twenty five increased slightly 0.6% to $6,700,000 from $6,700,000 in the same year ago quarter. The aggregate increase in interest income was due to an increase in other finance product income of 400,000.0 and a decrease in interest income earned by the Secured Lending segment of $400,000 For the nine month period, interest income increased 8% to $20,600,000 from $19,100,000 in the same year ago period. The aggregate increase in interest income was due to an increase in other finance product income of $1,700,000 and a decrease in interest income earned by our secured lending segment of 200,000.0 Interest expense for fiscal Q3 twenty twenty five increased 31% to $13,000,000 from $9,900,000 in the same year ago quarter. The increase in interest expense was primarily due to an increase of $2,000,000 related to product financing arrangements and $900,000 from liabilities on borrowed metals. For the nine month period, interest expense increased 11% to $33,300,000 from $29,900,000 in the same year ago period.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

The increase in interest expense was primarily due to an increase of 2,900,000 related to product financing arrangements, an increase of $1,600,000 from liabilities on borrowed metals, and an increase of $1,300,000 associated with our trading credit facility due to increased borrowings as well as an increase in the weighted average effective interest rate. This was partially offset by a decrease of 2,500,000.0 related to the AMCF notes, including amortization of debt issuance costs, due to their repayment in December 2023. Losses from equity method investments in Q3 of fiscal twenty twenty five of $200,000 remained consistent with the same year ago quarter. For the nine month period, earnings from equity method investments decreased 163% to a loss of $2,100,000 from earnings of $3,300,000 in the same year ago period. The decrease was due to decreased earnings of our equity method investees.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

Net loss attributable to the company for the third quarter of fiscal twenty twenty five totaled $8,500,000 or $0.36 loss per diluted share compared to net income of $5,000,000 or $0.21 per diluted share in Q3 of last year. For the nine month period, net income attributable to the company totaled $7,000,000 or $0.29 per diluted share compared to net income of $37,600,000 or $1.56 per diluted share in the same year ago period. Adjusted net income before provision for income taxes, a non GAAP financial measure which excludes acquisition costs, amortization, depreciation, remeasurement gains or losses, and contingent consideration fair value adjustments for Q3 fiscal twenty twenty five totaled 5,700,000 a decrease of $5,900,000 or 51% compared to $11,600,000 in the same year ago quarter. The decrease was primarily due to lower net income before provision for income taxes of $16,400,000 the contingent consideration fair value adjustment of $1,000,000 partially offset by higher acquisition costs of $2,400,000 higher amortization of acquired intangibles of $1,800,000 and the one time remeasurement loss on our pre existing equity interest in Pinehurst of $7,000,000 Adjusted net income before provision for income taxes for the nine month period totaled $33,900,000 a decrease of $26,200,000 or 44% compared to $60,100,000 in the same year ago period.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

The decrease was primarily due to lower net income before provision for income taxes of $40,600,000 contingent consideration fair value adjustment of $1,100,000 and this was partially offset by higher amortization of acquired intangibles of 5,100,000.0 higher acquisition costs of $2,600,000 and the one time remeasurement loss on our pre existing equity interest in Pinehurst of $7,000,000 EBITDA, a non GAAP liquidity measure, for Q3 totaled 1,300,000.0 a decrease of $11,300,000 or 90% compared to $12,600,000 in the same year ago quarter. The decrease was primarily due to lower net income of $14,000,000 partially offset by the exclusion of higher interest expense of 3,000,000 EBITDA for the nine month period totaled $35,300,000 a decrease of $32,900,000 or 48% compared to $68,200,000 in the same year ago period. The decrease was primarily due to lower net income of $32,400,000 Turning to our balance sheet. At quarter end, we had 114,300,000 of cash compared to $48,600,000 at the end of fiscal year twenty twenty four. Our tangible net worth, excluding noncontrolling interest, at the end of the quarter was $315,700,000 up from $306,000,000 at the end of the prior fiscal year.

Kathleen Simpson-Taylor
Kathleen Simpson-Taylor
CFO, Executive VP & Assistant Secretary at A-Mark Precious Metals

During the quarter, we amended our credit facility and now have a revolving commitment of $467,000,000 A Mark's Board of Directors has continued to maintain the company's regular quarterly cash dividend program 20 per common share. The most recent quarterly cash dividend was paid in April. It is expected that the next quarterly dividend will be paid in August 2025. That completes my financial summary. Now I will turn the call over to Thor, who will provide an update on our key operating metrics. Thor?

Thor Gjerdrum
President at A-Mark Precious Metals

Thanks, Kathleen. Looking at our key operating metrics for the third quarter of fiscal twenty twenty five, we sold 432,000 ounces of gold in Q3 fiscal twenty twenty five, which was down 3% from Q3 of the previous year and down 7% from the prior quarter. For the nine month period, we sold 1,300,000 ounces of gold, which is down 7% from the same year ago period. We sold 15,700,000 ounces of silver in Q3 fiscal twenty twenty five, which is down 39% from Q3 of the previous year and down 28% from the last quarter. For the nine month period, we sold 58,000,000 ounces of silver, which is down 30% from the same year ago period.

Thor Gjerdrum
President at A-Mark Precious Metals

The number of new customers in the DTC segment, which is defined as those who registered or set up a new account or made a purchase for the first time during the period, was 899,600 in Q3 fiscal twenty twenty five, which is up 1489% from Q3 of last year and increased 1276% from the prior quarter. For the three month period ended 03/31/2025, approximately 849% of the new customers were attributable to the acquisitions of Pinehurst and SGI, respectively. For the nine month period, the number of new customers in the DTC segment was 1,020,300, which is up 588% from 148,200 new customers in the same year ago period. For the nine month period ended 03/31/2025, approximately 748% of the new customers were attributable to the acquisitions of Pinehurst and SGI, respectively. The total number of customers in the DTC segment at the end of the third quarter was approximately 4,100,000, a 64 increase from the prior year.

Thor Gjerdrum
President at A-Mark Precious Metals

The year over year growth was driven by organic expansion of our customer base and the acquisitions of Pinehurst, SGI and the acquisition of a non controlling interest in SGB. The DTC segment average order value, which represents the average dollar amount of products ordered, excluding accumulation program orders delivered to DTC segment customers during Q3 fiscal twenty twenty five was $3,084 which is up 45% from Q3 fiscal twenty twenty four and a 3% decrease from the prior quarter. For the nine month period, the DTC average order value was $3,080 which is up 37% from the same year ago period. For the fiscal third quarter, our inventory turn ratio was 2.4, a 4% increase from 2.3 in Q3 of the previous year and a 9% increase from 2.2 in the prior quarter. For the nine month period, the inventory turn ratio was 6.9, a 1% increase from 6.8 in the same year ago period.

Thor Gjerdrum
President at A-Mark Precious Metals

Finally, the number of secured loans at the March totaled four ninety one, a 27% decrease from 03/31/2024, and a 5% decrease from the December. The value of the loan portfolio as of 03/31/2025, was $86,500,000 a 25 decrease from the prior year period and a 12% decrease from 12/31/2024. That concludes my prepared remarks. I'll now turn it over to Greg for closing remarks. Greg?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Thank you Thor and Kathleen. We are focused on integrating our recent acquisitions and driving efficiencies throughout the businesses to close out the fiscal year. We are excited about the new markets that we have entered and will be operating in. Our commitment to generating stockholder value remains firm and we are confident in A Mark's diversified and proven business model. That concludes my prepared remarks. Operator?

Operator

Thank you. The floor is now open for questions. If you have any questions or comments, please press Your first question is coming from Andrew Scott with ROTH Capital Partners. Please pose your question. Your line is live.

Andrew Scutt
Equity Research Associate at Roth Capital Partners, LLC

Hey, good afternoon. Thank you for taking my questions. First one for me here. In April, kind of gold and silver prices saw a little bit of volatility. So can you just kind of talk about what you've seen in the market here quarter to date?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Yeah, we saw, post April 2, we saw an increased level of activity. We were happy to see that based on what we went through the quarter we just described. But yes, in the first couple of weeks of April, we were very active and believe the business is operating very efficiently. Things have slowed down a little bit the last week or two. But all in all, April was a very solid month for us.

Andrew Scutt
Equity Research Associate at Roth Capital Partners, LLC

Great to hear. Thank you for the color. Second one for me, and then I'll jump back in the queue. Kind of tangent from the core business, but recently you guys have gotten more into the collectible space. Can you just kind of talk about the progress you've seen there and the outlook on the business?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Sure. As we've communicated, we closed the SGI deal as well as the Pinehurst deal within the quarter, our Q3. We've done a good job, in my opinion, of integrating the businesses and the businesses are operating as we would expect them to. I think the market has been active in the collectible space, particularly at the Stacks Bowers division. They had some very impressive auctions with great demands in April.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And, you know, I think, you know, I think the overall market for the collectibles, although, you know, historically has been driven a bit by precious metal prices, happy happy with with the demand and and the execution at the collectible side of things.

Andrew Scutt
Equity Research Associate at Roth Capital Partners, LLC

Perfect. Well, that's great to hear, and I'll jump back in the queue.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Sure.

Operator

Your next question is coming from Thomas Forte with Maxim Group. Please pose your question. Your line is live.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Great. So first off for Kathleen, I wanted to offer her congratulations and best wishes. And then Greg, had two questions and then also I want to get back in the queue as well. I have a lot of questions. So can you explain how backwardation impacted your results?

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

And when was the last time A Mark experienced backwardation?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Sure. The last time that backwardation was material and affected us was right after the COVID. And there were some similarities to what happened then versus what happened to us through most of February and March and part of January. In general, and throughout most of, you know, as we've been reporting and as we've been a public company, the company carries a very large short position, which hedges our inventory. So if you look at our balance sheet and you look at, the rising cost of spot price of metal, that increases our carrying cost, A, through borrowings on our dollar lines.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

But as it relates to the difference between contango and backwardation, as we moved into, the tariff uncertainty and as we moved closer to April 2, there was a significant fear that precious metals and bullion would be subject to tariffs. That caused a disruption in the normal contango market where, as your short metal, as you go out out on the curve, you're going to get paid to be short. The difference in backwardation is that you're paying to be short. And it's a flip you know, from what we normally earn in contango. So it is a part of our trading revenue and our gross profit.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And, you know, it did disrupt our, you know, our GP in that area fairly significantly in February, March. At the same time, we create liquidity through leases and through repo. And the rates on those borrowing facilities also increase. So we saw an increased level of borrowing. On April 2, when the administration became more specific on what was going to be tariffed and what wasn't, there was an exemption for precious metals and bullion.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And since then, the markets have gone back to a much more normal and historic level. Now it takes a little while for backwardation to go back to contango. But as we are rolling our positions today, as we roll them out and we roll out to the future, we're gaining contango again and we're we're actually seeing contango back back to a level that that, you know, was pre pre Trump, pre tariff, pre tariff world. So it was a negative and it was a big headwind on the business in mostly February and March. But what we're seeing today is a much more normalized situation.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Thank you. If there's anything there I wasn't clear enough on or you need more clarification, let me know. It's a bit of a complex situation and there's a lot to digest there.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Yep. So that was very helpful. Let me ask my second question, then let me get back in the queue for some more. So at a high level, how should we think about A Mark's earnings power in a period of macroeconomic uncertainty, but a one way trade in gold?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Yeah. I mean, it's interesting. We we talk about this all the time. If you go back historically with A Mark, we make most of our money in a very active silver market. So in general, premiums and margins for us are higher on silver than than in gold.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

You know, what we've seen in the last six or eight months as gold continues to hit new highs, you know, almost every month it seems like, we we did see the company and the earnings power perform very well in in a gold dominated market. And in market conditions where really over the last twelve months, silver has been left behind. And as you just look at the ratio between silver and gold, it's trading at really unprecedented numbers for any extended period of time. You're up over 100x between silver and gold. So it's clear that the precious metals markets right now are very dominated by gold, and we believe they're very dominated by central banks and institutional buying.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And the smaller precious metals buyer that historically has bought silver Up to this time, you know, we haven't seen anything to indicate that, you know, there's a level of, you know, FOMO or frothiness that is trickling down to the silver buyer. And I will say, as we saw silver and gold a few weeks ago, make a new time high, an all time high in gold and recent high in silver, we did see our DTC customers become a bit more active. And actually, you know, in communications with customers, we did hear a bit of anxiety and a beer, a little bit of fear of being left behind. So we're going to have to see how that plays out. But it is fairly uncharted.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

With gold at $3,500 an ounce, I just believe there's a little bit of frozen behavior right now as to, know, is gold going to 5,000? Is gold going back to 2,500? You know, we're just not sure on that. And I think in general, the retail purchaser of fabricated precious metals right now is also kind of looking for more direction there. On the positive side, we've seen some really volatile days over the last three weeks where you've had $100 swings in gold within a day and $1.5 in silver. So there is certainly uncertainty. And I think as equities became a bit shaky in early April, we realized what we would expect from our customer base is there is a move to safety and there is a move to precious metals as a place to go if you're pulling out of equity investments. We saw a lot of good things.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Still have not seen enough demand to really affect premiums to the upside. And we'll see how that plays out through the rest of this quarter.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Thank you. I'm gonna get back in the queue. That was very helpful. Thanks, Greg.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Thanks, Greg.

Operator

Your next question is coming from Greg Gibas with Northland Securities. Please pose your question. Your line is live.

Greg Gibas
Vice President & Senior Research Analyst at Northland Securities, Inc

Hey, good afternoon, Greg, Thorne, Kathleen. Thanks for taking the questions. Sure. We've seen A Mark capitalize on the software conditions completing those three acquisitions in the quarter. I wanted to ask what your maybe current stance on acquisitions is and whether your M and A focus has shifted at all following the acquisitions you closed in the quarter.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

As we've said before, want to be very active in acquisitions when the markets are slow. Generally, I have found historically that things aren't really for sale at a price I want to pay when we're at the top. Things become available and for sale at the right price when things are not going great or when markets are slow. I feel very good and confident about the acquisitions we've closed. There are still a number of things we're looking at.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

I believe we are properly positioned that if an opportunity presents itself at what we think is the best use of capital, we will continue to deploy capital in acquisitions. I am particularly encouraged by what these acquisitions have done positively to our balance sheet which we will be putting out with our 10 Q, as well as the 4,000,000 retail customers in the DTC segment that we reported today. Just very large numbers and through acquisitions we've been able to add to that customer base. And I'm very confident that when the markets do become more favorable and we get to a situation where we have tailwinds instead of headwinds, the customer base is going to significantly outperform a lower number of customers that we had two or three years ago. So I continue to view acquisitions as a great way combined with our organic marketing and new customer growth to add to the customer base that will really propel A Mark to a new place.

Greg Gibas
Vice President & Senior Research Analyst at Northland Securities, Inc

Got it. Very helpful, Greg. And a couple of my other questions have been answered. But if I could follow-up on how things have trended post Liberation Day. You mentioned a very active April.

Greg Gibas
Vice President & Senior Research Analyst at Northland Securities, Inc

Are you still seeing more favorable elevated customer activity relative to not that we have a near term baseline, but like kind of maybe normalized demand in a way or it would be helpful if you can kind of characterize like how things have trended post those first few weeks.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Yeah, I mean, I think we are, we are definitely seeing elevated interest throughout April. It's a little early to talk about May, but throughout April we definitely saw elevated interest across all of our different businesses, both our normal trading business, our DTC business, and our newly acquired businesses. So we saw elevated activity, impressive above what we saw in our Q3 that we're reporting here. I will say there does seem to be a bit more of a correlation right now in our businesses as it relates to what, you know, the stock market and equities are doing. Certainly, throughout the March and the April, there was just tremendous volatility and tremendous uncertainty as it relates to what's really going on out there in the world right now.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

It's clear that from looking at other companies earnings calls over the last couple weeks, there just continues to be CEOs that are very uncertain and pulling guidance and there's just a lot of uncertainty. There is a, at the moment, we're seeing a direct correlation that days where the stock market is down two or 3%, there's a direct correlation to positive results at the A Mark level. And vice versa, when you see the stock market up 3%, we're seeing things slow down. So at least at the moment, that seems to be what we're following. And I think we're very well positioned in either scenario.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

But I just continue to see uncertainty out there outside of our business. But as I said before, I'm very encouraged. It doesn't take a whole lot for us to see when all 12 cylinders are firing, know, albeit a very small sample size that we're talking about. But but the businesses, you know, we definitely saw them perform.

Greg Gibas
Vice President & Senior Research Analyst at Northland Securities, Inc

Great to hear. Thank you. I'll pass it on.

Operator

Your next follow-up question is coming from Thomas Forte with Maxim Group. Please pose your question. Your line is live.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Great. So I have three. I apologize if that's too many. No, you go right ahead, Tom. Okay.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Thank you, Greg. So one of the things that seems to happen in a period of elevated gold prices is that longtime gold owners sell their own inventory. Do you have any visibility on that being exhausted? And then how does that impact your earnings power when when you have a lot of existing holders selling into the market?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Well, it's just a supply and demand equation. You know, the more long term holders of precious metals that sell back into the market, it's going to create, you know, supply situations that are different than when you have, you know, the reverse of that. And I think I've discussed this a bit before. You have a number of retail customers bringing metal back into the market, you're going to have less new material being made. So for every ounce of silver that there's demand for that comes back into the marketplace through a buyback or through customer liquidation or a long term holder selling, that's one less, you know, new silver round that we make at SilverTowne or new gold bar that we make at Sunshine.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

So it does affect throughout. And then it also stunts our trading division on a wholesale level because a lot of our wholesale customers are buying back material and they don't need to buy new material from A Mark. So that is a metric that I look at every week. And I view it through the lens of what percentage are we buying back from wholesale and retail customers versus new sales to new customers. And when you have an elevated percentage there where the percentage is elevated higher, you're going to have headwinds and you're going to have lower performance, which is you know, this is probably the third or fourth quarter that we've been talking about this.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And we've been talking about it since, you know, we talked when gold hit an all time high at 2,700. And we had elevated, you know, elevated liquidations when gold hit that spot price. Since then, we've continued all the way up to $406,500 where you have people liquidating and taking profits, whether they've been holding material for twenty years or whether they've been holding material since gold was at 2,700, you're going to have a percentage of people that are going to liquidate and they're going to take advantage of these prices. I will say that what I did see in the first week or so April where we had some elevated demand and we had higher numbers, as I've discussed, we did see the liquidations and the wholesale buys that we were making go down as a percentage of new sales. You know, it is fairly, you know, is the numbers and the metrics and the analytics are fairly consistent with what happens.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

You know, and then, you know, two weeks ago or a week ago, we saw a new, a new high spot price and we did see some elevated liquidations and sell backs. That's what we're seeing and just, you know, operating within in the environment and trying to execute as well as we can.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Great. Alright, so then two more. So I'm very impressed by the improvements you've made to your Las Vegas facility or are in the process of making. Does that translate into higher volumes and slightly better margins? How should we think about the financial impact of those improvements?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

I mean, we're not fully operational there yet. But certainly, we believe that the automation that we've created in the facility that is very, very impressive. And it allows us to bring in more third party shippers and other third party inventories into the facility and allows us to ship, sort, pick and pack just a much higher percentage. I think when this is all said and done, likely will be able you know, do 50 to 75% more packages a week without adding more employees. So, I think this is, you know, part of my long term goal and strategy and it's something that Thor and Brian Aquilina have been working on for quite some time.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And and I'm just very, very pleased that we took the leap three years ago or four years ago when we first, you know, we went to SpaceX and we saw these machines and we saw what they could do. And that demonstration, I'm just very pleased that, you know, we weren't afraid to do it and we went ahead and and and, know got in the queue to get these machines and they're very impressive what they can do. So that's certainly going to help us and as it relates to integrating our acquisitions and looking for ways to make our make our subsidiaries inventory more efficient or inventory light, whether it be an asset or Pinehurst or stacks. Being able to to have more demand out of A Mark's inventory and have it all in Las Vegas where it can be accessed is going to create synergies and create efficiencies and hopefully have a positive effect on our SG and A.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Okay, last one. I apologize if this has elements of being a comment and a question. So one of the wonderful things in my opinion about your business model is the improvements you make over time that position you to capture incremental profits in the next favorable environment. Off the top of my head, I couldn't name all the M and A you've done since that last trading environment. But it feels like to me that you're it's almost like a coiled spring that when the time comes, the earnings will be very big.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

So that's the statement part. The question part then is, what are your current thoughts on buybacks given where shares are trading?

Gregory Roberts
CEO & Director at A-Mark Precious Metals

As I've said before, and just to, I guess, respond to your comment, as I've said for quite some time now, the goals are to have higher highs and higher lows within similar environments. And I believe that is what we're doing here. I mean, am very impressed by our balance sheet, our number of DTC customers, our ability to sell $3,000,000,000 in a quarter, albeit at lower margins, which we realize the margins are low right now. Hitting that $3,000,000,000 mark or a $12,000,000,000 run rate is going to position us if margins increase that we're going to see tremendous performance. There's no doubt about that.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

So I agree with your comment and I think that is what I am trying to build here. That's what we're trying to accomplish and take advantage of things in good markets as well as bad markets. As it relates to our stock buybacks, I'm going to go back to what I always say. We look at four or five different things that we look at every day when we're talking about capital deployment. We're looking at inventory reduction.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

We're looking at affecting our interest expense. We look at dividends. We look at stock buybacks. And we look at acquisitions. And those are, I'm very consistent on that.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

That's what we do. We feel good at the moment in digesting the acquisitions that we closed on. I think there's still work to be done on integration and making sure we recognize the efficiencies that we have projected. As I said earlier, there's still a number of opportunities that we're looking at that as it relates to M and A that we think would be the right use of capital as it relates to return on equity or return on investment. And I think we're always looking at stock buybacks if we believe that is the best use of our capital.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

So I'm not precluding anything. But I think that we see great opportunity with the market being slow, as I've said before, that we believe that acquisitions, new clients that come with acquisitions, new DTC customers that come, we believe that is a very good long term use or deployment of capital. So I think we're flexible and open to everything, But you gotta stay flexible and we're always looking at this.

Tom Forte
Managing Director & Senior Consumer Internet Analyst at Maxim Group

Thank you, Greg, for taking all my questions. I appreciate it.

Operator

At this time, this does conclude our question and answer session. I'd now like to turn the call back over to Mr. Roberts for his closing remarks.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

Great. Thank you. Again, thanks everybody for being on the call. Thank you for being long term followers and shareholders. We continue to be positive at A Mark about what we're accomplishing, where we've been, where we're going.

Gregory Roberts
CEO & Director at A-Mark Precious Metals

And again, are committed to this, creating shareholder value, and we're going to continue on the mission here. So thank you very much for being on the call.

Operator

Before we conclude today's call, I would like to provide A Statements that relate A Mark's 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. These include statements regarding expectations with respect to the dividend declarations, the amount of timing of any future dividends, future macroeconomic conditions and a demand for precious metals products, and the company's ability to effectively respond to changing economic conditions. 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.

Operator

These include the following with respect to the proposed transaction with the failure of the parties to agree on definitive transaction documents the failure of the parties to complete the contemplated transactions within the currently expected timeline or at all the failure to obtain necessary third party consents or approvals and anticipated costs incurred to consummate the transactions. Other factors that could possibly cause actual results to differ include the failure to execute the company's growth strategy, including the inability to identify suitable or available acquisition or investment opportunities greater than anticipated costs incurred to execute this strategy changes in the current international political climate, which historically has favorably contributed to demand and volatility in the precious metals markets Potential adverse effects of the current problems in the national and global supply chains Increased competition for the company's higher margin services, which could depress pricing the failure of the company's business model to respond to changes in the market environment as anticipated changes in consumer demand and preferences for precious metal products generally potential negative effects that inflationary pressure may have on our business, the inability of the company to expand capacity at SilverTowne Mint, the failure of our investee companies to maintain or address the preferences of their consumer bases, general risks of doing business in the commodity markets, and the strategic business, economic, financial, political, and governmental risk, and other risk factors described in the company's public filings with the Securities and Exchange Commission.

Operator

The company undertakes no obligation to publicly update or reverse any forward looking statements. Listeners are cautioned not to place undue reliance on these forward looking statements. Finally, I would like to remind everyone that a recording of today's call will be available for replay via a link in the Investors section of the company's website. Thank you for joining us today for A Mark's earnings call. You may now disconnect.

Executives
    • Kathleen Simpson-Taylor
      Kathleen Simpson-Taylor
      CFO, Executive VP & Assistant Secretary
Analysts
    • Gregory Roberts
      CEO & Director at A-Mark Precious Metals
    • Thor Gjerdrum
      President at A-Mark Precious Metals
    • Andrew Scutt
      Equity Research Associate at Roth Capital Partners, LLC
    • Tom Forte
      Managing Director & Senior Consumer Internet Analyst at Maxim Group
    • Greg Gibas
      Vice President & Senior Research Analyst at Northland Securities, Inc
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